Check the appropriate box:
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|||
☐
|
| |
Preliminary Proxy Statement
|
☐
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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☒
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| |
Definitive Proxy Statement
|
☐
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Definitive Additional Materials
|
☐
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Soliciting Material under §240.14a-12
|
Square, Inc.
|
(Name of Registrant as Specified in Its Charter)
|
|
N/A
|
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
|
1.
|
To approve the issuance of shares of Square Class A common stock (including the shares underlying the New Square CDIs) to Afterpay shareholders pursuant to the Scheme and Deed Poll and as contemplated by the Transaction Agreement; and
|
2.
|
To approve one or more adjournments of the Special Meeting, if necessary or appropriate and consented to by Afterpay, including to permit further solicitation of proxies if there are insufficient votes at the time of the Special Meeting to approve the proposal above.
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|
| |
Sincerely,
|
|
| |
|
|
| |
Jack Dorsey
President, Chief Executive Officer and Chairman of the Board
|
1.
|
To approve the issuance of shares of Square Class A common stock (including the shares underlying the New Square CDIs) to Afterpay shareholders pursuant to the Scheme and Deed Poll and as contemplated by the Transaction Agreement; and
|
2.
|
To approve one or more adjournments of the Special Meeting, if necessary or appropriate and consented to by Afterpay, including to permit further solicitation of proxies if there are insufficient votes at the time of the Special Meeting to approve the proposal above.
|
|
| |
By order of the Board of Directors,
|
|
| |
|
|
| |
Jack Dorsey
President, Chief Executive Officer and Chairman of the Board
|
|
| |
October 5, 2021
|
1.
|
To approve the issuance of shares of Square Class A common stock (including the shares underlying the New Square CDIs) to Afterpay shareholders pursuant to the Scheme and Deed Poll and as contemplated by the Transaction Agreement (the “Transaction Proposal”); and
|
2.
|
To approve one or more adjournments of the Special Meeting, if necessary or appropriate and consented to by Afterpay, including to permit further solicitation of proxies if there are insufficient votes at the time of the Special Meeting to approve the Transaction Proposal (the “Adjournment Proposal”).
|
•
|
Assuming a quorum is present, approval of the Transaction Proposal will require the affirmative vote of a majority of the voting power of the shares of Square common stock present or represented by proxy at the Special Meeting and entitled to vote thereon. An abstention from voting or an attending non-vote will have the same effect as a vote AGAINST the Transaction Proposal.
|
•
|
Approval of the Adjournment Proposal will require the affirmative vote of a majority of the voting power of the shares of Square common stock present or represented by proxy at the Special Meeting and entitled to vote thereon (whether or not a quorum is present). An abstention from voting or an attending non-vote will have the same effect as a vote AGAINST the Adjournment Proposal.
|
Date
|
| |
Afterpay
Ordinary
Share (A$)
|
| |
Square
Class A
Common
Stock ($)
|
| |
Share
Conversion
Ratio
|
| |
U.S. Dollar
to
Australian
Dollar
Exchange
Rate
|
| |
Implied
Value of
Afterpay
Ordinary
Share (A$)
|
July 30, 2021
|
| |
96.66
|
| |
247.26
|
| |
0.375
|
| |
0.73465
|
| |
126.21
|
September 16, 2021
|
| |
123.54
|
| |
255.09
|
| |
0.375
|
| |
0.72833
|
| |
131.34
|
•
|
ASIC provides the Court with a statement that it has no objection to the Transaction; or
|
•
|
the Court is satisfied that the Transaction has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6 of the Australian Corporations Act (which relates to takeovers).
|
•
|
certain regulatory approvals;
|
•
|
approval by Square stockholders and Afterpay shareholders;
|
•
|
the Court’s approval of the Scheme in accordance with the Australian Corporations Act;
|
•
|
issuance of the Independent Expert’s report concluding that the Scheme is in the best interests of Scheme Participants before the lodgement of the Scheme Booklet with ASIC;
|
•
|
listing of the New Square Shares and New Square CDIs on the NYSE and ASX, respectively;
|
•
|
absence of Afterpay Prescribed Event and Square Prescribed Event (as defined under “The Transaction Agreement, Scheme and Deed Poll—Conditions Precedent to the Scheme”);
|
•
|
absence of Afterpay Material Adverse Effect and Square Material Adverse Effect (as defined under “The Transaction Agreement, Scheme and Deed Poll—Representations and Warranties”);
|
•
|
performance in all material respects of the respective obligations, covenants, and agreements under the Transaction Agreement by Afterpay, Square, and their respective subsidiaries; and
|
•
|
accuracy of representations and warranties of Afterpay and Square, subject to certain qualifications.
|
•
|
if the Scheme has not become effective on or before August 2, 2022 (the “End Date”), unless the failure of the Scheme to become effective on or before the End Date is due to the failure of the party seeking to terminate the Transaction Agreement to perform or observe its obligations, covenants and agreements under the Transaction Agreement;
|
•
|
before 8:00 a.m. (Australian Eastern Time) on the Second Court Date, if the other party’s board of directors changes, withdraws or adversely modifies its recommendation that such other party’s shareholders vote in favor of the Scheme or the issuance of the Scheme Consideration, as applicable, or otherwise makes a public statement indicating that such other party’s board of directors no longer supports the Scheme;
|
•
|
before 8:00 a.m. (Australian Eastern Time) on the Second Court Date, if (a) any governmental authority who must grant a Regulatory Approval (as defined under “The Transaction Agreement, Scheme and Deed Poll—Conditions Precedent to the Scheme”) that is a condition precedent to the Scheme has denied such approval, and such denial has become final and non-appealable or (b) any governmental authority of competent jurisdiction has issued a final and non-appealable order, injunction, decree or other legal restraint or prohibition permanently enjoining or otherwise prohibiting or making illegal the consummation of the Scheme, unless such denial or prohibition is due to the failure of the party seeking to terminate the Transaction Agreement to perform or observe its obligations, covenants and agreements under the Transaction Agreement;
|
•
|
before 8:00 a.m. (Australian Eastern Time) on the Second Court Date, if the other party is in material breach of a term of the Transaction Agreement (excluding representations and warranties), taken in the context of the Scheme as a whole, subject to notice of breach setting out the relevant circumstances and a 30 business day cure period (or such shorter period ending at 8:00 a.m. (Australian Eastern Time) on the Second Court Date) after such notice is given;
|
•
|
if (a) a “Consultation Failure” (as defined under “The Transaction Agreement, Scheme and Deed Poll—Conditions Precedent to the Scheme”) has occurred or (b) the Court has denied approval of the Scheme and the parties agree not to appeal or an independent counsel has determined that an appeal would be futile; or
|
•
|
if agreed to in writing by both parties.
|
•
|
Square's audited consolidated financial statements and related notes thereto contained in its Annual Report on Form 10-K as of and for the year ended December 31, 2020 and Square's unaudited consolidated financial statements and related notes thereto contained in its Quarterly Report on Form 10-Q as of and for the period ended June 30, 2021; and
|
•
|
Afterpay's audited consolidated financial statements and related notes thereto as of June 30, 2021 and June 30, 2020 and for fiscal years ended June 30, 2021 and June 30, 2020, included as Annex B to this proxy statement and Afterpay's unaudited consolidated financial statements as of December 31, 2020 and for the six months ended December 31, 2020 and December 31, 2019, which are not included in this proxy statement but are included in Afterpay's 2020 Half Year Report as filed with the ASX on February 27, 2020.
|
|
| |
Historical
SQUARE, INC.
(USD)
|
| |
Historical
Afterpay Limited
U.S. GAAP
(USD)
|
| |
Transaction
Accounting
Adjustments
(USD)
|
| |
Note(s)
|
| |
Pro Forma
Condensed
Combined
|
Assets
|
| |
|
| |
|
| |
|
| |
|
| |
|
Current assets:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents
|
| |
$4,581,234
|
| |
$861,782
|
| |
$(1,174,272)
|
| |
7(A)
|
| |
$4,268,744
|
Investments in short-term debt securities
|
| |
1,014,903
|
| |
—
|
| |
—
|
| |
|
| |
1,014,903
|
Settlements receivable
|
| |
1,155,757
|
| |
—
|
| |
—
|
| |
|
| |
1,155,757
|
Customer funds
|
| |
2,847,477
|
| |
—
|
| |
—
|
| |
|
| |
2,847,477
|
Consumer receivables, net
|
| |
—
|
| |
1,109,175
|
| |
—
|
| |
|
| |
1,109,175
|
Loans held for sale
|
| |
807,402
|
| |
—
|
| |
—
|
| |
|
| |
807,402
|
Other current assets
|
| |
593,462
|
| |
47,960
|
| |
—
|
| |
|
| |
641,422
|
Total current assets
|
| |
$11,000,235
|
| |
$2,018,917
|
| |
$(1,174,272)
|
| |
|
| |
$11,844,880
|
Property and equipment, net
|
| |
260,883
|
| |
6,094
|
| |
—
|
| |
|
| |
266,977
|
Goodwill
|
| |
501,400
|
| |
84,361
|
| |
25,842,669
|
| |
7(B)
|
| |
26,428,430
|
Acquired intangible assets, net
|
| |
262,196
|
| |
86,556
|
| |
2,498,444
|
| |
7(C)
|
| |
2,847,196
|
Investments in long-term debt securities
|
| |
947,093
|
| |
—
|
| |
—
|
| |
|
| |
947,093
|
Operating lease right-of-use assets
|
| |
461,277
|
| |
25,511
|
| |
—
|
| |
|
| |
486,788
|
Other non-current assets
|
| |
382,604
|
| |
136,412
|
| |
(117,290)
|
| |
7(D)
|
| |
401,726
|
Total assets
|
| |
$13,815,688
|
| |
$2,357,851
|
| |
$27,049,551
|
| |
|
| |
$43,223,090
|
Liabilities and stockholders' equity
|
| |
|
| |
|
| |
|
| |
|
| |
|
Current liabilities:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Customers payable
|
| |
$3,993,164
|
| |
$119,770
|
| |
$—
|
| |
|
| |
$4,112,934
|
Settlements payable
|
| |
257,008
|
| |
—
|
| |
—
|
| |
|
| |
257,008
|
Accrued expenses and other current liabilities
|
| |
515,813
|
| |
139,975
|
| |
162,702
|
| |
7(G)
|
| |
818,490
|
Operating lease liabilities, current
|
| |
57,102
|
| |
—
|
| |
—
|
| |
|
| |
57,102
|
PPP Liquidity Facility advances
|
| |
823,683
|
| |
—
|
| |
—
|
| |
|
| |
823,683
|
Total current liabilities
|
| |
$5,646,770
|
| |
$259,745
|
| |
$162,702
|
| |
|
| |
$6,069,217
|
Long-term debt
|
| |
4,841,277
|
| |
941,185
|
| |
(941,026)
|
| |
7(F)
|
| |
4,841,436
|
Operating lease liabilities, non-current
|
| |
404,571
|
| |
25,692
|
| |
—
|
| |
|
| |
430,263
|
Other non-current liabilities
|
| |
186,369
|
| |
151,684
|
| |
295,038
|
| |
7(D), 7(H)
|
| |
633,091
|
Total liabilities
|
| |
$11,078,987
|
| |
$1,378,306
|
| |
$(483,286)
|
| |
|
| |
$11,974,007
|
Commitments and contingencies
|
| |
|
| |
|
| |
|
| |
|
| |
|
Stockholders' equity:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Preferred stock, $0.0000001 par value: 100,000,000 shares authorized at June 30, 2021 and December 31, 2020. None issued and outstanding at June 30, 2021 and December 31, 2020.
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Class A common stock, $0.0000001 par value: 1,000,000,000 authorized at June 30, 2021 and December 31, 2020; 395,321,647 and 390,187,079 issued and outstanding at June 30, 2021 and December 31, 2020, respectively.
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
—
|
|
| |
Historical
SQUARE, INC.
(USD)
|
| |
Historical
Afterpay Limited
U.S. GAAP
(USD)
|
| |
Transaction
Accounting
Adjustments
(USD)
|
| |
Note(s)
|
| |
Pro Forma
Condensed
Combined
|
Class B common stock, $0.0000001 par value: 500,000,000 shares authorized at June 30, 2021 and December 31, 2020; 62,501,770 and 65,997,697 issued and outstanding at June 30, 2021 and December 31, 2020, respectively.
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Additional paid-in capital
|
| |
2,632,234
|
| |
1,656,070
|
| |
27,047,798
|
| |
7(E)
|
| |
31,336,102
|
Accumulated other comprehensive income
|
| |
7,838
|
| |
(491,840)
|
| |
491,840
|
| |
7(E)
|
| |
7,838
|
Retained earnings (accumulated deficit)
|
| |
48,780
|
| |
(185,296)
|
| |
(6,190)
|
| |
7(E)
|
| |
(142,706)
|
Total stockholders' equity attributable to common stockholders
|
| |
$2,688,852
|
| |
$978,934
|
| |
$27,533,448
|
| |
|
| |
$31,201,234
|
Noncontrolling interests
|
| |
47,849
|
| |
611
|
| |
(611)
|
| |
7(E)
|
| |
47,849
|
Total stockholders' equity
|
| |
$2,736,701
|
| |
$979,545
|
| |
$27,532,837
|
| |
|
| |
$31,249,083
|
Total liabilities and shareholders’ equity
|
| |
$13,815,688
|
| |
$2,357,851
|
| |
$27,049,551
|
| |
|
| |
$43,223,090
|
|
| |
Historical
SQUARE, INC.
(USD)
|
| |
Historical
Afterpay Limited
U.S. GAAP
(USD)
|
| |
Transaction
Accounting
Adjustments
(USD)
|
| |
Note(s)
|
| |
Pro Forma
Condensed
Combined
|
Revenue:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Transaction-based revenue
|
| |
$2,187,205
|
| |
$—
|
| |
$—
|
| |
|
| |
$2,187,205
|
Subscription and services-based revenue
|
| |
1,242,859
|
| |
381,455
|
| |
—
|
| |
|
| |
1,624,314
|
Hardware revenue
|
| |
72,514
|
| |
—
|
| |
—
|
| |
|
| |
72,514
|
Bitcoin revenue
|
| |
6,235,364
|
| |
—
|
| |
—
|
| |
|
| |
6,235,364
|
Total net revenue
|
| |
$9,737,942
|
| |
$381,455
|
| |
$—
|
| |
|
| |
$10,119,397
|
Cost of revenue:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Transaction-based costs
|
| |
1,211,618
|
| |
—
|
| |
—
|
| |
|
| |
1,211,618
|
Subscription and services-based costs
|
| |
214,098
|
| |
97,453
|
| |
—
|
| |
|
| |
311,551
|
Hardware costs
|
| |
101,885
|
| |
—
|
| |
—
|
| |
|
| |
101,885
|
Bitcoin costs
|
| |
6,105,776
|
| |
—
|
| |
—
|
| |
|
| |
6,105,776
|
Amortization of acquired technology
|
| |
—
|
| |
10,616
|
| |
1,234
|
| |
8(A)
|
| |
11,850
|
Total cost of revenue
|
| |
$7,633,377
|
| |
$108,069
|
| |
$1,234
|
| |
|
| |
$7,742,680
|
Gross profit
|
| |
$2,104,565
|
| |
$273,386
|
| |
$(1,234)
|
| |
|
| |
$2,376,717
|
Operating expenses:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Product development
|
| |
636,651
|
| |
35,577
|
| |
256
|
| |
8(B)
|
| |
672,484
|
Sales and marketing
|
| |
724,561
|
| |
108,640
|
| |
195
|
| |
8(B)
|
| |
833,396
|
General and administrative
|
| |
416,929
|
| |
91,881
|
| |
(3,099)
|
| |
8(B), 8(D)
|
| |
505,711
|
Transaction and loan receivable losses
|
| |
68,568
|
| |
94,801
|
| |
—
|
| |
|
| |
163,369
|
Bitcoin impairment losses
|
| |
65,126
|
| |
—
|
| |
—
|
| |
|
| |
65,126
|
Amortization of acquired customer assets
|
| |
—
|
| |
2,157
|
| |
88,094
|
| |
8(A)
|
| |
90,251
|
Total operating expenses
|
| |
$1,911,835
|
| |
$333,056
|
| |
$85,446
|
| |
|
| |
$2,330,337
|
Operating income (loss)
|
| |
$192,730
|
| |
$(59,670)
|
| |
$(86,680)
|
| |
|
| |
$46,380
|
Interest expense, net
|
| |
6,717
|
| |
—
|
| |
—
|
| |
|
| |
6,717
|
Other expense (income), net
|
| |
(48,260)
|
| |
31,372
|
| |
(35,794)
|
| |
8(C), 8(D)
|
| |
(52,682)
|
Income (loss) before income tax
|
| |
$234,273
|
| |
$(91,042)
|
| |
$(50,886)
|
| |
|
| |
$92,345
|
Benefit for income taxes
|
| |
(8,413)
|
| |
(29,202)
|
| |
(21,520)
|
| |
8(E)
|
| |
(59,135)
|
Net income (loss)
|
| |
$242,686
|
| |
$(61,840)
|
| |
$(29,366)
|
| |
|
| |
$151,480
|
Net income (loss) attributable to noncontrolling interests
|
| |
$(343)
|
| |
$(292)
|
| |
$292
|
| |
8(H)
|
| |
$(343)
|
Net income (loss) attributable to common stockholders
|
| |
$243,029
|
| |
$(61,548)
|
| |
$(29,658)
|
| |
|
| |
$151,823
|
Net income (loss) per share:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic
|
| |
$0.53
|
| |
|
| |
|
| |
|
| |
$0.27
|
Diluted
|
| |
0.48
|
| |
|
| |
|
| |
|
| |
0.24
|
Weighted-average shares used to compute net income (loss) per share:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic
|
| |
455,203
|
| |
|
| |
|
| |
|
| |
566,282
|
Diluted
|
| |
519,713
|
| |
|
| |
|
| |
|
| |
632,079
|
|
| |
Historical
SQUARE, INC.
(USD)
|
| |
Historical
Afterpay Limited
U.S. GAAP
(USD)
|
| |
Transaction
Accounting
Adjustments
(USD)
|
| |
Note(s)
|
| |
Pro Forma
Condensed
Combined
|
Revenue:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Transaction-based revenue
|
| |
$3,294,978
|
| |
$—
|
| |
$—
|
| |
|
| |
$3,294,978
|
Subscription and services-based revenue
|
| |
1,539,403
|
| |
480,705
|
| |
—
|
| |
|
| |
2,020,108
|
Hardware revenue
|
| |
91,654
|
| |
—
|
| |
—
|
| |
|
| |
91,654
|
Bitcoin revenue
|
| |
4,571,543
|
| |
—
|
| |
—
|
| |
|
| |
4,571,543
|
Total net revenue
|
| |
$9,497,578
|
| |
$480,705
|
| |
$—
|
| |
|
| |
$9,978,283
|
Cost of revenue:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Transaction-based costs
|
| |
1,911,848
|
| |
—
|
| |
—
|
| |
|
| |
1,911,848
|
Subscription and services-based costs
|
| |
222,712
|
| |
116,956
|
| |
—
|
| |
|
| |
339,668
|
Hardware costs
|
| |
143,901
|
| |
—
|
| |
—
|
| |
|
| |
143,901
|
Bitcoin costs
|
| |
4,474,534
|
| |
—
|
| |
—
|
| |
|
| |
4,474,534
|
Amortization of acquired technology
|
| |
11,174
|
| |
15,138
|
| |
9,491
|
| |
8(A)
|
| |
35,803
|
Total cost of revenue
|
| |
$6,764,169
|
| |
$132,094
|
| |
$9,491
|
| |
|
| |
$6,905,754
|
Gross profit
|
| |
$2,733,409
|
| |
$348,611
|
| |
$(9,491)
|
| |
|
| |
$3,072,529
|
Operating expenses:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Product development
|
| |
881,826
|
| |
43,467
|
| |
54,108
|
| |
8(B)
|
| |
979,401
|
Sales and marketing
|
| |
1,109,670
|
| |
112,425
|
| |
45,631
|
| |
8(B)
|
| |
1,267,726
|
General and administrative
|
| |
579,203
|
| |
103,860
|
| |
363,618
|
| |
8(B), 8(F), 8(G)
|
| |
1,046,681
|
Transaction and loan receivable losses
|
| |
177,670
|
| |
82,038
|
| |
—
|
| |
|
| |
259,708
|
Amortization of acquired customer assets
|
| |
3,855
|
| |
2,110
|
| |
177,461
|
| |
8(A)
|
| |
183,426
|
Total operating expenses
|
| |
$2,752,224
|
| |
$343,900
|
| |
$640,818
|
| |
|
| |
$3,736,942
|
Operating income (loss)
|
| |
$(18,815)
|
| |
$4,711
|
| |
$(650,309)
|
| |
|
| |
$(664,413)
|
Gain on sale of asset group
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Interest expense, net
|
| |
56,943
|
| |
—
|
| |
—
|
| |
|
| |
56,943
|
Other expense (income), net
|
| |
(291,725)
|
| |
51,078
|
| |
(46,121)
|
| |
8(C)
|
| |
(286,768)
|
Income (loss) before income tax
|
| |
$215,967
|
| |
$(46,367)
|
| |
$(604,188)
|
| |
|
| |
$(434,588)
|
Provision (benefit) for income taxes
|
| |
2,862
|
| |
2,311
|
| |
(137,857)
|
| |
8(E)
|
| |
(132,684)
|
Net income (loss)
|
| |
$213,105
|
| |
$(48,678)
|
| |
$(466,331)
|
| |
|
| |
$(301,904)
|
Net income (loss) attributable to noncontrolling interests
|
| |
$—
|
| |
$(2,165)
|
| |
$2,165
|
| |
8(H)
|
| |
$—
|
Net income (loss) attributable to common stockholders
|
| |
$213,105
|
| |
$(46,513)
|
| |
$(468,496)
|
| |
|
| |
$(301,904)
|
Net income (loss) per share:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic
|
| |
$0.48
|
| |
|
| |
|
| |
|
| |
$(0.54)
|
Diluted
|
| |
0.44
|
| |
|
| |
|
| |
|
| |
(0.54)
|
Weighted-average shares used to compute net income (loss) per share:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic
|
| |
443,126
|
| |
|
| |
|
| |
|
| |
554,205
|
Diluted
|
| |
482,167
|
| |
|
| |
|
| |
|
| |
554,205
|
•
|
the historical unaudited consolidated statements of operations of Square for the six months ended June 30, 2021;
|
•
|
the historical audited consolidated statements of operations of Square for the year ended December 31, 2020;
|
•
|
the historical unaudited consolidated statement of comprehensive income of Afterpay for the twelve months ended December 31, 2020, which has been derived by adding the financial data from the historical unaudited consolidated statement of comprehensive income for the six months ended December 31, 2020, to the financial data from the historical audited consolidated statement of comprehensive income for the fiscal year ended June 30, 2020, and subtracting the financial data from the historical unaudited consolidated statement of comprehensive income for the six months ended December 31, 2019; and
|
•
|
the historical unaudited consolidated statement of comprehensive income of Afterpay for the six months ended June 30, 2021, which has been derived by subtracting the financial data from the historical unaudited consolidated statement of comprehensive income for the six months ended December 31, 2020 from the historical audited consolidated statement of comprehensive income for the fiscal year ended June 30, 2021.
|
|
| |
USD/AUD
|
Statement of operations – average exchange rate for the year ended December 31, 2020
|
| |
0.6904
|
Statement of operations – average exchange rate for the six month period ended June 30, 2021
|
| |
0.7712
|
Balance sheet – spot rate at June 30, 2021
|
| |
0.7512
|
|
| |
As of June 30, 2021
|
|||
|
| |
Afterpay Limited Historical
(AUD)
|
| |
Afterpay Limited Historical
Translated
(USD)
|
(in thousands)
|
| |
|
| |
|
ASSETS
|
| |
|
| |
|
Current assets
|
| |
|
| |
|
Cash and cash equivalents
|
| |
A$ 1,147,147
|
| |
$861,782
|
Receivables
|
| |
1,454,072
|
| |
1,092,357
|
Other financial assets
|
| |
26,788
|
| |
20,124
|
Other assets
|
| |
18,780
|
| |
14,108
|
Income tax receivable
|
| |
10,970
|
| |
8,241
|
Total current assets
|
| |
A$ 2,657,757
|
| |
$1,996,612
|
|
| |
As of June 30, 2021
|
|||
|
| |
Afterpay Limited Historical
(AUD)
|
| |
Afterpay Limited Historical
Translated
(USD)
|
Non-Current Assets
|
| |
|
| |
|
Property, plant and equipment
|
| |
8,112
|
| |
6,094
|
Right-of-use assets
|
| |
33,958
|
| |
25,511
|
Intangible assets(1)
|
| |
227,513
|
| |
170,917
|
Deferred tax assets
|
| |
156,127
|
| |
117,289
|
Investment in associate
|
| |
23,578
|
| |
17,713
|
Other financial assets
|
| |
3,217
|
| |
2,417
|
Other assets
|
| |
5,965
|
| |
4,480
|
Total Non-Current Assets
|
| |
A$ 458,470
|
| |
$344,421
|
TOTAL ASSETS
|
| |
A$ 3,116,227
|
| |
$2,341,033
|
LIABILITIES
|
| |
|
| |
|
Current liabilities
|
| |
|
| |
|
Trade and other payables
|
| |
A$ 306,259
|
| |
$230,074
|
Employee benefit provision
|
| |
10,323
|
| |
7,755
|
Other provisions
|
| |
501
|
| |
376
|
Contract liabilities
|
| |
3,636
|
| |
2,732
|
Lease liabilities
|
| |
2,201
|
| |
1,653
|
Income tax payable
|
| |
2,477
|
| |
1,861
|
Total current liabilities
|
| |
A$ 325,397
|
| |
$244,451
|
Non-Current Liabilities
|
| |
|
| |
|
Employee benefit provision
|
| |
672
|
| |
505
|
Other provisions
|
| |
1,222
|
| |
918
|
Lease liabilities
|
| |
31,999
|
| |
24,039
|
Borrowings(2)
|
| |
1,286,383
|
| |
966,382
|
Other financial liabilities
|
| |
166,648
|
| |
125,193
|
Total Non-Current Liabilities
|
| |
A$ 1,486,924
|
| |
$1,117,037
|
Total Liabilities
|
| |
A$ 1,812,321
|
| |
$1,361,488
|
NET ASSETS
|
| |
A$ 1,303,906
|
| |
$979,545
|
EQUITY
|
| |
|
| |
|
Issued capital
|
| |
A$ 2,204,450
|
| |
$1,656,070
|
Accumulated losses(3)
|
| |
(246,653)
|
| |
(185,296)
|
Reserves
|
| |
(654,704)
|
| |
(491,840)
|
Equity attributable to the owners of Afterpay Limited
|
| |
A$ 1,303,093
|
| |
$978,934
|
Noncontrolling interests
|
| |
813
|
| |
611
|
TOTAL EQUITY
|
| |
A$ 1,303,906
|
| |
$979,545
|
Total Liabilities and Equity
|
| |
A$ 3,116,227
|
| |
$2,341,033
|
(1)
|
Intangible assets are revalued at their acquisition date fair values under U.S. GAAP as part of the accounting for the Transaction as described in Note 7. As such, no differences are noted from an IFRS to U.S. GAAP perspective that would have an ongoing impact.
|
(2)
|
Borrowings comprise mostly of the SGX-listed Convertible Notes (as defined below) (A$1.28 billion) partially offset by the associated capitalized borrowing costs (A$23.3 million), both of which were not adjusted for the impact of IFRS to U.S. GAAP adjustments as the SGX-listed Convertible Notes are assumed to be fully repaid as described in Notes 6, 7 and 8.
|
(3)
|
Historical equity accounts were not recast into different categories (i.e. Retained earnings or Additional paid-in capital) or adjusted for any impact of IFRS to U.S. GAAP adjustments as equity is reset through the application of purchase accounting.
|
(a)
|
Represents an adjustment to decrease Afterpay income and Cost of sales due to certain costs qualifying as direct loan origination costs under U.S. GAAP and such costs are recognized within revenues based upon ASC 310, Receivables (“ASC 310”).
|
(a)
|
Represents an adjustment to decrease Afterpay income and Cost of sales due to certain costs qualifying as direct loan origination costs under U.S. GAAP and such costs are recognized within revenues based upon ASC 310.
|
|
| |
As of June 30, 2021
|
|||||||||
|
| |
Afterpay Limited
Historical Translated
(USD)
(Note 4)
|
| |
Reclassification
Adjustments
(USD)
|
| |
Notes
|
| |
Historical
Afterpay Limited
U.S. GAAP
(USD)
|
(in thousands)
|
| |
|
| |
|
| |
|
| |
|
Assets
|
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents
|
| |
$861,782
|
| |
$—
|
| |
|
| |
$861,782
|
Receivables
|
| |
1,092,357
|
| |
(1,092,357)
|
| |
(j)
|
| |
—
|
Consumer receivables, net
|
| |
—
|
| |
1,109,175
|
| |
(j)
|
| |
1,109,175
|
Other financial assets
|
| |
22,541
|
| |
(22,541)
|
| |
(i)
|
| |
—
|
Other current assets
|
| |
—
|
| |
|
| |
|
| |
47,960
|
|
| |
As of June 30, 2021
|
|||||||||
|
| |
Afterpay Limited
Historical Translated
(USD)
(Note 4)
|
| |
Reclassification
Adjustments
(USD)
|
| |
Notes
|
| |
Historical
Afterpay Limited
U.S. GAAP
(USD)
|
(in thousands)
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
17,178
|
| |
(h)
|
| |
|
|
| |
|
| |
22,541
|
| |
(i)
|
| |
|
|
| |
|
| |
8,241
|
| |
(q)
|
| |
|
Income tax receivable
|
| |
8,241
|
| |
(8,241)
|
| |
(q)
|
| |
—
|
Property and equipment, net
|
| |
6,094
|
| |
—
|
| |
|
| |
6,094
|
Right-of-use assets
|
| |
25,511
|
| |
(25,511)
|
| |
(o)
|
| |
—
|
Goodwill
|
| |
—
|
| |
84,361
|
| |
(b)
|
| |
84,361
|
Intangible assets
|
| |
170,917
|
| |
(170,917)
|
| |
(b)
|
| |
—
|
Acquired intangible assets, net
|
| |
—
|
| |
86,556
|
| |
(b)
|
| |
86,556
|
Deferred tax asset
|
| |
117,289
|
| |
(117,289)
|
| |
(a)
|
| |
—
|
Investment in associate
|
| |
17,713
|
| |
(17,713)
|
| |
(n)
|
| |
—
|
Operating lease right-of-use assets
|
| |
—
|
| |
25,511
|
| |
(o)
|
| |
25,511
|
Other assets
|
| |
18,588
|
| |
(18,588)
|
| |
(h)
|
| |
—
|
Other non-current assets
|
| |
—
|
| |
|
| |
|
| |
136,412
|
|
| |
|
| |
117,289
|
| |
(a)
|
| |
|
|
| |
|
| |
1,410
|
| |
(h)
|
| |
|
|
| |
|
| |
17,713
|
| |
(n)
|
| |
|
Total assets
|
| |
$2,341,033
|
| |
$16,818
|
| |
|
| |
$2,357,851
|
Liabilities and stockholders' equity
|
| |
|
| |
|
| |
|
| |
|
Trade and other payables
|
| |
$230,074
|
| |
$(230,074)
|
| |
(l)
|
| |
$—
|
Customers payable
|
| |
—
|
| |
119,770
|
| |
(l)
|
| |
119,770
|
Employee benefit provision
|
| |
8,260
|
| |
(8,260)
|
| |
(c)
|
| |
—
|
Other provisions
|
| |
1,294
|
| |
(1,294)
|
| |
(m)
|
| |
—
|
Contract liabilities
|
| |
2,732
|
| |
(2,732)
|
| |
(d)
|
| |
—
|
Operating lease liabilities, non-current
|
| |
—
|
| |
25,692
|
| |
(p)
|
| |
25,692
|
Lease liabilities
|
| |
25,692
|
| |
(25,692)
|
| |
(p)
|
| |
—
|
Borrowings
|
| |
966,382
|
| |
(966,382)
|
| |
(e)
|
| |
—
|
Accrued expenses and other current liabilities
|
| |
—
|
| |
|
| |
|
| |
139,975
|
|
| |
|
| |
8,260
|
| |
(c)
|
| |
|
|
| |
|
| |
2,732
|
| |
(d)
|
| |
|
|
| |
|
| |
1,861
|
| |
(g)
|
| |
|
|
| |
|
| |
16,818
|
| |
(j)
|
| |
|
|
| |
|
| |
110,304
|
| |
(l)
|
| |
|
Other financial liabilities
|
| |
125,193
|
| |
(125,193)
|
| |
(f)
|
| |
—
|
Income tax payable
|
| |
1,861
|
| |
(1,861)
|
| |
(g)
|
| |
—
|
Long-term debt
|
| |
—
|
| |
941,185
|
| |
(e)
|
| |
941,185
|
Other non-current liabilities
|
| |
—
|
| |
|
| |
|
| |
151,684
|
|
| |
|
| |
25,197
|
| |
(e)
|
| |
|
|
| |
|
| |
125,193
|
| |
(f)
|
| |
|
|
| |
|
| |
1,294
|
| |
(m)
|
| |
|
Total liabilities
|
| |
$1,361,488
|
| |
$16,818
|
| |
|
| |
$1,378,306
|
Stockholders' equity:
|
| |
|
| |
|
| |
|
| |
|
Additional paid-in capital
|
| |
$—
|
| |
$1,656,070
|
| |
(k)
|
| |
$1,656,070
|
Issued capital
|
| |
1,656,070
|
| |
(1,656,070)
|
| |
(k)
|
| |
—
|
Accumulated other comprehensive income
|
| |
—
|
| |
(491,840)
|
| |
(k)
|
| |
(491,840)
|
|
| |
As of June 30, 2021
|
|||||||||
|
| |
Afterpay Limited
Historical Translated
(USD)
(Note 4)
|
| |
Reclassification
Adjustments
(USD)
|
| |
Notes
|
| |
Historical
Afterpay Limited
U.S. GAAP
(USD)
|
(in thousands)
|
| |
|
| |
|
| |
|
| |
|
Accumulated losses
|
| |
(185,296)
|
| |
185,296
|
| |
(k)
|
| |
—
|
Reserves
|
| |
(491,840)
|
| |
491,840
|
| |
(k)
|
| |
—
|
Retained earnings (accumulated deficit)
|
| |
—
|
| |
(185,296)
|
| |
(k)
|
| |
(185,296)
|
Equity attributable to Afterpay
|
| |
$978,934
|
| |
$—
|
| |
|
| |
$978,934
|
Non-controlling interest
|
| |
611
|
| |
—
|
| |
|
| |
611
|
Total stockholders' equity
|
| |
$979,545
|
| |
$—
|
| |
|
| |
$979,545
|
Total liabilities and shareholders’ equity
|
| |
$2,341,033
|
| |
$16,818
|
| |
|
| |
$2,357,851
|
(a)
|
Represents a reclassification to Square's Other non-current assets from Afterpay's Deferred tax asset.
|
(b)
|
Represents a reclassification to Square’s Acquired intangible assets, net, and Goodwill from Afterpay's Intangible assets. Reclassification to Square's Acquired intangible assets, net consists of Afterpay's intangible assets and M&A assets net of amortization historically included in Intangible assets. Reclassification to Square's Goodwill consists of Afterpay's goodwill historically included in Intangible assets.
|
(c)
|
Represents a reclassification to Square's Accrued expenses and other current liabilities from Afterpay's Employee benefit provision.
|
(d)
|
Represents a reclassification to Square's Accrued expenses and other current liabilities from Afterpay's Contract liabilities.
|
(e)
|
Represents a reclassification to Square's Other non-current liabilities and Long-term debt from Afterpay's Borrowings. Reclassification to Square’s Long-term debt consists of Afterpay’s convertible notes and capitalized borrowing costs historically included in Borrowings. Reclassification to Square’s Other non-current liabilities consists of secured interest bearing loans and the accrued interest on secured interest bearing loans historically included in Borrowings.
|
(f)
|
Represents a reclassification to Square's Other non-current liabilities from Afterpay's Other financial liabilities.
|
(g)
|
Represents a reclassification to Square's Accrued expenses and other current liabilities from Afterpay's Income tax payable.
|
(h)
|
Represents a reclassification to Square's Other current assets and Other non-current assets from Afterpay's Other assets. Reclassification to Square’s Other current assets consists of Afterpay’s prepaid expenses, sales clearing, and other assets historically included in Other assets. Reclassification to Square’s Other non-current assets consists of Afterpay’s capitalized borrowing costs historically included in Other assets.
|
(i)
|
Represents a reclassification to Square's Other current assets from Afterpay's Other financial assets.
|
(j)
|
Represents a reclassification to Square's Consumer receivables, net and Accrued expenses and other current liabilities, from Afterpay's Receivables. Reclassification to Square’s Consumer receivables, net consists of Afterpay’s receivables, late fees, provision for doubtful debt related to receivables and late fees, control receivables account, merchant receivables, and accrued receivables historically included in Receivables. Reclassification to Square’s Accrued expenses and other current liabilities consists of Afterpay’s deferred revenue balance historically included in Receivables.
|
(k)
|
Represents a reclassification to Square's Additional paid-in capital, Accumulated other comprehensive income, and Retained earnings (accumulated deficit) from Afterpay's Reserves, Issued capital, and Accumulated losses.
|
(l)
|
Represents a reclassification to Square's Customers payables and Accrued expenses and other current liabilities from Afterpay's Trade and other payables.
|
(m)
|
Represents a reclassification to Square's Other non-current liabilities from Afterpay's Other provisions.
|
(n)
|
Represents a reclassification to Square's Other non-current assets from Afterpay's Investment in associate.
|
(o)
|
Represents a reclassification to Square's Operating lease right-of-use assets from Afterpay's Right-of-use assets.
|
(p)
|
Represents a reclassification to Square's Operating lease liabilities, non-current from Afterpay's Lease liabilities.
|
(q)
|
Represents a reclassification to Square's Other current assets from Afterpay's Income tax receivable.
|
|
| |
Six Months Ended June 30, 2021
|
|||||||||
|
| |
Afterpay Limited
Historical U.S. GAAP
Adjusted and Translated
(USD)
(Note 4)
|
| |
Reclassification
Adjustments
(USD)
|
| |
Notes
|
| |
Historical
Afterpay Limited
U.S. GAAP
(USD)
|
(in thousands)
|
| |
|
| |
|
| |
|
| |
|
Revenue:
|
| |
|
| |
|
| |
|
| |
|
Afterpay income
|
| |
$335,604
|
| |
$(335,604)
|
| |
(b)
|
| |
$—
|
Pay Now revenue
|
| |
4,592
|
| |
(4,592)
|
| |
(b)
|
| |
—
|
Subscription and services-based revenue
|
| |
—
|
| |
|
| |
|
| |
381,455
|
|
| |
|
| |
340,196
|
| |
(b)
|
| |
|
|
| |
|
| |
41,259
|
| |
(c)
|
| |
|
Other income
|
| |
41,259
|
| |
(41,259)
|
| |
(c)
|
| |
—
|
Total net revenue
|
| |
$381,455
|
| |
$—
|
| |
|
| |
$381,455
|
Cost of revenue:
|
| |
|
| |
|
| |
|
| |
|
Cost of sales
|
| |
97,453
|
| |
(97,453)
|
| |
(d)
|
| |
—
|
Subscription and services-based costs
|
| |
—
|
| |
97,453
|
| |
(d)
|
| |
97,453
|
Amortization of acquired technology
|
| |
—
|
| |
10,616
|
| |
(f)
|
| |
10,616
|
Total cost of revenue
|
| |
$97,453
|
| |
$10,616
|
| |
|
| |
$108,069
|
Gross profit
|
| |
$284,002
|
| |
$(10,616)
|
| |
|
| |
$273,386
|
Operating expenses:
|
| |
|
| |
|
| |
|
| |
|
Depreciation and amortisation expenses
|
| |
16,386
|
| |
(16,386)
|
| |
(f)
|
| |
—
|
Employment expenses
|
| |
68,116
|
| |
(68,116)
|
| |
(g)
|
| |
—
|
Share-based payment expenses
|
| |
25,810
|
| |
(25,810)
|
| |
(h)
|
| |
—
|
Net loss on financial liabilities at fair value
|
| |
24,705
|
| |
(24,705)
|
| |
(j)
|
| |
—
|
Operating expenses
|
| |
129,749
|
| |
(129,749)
|
| |
(i)
|
| |
—
|
Transaction and loan receivable losses
|
| |
—
|
| |
94,801
|
| |
(l)
|
| |
94,801
|
Receivables impairment expenses
|
| |
94,801
|
| |
(94,801)
|
| |
(l)
|
| |
—
|
Amortization of acquired customer assets
|
| |
—
|
| |
2,157
|
| |
(f)
|
| |
2,157
|
Sales and marketing
|
| |
—
|
| |
|
| |
|
| |
108,640
|
|
| |
|
| |
24,701
|
| |
(g)
|
| |
|
|
| |
|
| |
6,908
|
| |
(h)
|
| |
|
|
| |
|
| |
77,031
|
| |
(i)
|
| |
|
General and administrative
|
| |
—
|
| |
|
| |
|
| |
91,881
|
|
| |
|
| |
33,151
|
| |
(g)
|
| |
|
|
| |
|
| |
9,811
|
| |
(h)
|
| |
|
|
| |
|
| |
48,919
|
| |
(i)
|
| |
|
|
| |
Six Months Ended June 30, 2021
|
|||||||||
|
| |
Afterpay Limited
Historical U.S. GAAP
Adjusted and Translated
(USD)
(Note 4)
|
| |
Reclassification
Adjustments
(USD)
|
| |
Notes
|
| |
Historical
Afterpay Limited
U.S. GAAP
(USD)
|
(in thousands)
|
| |
|
| |
|
| |
|
| |
|
Product development
|
| |
—
|
| |
|
| |
|
| |
35,577
|
|
| |
|
| |
3,613
|
| |
(f)
|
| |
|
|
| |
|
| |
10,264
|
| |
(g)
|
| |
|
|
| |
|
| |
9,091
|
| |
(h)
|
| |
|
|
| |
|
| |
12,609
|
| |
(i)
|
| |
|
Total operating expenses
|
| |
$359,567
|
| |
$(26,511)
|
| |
|
| |
$333,056
|
Operating income (loss)
|
| |
$(75,565)
|
| |
$15,895
|
| |
|
| |
$(59,670)
|
Other expense (income), net
|
| |
—
|
| |
|
| |
|
| |
31,372
|
|
| |
|
| |
18,801
|
| |
(a)
|
| |
|
|
| |
|
| |
(262)
|
| |
(e)
|
| |
|
|
| |
|
| |
(8,810)
|
| |
(i)
|
| |
|
|
| |
|
| |
24,705
|
| |
(j)
|
| |
|
|
| |
|
| |
1,321
|
| |
(k)
|
| |
|
|
| |
|
| |
(4,383)
|
| |
(m)
|
| |
|
Share of loss of associate
|
| |
1,321
|
| |
(1,321)
|
| |
(k)
|
| |
—
|
Finance income
|
| |
(262)
|
| |
262
|
| |
(e)
|
| |
—
|
Finance costs
|
| |
18,801
|
| |
(18,801)
|
| |
(a)
|
| |
—
|
Gain on dilution of shareholding in associate
|
| |
(4,383)
|
| |
4,383
|
| |
(m)
|
| |
—
|
Income (loss) before income tax
|
| |
$(91,042)
|
| |
$—
|
| |
|
| |
$(91,042)
|
Benefit for income taxes
|
| |
(29,202)
|
| |
—
|
| |
|
| |
(29,202)
|
Net income (loss)
|
| |
$(61,840)
|
| |
$—
|
| |
|
| |
$(61,840)
|
(a)
|
Represents a reclassification to Square's Other expense (income), net from Afterpay's Finance costs.
|
(b)
|
Represents a reclassification to Square's Subscription and services-based revenue from Afterpay's Afterpay income and Pay Now revenue.
|
(c)
|
Represents a reclassification to Square's Subscription and services-based revenue from Afterpay's Other income.
|
(d)
|
Represents a reclassification to Square's Subscription and services-based costs from Afterpay's Cost of sales.
|
(e)
|
Represents a reclassification to Square's Other expense (income), net from Afterpay's Finance income.
|
(f)
|
Represents a reclassification to Square's Product and development expense, Amortization of acquired technology, and Amortization of acquired customer assets from Afterpay's Depreciation and amortisation expenses.
|
(g)
|
Represents a reclassification to Square's Product development, Sales and marketing, and General and administrative expenses, from Afterpay's Employment expenses. Allocation to Square’s accounts was based on headcount.
|
(h)
|
Represents a reclassification to Square's Product development, Sales and marketing, and General and administrative expenses, from Afterpay's Share-based payment expenses. Allocation to Square’s accounts was based on headcount.
|
(i)
|
Represents a reclassification to Square's Other expense (income), Product development, Sales and marketing, and General and administrative expenses, from Afterpay's Operating expenses. Allocation to Square’s accounts was based on headcount.
|
(j)
|
Represents a reclassification to Square's Other expense (income), net from Afterpay's Net loss on financial liabilities at fair value.
|
(k)
|
Represents a reclassification to Square's Other expense (income), net, from Afterpay's Share of loss of associate.
|
(l)
|
Represents a reclassification to Square's Transaction and loan receivable losses from Afterpay's Receivables impairment expense.
|
(m)
|
Represents a reclassification to Square's Other expense (income), net, from Afterpay's Gain on dilution of shareholding in associate.
|
|
| |
Year Ended December 31, 2020
|
|||||||||
|
| |
Afterpay Limited
Historical U.S. GAAP
Adjusted and Translated
(USD)
(Note 4)
|
| |
Reclassification
Adjustments
(USD)
|
| |
Notes
|
| |
Historical
Afterpay Limited
U.S. GAAP
(USD)
|
(in thousands)
|
| |
|
| |
|
| |
|
| |
|
Revenue:
|
| |
|
| |
|
| |
|
| |
|
Afterpay income
|
| |
$420,198
|
| |
$(420,198)
|
| |
(b)
|
| |
$—
|
Pay Now revenue
|
| |
11,210
|
| |
(11,210)
|
| |
(b)
|
| |
—
|
Subscription and services-based revenue
|
| |
—
|
| |
|
| |
|
| |
480,705
|
|
| |
|
| |
431,408
|
| |
(b)
|
| |
|
|
| |
|
| |
49,297
|
| |
(c)
|
| |
|
Other income
|
| |
49,297
|
| |
(49,297)
|
| |
(c)
|
| |
—
|
Total net revenue
|
| |
$480,705
|
| |
$—
|
| |
|
| |
$480,705
|
Cost of revenue:
|
| |
|
| |
|
| |
|
| |
|
Cost of sales
|
| |
116,956
|
| |
(116,956)
|
| |
(d)
|
| |
—
|
Subscription and services-based costs
|
| |
—
|
| |
116,956
|
| |
(d)
|
| |
116,956
|
Amortization of acquired technology
|
| |
—
|
| |
15,138
|
| |
(f)
|
| |
15,138
|
Total cost of revenue
|
| |
$116,956
|
| |
$15,138
|
| |
|
| |
$132,094
|
Gross profit
|
| |
$363,749
|
| |
$(15,138)
|
| |
|
| |
$348,611
|
Operating expenses:
|
| |
|
| |
|
| |
|
| |
|
Depreciation and amortisation expenses
|
| |
23,467
|
| |
(23,467)
|
| |
(f)
|
| |
—
|
Employment expenses
|
| |
77,809
|
| |
(77,809)
|
| |
(g)
|
| |
—
|
Share-based payment expenses
|
| |
29,234
|
| |
(29,234)
|
| |
(h)
|
| |
—
|
Net loss on financial liabilities at fair value
|
| |
45,491
|
| |
(45,491)
|
| |
(j)
|
| |
—
|
Operating expenses
|
| |
135,362
|
| |
(135,362)
|
| |
(i)
|
| |
—
|
Transaction and loan receivable losses
|
| |
—
|
| |
82,038
|
| |
(l)
|
| |
82,038
|
Receivables impairment expenses
|
| |
82,038
|
| |
(82,038)
|
| |
(l)
|
| |
—
|
Amortization of acquired customer assets
|
| |
—
|
| |
2,110
|
| |
(f)
|
| |
2,110
|
Sales and marketing
|
| |
—
|
| |
|
| |
|
| |
112,425
|
|
| |
|
| |
29,640
|
| |
(g)
|
| |
|
|
| |
|
| |
8,101
|
| |
(h)
|
| |
|
|
| |
|
| |
74,684
|
| |
(i)
|
| |
|
General and administrative
|
| |
—
|
| |
|
| |
|
| |
103,860
|
|
| |
|
| |
40,013
|
| |
(g)
|
| |
|
|
| |
|
| |
11,527
|
| |
(h)
|
| |
|
|
| |
|
| |
52,320
|
| |
(i)
|
| |
|
|
| |
Year Ended December 31, 2020
|
|||||||||
|
| |
Afterpay Limited
Historical U.S. GAAP
Adjusted and Translated
(USD)
(Note 4)
|
| |
Reclassification
Adjustments
(USD)
|
| |
Notes
|
| |
Historical
Afterpay Limited
U.S. GAAP
(USD)
|
(in thousands)
|
| |
|
| |
|
| |
|
| |
|
Product development
|
| |
—
|
| |
|
| |
|
| |
43,467
|
|
| |
|
| |
6,219
|
| |
(f)
|
| |
|
|
| |
|
| |
8,156
|
| |
(g)
|
| |
|
|
| |
|
| |
9,606
|
| |
(h)
|
| |
|
|
| |
|
| |
19,486
|
| |
(i)
|
| |
|
Total operating expenses
|
| |
$393,401
|
| |
$(49,501)
|
| |
|
| |
$343,900
|
Operating income (loss)
|
| |
$(29,652)
|
| |
$34,363
|
| |
|
| |
$4,711
|
Other expense (income), net
|
| |
—
|
| |
|
| |
|
| |
51,078
|
|
| |
|
| |
16,481
|
| |
(a)
|
| |
|
|
| |
|
| |
(911)
|
| |
(e)
|
| |
|
|
| |
|
| |
(11,128)
|
| |
(i)
|
| |
|
|
| |
|
| |
45,491
|
| |
(j)
|
| |
|
|
| |
|
| |
1,145
|
| |
(k)
|
| |
|
Share of loss of associate
|
| |
1,145
|
| |
(1,145)
|
| |
(k)
|
| |
—
|
Finance income
|
| |
(911)
|
| |
911
|
| |
(e)
|
| |
—
|
Finance costs
|
| |
16,481
|
| |
(16,481)
|
| |
(a)
|
| |
—
|
Income (loss) before income tax
|
| |
$(46,367)
|
| |
$—
|
| |
|
| |
$(46,367)
|
Provision (benefit) for income taxes
|
| |
2,311
|
| |
—
|
| |
|
| |
2,311
|
Net income (loss)
|
| |
$(48,678)
|
| |
$—
|
| |
|
| |
$(48,678)
|
(a)
|
Represents a reclassification to Square's Other expense (income), net from Afterpay's Finance costs.
|
(b)
|
Represents a reclassification to Square's Subscription and services-based revenue from Afterpay's Afterpay income and Pay Now revenue.
|
(c)
|
Represents a reclassification to Square's Subscription and services-based revenue from Afterpay's Other income.
|
(d)
|
Represents a reclassification to Square's Subscription and services-based costs from Afterpay's Cost of sales.
|
(e)
|
Represents a reclassification to Square's Other expense (income), net from Afterpay's Finance income.
|
(f)
|
Represents a reclassification to Square's Product and development expense, Amortization of acquired technology, and Amortization of acquired customer assets from Afterpay's Depreciation and amortisation expenses.
|
(g)
|
Represents a reclassification to Square's Product development, Sales and marketing, and General and administrative expenses, from Afterpay's Employment expenses. Allocation to Square’s accounts was based on headcount.
|
(h)
|
Represents a reclassification to Square's Product development, Sales and marketing, and General and administrative expenses, from Afterpay's Share-based payment expenses. Allocation to Square’s accounts was based on headcount.
|
(i)
|
Represents a reclassification to Square's Other expense (income), net, Product development, Sales and marketing, and General and administrative expenses from Afterpay's Operating expenses. Allocation to Square’s accounts was based on headcount.
|
(j)
|
Represents a reclassification to Square's Other expense (income), net from Afterpay's Net loss on financial liabilities at fair value.
|
(k)
|
Represents a reclassification to Square's Other expense (income), net, from Afterpay's Share of loss of associate.
|
(l)
|
Represents a reclassification to Square's Transaction and loan receivable losses from Afterpay's Receivables impairment expense.
|
Preliminary calculation of Purchase Consideration
|
| |
|
| |
(in thousands)
|
Share consideration
|
| |
|
| |
|
Ordinary shares of Afterpay outstanding
|
| |
289,392,911
|
| |
|
Additional shares of Afterpay to be issued due to settlement of Pagantis Convertible Note (i), Clearpay Call Option (ii) and Matrix Convertible Notes (iii)
|
| |
5,060,045
|
| |
|
Employee Stock Plans:
|
| |
|
| |
|
Additional ordinary shares of Afterpay issued for vested US ESOP (common shares) (v)
|
| |
1,095,431
|
| |
|
Additional ordinary shares of Afterpay issued for settlement of RSUs and RSAs (vi)
|
| |
661,609
|
| |
|
Total ordinary shares of Afterpay to be exchanged
|
| |
296,209,996
|
| |
|
Exchange ratio
|
| |
0.375
|
| |
|
Square common stock to be issued
|
| |
111,078,748
|
| |
|
Share price of Square as of September 16, 2021
|
| |
$255.09
|
| |
|
Preliminary share consideration
|
| |
|
| |
$28,335,078
|
Estimated cash repayment of Afterpay's SGX-listed Convertible Notes (iv)
|
| |
|
| |
1,126,860
|
Estimated cash repayment of Afterpay's Pagantis deferred consideration (i)
|
| |
|
| |
47,412
|
Estimated fair value of replacement equity awards attributable to the pre-combination period (vii)
|
| |
|
| |
232,804
|
Preliminary Purchase Consideration
|
| |
|
| |
$29,742,154
|
i.
|
Pagantis Convertible Note—The Transaction qualifies as a change of control event, and accordingly, Afterpay has the ability (directly or through its subsidiaries, at its discretion) to execute an early exercise of the convertible promissory note issued as part of the acquisition of Pagantis, S.A.U. and PMT Technology S.L.U. (the “Pagantis Convertible Note”). A portion of the consideration required to settle Afterpay’s outstanding Pagantis Convertible Note relates to the repayment of the principal amount of the Pagantis Convertible Note in cash (i.e., the Pagantis deferred purchase consideration) and the remainder relates to the settlement of the Pagantis contingent consideration in Afterpay ordinary shares. The payment of cash consideration of $47.4 million represents the settlement of the deferred purchase consideration portion of the Pagantis Convertible Note. The value of Afterpay shares issued upon conversion of the contingent consideration portion of the Pagantis Convertible Note is dependent on the enterprise value of Pagantis and PMT Technology S.L.U., as determined by the terms of the underlying agreement of the Pagantis Convertible Note and is subject to change as the estimate of Pagantis’ and PMT’s value changes.
|
ii.
|
Clearpay Call Option—The Transaction qualifies as a change of control event, and accordingly Afterpay has the ability (directly or through its subsidiaries, at its discretion) to early exercise its right to purchase all of the 10% non-controlling interest in Clearpay Finance Limited (the “Clearpay Call
|
iii.
|
Matrix Convertible Note—The Transaction qualifies as a change of control event and accordingly, Afterpay has the option, at its discretion, to early convert the two convertible promissory notes issued to Matrix Partners X L.P. and Weston & Co. X LLC (collectively, the “Matrix Convertible Note”). The holders of the Matrix Convertible Note hold the right to convert the Matrix Convertible Note between five and seven years from the date of issuance of the Matrix Convertible Note in January 2018. The Matrix Convertible Note has been recorded as an expense in Afterpay's historical financial statements as it was issued in exchange for advisory services provided to Afterpay. Afterpay intends to early exercise the settlement of these convertible promissory notes by issuing Afterpay ordinary shares. The amount included in the table above represents the portion of the settlement amount attributable to pre-combination services. The value of Afterpay shares issued upon conversion of the Matrix Convertible Note is dependent on the enterprise value of Afterpay US, Inc. as determined by the terms of the underlying agreement of the Matrix Convertible Note, and is subject to change as the estimate of Afterpay US, Inc.’s enterprise value changes.
|
iv.
|
SGX-listed Convertible Notes—Reflects the settlement of the principal amount of the A$1.5 billion SGX-listed convertible notes, issued by Afterpay on March 12, 2021 (the “SGX-listed Convertible Notes”). Upon a change of control event, noteholders have the option to (i) convert their SGX-listed Convertible Notes into Afterpay ordinary shares at a reduced conversion price, which is dependent on the date of the change of control event, or (ii) redeem the SGX-listed Convertible Notes at their principal value.
|
v.
|
Represents vested US ESOP (common shares) that will be converted into Afterpay common shares and settled in converted Square Class A common stock at the closing of the Transaction.
|
vi.
|
Represents the RSUs and RSAs that will immediately vest based upon the Transaction, which are based upon the computation of the pro rate number of RSUs and RSAs, defined as the number of months satisfied in the service period as of the transaction date, compared to the required vesting period based upon the terms of the RSUs and RSAs.
|
vii.
|
Represents the additional fair value of stock-based compensation awards attributable to pre-combination services related to vested options and restricted stock units/awards described in (vi) above.
|
A)
|
Cash and cash equivalents—The decrease in cash and cash equivalents of $1.2 billion, was determined as follows:
|
|
| |
(in thousands)
|
Settlement of SGX-listed Convertible Notes (i)
|
| |
$(1,126,860)
|
Settlement of Pagantis deferred consideration (ii)
|
| |
(47,412)
|
Pro forma net adjustment to cash and cash equivalents
|
| |
$(1,174,272)
|
i.
|
Settlement of SGX-listed Convertible Notes – Reflects the settlement of the principal amount of the SGX-listed Convertible Notes. Refer to Note 6(iv) above for further details.
|
ii.
|
Settlement of Pagantis deferred consideration – Reflects the settlement of the deferred consideration portion of the Pagantis Convertible Note. Refer to Note 6(i) above for further details.
|
B)
|
Goodwill—Represents an increase of $25.9 billion related to goodwill, inclusive of historical Afterpay goodwill of $84.4 million which was calculated as the excess of the estimated purchase price of $29.7 billion over the $3.8 billion in net assets acquired. Refer to Note 6 - Preliminary Purchase Price Allocation for details on Square management's calculation of goodwill.
|
C)
|
Acquired intangibles, net—The net increase in Acquired intangible assets, net of $2.5 billion represents the change from Afterpay's historical net book value to preliminary estimated fair value as follows:
|
|
| |
(in thousands)
|
Fair value of intangible assets acquired
|
| |
$2,585,000
|
Less: Carrying value of Afterpay's historical acquired intangible assets
|
| |
(86,556)
|
Pro forma net adjustment to acquired intangible assets, net
|
| |
$2,498,444
|
D)
|
Deferred tax liabilities—The increase in deferred tax liabilities of $420.2 million reflects the net deferred tax impact of the fair value adjustments discussed above equal to $537.5 million offset by pre-transaction deferred tax assets equal to $117.3 million. Pre-transaction, jurisdictions were in net deferred tax asset positions. Due to the deferred tax liabilities recorded in acquisition accounting, jurisdictions that are now in net deferred tax liability positions and the pre-transaction deferred tax assets have been reclassified to the liability account for proper jurisdictional netting presentation.
|
|
| |
(in thousands)
|
Historical Square DTA
|
| |
$7,777
|
Afterpay Opening Balance Sheet DTA
|
| |
117,290
|
Reclass from DTA to DTL
|
| |
(117,290)
|
Subtotal DTA
|
| |
$7,777
|
|
| |
|
Reclass Historical DTA's
|
| |
$117,290
|
Afterpay PPA Opening Balance Sheet DTL
|
| |
(537,521)
|
Net deferred tax asset / (liability)
|
| |
$(420,231)
|
|
| |
|
DTL attributable to Afterpay
|
| |
$(420,231)
|
DTA attributable to Historical Square
|
| |
7,777
|
Net deferred tax asset / (liability)
|
| |
$(412,454)
|
E)
|
Stockholders equity—The increase in equity balances consists of the following:
|
|
| |
(in thousands)
|
Fair value of common stock issued to the sellers (i)
|
| |
$27,682,964
|
Capital issued in settlement of Pagantis contingent consideration (ii); Clearpay Call Option (ii); Matrix Convertible Note (ii)
|
| |
484,037
|
Estimated value of replacement equity awards attributable to the pre-combination period (iii)
|
| |
232,804
|
Additional ordinary shares of Afterpay issued for settlement of RSUs and RSAs (iv)
|
| |
63,289
|
Additional ordinary shares of Afterpay issued for vested US ESOP (common shares) (v)
|
| |
104,788
|
Non-controlling interest (vi)
|
| |
(611)
|
Removal of Afterpay's historical shareholders' equity - Additional paid-in capital
|
| |
(1,656,070)
|
Removal of Afterpay's historical shareholders' equity - Accumulated other comprehensive income
|
| |
491,840
|
Removal of Afterpay's historical shareholders' equity - Retained earnings
|
| |
185,296
|
Square's estimated transaction costs and other one-time charges (vii)
|
| |
(191,486)
|
Increase in Afterpay's additional paid-in capital from one-time charge (vii)
|
| |
135,986
|
Pro forma net adjustment to total equity
|
| |
$27,532,837
|
i.
|
Value was determined as follows: (a) Ordinary shares of Afterpay as of close on September 16, 2021, multiplied by (b) the Exchange ratio, multiplied by (c) Share price of Square as of close on September 16, 2021.
|
ii.
|
Refer to Note 6 above for further details.
|
iii.
|
Replacement equity awards—Represents the issuance of replacement equity awards for which service was provided in the pre-combination period and thus is included in the calculation of purchase consideration. Replacement awards with an aggregate estimated fair value of $505.6 million are expected to be issued at close, $232.8 million relates to service provided in the pre-combination period and is included within additional paid-in capital.
|
iv.
|
Vested RSUs and RSAs—Represents the issuance of vested RSUs and RSAs as of close as a result of pro-rata vesting.
|
v.
|
Vested US ESOP (common shares)—Represents the conversion of vested US ESOP into Afterpay ordinary shares and settlement in Square Class A shares as part of the Transaction. Value was determined as follows: (a) vested US ESOP (common shares), multiplied by (b) the Exchange ratio, multiplied by (c) Share price of Square on September 16, 2021.
|
vi.
|
Non-controlling interest—The decrease in non-controlling interest of $0.6 million reflects the early exercise of the Clearpay Call Option (refer to Note 6(ii) above for further details) and the
|
vii.
|
Transaction costs and other one-time charges—A decrease in retained earnings of $191.5 million reflects the impact of Square’s portion of estimated transaction costs and other one-time charges, which are not recurring in nature. Other one-time charges result in an increase to additional paid-in capital.
|
F)
|
Long-term debt—The decrease in long-term debt of $941.0 million reflects the settlement of the SGX-listed Convertible Notes.
|
G)
|
Accrued expenses and other current liabilities—The increase in accrued expenses and other current liabilities of $162.7 million reflects the accrual for estimated transactions costs directly attributable to the Transaction, of which $55.5 million is attributed to Square and $107.2 million is attributed to Afterpay. The $55.5 million is also reflected in retained earnings and $107.2 million is reflected in goodwill. Refer to Note 7(B) and 7(E) above for further details.
|
H)
|
Other non-current liabilities—The decrease in other non-current liabilities of $125.2 million is attributed to the following:
|
|
| |
(in thousands)
|
Removal of Pagantis contingent consideration (i)
|
| |
$(4,806)
|
Removal of Pagantis deferred consideration (ii)
|
| |
(45,358)
|
Removal of Clearpay Put Option (iii)
|
| |
(75,029)
|
Pro forma net adjustment to other non-current liabilities
|
| |
$(125,193)
|
i.
|
Pagantis contingent consideration—Reflects the settlement of the Pagantis contingent consideration of $4.8 million. Refer to Note 6(i) above for further details.
|
ii.
|
Pagantis deferred consideration—Reflects the settlement of Pagantis deferred consideration of $45.4 million. Refer to Note 6(i) above for further details.
|
iii.
|
Clearpay Put Option—Reflects the removal of the put option on the remaining 6.5% non-controlling interest in Clearpay held by ThinkSmart (the “Clearpay Put Option”) of $75.0 million. The Clearpay Put Option is only exercisable by ThinkSmart in the event Afterpay does not exercise its Call Option. As it is assumed that Afterpay will early exercise its Call Option, the Put Option is eliminated. Refer to Note 6(ii) above for further details.
|
A)
|
Amortization of acquired technology and Amortization of acquired customer assets—The estimated incremental amortization expense related to the finite-lived intangible assets identified in connection with the Transaction is recorded within two accounts. The incremental amortization related to Developed Technology of $1.2 million and $9.5 million is included within Amortization of acquired technology for the six months ended June 30, 2021 and the year ended December 31, 2020, respectively.
|
Identifiable
intangible assets (in thousands)
|
| |
Estimated
Fair Value
(USD)
|
| |
Estimated
Useful Life
(in years)
|
| |
Classification
within
Statement of
Operations
|
| |
For the Six Months
Ended June 30, 2021
Amortization
Expense
(USD)
|
| |
Year Ended
December 31, 2020
Amortization
Expense
(USD)
|
Developed Technology
|
| |
$122,000
|
| |
5
|
| |
Amortization of acquired technology
|
| |
$12,200
|
| |
$24,400
|
Less: Historical Amortization Expense
|
| |
|
| |
|
| |
|
| |
(10,966)
|
| |
(14,909)
|
Increase in Amortization Expense
|
| |
|
| |
|
| |
|
| |
$1,234
|
| |
$9,491
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Customer Relationships
|
| |
$2,112,000
|
| |
15
|
| |
Amortization of acquired customer assets
|
| |
$70,400
|
| |
$140,800
|
Trade Name
|
| |
351,000
|
| |
9
|
| |
Amortization of acquired customer assets
|
| |
19,500
|
| |
39,000
|
Subtotal
|
| |
$2,585,000
|
| |
|
| |
|
| |
$89,900
|
| |
$179,800
|
Less: Historical Amortization Expense
|
| |
|
| |
|
| |
|
| |
(1,806)
|
| |
(2,339)
|
Increase in Amortization Expense
|
| |
|
| |
|
| |
|
| |
$88,094
|
| |
$177,461
|
B)
|
Stock based compensation expense—Reflects the stock based compensation expense expected to be incurred in connection with the replacement equity awards, net of historical stock compensation expense incurred by Afterpay. The stock based compensation expense is calculated using a September 16, 2021 cut-off date, consistent with the date of the share registry utilized in Note 6 above. The aggregate stock based compensation expenses for the six months ended June 30, 2021 and the year ended December 31, 2020 is calculated as follows (note that the stock based compensation expense was allocated to Product development, Sales and marketing, and General and administrative based on headcount):
|
(in thousands)
|
| |
Classification within
Statement of Operations
|
| |
Six Months
Ended June 30,
2021
|
| |
Year Ended
December 31,
2020
|
Anticipated stock compensation expense due to vesting of replacement equity awards
|
| |
Product and development
|
| |
$9,347
|
| |
$63,714
|
Less: Historical stock compensation expense
|
| |
|
| |
(9,091)
|
| |
(9,606)
|
Net adjustment related to stock based compensation expense
|
| |
|
| |
$256
|
| |
$54,108
|
|
| |
|
| |
|
| |
|
Anticipated stock compensation expense due to vesting of replacement equity awards
|
| |
Sales and marketing
|
| |
$7,103
|
| |
$53,732
|
Less: Historical stock compensation expense
|
| |
|
| |
(6,908)
|
| |
(8,101)
|
Net adjustment related to stock based compensation expense
|
| |
|
| |
$195
|
| |
$45,631
|
|
| |
|
| |
|
| |
|
(in thousands)
|
| |
Classification within
Statement of Operations
|
| |
Six Months
Ended June 30,
2021
|
| |
Year Ended
December 31,
2020
|
Anticipated stock compensation expense due to vesting of replacement equity awards
|
| |
General and administrative
|
| |
$10,088
|
| |
$76,457
|
Less: Historical stock compensation expense
|
| |
|
| |
(9,811)
|
| |
(11,527)
|
Net adjustment related to stock based compensation expense
|
| |
|
| |
$277
|
| |
$64,930
|
C)
|
Clearpay Put Option mark-to-market—Reflects the reversal of historical periodic mark-to-market expense of $24.7 million and $46.1 million for the six months ended June 30, 2021 and year ended December 31, 2020 related to the Clearpay Put Option. Refer to Notes 6(ii) and 7(H) above for further details.
|
D)
|
SGX-listed Convertible Notes interest expense and borrowing costs—Reflects the reversal of $14.5 million in interest expense and borrowing costs on the SGX-listed Convertible Notes incurred by Afterpay within their historical financial statements for the six months ended June 30, 2021, of which $3.4 million is reversed from general and administrative expense and $11.1 million is reversed from other expense. Refer to Note 6(iv) above for further details.
|
E)
|
Income tax expense (benefit)—The net increase in pro forma income tax expense (benefit) reflects the estimated tax effect of the pro forma adjustments using the blended statutory U.S. federal and state tax rate and statutory tax rates of the respective foreign jurisdictions in which the company operates. The statutory tax rates range from 19% to 30%, which are in effect as of the pro forma income statement dates. The actual effective tax rate, of the combined company, could be materially different (either higher or lower) from the rate presented in the unaudited pro forma condensed combined financial information.
|
(in thousands)
|
| |
Six Months Ended
June 30, 2021
|
| |
Year Ended
December 31, 2020
|
Historical Square income tax expense (benefit)
|
| |
$(8,413)
|
| |
$2,862
|
Historical Afterpay income tax expense (benefit)
|
| |
(29,202)
|
| |
2,311
|
Income tax expense (benefit) resulting from acquisition adjustments
|
| |
(21,520)
|
| |
(137,857)
|
Total adjustment for income tax expense (benefit)
|
| |
$(59,135)
|
| |
$(132,684)
|
F)
|
Matrix Convertible Note day one post-combination charge—The increase in general and administrative expense of $136.0 million for the year ended December 31, 2020 reflects the portion of the settlement amount of the Matrix Convertible Note attributable to post-combination services that will be recognized as a post-combination day one expense recognized through the statement of operations. Refer to Note 6(iii) above for further details.
|
G)
|
Transaction costs—The increase in general and administrative expense of $162.7 million for the year ended December 31, 2020 reflects the additional estimated costs that are directly attributable to the Transaction.
|
H)
|
Non-controlling interest—Reflects the reversal of $0.3 million and $2.2 million for the six months ended June 30, 2021 and year ended December 31, 2020 related to net loss attributable to noncontrolling interest. Refer to Note 7(E) above for further details.
|
(in thousands, except per share data)
|
| |
Six Months Ended
June 30, 2021
|
| |
Year Ended
December 31, 2020
|
Pro Forma Weighted Average Shares
|
| |
|
| |
|
Basic weighted average number of common shares outstanding - historical
|
| |
455,203
|
| |
443,126
|
Common shares issued as part of Transaction
|
| |
111,079
|
| |
111,079
|
Pro forma weighted average shares - Basic
|
| |
566,282
|
| |
554,205
|
|
| |
|
| |
|
Diluted weighted average number of common shares outstanding - historical
|
| |
519,713
|
| |
|
Common shares issued as part of Transaction
|
| |
111,079
|
| |
|
Weighted average dilutive impact of awards assumed in the Transaction (i)
|
| |
1,287
|
| |
|
Pro forma weighted average shares - Diluted
|
| |
632,079
|
| |
|
|
| |
|
| |
|
Pro Forma Earnings per Share
|
| |
|
| |
|
Pro forma net income (loss) attributable to common shareholders
|
| |
$151,823
|
| |
$(301,904)
|
Basic – pro forma
|
| |
$0.27
|
| |
$(0.54)
|
Diluted – pro forma
|
| |
$0.24
|
| |
$(0.54)
|
i.
|
Represents the dilutive impact of stock-based compensation calculated under the treasury stock method.
|
Date
|
| |
Afterpay
Ordinary
Share (A$)
(2)
|
| |
Square
Class A
Common
Stock ($)
(3)
|
| |
Share
Conversion
Ratio
|
| |
U.S. Dollar
to
Australian
Dollar
Exchange
Rate(4)
|
| |
Implied
Value of
Afterpay
Ordinary
Share (A$)
|
July 30, 2021(1)
|
| |
96.66
|
| |
247.26
|
| |
0.375
|
| |
0.73465
|
| |
126.21
|
September 16, 2021
|
| |
123.54
|
| |
255.09
|
| |
0.375
|
| |
0.72833
|
| |
131.34
|
(1)
|
Represents the last trading day prior to announcement of the Transaction Agreement.
|
(2)
|
Trading price of Afterpay ordinary shares upon the close of trading on the ASX on the date indicated.
|
(3)
|
Trading price of Square common stock upon the close of trading on the NYSE on the date indicated.
|
(4)
|
Historical exchange rates based on ending exchange rate for the date indicated per Capital IQ.
|
Q:
|
Why am I receiving this proxy statement?
|
A:
|
You are receiving this proxy statement because Square is proposing to acquire Afterpay in the Transaction pursuant to the terms and conditions of the Transaction Agreement, the Scheme and the Deed Poll that are described in this proxy statement. In the Transaction, Square Sub will acquire all of the outstanding ordinary shares of Afterpay in exchange for New Square Shares and New Square CDIs pursuant to a scheme of arrangement under the Australian Corporations Act. As a result, Afterpay will become a wholly owned subsidiary of Square Sub and an indirect wholly owned subsidiary of Square. A copy of the Transaction Agreement is attached to this proxy statement as Annex A. A copy of the draft Scheme is attached as Annexure B to the Transaction Agreement, and a copy of the draft Deed Poll is attached as Annexure C to the Transaction Agreement.
|
Q:
|
What will I receive in the Transaction?
|
A:
|
Square stockholders will continue to own their existing shares of Square common stock after the Transaction. Upon completion of the Transaction, Square anticipates that shares of Square common stock held by former Afterpay shareholders will represent approximately 18.4% of the fully diluted shares of Square common stock, and the shares of Square common stock held by existing Square stockholders will represent approximately 81.6% of the fully diluted shares of Square common stock, in each case based on the number of shares outstanding as of September 16, 2021 and giving effect to outstanding stock options, restricted stock, employee stock purchase plan, convertible senior notes, and warrants. The actual number of shares of Square Class A common stock that will be issued in the Transaction will depend on, among other factors, the number of Afterpay ordinary shares, equity awards and other dilutive instruments outstanding immediately prior to the effectiveness of the Scheme, and the actual relative ownership levels of Square Class A common stock will also depend on the number of shares of Square Class A common stock outstanding at the completion of the Transaction. Accordingly, at the time you vote, you will not be able to ascertain the precise number of shares of Square Class A common stock that will be issued in the Transaction or the relative ownership levels of former Afterpay shareholders and current Square stockholders after the completion of the Transaction.
|
Q:
|
When and where will Square hold its Special Meeting?
|
A:
|
The Special Meeting will be held virtually at 10:00 a.m. Pacific Time on November 3, 2021 to consider and vote on each of the proposals described below.
|
Q:
|
Who is entitled to vote at the Special Meeting?
|
A:
|
Holders of Square Class A common stock or Square Class B common stock as of the close of business on the Record Date may vote at the Special Meeting. As of the Record Date, there were 399,694,840 shares of
|
Q:
|
What do I need to do to attend and participate in the Special Meeting?
|
A:
|
The Special Meeting will be a completely virtual meeting of stockholders, which Square believes provides the opportunity for participation by a broader group of stockholders while reducing the environmental impact and the costs associated with in-person meetings. Stockholders of record and street name stockholders with a legal proxy from their broker, bank or other nominee will be able to attend the Special Meeting by visiting www.virtualshareholdermeeting.com/SQ2021SM, which will allow such stockholders to vote shares electronically at the meeting.
|
Q:
|
What if during the check-in time or during the meeting I have technical difficulties or trouble accessing the virtual meeting website?
|
A:
|
Square will have technicians to assist you if you experience technical difficulties accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call 844-986-0822 (domestic) or 303-562-9302 (international).
|
Q:
|
What matters am I voting on at the Special Meeting?
|
A:
|
At the Special Meeting, Square stockholders will be asked to consider and vote on:
|
1.
|
the Transaction Proposal; and
|
2.
|
the Adjournment Proposal.
|
Q:
|
What will the Afterpay shareholders be asked to vote on?
|
A:
|
Afterpay shareholders will not be asked to vote on any of the proposals to be considered and voted on at the Special Meeting. Rather, if the Court grants the necessary orders to convene a meeting of Afterpay shareholders to consider and vote on a resolution to approve the Transaction on the First Court Date, Afterpay will hold the Scheme Meeting pursuant to those orders. The Scheme Meeting is not expected to be held until after the Special Meeting, and accordingly you are not expected to know whether Afterpay shareholders have approved the Scheme at the time you vote.
|
Q:
|
How does Square’s board of directors recommend that I vote on these proposals?
|
A:
|
Square’s board of directors recommends that you vote “FOR” each of the proposals to be considered and voted on at the Special Meeting.
|
Q:
|
What constitutes a quorum for the Special Meeting?
|
A:
|
A quorum is the minimum number of shares required to be present at the Special Meeting to properly hold a special meeting of stockholders and conduct business under Square’s amended and restated bylaws and Delaware law. The presence, virtually or represented by proxy, of a majority of the voting power of all issued and outstanding shares of Square common stock entitled to vote at the Special Meeting will constitute a quorum at the Special Meeting. Abstentions and attending non-votes are counted as shares present and entitled to vote for purposes of determining a quorum.
|
Q:
|
What vote by the Square stockholders is required to approve the Transaction Proposal?
|
A:
|
Assuming a quorum is present, approval of the Transaction Proposal will require the affirmative vote of a majority of the voting power of the shares of Square common stock present or represented by proxy at the Special Meeting and entitled to vote thereon. An abstention from voting or an attending non-vote will have the same effect as a vote AGAINST the Transaction Proposal.
|
Q:
|
What vote by the Square stockholders is required to approve the Adjournment Proposal?
|
A:
|
Approval of the Adjournment Proposal will require the affirmative vote of a majority of the voting power of the shares of Square common stock present or represented by proxy at the Special Meeting and entitled to vote thereon (whether or not a quorum is present). An abstention from voting or an attending non-vote will have the same effect as a vote AGAINST the Adjournment Proposal.
|
Q:
|
Why is my vote important?
|
A:
|
In order to complete the Transaction, Square stockholders must approve the Transaction Proposal.
|
Q:
|
Why am I being asked to consider and vote upon the Transaction Proposal?
|
A:
|
Because Square Class A common stock is listed for trading on the NYSE, issuances of shares of Square common stock are subject to the NYSE Listed Company Manual. Section 312.03 of the NYSE Listed
|
Q:
|
Will the New Square Shares and the New Square CDIs be traded on an exchange?
|
A:
|
It is a condition to the completion of the Transaction that the New Square Shares to be issued pursuant to the Transaction be approved for listing on the NYSE and that the New Square CDIs to be issued pursuant to the Transaction be approved for listing on the ASX.
|
Q:
|
What are Square’s reasons for proposing the Transaction and entering into the Transaction Agreement?
|
A:
|
Square’s board of directors concluded that there are significant potential benefits in the Transaction, including, among other things, combination of complementary merchant and consumer ecosystems, expansion of the customer base for Square’s Cash App and Seller business units, and Afterpay’s position as a category and innovation leader in BNPL, that outweigh the uncertainties, risks and potentially negative factors relevant to the Transaction. For a more detailed discussion of the reasoning of Square’s board of directors, see “The Transaction—Square’s Reasons for the Transaction” beginning on page 67 of this proxy statement and “The Transaction—Recommendations of Square’s Board of Directors” beginning on page 69 of this proxy statement.
|
Q:
|
What is a scheme of arrangement?
|
A:
|
A scheme of arrangement is a statutory procedure under Part 5.1 of the Australian Corporations Act that allows companies, with shareholder and court approval, to carry out transactions that become binding on all shareholders by operation of law. The Scheme that is being proposed by Afterpay will allow Square Sub to acquire all of the outstanding Afterpay ordinary shares. Approval of the Scheme requires a 50% majority of the number of shareholders voting (unless the Court orders otherwise) and a 75% majority of the total votes cast being in favor of the Scheme, as well as approval by the Court.
|
Q:
|
What do I need to do now?
|
A:
|
You should read this proxy statement (including the attached annexes, information incorporated by reference into this proxy statement, and the other documents to which this proxy statement refers you to) carefully to consider how the Transaction affects you. After you read this proxy statement, you should return your completed, signed and dated proxy card by mail in the enclosed postage-paid envelope or submit your voting instructions by phone or the Internet as soon as possible so that your shares of Square common stock will be voted in accordance with your instructions.
|
Q:
|
How do I vote?
|
A:
|
If you are a stockholder of record, there are four ways to vote:
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•
|
by Internet at www.proxyvote.com, 24 hours a day, seven days a week, until 11:59 p.m. Eastern Time on November 2, 2021 (please have your proxy card in hand when you visit the website);
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•
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by toll-free telephone at 1-800-690-6903, until 11:59 p.m. Eastern Time on November 2, 2021 (please follow the instructions on your proxy card or voting instruction form from your broker, bank or other nominee provided to you by email or over the Internet);
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•
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by completing and mailing your proxy card (if you received printed proxy materials) to be received prior to the Special Meeting; or
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•
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by attending the Special Meeting by visiting www.virtualshareholdermeeting.com/SQ2021SM, where you may vote during the meeting. Please have your proxy card or the instructions that accompanied your proxy materials in hand when you visit the website.
|
Q:
|
Can I change my vote or revoke my proxy?
|
A:
|
Yes. If you are a stockholder of record, you can change your vote or revoke your proxy any time before the Special Meeting by:
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•
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entering a new vote by Internet or by telephone;
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•
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completing and returning a later-dated proxy card;
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•
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notifying the Corporate Secretary of Square, Inc., in writing, at Square, Inc., 1455 Market Street, Suite 600, San Francisco, California 94103; or
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•
|
attending and voting at the Special Meeting (although attendance at the Special Meeting will not, by itself, revoke a proxy).
|
Q:
|
What is “householding”?
|
A:
|
Square has adopted a procedure called “householding,” which the SEC has approved. Under this procedure, Square delivers a single copy of the proxy materials to multiple stockholders who share the same address, unless it has received contrary instructions from one or more of such stockholders. This procedure reduces printing and mailing costs and fees. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards.
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•
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By Internet: www.proxyvote.com
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•
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By telephone: 1-800-579-1639
|
•
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By email: sendmaterial@proxyvote.com
|
Q:
|
What happens if I sell my shares of common stock before the Special Meeting?
|
A:
|
The Record Date is earlier than the date of the Special Meeting. If you transfer your shares of Square common stock after the Record Date, but before the date of the Special Meeting, you will retain your right to vote at the Special Meeting unless special arrangements are made between you and the person to whom you transfer your shares.
|
Q:
|
What is the effect of giving a proxy?
|
A:
|
Proxies are solicited by and on behalf of Square’s board of directors. Amrita Ahuja and Sivan Whiteley have been designated as proxy holders by Square’s board of directors. When proxies are properly dated, executed and returned, the shares represented by such proxies will be voted at the Special Meeting in accordance with the instructions of the stockholder. For stockholders of record, if no specific instructions are given, however, the shares will be voted in accordance with the recommendations of Square’s board of directors as described above. If the Special Meeting is adjourned or postponed, the proxy holders can vote the shares on the new special meeting date as well, unless you have properly revoked your proxy instructions, as described above.
|
Q:
|
Where can I find the voting results of the Special Meeting?
|
A:
|
Within four business days following certification of the final voting results, Square intends to file the final voting results of the Special Meeting with the SEC in a Current Report on Form 8-K. If final voting results are not available to us in time to file a Current Report on Form 8-K within four business days after the Special Meeting, we will file a Current Report on Form 8-K to publish preliminary results and will provide the final results in an amendment to the Current Report on Form 8-K as soon as they become available.
|
Q:
|
Am I entitled to appraisal rights?
|
A:
|
No. Under Delaware law, holders of shares of Square common stock are not entitled to appraisal rights in connection with the Transaction or any of the matters to be acted on at the Special Meeting.
|
Q:
|
Is completion of the Transaction subject to any conditions?
|
A:
|
Yes. Square and Afterpay are not required to complete the Transaction unless a number of conditions are satisfied or waived, including receipt of the required approvals from the Square stockholders, Afterpay shareholders and the Court. See the section titled “The Transaction Agreement, Scheme and Deed Poll—Conditions Precedent to the Scheme” beginning on page 108 of this proxy statement for a more complete summary of the conditions that must be satisfied or waived prior to completion of the Transaction.
|
Q:
|
When is the Scheme expected to be completed?
|
A:
|
The Scheme is expected to be completed in the first quarter of 2022, subject to the satisfaction or waiver of the various closing conditions set forth in the Transaction Agreement. In order for the Scheme to be completed, it must first become effective. To become effective it must (among other things) be approved by the Court. Afterpay will apply to the Court for an order approving the Scheme if the Scheme is approved by the requisite majorities of Afterpay shareholders at the Scheme Meeting and all other conditions precedent to the Scheme (other than approval of the Court) have been satisfied or waived. Such application is expected to occur after the Special Meeting. The Court will approve the Transaction on the Second Court Date only if it is satisfied, among other things, that the Transaction is fair and reasonable to persons legitimately interested in the Transaction, including Afterpay shareholders.
|
Q:
|
What happens if the Scheme is not completed?
|
A:
|
If the Scheme is not completed, Afterpay shareholders will not receive the Scheme Consideration; Afterpay will remain listed on the ASX, and the market price of Square Class A common stock and/or Afterpay shares may fall in the short term. Afterpay will remain an independent company, and Afterpay shareholders will continue to own their Afterpay shares. In certain circumstances, Square may be obligated to pay Afterpay a termination fee. In certain other circumstances, Afterpay may be obligated to pay Square a termination fee. Please see the section titled “The Transaction Agreement, Scheme and Deed Poll—Termination Fees” beginning on page 126 of this proxy statement for a more complete summary of conditions under which a termination fee may be payable by either Square or Afterpay.
|
Q:
|
Are there any risks in the Transaction or the Transaction Proposal that I should consider?
|
A:
|
Yes. There are risks associated with all business combinations, including the Transaction and the related Transaction Proposal. These risks are discussed in more detail in the section titled “Risk Factors” beginning on page 45 of this proxy statement.
|
Q:
|
Who can help answer my questions?
|
A:
|
The information provided above in the question-and-answer format is for your convenience only and is merely a summary of some of the information in this proxy statement. You should carefully read the entire proxy statement, including its annexes. You may also wish to consult your legal, tax and/or financial advisers with respect to any aspect of the Transaction, the Transaction Agreement, the Scheme or Deed Poll or other matters discussed in this proxy statement.
|
•
|
the approval of the Transaction by the Afterpay shareholders;
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•
|
the approval of the Scheme by the Court;
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•
|
the issuance of a report by an independent expert (who is approved by Square and appointed by Afterpay pursuant to the Transaction Agreement and is referred to as the “Independent Expert”) for the Scheme concluding that the Scheme is in the best interests of Afterpay shareholders;
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•
|
the absence of any law, order or injunction that would prohibit or make illegal the Transaction;
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•
|
the receipt of certain regulatory approvals;
|
•
|
the approval for listing on the NYSE of the New Square Shares to be issued in the Transaction and the establishment of a secondary listing on the ASX to allow shareholders of Afterpay to trade New Square CDIs on the ASX;
|
•
|
the accuracy of the representations and warranties and compliance with the respective covenants of the parties, subject to materiality qualifiers set forth in the Transaction Agreement; and
|
•
|
no events having occurred that would have a material adverse effect on Afterpay or Square.
|
•
|
negative reactions from the financial markets;
|
•
|
incurring and paying significant expenses in connection with the Transaction, such as financial adviser fees, filing fees, legal and accounting fees, soliciting fees, regulatory fees and other related expenses, many of which will become due and payable regardless of whether the Transaction is completed; and
|
•
|
paying a termination fee of A$385 million if the Transaction Agreement is terminated in certain circumstances.
|
•
|
challenges and difficulties associated with managing the larger, more complex, combined company;
|
•
|
conforming standards, controls, procedures and policies, and compensation structures between the companies;
|
•
|
integrating personnel from the two companies while maintaining focus on developing, producing and delivering consistent, high quality products and services;
|
•
|
consolidating corporate and administrative infrastructures;
|
•
|
coordinating geographically dispersed organizations;
|
•
|
addressing possible differences in business backgrounds, corporate cultures and management philosophies;
|
•
|
potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with the Transaction;
|
•
|
effecting potential actions that may be required in connection with obtaining regulatory approvals;
|
•
|
performance shortfalls at one or both of the companies as a result of the diversion of management’s attention caused by completing the Transaction and integrating the companies’ operations; and
|
•
|
the ability of Square to deliver on its strategy, including the ability of the Transaction to accelerate growth and to strengthen the integration between Square’s Seller and Cash App ecosystems.
|
1.
|
the Transaction Proposal; and
|
2.
|
the Adjournment Proposal.
|
•
|
each of Square’s directors;
|
•
|
each of Square’s named executive officers;
|
•
|
all of Square’s current directors and executive officers as a group; and
|
•
|
each person or group known by Square to be the beneficial owner of more than 5% of Square Class A or Square Class B common stock.
|
|
| |
Square
Class A Common Stock
|
| |
Square
Class B Common Stock+
|
| |
Percent of
Total Voting
Power
|
||||||
Name of Beneficial Owner
|
| |
Number
|
| |
Percent
|
| |
Number
|
| |
Percent
|
| ||
5% Stockholders:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Morgan Stanley(1)
|
| |
24,316,533
|
| |
6.11%
|
| |
—
|
| |
*
|
| |
2.38%
|
The Vanguard Group(2)
|
| |
24,132,754
|
| |
6.06%
|
| |
—
|
| |
*
|
| |
2.36%
|
BlackRock, Inc.(3)
|
| |
20,935,606
|
| |
5.26%
|
| |
—
|
| |
*
|
| |
2.05%
|
Named Executive Officers and Directors:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Jack Dorsey(4)
|
| |
—
|
| |
*
|
| |
48,844,566
|
| |
78.40%
|
| |
47.84%
|
Amrita Ahuja(5)
|
| |
110,289
|
| |
*
|
| |
—
|
| |
*
|
| |
*
|
Brian Grassadonia(6)
|
| |
387,860
|
| |
*
|
| |
883,764
|
| |
1.40%
|
| |
*
|
Alyssa Henry(7)
|
| |
605,828
|
| |
*
|
| |
1,600,000
|
| |
2.50%
|
| |
1.60%
|
Jacqueline Reses(8)
|
| |
1,802,579
|
| |
*
|
| |
—
|
| |
*
|
| |
*
|
Sivan Whiteley(9)
|
| |
195,034
|
| |
*
|
| |
17,292
|
| |
*
|
| |
*
|
Roelof Botha(10)
|
| |
697,789
|
| |
*
|
| |
—
|
| |
*
|
| |
*
|
Amy Brooks(11)
|
| |
6,127
|
| |
*
|
| |
—
|
| |
*
|
| |
*
|
Shawn Carter(12)
|
| |
31,718
|
| |
*
|
| |
—
|
| |
*
|
| |
*
|
Paul Deighton(13)
|
| |
30,185
|
| |
*
|
| |
—
|
| |
*
|
| |
*
|
Randall Garutti(14)
|
| |
18,601
|
| |
*
|
| |
—
|
| |
*
|
| |
*
|
James McKelvey(15)
|
| |
177,768
|
| |
*
|
| |
12,831,216
|
| |
20.60%
|
| |
12.58%
|
Mary Meeker(16)
|
| |
406,108
|
| |
*
|
| |
—
|
| |
*
|
| |
*
|
Anna Patterson(17)
|
| |
13,442
|
| |
*
|
| |
—
|
| |
*
|
| |
*
|
Lawrence Summers(18)
|
| |
20,559
|
| |
*
|
| |
89,133
|
| |
*
|
| |
*
|
David Viniar(19)
|
| |
71,833
|
| |
*
|
| |
253,200
|
| |
*
|
| |
*
|
Darren Walker(20)
|
| |
2,859
|
| |
*
|
| |
—
|
| |
*
|
| |
*
|
All current executive officers and directors as a group (16 persons)(21)
|
| |
2,776,000
|
| |
*
|
| |
64,519,171
|
| |
99.21%
|
| |
61.77%
|
*
|
Represents beneficial ownership of less than one percent (1%) of the outstanding shares of Square common stock.
|
+
|
Options to purchase shares of Square Class B common stock included in this table may be early exercisable. To the extent such shares have not yet vested as of a given date, such shares will remain subject to repurchase by Square at the original purchase price. The Square Class B common stock is convertible at any time by the holder into shares of Square Class A common stock on a share-for-share basis, such that each holder of Square Class B common stock beneficially owns an equivalent number of Square Class A common stock.
|
(1)
|
Based solely on a Schedule 13G/A, reporting beneficial ownership as of December 31, 2020, filed with the SEC on February 12, 2021, with sole dispositive power over 0 shares of Square Class A common stock, sole voting power over 0 shares of Square Class A common stock, shared dispositive power over 24,316,533 shares of Square Class A common stock and shared voting power over 18,958,700 shares of Square Class A common stock. The address for Morgan Stanley is 1585 Broadway, New York, NY 10036.
|
(2)
|
Based solely on a Schedule 13G/A, reporting beneficial ownership as of December 31, 2020, filed with the SEC on February 10, 2021, with sole dispositive power over 23,237,356 shares of Square Class A common stock, sole voting power over 0 shares of Square Class A common stock, shared dispositive power over 895,398 shares of Square Class A common stock and shared voting power over 391,289 shares of Square Class A common stock. The address for The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.
|
(3)
|
Based solely on a Schedule 13G/A, reporting beneficial ownership as of December 31, 2020, filed with the SEC on February 5, 2021, with sole dispositive power over 20,935,606 shares of Square Class A common stock, and sole voting power over 18,084,122 shares of Square Class A common stock. The address for BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055.
|
(4)
|
Consists of (i) 36,763,992 shares of Square Class B common stock held of record by the Jack Dorsey Revocable Trust u/a/d 12/8/10, for which Mr. Dorsey serves as trustee, and (ii) 12,080,574 shares of Square Class B common stock held of record by Start Small LLC, which Mr. Dorsey manages.
|
(5)
|
Consists of (i) 86,479 shares of Square Class A common stock held of record by Ms. Ahuja, and (ii) 23,810 shares of Square Class A common stock subject to options exercisable within 60 days of July 31, 2021, of which 11,170 shares are vested as of such date.
|
(6)
|
Consists of (i) 37,170 shares of Square Class A common stock held of record by Mr. Grassadonia, (ii) 883,764 shares of Square Class B common stock subject to options exercisable within 60 days of July 31, 2021, of which all shares are vested as of such date, and (iii) 350,690 shares of Square Class A common stock subject to options exercisable within 60 days of July 31, 2021, of which 332,535 shares are vested as of such date.
|
(7)
|
Consists of (i) 336,577 shares of Square Class A common stock held of record by Ms. Henry, (ii) 1,600,000 shares of Square Class B common stock subject to options exercisable within 60 days of July 31, 2021, of which all shares are vested as of such date, and (iii) 269,251 shares of Square Class A common stock subject to options exercisable within 60 days of July 31, 2021, of which 251,096 shares are vested as of such date.
|
(8)
|
Consists of (i) 1,802,579 shares of Square Class A common stock held of record by Ms. Reses. Ms. Reses employment with the company ended effective as of October 30, 2020. She is included as a named executive officer because she would have been one of the three most highly compensated executive officers for the fiscal year ended December 31, 2020 had she remained employed as an executive officer as of December 31, 2020.
|
(9)
|
Consists of (i) 68,768 shares of Square Class A common stock held of record by Ms. Whiteley, (ii) 17,292 shares of Square Class B common stock subject to options exercisable within 60 days of July 31, 2021, of which all shares are vested as of such date, (iii) 126,058 shares of Square Class A common stock subject to options exercisable within 60 days of July 31, 2021, of which 114,577 shares are vested as of such date, and (iv) 208 shares of Square Class A common stock subject to RSUs that vest within 60 days of July 31, 2021.
|
(10)
|
Consists of (i) 11,109 shares of Square Class A common stock held of record by Mr. Botha, and (ii) a total of 684,741 shares of Square Class A common stock held of record by Mr. Botha’s estate planning vehicles, (iii) 1,862 shares of Square Class A common stock held of record by Sequoia Capital U.S. Growth Fund IV, LP and (iv) 77 shares of Square Class A common stock held of record by Sequoia Capital USGF Principals Fund IV, LP (the funds (iii)-(iv) collectively, the “SC USGF Funds”). SC US (TTGP), Ltd., where Mr. Botha is a director, is the general partner of SCGF IV Management, L.P. (which is the general partner of each of the SC USGF Funds). Mr. Botha disclaims beneficial ownership of the securities held by the SC USGF Funds. The address of each Sequoia entity is 2800 Sand Hill Road, Suite 101, Menlo Park, CA 94025.
|
(11)
|
Consists of (i) 6,127 shares of Square Class A common stock held of record by Ms. Brooks.
|
(12)
|
Consists of (i) 8,831 shares of Square Class A common stock held of record by Mr. Carter, (ii) 1,779 shares of Square Class A common stock held of record by an immediate family member of Mr. Carter, (iii) 20,812 shares of Square Class A common stock held of record by SC Panther, LLC, for which Mr. Carter serves as the sole member, and (iv) 296 shares of Square Class A common stock held of record by SC Vessel 5, LLC, for which Mr. Carter serves as the sole member.
|
(13)
|
Consists of (i) 30,185 shares of Square Class A common stock held of record by Mr. Deighton.
|
(14)
|
Consists of (i) 18,601 shares of Square Class A common stock held of record by Mr. Garutti.
|
(15)
|
Consists of (i) 2,768 shares of Square Class A common stock and 200,000 shares of Square Class B common stock held of record by Mr. McKelvey, (ii) 12,631,216 shares of Square Class B common stock held of record by the James McKelvey, Jr. Revocable Trust dated July 2, 2014, for which Mr. McKelvey serves as trustee, and (iii) 175,000 shares of Square Class A common stock held of record by the Anna Elefteria Ntenta Revocable Trust dated November 30, 2017.
|
(16)
|
Consists of (i) 400,291 shares of Square Class A common stock held of record by Ms. Meeker, and (ii) 5,817 shares of Square Class A common stock held in the name of KPCB sFund Associates, LLC. John Doerr, Ted Schlein, Brook Byers and Bing Gordon are managing members of KPCB sFund Associates, LLC, the managing member of sFund and, therefore, share voting and dispositive power over the shares held by sFund. The address is 2750 Sand Hill Road, Menlo Park, CA 94025.
|
(17)
|
Consists of (i) 13,442 shares of Square Class A common stock held of record by Ms. Patterson.
|
(18)
|
Consists of (i) 20,559 shares of Square Class A common stock and 89,133 shares of Square Class B common stock held of record by Dr. Summers.
|
(19)
|
Consists of (i) 71,833 shares of Square Class A common stock and 26,250 shares of Square Class B common stock held of record by Mr. Viniar, and (ii) 226,950 shares of Square Class B common stock subject to options exercisable within 60 days of July 31, 2021, all of which shares are vested as of such date.
|
(20)
|
Consists of (i) 2,859 shares of Square Class A common stock held of record by Mr. Walker.
|
(21)
|
Consists of (i) 2,005,983 shares of Square Class A common stock and 61,791,165 shares of Square Class B common stock held of record by Square’s current executive officers and directors, (ii) 769,809 shares of Square Class A common stock subject to options exercisable within 60 days of July 31, 2021, of which 709,378 are vested as of such date, (iii) 2,728,006 shares of Square Class B common stock subject to options exercisable within 60 days of July 31, 2021, all of which are vested as of such date, and (iv) 208 shares of Square Class A common stock subject to RSUs that vest within 60 days of July 31, 2021.
|
•
|
“FOR” approval of the Transaction Proposal; and
|
•
|
“FOR” approval of the Adjournment Proposal.
|
•
|
by Internet at www.proxyvote.com, 24 hours a day, seven days a week, until 11:59 p.m. Eastern Time on November 2, 2021 (please have your proxy card in hand when you visit the website);
|
•
|
by toll-free telephone at 1-800-690-6903, until 11:59 p.m. Eastern Time on November 2, 2021 (please follow the instructions on your proxy card or voting instruction form from your broker, bank or other nominee provided to you by email or over the Internet);
|
•
|
by completing and mailing your proxy card (if you received printed proxy materials) to be received prior to the Special Meeting; or
|
•
|
by attending the Special Meeting by visiting www.virtualshareholdermeeting.com/SQ2021SM, where you may vote during the meeting. Please have your proxy card or the instructions that accompanied your proxy materials in hand when you visit the website.
|
•
|
entering a new vote by Internet or by telephone;
|
•
|
completing and returning a later-dated proxy card;
|
•
|
notifying the Corporate Secretary of Square, Inc., in writing, at Square, Inc., 1455 Market Street, Suite 600, San Francisco, California 94103; or
|
•
|
attending and voting at the Special Meeting (although attendance at the Special Meeting will not, by itself, revoke a proxy).
|
•
|
By Internet: www.proxyvote.com
|
•
|
By telephone: 1-800-579-1639
|
•
|
By email: sendmaterial@proxyvote.com
|
•
|
Square’s board of directors’ and management’s understanding of Afterpay’s business and operations, and its current and historical results of operations, financial prospects and conditions;
|
•
|
that the Transaction would create a leading global financial technology company with an exceptional product mix and would allow Square stockholders to participate in the benefits of the combined company, including the future potential value of the combined company’s products and services and potential expansion into new geographies and new verticals;
|
•
|
that the Transaction would strengthen and enable closer integration between Square's Cash App and Seller ecosystems;
|
•
|
that Square and Afterpay combine complementary merchant and consumer ecosystems;
|
•
|
that the Transaction would expand the customer base for Square’s Cash App and Seller business units;
|
•
|
that the Transaction would allow Square to integrate BNPL capability into its existing ecosystems;
|
•
|
Afterpay’s position as a category and innovation leader in BNPL;
|
•
|
the reinforcing effects between Afterpay’s growing consumer and merchant bases that has led to substantial growth in gross merchant volume and revenue;
|
•
|
BNPL’s growth potential in the global e-commerce opportunity;
|
•
|
that Square’s and Afterpay’s visions, missions and cultures are aligned and that Afterpay’s high-quality management and employees are expected to join Square’s proven management team and employees;
|
•
|
that Square is expected to have enhanced operational capabilities and geographic reach with a diversified business;
|
•
|
Square’s board of directors’ understanding of the current and prospective competitive space in the industries in which Square and Afterpay, respectively, operate;
|
•
|
that the Transaction is expected to generate substantial synergies;
|
•
|
that the Transaction is expected to be accretive to gross profit growth in year one after completion;
|
•
|
the oral opinion of Morgan Stanley, subsequently confirmed in writing, rendered to Square’s board of directors that, as of August 1, 2021 and based upon and subject to the various assumptions made, procedures followed, matters considered, and qualifications and limitations on the scope of the review undertaken by Morgan Stanley as set forth in the written opinion, the exchange ratio pursuant to the Transaction Agreement was fair from a financial point of view to Square. Such opinion is more fully described below under “—Opinion of Square’s Financial Adviser”;
|
•
|
the terms and conditions of the Transaction Agreement, including:
|
•
|
that the Scheme Consideration consists only of stock (or, if Square makes the Cash Election, will consist of 99% stock), which Square’s board of directors believed was consistent with the strategic purpose of the Transaction as a combination of two complementary companies;
|
•
|
the customary nature of the representations, warranties, and covenants of Square and Afterpay in the Transaction Agreement;
|
•
|
the parties’ covenants to use all reasonable endeavors to procure satisfaction of the conditions precedent to the Transaction;
|
•
|
the deal protection and termination provisions of the Transaction Agreement; and
|
•
|
the review of Square’s board of directors, with the assistance of Square’s advisers, of the terms and conditions of comparable transactions and its overall beliefs that the terms of the Transaction Agreement were consistent with market practice in Australia and in the best interest of Square and its stockholders; and
|
•
|
the likelihood that the Transaction would be completed, including after consideration of the risks related to certain conditions and regulatory approvals which will be required to complete the Transaction.
|
•
|
that the integration of Afterpay with Square will subject Square to liabilities that may exist at Afterpay, including liabilities arising out of the Transaction;
|
•
|
that Square will incur significant transaction- and combination-related costs in connection with the Transaction, including for the integration of organizations, systems, and employees;
|
•
|
that the issuance of the Scheme Consideration to Afterpay shareholders will dilute Square’s current stockholders;
|
•
|
the possibility of encountering difficulties in achieving, or failing to achieve, anticipated synergies in the amounts estimated or in the time frame contemplated;
|
•
|
increasing competition in BNPL;
|
•
|
the possibility that additional regulations may be imposed on BNPL products;
|
•
|
the risk of losing key Square or Afterpay management or employees during the pendency of the Transaction and thereafter;
|
•
|
the terms of the Transaction Agreement that restrict Square’s ability to engage in certain transactions and initiatives;
|
•
|
the diversion of management attention and resources from the operation of Square’s business towards the completion of the Transaction; and
|
•
|
the risk that the Transaction could be delayed or not completed, or that the Transaction Agreement could be terminated, each of which could negatively impact the price of Square common stock and Square’s future business and operations.
|
•
|
“FOR” approval of the Transaction Proposal; and
|
•
|
“FOR” approval of the Adjournment Proposal.
|
Square Consensus Projections
|
| |
CH2
'21E
|
| |
CY22
|
| |
CY23
|
| |
CY24
|
| |
CY25
|
| |
CY26
|
| |
CY27
|
| |
CY28
|
| |
CY29
|
| |
CY30
|
| |
CY31
|
| |
CY32
|
| |
CY33
|
| |
CY34
|
| |
CY35
|
| |
CY36
|
| |
CY37
|
| |
CY38
|
| |
CY39
|
| |
CY40
|
Gross Profit
|
| |
$2,235
|
| |
$5,371
|
| |
$6,808
|
| |
$8,373
|
| |
$10,299
|
| |
$12,668
|
| |
$15,582
|
| |
$19,165
|
| |
$23,573
|
| |
$28,995
|
| |
$35,664
|
| |
$43,867
|
| |
$53,956
|
| |
$66,366
|
| |
$81,630
|
| |
$97,548
|
| |
$113,156
|
| |
$127,300
|
| |
$138,757
|
| |
$144,308
|
Adjusted EBITDA
|
| |
$481
|
| |
$1,250
|
| |
$1,822
|
| |
$2,291
|
| |
$2,880
|
| |
$3,618
|
| |
$4,543
|
| |
$5,703
|
| |
$7,156
|
| |
$8,975
|
| |
$11,253
|
| |
$14,104
|
| |
$17,671
|
| |
$22,133
|
| |
$27,713
|
| |
$34,773
|
| |
$42,257
|
| |
$49,700
|
| |
$56,529
|
| |
$61,239
|
Unlevered Free Cash Flow (UFCF)
|
| |
$41
|
| |
$213
|
| |
$510
|
| |
$673
|
| |
$913
|
| |
$1,227
|
| |
$1,638
|
| |
$2,173
|
| |
$2,867
|
| |
$3,765
|
| |
$4,926
|
| |
$6,420
|
| |
$8,342
|
| |
$10,807
|
| |
$13,966
|
| |
$18,367
|
| |
$23,253
|
| |
$28,352
|
| |
$33,297
|
| |
$37,143
|
Afterpay Selected Street Projections
|
| |
CH2
'21E
|
| |
CY22
|
| |
CY23
|
| |
CY24
|
| |
CY25
|
| |
CY26
|
| |
CY27
|
| |
CY28
|
| |
CY29
|
| |
CY30
|
| |
CY31
|
| |
CY32
|
| |
CY33
|
| |
CY34
|
| |
CY35
|
Gross Profit
|
| |
$361
|
| |
$932
|
| |
$1,212
|
| |
$1,512
|
| |
$1,857
|
| |
$2,247
|
| |
$2,676
|
| |
$3,139
|
| |
$3,627
|
| |
$4,113
|
| |
$4,587
|
| |
$5,029
|
| |
$5,420
|
| |
$5,738
|
| |
$5,968
|
Adjusted EBITDA
|
| |
$108
|
| |
$336
|
| |
$520
|
| |
$713
|
| |
$918
|
| |
$1,140
|
| |
$1,386
|
| |
$1,671
|
| |
$1,981
|
| |
$2,246
|
| |
$2,505
|
| |
$2,746
|
| |
$2,959
|
| |
$3,133
|
| |
$3,258
|
Levered Free Cash Flow (LFCF)
|
| |
$33
|
| |
$177
|
| |
$308
|
| |
$446
|
| |
$589
|
| |
$742
|
| |
$914
|
| |
$1,112
|
| |
$1,330
|
| |
$1,508
|
| |
$1,682
|
| |
$1,844
|
| |
$1,987
|
| |
$2,103
|
| |
$2,188
|
Afterpay Standalone Projections
|
| |
CH2
'21E
|
| |
CY22
|
| |
CY23
|
| |
CY24
|
| |
CY25
|
| |
CY26
|
| |
CY27
|
| |
CY28
|
| |
CY29
|
| |
CY30
|
| |
CY31
|
| |
CY32
|
| |
CY33
|
| |
CY34
|
| |
CY35
|
Gross Profit
|
| |
$326
|
| |
$1,075
|
| |
$1,591
|
| |
$2,256
|
| |
$3,098
|
| |
$4,050
|
| |
$5,208
|
| |
$6,507
|
| |
$7,878
|
| |
$9,233
|
| |
$10,582
|
| |
$11,851
|
| |
$12,958
|
| |
$13,823
|
| |
$14,376
|
Adjusted EBITDA
|
| |
($17)
|
| |
$30
|
| |
$207
|
| |
$472
|
| |
$794
|
| |
$1,338
|
| |
$1,835
|
| |
$2,429
|
| |
$3,101
|
| |
$3,820
|
| |
$4,376
|
| |
$4,898
|
| |
$5,354
|
| |
$5,711
|
| |
$5,939
|
Levered Free Cash Flow (LFCF)
|
| |
($79)
|
| |
($167)
|
| |
($60)
|
| |
$45
|
| |
$219
|
| |
$559
|
| |
$810
|
| |
$1,122
|
| |
$1,488
|
| |
$1,892
|
| |
$2,167
|
| |
$2,426
|
| |
$2,652
|
| |
$2,828
|
| |
$2,942
|
Synergy Projections
|
| |
CH2
'21E
|
| |
CY22
|
| |
CY23
|
| |
CY24
|
| |
CY25
|
| |
CY26
|
| |
CY27
|
| |
CY28
|
| |
CY29
|
| |
CY30
|
| |
CY31
|
| |
CY32
|
| |
CY33
|
| |
CY34
|
| |
CY35
|
Levered Free Cash Flow (LFCF)
|
| |
—
|
| |
($299)
|
| |
($204)
|
| |
($272)
|
| |
($235)
|
| |
($124)
|
| |
$16
|
| |
$176
|
| |
$324
|
| |
$421
|
| |
$492
|
| |
$558
|
| |
$619
|
| |
$671
|
| |
$714
|
•
|
reviewed certain publicly available financial statements and other business and financial information of Afterpay and Square, respectively;
|
•
|
reviewed certain internal financial statements and other financial and operating data concerning Afterpay and Square, respectively;
|
•
|
reviewed certain financial projections of Afterpay prepared by the management of Square;
|
•
|
reviewed information relating to certain strategic, financial and operational benefits anticipated from the Transaction, prepared by the management of Square;
|
•
|
discussed the past and current operations and financial condition and the prospects of Square, including information relating to certain strategic, financial and operational benefits anticipated from the Transaction, with senior executives of Square;
|
•
|
reviewed the pro forma impact of the Transaction on Square’s earnings per share, cash flow, consolidated capitalization and certain financial ratios;
|
•
|
reviewed the reported prices and trading activity for Afterpay ordinary shares and Square Class A common stock;
|
•
|
compared the financial performance of Afterpay and Square and the prices and trading activity of Afterpay ordinary shares and Square Class A common stock with that of certain other publicly traded companies comparable with Afterpay and Square, respectively, and their securities;
|
•
|
participated in certain discussions and negotiations among representatives of Afterpay’s and Square’s financial and legal advisers;
|
•
|
reviewed the Transaction Agreement and certain related documents; and
|
•
|
performed such other analyses, reviewed such other information and considered such other factors as Morgan Stanley deemed appropriate.
|
•
|
aggregate value to estimated gross profit;
|
•
|
aggregate value to estimated gross profit/estimated percentage annual growth in gross profit;
|
•
|
aggregate value to estimated steady-state earnings before interest, taxes, depreciation and amortization, which is referred to as “EBITDA”; and
|
•
|
aggregate value to estimated steady-state EBITDA/estimated annual percentage growth in gross profit.
|
Public Trading Multiples—Afterpay Selected Street Projections
|
| |
Selected Comparable
Company Multiple
Ranges
|
| |
Implied Value per
Afterpay Ordinary
Share (A$)
|
CY 2023E AV / Gross Profit
|
| |
18.5x – 23.5x
|
| |
99 – 126
|
CY 2023E AV / Gross Profit/Growth
|
| |
0.7x – 1.1x
|
| |
102 – 161
|
CY 2023E AV / Steady State EBITDA
|
| |
40.0x – 60.0x
|
| |
112 – 168
|
CY 2023E AV / Steady State EBITDA/Growth
|
| |
1.8x – 2.3x
|
| |
135 – 173
|
Public Trading Multiples—Square Consensus Projections
|
| |
Selected Comparable
Company Multiple
Ranges
|
| |
Implied Value per
Share of Square Class A
Common Stock ($)
|
CY 2023E AV / Gross Profit
|
| |
18.5x – 23.5x
|
| |
259 – 327
|
CY 2023E AV / Gross Profit/Growth
|
| |
0.7x – 1.1x
|
| |
244 – 379
|
CY2023E AV/Steady State EBITDA
|
| |
40.0x – 60.0x
|
| |
238 – 353
|
CY 2023E AV / Steady State EBITDA/Growth
|
| |
1.8x – 2.3x
|
| |
258 – 330
|
Public Trading Multiples—Afterpay Selected Street Projections to Square Consensus Projections
|
| |
Implied Exchange
Ratio
|
CY 2023E AV / Gross Profit
|
| |
0.222x – 0.357x
|
CY 2023E AV / Gross Profit/Growth
|
| |
0.199x – 0.485x
|
CY2023E AV/Steady State EBITDA
|
| |
0.233x – 0.518x
|
CY2023E AV/Steady State EBITDA/Growth
|
| |
0.300x – 0.491x
|
Based on Calendar Year 2028
|
| |
Selected AV / Estimated
Gross Profit Multiple Ranges
|
| |
Implied Value per Afterpay
Ordinary Share (A$)
|
Estimated Gross Profit
|
| |
|
| |
|
Afterpay Selected Street Projections - 9% Discount Rate
|
| |
12.5x – 18.5x
|
| |
111 – 161
|
Afterpay Selected Street Projections - 15% Hurdle Rate
|
| |
12.5x – 18.5x
|
| |
85 – 124
|
Afterpay Standalone Projections – 9% Discount Rate
|
| |
12.5x – 18.5x
|
| |
220 – 325
|
Afterpay Standalone Projections – 15% Hurdle Rate
|
| |
12.5x – 18.5x
|
| |
169 – 249
|
Afterpay Standalone Projections Including Synergies - 9% Discount Rate
|
| |
12.5x – 18.5x
|
| |
305 – 452
|
Afterpay Standalone Projections Including Synergies - 15% Hurdle Rate
|
| |
12.5x – 18.5x
|
| |
234 – 346
|
Based on Calendar Year 2028 Estimated Gross Profit
|
| |
Selected AV /
Estimated Gross Profit
Multiple Ranges
|
| |
Implied Value per
Share of Square Class A
Common Stock ($)
|
Square Consensus Projections – 11.2% Discount Rate
|
| |
12.5x – 18.5x
|
| |
242 – 354
|
Square Consensus Projections – 15% Hurdle Rate
|
| |
12.5x – 18.5x
|
| |
204 – 299
|
Discounted Equity Value Analysis
|
| |
Implied Exchange
Ratio
|
Afterpay Selected Street Projections to Square Consensus Projections – Cost of Equity
|
| |
0.231x – 0.490x
|
Afterpay Selected Street Projections to Square Consensus Projections – Hurdle Rate
|
| |
0.209x – 0.445x
|
Afterpay Standalone Projections to Square Consensus Projections – Cost of Equity
|
| |
0.458x – 0.987x
|
Afterpay Standalone Projections to Square Consensus Projections – Hurdle Rate
|
| |
0.415x – 0.896x
|
Afterpay Standalone Projections Including Synergies to Square Consensus Projections – Cost of Equity
|
| |
0.634x – 1.372x
|
Afterpay Standalone Projections Including Synergies to Square Consensus Projections – Hurdle Rate
|
| |
0.575x – 1.245x
|
|
| |
Implied Value Per Afterpay
Ordinary Share (A$)
|
Afterpay Selected Street Projections
|
| |
73 – 136
|
Afterpay Standalone Projections
|
| |
86 – 165
|
Afterpay Standalone Projections Including Synergies
|
| |
102 – 199
|
|
| |
Implied Value Per Share of Square
Class A Common Stock ($)
|
Square Consensus Projections
|
| |
198 – 311
|
Discounted Cash Flow Analysis
|
| |
Implied Exchange
Ratio
|
Afterpay Selected Street Projections to Square Consensus Projections
|
| |
0.172x – 0.504x
|
Afterpay Standalone Projections to Square Consensus Projections
|
| |
0.204x – 0.610x
|
Afterpay Standalone Projections Including Synergies to Square Consensus Projections
|
| |
0.241x – 0.738x
|
Trading Periods
|
| |
Range of Trading Prices of
Afterpay Ordinary Shares
(A$)
|
| |
Range of Trading Prices
per Share of Square Class A
Common stock ($)
|
One Month
|
| |
97 – 124
|
| |
234 – 264
|
Three Month
|
| |
85 – 131
|
| |
197 – 264
|
12 Month
|
| |
67 – 158
|
| |
129 – 277
|
Trading Periods
|
| |
Implied Exchange Ratio
Range
|
One Month
|
| |
0.281x – 0.390x
|
Three Month
|
| |
0.281x – 0.409x
|
12 Month
|
| |
0.281x – 0.554x
|
•
|
ASIC provides the Court with a statement that it has no objection to the Transaction; or
|
•
|
the Court is satisfied that the Transaction has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6 of the Australian Corporations Act (which relates to takeovers).
|
•
|
Platform connecting consumers with merchants;
|
•
|
Enables customers to make a purchase and pay over four installments;
|
•
|
Spending limits increase as customer repayment history is established;
|
•
|
Customers are incentivized to repay debts and continue using services;
|
•
|
Proprietary algorithms, eliminating the need for traditional credit checks;
|
•
|
Historically low loss rates as a design of proactive risk management limiting customers from overspending;
|
•
|
No interest and low and capped late fees; and
|
•
|
Proponent amongst its suppliers and retail supply chains for greater awareness of ethical and sustainable practices.
|
•
|
when the sales tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the sales tax is recognized as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
|
•
|
receivables and payables are stated with the amount of sales tax included.
|
|
Stage
|
| |
Aging Status
|
| |
Measurement Basis
|
|
|
Stage 1
|
| |
Not yet due
|
| |
While the Consumer receivables are not yet due, an ECL has been determined based on a probability of a default event occurring over the life of the Consumer receivables.
|
|
|
Stage 2
|
| |
1 to 61 days past due
|
| |
Although there is usually no objective evidence of impairment, when a customer has not paid by the due date, it is an indication that credit risk has increased. As a result, the loss allowance for that Consumer receivable is measured at an amount equal to the lifetime ECL for increased credit risk. Lifetime ECL is the expected credit losses that result from all possible default events over the expected life of the Consumer receivables.
|
|
|
Stage 3
|
| |
Greater than 61 days past due
|
| |
When the Consumer receivable is greater than 61 days past due, there is considered to be objective evidence of impairment and is considered to have an adverse impact on the estimated future cash flows of the Consumer receivable.
|
|
•
|
the amount of the initial measurement of lease liability;
|
•
|
any lease payments made at or before the commencement date less any lease incentives received; and
|
•
|
any initial direct costs.
|
•
|
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
|
•
|
variable lease payments that are based on an index or a rate;
|
•
|
amounts expected to be payable by the lessee under residual value guarantees;
|
•
|
the lease component of contracts that included non-lease components and other services, within the lease liability;
|
•
|
the extension option if the lessee is reasonably certain to exercise that option; and
|
•
|
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
|
•
|
the technical feasibility of completing the intangible asset so that the asset will be available for use or sale;
|
•
|
its intention to complete, and its ability to use or sell the asset;
|
•
|
how the asset will generate future economic benefits;
|
•
|
the ability to reliably measure the expenditure during development; and
|
•
|
the ability to use the intangible asset generated.
|
•
|
IFRIC agenda decision Configuration or Customization Costs in a Cloud Computing Arrangement
|
•
|
Amendments to IAS 1 Classification of Liabilities as Current or Non-current
|
•
|
Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting Policies
|
|
| |
Year Ended June 30,
|
||||||
|
| |
2021
|
| |
2020
|
| |
2019
|
Total income
|
| |
A$ 924,670
|
| |
A$ 519,151
|
| |
A$ 264,112
|
Cost of sales
|
| |
(249,564)
|
| |
(134,295)
|
| |
(59,562)
|
Gross profit
|
| |
675,106
|
| |
384,856
|
| |
204,550
|
Total operating expenses
|
| |
(839,390)
|
| |
(389,415)
|
| |
(236,246)
|
Operating loss
|
| |
(164,284)
|
| |
(4,559)
|
| |
(31,696)
|
Loss before tax
|
| |
(194,214)
|
| |
(26,782)
|
| |
(42,786)
|
Income tax benefit (expense)
|
| |
34,819
|
| |
3,925
|
| |
(1,013)
|
Loss for the year
|
| |
A$(159,395)
|
| |
A$ (22,857)
|
| |
A$ (43,799)
|
|
| |
Year Ended June 30,
|
|||||||||
|
| |
2021
|
| |
2020
|
| |
Change
|
| |
%
Change
|
Underlying Sales (millions)
|
| |
A$ 21,087.4
|
| |
A$ 11,114.2
|
| |
A$ 9,973.2
|
| |
90%
|
Active Customers (millions)(1)
|
| |
16.2
|
| |
9.9
|
| |
6.3
|
| |
63%
|
Active Merchants (’000s)1
|
| |
98.2
|
| |
55.4
|
| |
42.8
|
| |
77%
|
(1)
|
Active is defined as having transacted at least once in the last 12 months.
|
|
| |
Year Ended June 30,
|
|||||||||
|
| |
2021
|
| |
2020
|
| |
A$ Change
|
| |
%
Change
|
Afterpay income
|
| |
A$ 822,258
|
| |
A$ 433,815
|
| |
A$ 388,443
|
| |
90%
|
Pay Now revenue
|
| |
13,788
|
| |
16,493
|
| |
(2,705)
|
| |
(16)%
|
Other income
|
| |
88,624
|
| |
68,843
|
| |
19,781
|
| |
29%
|
Total income
|
| |
A$ 924,670
|
| |
A$ 519,151
|
| |
A$ 405,519
|
| |
78%
|
|
| |
Year Ended June 30,
|
|||||||||
|
| |
2020
|
| |
2019
|
| |
A$ Change
|
| |
%
Change
|
Afterpay income
|
| |
A$ 433,815
|
| |
A$ 200,868
|
| |
A$ 232,947
|
| |
116%
|
Pay Now revenue
|
| |
16,493
|
| |
17,095
|
| |
(602)
|
| |
(4)%
|
Other income
|
| |
68,843
|
| |
46,149
|
| |
22,694
|
| |
49%
|
Total income
|
| |
A$ 519,151
|
| |
A$ 264,112
|
| |
A$ 255,039
|
| |
97%
|
|
| |
Year Ended June 30,
|
|||||||||
|
| |
2021
|
| |
2020
|
| |
A$ Change
|
| |
%
Change
|
Cost of sales
|
| |
A$ (249,564)
|
| |
A$ (134,295)
|
| |
A$ (115,269)
|
| |
86%
|
|
| |
Year Ended June 30,
|
|||||||||
|
| |
2020
|
| |
2019
|
| |
A$ Change
|
| |
%
Change
|
Cost of sales
|
| |
A$ (134,295)
|
| |
A$ (59,562)
|
| |
A$ (74,733)
|
| |
125%
|
|
| |
Year Ended June 30,
|
|||||||||
|
| |
2021
|
| |
2020
|
| |
A$ Change
|
| |
% Change
|
Depreciation and amortization expenses
|
| |
A$ (38,989)
|
| |
A$ (30,035)
|
| |
A$ (8,954)
|
| |
30%
|
Employment expenses
|
| |
(150,911)
|
| |
(86,129)
|
| |
(64,782)
|
| |
75%
|
Share-based payment expenses
|
| |
(59,003)
|
| |
(30,454)
|
| |
(28,549)
|
| |
94%
|
Receivables impairment expenses
|
| |
(195,056)
|
| |
(94,493)
|
| |
(100,563)
|
| |
106%
|
Net loss on financial liabilities at fair value
|
| |
(96,835)
|
| |
(1,999)
|
| |
(94,836)
|
| |
NM
|
Operating expenses
|
| |
(298,596)
|
| |
(146,305)
|
| |
(152,291)
|
| |
104%
|
Total expenses
|
| |
A$(839,390)
|
| |
A$(389,415)
|
| |
A$(449,975)
|
| |
116%
|
•
|
Marketing expenses were A$168.8 million in the year ended June 30, 2021, up by 139% compared to the prior year. Marketing expenses represented 0.8% of Underlying Sales, an increase from 0.6% in the prior year. Marketing expenses include co-marketing initiatives with major brand merchant partners, investment in growing Afterpay brand awareness including the global roll-out of the Pay Better campaign, growth and lifecycle marketing to support new customer acquisition and investments in in-store partnerships and visual merchandising.
|
•
|
Other Operating Expenses were A$129.8 million in the year ended June 30, 2021, up 71% compared to the prior year but lower as a percentage of Underlying Sales. Other Operating Expenses represented 0.6% of Afterpay Underlying Sales, compared to 0.7% in the prior year.
|
|
| |
Year Ended June 30,
|
|||||||||
|
| |
2020
|
| |
2019
|
| |
$ Change
|
| |
% Change
|
Depreciation and amortization expenses
|
| |
A$ (30,035)
|
| |
A$ (22,371)
|
| |
A$ (7,664)
|
| |
34%
|
Employment expenses
|
| |
(86,129)
|
| |
(51,445)
|
| |
(34,684)
|
| |
67%
|
Share-based payment expenses
|
| |
(30,454)
|
| |
(30,545)
|
| |
91
|
| |
—%
|
Receivables impairment expenses
|
| |
(94,493)
|
| |
(58,675)
|
| |
(35,818)
|
| |
61%
|
Net loss on financial liabilities at fair value
|
| |
(1,999)
|
| |
—
|
| |
(1,999)
|
| |
NM
|
Operating expenses
|
| |
(146,305)
|
| |
(73,210)
|
| |
(73,095)
|
| |
100%
|
Total expenses
|
| |
A$(389,415)
|
| |
A$(236,246)
|
| |
A$(153,169)
|
| |
65%
|
•
|
Marketing Expenses were A$70.5 million in the year ended June 30, 2020, up by 208% compared to the prior year. Marketing Expenses represented 0.6% of Underlying Sales, up from 0.4% in the prior year. Marketing Expenses include both co-marketing initiatives with major brand merchant partners and other marketing spend such as digital paid media and visual merchandising. The increase in Marketing Expenses was due to increase in marketing spend and partnerships with major brand merchants to accelerate growth in Underlying Sales. Marketing Expenses in the year also supported increased investment in the brand, including the recent global Afterpay re-brand.
|
•
|
Other Operating Expenses were A$75.8 million in the year ended June 30, 2020, up 51% compared to the prior year. Other Operating Expenses represented 0.7% of Afterpay Underlying Sales for the year ended June 30, 2020, down from 1.0% in the prior year. Other Operating Expenses are comprised of technology costs which support the global Afterpay service, costs for outsourced customer services teams, and corporate costs such as legal, compliance, finance, and other general and administrative costs. Increased investment in Other Operating Expenses was made to support Underlying Sales growth and global expansion.
|
|
| |
Year Ended June 30,
|
|||
|
| |
2021
|
| |
2020
|
Cash and cash equivalents
|
| |
A$1,147,147
|
| |
A$ 606,041
|
Restricted cash(1)
|
| |
13,808
|
| |
1,536
|
Total cash
|
| |
1,160,955
|
| |
607,577
|
Borrowings
|
| |
(1,286,383)
|
| |
(461,600)
|
Net cash (debt)
|
| |
A$ (125,428)
|
| |
A$ 145,977
|
(1)
|
Restricted cash relates to cash held with banks and other financial services providers as collateral for daily cash settlements with merchants and payments to funding providers. Included within Other Financial Assets in the Financial Statements.
|
|
| |
Year Ended June 30,
|
||||||
|
| |
2021
|
| |
2020
|
| |
2019
|
Net cash provided by (used in) operating activities
|
| |
A$ (571,195)
|
| |
A$ (233,953)
|
| |
A$ (142,192)
|
Net cash provided by (used in) investing activities:
|
| |
(110,909)
|
| |
(48,647)
|
| |
(16,290)
|
Net cash provided by (used in) financing activities
|
| |
1,220,401
|
| |
649,448
|
| |
357,133
|
Effect of foreign exchange rate on cash and cash equivalents
|
| |
2,809
|
| |
7,737
|
| |
246
|
Net increase in cash, cash equivalents and restricted cash
|
| |
A$ 538,297
|
| |
A$ 366,848
|
| |
A$ 198,651
|
|
| |
Loss after tax
(Higher)/ Lower
|
| |
Equity
(Higher)/ Lower
|
Possible movements:
|
| |
|
| |
|
AUD/ NZD +10%
|
| |
A$(3,337)
|
| |
A$3,337
|
AUD/ NZD -5%
|
| |
A$1,932
|
| |
A$(1,932)
|
|
| |
|
| |
|
AUD/ USD +10%
|
| |
A$(52,834)
|
| |
A$52,834
|
AUD/ USD -5%
|
| |
A$30,588
|
| |
A$(30,588)
|
|
| |
|
| |
|
AUD/ GBP +10%
|
| |
A$(10,374)
|
| |
A$10,374
|
AUD/ GBP -5%
|
| |
A$6,006
|
| |
A$(6,006)
|
|
| |
|
| |
|
AUD/ EUR +10%
|
| |
A$2,994
|
| |
A$(2,994)
|
AUD/ EUR -5%
|
| |
A$(1,773)
|
| |
A$1,773
|
|
| |
|
| |
|
AUD/ CAD +10%
|
| |
A$(2,841)
|
| |
A$2,841
|
AUD/ CAD -5%
|
| |
A$1,645
|
| |
A$(1,645)
|
|
| |
|
| |
|
AUD/ Other +10%
|
| |
A$(23)
|
| |
A$23
|
AUD/ Other -5%
|
| |
A$13
|
| |
A$(13)
|
(i)
|
Before 5:00 p.m. (Australian Eastern Time) on the business day before the Second Court Date, the Federal Treasurer or his delegate has provided a written no objection notification to the Scheme (either without conditions or with conditions acceptable to Square) or the Federal Treasurer otherwise becomes precluded by passage of time from objecting to the Transaction;
|
(ii)
|
before 5:00 p.m. (Australian Eastern Time) on the business day before the Second Court Date, Square Sub has received all consents required under the Overseas Investment Act 2005 (New Zealand) and the Overseas Investment Regulations 2005 (New Zealand) for the implementation of the Scheme, either unconditionally or subject only to conditions that are substantially the same as conditions of a kind commonly imposed on such a consent and referred to as the “Standard Conditions,” and such consents have not been withdrawn or revoked;
|
(iii)
|
before 8:00 a.m. (Australian Eastern Time) on the Second Court Date, written authorization of the indirect transfer of the Spanish Subsidiaries pursuant to the Scheme (either without conditions or with conditions acceptable to Square) from the Spanish Council of Ministers (or any other competent public authority) or written confirmation from the Deputy General Directorate of Foreign Investments of Spain (or any other competent public authority) that such authorization by the Spanish Council of Ministers is not required is received;
|
(iv)
|
before 8:00 a.m. (Australian Eastern Time) on the Second Court Date, written confirmation of Bank of Spain’s non-objection to the indirect transfer of the Spanish Subsidiaries (either without conditions or with conditions acceptable to Square) is received, written confirmation from Bank of Spain that no clearance of the indirect transfer of the Spanish Subsidiaries is required is received, or any waiting period for authorization applicable to the indirect transfer of the Spanish Subsidiaries under Spain’s Royal Decree 84/2015 expires without an express objection to such transfer from the Bank of Spain;
|
(v)
|
any waiting period applicable to the Scheme under the HSR Act has expired or been terminated;
|
(vi)
|
other Regulatory Approvals (as defined below) which Square and Afterpay, acting reasonably, agree are necessary or desirable to implement the Scheme have been obtained and those approvals have not been withdrawn or revoked by 8:00 a.m. (Australian Eastern Time) on the Second Court Date;
|
(vii)
|
no governmental authority has issued an order, temporary restraining order, preliminary or permanent injunction, decree or ruling enjoining, restraining or otherwise imposing a legal restraint or prohibition preventing the Scheme, and no such order, temporary preliminary or permanent injunction, decree or ruling is in effect as of 8:00 a.m. (Australian Eastern Time) on the Second Court Date;
|
(viii)
|
before 8:00 a.m. (Australian Eastern Time) on the Second Court Date, the New Square CDIs to be issued pursuant to the Scheme have been approved for official quotation on the ASX, subject only to customary conditions and effectiveness of the Scheme;
|
(ix)
|
before 8:00 a.m. (Australian Eastern Time) on the Second Court Date, the New Square Shares to be issued pursuant to the Scheme have been approved for official quotation on the NYSE, subject only to official notice of issuance; and
|
(x)
|
before 8:00 a.m. (Australian Eastern Time) on the Second Court Date, Afterpay has received confirmation from the Australian Tax Office (the “ATO”) that the ATO is prepared to issue a class ruling (in form and substance satisfactory to Afterpay and Square, each acting reasonably) confirming that qualifying Australian resident Afterpay shareholders who hold their shares on capital account will be eligible for scrip-for-scrip rollover relief.
|
(b)
|
Afterpay shareholders approve the Scheme at the Scheme Meeting by the requisite majorities under the Australian Corporations Act.
|
(i)
|
If Square determines (in its sole discretion after consulting with Afterpay) that a registration statement under the Securities Act is required for the Scheme Consideration, such registration statement has been declared effective and has not been the subject of any stop order or proceedings seeking a stop order; and
|
(ii)
|
Square stockholders approve the issuance of the Scheme Consideration by the requisite majorities in accordance with the NYSE listing rules.
|
(d)
|
The Court approves the Scheme in accordance with the Australian Corporations Act.
|
(e)
|
The Independent Expert issues a report that concludes that the Scheme is in the best interests of Scheme Participants before the lodgement of the Scheme Booklet with ASIC.
|
(f)
|
No Afterpay Prescribed Event (as defined and described further under “—Conduct of Business” below) occurs between the date of the Transaction Agreement and 8:00 a.m. (Australian Eastern time) on the Second Court Date.
|
(g)
|
No Square Prescribed Event (as defined and described further under “—Conduct of Business” below) occurs between the date of the Transaction Agreement and 8:00 a.m. (Australian Eastern time) on the Second Court Date.
|
(h)
|
No Afterpay Material Adverse Effect (as defined and described further under “—Representations and Warranties” below) occurs between the date of the Transaction Agreement and 8:00 a.m. (Australian Eastern time) on the Second Court Date.
|
(i)
|
No Square Material Adverse Effect (as defined and described further under “—Representations and Warranties” below) occurs between the date of the Transaction Agreement and 8:00 a.m. (Australian Eastern Time) on the Second Court Date.
|
(j)
|
Afterpay and its subsidiaries have performed or complied in all material respects with the obligations, covenants, and agreements required to be performed or complied with by them under the Transaction Agreement prior to 8:00 a.m. (Australian Eastern Time) on the Second Court Date.
|
(k)
|
Square and its subsidiaries have performed or complied in all material respects with the obligations, covenants, and agreements required to be performed or complied with by them under the Transaction Agreement prior to 8:00 a.m. (Australian Eastern Time) on the Second Court Date.
|
(l)
|
The Afterpay representations and warranties (described further under “—Representations and Warranties” below) are true and correct as at the date of the Transaction Agreement and, in relation to a number of representations and warranties, as at 8:00 a.m. (Australian Eastern Time) on the Second Court Date, subject to certain materiality qualifiers.
|
(m)
|
The Square representations and warranties (described further under “—Representations and Warranties” below) are true and correct as at the date of the Transaction Agreement and, in relation to a number of representations and warranties, as at 8:00 a.m. (Australian Eastern Time) on the Second Court Date, subject to certain materiality qualifiers.
|
•
|
corporate existence;
|
•
|
power and authority to execute, deliver and perform the Transaction Agreement and to carry on its business;
|
•
|
that the entry by it into and performance under the Transaction Agreement does and will not conflict with or breach its constituent documents, any applicable law or any other document or agreement binding on Afterpay or any of its subsidiaries;
|
•
|
no consents or approvals of or filings or registrations with any governmental authority being required in connection with the Transaction other than certain enumerated approvals;
|
•
|
effectiveness of necessary authorizations;
|
•
|
the validity and enforceability of its obligations under the Transaction Agreement;
|
•
|
the accuracy and good faith inclusion of information relating to Afterpay included in or incorporated by reference into the Scheme Booklet or this proxy statement;
|
•
|
the good faith preparation and accuracy of non-forward looking Afterpay Disclosure Materials (as defined below);
|
•
|
compliance with laws, licenses, permits, authorizations and continuous disclosure requirements;
|
•
|
good faith provision of information to the Independent Expert for purposes of its report;
|
•
|
good faith provision of information to the accounting firm to be appointed by Afterpay and Square (the “Investigating Accountant”) to prepare a report in relation to the financial information regarding the combined company for inclusion in the Scheme Booklet (the “Investigating Accounting Report”);
|
•
|
no default under any binding document, agreement or instrument;
|
•
|
capital structure;
|
•
|
no material encumbrance over assets or revenues;
|
•
|
solvency;
|
•
|
Afterpay ordinary shares not constituting indirect Australian real property interests;
|
•
|
financial information and filings and the accounting standards applicable thereto;
|
•
|
asset control;
|
•
|
anti-bribery;
|
•
|
broker’s fees;
|
•
|
absence of an Afterpay Material Adverse Effect;
|
•
|
taxes;
|
•
|
employee benefit plans, workers compensation and other employment and labor matters;
|
•
|
real property;
|
•
|
intellectual property and data protection;
|
•
|
material contracts;
|
•
|
related party transactions;
|
•
|
relationships with key merchants; and
|
•
|
insurance.
|
•
|
corporate existence;
|
•
|
power and authority to execute, deliver and perform the Transaction Agreement and to carry on its business;
|
•
|
that the entry by it into and performance under the Transaction Agreement does and will not conflict with or breach its constituent documents, any applicable law, or any other document or agreement binding on Square or any of its subsidiaries;
|
•
|
no consents or approvals of or filings or registrations with any governmental authority being required in connection with the Transaction other than certain enumerated approvals;
|
•
|
effectiveness of necessary authorizations;
|
•
|
the validity and enforceability of its obligations under the Transaction Agreement;
|
•
|
the accuracy and good faith inclusion of information relating to Square included in or incorporated by reference into the Scheme Booklet or this proxy statement;
|
•
|
the good faith preparation and accuracy of non-forward-looking information included in or incorporated by reference into the Square Disclosure Materials (as defined below);
|
•
|
compliance with laws, licenses, permits and authorizations;
|
•
|
no side dealing with Afterpay shareholders;
|
•
|
good faith provision of information to the Independent Expert and the Investigating Accountant for their respective reports;
|
•
|
capital structure;
|
•
|
authorization and valid issuance of, and absence of encumbrances over, the New Square Shares and the Square Class A common stock underlying the New Square CDIs;
|
•
|
the approval by the holders of a majority of voting power of Square common stock represented in person or by proxy at the Special Meeting being the only shareholder vote required for the issuance of the Scheme Consideration;
|
•
|
insolvency;
|
•
|
financial information and filings and the accounting standards applicable thereto;
|
•
|
anti-bribery;
|
•
|
broker’s fees;
|
•
|
absence of a Square Material Adverse Effect;
|
•
|
taxes; and
|
•
|
intellectual property and data protection.
|
•
|
corporate existence;
|
•
|
power and authority to execute, deliver and perform the Transaction Agreement;
|
•
|
that the entry by it into and performance under the Transaction Agreement does and will not conflict with or breach its constituent documents or any applicable law;
|
•
|
effectiveness of necessary authorizations;
|
•
|
the validity and enforceability of its obligations under the Transaction Agreement;
|
•
|
Square’s ownership of all of the outstanding equity interests of Square Sub; and
|
•
|
Square Sub having conducted no other business activities outside of the transactions contemplated by the Transaction Agreement.
|
(a)
|
any matter Disclosed to Afterpay;
|
(b)
|
changes in general economic, industry, regulatory or political conditions, the securities or other capital markets in general or law;
|
(c)
|
any epidemic, pandemic (including COVID-19 or measures in response to COVID-19 adopted by governmental authorities), hurricane, earthquake, flood, weather conditions, calamity or other natural disaster, act of God or other force majeure event (or any worsening of or recovery from any of the foregoing);
|
(d)
|
geopolitical conditions, hostilities, civil or political unrest, any acts of war, sabotage, cyberattack or terrorism (including any outbreak, escalation or worsening of any of the foregoing);
|
(e)
|
any change in taxation rates, interest rates or exchange rates;
|
(f)
|
any change in generally accepted accounting principles or the authoritative interpretation of them;
|
(g)
|
the taking of any action required under the Transaction Agreement, the Scheme or the transactions contemplated by them (other than, to the extent not excluded by another clause of this definition, Square’s compliance with certain obligations under the Transaction Agreement described in “—Conduct of Business” below);
|
(h)
|
any change in the market price or trading volume of shares of Square common stock (although this exception will not prevent the underlying cause or contributing factor of any such change, if not falling within any other exception, from being taken into account in determining whether there has been a Square Material Adverse Effect);
|
(i)
|
any failure, in and of itself, by Square or a member of the Square Group to meet any internal or published projections, forecasts, estimates or predictions of revenues, earnings or other financial or
|
(j)
|
the execution, delivery or performance of the Transaction Agreement, the announcement or pendency of the Scheme or the other transactions contemplated by the Transaction Agreement (including the impact of any of the foregoing on the relationship of Square or a member of the Square Group with their respective employees, customers, creditors, suppliers or contractual counterparties) (except that this clause does not apply with respect to any representation or warranty that addresses the consequences of the execution, delivery or performance of the Transaction Agreement or the announcement or pendency of the Scheme or the other transactions contemplated by the Transaction Agreement or with respect to the conditions precedent to the Scheme that relate to such representations or warranties);
|
(k)
|
the identity of, or any facts or circumstances relating to, Afterpay or any member of the Afterpay Group;
|
(l)
|
any actions, suits or claims arising from allegations of a breach of fiduciary duty or violation of securities laws, in each case relating to the Transaction Agreement, the Scheme or the transactions contemplated by the Transaction Agreement; or
|
(m)
|
any action (or the failure to take any action) with the written consent or at the written request of Afterpay.
|
(a)
|
any matter Disclosed to Square;
|
(b)
|
changes in general economic, industry, regulatory or political conditions, the securities or other capital markets in general or law;
|
(c)
|
any epidemic, pandemic (including COVID-19 or measures in response to COVID-19 adopted by governmental authorities), hurricane, earthquake, flood, weather conditions, calamity or other natural disaster, act of God or other force majeure event (or any worsening of or recovery from any of the foregoing);
|
(d)
|
geopolitical conditions, hostilities, civil or political unrest, any acts of war, sabotage, cyberattack or terrorism (including any outbreak, escalation or worsening of any of the foregoing);
|
(e)
|
any change in taxation rates, interest rates or exchange rates;
|
(f)
|
any change in generally accepted accounting principles or the authoritative interpretation of them;
|
(g)
|
the taking of any action required under the Transaction Agreement, the Scheme or the transactions contemplated by them (other than, to the extent not excluded by another clause of this definition, Afterpay’s compliance with certain obligations under the Transaction Agreement described in “—Conduct of Business” below);
|
(h)
|
any change in the market price or trading volume of Afterpay ordinary shares (although this exception will not prevent the underlying cause or contributing factor of any such change, if not falling within any other exception in this definition, from being taken into account in determining whether there has been an Afterpay Material Adverse Effect);
|
(i)
|
any failure, in and of itself, by Afterpay or a member of the Afterpay Group to meet any internal or published projections, forecasts, estimates or predictions of revenues, earnings or other financial or operating metrics for any period (although this exception will not prevent the underlying cause or contributing factor of any such failure, if not falling within any other exception in this definition, from being taken into account in determining whether there has been an Afterpay Material Adverse Effect);
|
(j)
|
the execution, delivery or performance of the Transaction Agreement, the announcement or pendency of the Scheme or the other transactions contemplated by the Transaction Agreement (including the impact of any of the foregoing on the relationship of Afterpay or a member of the Afterpay Group with their respective employees, customers, creditors, suppliers or contractual counterparties) (except that this clause does not apply with respect to any representation or warranty that addresses the consequences of the execution, delivery or performance of the Transaction Agreement or the announcement or pendency of the Scheme or the other transactions contemplated by the Transaction Agreement or with respect to the conditions precedent to the Scheme that relate to such representations or warranties);
|
(k)
|
the identity of, or any facts or circumstances relating to, Square or any member of the Square Group;
|
(l)
|
any actions, suits or claims arising from allegations of a breach of fiduciary duty or violation of securities laws, in each case relating to the Transaction Agreement, the Scheme or the transactions contemplated by the Transaction Agreement; or
|
(m)
|
any action (or the failure to take any action) with the written consent or at the written request of Square.
|
(i)
|
other than in the ordinary course of business or as would not be adverse to the Afterpay Group or the Square Group including the Afterpay Group after implementation of the Scheme (the
|
(ii)
|
enter into any contract or commitment (A) restraining in any material respect any member of the Merged Group from competing with any person or conducting activities in any market, (B) obligating in any material respect any member of the Merged Group to conduct business with any third party on a preferential or exclusive basis or (C) containing “most favored nation” or similar provisions that would bind the Merged Group in any material respect;
|
(b)
|
enter into any new line of business that is materially different to the business of consumer finance, retail and retail purchase financing (the “Core Business”) or discontinue any material aspect of the Core Business;
|
(c)
|
incur or make any capital expenditures, or commit to do so, in excess of A$20 million in the aggregate or individually;
|
(d)
|
enter into any agreement, arrangement or transaction with respect to derivative instruments or similar instruments;
|
(e)
|
change any accounting policy applied by a member of the Afterpay Group to report their financial position in any material respect other than any change required by a change in the requirements of the Australian Corporations Act relevant to the preparation and contents of financial reports, the Australian Accounting Standards (including any authoritative interpretation issued by the Australian Accounting Standards Board), or U.S. GAAP;
|
(f)
|
settle or compromise or make, change or revoke any concessions in relation to any material tax claims, liabilities or disputes or make any election in relation to tax, or otherwise engage in any transaction, act or event which gives rise to any tax liability which is outside the ordinary course of business as it was conducted prior to the date of the Transaction Agreement;
|
(g)
|
settle any legal proceedings, claim, investigation, arbitration or other like proceedings, except where such settlement (i) would result in monetary obligations involving the payment of not more than A$1.5 million (net of all amounts covered by existing insurance policies) in the aggregate or individually, (ii) does not involve the imposition of injunctive relief or other non-monetary obligations, including admission of wrongdoing (other than to pay such monies or customary confidentiality or other non-monetary obligations that are incidental to the agreement to pay such monies) on the Afterpay Group (or on the Merged Group after implementation of the Scheme), and (iii) would not create any adverse precedent that would be material to the Afterpay Group (or the Merged Group after implementation of the Scheme);
|
(h)
|
other than as required pursuant to the terms of an Afterpay employee plan in place as of the date of the Transaction Agreement and included in the Afterpay Disclosure Materials, or adopted or amended not in violation of the Transaction Agreement, or as is necessary to comply with Afterpay’s obligations under the Transaction Agreement regarding the treatment of employee equity awards:
|
(i)
|
increase the remuneration of, or otherwise vary the service or employment arrangements with, any of its current or former directors, officers, or employees, other than annual increases in remuneration or benefits for employees other than Level E2 or Level E3 employees, made in the ordinary course of business consistent with past practice that, in each case, do not exceed 10% of such individual’s annual cash compensation immediately prior to the increase or 5% of total payroll costs in the aggregate;
|
(ii)
|
grant any new equity-based awards or amend or modify the terms of any outstanding equity-based awards;
|
(iii)
|
pay or award, or agree to pay or award, any cash bonuses or cash incentive compensation, termination or retention payments;
|
(iv)
|
pay or agree to pay to any current or former director, officer, employee or other service provider any pension, retirement allowance or other benefit in excess of those in place as of the date of the Transaction Agreement and included in the Afterpay Disclosure Materials or permitted in accordance with clause (vii) below;
|
(v)
|
enter into any new, or amend any existing, employment, change in control, retention or severance or termination agreement with any current or former director, officer, employee or other service provider, other than (A) agreements with new hires or newly promoted employees who are permitted to be hired or promoted under clause (vii) below where such agreements are materially consistent with those provided to other similarly situated employees and do not provide any retention, equity award grants or enhanced (change in control) severance or (B) to provide severance compensation and severance benefits (excluding any enhanced change in control severance) in the ordinary course of business as it was conducted prior to the date of the Transaction Agreement to employees who are terminated under circumstances permitted by clause (vii) below;
|
(vi)
|
establish any Afterpay employee plan which was not in place as of the date of the Transaction Agreement, or amend or terminate any Afterpay employee plan, other than (A) Afterpay employee plans that document any action not otherwise prohibited by this clause, (B) de minimis administrative amendments or (C) in connection with the annual renewal of health and welfare benefit plans, in each case, that do not have the effect of materially enhancing any benefits thereunder or otherwise result in materially increased costs to the Afterpay Group;
|
(vii)
|
offer employment to, promote an existing employee, or terminate the employment of any employee or individual service provider who is an employee at Level 7 and above, other than terminations for “cause” (as determined by the Afterpay Group in its reasonable discretion);
|
(viii)
|
enter into, amend or terminate any collective bargaining agreement or other labor agreement; or
|
(ix)
|
waive any non-competition or non-solicitation obligation of any direct report of either of the Afterpay Chief Executive Officers or any direct report of such direct report;
|
(i)
|
accelerate or fund the rights of any of its directors, officers or employees to compensation or benefits of any kind (including under any Afterpay executive or employee share plans), other than as permitted under clause (h) above or as required pursuant to the terms of an Afterpay employee plan in place as of the date of the Transaction Agreement, or adopted or amended not in violation of the Transaction Agreement;
|
(j)
|
(A) sell, assign, transfer or grant any exclusive license to, or (B) abandon or permit to let lapse or expire (other than immaterial in-bound licenses to the Afterpay Group that the Afterpay Group would allow to expire in the ordinary course of business in accordance with their terms), any intellectual property material to the business of the Afterpay Group as conducted as of the date of the Transaction Agreement, and as proposed by the Afterpay Group as of the date of the Transaction Agreement to be conducted in the future;
|
(k)
|
incur, assume, guarantee or become liable for any indebtedness other than (A) intercompany indebtedness, (B) guarantees by Afterpay or any direct or indirect wholly owned subsidiary of indebtedness of Afterpay or any other direct or indirect wholly owned subsidiary of Afterpay, (C) drawing down on undrawn amounts under the Afterpay Group’s warehouse facilities as of the date of the Transaction Agreement to fund underlying sales in the ordinary course of business, or (D) subject to certain limitations, any indebtedness incurred to refinance, roll over, replace or renew any indebtedness already outstanding as of the date of the Transaction Agreement;
|
(i)
|
acquire any material real property or enter into any material lease or sublease of real property;
|
(ii)
|
sell, assign, dispose of, surrender or exercise any right to terminate any material lease or sublease of real property other than, in each case, expirations or surrenders of any leases or subleases in accordance with their terms or in the ordinary course of business;
|
(iii)
|
materially modify or amend or exercise any right to renew any material lease, or waive any material term or condition thereof or grant any consents thereunder;
|
(iv)
|
grant or otherwise create or consent to the creation of any easement, covenant, restriction, assessment or charge affecting, in any material respect, any material real property leased by a member of the Afterpay Group, or any interest therein or part thereof; or
|
(m)
|
agree to do any of the matters set out above.
|
(a)
|
Afterpay converts all or any of its shares into a larger or smaller number of shares;
|
(b)
|
Afterpay or a non-wholly owned subsidiary of Afterpay resolves to reduce its share capital in any way or resolves to reclassify, combine, split or redeem or repurchase directly or indirectly any of its shares, subject to certain exceptions specified in the Transaction Agreement;
|
(c)
|
Afterpay or a non-wholly owned subsidiary of Afterpay enters into a buy-back agreement or resolves to approve the terms of a buy-back agreement under the Australian Corporations Act;
|
(d)
|
Afterpay makes or declares, or announces an intention to make or declare, any dividend or other distribution;
|
(e)
|
any member of the Afterpay Group issues shares or grants an option over its shares (or agrees to do the foregoing) in each case to a person that is not Afterpay or a wholly owned subsidiary of Afterpay, subject to certain exceptions for actions relating to Afterpay’s equity plans or for certain issuances in connection with the settlement during the Interim Period of outstanding convertible or other equity-linked securities of Afterpay and its subsidiaries;
|
(f)
|
any member of the Afterpay Group issues or agrees to issue securities or other instruments convertible into shares in each case to a person that is not Afterpay or a wholly owned subsidiary of Afterpay, subject to certain exceptions for actions relating to Afterpay’s equity plans or for certain issuances in connection with the settlement during the Interim Period of outstanding convertible or other equity-linked securities of Afterpay and its subsidiaries;
|
(g)
|
Afterpay or any non-wholly owned subsidiary of Afterpay adopts a new constitution or modifies or repeals (in whole or in part) its constitution;
|
(h)
|
any member of the Afterpay Group acquires or disposes of, agrees to acquire or dispose of, or offers, proposes, announces a bid or tenders for, any business, entity or undertaking or assets comprising a business (A) the value of which exceeds A$20 million individually or in the aggregate or (B) where that acquisition, disposal, bid or tender will or is reasonably likely to have a material adverse effect on the timeline for completion of the Scheme or the prospects of obtaining any Regulatory Approval for the Scheme;
|
(i)
|
any member of the Afterpay Group creates or agrees to create any encumbrance over or declares itself the trustee of all or a material part of the Afterpay Group’s business or property;
|
(j)
|
Afterpay or any material member of the Afterpay Group merges or consolidates with any other person (other than, in the case of a material member of the Afterpay Group, with Afterpay or a wholly owned subsidiary of Afterpay) or restructures, reorganizes or completely or partially liquidates or dissolves; or
|
(k)
|
Afterpay or any of its material “Related Bodies Corporate” (generally defined in the Australian Corporations Act as a holding company, a subsidiary, or a subsidiary of a holding company of another entity) becomes insolvent.
|
(a)
|
Square converts all or any of its shares into a larger or smaller number of shares (other than the conversion of shares of Square Class B common stock to shares of Square Class A common stock pursuant to the terms of its certificate of incorporation);
|
(b)
|
Square or a non-wholly owned subsidiary of Square resolves to reduce its share capital in any way or resolves to reclassify, combine or split directly or indirectly any of its shares, subject to certain exceptions relating to Square equity plans;
|
(c)
|
Square or a non-wholly owned subsidiary of Square repurchases, redeems or otherwise acquires any shares of capital stock of Square, or agrees to do any of the foregoing, subject to certain exceptions relating to Square equity plans;
|
(d)
|
any member of the Square Group issues shares of Square common stock or other instruments convertible into shares of Square common stock (or agrees to do the foregoing) to a person outside the Square Group, subject to certain exceptions relating to Square’s equity plans, issuances under Square’s convertible notes outstanding as of the date of the Transaction Agreement or issuances of securities in an amount up to 15% of the outstanding shares of Square common stock as of the date of the Transaction Agreement;
|
(e)
|
Square makes or declares (or announces an intention to do so) any dividend or other distribution;
|
(f)
|
Square adopts a new charter or modifies or repeals its charter, in each case in a manner that would materially and adversely impact the rights of the Afterpay shareholders or would prevent, materially delay or materially impair the ability of the parties to perform their obligations under the Transaction Agreement or to consummate the Scheme;
|
(g)
|
any member of the Square Group creates or agrees to create any encumbrance over or declares itself the trustee of all or a material part of the Square Group’s business or property;
|
(h)
|
any member of the Square Group undertakes or agrees to undertake a Square Competing Acquisition;
|
(i)
|
Square merges or consolidates with any other person or restructures, reorganizes or completely or partially liquidates or dissolves itself; or
|
(j)
|
Square or any of its material Related Bodies Corporate becomes insolvent.
|
•
|
an annual total target compensation opportunity that is no less favorable than that in effect for such employee immediately prior to the implementation of the Scheme; and
|
•
|
other benefits that are, in the aggregate, substantially comparable to the aggregate other benefits provided to such employee immediately prior to the implementation of the Scheme (excluding any defined benefit pension benefits or any one-time or non-recurring compensation or benefits).
|
•
|
any breach of any representations and warranties of the other party or any of its subsidiaries in the Transaction Agreement; or
|
•
|
any disclosures containing any statement which is false or misleading whether in content or by omission, whether current or future, known or unknown, arising at common law, in equity, under statute or otherwise;
|
•
|
there is an Afterpay Superior Proposal (as defined below) and Afterpay’s board of directors determines in good faith and acting reasonably (having received external legal advice from reputable advisers experienced in transactions of this nature) that failing to do so would constitute a breach of its fiduciary or statutory duties to Afterpay shareholders; or
|
•
|
the Independent Expert concludes that the Scheme is not in the best interests of Afterpay shareholders or adversely changes its previously given opinion that the Scheme is in the best interests of Afterpay shareholders.
|
•
|
there is an Intervening Event or a Square Superior Proposal (as defined below); and
|
•
|
Square’s board of directors determines in good faith and acting reasonably (having received external legal advice from reputable advisers experienced in transactions of this nature) that failing to do so would constitute a breach of their fiduciary or statutory obligations to Square stockholders.
|
•
|
directly or indirectly solicit, invite, facilitate, encourage or initiate any inquiries, negotiations or discussions (or communicates any intention to do any of the foregoing) with a view to obtaining any offer, proposal or expression of interest from any person in relation to an Afterpay Competing Transaction (“No Shop”);
|
•
|
negotiate, enter into or participate in negotiations or discussions regarding an Afterpay Competing Transaction or any agreement, understanding or arrangement that could be reasonably expected to lead to an Afterpay Competing Transaction (even if such Afterpay Competing Transaction was not directly or indirectly solicited, invited, encouraged or initiated by Afterpay or its representatives or such Afterpay Competing Transaction was announced publicly) (“No Talk”); and
|
•
|
in relation to an Afterpay Competing Transaction, (x) enable, solicit, invite, initiate, encourage, facilitate or permit any other person other than Square and its representatives to undertake due diligence investigations on any member of the Afterpay Group (or any of their businesses or operations) or (y) make available to any person or permit any person to receive (other than Square and its representatives) any non-public information relating to any member of the Afterpay Group (or any of their respective businesses or operations), in each case in connection with such person formulating, developing or finalizing an Afterpay Competing Transaction (“No Due Diligence”).
|
•
|
Afterpay’s board of directors, acting in good faith after receiving advice from its financial and external legal advisers, determines that the Afterpay Competing Transaction constitutes an Afterpay Superior Proposal and that the failure to enter into such agreement, arrangement or understanding and/or to change its recommendation would constitute a breach of its fiduciary or statutory duties to Afterpay shareholders;
|
•
|
Afterpay has provided Square with the material terms and conditions of the Afterpay Competing Transaction to the extent required by the Transaction Agreement and a written explanation as to why it considers that the Afterpay Competing Transaction constitutes an Afterpay Superior Proposal;
|
•
|
for at least five business days, Afterpay and its representatives have negotiated in good faith with Square and its representatives, to the extent Square wishes to negotiate and makes itself reasonably available to negotiate, to enable Square to propose revisions to the terms of the Transaction Agreement; and
|
•
|
upon the expiry of such negotiation period, Afterpay’s board of directors has considered in good faith any binding proposed revisions to the Transaction Agreement proposed by Square, and has determined in good faith, after receiving advice from its financial and external legal advisers, that such Afterpay Competing Transaction would nevertheless continue to constitute an Afterpay Superior Proposal if such revisions proposed by Square were to be given effect and that the failure to enter into such agreement, arrangement or understanding and/or to change its recommendation would continue to constitute a breach of its fiduciary or statutory duties to Afterpay shareholders.
|
•
|
Afterpay shareholders immediately prior to such transaction do not own more than 80% of the voting power of securities of the resulting entity or its ultimate parent;
|
•
|
a person other than Square or its Related Bodies Corporate (whether alone or together with its associates) would (1) directly or indirectly acquire a Relevant Interest (as defined in the Australian Corporations Act) in or become the holder of 20% of Afterpay shares (other than as custodian, nominee or bare trustee), (2) acquire control of Afterpay (within the meaning of the Australian Corporations Act) or (3) directly or indirectly acquire, obtain a right to acquire, or otherwise obtain an interest in (including through any license arrangement) 20% or more of the consolidated assets of the Afterpay Group; or
|
•
|
Square would be required to abandon or otherwise fail to proceed with the Scheme.
|
•
|
if the Scheme has not become effective on or before the End Date, unless the failure of the Scheme to become effective on or before the End Date is due to the failure of the party seeking to terminate the Transaction Agreement to perform or observe its obligations, covenants and agreements under the Transaction Agreement;
|
•
|
before 8:00 a.m. (Australian Eastern Time) on the Second Court Date, if the other party’s board of directors changes, withdraws or adversely modifies its recommendation that such other party’s shareholders vote in favor of the Scheme or the issuance of the Scheme Consideration, as applicable, or otherwise makes a public statement indicating that such other party’s board of directors no longer supports the Scheme (an “Adverse Recommendation Change”);
|
•
|
before 8:00 a.m. (Australian Eastern Time) on the Second Court Date, if (a) any governmental authority who must grant a Regulatory Approval that is a condition precedent to the Scheme has denied such approval, and such denial has become final and non-appealable or (b) any governmental authority of competent jurisdiction has issued a final and non-appealable order, injunction, decree or other legal restraint or prohibition permanently enjoining or otherwise prohibiting or making illegal the consummation of the Scheme, unless such denial or prohibition is due to the failure of the party seeking to terminate the Transaction Agreement to perform or observe its obligations, covenants and agreements under the Transaction Agreement;
|
•
|
before 8:00 a.m. (Australian Eastern Time) on the Second Court Date, if the other party is in material breach of a term of the Transaction Agreement (excluding representations and warranties), taken in the context of the Scheme as a whole, subject to notice of breach setting out the relevant circumstances and 30 business day cure period (or such shorter period ending at 8:00 a.m. (Australian Eastern Time) on the Second Court Date) after such notice is given;
|
•
|
if (a) a Consultation Failure has occurred or (b) the Court has denied approval of the Scheme and the parties agree not to appeal or an independent counsel has determined that an appeal would be futile (“Appeal Failure”); or
|
•
|
if agreed to in writing by both parties.
|
•
|
an Afterpay Competing Transaction is publicly announced or made before the date on which the Scheme becomes effective and within 12 months of the End Date, an Afterpay Competing Transaction is completed;
|
•
|
Square validly terminates the Transaction Agreement for an Adverse Recommendation Change by Afterpay’s board of directors, except where such change is made after the Independent Expert concludes that the Scheme is not in the best interests of Afterpay shareholders (other than where the reason for such opinion is an Afterpay Competing Transaction) or in circumstances arising as a result of Square’s material breach of the Transaction Agreement;
|
•
|
Afterpay validly terminates the Transaction Agreement because its board of directors has determined, after completion of the process outlined under “—Exclusivity” above, that an Afterpay Competing Transaction is an Afterpay Superior Proposal; or
|
•
|
Square validly terminates the Transaction Agreement for Afterpay’s material breach of the Transaction Agreement (excluding any representation and warranty not being true and correct), taken in the context
|
•
|
Afterpay validly terminates the Transaction Agreement for an Adverse Recommendation Change by Square’s board of directors, except where such change is made in circumstances arising as a result of Afterpay’s material breach of the Transaction Agreement;
|
•
|
Afterpay validly terminates the Transaction Agreement for Square’s material breach of the Transaction Agreement (excluding any representation and warranty not being true and correct), taken in the context of the Scheme as a whole, subject to notice to Square of breach setting out the relevant circumstances and 30 business day cure period (or such shorter period ending at 8:00 a.m. (Australian Eastern Time) on the Second Court Date) after such notice is given;
|
•
|
Square or Afterpay validly terminates the Transaction Agreement for a Consultation Failure or an Appeal Failure because Square has failed to obtain the approval of its shareholders for issuance of the Scheme Consideration at its shareholder meeting or Afterpay validly terminates the Transaction Agreement for the failure of the Scheme to become effective on or before the End Date without Square’s stockholder meeting having been held, in each case provided that there has not been an Adverse Recommendation Change by Square’s board of directors; or
|
•
|
a Square Competing Transaction is publicly announced or made before the date on which the Scheme becomes effective and within 12 months of the End Date, a Square Competing Transaction is completed.
|
•
|
Square stockholders immediately prior to such transaction do not own more than 80% of the voting power of securities of the resulting entity or its ultimate parent; or
|
•
|
a person other than Square, its Related Bodies Corporate, or holders of Square Class B common stock (whether alone or together with its associates) would (1) directly or indirectly acquire a Relevant Interest (as defined in the Australian Corporations Act) in or become the holder of securities representing 20% or more of the total outstanding voting power of Square (other than as a custodian, nominee or bare trustee) or (2) directly or indirectly acquire, obtain a right to acquire, or otherwise obtain an interest in (including through any license arrangement) 20% or more of the consolidated asset ownership of Square Group.
|
•
|
not earlier than the close of business on February 15, 2022; and
|
•
|
not later than the close of business on March 17, 2022.
|
•
|
the 90th day prior to the 2022 annual meeting of stockholders; or
|
•
|
the 10th day following the day on which public announcement of the date of the 2022 annual meeting of stockholders is first made if such first public announcement is less than 100 days prior to the date of the 2022 annual meeting of stockholders.
|
•
|
Square’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 23, 2021;
|
•
|
Square’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021, filed with the SEC on May 6, 2021 and August 2, 2021, respectively;
|
•
|
Square’s Current Reports on Form 8-K filed with the SEC on February 3, 2021, May 7, 2021, May 20, 2021, May 26, 2021, June 17, 2021, and August 2, 2021 (SEC Accession No. 0001193125-21-232215) (Item 1.01 only); and
|
•
|
The description of Square’s capital stock contained in Exhibit 4.7 to Square’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 26, 2020, including any amendments or reports filed for the purpose of updating such description.
|
•
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By Internet: www.proxyvote.com
|
•
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By telephone: 1-800-579-1639
|
•
|
By email: sendmaterial@proxyvote.com
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Parties
|
| |
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| |
|
Square
|
| |
Name
|
| |
Square, Inc.
|
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| |
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| |
|
|
| |
Formed in
|
| |
State of Delaware
|
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| |
|
| ||
|
| |
Address
|
| |
1455 Market Street, Unit 600 San Francisco, CA 94103, USA
|
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| |
|
| |
|
|
| |
Email
|
| |
Legal-Notices@squareup.com
|
|
| |
|
| |
|
|
| |
Attention
|
| |
Legal
|
|
| |
|
| |
|
Square Acquirer
|
| |
Name
|
| |
Lanai (AU) 2 Pty Ltd
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ACN
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652 352 451
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Formed in
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Victoria
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Address
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C/- King & Wood Mallesons Level 61, Governor Phillip Tower, 1 Farrer Place
Sydney NSW 2000, Australia
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Email
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Legal-Notices@squareup.com
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Attention
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Legal
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Afterpay
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Name
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Afterpay Limited
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ACN
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618 280 649
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Formed in
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Victoria
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Address
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Level 23, 2 Freshwater Place
Melbourne VIC 3006, Australia
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Email
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legal@afterpay.com.au
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Attention
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General Counsel
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Governing law
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Victoria
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Recitals
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A
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Square, Square Acquirer and Afterpay have agreed that Square Acquirer will acquire all of the ordinary shares in Afterpay by means of a scheme of arrangement under Part 5.1 of the Corporations Act.
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B
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At the request of Square and Square Acquirer, Afterpay intends to propose the Scheme and issue the Scheme Booklet.
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C
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Afterpay, Square and Square Acquirer have agreed to implement the Scheme on the terms and conditions of this document.
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Definitions and interpretation
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Definitions
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(a)
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the requirements of the Corporations Act relevant to the preparation and contents of financial reports; and
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(b)
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the accounting standards approved under the Corporations Act, being the Australian Accounting Standards and any authoritative interpretation issued by the Australian Accounting Standards Board.
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(a)
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the Afterpay Shareholders immediately prior to such transaction do not own more than 80% of the voting power of securities of the resulting entity or its ultimate parent;
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(b)
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a person (other than Square or its Related Bodies Corporate), whether alone or together with its Associates, would:
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(i)
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directly or indirectly acquire a Relevant Interest in or become the holder of 20% or more of the Afterpay Shares (other than as custodian, nominee or bare trustee);
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(ii)
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acquire control of Afterpay, within the meaning of section 50AA of the Corporations Act; or
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(iii)
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directly or indirectly acquire, obtain a right to acquire, or otherwise obtain an interest in (including through any license arrangement) 20% or more of the consolidated assets of the Afterpay Group; or
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(c)
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Square would be required to abandon, or otherwise fail to proceed with, the Scheme.
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(a)
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is or becomes available to Square or any of its Representatives on a non-confidential basis from a source (other than Afterpay or any of its Representatives) which, to Square’s knowledge, is not prohibited from disclosing such information to Square;
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(b)
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is known to Square or any of its Representatives prior to disclosure by Afterpay or any of its Representatives;
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(c)
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is or has been independently developed by Square without use of any information furnished to it by Afterpay (where Square can prove the same in writing); or
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(d)
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is transmitted by Afterpay after delivery of notice by Square that it no longer wishes to receive Afterpay Confidential Information.
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(a)
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the information disclosed in Afterpay’s virtual data room hosted at Intralinks as of 11.59pm on Wednesday, 28 July 2021 (Pacific time) (except as set forth in the Afterpay Disclosure Letter), or on behalf of the Afterpay Group in written responses (including by email) to requests for information to Square or any of its Representatives prior to the date of this document, in each case except any information redacted; and
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(b)
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the Afterpay Disclosure Letter.
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(a)
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all information contained in the Scheme Booklet other than the Square Information, the Independent Expert’s Report and the Investigating Accountant’s Report, and
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(b)
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all information relating to Afterpay contained in the Square Registration/Proxy Statement and specifically provided by Afterpay to Square in writing for inclusion in the Square Registration/Proxy Statement.
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(a)
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any matter Disclosed to Square;
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(b)
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changes in general economic, industry, regulatory or political conditions, the securities or other capital markets in general or law;
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(c)
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any epidemic, pandemic (including COVID-19 or COVID-19 Measures), hurricane, earthquake, flood, weather conditions, calamity or other natural disaster, act of God or other force majeure event (or any worsening of or recovery from any of the foregoing);
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(d)
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geopolitical conditions, hostilities, civil or political unrest, any acts of war, sabotage, cyberattack or terrorism (including any outbreak, escalation or worsening of any of the foregoing);
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(e)
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any change in taxation rates, interest rates or exchange rates;
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(f)
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any change in generally accepted accounting principles or the authoritative interpretation of them;
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(g)
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the taking of any action required under this document, the Scheme or the transactions contemplated by them (other than, to the extent not excluded by another clause of this definition, Afterpay’s compliance with its obligations pursuant to clause 8);
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(h)
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any change in the market price or trading volume of Afterpay Shares (but this exception will not prevent the underlying cause or contributing factor of any such change, if not falling within any other exception in this definition, from being taken into account in determining whether there has been an Afterpay Material Adverse Effect);
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(i)
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any failure, in and of itself, by Afterpay or a member of the Afterpay Group to meet any internal or published projections, forecasts, estimates or predictions of revenues, earnings or other financial or operating metrics for any period (but this exception will not prevent the underlying cause or contributing factor of any such failure, if not falling within any other exception in this definition, from being taken into account in determining whether there has been an Afterpay Material Adverse Effect);
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(j)
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the execution, delivery or performance of this document, the announcement or pendency of the Scheme or the other transactions contemplated by this document (including the impact of any of the foregoing on the relationship of Afterpay or a member of the Afterpay Group with their respective employees, customers, creditors, suppliers or contractual counterparties), provided that this clause (j) shall not apply with respect to any representation or warranty that addresses the consequences of the execution, delivery or performance of this document or the announcement or pendency of the Scheme or the other transactions contemplated by this document or with respect to the Conditions Precedent that relate to such representations or warranties;
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(k)
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the identity of, or any facts or circumstances relating to, Square or any member of the Square Group;
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(l)
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any actions, suits or claims arising from allegations of a breach of fiduciary duty or violation of securities laws, in each case relating to this document, the Scheme or the transactions contemplated by this document; or
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(m)
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any action (or the failure to take any action) with the written consent or at the written request of Square;
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(a)
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(conversion) Afterpay converts all or any of its shares into a larger or smaller number of shares;
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(b)
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(reduction of share capital) Afterpay or another member of the Afterpay Group (other than a wholly owned Subsidiary of Afterpay) resolves to reduce its share capital in any way or resolves to reclassify, combine, split or redeem or repurchase directly or indirectly any of its shares, other than (i) any actions taken to comply with clause 4.8(a) or as required pursuant to an Afterpay Employee Plan, (ii) as a result of the forfeiture or exercise of any Employee Share Rights (including the withholding of shares to satisfy any exercise price or Tax liability), or (iii) to the extent required by a Minority Interest in accordance with its terms or actions taken in compliance with clause 5.10;
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(c)
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(buy-back) Afterpay or another member of the Afterpay Group (other than a wholly owned Subsidiary of Afterpay):
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(i)
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enters into a buy-back agreement; or
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(ii)
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resolves to approve the terms of a buy-back agreement under the Corporations Act;
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(d)
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(distribution) Afterpay makes or declares, or announces an intention to make or declare, any distribution (whether by way of dividend, capital reduction or otherwise and whether in cash or in specie);
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(e)
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(issuing or granting shares or options) any member of the Afterpay Group:
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(i)
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issues shares;
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(ii)
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grants an option over its shares; or
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(iii)
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agrees to make an issue of or grant an option over shares,
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(f)
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(securities or other instruments) any member of the Afterpay Group issues or agrees to issue securities or other instruments convertible into shares in each case to a person that is not Afterpay or a wholly owned Subsidiary of Afterpay other than (i) actions taken to comply with clause 4.8(a), required pursuant to an Afterpay Employee Plan or in accordance with clause 7.9, (ii) the issuance of securities in connection with employee incentives that are not in breach of clause 8.3(h), or (iii) to the extent required by a Minority Interest in accordance with its terms or actions taken in compliance with clause 5.10;
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(g)
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(constitution) Afterpay or any non-wholly owned Subsidiary of Afterpay adopts a new constitution or modifies or repeals its constitution or a provision of it;
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(h)
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(acquisitions, disposals or tenders) any member of the Afterpay Group:
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(i)
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acquires or disposes of;
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(ii)
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agrees to acquire or dispose of; or
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(iii)
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offers, proposes, announces a bid or tenders for,
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(i)
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(encumbrances) any member of the Afterpay Group creates, or agrees to create, any Encumbrance over or declares itself the trustee of all or a material part of the Afterpay Group’s business or property;
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(j)
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(merger) (i) Afterpay or (ii) any material member of the Afterpay Group merges or consolidates with any other person (other than, in the case of clause (ii) Afterpay or a wholly owned Subsidiary of Afterpay) or restructures, reorganises or completely or partially liquidates or dissolves;
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(k)
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[reserved];
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(l)
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(Insolvency) Afterpay or any of its material Related Bodies Corporate becomes Insolvent,
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(i)
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Disclosed to Square;
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(ii)
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required by law, regulation, changes in generally accepted accounting principles or by an order of a court or Governmental Authority;
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(iii)
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made at the written request of Square; or
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(iv)
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the undertaking of which Square has approved in writing (which approval will not be unreasonably withheld, delayed or conditioned, and will not be withheld if to do so would contravene competition laws).
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(a)
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reasonably likely of being completed on a reasonable timeline; and
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(b)
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of a higher financial value and more favourable to Afterpay Shareholders than the Scheme (as may be revised in accordance with clause 9.8, if applicable),
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(a)
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a day on which the banks in Sydney, New South Wales, Australia, are authorised or required to close, nor
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(b)
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a day on which the banks in San Francisco, California, United States of America, are authorised or required to close.
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(a)
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a Scheme Participant whose registered address on the Register as at the Record Date is in Australia or New Zealand who has not made a Share Election; and
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(b)
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a Scheme Participant whose registered address on the Register as at the Record Date is not in Australia or New Zealand (other than an Ineligible Foreign Shareholder) who has made a valid CDI Election.
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(a)
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in the case of Afterpay:
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(i)
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in the Afterpay Disclosure Materials; or
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(ii)
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in any announcement made by Afterpay on ASX prior to the date of this document (other than any forward looking, projected or hypothetical information); and
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(b)
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in the case of Square:
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(i)
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in the Square Disclosure Materials; or
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(ii)
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in any statement, prospectus, report, schedule or another form filed with or furnished to the SEC by Square pursuant to the Securities Act or the Exchange Act prior to the date of this document (other than any forward looking, projected or hypothetical information).
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(a)
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any supranational, national, federal, state, county, municipal, local, provincial or foreign government or any entity exercising executive, legislative, judicial, arbitral, regulatory, taxing, or administrative functions of or pertaining to government;
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(b)
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any public international governmental organisation;
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(c)
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any agency, division, bureau, department, committee, or other political subdivision of any government, entity or organisation described in the foregoing clauses (a) or (b) of this definition (including patent and trademark offices); or
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(d)
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quasi-governmental, self-regulatory agency, commission or authority, including any national securities exchange or national quotation system,
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(a)
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the outstanding principal amount of, accrued and unpaid interest on, and other payment obligations or liabilities (including any prepayment premiums, penalties, make-whole payments, termination fees, reimbursement obligations, breakage costs and other fees and expenses that are payable upon repayment of such obligations) of such person arising under, consisting of, pursuant to, or in respect of:
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(i)
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indebtedness for borrowed money or indebtedness evidenced by notes, bonds, debentures or other debt securities;
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(ii)
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the deferred purchase price of property or services (including any earn out obligations whether or not contingent and regardless of when due) (but excluding trade payables, accrued expenses and current accounts, in each case, incurred and paid in the ordinary course of business);
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(iii)
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any letter of credit, bank guarantee, bankers’ acceptance or other similar instrument, in each case, to the extent drawn, issued for the account of such person;
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(iv)
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any hedging agreement, derivative instrument or similar arrangement, including any interest rate swap, currency swap, forward currency or interest rate contracts or other interest rate or currency hedging arrangements (in each case valued at their termination value as of immediately prior to the date of determination);
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(v)
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any transaction related to the securitization of assets (including inventory or receivables) for financing purposes to any third party, including all factoring and inventory agreements and similar agreements executed for the purpose of obtaining financing;
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(vi)
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any obligations in respect of dividends declared but not paid; and
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(vii)
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any obligations in respect of a capital or finance lease (in which case only the capitalized portion thereof shall constitute Indebtedness); and
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(b)
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any obligation of another person of the kind described in clause (a) for which such person is responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise or in respect of which such person has pledged any of its assets as collateral therefor.
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(a)
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who is (or is acting on behalf of) a citizen or resident of a jurisdiction other than residents of Australia and its external territories, Canada, Hong Kong, New Zealand, Singapore, Switzerland, United Kingdom and the United States; or
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(b)
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whose address shown in the Register is a place outside Australia and its external territories, Canada, Hong Kong, New Zealand, Singapore, Switzerland, United Kingdom and the United States or who is acting on behalf of such a person,
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(c)
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it is lawful and not unduly onerous or unduly impracticable to issue that Afterpay Shareholder with the New Square Shares or New Square CDIs on implementation of the Scheme; and
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(d)
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it is lawful for that Afterpay Shareholder to participate in the Scheme by the law of the relevant place outside Australia and its external territories, Canada, Hong Kong, New Zealand, Singapore, Switzerland, United Kingdom and the United States.
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(a)
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it is (or states that it is) an insolvent under administration or insolvent (each as defined in the Corporations Act);
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(b)
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it is in liquidation, in provisional liquidation, under administration or wound up or has had a Controller appointed to any part of its property;
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(c)
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it is subject to any arrangement (including a deed of company arrangement or scheme of arrangement), assignment, moratorium, compromise or composition, protected from creditors under any statute or dissolved (in each case, other than to carry out a reconstruction or amalgamation while solvent on terms approved by the other parties to this document);
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(d)
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an application or order has been made (and in the case of an application which is disputed by the person, it is not stayed, withdrawn or dismissed within 14 days), resolution passed, proposal put forward, or any other action taken, in each case in connection with that person, which is preparatory to or could result in any of the things described in any of the above paragraphs;
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(e)
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it is taken (under section 459F(1) of the Corporations Act) to have failed to comply with a statutory demand;
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(f)
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it is the subject of an event described in section 459C(2)(b) or section 585 of the Corporations Act (or it makes a statement from which another party to this document reasonably deduces it is so subject);
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(g)
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it is otherwise unable to pay its debts when they fall due; or
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(h)
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something having a substantially similar effect to any of the things described in the above paragraphs happens in connection with that person under the law of any jurisdiction.
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(a)
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trademarks, service marks, brand names, internet domain names, internet and social media usernames, logos, symbols, certification marks, trade dress and other indications of origin, the goodwill associated with the foregoing and registrations in any jurisdiction of, and applications in any jurisdiction to register, the foregoing, including any extension, modification or renewal of any such registration or application;
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(b)
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inventions, discoveries and ideas, whether patentable or not, in any jurisdiction;
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(c)
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patents, applications for patents (including divisions, continuations, continuations in part and renewal applications), all improvements thereto, and any renewals, extensions or reissues thereof, in any jurisdiction;
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(d)
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non-public information, trade secrets and know-how, including processes, technologies, protocols, formulae, prototypes and confidential information and rights in any jurisdiction to limit the use or disclosure thereof by any person;
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(e)
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writings and other works, whether copyrightable or not and whether in published or unpublished works, in any jurisdiction;
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(f)
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rights of publicity, likeness rights, or other similar personality rights;
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(g)
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registrations or applications for registration of copyrights in any jurisdiction, and any renewals or extensions thereof; and
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(h)
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any similar intellectual property or proprietary rights.
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(a)
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in respect of Afterpay, the Listing Rules of ASX and any other applicable rules of ASX modified to the extent of any express written waiver by ASX; or
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(b)
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in respect of Square, the applicable rules contained in the NYSE Listed Company Manual,
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(a)
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in relation to the Minority Interests;
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(b)
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that is a material agreement with a Key Merchant;
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(c)
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which is, in the opinion of Afterpay management, critical to the business of the Afterpay Group;
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(d)
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which has a material strategic significance to the business of the Afterpay Group; including material agreements with a Key Payments Partner;
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(e)
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containing continuing material “earn out” milestones;
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(f)
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granting any right of first refusal, right of first offer or similar right with respect to any material assets, rights or properties of the Afterpay Group;
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(g)
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that obligates in any material respect any member of the Afterpay Group or that will obligate in any material respect any member of the Merged Group to conduct business with any third party on an exclusive basis or contains “most favoured nation” or similar provisions that are material in relation to the conduct of business with the relevant third party;
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(h)
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that is a settlement or similar agreement containing any material continuing obligations of the Afterpay Group;
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(i)
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pursuant to which any member of the Afterpay Group:
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(i)
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has granted or grants any license, covenant not to assert, release, agreement not to enforce or prosecute or other immunity to any third party under or to any material Intellectual Property; or
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(ii)
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is granted a license, covenant not to assert, release, agreement not to enforce or prosecute or immunity to or under any material Intellectual Property from any third party, other than, in each case, non-exclusive licenses in the ordinary course of business;
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(j)
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that is a material joint venture or a material profit sharing; or
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(k)
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containing a covenant not to compete or a covenant not to solicit clients or customers that is granted by any member of the Afterpay Group in favour of a third party, in each case that restricts the Afterpay Group in any material respect,
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(a)
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the SGX Notes; and
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(b)
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the Employee Share Rights.
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(a)
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a Related Body Corporate;
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(b)
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a director, officer or employee of the party or any of the party’s Related Bodies Corporate; or
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(c)
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an adviser or consultant to the party or any of the party’s Related Bodies Corporate.
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(a)
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where that Scheme Participant is a Share Elected Shareholder, 0.375 (the “Exchange Ratio”) New Square Shares; or
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(b)
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where that Scheme Participant is a CDI Elected Shareholder, 0.375 New Square CDIs.
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(a)
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a Scheme Participant whose registered address on the Register as at the Record Date is in Australia or New Zealand who has made a valid Share Election; and
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(b)
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a Scheme Participant whose registered address on the Register as at the Record Date is not in Australia or New Zealand (other than an Ineligible Foreign Shareholder) who has not made a valid CDI Election.
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(a)
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such target is material to the Merged Group (provided that, for this purpose, the Merged Group, taken as a whole, shall be deemed a consolidated group of entities the same size as the Afterpay Group) and derives a material portion of its revenues from “buy now pay later” products and/or services; or
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(b)
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the target operates in the “buy now pay later” space in North America, the United Kingdom, New Zealand, Europe or Australia and such acquisition or other transaction would likely materially delay or create substantial risk of any Regulatory Approval not being obtained.
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(a)
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the Square Shareholders immediately prior to such transaction do not own more than 80% of the voting power of securities of the resulting entity or its ultimate parent; or
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(b)
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a person (other than Square, its Related Bodies Corporate, or holders of Square B Shares as of the date of this document), whether alone or together with its Associates, would:
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(i)
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directly or indirectly acquire a Relevant Interest in or become the holder of securities representing 20% or more of the total outstanding voting power of Square (other than as a custodian, nominee or bare trustee); or
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(ii)
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directly or indirectly acquire, obtain a right to acquire, or otherwise obtain an interest in (including through any license arrangement) 20% or more of the consolidated assets of the Square Group.
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(a)
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is or becomes available to Afterpay or any of its Representatives on a non-confidential basis from a source (other than Square or any of its Representatives) which, to Afterpay’s knowledge, is not prohibited from disclosing such information to Afterpay;
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(b)
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is known to Afterpay or any of its Representatives prior to disclosure by Square or any of its Representatives;
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(c)
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is or has been independently developed by Afterpay without use of any information furnished to it by Square (where Afterpay can prove the same in writing); or
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(d)
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is transmitted by Square after delivery of notice by Afterpay that it no longer wishes to receive Square Confidential Information.
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(a)
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the information disclosed on behalf of the Square Group in written responses (including by email) to requests for information to Afterpay or any of its Representatives prior to the date of this document, except any information redacted; and
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(b)
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the Square Disclosure Letter.
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(a)
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any matter Disclosed to Afterpay;
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(b)
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changes in general economic, industry, regulatory or political conditions, the securities or other capital markets in general or law;
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(c)
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any epidemic, pandemic (including COVID-19 or COVID-19 Measures), hurricane, earthquake, flood, weather conditions, calamity or other natural disaster, act of God or other force majeure event (or any worsening of or recovery from any of the foregoing);
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(d)
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geopolitical conditions, hostilities, civil or political unrest, any acts of war, sabotage, cyberattack or terrorism (including any outbreak, escalation or worsening of any of the foregoing);
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(e)
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any change in taxation rates, interest rates or exchange rates;
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(f)
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any change in generally accepted accounting principles or the authoritative interpretation of them;
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(g)
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the taking of any action required under this document, the Scheme or the transactions contemplated by them (other than, to the extent not excluded by another clause of this definition, Square’s compliance with its obligations pursuant to clause 8);
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(h)
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any change in the market price or trading volume of Square Shares (but this exception will not prevent the underlying cause or contributing factor of any such change, if not falling within any other exception in this definition, from being taken into account in determining whether there has been a Square Material Adverse Effect);
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(i)
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any failure, in and of itself, by Square or a member of the Square Group to meet any internal or published projections, forecasts, estimates or predictions of revenues, earnings or other financial or operating metrics for any period (but this exception will not prevent the underlying cause or contributing factor of any such failure, if not falling within any other exception in this definition, from being taken into account in determining whether there has been a Square Material Adverse Effect);
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(j)
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the execution, delivery or performance of this document, the announcement or pendency of the Scheme or the other transactions contemplated by this document (including in the impact of any of the foregoing on the relationship of Square or a member of the Square Group with their respective employees, customers, creditors, suppliers or contractual counterparties), provided that this clause (j) shall not apply with respect to any representation or warranty that addresses the consequences of the execution, delivery or performance of this document or the announcement or pendency of the Scheme or the other transactions contemplated by this document or with respect to the Conditions Precedent that relate to such representations or warranties;
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(k)
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the identity of, or any facts or circumstances relating to, Afterpay or any member of the Afterpay Group;
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(l)
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any actions, suits or claims arising from allegations of a breach of fiduciary duty or violation of securities laws, in each case relating to this document, the Scheme or the transactions contemplated by this document; or
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(m)
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any action (or the failure to take any action) with the written consent or at the written request of Afterpay;
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(a)
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(conversion) Square converts all or any of its shares into a larger or smaller number of shares, other than a conversion of Square B Shares to Square A Shares pursuant to the terms of Square’s Certificate of Incorporation;
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(b)
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(reduction of share capital) Square or another member of the Square Group (other than a wholly owned Subsidiary of Square) resolves to reduce its share capital in any way or resolves to reclassify, combine or split directly or indirectly any of its shares, other than any actions under Square executive or employee share plans in the ordinary course of business;
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(c)
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(buy-back) Square or another member of the Square Group (other than a wholly owned Subsidiary of Square) repurchases, redeems or otherwise acquires any shares of capital stock of Square, or agrees to do any of the foregoing, except (i) for acquisitions of Square A shares tendered by holders of equity awards under Square executive or employee share plans in the ordinary course of business as such awards are in effect on the date of this document in order to satisfy obligations to pay the exercise price or Tax withholding obligations with respect thereto or (ii) transactions solely between Square and a wholly owned Subsidiary of Square or wholly owned Subsidiaries of Square;
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(d)
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(issuing of securities) any member of the Square Group issues or agrees to issue Square Shares or other instruments convertible into Square Shares to a person outside the Square Group other than (i) under Square executive or employee share plans in the ordinary course of business, (ii) under Square’s convertible notes outstanding as of the date of this document or (iii) issuance of Square Shares or other instruments convertible into Square Shares in an amount of up to 15% of outstanding Square Shares as of the date of this document;
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(e)
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(distribution) Square makes or declares, or announces an intention to make or declare, any distribution (whether by way of dividend, capital reduction or otherwise and whether in cash or in specie);
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(f)
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(charter) Square adopts a new charter or modifies or repeals its charter or a provision of it, in each case in a manner that would materially and adversely impact the rights of the Afterpay Shareholders or would prevent, materially delay or materially impair the ability of the parties to perform their obligations under this document or to consummate the Scheme;
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(g)
|
(encumbrances) any member of the Square Group creates, or agrees to create, any Encumbrance over or declares itself the trustee of all or a material part of the Square Group’s business or property;
|
(h)
|
(Square Competing Acquisition) any member of the Square Group undertakes or agrees to undertake a Square Competing Acquisition;
|
(i)
|
(merger) Square merges or consolidates with any other person, or restructures, reorganises or completely or partially liquidates or dissolves itself; or
|
(j)
|
(Insolvency) Square or any of its material Related Bodies Corporate becomes Insolvent,
|
(i)
|
Disclosed to Afterpay;
|
(ii)
|
required by law, regulation, changes in generally accepted accounting principles or by an order of a court or Governmental Authority;
|
(iii)
|
made at the written request of Afterpay; or
|
(iv)
|
the undertaking of which Afterpay has approved in writing (which approval must not be unreasonably withheld, delayed or conditioned).
|
(a)
|
reasonably likely of being completed on a reasonable timeline; and
|
(b)
|
of a higher financial value and more favourable to Square Shareholders than the Scheme,
|
(a)
|
is a subsidiary of the first entity within the meaning of the Corporations Act; and
|
(b)
|
is part of a consolidated entity constituted by the first entity and the entities it is required to include in the consolidated financial statements it prepares, or would be if the first entity was required to prepare consolidated financial statements.
|
General interpretation
|
(a)
|
the singular includes the plural and vice versa;
|
(b)
|
the meaning of general words is not limited by specific examples introduced by “including”, “for example”, “such as” or similar expressions;
|
(c)
|
a reference to “person” includes an individual, a body corporate, a partnership, a joint venture, an unincorporated association and an authority or any other entity or organisation;
|
(d)
|
a reference to a particular person includes the person’s executors, administrators, successors, substitutes (including persons taking by novation) and assigns;
|
(e)
|
a reference to a time of day is a reference to the time in Melbourne, Victoria;
|
(f)
|
a reference to dollars, $ or A$ is a reference to the currency of Australia, and US$ is a reference to the currency of the United States of America;
|
(g)
|
a reference to “law” includes common law, principles of equity and legislation (including regulations);
|
(h)
|
a reference to any “legislation” includes regulations under it and any consolidations, amendments, re-enactments or replacements of the law or any of them;
|
(i)
|
a reference to “regulations” includes instruments of a legislative character under legislation (such as regulations, rules, by-laws, ordinances and proclamations); and
|
(j)
|
a reference to a group of persons is a reference to any 2 or more of them jointly and to each of them individually.
|
Agreement to propose and implement Scheme
|
Afterpay to propose Scheme
|
Acquirer Subsidiary
|
Agreement to implement Scheme
|
Conditions Precedent
|
Conditions Precedent
|
Condition Precedent
|
| |
Party
entitled to
benefit
|
| |
Party
responsible
|
|||
(a)
|
| |
(FIRB approval) Before 5.00pm on the Business Day before the Second Court Date either:
|
| |
Cannot be waived
|
| |
Square
|
|
| |
|
| |
|
| |
|
|
| |
(i) the Treasurer (or the Treasurer’s delegate) has provided a written no objection notification to the Scheme either without conditions or with conditions acceptable to Square (having regard to clause 3.4); or
|
| |
|
| |
|
|
| |
|
| |
|
| ||
|
| |
(ii) following notice of the proposed Scheme having been given by Square to the Treasurer under the FIRB Act, the Treasurer has ceased to be empowered to make any order under Part 3 of the FIRB Act because the applicable time limit on making orders and decisions under the FIRB Act has expired.
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
(b)
|
| |
(OIO approval) Before 5.00pm on the Business Day before the Second Court Date Square Acquirer has received all consents required under the Overseas Investment Act 2005 (NZ) and the Overseas Investment Regulations 2005 (NZ) for the implementation of the Scheme either unconditionally or subject only to conditions imposed by the OIO that are substantially the same as the conditions of a kind commonly imposed by the OIO on such a consent and referred to as the 'Standard Conditions', and such consents have not been withdrawn or revoked at that time.
|
| |
Cannot be waived
|
| |
Square
|
|
| |
|
| |
|
| |
|
(c)
|
| |
(Spain – Foreign Investment Approval)
|
| |
Cannot be waived
|
| |
Square
|
|
| |
Before 8.00am on the Second Court Date:
(i) the receipt of written authorisation of the indirect transfer of the Spanish Subsidiaries pursuant to the Scheme, either without conditions or with conditions acceptable to Square (having regard to clause 3.4), from the Spanish Council of Ministers (Consejo de Ministros), or any other competent public authority, in relation to the application of Article 7 bis of Act 19/2003, 4 July (“on the legal framework of capital movements and foreign economic transactions and on certain measures to prevent money laundering”); or
|
| |||||
|
| |
(ii) the receipt of written confirmation from the Deputy General Directorate of Foreign Investments (“Subdirección General de Inversiones Exteriores”), or any other competent public authority, that the authorisation by the Spanish Council of Ministers is not required in respect of the indirect transfer of the Spanish Subsidiaries pursuant to the Scheme.
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
Condition Precedent
|
| |
Party
entitled to
benefit
|
| |
Party
responsible
|
|||
(i)
|
| |
(Regulatory Approvals) All Regulatory Approvals listed in Section 3.1(i) of the Square Disclosure Letter and other Regulatory Approvals which Square and Afterpay (acting reasonably) agree are necessary or desirable to implement the Scheme are obtained and those approvals have not been withdrawn or revoked by 8.00am on the Second Court Date.
|
| |
Both
|
| |
Both
|
|
| |
|
| |
|
| |
|
(j)
|
| |
(Government Intervention) No Governmental Authority (including any court) has issued an order, temporary restraining order, preliminary or permanent injunction, decree or ruling enjoining, restraining or otherwise imposing a legal restraint or prohibition preventing the Scheme and none of those things is in effect as at 8.00am on the Second Court Date.
|
| |
Both
|
| |
Both
|
|
| |
|
| |
|
| |
|
(k)
|
| |
(Independent Expert) The Independent Expert issues a report which concludes that the Scheme is in the best interests of Scheme Participants before the date on which the Scheme Booklet is lodged with ASIC.
|
| |
Afterpay
|
| |
Afterpay
|
|
| |
|
| |
|
| |
|
(l)
|
| |
(No Afterpay Prescribed Event) No Afterpay Prescribed Event occurs between the date of this document and 8.00am on the Second Court Date.
|
| |
Square
|
| |
Afterpay
|
|
| |
|
| |
|
| |
|
(m)
|
| |
(Performance of Obligations by Afterpay) Afterpay Group shall have performed or complied in all material respects with the obligations, covenants, and agreements required to be performed or complied with by it under this document prior to 8.00am on the Second Court Date.
|
| |
Square
|
| |
Afterpay
|
|
| |
|
| |
|
| |
|
(n)
|
| |
(Afterpay Representations and Warranties)
(i) The Afterpay Representations and Warranties set out in clauses 12.1(a), 12.1(b)(i), 12.1(c)(i), 12.1(e), 12.1(f), 12.1(o)(ii), 12.1(o)(iii), 12.1(q), and 12.1(v) are true and correct (A) in the case of such representations and warranties qualified by materiality or Afterpay Material Adverse Effect, in all respects, and (B) in the case of such representations and warranties not so qualified, in all material respects, in each case as of the date of this document and as of 8.00am on the Second Court Date, except where expressed to be operative at another date;
(ii) the Afterpay Representations and Warranties set out in clause 12.1(o)(i) are true and correct in all respects as of the date of this document, except where expressed to be operative at another date and except for any de minimis inaccuracies; and
(iii) all other Afterpay Representations and Warranties (disregarding all qualifications and exceptions contained therein relating to materiality or Afterpay Material Adverse Effect) are true and correct as of the date of this document and as of 8.00am on the Second Court Date, except where
|
| |
Square
|
| |
Afterpay
|
Condition Precedent
|
| |
Party
entitled to
benefit
|
| |
Party
responsible
|
|||
|
| |
expressed to be operative at another date and except where the failure of such Afterpay Representations and Warranties to be true and correct has not and would not reasonably be expected to have, individually or in the aggregate, an Afterpay Material Adverse Effect.
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
(o)
|
| |
(No Square Prescribed Event) No Square Prescribed Event occurs between the date of this document and 8.00am on the Second Court Date.
|
| |
Afterpay
|
| |
Square
|
|
| |
|
| |
|
| |
|
(p)
|
| |
(Performance of Obligations by Square) Square Group shall have performed or complied in all material respects with the obligations, covenants, and agreements required to be performed or complied with by it under this document prior to 8.00am on the Second Court Date.
|
| |
Afterpay
|
| |
Square
|
|
| |
|
| |
|
| |
|
(q)
|
| |
(Square Representations and Warranties)
(i) The Square Representations and Warranties set out in clause 12.3(a), 12.3(b)(i), 12.3(c)(i), 12.3(e), 12.3(f), 12.3(n)(ii), 12.3(o), 12.3(p), 12.3(q) and 12.3(t) are true and correct (A) in the case of such representations and warranties qualified by materiality or Square Material Adverse Effect, in all respects, and (B) in the case of such representations and warranties not so qualified, in all material respects, in each case as of the date of this document and as of 8.00am on the Second Court Date, except where expressed to be operative at another date;
(ii) the Square Representations and Warranties set out in clause 12.3(n)(i) are true and correct in all respects as of the date of this document, except where expressed to be operative at another date and except for any de minimis inaccuracies; and
(iii) all other Square Representations and Warranties (disregarding all qualifications and exceptions contained therein relating to materiality or Square Material Adverse Effect) are true and correct as of the date of this document and as of 8.00am on the Second Court Date, except where expressed to be operative at another date and except where the failure of such Square Representations and Warranties to be true and correct has not and would not reasonably be expected to have, individually or in the aggregate, a Square Material Adverse Effect.
|
| |
Afterpay
|
| |
Square
|
|
| |
|
| |
|
| |
|
(r)
|
| |
(ASX Quotation) Before 8.00am on the Second Court Date, the New Square CDIs have been approved for official quotation on ASX, subject only to customary conditions and the Scheme becoming Effective.
|
| |
Afterpay
|
| |
Square
|
|
| |
|
| |
|
| |
|
(s)
|
| |
(NYSE Quotation) Before 8.00am on the Second Court Date, the New Square Shares have been approved for quotation on NYSE, subject only to official notice of issuance.
|
| |
Afterpay
|
| |
Square
|
|
| |
|
| |
|
|
Condition Precedent
|
| |
Party
entitled to
benefit
|
| |
Party
responsible
|
|||
(t)
|
| |
(Afterpay Material Adverse Effect) No Afterpay Material Adverse Effect has occurred between the date of this document and 8.00am on the Second Court Date.
|
| |
Square
|
| |
Afterpay
|
|
| |
|
| |
|
| |
|
(u)
|
| |
(Square Material Adverse Effect) No Square Material Adverse Effect has occurred between the date of this document and 8.00am on the Second Court Date.
|
| |
Afterpay
|
| |
Square
|
|
| |
|
| |
|
| |
|
(v)
|
| |
(ATO Tax Ruling) Before 8.00am on the Second Court Date, Afterpay has received confirmation from the ATO that it is prepared to issue a Class Ruling, in a form and substance satisfactory to Afterpay and Square (in each case acting reasonably), confirming that qualifying Australian resident Afterpay Shareholders who hold their Afterpay Shares on capital account will be eligible to choose scrip-for-scrip rollover relief under Subdivision 124-M of the Tax Act to the extent to which they receive New Square CDIs or New Square Shares in exchange for their Afterpay Shares under the Scheme.
|
| |
Afterpay
|
| |
Afterpay
|
(a)
|
each of the Conditions Precedent for which it is a party responsible (as noted in clause 3.1):
|
(i)
|
is satisfied as soon as practicable after the date of this document; and
|
(ii)
|
continues to be satisfied at all times until the last time it is to be satisfied (as the case may require); and
|
(b)
|
there is no occurrence that would prevent the Condition Precedent for which it is a party responsible being satisfied.
|
(a)
|
Without limiting clause 3.2, each party:
|
(i)
|
(applying for Regulatory Approvals) must promptly apply for or file all relevant Regulatory Approvals for which it is the party responsible (and with respect to notifications under the HSR Act, no later than 10 Business Days after the date of this document) and provide the other parties with a copy of those applications or notifications (provided that any commercially sensitive information may be redacted from the copy provided);
|
(ii)
|
(assistance) agrees to provide reasonable assistance to the other parties in order to enable the other parties to obtain any Regulatory Approvals for which the other party is the party responsible;
|
(iii)
|
(Regulatory Approvals process) must take all steps it is responsible for as part of the Regulatory Approval process, including responding to requests for information and documentary material at the earliest practicable time;
|
(iv)
|
(representation) has the right to be represented and make submissions at any meeting with any Governmental Authority relating to a Regulatory Approval; and
|
(v)
|
(consultation) must consult with the other parties in advance in relation to all applications and other communications (whether written or oral, and whether direct or via a Representative) with any Governmental Authority relating to any Regulatory Approval and keep the other parties fully informed of progress in relation to the obtaining of the Regulatory Approval and:
|
(A)
|
provide the other parties with drafts of any applications and other written communications to be sent to a Governmental Authority and make any amendments as the other party reasonably requires; and
|
(B)
|
provide copies of any written communications sent to or received from a Governmental Authority to the other parties promptly upon despatch or receipt (as the case may be),
|
(b)
|
Subject to clause 3.3(c), before providing any document or other information to the other parties (in this clause 3.3(b), the “Recipient”) pursuant to clause 3.3(a) or 8.6, a party (in this clause 3.3(b), the “Discloser”) may redact any part of that document, or not disclose any part of that information, which contains or is confidential, non-public information (“Sensitive Commercial Information”) if the Discloser reasonably believes that:
|
(i)
|
the Sensitive Commercial Information is of a commercially sensitive nature; or
|
(ii)
|
the disclosure of the Sensitive Commercial Information to the Recipient would be damaging to the commercial or legal interests of the Discloser or any of its related bodies corporate,
|
(c)
|
Clause 3.3(b) will not apply to the extent the Recipient is a member of the “clean team” and bound by the obligations set out in the Information Exchange Protocol.
|
Conditions on Regulatory Approvals
|
(a)
|
must offer and agree or accept, the standard tax conditions published at the date of this document in section D of Guidance Note 12 issued by FIRB from time to time; and
|
(b)
|
must consider in good faith and in consultation with Afterpay agreeing or accepting any other conditions required or requested in connection with a Regulatory Approval (including as to data or reporting), unless such conditions or undertakings:
|
(i)
|
are not conditional on the Scheme becoming Effective; or
|
(ii)
|
would be reasonably likely to have a material adverse effect on the Merged Group (provided that, for this purpose, the Merged Group, taken as a whole, shall be deemed a consolidated group of entities the same size as the Afterpay Group).
|
Square Shareholder Approval
|
(a)
|
as soon as reasonably practicable after the date of this document, Square shall prepare and file the preliminary Square Registration/Proxy Statement with the SEC and must use reasonable endeavours to complete this filing within 25 Business Days of the date of this document (provided Afterpay has complied with its obligations under clause 5.2(e));
|
(b)
|
subject to clause 6.2, Square shall include in the Square Registration/Proxy Statement a statement by the Square Board recommending that Square Shareholders vote in favour of the issuance of the New Square Shares and Square A Shares underlying New Square CDIs to the Afterpay Shareholders in the Scheme;
|
(c)
|
Square and Afterpay shall furnish all information concerning itself and its affiliates that is required to be included in the Square Registration/Proxy Statement or that is requested by the other party and customarily included in proxy statements and/or registration statements prepared in connection with transactions of the type contemplated by this document, and each of Square and Afterpay will use all reasonable endeavours to ensure that none of the information supplied or to be supplied by it for inclusion in or incorporation by reference into the Square Registration/Proxy Statement will, at the date the Square Registration/Proxy Statement or any amendment or supplement thereto is filed with the SEC, declared effective by the SEC or mailed to the Square Shareholders or at the time of the Square Shareholder Meeting, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading;
|
(d)
|
Square shall consult with Afterpay as to the content and presentation of the Square Registration/Proxy Statement, including:
|
(i)
|
providing to Afterpay drafts of the Square Registration/Proxy Statement within a reasonable time prior to the initial filing thereof with the SEC for the purpose of enabling Afterpay to review and comment on the draft document and considering in good faith any timely and reasonable comments; and
|
(ii)
|
providing to Afterpay drafts of each subsequent filing of or amendment or supplement to Square Registration/Proxy Statement within a reasonable time before filing any such revised document with the SEC or disseminating it to Square Shareholders for the purpose of enabling Afterpay to review and comment on the draft document and considering in good faith any timely and reasonable comments;
|
(e)
|
Square shall promptly respond to, and use all reasonable endeavours to cause to be resolved, any requests for information or comments from the SEC (including by filing amendments or supplements to the Square Registration/Proxy Statement) in relation to the Square Registration/Proxy Statement at the earliest practicable time;
|
(f)
|
Square shall keep Afterpay reasonably informed of any matters raised or comments provided by the SEC in relation to the Square Registration/Proxy Statement, and use all reasonable endeavours to take into consideration in resolving such matters any issues raised by Afterpay;
|
(g)
|
if, at any time prior to the Square Shareholder Meeting, any information relating to Square or Afterpay or any of their respective affiliates, officers or directors should be discovered by Square or Afterpay that should be set forth in an amendment or supplement to the Square Registration/Proxy Statement, so that the Square Registration/Proxy Statement would not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they are or were made, not misleading, the party that discovers such information shall promptly notify the other party and an appropriate amendment or supplement describing (or correcting) such information shall be prepared and, following a reasonable opportunity for the other party (and its counsel) to review and comment on such amendment or supplement, promptly filed with the SEC and, to the extent required by applicable law, disseminated to Square Shareholders;
|
(h)
|
Square shall file the Square Proxy Statement with the SEC in definitive form and begin mailing the Square Proxy Statement to holders of Square Shares as soon as practicable (and shall use all reasonable endeavours to do so within three (3) Business Days) after the later of (1) the expiration of the ten (10) day waiting period provided in Rule 14a-6(a) promulgated under the Exchange Act without comment from the SEC, (2) the date on which Square learns that the SEC has no further comments on,
|
(i)
|
If registration of the Scheme Consideration is required under the Securities Act, Square shall use reasonable endeavours to have the Square Registration Statement declared effective by the staff of the SEC under the Securities Act as promptly as practicable after its initial filing with the SEC and to keep the Square Registration Statement effective as long as necessary to implement and consummate the Scheme;
|
(j)
|
Square must convene and hold the Square Shareholder Meeting to obtain the Square Shareholder Approval within 30 Business Days after the Clearance Date (unless prohibited by the SEC, in which case Square shall convene and hold the Square Shareholder Meeting at the earliest possible date permitted by the SEC);
|
(k)
|
Square shall not propose any matters to be voted on at the Square Shareholder Meeting other than the matters contemplated by this document in connection with the Square Shareholder Approval (and any matters of procedure to be voted on by the Square Shareholders in connection therewith);
|
(l)
|
except as required by law or a Governmental Authority, Square may not adjourn or postpone the Square Shareholder Meeting without the prior consent of Afterpay, provided, however, that Square may, without the consent of Afterpay and in accordance with Square’s charter, law and, if relevant, the consent of any Governmental Authority, adjourn or postpone the Square Shareholder Meeting to the extent necessary to ensure that any required (or, as determined by the Square Board acting reasonably and in good faith after consulting with outside counsel and having first consulted with Afterpay, advisable) supplement or amendment to the Square Registration/Proxy Statement is provided to the Square Shareholders, with such postponement or adjournment to extend for no longer than the period that the Square Board determines in good faith (after consulting with outside counsel) is required or (having first consulted with Afterpay) advisable to give the Square Shareholders sufficient time to evaluate any such supplement or amendment so provided or disseminated (provided, that no such postponement or adjournment may be to a date that is after the 10th Business Day after the date of such supplement or amendment other than to the extent required by law); and
|
(m)
|
unless this document shall have been terminated in accordance with clause 13, Square must hold the Square Shareholder Meeting pursuant to this clause 3.5 and submit the issue of the New Square Shares and the Square A Shares underlying the New Square CDIs for the approval of the Square Shareholders.
|
Waiver of Conditions Precedent
|
(a)
|
A Condition Precedent may only be waived in writing by the party or parties entitled to the benefit of that Condition Precedent as and to the extent noted in clause 3.1 and will be effective only to the extent specifically set out in that waiver.
|
(b)
|
A party entitled to waive the breach or non-fulfilment of a Condition Precedent under this clause 3.6 may do so in its absolute discretion.
|
(c)
|
If either Afterpay or Square waives the breach or non-fulfilment of all or any portion of a Condition Precedent in accordance with this clause 3.6, then:
|
(i)
|
subject to clause 3.6(c)(ii), that waiver precludes that party from suing the other party for any breach of this document arising as a result of the breach or non-fulfilment of that portion of such Condition Precedent or arising from the same event which gave rise to the breach or non-fulfilment of that portion of such Condition Precedent; but
|
(ii)
|
if the waiver of all or any portion of the Condition Precedent is itself conditional and the other party:
|
(A)
|
accepts the condition, the terms of that condition apply notwithstanding any inconsistency with clause 3.6(c)(i); or
|
(B)
|
does not accept the condition, the Condition Precedent or a portion thereof has not been waived.
|
(d)
|
A waiver of a breach or non-fulfilment in respect of a Condition Precedent does not constitute:
|
(i)
|
a waiver of a breach or non-fulfilment of any other Condition Precedent arising from the same event; or
|
(ii)
|
a waiver of a breach or non-fulfilment of that Condition Precedent resulting from any other event.
|
Notices in relation to Conditions Precedent
|
(a)
|
(notice of satisfaction) promptly notify the other party of satisfaction of a Condition Precedent and must keep the other parties informed of any material development of which it becomes aware that may lead to the breach or non-fulfilment of a Condition Precedent which it is responsible for satisfying; and
|
(b)
|
(notice of failure) promptly notify the other parties of a breach or non-fulfilment of a Condition Precedent which it is responsible for satisfying, or of any event which will prevent the Condition Precedent being satisfied.
|
Consultation on failure of Condition Precedent
|
(a)
|
there is a breach or non-fulfilment of a Condition Precedent set out in clauses 3.1(a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (r), (s) or (v) which is not waived in accordance with this document by the time or date specified in this document for the satisfaction of the Condition Precedent; or
|
(b)
|
there is an act, failure to act or occurrence which will prevent a Condition Precedent set out in clause 3.1(a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (r), (s) or (v) from being satisfied by the time or date specified in this document for the satisfaction of the Condition Precedent (and the breach or non-fulfilment which would otherwise occur has not already been waived in accordance with this document),
|
(c)
|
whether the Scheme may proceed by way of alternative means or methods;
|
(d)
|
to extend the relevant time for satisfaction of the Condition Precedent or to adjourn or change the date of an application to the Court; or
|
(e)
|
to extend the End Date.
|
Failure to agree
|
(a)
|
subject to clause 3.9(b), either party may terminate this document (and that termination will be in accordance with clause 13.1(g)); or
|
(b)
|
if a Condition Precedent may be waived and exists for the benefit of one party only, that party only may waive that Condition Precedent or terminate this document (and that termination will be in accordance with clause 13.1(g)),
|
Scheme voted down because of the Headcount Test
|
(a)
|
apply for an order of the Court contemplated by section 411(4)(a)(ii)(A) of the Corporations Act to disregard the Headcount Test and seek Court approval of the Scheme under section 411(4)(b) of the Corporations Act, notwithstanding that the Headcount Test has not been satisfied; and
|
(b)
|
make such submissions to the Court and file such evidence as counsel engaged by Afterpay to represent it in Court proceedings related to the Scheme, in consultation with Square, considers is reasonably required to seek to persuade the Court to exercise its discretion under section 411(4)(a)(ii)(A) of the Act by making an order to disregard the Headcount Test.
|
Outline of Scheme
|
Scheme
|
(a)
|
all of the Afterpay Shares held by Scheme Participants at the Record Date will be transferred to Square Acquirer; and
|
(b)
|
each Scheme Participant will be entitled to receive the Scheme Consideration.
|
Scheme Consideration
|
(a)
|
Subject to and in accordance with this document and the Scheme, each Scheme Participant is entitled to receive the Scheme Consideration in respect of each Afterpay Share held by that Scheme Participant.
|
(b)
|
At any time prior to the lodgement of the Regulator’s Draft with ASIC, Square Acquirer may elect (Cash Election) to change the Scheme Consideration to the Cash Election Payment for each Afterpay Share; plus either:
|
(i)
|
where that Scheme Participant is a Share Elected Shareholder, 0.37125 New Square Shares; or
|
(ii)
|
where that Scheme Participant is a CDI Elected Shareholder, 0.37125 New Square CDIs.
|
(c)
|
If Square Acquirer makes a Cash Election, the parties will work together in good faith to agree the necessary amendments to the Scheme, the Scheme Booklet, and Square Registration/Proxy Statement to reflect the revised Scheme Consideration, including for the purposes of clause 4.8.
|
Provision of Scheme Consideration
|
(a)
|
Square Acquirer will accept that transfer; and
|
(b)
|
Square Acquirer will provide or procure as set forth in clause 4.3(c) the provision to each Scheme Participant the Scheme Consideration in accordance with the Scheme; and
|
(c)
|
Square Acquirer agrees to cause Square to, and Square will at the direction of and on behalf of Square Acquirer (in satisfaction of Square Acquirer’s obligation to provide such Scheme Consideration to the Scheme Participants under clause 4.3(b)), issue the Scheme Consideration in accordance with the Scheme. If Square Acquirer fails to provide direction to Square as contemplated by this clause 4.3(c) (or to have otherwise procured the provision of the Scheme Consideration) within 1 Business Day following the Effective Date, Square Acquirer will be deemed to have provided such direction to Square and Square agrees that it will take the actions required by this clause 4.3(c).
|
Scheme Consideration Discretion
|
Fractional elements
|
(a)
|
If the number of Afterpay Shares held by a Scheme Participant at the Record Date is such that the aggregate entitlement of the Scheme Participant to Scheme Consideration comprising New Square Shares or New Square CDIs includes a fractional entitlement to a New Square Share or New Square CDI, the entitlement will be rounded as follows:
|
(i)
|
if the fractional entitlement is less than 0.5, it will be rounded down to zero New Square Shares or New Square CDIs; and
|
(ii)
|
if the fractional entitlement is equal to or more than 0.5, it will be rounded up to one New Square Share or New Square CDI.
|
(b)
|
If Square and Afterpay are of the opinion (acting reasonably) that two or more Scheme Participants (each of whom holds a number of Afterpay Shares which results in rounding in accordance with clause 4.5(a)) have, before the Record Date for the Scheme, been party to Share Splitting in an attempt to obtain unfair advantage by reference to such rounding, if requested by Square, Afterpay must give notice to those Scheme Participants:
|
(i)
|
setting out their names and registered addresses as shown in the Register;
|
(ii)
|
stating that opinion; and
|
(iii)
|
attributing to one of them specifically identified in the notice the Afterpay Shares held by all of them,
|
Ineligible Foreign Shareholders
|
(a)
|
Where an Ineligible Foreign Shareholder would otherwise be entitled to receive New Square Shares or New Square CDIs as Scheme Consideration pursuant to clause 4.3, Square Acquirer has no obligation to issue any New Square Shares or New Square CDIs to the Ineligible Foreign Shareholder, and instead (on behalf of and at the direction of Square Acquirer):
|
(i)
|
Square will issue to a nominee appointed by Square any New Square Shares to which an Ineligible Foreign Shareholder would otherwise be entitled;
|
(ii)
|
Square will procure that, as soon as reasonably practicable and in any event not more than 15 Business Days after the Implementation Date, the nominee:
|
(A)
|
sells or procures the sale of all of the New Square Shares issued to the nominee pursuant to clause 4.6(a)(i), in the ordinary course of trading on NYSE; and
|
(B)
|
remits to Square the proceeds of sale (after deducting any applicable brokerage, stamp duty and other selling costs, taxes and charges); and
|
(iii)
|
promptly after the last sale of New Square Shares in accordance with clause 4.6(a)(ii)(A), Square will pay to each Ineligible Foreign Shareholder an amount equal to the proportion of the net proceeds of sale received by Square under clause 4.6(a)(ii)(B) to which that Ineligible Foreign Shareholder is entitled in full satisfaction of the Ineligible Foreign Shareholder entitlement to the relevant New Square Shares.
|
(b)
|
None of Afterpay, Square or the relevant nominee gives any assurance as to the price that will be achieved for the sale of New Square Shares in accordance with this clause 4.6 and the sale of New Square Shares will be at the risk of the Ineligible Foreign Shareholder.
|
New Square Shares to rank equally
|
(a)
|
all New Square Shares issued as Scheme Consideration pursuant to clause 4.3 (including those issued to CDN in connection with the New Square CDIs) will, upon their issue:
|
(i)
|
rank equally with all other Square A Shares then on issue;
|
(ii)
|
be fully paid and free from any Encumbrance; and
|
(b)
|
it will use all reasonable endeavours to ensure that trading in the New Square Shares and New Square CDIs commences on a normal settlement basis no later than the first trading day (as defined in the Listing Rules) following the Implementation Date.
|
Employee incentives
|
(a)
|
Afterpay must use all reasonable endeavours (subject to clause 5.10 to the extent applicable) to ensure that (i) the treatment of Employee Share Rights set forth below can be effectuated and (ii) there is a “blackout” such that no Afterpay Employee Options (as defined below) shall be exercised following the 5th Business Day prior to the Record Date.
|
(b)
|
Subject to, and immediately following, the Effective Date, each equity award corresponding to Afterpay Shares issued under an employee incentive plan operated by the Afterpay Group that is held by a non-employee director of Afterpay (each an “Afterpay Director Award”) shall vest in full.
|
(c)
|
Afterpay Employee Options:
|
(i)
|
Subject to, and immediately following, the Effective Date, each option to purchase Afterpay Shares issued under an employee incentive plan operated by the Afterpay Group (each, an “Afterpay Employee Option”) that is outstanding as of the Effective Date shall vest with respect to a number of Afterpay Shares (rounded up to the nearest whole share) such that the vested portion of such Afterpay Employee Option, after giving effect to the vesting contemplated by this clause, shall equal a fraction, the numerator of which is the number of full months from the grant
|
(ii)
|
Subject to, and upon, the implementation of the Scheme, the unvested portion of each Afterpay Employee Option that is outstanding as of the Effective Date and that does not vest pursuant to the immediately preceding clause shall be cancelled (such portion, the “Cancelled Option”) and converted into an option (each, a “Replacement Option Award”) covering a number of Square A Shares (rounded down to the nearest whole share) determined by multiplying the number of Afterpay Shares covered by the Cancelled Option by the Exchange Ratio, and with a per share exercise price, rounded up to the nearest whole cent, determined by dividing the per share exercise price of such Cancelled Option by the Exchange Ratio, with such award vesting in equal quarterly instalments over the period of time from the Effective Date through the latest vesting date applicable to such Cancelled Option, subject to the holder’s continued employment by Afterpay or an affiliate through the applicable vesting dates.
|
(iii)
|
The Afterpay Board (A) may provide that all vested Afterpay Employee Options (and any other vested options to purchase Afterpay Shares) shall be automatically exercised prior to the fifth Business Day prior to the Record Date, including on a net settlement basis, and (B) shall cause each vested Afterpay Employee Option (and any other vested option to purchase Afterpay Shares) that is outstanding immediately following the Effective Date, including the portion of any Afterpay Employee Option that vests pursuant to clause 4.8(c)(i), that is unexercised as of the Record Date, to expire, lapse and be cancelled for no consideration on such date.
|
(d)
|
Afterpay RSU Awards and Afterpay Restricted Stock Awards
|
(i)
|
Subject to, and immediately following the Effective Date, each restricted stock unit or performance right (each an “Afterpay RSU Award”) or restricted stock award (each an “Afterpay Restricted Stock Award”), in each case, corresponding to Afterpay Shares issued under an employee incentive plan operated by the Afterpay Group, that is outstanding as of the Effective Date, shall vest with respect to a number of Afterpay Shares (rounded up to the nearest whole share) such that the vested portion of such Afterpay RSU Award or Afterpay Restricted Stock Award, as applicable, after giving effect to the vesting contemplated by this clause shall equal a fraction, the numerator of which is the number of full months from the grant date of such Afterpay RSU Award or Afterpay Restricted Stock Award, as applicable, through the Effective Date, and the denominator of which is the total number of months from the grant date of such Afterpay RSU Award or Afterpay Restricted Stock Award, as applicable, through the last vesting date of such Afterpay RSU Award or Afterpay Restricted Stock Award, as applicable, (e.g., 48 in the case of an option that vests in full on the fourth anniversary of the grant date); provided, that such accelerated vesting shall not apply to any Afterpay RSU Award or Afterpay Restricted Stock Award, as applicable, granted after the date of this document, other than the awards set forth on Schedule 4.8(g) of the Afterpay Disclosure Letter, and the unvested portion of such Afterpay RSU Award or Afterpay Restricted Stock Award, as applicable, that does not vest pursuant to this clause shall be forfeited (such portion, the “Forfeited Full Value Award”).
|
(ii)
|
Subject to, and upon, the implementation of the Scheme, Square shall grant to the holder of a Forfeited Full Value Award who remains employed by Afterpay or an affiliate as of the Implementation Date, an award (each, a “Replacement Full Value Award”) of restricted stock units covering a number of Square A Shares or a grant of restricted Square A Shares (in each case rounded up to the nearest whole share) equal to the number of Afterpay Shares covered by the Forfeited Full Value Award multiplied by the Exchange Ratio, with such award vesting in equal quarterly instalments over the period of time from the Effective Date through the latest vesting date applicable to such Forfeited Full Value Award, subject to the holder’s continued employment by Afterpay or an affiliate through the applicable vesting dates.
|
(e)
|
Afterpay US Equity Plan
|
(i)
|
Pro- Rata Vesting. Subject to, and upon, the Implementation Date, the unvested portion of any award with respect to shares of Afterpay US, Inc. (“Afterpay US Shares”) issued under an employee incentive plan operated by the Afterpay Group that is outstanding immediately prior to the Implementation Date shall vest with respect to a number of Afterpay Shares (rounded up to the nearest whole share) such that the vested portion of such award, after giving effect to the vesting contemplated by this clause shall equal a fraction, the numerator of which is the number of full months from the grant date of such award through the Effective Date and the denominator of which is the total number of months from the grant date of such award through the last vesting date of such award (e.g., 48 in the case of an award that vests in full on the fourth anniversary of the grant date). For purposes of the foregoing, an option award and any restricted stock award resulting from the early exercise of such option award shall be considered one award.
|
(ii)
|
Afterpay US Employee Options. Subject to, and upon, the Implementation Date:
|
(A)
|
the vested portion of each option to purchase Afterpay US Shares issued under an employee incentive plan operated by the Afterpay Group (each, an “Afterpay US Employee Option”) that is outstanding immediately prior to the Implementation Date, including any portion that vests pursuant to clause 4.8(e)(i), shall be cancelled and converted into the right to receive a number of Square A Shares equal to the quotient obtained by dividing the applicable Aggregate Spread by the Square Stock Value; and
|
(B)
|
the unvested portion of each Afterpay US Employee Option that is outstanding immediately prior to the Implementation Date, after taking into account the vesting provided under clause 4.8(e)(i), shall be cancelled (such portion, the “Cancelled US Option”) and converted into an award of stock options (each a “Replacement US Option Award”) covering a number of Square A Shares (rounded down to the nearest whole share) determined by multiplying the number of Afterpay US Shares covered by such Cancelled US Option by the Afterpay US Exchange Ratio, with a per share exercise price, rounded up to the nearest whole cent, determined by dividing the per share exercise price of such Cancelled US Option by the Afterpay US Exchange Ratio, with such award vesting in equal quarterly installments over the period of time from the Effective Date through the latest vesting date applicable to such Cancelled US Option, subject to the holder’s continued employment by Afterpay or an affiliate through the applicable vesting dates.
|
(C)
|
For purposes of this document, (I) “Aggregate Spread” means, with respect to an Afterpay US Employee Option, the product obtained by multiplying (x) the number of Afterpay US Shares covered by the vested portion of such Afterpay US Employee Option immediately prior to implementation of the Scheme by (y) the excess, if any, of the Afterpay US Value over the per share exercise price of such Afterpay US Employee Option (II) “Afterpay US Exchange Ratio” means the Afterpay US Value divided by the Square Stock Value, (III) “Afterpay US Value” means the fair market value of an Afterpay US Share (as jointly determined by Square and Afterpay pursuant to the terms of the Afterpay US Options acting reasonably and taking into account applicable tax law and the actions taken pursuant to Attachment 2 to the Afterpay Disclosure Letter) and (IV) “Square Stock Value” means the closing price of Square A Shares on the NYSE on the trading day immediately prior to the Implementation Date.
|
(iii)
|
Afterpay US RSAs
|
(A)
|
On the Implementation Date, each award of restricted Afterpay US Shares issued under an employee incentive plan operated by the Afterpay Group (each an “Afterpay US RSA”) that is outstanding and unvested as of immediately prior to the Implementation Date, after taking into account the vesting provided under clause 4.8(e)(i), shall be cancelled and converted into an award (each a “Replacement US RSA”) covering a number of restricted Square A Shares (rounded up to the nearest whole share) equal to the number of Afterpay US Shares covered by such Afterpay US RSA immediately prior to the Implementation Date multiplied by the Afterpay US Exchange Ratio, with such award vesting on the same vesting schedule as was
|
(B)
|
“Accelerated Shares” means:
|
(aa)
|
for an Afterpay US RSA, with respect to which the holder has made a valid election under Section 83(b) of the Code, a number of restricted Square A Shares, rounded up to the nearest whole share, equal to the quotient obtained by dividing the Applicable Tax by the Square Stock Value, and
|
(ab)
|
for any other holder, zero.
|
(C)
|
“Applicable Tax” means, with respect to an Afterpay US RSA, the Tax on such Afterpay US RSA that becomes due upon the consummation of the transactions contemplated by this document.
|
(f)
|
UK Options. Subject to, and upon, the implementation of the Scheme, Square shall grant to the holder of each Forfeited U.K. Option (as defined on Attachment 2 to the Afterpay Disclosure Letter) who remains employed by Afterpay or an affiliate as of the Implementation Date, an award of stock options (a “Replacement UK Option Award”) covering a number of Square A Shares determined by multiplying the number of Clearpay Finance Limited shares that were covered by such Forfeited U.K. Option by the Afterpay UK Exchange Ratio and rounding down to the nearest whole number of shares, and with a per share exercise price determined by dividing the per share exercise price of such Forfeited U.K. Option by the Afterpay UK Exchange Ratio and rounding up to the nearest whole cent, with such award vesting in equal quarterly installments over the period of time from the Effective Date through the latest vesting date applicable to such Forfeited U.K. Option, subject to the holder’s continued employment by Afterpay or an affiliate through the applicable vesting dates. For purposes of this clause 4.8(f), (i) “Afterpay UK Exchange Ratio” means the Afterpay UK Value divided by the Square Stock Value and (ii) “Afterpay UK Value” means the fair market value of Clearpay Finance Limited shares underlying the Forfeited U.K. Options (as jointly determined by Afterpay in its reasonable discretion pursuant to the terms of the Forfeited U.K. Options acting reasonably and taking into account applicable tax law and the actions taken pursuant to Attachment 2 to the Afterpay Disclosure Letter).
|
(g)
|
Notwithstanding anything to the contrary contained in this clause 4.8, the provisions of Schedule 4.8(g) of the Afterpay Disclosure Letter shall apply to the Replacement Option Awards, the Replacement Full Value Awards, the Replacement US Option Awards, the Replacement US RSAs and the Replacement UK Option Awards (collectively, “Replacement Awards”).
|
(h)
|
No later than the Implementation Date, Square shall file one or more appropriate registration statements (on Form S-8, or any successor or other appropriate forms), or utilize a pre-existing registration statement, with respect to the Square A Shares underlying the Replacement Awards, and Square shall maintain the effectiveness of each such registration statement for so long as such awards remain outstanding.
|
(i)
|
All payments contemplated by this clause 4.8 shall be made less any applicable withholdings.
|
United States Tax Treatment
|
(a)
|
Each of Afterpay, Square and their respective Subsidiaries shall cooperate and use best endeavours to (i) cause the acquisition of the Afterpay Shares pursuant to the Scheme to qualify as a “qualified stock purchase” within the meaning of Section 338(d) of the Code and (ii) eliminate or mitigate the extent to which payment of the Scheme Consideration is subject to withholding Tax as a result of the application of Section 304 of the Code (including, if necessary, by making a Cash Election pursuant to clause 4.2 and certain Tax elections). For the avoidance of doubt, the parties acknowledge and agree that, after the Implementation Date, Square shall be permitted, in its sole discretion and to the extent permitted by
|
(b)
|
After the date of this document and prior to the Implementation Date, Afterpay shall deliver, or cause to be delivered, upon the reasonable request of Square and to the extent permitted under applicable law, one or more certificates under Treasury Regulations Sections 1.897-2(h) and 1.1445-2(c)(3), certifying that each Afterpay U.S. Subsidiary (other than any Afterpay U.S. Subsidiary treated as disregarded from its owner for U.S. federal income Tax purposes) identified in Square’s request is not a “United States real property holding corporation” within the meaning of Section 897(c)(3) of the Code, together with any notifications to the U.S. Internal Revenue Service related thereto.
|
No amendment to the Scheme without consent
|
Implementation
|
General obligations
|
(a)
|
use all reasonable endeavours and commit necessary resources (including management and corporate relations resources and the resources of external advisers); and
|
(b)
|
procure that its officers and advisers work in good faith and in a timely and co-operative fashion with the other party (including by attending meetings and by providing information),
|
Afterpay’s obligations
|
(a)
|
(announce directors' recommendation) following execution of this document, announce, in the form contained in Annexure A (on the basis of statements made to Afterpay by each member of the Afterpay Board) that:
|
(i)
|
the Afterpay Board intends to unanimously recommend to Scheme Participants that the Scheme be approved; and
|
(ii)
|
each Afterpay Board member who holds Afterpay Shares intends to vote his or her Afterpay Shares in favour of the Scheme,
|
(iii)
|
the Independent Expert concluding, and continuing to conclude, that the Scheme is in the best interests of Afterpay Shareholders; and
|
(iv)
|
there being no Afterpay Superior Proposal;
|
(b)
|
(preparation of Scheme Booklet) subject to clause 5.2(h)(i), as soon as practicable after the date of this document, prepare and despatch the Scheme Booklet:
|
(i)
|
in accordance with all applicable laws, including the Corporations Act, Corporations Regulations, ASIC Regulatory Guide 60 and the Listing Rules; and
|
(ii)
|
which includes a statement by the Afterpay Directors, subject to any withdrawal or change of recommendation by the Afterpay Board that is permitted by clause 6.3:
|
(A)
|
unanimously recommending that Afterpay Shareholders vote in favour of the Scheme subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of Afterpay Shareholders and there being no Afterpay Superior Proposal; and
|
(B)
|
that each Afterpay Director who holds Afterpay Shares intends to vote his or her Afterpay Shares in favour of the Scheme subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of Afterpay Shareholders and there being no Afterpay Superior Proposal;
|
(c)
|
(Independent Expert) promptly appoint the Independent Expert and provide any assistance and information reasonably requested by the Independent Expert to enable the Independent Expert to prepare its report for the Scheme Booklet as soon as practicable;
|
(d)
|
(Investigating Accountant) jointly with Square, appoint the Investigating Accountant and provide assistance and information reasonably required by the Investigating Accountant to enable it to prepare the Investigating Accountant’s Report;
|
(e)
|
(Afterpay information) prepare and promptly provide to Square any information that Square reasonably requires regarding Afterpay or the Afterpay Group for inclusion in the Square Registration/Proxy Statement, and must use all reasonable endeavours to ensure the Afterpay Information complies, in all material respects, with all applicable laws, including the Securities Act;
|
(f)
|
(consent) provide a consent and use all reasonable endeavours to obtain consents from third parties in such form as Square reasonably requires in relation to the form and context in which the Afterpay Information appears in the Square Registration/Proxy Statement;
|
(g)
|
(section 411(17)(b) statement) apply to ASIC for a statement pursuant to section 411(17)(b) of the Corporations Act stating that ASIC has no objection to the Scheme;
|
(h)
|
(consultation with Square) consult with Square as to the content and presentation of:
|
(i)
|
the Scheme Booklet, which includes:
|
(A)
|
allowing Square a reasonable opportunity to review and make comments on successive drafts of the Scheme Booklet (accepting that any review of the Independent Expert’s Report is limited to review for factual accuracy of those parts that include information relating to Square and that Afterpay makes no representation as to the extent to which the Independent Expert will receive or consider those comments);
|
(B)
|
taking any timely and reasonable comments made by Square into account in good faith when producing a revised draft of the Scheme Booklet;
|
(C)
|
providing to Square a revised draft of the Scheme Booklet within a reasonable time before the draft of the Scheme Booklet which is provided to ASIC for approval pursuant to section 411(2) of the Corporations Act is finalised; and
|
(D)
|
obtaining Square’s consent to the inclusion of the Square Information (including in respect of the form and context in which the Square Information appears in the Scheme Booklet (such consent must not be unreasonably withheld, delayed or conditioned)); and
|
(ii)
|
documents required for the purposes of the Court hearings held for the purposes of sections 411(1) and 411(4)(b) of the Corporations Act in relation to the Scheme (including originating processes, affidavits, submissions and draft minutes of Court orders), and consider in good faith, for the purpose of amending drafts of those documents, any comments on, or suggested amendments to, those documents from Square prior to filing those documents with the Court;
|
(i)
|
(lodgement of Regulator’s Draft)
|
(i)
|
no later than 14 days before the First Court Date, provide an advanced draft of the Scheme Booklet to ASIC for its review for the purposes of section 411(2) of the Corporations Act, and provide a copy of the Regulator’s Draft to Square as promptly as practicable thereafter; and
|
(ii)
|
keep Square reasonably informed of any issues raised by ASIC in relation to the Regulator’s Draft and, where practical to do so, consult with Square in good faith prior to taking any steps or actions to address those issues (provided that, where those issues relate to Square or any Square Information, Afterpay must not take any steps to address them without Square’s prior written consent, not to be unreasonably withheld, delayed or conditioned);
|
(j)
|
(supplementary disclosure) if, after despatch of the Scheme Booklet, Afterpay becomes aware:
|
(i)
|
that information included in the Scheme Booklet is or has become misleading or deceptive in any material respect (whether by omission or otherwise); or
|
(ii)
|
of information that is required to be disclosed to Afterpay Shareholders under any applicable law but was not included in the Scheme Booklet,
|
(k)
|
(Court application) apply to the Court for an order under section 411(1) of the Corporations Act directing Afterpay to convene the Scheme Meeting;
|
(l)
|
(send Scheme Booklet) send the Scheme Booklet to Afterpay Shareholders as soon as practicable after the Court orders Afterpay to convene the Scheme Meeting;
|
(m)
|
(Scheme Meeting) convene the Scheme Meeting to agree to the Scheme in accordance with any orders made by the Court pursuant to section 411(1) of the Corporations Act;
|
(n)
|
(director’s voting) use its reasonable endeavours to procure that each member of the Afterpay Board votes any Afterpay Shares in which they have a Relevant Interest in favour of the Scheme subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of Shareholders and there being no Afterpay Superior Proposal;
|
(o)
|
(Court approval) subject to all Conditions Precedent, other than paragraph (h) in clause 3.1 being satisfied or waived in accordance with this document, apply to the Court for an order approving the Scheme in accordance with sections 411(4)(b) and 411(6) of the Corporations Act;
|
(p)
|
(Conditions Precedent certificate) at the hearing on the Second Court Date, provide to the Court (through its counsel):
|
(i)
|
a certificate signed by one of its directors and made in accordance with a resolution of its board confirming (in respect of matters within Afterpay’s knowledge) whether or not the Conditions Precedent for which it is responsible, as noted in clause 3.1 (other than paragraph (h)), have been satisfied or waived in accordance with clause 3, a draft of which must be provided to Square by 5.00pm on the Business Day prior to the Second Court Date; and
|
(ii)
|
any certificate provided to it by Square under clause 5.3(h);
|
(q)
|
(lodge copy of Court order) lodge with ASIC an office copy of the Court order approving the Scheme as approved by the Afterpay Shareholders at the Scheme Meeting in accordance with section 411(10) of the Corporations Act on the first Business Day after that office copy is received (or any later date agreed in writing by Square);
|
(r)
|
(Register) close the Register as at the Record Date to determine the identity of Scheme Participants and their entitlements to Scheme Consideration;
|
(s)
|
(instruments of transfer) subject to Square Acquirer satisfying its obligations under clause 4.3, on the Implementation Date:
|
(i)
|
execute proper instruments of transfer and effect the transfer of Afterpay Shares to Square Acquirer in accordance with the Scheme; and
|
(ii)
|
register all transfers of Afterpay Shares held by Scheme Participants to Square Acquirer;
|
(t)
|
(suspension of trading) apply to ASX to suspend trading in Afterpay Shares with effect from the close of trading on the Effective Date;
|
(u)
|
(listing) take all reasonable steps to maintain Afterpay’s listing on ASX, notwithstanding any suspension of the quotation of Afterpay Shares, up to and including one Business Day after the Implementation Date, including making appropriate applications to ASX and ASIC and take all steps reasonably requested by Square to obtain the approval of ASX to the de-listing of Afterpay following implementation of the Scheme;
|
(v)
|
(Australian Admission) assist Square to prepare all documents required by ASX to apply for Australian Admission;
|
(w)
|
(Registry details) subject to the terms of the Scheme, provide all necessary directions to the Registry promptly to provide any information that Square requires in relation to the Register, including any sub-register, and where requested by Square, Afterpay must procure whatever information to be provided in the electronic form as is reasonably requested by Square;
|
(x)
|
(proxy solicitation) if requested by Square, retain a proxy solicitation services firm to assist Afterpay with the solicitation of votes at the Scheme Meeting and provide Square with copies of or access to information regarding the Scheme Meeting generated by that firm, including promptly advising Square, at times that Square may reasonably request and at least on a daily basis on each of the last 5 Business Days prior to the date of the Scheme Meeting, as to the aggregate tally of the votes received by Afterpay in respect of the Scheme;
|
(y)
|
(compliance with laws) do everything reasonably within its power to ensure that the Scheme is effected in accordance with all applicable laws and regulations; and
|
(z)
|
(other steps) do all other things necessary to give effect to the Scheme and the orders of the Court approving the Scheme in accordance with all applicable laws and regulations.
|
Square’s obligations
|
(a)
|
(Investigating Accountant) jointly with Afterpay, appoint the Investigating Accountant and provide assistance and information reasonably required by the Investigating Accountant to enable it to prepare the Investigating Accountant’s Report;
|
(b)
|
(Australian Admission) prepare all documents required by ASX to apply for Australian Admission, apply to ASX for Australian Admission and use all reasonable endeavours to ensure that the ASX grants approval for Australian Admission on or before the Business Day after the Effective Date and that trading in New Square CDIs commences on ASX on a normal trading basis as soon as possible on or after the Implementation Date;
|
(c)
|
(assistance with Scheme Booklet and Court documents) promptly provide any assistance or information reasonably requested by Afterpay or its Representatives in connection with the preparation of the Scheme Booklet (including any supplementary disclosure to Afterpay Shareholders) and any documents required to be filed with the Court in respect of the Scheme, promptly review the drafts of the Scheme Booklet (including any updated or supplementary Scheme Booklet) prepared by Afterpay and provide comments on those drafts in a timely manner and in good faith;
|
(d)
|
(Square Information) prepare and promptly provide to Afterpay for inclusion in the Scheme Booklet the Square Information (in accordance in all material respects with all applicable laws, including the Corporations Act, Corporations Regulations, ASIC Regulatory Guide 60 and the Listing Rules) and consent to the inclusion of that information in the Scheme Booklet;
|
(e)
|
(further Square Information) promptly provide to Afterpay any further or new Square Information as may arise after the Scheme Booklet has been sent to Afterpay Shareholders and until the date of the Scheme Meeting as may be necessary to ensure that the Square Information contained in the Scheme Booklet is not, having regard to applicable disclosure requirements, false, misleading or deceptive in any material respect (including because of any material omission) and to ensure that there would be no breach of clause 12.3(h) if it applied as at the date on which the further or new Square Information arose;
|
(f)
|
(verification) undertake appropriate verification processes for the information supplied by Square in the Scheme Booklet and if requested by Afterpay in writing, provide a certificate to Afterpay attesting to the fact appropriate verification processes have been undertaken in respect of such information prior to lodgement of the Scheme Booklet (or any supplementary Scheme Booklet) with ASIC and prior to filing of the Scheme Booklet (or any supplementary Scheme Booklet) with the Court;
|
(g)
|
(Independent Expert information) provide any assistance or information reasonably requested by the Independent Expert in connection with the preparation of the Independent Expert’s Report;
|
(h)
|
(Consent) provide a consent and use all reasonable endeavours to obtain consents from third parties in such form as Afterpay reasonably requires in relation to the form and content in which the Square Information appears in the Scheme Booklet;
|
(i)
|
(Deed Poll) no later than the Business Day prior to the First Court Date, sign and deliver the Deed Poll;
|
(j)
|
(representation) procure that, if requested by Afterpay or if Square so elects, Square is represented by counsel at the Court hearings convened for the purposes of section 411(4)(b) of the Corporations Act, at which, through its counsel, Square will undertake (if requested by the Court) to do all such things and take all such steps within its power as are necessary in order to ensure fulfilment of its obligations under this document and the Scheme;
|
(k)
|
(Conditions Precedent certificate) before 8.00am on the Second Court Date, provide to Afterpay for provision to the Court at the hearing on that date a certificate signed by one of its officers and made in accordance with a resolution of its board confirming (in respect of matters within Square’s knowledge) whether or not the Conditions Precedent for which Square is responsible, as noted in clause 3.1 (other than paragraph (h)), have been satisfied of waived in accordance with clause 3, a draft of which must be provided to Afterpay by 5.00pm on the Business Day prior to the Second Court Date; and
|
(l)
|
(Scheme Consideration) if the Scheme becomes Effective, at the direction of and on behalf of Square Acquirer, issue the New Square Shares and New Square CDIs comprising the Scheme Consideration in the manner and amount contemplated by clause 4.3(c) and the terms of the Scheme.
|
Square Acquirer’s obligations
|
(b)
|
(Scheme Consideration) if the Scheme becomes Effective, provide or procure the provision of the Scheme Consideration in the manner and amount contemplated by clause 4.3(b) and the terms of the Scheme; and
|
(c)
|
(Share transfer) if the Scheme becomes Effective, accept a transfer of the Afterpay Shares as contemplated by clause 4.3(a) and execute instruments of transfer in respect of the Afterpay Shares.
|
Scheme Booklet responsibility statement
|
(a)
|
Afterpay has prepared, and is responsible for, the content of the Scheme Booklet other than, to the maximum extent permitted by law, the Square Information, the Independent Expert’s Report, the Investigating Accountant’s report or any other report or letter issued to Afterpay by a third party and that Square and its directors and officers do not assume any responsibility for the accuracy or completeness of the sections of the Scheme Booklet that Afterpay has prepared and has responsibility for; and
|
(b)
|
Square has prepared, and is responsible for, the Square Information in the Scheme Booklet (and no other part of the Scheme Booklet) and that Afterpay and its directors and officers do not assume any responsibility for the accuracy or completeness of the sections of the Scheme Booklet that Square has prepared and has responsibility for.
|
Disagreement on content of Scheme Booklet
|
(a)
|
if the disagreement relates to the form or content of the Square Information or information related to the Merged Group contained in the Scheme Booklet, Afterpay will make any amendments as Square reasonably requires; and
|
(b)
|
if the disagreement relates to the form or content of any other part of the Scheme Booklet, the Afterpay Board will, acting in good faith, decide the final form or content of the disputed part of the Scheme Booklet.
|
Verification
|
Conduct of Court proceeding
|
Appeal process
|
(a)
|
the parties agree otherwise; or
|
(b)
|
an independent senior counsel advises that, in their opinion, an appeal would have no reasonable prospect of success before the End Date,
|
Minority Interests
|
(a)
|
As promptly as practicable after the date of this document, Afterpay must use all reasonable endeavours to ensure that, by the Record Date, there are no outstanding Minority Interests that are not owned, directly or indirectly, by Afterpay.
|
(b)
|
Without limitation to clause 5.10(a), Afterpay shall:
|
(i)
|
use all reasonable endeavours to take, or cause to be taken, all actions and steps reasonably determined by Square to acquire or cancel the Minority Interests that are not owned, directly or indirectly, by Afterpay by the Record Date;
|
(ii)
|
other than with Square’s prior approval, not do, or cause to be done, any thing (including making any payment or providing any consideration) set out in Attachment 2 of the Afterpay Disclosure Letter with respect to the Minority Interests;
|
(iii)
|
keep Square reasonably informed of its progress towards the close out of the Minority Interests; and
|
(iv)
|
use all reasonable endeavours to do, or cause to be done, all things necessary, proper or advisable to consummate the transactions set out in Attachment 2 of the Afterpay Disclosure Letter.
|
(c)
|
Notwithstanding the foregoing, at Afterpay’s option any of the actions contemplated by clause 5.10(a) or 5.10(b) may be subject to, and conditioned upon, the Scheme becoming Effective.
|
(d)
|
For the avoidance of doubt, and subject at all times to Afterpay’s compliance with the provisions of clause 5.10(a) and clause 5.10(b), failure by Afterpay to ensure that, by the Record Date, there are no outstanding Minority Interests that are not owned, directly or indirectly, by Afterpay shall not constitute a breach of this document or give rise to the failure of any Condition Precedent or any right of termination of this document.
|
Integration Planning
|
(a)
|
The parties agree that:
|
(i)
|
they will establish an Executive Steering Committee as soon as reasonably practicable after the date of this document, which shall be comprised of (i) Cash App Lead and Seller Lead of Square and (ii) Co-CEOs of Afterpay; and
|
(ii)
|
subject to applicable law, the Executive Steering Committee shall, as promptly as practicable following the date of this document, meet to discuss and plan for the implementation of the Scheme and the integration of the business and affairs of the Afterpay Group with the Square Group following the implementation of the Scheme and shall meet from time to time at least once every month, with weekly contacts, and such other times as reasonably requested by either Square or Afterpay and reasonably agreed to by the other party.
|
(b)
|
Subject to applicable law, the parties shall cooperate and use all reasonable endeavours to take all actions as may be necessary or advisable to implement the plan for integration of the business and affairs of the Afterpay Group with the Square Group following the implementation of the Scheme.
|
No partnership or joint venture
|
Board recommendation
|
Afterpay Board recommendation
|
(a)
|
there is an Afterpay Superior Proposal and the Afterpay Board determines in good faith and acting reasonably, having received legal advice from its external legal advisers (who must be reputable advisers experienced in transactions of this nature) that failing to do so would constitute a breach of their fiduciary or statutory duties to Afterpay Shareholders; or
|
(b)
|
the Independent Expert concludes that the Scheme is not in the best interests of Afterpay Shareholders, or adversely changes its previously given opinion that the Scheme is in the best interests of Afterpay Shareholders.
|
Square Board recommendation
|
(a)
|
there is (i) an Intervening Event or (ii) a Square Superior Proposal; and
|
(b)
|
the Square Board determines in good faith and acting reasonably, having received legal advice from its external legal advisers (who must be reputable advisers experienced in transactions of this nature) that failing to do so would constitute a breach of their fiduciary or statutory obligations to Square Shareholders.
|
Withdrawal or change of recommendation
|
(a)
|
the relevant party must notify the other party in writing as promptly as reasonably practicable; and
|
(b)
|
the parties must consult in good faith for 5 Business Days after the date on which the notification in clause 6.3(a) is given to consider and determine whether the recommendation in place at the time can be maintained. That recommendation cannot be withdrawn or changed in accordance with clause 6.1 or with clause 6.2 until the end of the consultation period (provided that, in the case of an actual, proposed or potential Afterpay Competing Transaction, Afterpay must comply with clause 9.8 in lieu of this clause 6.3).
|
Directors and employees
|
Appointment/retirement of Afterpay directors
|
(a)
|
cause the appointment of each Incoming Director to the Afterpay Board as of such Implementation Date; and
|
(b)
|
procure that each of the Outgoing Directors retire from the Afterpay Board and provide written notice to the effect that they have no claim outstanding for loss of office, remuneration or otherwise against Afterpay or Square,
|
Directors’ and officers' insurance
|
(a)
|
Subject to the Scheme becoming Effective and subject to the Corporations Act, Square undertakes in favour of Afterpay and each other person who is an Afterpay Indemnified Party that it will, for a period of 7 years from the Implementation Date:
|
(i)
|
ensure that the constitutions of Afterpay and each other member of the Afterpay Group (including any successor entities thereto) continue to contain the rules that are contained in those constitutions at the date of this document that provide for each company to indemnify each of its directors and officers against any liability incurred by that person in his or her capacity as a director or officer of the company to any person other than a member of the Square Group; and
|
(ii)
|
procure that Afterpay and each other member of the Afterpay Group comply with any deeds of indemnity, access and insurance entered into by them in favour of their respective directors and officers from time to time.
|
(b)
|
At or prior to the Implementation Date, Afterpay must purchase a 7-year prepaid “run-off” directors’ and officers’ liability insurance policy (“D&O Run-Off Policy”) on terms and conditions providing coverage retentions, limits and other material terms (including in relation to deductibles) substantially equivalent to the current policies of directors’ and officers’ liability insurance maintained by members of the Afterpay Group with respect to matters arising at or prior to the Implementation Date. In connection with obtaining such D&O Run-Off Policy, Afterpay must consult in good faith with Square regarding the proposed terms of the D&O Run-Off Policy and permit Square to participate in all negotiations over such terms.
|
Period of undertaking
|
Release of Afterpay Indemnified Parties
|
(a)
|
any breach of any representations and warranties of Afterpay or any other Afterpay Group entity in this document; or
|
(b)
|
any disclosures containing any statement which is false or misleading whether in content or by omissions,
|
Benefit of undertaking for Afterpay Group
|
Release of Square Indemnified Parties
|
(a)
|
any breach of any representations and warranties of Square or any other Square Group entity in this document; or
|
(b)
|
any disclosures containing any statement which is false or misleading whether in content or by omissions,
|
Benefit of undertaking for Square Group
|
Post-Implementation Square Board
|
(a)
|
Square shall appoint one Afterpay director as a member of the Square Board (who shall serve as a Class III director of Square), with such appointment to be effective as of immediately following the implementation of the Scheme.
|
(b)
|
The director shall be selected by Square in consultation with Afterpay, and Square will consider in good faith the recommendation of Afterpay with respect thereto. Subject to Square’s board nomination process, Square shall use reasonable endeavours to select such director as soon as practicable after the date of this document.
|
Employee and Benefit Matters
|
(a)
|
Subject to the requirements of applicable law or regulation, each Continuing Employee, for the period from the Implementation Date and ending on the first anniversary of the Implementation Date (or, if earlier, the date of such Continuing Employee’s termination of employment with Afterpay and its affiliates, including the Square Group), the Square Group will provide to each Continuing Employee:
|
(i)
|
an annual total target compensation opportunity that is no less favourable than the annual total target compensation opportunity in effect for such Continuing Employee immediately prior to the Implementation Date (for the avoidance of doubt, including equity or equity-based compensation opportunities); and
|
(ii)
|
other benefits that are, in the aggregate, substantially comparable to the aggregate other benefits provided to such Continuing Employee immediately prior to the Implementation Date (excluding any defined benefit pension benefits or any one-time or non-recurring compensation or benefits).
|
(b)
|
For all purposes (including for purposes of determining eligibility to participate, level of benefits, vesting, and benefit accruals) under any plan, program, policy or arrangement maintained by the Square Group, including any vacation, paid time off and severance plans, each Continuing Employee’s service with or otherwise credited by the Afterpay Group shall be treated as service with the Square Group; provided that such service shall not be recognized to the extent that such recognition would result in any duplication of benefits or for purposes of benefit accruals under any defined benefit pension plan.
|
(c)
|
The Square Group will use reasonable efforts to waive, or cause to be waived, any pre-existing condition limitations, exclusions, actively at work requirements and waiting periods under any welfare benefit plan maintained by the Square Group in which Continuing Employees (and their eligible dependents) will be eligible to participate from and after the Implementation Date, except to the extent that such pre-existing condition limitations, exclusions, actively-at-work requirements and waiting periods would not have been satisfied or waived under the comparable Afterpay Employee Plan immediately prior to the Implementation Date. The Square Group will use reasonable efforts to recognize, or cause to be recognized, the dollar amount of all co-payments, deductibles and similar expenses incurred by each Continuing Employee (and his or her eligible dependents) during the calendar year in which the Implementation Date occurs for purposes of satisfying such year's deductible, co-payment and out-of-pocket maximum limitations under the relevant welfare benefit plans in which such Continuing Employee (and dependents) will be eligible to participate from and after the Implementation Date.
|
(d)
|
This clause 7.9 shall be binding upon and shall inure solely to the benefit of each of the parties to this document, and nothing in this clause 7.9, express or implied, is intended to confer upon any other person (including, for the avoidance of doubt, any current or former directors, officers, employees, contractors or consultants of any of the Afterpay Group or the Square Group) any rights or remedies of any nature whatsoever under or by reason of this clause 7.9.
|
(e)
|
Nothing contained in this clause 7.9 shall:
|
(i)
|
be treated as an amendment of any Afterpay Employee Plan or any compensation or benefit plan, program, policy, contract or arrangement maintained by the Square Group or
|
(ii)
|
obligate either the Afterpay Group or the Square Group to (A) maintain any particular compensation or benefit plan, program, policy, contract or arrangement, except in accordance with the terms of such plan, program, policy, contract or arrangement, or (B) retain the employment of any particular employee.
|
Conduct of business
|
Overview
|
Specific obligations
|
(a)
|
(business and material assets) maintains the condition of its business and material assets in all material respects;
|
(b)
|
(key officers and employees) keeps available the services of its key officers and key employees;
|
(c)
|
(relationships) preserves its material relationships with key customers, suppliers, licensors, licensees, joint venturers and others with whom it has business dealings in all material respects;
|
(d)
|
(change of control provisions) identifies any change of control or similar provisions in any contracts in limbs (b), (c) and (d) of the definition of Material Contracts (Specified Material Contracts) any other significant contracts as reasonably requested by Square, and obtain the consents of relevant persons who have rights in respect of those Specified Material Contracts, and cooperate with Square in good faith to discuss obtaining consent in respect of such other significant contracts for, the transactions contemplated by the Scheme, provided that:
|
(i)
|
Square must cooperate with, and provide reasonable assistance to Afterpay to obtain such consents, including by promptly providing any information reasonably required by counterparties;
|
(ii)
|
Afterpay is not required to make any payment to obtain any such consent prior to the Implementation Date;
|
(iii)
|
a failure by Afterpay or a member of the Afterpay Group to obtain any such consent in and of itself will not constitute a breach of this document by Afterpay; and
|
(iv)
|
this clause 8.2(d) shall not apply to any contract in respect of any Minority Interest, which shall be exclusively governed by clause 5.10.
|
Prohibited actions
|
(a)
|
(Material Contracts; Restraints)
|
(i)
|
other than in the ordinary course of business or as would not be adverse to the Afterpay Group or the Merged Group in any material respect, enter into, terminate (other than non-renewals occurring in the ordinary course of business), amend or waive any right under, or agree to do any of the foregoing with respect to, any contracts in limbs (a), (b), (c) or (d) of the definition of Material Contract; or
|
(ii)
|
enter into any contract or commitment (A) restraining in any material respect any member of the Merged Group from competing with any person or conducting activities in any market, (B) obligating in any material respect any member of the Merged Group to conduct business with any third party on a preferential or exclusive basis or (C) containing “most favoured nation” or similar provisions that would bind the Merged Group in any material respect.
|
(b)
|
(lines of business) enter into any new line of business that is materially different to the Core Business or discontinue any material aspect of the Core Business;
|
(c)
|
(capital expenditure) incur or make any capital expenditures or enter into arrangements or agreements providing for capital expenditures or otherwise commit to do so, whether in one transaction or in a series of related transactions, in excess of A$20 million in the aggregate or individually;
|
(d)
|
(derivative instruments) enter into any agreement, arrangement or transaction with respect to derivative instruments (including swaps, futures contracts, forward commitments, commodity derivatives or options) or similar instruments;
|
(e)
|
(accounting policies) change any accounting policy applied by a member of the Afterpay Group to report their financial position in any material respect other than any change required by a change in the Accounting Standards or US GAAP;
|
(f)
|
(tax) settle or compromise or make, change or revoke any concessions in relation to any material tax claims, liabilities or disputes or make any election in relation to tax, or otherwise engage in any transaction, act or event which gives rise to any tax liability which is outside the ordinary course of business as it was conducted prior to the date of this document;
|
(g)
|
(legal proceedings) settle any legal proceedings, claim, investigation, arbitration or other like proceedings, except where such settlement would result in monetary obligations involving the payment of monies of not more than A$1,500,000 (net of all amounts covered by existing insurance policies) in the aggregate or individually, does not involve the imposition of injunctive relief or other non-monetary obligations, including admission of wrongdoing (other than to pay such monies or customary confidentiality or other non-monetary obligations that are incidental to the agreement to pay such monies) on the Afterpay Group (or on the Merged Group after implementation of the Scheme) and would not create any adverse precedent that would be material to the Afterpay Group (or the Merged Group after implementation of the Scheme);
|
(h)
|
(compensation and employment arrangements) other than as required pursuant to the terms of an Afterpay Employee Plan in place as of the date of this document and included in the Afterpay Disclosure Materials, or adopted or amended not in violation of this document, or as is necessary to comply with clause 4.8(a):
|
(i)
|
increase the remuneration of, or otherwise vary the service or employment arrangements with, any of its current or former directors, officers, or employees, other than annual increases in remuneration or benefits for employees other than Level E2 or Level E3 employees, made in the ordinary course of business consistent with past practice that, in each case, do not exceed 10% of such individual’s annual cash compensation immediately prior to the increase or 5% of total payroll costs in the aggregate;
|
(ii)
|
grant any new equity-based awards or amend or modify the terms of any outstanding equity-based awards;
|
(iii)
|
pay or award, or agree to pay or award, any cash bonuses or cash incentive compensation, termination or retention payments;
|
(iv)
|
pay or agree to pay to any current or former director, officer, employee or other service provider any pension, retirement allowance or other benefit in excess of those in place as of the date of this document and included in the Afterpay Disclosure Materials or permitted in accordance with clause 8.3(h)(vii);
|
(v)
|
enter into any new, or amend any existing, employment, change in control, retention or severance or termination agreement with any current or former director, officer, employee or other service provider, other than (i) agreements with new hires or newly promoted employees who are permitted to be hired or promoted under clause 8.3(h)(vii) where such agreements are materially consistent with those provided to other similarly situated employees and do not provide any retention, equity award grants or enhanced (change in control) severance or (ii) to provide severance compensation and severance benefits (excluding any enhanced change in control severance) in the ordinary course of business as it was conducted prior to the date of this document to employees who are terminated under circumstances permitted by clauses 8.3(h)(v) and 8.3(h)(vii);
|
(vi)
|
establish any Afterpay Employee Plan which was not in place as at the date of this document, or amend or terminate any Afterpay Employee Plan, other than (i) Afterpay Employee Plans that document any action not otherwise prohibited by this clause 8.3(h), (ii) de minimis administrative amendments or (iii) in connection with the annual renewal of health and welfare benefit plans, in each case, that do not have the effect of materially enhancing any benefits thereunder or otherwise result in materially increased costs to the Afterpay Group;
|
(vii)
|
offer employment to, promote an existing employee, or terminate the employment of any employee or individual service provider who is an employee at Level 7 and above, other than terminations for “cause” (as determined by the Afterpay Group in its reasonable discretion);
|
(viii)
|
enter into, amend or terminate any collective bargaining agreement or other labor agreement; or
|
(ix)
|
waive any non-competition or non-solicitation obligation of any direct report of either of the Afterpay Chief Executive Officers (each a “CEO Direct Report”) or any direct report of a CEO Direct Report;
|
(i)
|
(accelerate rights) accelerate or fund the rights of any of its directors, officers or employees to compensation or benefits of any kind (including under any Afterpay executive or employee share plans), other than as permitted under clause 8.3(h) or as required pursuant to the terms of an Afterpay Employee Plan in place as of the date of this document, or adopted or amended not in violation of this document;
|
(j)
|
(Intellectual Property) (A) sell, assign, transfer or grant any exclusive license to, or (B) abandon or permit to let lapse or expire (other than immaterial in-bound licenses to the Afterpay Group that the Afterpay Group would allow to expire in the ordinary course of business in accordance with their terms), any Intellectual Property material to the business of the Afterpay Group as conducted as of the date of this document, and as proposed by the Afterpay Group as of the date of this document to be conducted in the future;
|
(k)
|
(indebtedness) incur, assume, guarantee or become liable for any Indebtedness, other than:
|
(i)
|
intercompany Indebtedness;
|
(ii)
|
guarantees by Afterpay or any direct or indirect wholly owned Subsidiary of Afterpay of indebtedness of Afterpay or any other direct or indirect wholly owned Subsidiary of Afterpay;
|
(iii)
|
drawing down on undrawn amounts under the Afterpay Group’s warehouse facilities as of the date of this document to fund underlying sales in the ordinary course of business; or
|
(iv)
|
any Indebtedness incurred to refinance, roll over, replace or renew any Indebtedness already outstanding as of the date of this document, provided that (A) the principal amount of such refinancing, roll-over, replacement or renewed Indebtedness is not materially greater than the principal amount of the Indebtedness being refinanced, rolled over, replaced or renewed (plus accrued interest, and a reasonable amount of premium, fees and expenses incurred in connection with such refinancing), (B) such Indebtedness is on terms consistent in all material respects with the Indebtedness being refinanced, rolled over, replaced or renewed, taking into account conditions in the capital markets at the time such Indebtedness is incurred, and (C) such Indebtedness does not consist of securities or instruments convertible into securities;
|
(l)
|
(real property)
|
(i)
|
acquire or agree to acquire any material real property or enter into, or agree to enter into, any material lease or sublease of real property (whether as a lessor, sublessor, lessee or sublessee);
|
(ii)
|
sell, assign, dispose of, surrender or exercise any right to terminate, or agree to sell, assign, dispose of, surrender or exercise any right to terminate, any material lease or sublease of real property (whether as a lessor, sublessor, lessee or sublessee) other than, in each case, expirations or surrenders of any leases or subleases in accordance with their terms or in the ordinary course of business;
|
(iii)
|
materially modify or amend or exercise any right to renew any material lease, or waive any material term or condition thereof or grant any consents thereunder; or
|
(iv)
|
grant or otherwise create or consent to the creation of any easement, covenant, restriction, assessment or charge affecting, in any material respect, any material real property leased by a member of the Afterpay Group, or any interest therein or part thereof;
|
(m)
|
(Prescribed Events) take any action that, or fail to take any action whose omission, would give rise to any Afterpay Prescribed Event; or
|
(n)
|
(agree) agree to do any of the matters set out above.
|
Exceptions to Afterpay conduct of business provisions
|
(a)
|
is expressly required or permitted by this document, the Scheme, or otherwise required by law or regulation;
|
(b)
|
would be required to enforce Square’s obligations under the Information Exchange Protocol;
|
(c)
|
has been Disclosed to Square in the Afterpay Disclosure Letter;
|
(d)
|
has been agreed to in writing by Square (with such agreement not to be unreasonably withheld, delayed or conditioned); or
|
(e)
|
is reasonably and prudently required to respond to any epidemic, pandemic (including COVID-19 or any COVID-19 Measures), hurricane, earthquake, flood, weather conditions, calamity or other natural disaster, act of God or other force majeure event (or any worsening of or recovery from any of the foregoing).
|
Square conduct of business
|
(a)
|
Other than with the prior written approval of Afterpay (such approval not to be unreasonably withheld, delayed or conditioned), Square must, from the date of this document up to and including the Implementation Date, use all reasonable endeavours to ensure that Square and each member of the Square Group:
|
(i)
|
(business and material assets) maintains the condition of its business and material assets in all material respects;
|
(ii)
|
(key officers and employees) keeps available the services of its key officers and key employees; and
|
(iii)
|
(relationships) preserves its material relationships with customers, suppliers, licensors, licensees, joint venturers and others with whom it has business dealings in all material respects.
|
(b)
|
Other than with the prior written approval of Afterpay (such approval not to be unreasonably withheld or delayed), from the date of this document up to and including the earlier of termination of this document in accordance with its terms and the Implementation Date, Square must, and must cause each member of the Square Group to, not take any action that, or fail to take any action whose omission, would give rise to any Square Prescribed Event.
|
(c)
|
Nothing in this clause 8.5 restricts the ability of Square to take any action which:
|
(i)
|
is expressly required or permitted by this document, the Scheme, or otherwise required by law or regulation;
|
(ii)
|
would be required to enforce Afterpay’s obligations under the Information Exchange Protocol;
|
(iii)
|
has been Disclosed to Afterpay in the Square Disclosure Letter;
|
(iv)
|
has been agreed to in writing by Afterpay (with such agreement not to be unreasonably withheld, delayed or conditioned); or
|
(v)
|
is reasonably and prudently required to respond to any epidemic, pandemic (including COVID-19 or any COVID-19 Measures), hurricane, earthquake, flood, weather conditions, calamity or other natural disaster, act of God or other force majeure event (or any worsening of or recovery from any of the foregoing).
|
Access to people and Afterpay Information
|
(a)
|
as soon as reasonably practicable provides Square and its officers and advisers with any documents, records, and other information (subject to any existing confidentiality obligations owed to third parties, or applicable privacy laws) reasonably requested by them and provide Square and its officers and advisers with reasonable access to Afterpay’s officers and advisers which Square reasonably requires for the purposes of:
|
(i)
|
understanding Afterpay’s financial position (including its cash flow and working capital position), trading performance and management control systems;
|
(ii)
|
implementing the Scheme; and
|
(iii)
|
preparing for carrying on the business of Afterpay following implementation of the Scheme; and
|
(iv)
|
any other purpose which is agreed in writing between the parties (acting reasonably),
|
(b)
|
Afterpay will not be required to provide any access or take any action contemplated by this clause 8.6 to the extent that to do so would breach the Information Exchange Protocol, any applicable law or regulation or any obligations of confidentiality owed to third parties as of the date of this document, or result in the loss of legal privilege or to do so would cause undue disruption to the Afterpay Group’s business, provided, that Afterpay shall, and shall cause its Subsidiaries to, use all reasonable endeavours to make appropriate substitute disclosure arrangements under circumstances in which such restrictions apply (including (x) obtaining any required consent from any third party and (y) redacting such information only to the extent necessary to comply with any law, regulation or obligation of confidentiality or to prevent loss of legal privilege) and to provide such information as to the applicable matter as can be conveyed.
|
Warehouse facilities
|
(a)
|
As soon as practicable after the date of this document, and in any event prior to the Implementation Date, Afterpay must, and must procure that each other member of the Afterpay Group:
|
(i)
|
applies to each relevant Financier for consent in relation to the implementation of the Scheme and the transaction contemplated by this document;
|
(ii)
|
use their reasonable endeavours to:
|
(A)
|
obtain the consent referred to in clause 8.7(a)(i) from each relevant Financier;
|
(B)
|
ensure that, once given, the consent from a Financier is not withdrawn, cancelled or revoked; and
|
(C)
|
keeps Square informed of progress in obtaining the consent from the Financiers.
|
(b)
|
Square must reasonably cooperate with, and provide reasonable assistance to, Afterpay to obtain such consents, including by promptly providing any information reasonably required by each relevant Financier.
|
(c)
|
Notwithstanding the foregoing:
|
(i)
|
Afterpay is not required to make any payment to obtain any such consent prior to the Implementation Date; and
|
(ii)
|
subject to Afterpay’s compliance with clause 8.7(a) and clause 8.7(b), a failure by Afterpay or a member of the Afterpay Group to obtain any consent of any Financier pursuant to this clause 8.7 will not constitute a breach of this document by Afterpay.
|
Exclusivity
|
No existing discussions
|
No-shop
|
(a)
|
solicits, invites, facilitates, encourages or initiates any enquiries, negotiations or discussions; or
|
(b)
|
communicates any intention to do any of these things,
|
No-talk
|
(a)
|
negotiates or enters into negotiations or discussions regarding; or
|
(b)
|
participates in negotiations or discussions with any other person regarding,
|
Due diligence information
|
(a)
|
enables any other person other than Square or its Representatives to undertake due diligence investigations on any member of the Afterpay Group or their businesses or solicit, invite, initiate, encourage, facilitate or permit any other person other than Square or its Representatives to undertake due diligence investigations on any member of the Afterpay Group or any of their respective businesses or operations, in connection with the person formulating, developing or finalising, or assisting in the formulation, development or finalisation of, an Afterpay Competing Transaction; or
|
(b)
|
makes available to any other person, or permits any other person to receive, other than Square or its Representatives (in the course of due diligence investigations or otherwise) any non-public information relating to any member of the Afterpay Group or their businesses or operations in connection with the person formulating, developing or finalising, or assisting in the formulation, development or finalisation of, an Afterpay Competing Transaction.
|
Exceptions
|
(a)
|
that the Afterpay Competing Transaction is, or would reasonably be expected to become, an Afterpay Superior Proposal; and
|
(b)
|
that failing to respond to the Afterpay Competing Transaction would constitute a breach of the Afterpay Board’s fiduciary or statutory obligations,
|
Further exceptions
|
(a)
|
continuing to make normal presentations to, and to respond to enquiries from, brokers, portfolio investors and analysts in the ordinary course in relation to the Scheme or its business generally; or
|
(b)
|
fulfilling its continuous disclosure requirements as required by law.
|
Notice of unsolicited approach
|
(a)
|
During the Exclusivity Period, Afterpay must promptly (and in any event within 36 hours) inform Square if it or, to its knowledge, any of its Representatives:
|
(i)
|
receives any approach with respect to any Afterpay Competing Transaction;
|
(ii)
|
receives any request for information relating to any member of the Afterpay Group or any of their businesses or operations or any request for access to any non-public information of any member of the Afterpay Group in connection with a current or future Afterpay Competing Transaction; or
|
(iii)
|
provides any information relating to any member of the Afterpay Group or any of their businesses or operations to any person in connection with or for the purposes of a current or future Afterpay Competing Transaction.
|
(b)
|
A notice given under clause 9.7(a) must be accompanied by all material details of the relevant event, including (as the case may be):
|
(i)
|
the identity of the person who made the relevant approach, inquiry or proposal to initiate discussions or negotiations referred to in clause 9.7(a)(i), who made the relevant request for information referred to in clause 9.7(a)(ii), or to whom any information referred to in clause 9.7(a)(iii) was provided;
|
(ii)
|
the material terms and conditions (including price, conditions precedent, timetable and break or reimbursement fee (if any), or any other similar material terms) of any Afterpay Competing Transaction or any proposed Afterpay Competing Transaction (to the extent known); and
|
(iii)
|
the nature of the information requested and/or provided.
|
(c)
|
During the Exclusivity Period, Afterpay must promptly provide Square with:
|
(i)
|
in the case of written materials, a copy of; or
|
(ii)
|
in any other case, a written statement of,
|
(d)
|
Without limiting Afterpay’s other obligations under this clause 9.7, Afterpay shall keep Square reasonably informed on a prompt and timely basis of the status and material terms and of any material developments, discussions or negotiations regarding any Afterpay Competing Transaction or proposed Afterpay Competing Transaction and the material terms and conditions thereof (including any change in price or form of consideration or other material amendment thereto), within 36 hours after the receipt or delivery thereof, keep Square reasonably informed on a prompt and timely basis as to the nature of any non-public information requested of Afterpay with respect thereto, and provide information regarding any Afterpay Competing Transaction or proposed Afterpay Competing Transaction reasonably requested by Square.
|
Matching right
|
(a)
|
must not enter into any agreement, arrangement or understanding (whether or not in writing) pursuant to which a third party or Afterpay proposes (or both a third party and Afterpay propose) to undertake or give effect to an actual, proposed or potential Afterpay Competing Transaction; and
|
(b)
|
must procure that the Afterpay Board does not change its recommendation in favour of the Scheme to publicly recommend an actual, proposed or potential Afterpay Competing Transaction,
|
(c)
|
the Afterpay Board acting in good faith after taking advice from its outside legal adviser and financial adviser of nationally recognized reputation, determines that the Afterpay Competing Transaction constitutes an Afterpay Superior Proposal;
|
(d)
|
the Afterpay Board, after receiving such legal advice from its external legal advisers of nationally recognized reputation, determines that the failure to take such actions specified in clause 9.8(a) and/or 9.8(b) would constitute a breach of the Afterpay Board’s fiduciary or statutory duties to Afterpay Shareholders;
|
(e)
|
Afterpay has provided Square with the material terms and conditions of the Afterpay Competing Transaction to the extent required by clause 9.7(b) and a written explanation as to why it considers that the Afterpay Competing Transaction constitutes an Afterpay Superior Proposal;
|
(f)
|
for at least 5 Business Days, Afterpay and its Representatives have negotiated in good faith with Square and its Representatives, to the extent Square wishes to negotiate and make itself reasonably available to negotiate, to enable Square to propose revisions to the terms of this document; and
|
(g)
|
upon the expiry of such negotiation period, the Afterpay Board has considered in good faith any binding proposed revisions to the terms of this document proposed by Square, and has determined in good faith, after taking advice from its outside legal adviser and financial adviser of nationally recognized reputation, that such Afterpay Competing Transaction would nevertheless continue to constitute an Afterpay Superior Proposal if such revisions proposed by Square were to be given effect and that the failure to take the actions specified in clause 9.8(a) and/or 9.8(b) would continue to constitute a breach of the Afterpay Board’s fiduciary or statutory duties to Afterpay Shareholders.
|
Legal advice
|
Afterpay Break Fee
|
Background
|
(a)
|
Square and Afterpay believe that the Scheme will provide significant benefits to Afterpay, Square, and their respective shareholders, and Square and Afterpay acknowledge that, if they enter into this document and the Scheme is subsequently not implemented, Square will incur significant costs, including those set out in clause 10.5;
|
(b)
|
Square requested that provision be made for the Break Fee, without which Square would not have entered into this document;
|
(c)
|
both the Square Board and Afterpay Board believe that it is appropriate for both parties to agree to the payment referred to in this clause to secure Square’s participation in the Scheme; and
|
(d)
|
both parties have received legal advice on this document and the operation of this clause.
|
Payment by Afterpay to Square
|
(a)
|
(Competing Transaction) before the Effective Date an Afterpay Competing Transaction is publicly announced or made and within 12 months of the End Date, an Afterpay Competing Transaction is completed;
|
(b)
|
(change of recommendation) Square validly terminates this document in accordance with clause 13.1(b), except where the relevant change, withdrawal or modification of the Afterpay Board’s recommendation is made (i) after the Independent Expert concludes that in the opinion of the Independent Expert the Scheme is not in the best interests of Afterpay Shareholders (other than where the reason for such opinion is an Afterpay Competing Transaction) or (ii) in circumstances arising as a result of Square’s material breach of a term of this document;
|
(c)
|
(Afterpay Superior Proposal) Afterpay validly terminates this document in accordance with clause 13.1(f); or
|
(d)
|
(material breach) Square validly terminates this document in accordance with clause 13.1(e).
|
No amount payable if Scheme becomes Effective
|
(a)
|
no amount is payable by Afterpay under clause 10.2; and
|
(b)
|
if any amount has already been paid under clause 10.2 it must be refunded by Square.
|
Timing of payment
|
(a)
|
A demand by Square for payment of the Break Fee under clause 10.2 must:
|
(i)
|
be in writing;
|
(ii)
|
be made after the occurrence of the event in that clause giving rise to the right to payment;
|
(iii)
|
state the circumstances which give rise to the demand; and
|
(iv)
|
nominate an account in the name of Square into which Afterpay must pay the Break Fee.
|
(b)
|
Afterpay must pay the Break Fee to Square under clause 10.2 without withholding or set off within 5 Business Days of receipt by Afterpay of a valid demand for payment from Square under clause 10.4(a).
|
Nature of payment
|
(a)
|
advisory costs;
|
(b)
|
costs of management and directors’ time;
|
(c)
|
out-of-pocket expenses;
|
(d)
|
the distraction of Square’s management from conducting Square’s business as usual caused by pursuing the Scheme;
|
(e)
|
reasonable opportunity costs incurred by Square in pursuing the Scheme or in not pursuing alternative acquisitions or strategic initiatives which Square could have developed to further its business and objectives; and
|
(f)
|
damage to Square’s reputation associated with a failed transaction and the implications of that damage to Square’s business.
|
Afterpay’s limitation of liability
|
(a)
|
the maximum liability of Afterpay to Square under or in connection with this document including in respect of any breach of this document will be the amount of the Break Fee; and
|
(b)
|
the payment by Afterpay of the Break Fee represents the sole and absolute amount of liability of Afterpay under or in connection with this document and no further damages, fees, expenses or reimbursements of any kind will be payable by Afterpay in connection with this document, provided that nothing in this clause 10.6 impacts Square’s ability to seek and obtain the remedy of specific performance.
|
Square Break Fee
|
Background
|
(a)
|
Square and Afterpay believe that the Scheme will provide significant benefits to Square, Afterpay and their respective shareholders, and Square and Afterpay acknowledge that, if they enter into this document and the Scheme is subsequently not implemented, Afterpay and Afterpay Shareholders will incur significant costs including those set out in clause 11.5;
|
(b)
|
Afterpay requested that provision be made for the payment of the Break Fee, without which Afterpay would not have entered into this document;
|
(c)
|
both the Square Board and Afterpay Board believe that it is appropriate for both parties to agree to the payment referred to in this clause to secure Afterpay’s participation in the Scheme; and
|
(d)
|
both parties have received legal advice on this document and the operation of this clause.
|
Payment by Square to Afterpay
|
(a)
|
(Adverse Recommendation Change) Afterpay validly terminates this document in accordance with clause 13.1(c), except where the relevant change, withdrawal or modification of the Square Board’s recommendation is made in circumstances arising as a result of Afterpay’s material breach of a term of this document;
|
(b)
|
(material breach) Afterpay validly terminates this document in accordance with clause 13.1(e);
|
(c)
|
(failure to obtain Square Shareholder Approval) (i) Square or Afterpay validly terminates this document in accordance with 13.1(g) because Square has failed to obtain the Square Shareholder Approval at the Square Shareholder Meeting or (ii) this document is terminated by Afterpay in accordance with clause 13.1(a) without the Square Shareholder Meeting having been held, in each case provided that the Square Board has not changed, withdrawn or adversely modified its recommendation to the Square Shareholders that they vote in favour of the issuance of New Square Shares and Square A Shares underlying New Square CDIs for the Scheme; or
|
(d)
|
(Square Competing Transaction) before the Effective Date a Square Competing Transaction is publicly announced or made and within 12 months of the End Date, a Square Competing Transaction is completed.
|
No amount payable if Scheme becomes Effective
|
(a)
|
no amount is payable by Square under clause 11.2; and
|
(b)
|
if any amount has already been paid under clause 11.2 it must be refunded by Afterpay.
|
Timing of payment
|
(a)
|
A demand by Afterpay for payment of the Break Fee under clause 11.2 must:
|
(i)
|
be in writing;
|
(ii)
|
be made after the occurrence of the event in that clause giving rise to the right to payment;
|
(iii)
|
state the circumstances which give rise to the demand; and
|
(iv)
|
nominate an account in the name of Afterpay into which Square must pay the Break Fee.
|
(b)
|
Square must pay the Break Fee to Afterpay without withholding or set off within 5 Business Days of receipt by Square of a valid demand for payment from Afterpay under clause 11.4(a).
|
Nature of payment
|
(a)
|
advisory costs
|
(b)
|
costs of management and directors’ time;
|
(c)
|
out-of-pocket expenses;
|
(d)
|
the distraction of Afterpay’s management from conducting Afterpay’s business as usual caused by pursuing the Scheme;
|
(e)
|
reasonable opportunity costs incurred by Afterpay in pursuing the Scheme or in not pursuing strategic initiatives which Afterpay could have developed to further its business and objectives; and
|
(f)
|
damage to Afterpay’s reputation associated with a failed transaction and the implications of that damage to Afterpay’s business.
|
Square’s limitation of liability
|
(a)
|
the maximum liability of Square to Afterpay under or in connection with this document including in respect of any breach of this document will be the amount of the Break Fee;
|
(b)
|
the payment by Square of the Break Fee represents the sole and absolute liability of Square under or in connection with this document and no further damages, fees, expenses or reimbursements of any kind will payable by Square under or in connection with this document; and
|
(c)
|
nothing in this clause limits Square’s liability under (i) the Deed Poll or for failure to make any payment required under clause 4.2 or (ii) impacts Afterpay’s ability to seek and obtain the remedy of specific performance.
|
Representations and warranties
|
Afterpay's representations and warranties
|
(a)
|
(status)
|
(i)
|
it and each other member of the Afterpay Group has been incorporated or formed in accordance with the laws of its place of incorporation and remains in good standing thereunder, except in the case of such other members, where the failure to be in good standing would not reasonably be expected to have, individually or in the aggregate, an Afterpay Material Adverse Effect;
|
(ii)
|
there are no restrictions on the ability of any Afterpay Subsidiary to pay dividends or distributions except for restrictions imposed by applicable law.
|
(b)
|
(power)
|
(i)
|
it has power to enter into this document, to comply with its obligations under it and exercise its rights under it;
|
(ii)
|
it and each other member of the Afterpay Group has the corporate power and authority to own, lease or operate all of its properties and assets and to carry on its business as it is now being conducted, except in relation to such other members, where the failure to have such power and authority would not reasonably be expected to have, individually or in the aggregate, an Afterpay Material Adverse Effect;
|
(c)
|
(no contravention) the entry by it into, and its compliance with its obligations and the exercise of its rights under, this document does not and will not conflict with or breach:
|
(i)
|
its constituent documents or cause a limitation on its powers or the powers of its directors to be exceeded;
|
(ii)
|
any applicable law binding on it or its assets, except where any conflict would not, individually or in the aggregate, reasonably be expected to have an Afterpay Material Adverse Effect; or
|
(iii)
|
any other document or agreement that is binding on any member of the Afterpay Group, except where any conflict or breach would not, individually or in the aggregate, reasonably be expected to have an Afterpay Material Adverse Effect;
|
(d)
|
(consents and approvals) except for:
|
(i)
|
the filing of any required applications, filings and notices, as applicable, with the NYSE, SEC, ASX, or ASIC;
|
(ii)
|
the filing of any required applications, filings and notices, as applicable, with FIRB, OIO, Deputy General Directorate of Foreign Investments (“Subdirección General de Inversiones Exteriores”) (or other competent public authority), Bank of Spain, ACCC and the U.S. Federal Trade Commission and the U.S. Department of Justice under the HSR Act; and
|
(iii)
|
approval of the Scheme by Court,
|
(iv)
|
the execution and delivery by it of this document; or
|
(v)
|
the implementation of the Scheme and the other transactions contemplated by this document;
|
(e)
|
(authorisations) it has in full force and effect each authorisation necessary for it to enter into this document, to comply with its obligations and exercise its rights under it, and to allow them to be enforced;
|
(f)
|
(validity of obligations) its obligations under this document are valid and binding and are enforceable against it in accordance with its terms;
|
(g)
|
(reliance) the Afterpay Information contained in the Scheme Booklet will be included in good faith and on the understanding that Square and its directors will rely on that information for the purposes of considering and approving the Square Information in the Scheme Booklet before it is despatched, approving the entry into the Deed Poll and implementing the Scheme;
|
(h)
|
(Afterpay Information) the Afterpay Information provided in accordance with this document and included in, or incorporated by reference into, the Scheme Booklet and the Square Registration/Proxy Statement, as applicable, as at the date of the Scheme Booklet, the date the Square Registration/Proxy Statement or any amendment or supplement thereto is filed with the SEC or mailed to the Square Shareholders or at the time of the Square Shareholder Meeting, as applicable, will not contain any material statement which is misleading or deceptive nor contain any material omission having regard to applicable disclosure requirements and will comply in all material respects with the requirements of the Corporations Act, the Listing Rules, all relevant regulatory guides and other guidelines and requirements of ASIC, the Securities Act and the Exchange Act, as applicable;
|
(i)
|
(continuous disclosure) Afterpay has complied in all material respects with its continuous disclosure obligations under the Listing Rules and is not relying on the carve-out in Listing Rule 3.1A to withhold any information from disclosure (other than the transaction contemplated by this document);
|
(j)
|
(Afterpay Disclosure Materials) the Afterpay Disclosure Materials have been prepared and provided in good faith and, except as would not reasonably be expected to have, individually or in the aggregate, an Afterpay Material Adverse Effect, are accurate and are not misleading, whether by way of omission or otherwise, except that no representation is made with respect to any projections or other forward looking information included in the Afterpay Disclosure Materials;
|
(k)
|
(compliance)
|
(i)
|
except as would not reasonably be expected to have, individually or in the aggregate, an Afterpay Material Adverse Effect, the Afterpay Group has (A) since 1 July 2018 complied with all Australian and foreign laws and regulations applicable to it, (B) complied with all written agreements, consent agreements, memoranda of understanding or similar undertakings with any Governmental Authority and (C) maintained all licenses, permits and authorisations necessary for it to conduct its respective businesses as presently being conducted, and no suspension or cancellation of any such licenses, permits and authorisations is pending or, to the knowledge of Afterpay, threatened;
|
(ii)
|
no member of the Afterpay Group is a party to any, and there are no outstanding or pending or, to the knowledge of Afterpay, threatened, legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations of any nature against a member of the Afterpay Group or any of their directors or officers (in their capacity as such) which would reasonably be expected to, individually or in the aggregate, have an Afterpay Material Adverse Effect, or, as of the date of this document, challenging the validity or propriety of the Scheme or other transactions contemplated by this document;
|
(iii)
|
there is no material injunction, order, judgment, decree, or regulatory restriction imposed upon any member of the Afterpay Group or the assets thereof; and
|
(iv)
|
except as would not reasonably be expected to have, individually or in the aggregate, an Afterpay Material Adverse Effect, no member of the Afterpay Group is subject to any cease-and-desist or other order or enforcement action issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has been ordered to pay any civil money penalty by, or has been since 1 July 2018, a recipient of any supervisory letter from, or since 1 July 2018, has adopted any policies, procedures or board resolutions at the request or suggestion of, any Governmental Authority that currently restricts in any respect or would reasonably be expected to restrict in any respect the conduct of its business or would prevent or materially impair the ability of Afterpay to implement the Scheme and the transactions contemplated by this document, nor has any member of the Afterpay Group been advised since 1 July 2018 by any Governmental Authority that it is considering issuing, initiating, ordering or requesting any such agreement;
|
(l)
|
(provision of information to Independent Expert) all information provided by or on behalf of Afterpay to the Independent Expert to enable the Independent Expert’s Report to be prepared and completed will be provided in good faith and on the understanding that the Independent Expert will rely upon that information for the purpose of preparing the Independent Expert’s Report;
|
(m)
|
(provision of information to Investigating Accountant) all information provided by or on behalf of Afterpay to the Investigating Accountant to enable the Investigating Accountant’s Report to be prepared and completed will be provided in good faith and on the understanding that the Investigating Accountant will rely upon that information for the purpose of preparing the Investigating Accountant’s Report;
|
(n)
|
(no default) no member of the Afterpay Group is in default under any document, agreement or instrument binding on it or its assets nor has anything occurred which is or would with the giving of notice or lapse of time constitute an event of default, prepayment event or similar event, or give another party a termination right or right to accelerate any right or obligation, under the document or agreement with that effect, except where such default or occurrence would not, individually or in aggregate, reasonably be expected to have an Afterpay Material Adverse Effect;
|
(o)
|
(securities)
|
(i)
|
as at the date of this document, (i) its issued securities are 290,073,416 ordinary shares and (ii) Afterpay has not issued or agreed to issue any other securities or instruments which are still outstanding and which may convert into Afterpay Shares, other than as set out in the Afterpay Disclosure Letter;
|
(ii)
|
it owns, directly or indirectly, all of the issued and outstanding shares or other equity ownership interests of each Subsidiary of Afterpay, free and clear of any Encumbrance (other than transfer restrictions under applicable securities laws), and all of such shares or equity ownership interests are duly authorised and validly issued and are fully paid, nonassessable and free of preemptive rights;
|
(iii)
|
other than the shares or other equity ownership interests described in clause 12.1(o)(ii), there are no outstanding subscriptions, options, warrants, stock appreciation rights, phantom units, scrip, rights to subscribe to, pre-emptive rights, anti-dilutive rights, rights of first refusal or similar rights, puts, calls, commitments or agreements of any character relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock or other voting or equity securities of or ownership interests in any Subsidiary of Afterpay, or contracts, commitments, understandings or arrangements by which any Subsidiary of Afterpay may become bound to issue additional shares of its capital stock or other equity or voting securities or ownership interests in such Subsidiary, or otherwise obligating any Subsidiary of Afterpay to issue, transfer, sell, purchase, redeem or otherwise acquire any of the foregoing;
|
(p)
|
(no Encumbrances) there are no material Encumbrances over all or any of the assets or revenues of the Afterpay Group;
|
(q)
|
(Insolvency event) neither Afterpay nor any other material member of the Afterpay Group is Insolvent;
|
(r)
|
(Afterpay Shares not indirect Australian real property interests) the relevant Afterpay Shares held by each Scheme Participant are not, and until (and including) the Implementation Date will not be, indirect Australian real property interests within the meaning of Division 855 of the Tax Act for the Scheme Participant;
|
(s)
|
(financial information and filings)
|
(i)
|
the financial statements of the Afterpay Group included (or incorporated by reference) in Afterpay Reporting Documents (as defined below), including the related notes, where applicable:
|
(A)
|
have been prepared in accordance with the requirements of the Corporations Act and any other applicable laws and in accordance with the Accounting Standards; and
|
(B)
|
give a true and fair view in all material respects of the consolidated financial position of the Afterpay Group and the consolidated results of operations and changes in cash flows and equity of the Afterpay Group as of the respective dates and for the periods therein set forth;
|
(ii)
|
to the extent any of the books and records of Afterpay and its Subsidiaries are required to be maintained in accordance with the Accounting Standards, the Corporations Act and other applicable laws, such books and records have been since 1 July 2018, and are being, maintained in all material respects in accordance with the Accounting Standards;
|
(iii)
|
except as would not reasonably be expected to have, individually or in the aggregate, an Afterpay Material Adverse Effect, no member of the Afterpay Group has any liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become due), other than those liabilities (A) that are reflected or reserved against on the consolidated balance sheet of the Afterpay Group included in its half year report for the half year ended 31 December 2020 (including any notes thereto), (B) incurred in the ordinary course of business since 31 December 2020, or (C) incurred in connection with this document and the transactions contemplated by this document;
|
(iv)
|
since 1 July 2018, no independent public accounting firm of Afterpay has resigned (or informed Afterpay that it intends to resign) or been dismissed as independent public accountants of Afterpay as a result of or in connection with any disagreements with Afterpay on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure;
|
(v)
|
except as would not reasonably be expected to have, individually or in the aggregate, an Afterpay Material Adverse Effect, since 1 July 2018:
|
(A)
|
no member of the Afterpay Group, nor, to the knowledge of Afterpay, any director, officer, auditor, accountant or Representative of any member of the Afterpay Group, has received or otherwise had or obtained knowledge of any complaint, allegation, assertion or claim, whether written or, to the knowledge of Afterpay, oral, regarding the accounting or auditing practices, procedures, methodologies or methods (including with respect to reserves, write-downs, charge-offs and accruals) of any member of the Afterpay Group or their respective internal accounting controls, including any complaint, allegation, assertion or claim that a member of the Afterpay Group has engaged in inappropriate accounting or auditing practices; and
|
(B)
|
no employee of or legal adviser representing a member of the Afterpay Group, whether or not employed by a member of the Afterpay Group, has reported in writing evidence of a breach of securities laws, breach of fiduciary duty or similar breach by a member of the Afterpay Group or any of its directors, officers, employees or agents to the Afterpay Board or any committee thereof or the board of directors or similar governing body of any Subsidiary of Afterpay or any committee thereof, or to the knowledge of Afterpay, to any officer of a member of the Afterpay Group;
|
(vi)
|
since 1 July 2018, it has timely filed with ASIC and the ASX all required material reports, schedules, prospectuses, forms, statements, notices and other documents required to be filed with ASIC and the ASX, including any notices required to be filed by the Listing Rules (all of those documents being the “Afterpay Reporting Documents”);
|
(vii)
|
as of its date, each Afterpay Reporting Document complied in all material respects with the requirements of the Corporations Act and the Listing Rules and all rules, regulations and policy statements under the Corporations Act and the Listing Rules; and
|
(viii)
|
none of the Afterpay Reporting Documents as of the date of their respective filings (or, if amended or superseded by a filing prior to the date of this document, on the date of such amended or superseding filing) contained an untrue statement of a material fact or omitted to state a material fact required to be stated in it or necessary to prevent the statement made from being false or misleading in the circumstances in which it has been made;
|
(t)
|
(asset control) except as would not reasonably be expected to have, individually or in the aggregate, an Afterpay Material Adverse Effect, all the material tangible assets listed in the Afterpay Reporting Documents are (i) fully paid for, (ii) either the absolute property of a member of the Afterpay Group free and clear of all material encumbrances or used by an Afterpay Group Member under a contract under which it is entitled to use the assets on the terms and conditions of such contract, (iii) not the subject of any lease or hire purchase agreement or agreement for purchase on deferred terms, other than in the ordinary course of business, (iv) in the possession of an Afterpay Group Member, its agent or nominee, or (v) not the subject of any agreements or arrangements to dispose or not to dispose or that otherwise restrict their use or disposal, except as provided for, or taken into account in the preparation of, the Afterpay Reporting Documents;
|
(u)
|
(certain payments) except as would not reasonably be expected to be, individually or in the aggregate, material to the Afterpay Group (taken as a whole), since 1 July 2018, no member of the Afterpay Group or, to Afterpay’s knowledge, any of its respective officers, directors, employees, agents or representatives has, directly or indirectly, in connection with the business of the Afterpay Group: (i) made, offered or promised to make or offer any unlawful payment, loan or transfer of anything of value to or for the benefit of any government official, candidate for public office, political party or political campaign; (ii) paid, offered or promised to make or offer any bribe, payoff, influence payment, kickback, unlawful rebate, or other similar unlawful payment of any nature; (iii) made, offered or promised to make or offer any unlawful contributions, gifts, entertainment or other unlawful expenditures; (iv) established or maintained any unlawful fund of corporate monies or other properties; (v) created or caused the creation of any false or inaccurate books and records of the Afterpay Group or any of its members related to any of the foregoing; or (vi) otherwise violated any provision of the Foreign Corrupt Practices Act of 1977, 15 U.S.C. §§78dd-1, et seq., the UK Bribery Act of 2010, or any other applicable anti-corruption or anti-bribery law;
|
(v)
|
(broker’s fees)
|
(i)
|
with the exception of the engagement of Goldman, Sachs & Co. LLC, Qatalyst Partners LP and Highbury Partnership Pty Ltd, no member of the Afterpay Group, nor any of their respective officers or directors has employed any broker, finder or financial adviser or incurred any liability for any broker’s fees, commissions or finder’s fees in connection with the Scheme or transactions contemplated by this document; and
|
(ii)
|
a true and complete copy of the engagement letter with each of Goldman, Sachs & Co. LLC, Qatalyst Partners LP and Highbury Partnership Pty Ltd has been made available to Square prior to the date of this document, which have not been modified;
|
(w)
|
(absence of certain changes or events)
|
(i)
|
since 31 December 2020 through to the date of this document, there has not been any effect, change, event, circumstance, condition, occurrence or development that has had or would reasonable be expected to have, individually or in the aggregate, an Afterpay Material Adverse Effect; and
|
(ii)
|
since 31 December 2020 through to the date of this document, the Afterpay Group has carried on its business in all material respects in the ordinary course;
|
(x)
|
(taxes) except as would not reasonably be expected to have, individually or in aggregate, an Afterpay Material Adverse Effect:
|
(i)
|
all Tax Returns required to be lodged by a member of the Afterpay Group have been lodged on a timely basis with the relevant Governmental Authority and are or will be true, complete and correct in all material respects;
|
(ii)
|
all Taxes for which a member of the Afterpay Group is liable that are or have been due and payable, including any penalty or interest, have been paid or appropriately reserved for in the financial statements of the Afterpay Group, and any obligation on a member of the Afterpay Group under any Tax Law to withhold amounts at source on account of Tax has been complied with;
|
(iii)
|
there is no current, pending or threatened dispute between a member of the Afterpay Group and any Governmental Authority in respect of any Tax, and no such dispute is anticipated, nor, to Afterpay’s knowledge, is there any current, pending or threatened audit or investigation of a member of the Afterpay Group;
|
(iv)
|
each member of the Afterpay Group has maintained proper and adequate records to enable it to comply with its obligations to:
|
(A)
|
prepare and submit any information, notices, computations, returns and payments required in respect of any Tax Law;
|
(B)
|
prepare any accounts necessary for the compliance of any Tax Law; and
|
(C)
|
retain necessary records as required by any Tax Law;
|
(v)
|
no member of the Afterpay Group has a permanent establishment (within the meaning of an applicable Tax treaty) in, or otherwise conducts a trade or business in, any jurisdiction outside of the relevant member of the Afterpay Group’s place of incorporation;
|
(vi)
|
to Afterpay’s knowledge, no member of the Afterpay Group has entered into or been party to any transaction which contravenes the anti-avoidance provisions of any Tax Law;
|
(vii)
|
no member of the Afterpay Group has taken any action which has or might alter or prejudice any arrangement, agreement or tax ruling which has previously been negotiated with or obtained from the relevant Governmental Authority or under any Tax Law;
|
(viii)
|
no member of the Afterpay Group is or is expected to become liable to pay, reimburse or indemnify any person in respect of any Tax because of the failure of any other person to discharge that Tax;
|
(ix)
|
each member of the Afterpay Group has been a resident for tax purposes in the jurisdiction of incorporation (other than Touchcorp Limited, a Bermudan entity which is resident for tax purposes in Australia);
|
(x)
|
since 1 July 2018, the office of public officer of each member of the Afterpay Group as required under any Tax Law has been occupied without vacancy thereof;
|
(xi)
|
no dividend or other distribution has been paid or will be paid by Afterpay:
|
(A)
|
in respect of which the required franking amount (as provided for in Subdivision 202-D of the Tax Act) exceeded the franked amount (as defined in section 200-15 of the Tax Act) of the dividend;
|
(B)
|
giving rise to franking deficit tax as provided for in section 205-45 of the Tax Act;
|
(C)
|
which has been franked with franking credits in excess of the maximum franking credit for the distribution (as provided for in Subdivision 202-D of the Tax Act); or
|
(D)
|
which has been franked in breach of the benchmark rule and which would result in Afterpay either being liable to pay over-franking tax where the franking percentage for the distribution exceeds the entity's benchmark franking percentage or gives rise to a franking debit where the franking percentage is less than the entity's benchmark franking percentage (as provided for in Division 203 of the Tax Act);
|
(xii)
|
all documents and transactions entered into or made by a member of the Afterpay Group which are required to be stamped have been duly stamped and appropriately lodged with the relevant Governmental Authority, and there are no outstanding assessments of duty (including fines, penalties and interest) in respect of any document, instrument or statement which a member of the Afterpay Group is liable to pay stamp duty on, nor any requirement on the part of a member of the Afterpay Group to upstamp any document or instrument in the future on account of any interim stamping or assessment nor any requirement on the part of a member of the Afterpay Group to lodge and pay stamp duty for any transaction that has occurred but for which the liability to stamp duty has not yet arisen;
|
(xiii)
|
since 1 July 2016, no member of the Afterpay Group has obtained, wholly or in part, any corporate reconstruction concession, exemption or ex gratia relief from payment of duty in any Australian jurisdiction;
|
(xiv)
|
no event has occurred which has resulted in any duty from which a member of the Afterpay Group obtained relief (including but not limited to corporate reconstruction exemption or concession or ex gratia relief), becoming payable, and the implementation of the Scheme will not result in any such duty becoming payable;
|
(xv)
|
as at the date of this document, Afterpay is not and has not been a “controlled foreign corporation” as defined in section 957 of the Code (or any similar provision of state, local or foreign law) and no member of the Afterpay Group is or has been a “passive foreign investment company” within the meaning of Section 1297 of the Code;
|
(xvi)
|
no member of the Afterpay Group is or has been (i) a “surrogate foreign corporation” within the meaning of section 7874(a)(2)(B) of the Code or (ii) treated as a U.S. corporation under section 7874(b) of the Code;
|
(xvii)
|
each Afterpay Share is not an Indirect Australian Real Property Interest within the meaning of section 855-25 of the Tax Act; and
|
(xviii)
|
each member of the Afterpay Group is in material compliance with all applicable transfer pricing laws and regulations, including the execution and maintenance of contemporaneous documentation substantiating the transfer pricing practices and methodology between members of the Afterpay Group. All intercompany agreements have been adequately documented, and such documents have been duly executed in a timely manner. The prices for any property or services (or for the use of any property) provided by or to a member of the Afterpay Group are arm’s-length prices for purposes of all applicable transfer pricing laws;
|
(y)
|
(employees);
|
(i)
|
each member of the Afterpay Group has complied in all material respects with its obligations under employment and industrial laws, individual contracts of employment with its employees and any industrial awards, industrial agreements and legislation which apply to its employees (including laws relating to employment, tax, superannuation and workers’ compensation), except for instances of noncompliance that would not reasonably be expected to have, individually or in the aggregate, an Afterpay Material Adverse Effect;
|
(ii)
|
no member of the Afterpay Group is a party to any workplace agreement with a works council, trade union or industrial organisation, group of employees or individual employees in respect of the employees of the Afterpay Group and their employment and no industrial awards or workplace agreements apply to any employees of a member of the Afterpay Group other than those agreements identified in the Afterpay Disclosure Materials;
|
(iii)
|
no employee of the Afterpay Group has provided Afterpay or another member of the Afterpay Group with written notice of any pending or threatened claim (other than routine claims for benefits) against any member of the Afterpay Group which remains outstanding as at the date of this document and which could reasonably be expected to, individually or in the aggregate, have an Afterpay Material Adverse Effect;
|
(iv)
|
no member of the Afterpay Group has been involved in any employment or industrial law-related proceedings or dispute with any union or employee at any time since 1 July 2018 that could reasonably be expected to, individually or in the aggregate, have an Afterpay Material Adverse Effect, and, to the knowledge of Afterpay, there are not any circumstances that would reasonably be likely to give rise to any such industrial dispute or negotiation;
|
(v)
|
other than as Disclosed to Square, neither the execution of this document nor the implementation of the transactions contemplated by this document will (alone or in combination with one or more events or circumstances, including any termination of employment or service): (A) result in any compensation or benefit (including severance, golden parachute, bonus or otherwise) becoming due to any Afterpay employee or service provider (except as provided by applicable law); (B) increase or otherwise enhance any compensation or benefit otherwise payable to any such individual; (C) result in the acceleration of the time of payment, funding or vesting of any compensation or benefit under any Afterpay Employee Plan; (D) result in the acceleration or forgiveness (in whole or in part) of any outstanding loan to any Afterpay employee or service provider; (E) require any contributions or payments to fund any obligations under any Afterpay Employee Plan; or (F) except for payments consented to in writing by Square, result in any payment (whether in cash or property or the vesting of property) to any “disqualified individual” (as such term is defined in Treasury Regulations Section 1.280G-1) that would, individually or in combination with any other such payment, constitute an “excess parachute payment” (as defined in Section 280G(b)(1) of the Code);
|
(vi)
|
to the knowledge of Afterpay, there is no pending demand for recognition or any other request or demand from a labour organisation for representative status with respect to any Afterpay Employee as of the date of this document; and
|
(vii)
|
there is no material labour dispute, strike, walkout, picketing, lockout, or work stoppage against the Afterpay Group pending or, to the knowledge of Afterpay, threatened which may materially interfere with the respective business activities of the Afterpay Group as of the date of this document;
|
(z)
|
(employee benefit plans)
|
(i)
|
the Afterpay Disclosure Materials contain each material Afterpay Employee Plan;
|
(ii)
|
Afterpay has provided to Square to the extent applicable, (i) for each written material Afterpay Employee Plan complete copies of all current documents embodying each such Afterpay Employee Plan including, all amendments thereto and all related trust documents, provided that “form” agreements may be provided in the case of any offer letters, employment agreements or award agreements, (ii) for each unwritten material Afterpay Employee Plan, a written summary of the material terms, (iii) the most recent annual report (Form Series 5500 and all audit reports, schedules and financial statements attached thereto), if any, required by any applicable legal requirement in connection with each material Afterpay Employee Plan and (iv) the most recent summary plan description together with each summary of any material modification thereto, if any, required by any other applicable law with respect to each material Afterpay Employee Plan;
|
(iii)
|
each Afterpay Employee Plan has been established, maintained, funded, and administered in all respects in accordance with the terms of the applicable controlling documents and in compliance with applicable laws, other than instance of noncompliance that would not reasonably be expected to, individually or in the aggregate, have an Afterpay Material Adverse Effect;
|
(iv)
|
other than those arrangements Disclosed in the Afterpay Disclosure Materials, the Afterpay Group does not sponsor or maintain or have any liability with respect to any defined benefit pension plans or arrangements, including any (i) pension plan subject to Part 3 of Subtitle B of Title I of
|
(v)
|
other than those payments Disclosed in the Afterpay Disclosure Materials, no Afterpay Employee Plan provides benefits, including death or medical benefits (whether or not insured), with respect to current or former employees, directors or service providers of the Afterpay Group beyond their retirement or other termination of service, other than coverage mandated by the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or comparable law or where the full cost of such benefit is borne by the beneficiary or his or her dependents;
|
(vi)
|
there are no actions, suits or claims pending, or, to the knowledge of Afterpay, threatened or that could reasonably be expected to be commenced (other than routine claims for benefits) against any Afterpay Employee Plan or against the assets of any Afterpay Employee Plan, except as would not reasonably be expected to, individually or in the aggregate, have an Afterpay Material Adverse Effect;
|
(vii)
|
there are no audits, inquiries or proceedings pending, or, to the knowledge of Afterpay, threatened by the IRS, Department of Labour, or any other Governmental Entity with respect to any Afterpay Employee Plan, except as would not reasonably be expected to, individually or in the aggregate, have an Afterpay Material Adverse Effect;
|
(viii)
|
the Afterpay Group has timely made all contributions and other payments required by and due under the terms of each Afterpay Employee Plan, except for instance of non-compliance that would not reasonably be expected to, individually or in the aggregate, have an Afterpay Material Adverse Effect;
|
(ix)
|
the Afterpay Group does not have any obligation under any Afterpay Employee Plan to compensate any Person for excise Taxes payable pursuant to Section 4999 of the Code or for additional Taxes payable pursuant to Section 409A of the Code.
|
(aa)
|
(real property)
|
(i)
|
there are no freehold properties owned by the Afterpay Group;
|
(ii)
|
it or another member of the Afterpay Group is the lessee of all leasehold estates reflected in the audited financial statements included in Afterpay’s annual report for the fiscal year ended 30 June 2020 or acquired after the date thereof (except for leases that have expired by their terms since the date thereof), free and clear of all material Encumbrances and is in possession of the properties purported to be leased thereunder, and each such lease is valid without default thereunder by the lessee or, to the knowledge of Afterpay, the lessor, except as would not reasonably be expected to have, individually or in the aggregate, an Afterpay Material Adverse Effect; and
|
(iii)
|
there are no pending or, to the knowledge of Afterpay, threatened condemnation proceedings against any such real property leased by a member of the Afterpay Group, except as would not reasonably be expected to have, individually or in the aggregate, an Afterpay Material Adverse Effect;
|
(bb)
|
(intellectual property) except as would not reasonably be expected to have, individually or in the aggregate, an Afterpay Material Adverse Effect:
|
(i)
|
it or another member of the Afterpay Group solely and exclusively owns, or holds a license to use (in each case, free and clear of any Encumbrances), all Intellectual Property necessary for the conduct of its business as currently conducted as at the date of this document;
|
(ii)
|
the use of any Intellectual Property by a member of the Afterpay Group or the conduct of its business does not infringe, misappropriate, violate, or otherwise breach the rights of any person
|
(iii)
|
to the knowledge of Afterpay, no person is challenging, infringing on or otherwise violating any right of any member of the Afterpay Group with respect to any Intellectual Property owned by and/or exclusively licensed to a member of the Afterpay Group;
|
(iv)
|
no member of the Afterpay Group has received any written notice of any pending claim with respect to any Intellectual Property owned by a member of the Afterpay Group;
|
(v)
|
each member of the Afterpay Group has taken reasonably adequate actions to protect and maintain, and avoid the abandonment, cancellation or unenforceability of, all Intellectual Property owned or exclusively licensed by the Afterpay Group, which measures are commercially reasonable in the industry in which the Afterpay Group operates, and, to the knowledge of Afterpay, there have been no material unauthorised uses or disclosures of any trade secrets; and
|
(vi)
|
no current or former officer or employee of, or consultant or independent contractor to, the Afterpay Group is asserting or, to the knowledge of Afterpay, has grounds to assert any rights to any Intellectual Property arising from services performed for the business of the Afterpay Group by such Persons.
|
(cc)
|
(Material Contracts) except as would not reasonably be expected to have, individually or in the aggregate, an Afterpay Material Adverse Effect:
|
(i)
|
Afterpay has Disclosed a true and complete copy of each Material Contract in the Afterpay Disclosure Materials;
|
(ii)
|
each Material Contract is in full force and effect and is valid and binding on the applicable member of the Afterpay Group and, to Afterpay’s knowledge, the other parties thereto (except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and by general principles of equity, regardless of whether enforcement is sought in a proceeding at law or in equity);
|
(iii)
|
the relevant Afterpay Group Member has in all material respects complied with and performed all obligations required to be complied with or performed by it to date under each Material Contract;
|
(iv)
|
as at the date of this document, no member of the Afterpay Group has knowledge of, or has received notice of, any breach of any Material Contract by any of the other parties thereto; and
|
(v)
|
as at the date of this document, no event or condition exists which constitutes or, after notice or lapse of time or both, will constitute, a material breach or default on the part of the Afterpay Group or, to the knowledge of Afterpay, any other party thereto, of or under any Material Contract;
|
(dd)
|
(related party transactions) no member of the Afterpay Group has entered into, or agreed to enter into, a transaction which requires, or would require, the approval of the holders of Afterpay Shareholders under Chapter 10 of the Listing Rules;
|
(ee)
|
(merchants) since 1 July 2020, it has not received any written notice from any merchant from which more than 1% of the Afterpay Group’s GMV during the fiscal year ended 30 June 2021 was derived that such merchant intends to discontinue or substantially reduce its relationship with the Afterpay Group or terminate or materially and adversely amend any existing material contract with the Afterpay Group;
|
(ff)
|
(insurance) except as would not reasonably be expected to have, individually or in the aggregate, an Afterpay Material Adverse Effect:
|
(i)
|
the Afterpay Group is insured with reputable insurers against such risks and in such amounts as the management of Afterpay reasonably has determined to be prudent and consistent with industry practice, and it is in compliance with its insurance policies and is not in default under any of the terms thereof;
|
(ii)
|
each insurance policy held by a member of the Afterpay Group (“Insurance Policy”) is in full force and effect and, except for policies insuring against potential liabilities of officers, directors and employees of a member of the Afterpay Group, the relevant member of the Afterpay Group is the sole beneficiary of each Insurance Policy;
|
(iii)
|
all premiums and other payments due under each Insurance Policy have been paid, and all claims thereunder have been filed in due and timely fashion;
|
(iv)
|
as at the date of this document, there is no claim for coverage by a member of the Afterpay Group pending under any Insurance Policy as to which coverage has been questioned, denied or disputed by the underwriters of such Insurance Policy; and
|
(v)
|
as of the date of this document, no member of the Afterpay Group has received written notice of any threatened termination of, premium increase with respect to, or alteration of coverage under, any Insurance Policy; and
|
(gg)
|
(data protection) except as would not reasonably be expected to have, individually or in the aggregate, an Afterpay Material Adverse Effect:
|
(i)
|
as of the date of this document, it and each other member of the Afterpay Group is in compliance with all of its privacy policies and related data protection and management policies, all applicable Data Protection Laws and all contractual requirements worldwide to the extent such requirements relate to the collection, storage, transmission, transfer (including cross-border transfers), disclosure and use of personal data (collectively, “Data Protection Requirements”), except where such noncompliance would not result in a liability;
|
(ii)
|
no member of the Afterpay Group has received written notice from any applicable Governmental Authority alleging a violation of any Data Protection Laws, nor has any member of the Afterpay Group been threatened in writing to be charged with any such violation by any Governmental Authority;
|
(iii)
|
no member of the Afterpay Group has received a written complaint or demand from any individual claiming that the Afterpay Group has failed to comply with any Data Protection Requirements;
|
(iv)
|
it and each other member of the Afterpay Group has implemented measures, consistent with accepted industry practices, reasonably designed to ensure the confidentiality, privacy and security of personal data (including implementing reasonable technical, physical and administrative safeguards);
|
(v)
|
since 1 July 2018, it and each other member of the Afterpay Group has entered into written agreements with all third-party service providers, outsources, processors or other third parties who process, store or otherwise have access to or handle personal data for or on behalf of its business that obligate such persons to comply with all applicable Data Protection Requirements and to take steps to protect and secure personal data from loss, theft, misuse or unauthorised use, access, modification or disclosure;
|
(vi)
|
to Afterpay’s knowledge, since 1 July 2018, no third party has gained unauthorised access to or misused any personal data or any computers, software servers, networks or other information technology assets (“IT Assets”) used in the operation of the business of the Afterpay Group as currently conducted as at the date of this document, in each case in a manner that has resulted or is reasonably likely to result in either:
|
(A)
|
material liability, cost or disruption to the business of the Afterpay Group; or
|
(B)
|
a duty to notify any person;
|
(vii)
|
each member of the Afterpay Group has taken all commercially reasonable steps and implemented all commercially reasonable safeguards, consistent with accepted industry practices, designed to protect their products, services and IT Assets from unauthorised access and free from any disabling codes or instructions, spyware, trojan horses, worms, viruses, or other software routines that permit or cause unauthorised access to, or disruption, impairment, disablement, or destruction of software, data or other materials (“Malicious Code”);
|
(viii)
|
the IT Assets used by Afterpay Group:
|
(A)
|
are owned or validly licensed for use by, and are under the control of, an Afterpay Group Member;
|
(B)
|
are free from Malicious Code;
|
(C)
|
operate and perform substantially as needed by the Afterpay Group to adequately conduct the business of the Afterpay Group as currently conducted;
|
(D)
|
comprise all the information technology and telecommunications systems, hardware and software reasonably necessary for the conduct of the Afterpay Group’s business; and
|
(E)
|
have not experienced or suspected any vulnerabilities, defects, failure or malfunction that would reasonably be expected to result in any security breaches or unauthorised access or other security access incidents affecting the IT Assets or resulting in a loss of control of the IT Assets; and
|
(ix)
|
no open source software is compiled together with, or is otherwise incorporated into, the proprietary software distributed by the Afterpay Group in the operation of its business in a manner that would, pursuant to an open source license, require any material portion of such proprietary software to be (A) disclosed or distributed in source code form, or (B) be redistributable at no charge.
|
Afterpay's indemnity
|
Square’s representations and warranties
|
(a)
|
(status) it and each other member of the Square Group has been incorporated or formed in accordance with the laws of its place of incorporation and remains in good standing thereunder, except in the case of such other members, where the failure to be in good standing would not reasonably be expected to have, individually or in the aggregate, a Square Material Adverse Effect;
|
(b)
|
(power)
|
(i)
|
it has power to enter into this document, to comply with its obligations under it and exercise its rights under it; and
|
(ii)
|
it and each other member of the Square Group has the corporate power and authority to own, lease or operate all of its properties and assets and to carry on its business as it is now being conducted, except in relation to such other members, where the failure to have such power and authority would not reasonably be expected to have, individually or in the aggregate, a Square Material Adverse Effect;
|
(c)
|
(no contravention) the entry by it into, and its compliance with its obligations and the exercise of its rights under, this document does not and will not conflict with or breach:
|
(i)
|
its constituent documents or cause a limitation on its powers or the powers of its directors to be exceeded;
|
(ii)
|
any applicable law binding on to it or its assets, except where any conflict would not, individually or in the aggregate, reasonably be expected to have a Square Material Adverse Effect; or
|
(iii)
|
any other document or agreement that is binding on any member of the Square Group except where any conflict or breach would not, individually or in the aggregate, reasonably be expected to have a Square Material Adverse Effect;
|
(d)
|
(consents and approvals) except for:
|
(i)
|
the filing of any required applications, filings and notices, as applicable, with the NYSE, SEC, ASX, or ASIC;
|
(ii)
|
the filing of any required applications, filings, certificates and notices, as applicable, with FIRB, OIO, Deputy General Directorate of Foreign Investments (“Subdirección General de Inversiones Exteriores”) (or other competent public authority), Bank of Spain, ACCC, the Office of the Secretary of State of the State of Delaware pursuant to the Delaware General Corporation Law, and the U.S. Federal Trade Commission and the U.S. Department of Justice under the HSR Act; and
|
(iii)
|
approval of the Scheme by Court,
|
(iv)
|
the execution and delivery by it of this document; or
|
(v)
|
the implementation of the Scheme and the other transactions contemplated by this document;
|
(e)
|
(authorisations) it has in full force and effect each authorisation necessary for it to enter into this document, to comply with its obligations and exercise its rights under it, and to allow them to be enforced;
|
(f)
|
(validity of obligations) its obligations under this document are valid and binding and are enforceable against it in accordance with its terms;
|
(g)
|
(reliance) the Square Information provided to Afterpay for inclusion in the Scheme Booklet will be provided in good faith and on the understanding that Afterpay and its directors will rely on that information for the purposes of preparing the Scheme Booklet and proposing and implementing the Scheme in accordance with the Corporations Act;
|
(h)
|
(Square Information) the Square Information provided in accordance with this document and included in, or incorporated by reference into, the Scheme Booklet and the Square Registration/Proxy Statement, as applicable, as at the date of the Scheme Booklet, the date the Square Registration/Proxy Statement or any amendment or supplement thereto is filed with the SEC or mailed to the Square Shareholders or at the time of the Square Shareholder Meeting, as applicable, will not contain any material statement which is misleading or deceptive nor contain any material omission having regard to applicable disclosure requirements and will comply in all material respects with the requirements of the Corporations Act, the Listing Rules and all relevant regulatory guides and other guidelines and requirements of ASIC;
|
(i)
|
(Square Disclosure Letter and diligence information) all the information provided to Afterpay by Square in the Square Disclosure Materials and as part of due diligence in connection with this document has been prepared and provided in good faith and, except as would not reasonably be expected to have, individually or in the aggregate, a Square Material Adverse Effect, are accurate and are not misleading, whether by way of omission or otherwise, except that no representation is made with respect to any projections or other forward looking information included in the Square Disclosure Materials;
|
(j)
|
(compliance)
|
(i)
|
except as would not reasonably be expected to have, individually or in the aggregate, a Square Material Adverse Effect, the Square Group has (A) since 1 July 2018 complied with all United States, Australian and foreign laws and regulations applicable to it, (B) complied with all written agreements, consent written agreements, memoranda of understanding or similar undertakings with any Governmental Authority and (C) maintains all licenses, permits and authorisations necessary for it to conduct its respective businesses as presently being conducted, and no suspension or cancellation of any such licenses, permits and authorisations is pending or, to the knowledge of Square, threatened;
|
(ii)
|
no member of the Square Group is a party to any, and there are no outstanding or pending or, to the knowledge of Square, threatened, legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations of any nature against a member of the Square Group or any of their directors or officers (in their capacity as such) which would reasonably be expected to, individually or in the aggregate, have a Square Material Adverse Effect, or, as of the date of this document, challenging the validity or propriety of the Scheme or other transactions contemplated by this document;
|
(iii)
|
there is no material injunction, order, judgment, decree, or regulatory restriction imposed upon any member of the Square Group or the assets thereof; and
|
(iv)
|
except as would not reasonably be expected to have, individually or in the aggregate, a Square Material Adverse Effect, no member of the Square Group is subject to any cease-and-desist or other order or enforcement action issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has been ordered to pay any civil money penalty by, or has been since 1 July 2018, a recipient of any supervisory letter from, or since 1 July 2018, has adopted any policies, procedures or board resolutions at the request or suggestion of, any Governmental Authority that currently restricts in any respect or would reasonably be expected to restrict in any respect the conduct of its business or would prevent or materially impair the ability of Square to implement the Scheme and the transactions contemplated by this document, nor has any member of the Square Group been advised since 1 July 2018 by any Governmental Authority that it is considering issuing, initiating, ordering or requesting any such agreement;
|
(k)
|
(no dealing with Afterpay Shareholders) neither it nor any of its Associates has any agreement, arrangement or understanding with any Afterpay Shareholder under which that Afterpay Shareholder (or an Associate of that Afterpay Shareholder) would be entitled to receive consideration for their Afterpay Shares different from the Scheme Consideration;
|
(l)
|
(provision of information to Independent Expert) all information provided by or on behalf of Square to the Independent Expert to enable the Independent Expert’s Report to be prepared and completed will be provided in good faith and on the understanding that the Independent Expert will rely upon that information for the purpose of preparing the Independent Expert’s Report;
|
(m)
|
(provision of information to Investigating Accountant) all information provided by or on behalf of Square to the Investigating Accountant to enable the Investigating Accountant’s Report to be prepared and completed will be provided in good faith and on the understanding that the Investigating Accountant will rely upon that information for the purpose of preparing the Investigating Accountant’s Report;
|
(n)
|
(securities)
|
(i)
|
Square’s issued securities as of 25 July 2021 are 397,396,181 Square A Shares and 62,301,770 Square B Shares and Square has not issued or agreed to issue any other securities or instruments which are still outstanding and which may convert into Square Shares, other than as set out in the Square Disclosure Letter;
|
(ii)
|
it owns, directly or indirectly, all of the issued and outstanding shares or other equity ownership
|
(o)
|
(New Square Shares and New Square CDIs) the New Square Shares and New Square CDIs will be duly authorised and validly issued, fully paid and non-assessable, free of all Encumbrances and third party rights and the New Square Shares and the Square A Shares underlying New Square CDIs will rank equally with all other Square A Shares then on issue;
|
(p)
|
(vote required) the approval at the Square Shareholder Meeting of the issuance of the New Square Shares and Square A Shares underlying New Square CDIs by the affirmative vote of a majority of the voting power of the Square Shares represented in person or by proxy at the Square Shareholder Meeting and entitled to vote on the proposal to approve such issuance is the only vote of the holders of any class or series of Square’s capital stock necessary under applicable law, the Listing Rules, Square’s organizational documents and any contract to which Square is a party or is bound necessary for Square to implement the Scheme and the other transactions contemplated by this document;
|
(q)
|
(Insolvency event) neither Square nor any other material member of the Square Group is Insolvent;
|
(r)
|
(financial information and filings)
|
(i)
|
the financial statements of the Square Group, included (or incorporated by reference) in the Square Reporting Documents, including the related notes, where applicable:
|
(A)
|
have been prepared in accordance with the requirements of the Securities Act, the Exchange Act and any other applicable laws and in accordance with US GAAP applied on a consistent basis during the periods involved; and
|
(B)
|
fairly present, in all material respects, the consolidated financial position of the Square Group and the consolidated results of operations and changes in cash flows and stockholders’ equity of the Square Group as of the respective dates and for the periods therein set forth;
|
(ii)
|
except as would not reasonably be expected to have, individually or in the aggregate, a Square Material Adverse Effect, no member of the Square Group has any liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become due), other than those liabilities (A) that are reflected or reserved against on the consolidated balance sheet of the Square Group included in its last annual or quarterly report filed with the SEC prior to the date of this document (including any notes thereto), (B) incurred in the ordinary course of business since the date of such balance sheet, or (C) incurred in connection with this document and the transactions contemplated by this document;
|
(iii)
|
since 1 July 2018, no independent public accounting firm of Square has resigned (or informed Square that it intends to resign) or been dismissed as independent public accountants of Square as a result of or in connection with any disagreements with Square on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure;
|
(iv)
|
except as would not reasonably be expected to have, individually or in the aggregate, a Square Material Adverse Effect, since 1 July 2018:
|
(A)
|
no member of the Square Group, nor, to the knowledge of Square, any director, officer, auditor, accountant or Representative of any member of the Square Group, has received or otherwise had or obtained knowledge of any complaint, allegation, assertion or claim, whether written or, to the knowledge of Square, oral, regarding the accounting or auditing practices, procedures, methodologies or methods (including with respect to reserves, write-downs, charge-offs and accruals) of any member of the Square Group or their respective internal accounting controls, including any complaint, allegation, assertion or claim that a member of the Square Group has engaged in inappropriate accounting or auditing practices; and
|
(B)
|
no employee of or legal adviser representing a member of the Square Group, whether or not employed by a member of the Square Group, has reported in writing evidence of a breach of securities laws, breach of fiduciary duty or similar breach by a member of the Square Group
|
(v)
|
Square has timely filed with or furnished to the SEC all reports, schedules, forms, statements, prospectuses, registration statements and other documents required to be filed with or furnished to the SEC by Square since 1 July 2018 (collectively, together with any exhibits and schedules thereto and other information incorporated therein, the “Square Reporting Documents”);
|
(vi)
|
as of its date, each Square Reporting Document filed with or furnished to the SEC complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable;
|
(vii)
|
none of the Square Reporting Documents as of the date of their respective filings (or, if amended or superseded by a filing, on the date of such amended or superseding filing) contained an untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading;
|
(viii)
|
as of the date of this document, (i) there are no outstanding or unresolved comments received from the SEC staff with respect to any of the Square Reporting Documents and (ii) to the knowledge of Square, none of the Square Reporting Documents (including the financial statements included therein) are subject to ongoing SEC review;
|
(ix)
|
Square maintains disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act) that are designed to provide reasonable assurance that all information required to be disclosed in Square’s reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that all such information is accumulated and communicated to Square’s management as appropriate to allow timely decisions regarding required disclosure and to enable each of the principal executive officer of Square and the principal financial officer of Square to make the certifications required under the Exchange Act with respect to such reports; and
|
(x)
|
Square maintains internal controls designed to provide reasonable assurance regarding the reliability of Square’s financial reporting and the preparation of Square’s financial statements for external purposes in accordance with US GAAP, and Square’s principal executive officer and principal financial officer have disclosed, based on their most recent evaluation of such internal controls prior to the date of this document, to Square’s auditors and the audit committee of the Square Board (i) all significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely affect Square’s ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in internal controls. Since 1 January 2020 to the date of this document, each of the principal executive officer and principal financial officer of Square (or each former principal executive officer and principal financial officer of Square, as applicable) has made all certifications required by Rules 13a-14 and 15d-14 under the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as amended, and any related rules and regulations promulgated by the SEC and NYSE. As of the date of this document, neither Square nor any of its executive officers has received written notice from any Governmental Authority challenging or questioning the accuracy, completeness, form or manner of filing of such certifications.
|
(s)
|
(certain payments) except as would not reasonably be expected to be individually or in the aggregate, material to the Square Group (taken as a whole), since 1 July 2018, no member of the Square Group or, to Square’s knowledge, any of its respective officers, directors, employees, agents or representatives has, directly or indirectly, in connection with the business of the Square Group:
|
(i)
|
made, offered or promised to make or offer any unlawful payment, loan or transfer of anything of value to or for the benefit of any government official, candidate for public office, political party or political campaign;
|
(ii)
|
paid, offered or promised to make or offer any bribe, payoff, influence payment, kickback, unlawful rebate, or other similar unlawful payment of any nature;
|
(iii)
|
made, offered or promised to make or offer any unlawful contributions, gifts, entertainment or other unlawful expenditures;
|
(iv)
|
established or maintained any unlawful fund of corporate monies or other properties;
|
(v)
|
created or caused the creation of any false or inaccurate books and records of the Square Group or any of its members related to any of the foregoing; or
|
(vi)
|
otherwise violated any provision of the Foreign Corrupt Practices Act of 1977, 15 U.S.C. §§78dd-1, et seq., the UK Bribery Act of 2010, or any other applicable anti-corruption or anti-bribery law;
|
(t)
|
(broker’s fees) with the exception of the engagement of Morgan Stanley & Co. LLC, no member of the Square Group, nor any of their respective officers or directors has employed any broker, finder or financial adviser or incurred any liability for any broker’s fees, commissions or finder’s fees in connection with the Scheme or transactions contemplated by this document;
|
(u)
|
(absence of certain changes or events) since 31 December 2020 through to the date of this document, there has not been any effect, change, event, circumstance, condition, occurrence or development that has had, individually or in the aggregate, a Square Material Adverse Effect;
|
(v)
|
(taxes) (i) all Tax Returns required to be lodged by a member of the Square Group have been lodged on a timely basis with the relevant Governmental Authority and have been or will be prepared in good faith, except as would not reasonably be expected to have, individually or in the aggregate, a Square Material Adverse Effect; and (ii) all Taxes for which a member of the Square Group is liable that are or have been due and payable have been paid or appropriate reserved for in the financial statements of the Square Group, except as would not reasonably be expected to have, individually or in the aggregate, a Square Material Adverse Effect;
|
(w)
|
(intellectual property) except as would not reasonably be expected to have, individually or in the aggregate, a Square Material Adverse Effect:
|
(i)
|
it or another member of the Square Group owns or holds a license to use (in each case, free and clear of any Encumbrances) all Intellectual Property necessary for the conduct of its business as currently conducted as at the date of this document;
|
(ii)
|
the use of any Intellectual Property by a member of the Square Group or the conduct of its business does not infringe, misappropriate, violate, or otherwise breach the rights of any person and is in accordance with any applicable license pursuant to which a member of the Square Group acquired the right to use that Intellectual Property, and no person has asserted in writing to Square that a member of the Square Group or the conduct of its business has infringed, misappropriated, violated, or otherwise breached the Intellectual Property Rights of such person;
|
(iii)
|
to the knowledge of Square, no person is challenging, infringing on or otherwise violating any right of any member of the Square Group with respect to any Intellectual Property owned by and/or exclusively licensed to a member of the Square Group;
|
(iv)
|
no member of the Square Group has received any written notice of any pending claim with respect to any Intellectual Property owned by a member of the Square Group; and
|
(v)
|
each member of the Square Group has taken reasonably adequate actions to protect and maintain all Intellectual Property owned or exclusively licensed, respectively, by the Square Group, which measures are commercially reasonable in the industry in which the Square Group operates; and
|
(x)
|
(data protection) except as would not reasonably be expected to have, individually or in the aggregate, a Square Material Adverse Effect:
|
(i)
|
as of the date of this document, it and each other member of the Square Group is in compliance with all Data Protection Requirements, except where such noncompliance would not result in a liability;
|
(ii)
|
no member of the Square Group has received written notice from any applicable Governmental Authority alleging a violation of any Data Protection Laws, nor has any member of the Square Group been threatened in writing to be charged with any such violation by any Governmental Authority;
|
(iii)
|
it and each other member of the Square Group has implemented measures, consistent with accepted industry practices, reasonably designed to ensure the confidentiality, privacy and security of personal data (including implementing reasonable technical, physical and administrative safeguards);
|
(iv)
|
since 1 July 2018, it and each other member of the Square Group has entered into written agreements with all third-party service providers, outsources, processors or other third parties who process, store or otherwise have access to or handle personal data for or on behalf of its business that obligate such persons to comply with all material applicable Data Protection Requirements and to take steps to protect and secure personal data from loss, theft, misuse or unauthorised use, access, modification or disclosure;
|
(v)
|
to Square’s knowledge, since 1 July 2018, no third party has gained unauthorised access to or misused any IT Assets used in the operation of the business of the Square Group as currently conducted as at the date of this document, in each case in a manner that has resulted or is reasonably likely to result in either:
|
(A)
|
material liability, cost or disruption to the business of the Square Group; or
|
(B)
|
a duty to notify any person.
|
Square Acquirer’s representations and warranties
|
(a)
|
(status) it has been incorporated or formed in accordance with the laws of its place of incorporation;
|
(b)
|
(power) it has power to enter into this document, to comply with its obligations under it and exercise its rights under it;
|
(c)
|
(no contravention) the entry by it into, and its compliance with its obligations and the exercise of its rights under, this document does not and will not conflict with or breach:
|
(i)
|
its constituent documents or cause a limitation on its powers or the powers of its directors to be exceeded; or
|
(ii)
|
any law binding on or applicable to it or its assets;
|
(d)
|
(authorisations) it has in full force and effect each authorisation necessary for it to enter into this document, to comply with its obligations and exercise its rights under it, and to allow them to be enforced, and no other organizational proceedings or approvals of equityholders of Square Acquirer are necessary to authorise this document or the transactions contemplated hereby that have not already been taken;
|
(e)
|
(validity of obligations) its obligations under this document are valid and binding and are enforceable against it in accordance with its terms; and
|
(f)
|
(ownership; operations) Square owns all of the outstanding equity interests of Square Acquirer. Square Acquirer was formed on 28 July 2021 solely for the purpose of engaging in the transactions contemplated by this document. Square Acquirer has engaged in no other business activities, has no liabilities or obligations (other than intercompany liabilities and obligations incurred in connection with the transactions contemplated by this document) and has conducted its operations only as contemplated by this document.
|
Square’s indemnity
|
Termination
|
Termination events
|
(a)
|
(End Date) by either party, if the Scheme has not become Effective on or before the End Date, unless the failure of the Scheme to become Effective on or before the End Date is due to the failure of the party seeking to terminate this document to perform or observe its obligations, covenants and agreements under this document;
|
(b)
|
(Afterpay Board adverse recommendation change) by Square at any time prior to 8.00am on the Second Court Date if the Afterpay Board changes, withdraws or adversely modifies its recommendation to the Scheme Participants that they vote in favour of the resolution to approve the Scheme or otherwise makes a public statement indicating that it no longer supports the Scheme;
|
(c)
|
(Square Board adverse recommendation change) by Afterpay at any time prior to 8.00am on the Second Court Date if the Square Board changes, withdraws or adversely modifies its recommendation to the Square Shareholders that they vote in favour of the issuance of New Square Shares and Square A Shares underlying New Square CDIs or otherwise makes a public statement indicating that it no longer supports the Scheme;
|
(d)
|
(Governmental restraint) by either party at any time prior to 8.00am on the Second Court Date if any Governmental Authority who must grant a Regulatory Approval that constitutes a Condition Precedent has denied such Regulatory Approval and such denial has become final and non-appealable or any Governmental Authority of competent jurisdiction shall have issued a final and non-appealable order, injunction, decree or other legal restraint or prohibition permanently enjoining or otherwise prohibiting or making illegal the consummation of the Scheme, unless the failure to obtain the Regulatory Approval or the issuance of any such order, injunction, decree or other legal restraint or prohibition is due to the failure of the party seeking to terminate this document to perform or observe its obligations, covenants and agreements under this document;
|
(e)
|
(material breach) by either party at any time prior to 8.00am on the Second Court Date, if the other is in material breach of a term of this document (excluding any representation and warranty not being true and correct), taken in the context of the Scheme as a whole, provided that Square or Afterpay (as the case may be) has given notice to the other setting out the relevant circumstances of such breach and the relevant circumstances continue to exist 30 Business Days (or any shorter period ending at 8.00am on the Second Court Date) after the time the notice is given;
|
(f)
|
(Afterpay Superior Proposal) by Afterpay at any time prior to 8.00am on the Second Court Date if the Afterpay Board determines, in accordance with clause 9.5 and after completion of the processes specified in clause 9.7 and clause 9.8, that an Afterpay Competing Transaction is an Afterpay Superior Proposal provided that there has not been a material breach by Afterpay of its obligations under clause 9.7;
|
(g)
|
(consultation or appeal failure) by either Square or Afterpay in accordance with and pursuant to clause 3.9(a), 3.9(b) or 5.9; or
|
(h)
|
(agreement) if agreed to in writing by Square and Afterpay.
|
Termination
|
Effect of Termination
|
Damages
|
Public announcements
|
Public announcement of Scheme
|
Required disclosure
|
Other announcements
|
(a)
|
Subject to clauses 14.1, 14.2 and 14.3(b), no party may make any public announcement or disclosure (“Announcement”) in connection with the Scheme (including disclosure to a Governmental Authority) other than in a form approved by each party (acting reasonably). Each party will use all reasonable endeavours to provide that approval as soon as practicable. If either Square or Afterpay breaches this clause 14.3, then this clause 14.3 shall not apply to any announcement by the other party in response to such Announcement in breach of this clause 14.3.
|
(b)
|
The parties agree that, for the purposes of clause 14.3(a), if a party approves the form of an Announcement, that approval will also extend to any other public announcement or disclosure made in connection with the Scheme that is consistent in tone and substance with all or part of that Announcement.
|
(c)
|
Notwithstanding the foregoing, clause 14.2 and clause 14.3(a) shall not apply to an Announcement made in connection with (i) an Afterpay Competing Transaction or Square Competing Transaction or the Afterpay Board or Square Board withdrawing or changing its recommendation in accordance with clause 6.1 or clause 6.2, respectively, (ii) in connection with any dispute between the parties regarding this document, the Scheme or the other transactions contemplated by this document or (iii) the actual or expected financial impact (including earnings guidance) of the Scheme on a party.
|
Confidential Information
|
Disclosure of Confidential Information
|
Notices and other communications
|
Form
|
(a)
|
Unless this document expressly states otherwise, all notices, demands, certificates, consents, approvals, waivers and other communications in connection with this document must be in writing and signed by the sender (if an individual) or an Authorised Officer of the sender.
|
(b)
|
All communications (other than email communications) must also be marked for the attention of the person referred to in the Details (or, if the recipient has notified otherwise, then marked for attention in the way last notified) and:
|
(i)
|
if to Square or Square Acquirer, with a copy to (which shall not constitute notice):
|
(ii)
|
if to Afterpay, with a copy to (which shall not constitute notice):
|
(c)
|
Email communications must state the first and last name of the sender and are taken to be signed by the named sender.
|
Delivery
|
When effective
|
(a)
|
when the sender receives an automated message confirming delivery; or
|
(b)
|
4 hours after the time sent (as recorded on the device from which the sender sent the email) unless the sender receives an automated message that delivery failed,
|
Receipt outside business hours
|
GST
|
Definitions and interpretation
|
(a)
|
“GST Act” means the A New Tax System (Goods and Services Tax) Act 1999 (Cth);
|
(b)
|
a term which has a defined meaning in the GST Act has the same meaning when used in this clause, unless the contrary intention appears; and
|
(c)
|
each periodic or progressive component of a supply to which section 156-5(1) of the GST Act applies will be treated as if it were a separate supply.
|
GST exclusive
|
Payment of GST
|
(a)
|
If GST is payable, or notionally payable, on a supply in connection with this document, the party providing the consideration for the supply agrees to pay to the supplier an additional amount equal to the amount of GST payable on that supply (“GST Amount”).
|
(b)
|
Subject to the prior receipt of a tax invoice, the GST Amount is payable at the same time as the GST-exclusive consideration for the supply, or the first part of the GST-exclusive consideration for the supply (as the case may be), is payable or is to be provided.
|
(c)
|
This clause does not apply to the extent that the consideration for the supply is expressly stated to include GST or the supply is subject to a reverse-charge.
|
Adjustment events
|
Reimbursements
|
Costs
|
Costs
|
Stamp duty and registration fees
|
(a)
|
agrees to pay or reimburse all stamp duty, registration fees and similar taxes payable or assessed as being payable in connection with this document or any other transaction contemplated by this document (including any fees, fines, penalties and interest in connection with any of those amounts); and
|
(b)
|
indemnifies Afterpay against, and agrees to reimburse and compensate it for, any liability in respect of stamp duty under clause 18.2(a).
|
Withholding tax
|
General
|
Variation and waiver
|
Consents, approvals or waivers
|
Discretion in exercising rights
|
Partial exercising of rights
|
Conflict of interest
|
Remedies cumulative
|
Indemnities and reimbursement obligations
|
(a)
|
is a continuing obligation despite the satisfaction of any payment or other obligation in connection with this document, any settlement or any other thing;
|
(b)
|
is independent of any other obligations under this document; and
|
(c)
|
continues after this document, or any obligation arising under it, ends.
|
Inconsistent law
|
Supervening law
|
Counterparts
|
Entire agreement
|
Further steps
|
(a)
|
bind the party and any other person intended to be bound under this document; or
|
(b)
|
show whether the party is complying with this document.
|
No liability for loss
|
Severability
|
Rules of construction
|
Assignment
|
Specific Performance
|
Enforceability
|
(a)
|
Afterpay is taken to be acting as agent and trustee on behalf of and for the benefit of all Afterpay Indemnified Parties; and
|
(b)
|
Square is taken to be acting as agent and trustee on behalf of and for the benefit of all Square Indemnified Parties,
|
No representation or reliance
|
(a)
|
no party (nor any person acting on its behalf) has made any representation or other inducement to it to enter into this document, except for representations or inducements expressly set out in this document;
|
(b)
|
it does not enter into this document in reliance on any representation or other inducement by or on behalf of any other party, except for any representation or inducement expressly set out in this document; and
|
(c)
|
clauses 19.19(a) and 19.19(b) above do not prejudice any rights a party may have in relation to information which had been filed by another party with ASIC or ASX.
|
Governing law
|
Governing law and jurisdiction
|
Serving documents
|
Appointment of process agent
|
(a)
|
irrevocably appoints King & Wood Mallesons as its process agent to receive any document in an action in connection with this document, and agrees that any such document may be served on Square by being delivered to or left for Square at the following address:
|
(b)
|
agrees that failure by a process agent to notify King & Wood Mallesons of any document in an action in connection with this document does not invalidate the action concerned.
|
Event
|
| |
Indicative Dates
|
Lodge Scheme Booklet with ASIC and ASX
|
| |
Q3 CY2021
|
Application in respect of the Court hearing to be held on the First Court Date, filed with the Court, served on ASIC
|
| |
Q4 CY2021
|
First Court Date
|
| |
Q4 CY2021
|
Printing and despatch of Scheme Booklet
|
| |
Q4 CY2021
|
Scheme Meeting held
|
| |
Q4 CY2021
|
Second Court Date
|
| |
Q4 CY2021
|
Lodge Court order with ASIC (Effective Date)
|
| |
Q4 CY2021
|
Record Date
|
| |
Q1 CY2022
|
Implementation Date
|
| |
Q1 CY2022
|
DATED: 2 August 2021
|
| |
|
| |
|
|
| |
|
| |
|
SIGNED, SEALED AND DELIVERED by SQUARE, INC.:
|
| |
)
|
| |
|
|
| |
)
|
| |
|
|
| |
)
|
| |
|
|
| |
)
|
| |
|
/s/ Philip M. Seabrease
|
| |
)
|
| |
|
Signature of witness
|
| |
)
|
| |
/s/ Amrita Ahuja
|
|
| |
)
|
| |
Signature of authorised signatory
|
Philip M. Seabrease
|
| |
)
|
| |
|
Name of witness
|
| |
)
|
| |
Amrita Ahuja
|
Witnessed by audio-visual link
|
| |
)
|
| |
Name of authorised signatory
|
SIGNED, SEALED AND DELIVERED
|
| |
)
|
| |
|
by LANAI (AU) 2 PTY LTD (ACN 652
|
| |
)
|
| |
|
352 451) in accordance with section
|
| |
)
|
| |
|
127(1) of the Corporations Act 2001
|
| |
)
|
| |
|
(Cth) by authority of its directors:
|
| |
)
|
| ||
|
| |
)
|
| |
|
|
| |
)
|
| |
/s/ Philip M. Seabrease
|
/s/ Samina Hussain-Letch
|
| |
)
|
| |
Signature of director/company secretary*
|
Signature of director
|
| |
)
|
| |
*delete whichever is not applicable
|
|
| |
)
|
| |
|
|
| |
)
|
| |
|
SAMINA HUSSAIN-LETCH
|
| |
)
|
| |
PHILIP M. SEABREASE
|
Name of director (block letters)
|
| |
|
| |
Name of director/company secretary*
(block letters)
*delete whichever is not applicable
|
SIGNED, SEALED AND DELIVERED
|
| |
)
|
| |
|
by AFTERPAY LIMITED (ACN 618
|
| |
)
|
| |
|
280 649) in accordance with section
|
| |
)
|
| |
|
127(1) of the Corporations Act 2001
|
| |
)
|
| |
|
(Cth) by authority of its directors:
|
| |
)
|
| |
|
|
| |
)
|
| |
|
/s/ Anthony Eisen
|
| |
)
|
| |
/s/ Amanda Street
|
Signature of director
|
| |
)
|
| |
Signature of company
|
|
| |
)
|
| |
secretary*
|
|
| |
)
|
| |
*delete whichever is not applicable
|
|
| |
|
| |
|
ANTHONY EISEN
|
| |
)
|
| |
AMANDA STREET
|
Name of director (block letters)
|
| |
|
| |
Name of company secretary*
|
|
| |
|
| |
(block letters)
*delete whichever is not applicable
|
•
|
Enhance both the Seller and Cash App ecosystems. Afterpay’s global merchant base will accelerate Square’s growth with larger sellers and expansion into new geographies, while helping to drive further acquisition of new Square sellers. Afterpay will expand Cash App’s growing product offering, enable customers to manage their repayments, and help customers discover new merchants when the Afterpay App is integrated into Cash App.
|
•
|
Bring added value, differentiation, and scale to Afterpay. Afterpay will benefit from Square’s large and growing customer base of more than 70 million annual transacting active Cash App customers and millions of sellers, which will expand Afterpay’s reach and growth both online and in-person. Afterpay consumers will receive the benefits of Cash App’s financial tools, including money transfer, stock and Bitcoin purchases, Cash Boost, and more.
|
•
|
Drive long-term growth with meaningful revenue synergy opportunities. Square believes Afterpay will be accretive to gross profit growth with a modest decrease in Adjusted EBITDA margins expected in the first year after completion of the transaction. Square sees an opportunity to invest behind Afterpay’s strong unit economics as well as attractive growth synergies, including the opportunity to introduce offerings and drive incremental growth for sellers and increased engagement for Cash App customers.
|
•
|
Enhance both the Seller and Cash App ecosystems. Afterpay’s global merchant base will accelerate Square’s growth with larger sellers and expansion into new geographies, while helping to drive further acquisition of new Square sellers. Afterpay will expand Cash App’s growing product offering, enable customers to manage their repayments, and help customers discover new merchants when the Afterpay App is integrated into Cash App.
|
•
|
Bring added value, differentiation, and scale to Afterpay. Afterpay will benefit from Square’s large and growing customer base of more than 70 million annual transacting active Cash App customers and millions of sellers, which will expand Afterpay’s reach and growth both online and in-person. Afterpay consumers will receive the benefits of Cash App’s financial tools, including money transfer, stock and Bitcoin purchases, Cash Boost, and more.
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•
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Drive long-term growth with meaningful revenue synergy opportunities. Square believes Afterpay will be accretive to gross profit growth with a modest decrease in Adjusted EBITDA margins expected in the first year after completion of the transaction. Square sees an opportunity to invest behind Afterpay’s strong unit economics as well as attractive growth synergies, including the opportunity to introduce offerings and drive incremental growth for sellers and increased engagement for Cash App customers.
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1
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If Square elects to pay cash consideration, Afterpay shareholders will be entitled to receive 1% of the scheme consideration in cash determined by reference to the Square volume weighted average share price shortly prior to implementation.
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•
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The Consideration represents an attractive premium for Afterpay shareholders. Based on Square’s closing price of US$247.26 on July 30, 2021, this represents an implied transaction price of approximately A$126.21 per Afterpay share, and an attractive premium of approximately 30.6% to Afterpay’s latest closing price of A$96.66. This represents an approximate 21.9% premium over the 10-day volume weighted average Afterpay share price, and an approximate 10.5% premium over the 30-day volume weighted average Afterpay share price, each as of July 30, 2021.
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•
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Afterpay shareholders will receive a fixed exchange ratio of 0.375 shares of Square Class A common stock for each Afterpay share. Following completion of the transaction, Afterpay shareholders are expected to own approximately 18.5% of the combined company on a fully diluted basis.
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•
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The scrip consideration allows Afterpay shareholders to participate in the expected benefits of combining the two businesses.
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•
|
receipt of required regulatory approvals;
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•
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the approval of shareholders of both Afterpay and Square;2
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•
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no material adverse effect, prescribed event or breach of representations and warranties in relation to either Afterpay or Square;
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•
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approval for quotation of the Consideration securities on NYSE (Square shares) and ASX (CDIs);
|
•
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receipt of confirmation of the ATO class ruling; and
|
•
|
other customary conditions to a scheme of arrangement such as Australian court approval and an independent expert confirming that the transaction is in the best interests of Afterpay shareholders.
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2
|
Square has a dual class stock structure, meaning that in addition to the Class A common shares, Square also has Class B common stock on issue (primarily held by a small group of shareholders). Each Class B common share in Square carries a right to 10 votes, with each Class A common share carrying a right to 1 vote. As such, the holders of the Class B common stock hold, in aggregate, approximately 61.3% of the voting power in Square (as of June 30, 2021) and have the ability to determine the outcome of the Square shareholder approval.
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Parties
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Afterpay
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Name
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Afterpay Limited
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ACN
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618 280 649
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Formed in
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Victoria
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Address
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Level 23, 2 Freshwater Place Melbourne VIC
3006, Australia
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Email
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legal@afterpay.com.au
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Attention
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General Counsel
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Scheme
Participants
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Each person who is an Afterpay Shareholder as at the Record
Date.
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Governing law
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Victoria
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Definitions and interpretation
|
Definitions
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(a)
|
a day on which the banks in Sydney, New South Wales, Australia, are authorised or required to close, nor
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(b)
|
a day on which the banks in San Francisco, California, United States of America, are authorised or required to close.
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(a)
|
an Eligible AUSNZ Shareholder who has not made a Share Election; and
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(b)
|
an Eligible Non-AUSNZ Shareholder who has made a CDI Election.
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(a)
|
any supranational, national, federal, state, county, municipal, local, provincial or foreign government or any entity exercising executive, legislative, judicial, arbitral, regulatory, taxing, or administrative functions of or pertaining to government;
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(b)
|
any public international governmental organisation;
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(c)
|
any agency, division, bureau, department, committee, or other political subdivision of any government, entity or organisation described in the foregoing clauses (a) or (b) of this definition (including patent and trademark offices); or
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(d)
|
quasi-governmental, self-regulatory agency, commission or authority, including any national securities exchange or national quotation system,
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(a)
|
who is (or is acting on behalf of) a citizen or resident of a jurisdiction other than residents of Australia and its external territories, Canada, Hong Kong, New Zealand, Singapore, Switzerland, United Kingdom and the United States; or
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(b)
|
whose address shown in the Register is a place outside Australia and its external territories, Canada, Hong Kong, New Zealand, Singapore, Switzerland, United Kingdom and the United States or who is acting on behalf of such a person,
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(c)
|
it is lawful and not unduly onerous or unduly impracticable to issue that Afterpay Shareholder with the New Square Shares or New Square CDIs on implementation of this Scheme; and
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(d)
|
it is lawful for that Afterpay Shareholder to participate in this Scheme by the law of the relevant place outside Australia and its external territories, Canada, Hong Kong, New Zealand, Singapore, Switzerland, United Kingdom and the United States.
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(a)
|
where the Scheme Participant is a Share Elected Shareholder, 0.375 New Square Shares; and
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(b)
|
where the Scheme Participant is a CDI Elected Shareholder, 0.375 New Square CDIs.
|
(a)
|
an Eligible AUSNZ Shareholder who has made a valid Share Election;
|
(b)
|
an Eligible Non-AUSNZ Shareholder who has not made a valid CDI Election.
|
(a)
|
is a subsidiary of the first entity within the meaning of the Corporations Act; and
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(b)
|
is part of a consolidated entity constituted by the first entity and the entities it is required to include in the consolidated financial statements it prepares, or would be if the first entity was required to prepare consolidated financial statement.
|
General interpretation
|
(a)
|
the singular includes the plural and vice versa;
|
(b)
|
the meaning of general words is not limited by specific examples introduced by “including”, “for example”, “such as” or similar expressions;
|
(c)
|
a reference to “person” includes an individual, a body corporate, a partnership, a joint venture, an unincorporated association and an authority or any other entity or organisation;
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(d)
|
a reference to a particular person includes the person’s executors, administrators, successors, substitutes (including persons taking by novation) and assigns;
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(e)
|
a reference to a time of day is a reference to the time in Melbourne, Australia;
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(f)
|
a reference to dollars, $ or A$ is a reference to the currency of Australia;
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(g)
|
a reference to any legislation includes regulations under it and any consolidations, amendments, re-enactments or replacements of any of them;
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(h)
|
a reference to a group of persons is a reference to any 2 or more of them jointly and to each of them individually;
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(i)
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a period of time starting from a given day or the day of an act or event, is to be calculated exclusive of that day;
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(j)
|
if a party must do something under this document on or by a given day and it is done after 5.00pm on that day, it is taken to be done on the next day; and
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(k)
|
if the day on which a party must do something under this document is not a Business Day, the party must do it on the next Business Day.
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Preliminary
|
Afterpay
|
(a)
|
a public company limited by shares;
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(b)
|
incorporated in Australia and registered in Victoria; and
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(c)
|
admitted to the official list of ASX and Afterpay Shares are officially quoted on the stock market conducted by ASX.
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Square
|
(a)
|
a corporation incorporated under the laws of the State of Delaware; and
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(b)
|
Square Shares are officially listed on the NYSE.
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Square Acquirer
|
(a)
|
a proprietary company limited by shares; and
|
(b)
|
incorporated in Australia and registered in Victoria.
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If Scheme becomes Effective
|
(a)
|
in consideration of the transfer of each Scheme Share to Square Acquirer, Square Acquirer will provide or procure the provision of the Scheme Consideration to each Scheme Participant in accordance with the terms of this Scheme;
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(b)
|
all Scheme Shares will be transferred to Square Acquirer on the Implementation Date; and
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(c)
|
Afterpay will enter the name of Square Acquirer in the Register in respect of all Scheme Shares transferred to Square Acquirer in accordance with the terms of this Scheme.
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Scheme Implementation Deed
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Deed Poll
|
Conditions precedent
|
Conditions precedent to Scheme
|
(a)
|
as at 8.00am on the Second Court Date, the Scheme Implementation Deed and Deed Poll not having been terminated;
|
(b)
|
all of the conditions precedent in clause 3.1 of the Scheme Implementation Deed having been satisfied or waived (other than the conditions precedent relating to Court approval set out in item 3.1(h) of the Scheme Implementation Deed) in accordance with the terms of the Scheme Implementation Deed;
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(c)
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the Court having approved this Scheme, with or without any modification or condition, pursuant to section 411(4)(b) of the Corporations Act, and if applicable, Afterpay and Square having accepted in writing any modification or condition made or required by the Court under section 411(6) of the Corporations Act; and
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(d)
|
the coming into effect, pursuant to section 411(10) of the Corporations Act, of the orders of the Court made under section 411(4)(b) of the Corporations Act (and, if applicable, section 411(6) of the Corporations Act) in relation to this Scheme.
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Conditions precedent and operation of clause 5
|
Certificate in relation to conditions precedent
|
Scheme
|
Effective Date
|
End Date
|
(a)
|
the Effective Date does not occur on or before the End Date; or
|
(b)
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the Scheme Implementation Deed or Deed Poll is terminated in accordance with its terms.
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Implementation of Scheme
|
Elections
|
(a)
|
A Scheme Participant who is an Eligible AUSNZ Shareholder may make a Share Election to receive New Square Shares instead of New Square CDIs by completing a Share Election Form and returning it to the address specified in the Share Election Form so that it is received by the Registry (and not withdrawn) by no later than 5.00pm on the Election Date.
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(b)
|
Subject to clause 5.1(c), a Scheme Participant who is an Eligible Non-AUSNZ Shareholder may make a CDI Election to receive New Square CDIs instead of New Square Shares by completing a CDI Election Form and returning it to the address specified in the CDI Election Form so that it is received by the Registry (and not withdrawn) by no later than 5.00pm on the Election Date.
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(c)
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In the event that ASX does not grant approval for Australian Admission on or before the Business Day after the Effective Date, and Square and Afterpay both provide written consent in accordance with clause 4.4 of the Scheme Implementation Deed, all CDI Elections will be disregarded and the entitlements of all Scheme Participants (including those who made a CDI Election) will be satisfied by the distribution of New Square Shares in the manner described in clause 6.2(a).
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(d)
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A Scheme Participant may withdraw their Share Election under clause 5.1(a) or their CDI Election under clause 5.1(b) by lodging an Election Withdrawal Form provided that it is received by the Registry by no later than 5.00pm on the Election Date.
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(e)
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Subject to clause 5.1(f), a Share Election under clause 5.1(a) or a CDI Election under clause 5.1(b) may only be made in respect of all and not part of the Afterpay Shares held by the relevant Scheme Participant.
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(f)
|
A Scheme Participant who holds one or more parcels of Afterpay Shares as trustee or nominee for, or otherwise on account of, another person (“Nominee Holder”):
|
(i)
|
subject to clause 5.1(f)(ii), may make separate elections in accordance with clauses 5.1(a) or 5.1(b) in relation to each of those parcels of Afterpay Shares by lodging a separate election form for each separate holding in accordance with clauses 5.1(a) or 5.1(b), and in each case in accordance with clause 5.1(e); and
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(ii)
|
for the purposes of determining entitlements under this Scheme, will be treated as if they were a separate CDI Elected Shareholder or Share Elected Shareholder (as relevant) in respect of each parcel of Afterpay Shares in respect of which an election has been made.
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(g)
|
Square Acquirer will determine, in its sole discretion, all questions as to the correct completion of a CDI Election Form, Share Election Form or Election Withdrawal Form, and time of receipt of such form. Square Acquirer is not required to communicate with any Scheme Participant prior to making this determination. The determination of Square Acquirer will be final and binding on the Scheme Participant.
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Lodgement of Court orders with ASIC
|
Transfer and registration of Afterpay Shares
|
(a)
|
the Scheme Shares, together with all rights and entitlements attaching to the Scheme Shares as at the Implementation Date, will be transferred to Square Acquirer, without the need for any further act by any Scheme Participant (other than acts performed by Afterpay as attorney and agent for Scheme Participants under clause 9 of this Scheme), by:
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(i)
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Afterpay delivering to Square Acquirer a duly completed and executed Share Scheme Transfer executed on behalf of the Scheme Participants by Afterpay, for registration; and
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(ii)
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Square Acquirer duly executing the Share Scheme Transfer and delivering it to Afterpay for registration; and
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(b)
|
as soon as practicable after receipt of the duly executed Share Scheme Transfer, Afterpay must enter, or procure the entry of, the name of Square Acquirer in the Register in respect of all Scheme Shares transferred to Square Acquirer in accordance with the terms of this Scheme.
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Entitlement to Scheme Consideration
|
Title and rights in Afterpay Shares
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Warranty by Scheme Participants
|
(a)
|
all their Scheme Shares (including any rights and entitlements attaching to those shares) transferred to Square Acquirer under the Scheme will, as at the date of the transfer, be fully paid and free from all Encumbrances; and
|
(b)
|
they have full power and capacity to sell and to transfer their Scheme Shares (including any rights and entitlements attaching to those shares) to Square Acquirer under this Scheme.
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Transfer free of Encumbrances
|
Appointment of Square Acquirer as sole proxy
|
(a)
|
irrevocably appoints Afterpay as attorney and agent (and directs Afterpay in such capacity) to appoint Square Acquirer and each of its directors from time to time (jointly and each of them individually) as its sole proxy, and where applicable corporate representative, to attend shareholders’ meetings, exercise the votes attaching to Afterpay Shares registered in its name and sign any shareholders resolution, and no Scheme Participant may itself attend or vote at any of those meetings or sign any resolutions, whether in person, by proxy or by corporate representative (other than pursuant to this clause 5.8(a));
|
(b)
|
must take all other actions in the capacity of the registered holder of Afterpay Shares as Square Acquirer directs; and
|
(c)
|
acknowledges and agrees that in exercising the powers referred to in clause 5.8(a), Square Acquirer and any director or corporate representative nominated by Square Acquirer under clause 5.8(a) may act in the best interests of Square Acquirer as the intended registered holder of the Scheme Shares.
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Scheme Consideration
|
Consideration under this Scheme
|
(a)
|
must provide or procure as set forth in clause 6.1(b), in consideration for the transfer to Square Acquirer of the Afterpay Shares, the Scheme Consideration is issued to the Scheme Participants (or to the nominee in the case of Ineligible Foreign Shareholders, in accordance with clause 6.6) in accordance with this clause 6; and
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(b)
|
agrees to cause Square to, and Square will at the direction of and on behalf of Square Acquirer (in satisfaction of Square Acquirer’s obligation to provide such Scheme Consideration under clause 6.1(a)), issue the Scheme Consideration in accordance with this clause 6. If Square Acquirer fails to provide direction to Square as contemplated by this clause 6.1(b) (or to have otherwise procured the provision of the Scheme Consideration) within 1 Business Day following the Effective Date, Square Acquirer will be deemed to have provided such direction to Square and Square agrees that it will take the actions required by this clause 6.1(b).
|
Scheme Consideration
|
(a)
|
in respect of a Share Elected Shareholder, by the issue by Square (on behalf of and at the direction of Square Acquirer) of the Scheme Consideration comprising New Square Shares to that Scheme Participant on the Implementation Date; and
|
(b)
|
in respect of a CDI Elected Shareholder, by the issue by Square (on behalf of and at the direction of Square Acquirer) of Scheme Consideration comprising New Square CDIs to that Scheme Participant on the Implementation Date.
|
Provision of Scheme Consideration
|
(a)
|
in the case of Scheme Consideration that is required to be provided to Scheme Participants in the form of New Square Shares, by Square procuring that:
|
(i)
|
the name and address of each such Scheme Participant is entered into the Square Register on the Implementation Date in respect of the New Square Shares to which it is entitled under this clause 6; and
|
(ii)
|
a share certificate or holding statement (or equivalent document) is sent to the Registered Address of each such Scheme Participant representing the number of New Square Shares issued to the Scheme Participant pursuant to this Scheme;
|
(b)
|
in the case of Scheme Consideration that is required to be provided to Scheme Participants in the form of New Square CDIs, by Square:
|
(i)
|
issuing to CDN to be held on trust that number of New Square Shares that will enable CDN to issue New Square CDIs as envisaged by this clause 6 on the Implementation Date;
|
(ii)
|
procuring that the name and address of CDN is entered into the Square Register in respect of those New Square Shares on the Implementation Date and that a share certificate or holding statement (or equivalent document) in the name of CDN representing those New Square Shares is sent to CDN;
|
(iii)
|
procuring that on the Implementation Date, CDN issues to each such Scheme Participant the number of New Square CDIs to which it is entitled under this clause 6;
|
(iv)
|
procuring that on the Implementation Date, the name of each such Scheme Participant is entered in the records maintained by CDN as the holder of the New Square CDIs issued to that Scheme Participant on the Implementation Date;
|
(v)
|
in the case of each such Scheme Participant who held Scheme Shares on the CHESS subregister – procuring that the CDIs are held on the CHESS subregister on the Implementation Date and sending or procuring the sending of an allotment advice that sets out the number of New Square CDIs issued and procuring that ASX Settlement and Transfer Corporation Pty Ltd will provide at the end of the month of allotment a CDI holding statement confirming the number of New Square CDIs held on the CHESS subregister by that Scheme Participant; and
|
(vi)
|
in the case of each such Scheme Participant who held Scheme Shares on the issuer sponsored subregister – procuring that the New Square CDIs are held on the issuer sponsored subregister on the Implementation Date and sending or procuring the sending of a CDI holding statement to each such Scheme Participant which sets out the number of New Square CDIs held on the issuer sponsored subregister by that Scheme Participant.
|
Fractional entitlements
|
(a)
|
If the number of Afterpay Shares held by a Scheme Participant at the Record Date is such that the aggregate entitlement of the Scheme Participant to Scheme Consideration comprising New Square Shares or New Square CDIs includes a fractional entitlement to a New Square Share or New Square CDI, the entitlement will be rounded as follows:
|
(i)
|
if the fractional entitlement is less than 0.5, it will be rounded down to zero New Square Shares or New Square CDIs; and
|
(ii)
|
if the fractional entitlement is equal to or more than 0.5, it will be rounded up to one New Square Share or New Square CDI.
|
(b)
|
If a Nominee Holder makes separate elections in relation to parcels of Afterpay Shares it holds as trustee or nominee for, or otherwise on account of, another person, then for the purposes of this clause 6.4 the Scheme Consideration of the Nominee Holder will be calculated and rounded based on each nominated parcel of Afterpay Shares held by the Nominee Holder as trustee or nominee for, or otherwise on account of, another person.
|
(c)
|
If a Nominee Holder does not make separate elections in relation to parcels of Afterpay Shares it holds as trustee or nominee for, or otherwise on account of, another person, then for the purposes of this clause 6.4, the Scheme Consideration for the Nominee Holder will be calculated and rounded based on the aggregate number of Afterpay Shares held by the Nominee Holder in those parcels as trustee or nominee for, or otherwise on account of, other persons.
|
Scheme Participants’ agreements
|
(a)
|
agrees to the transfer of their Afterpay Shares together with all rights and entitlements attaching to those Afterpay Shares in accordance with this Scheme;
|
(b)
|
agrees to the variation, cancellation or modification of the rights attached to their Afterpay Shares constituted by or resulting from this Scheme;
|
(c)
|
agrees to, on the direction of Square Acquirer, destroy any holding statements or share certificates relating to their Afterpay Shares;
|
(d)
|
agrees to become a shareholder of Square, to have their name entered in the Square Register, accepts the New Square Shares or New Square CDIs (as relevant) issued to them and agrees to be bound by Square’s Amended and Restated Certificate of Incorporation;
|
(e)
|
agrees and acknowledges that the issue of New Square Shares or New Square CDIs (as applicable) in accordance with clause 6.1 constitutes satisfaction of all that person’s entitlements under this Scheme;
|
(f)
|
acknowledges that this Scheme binds Afterpay and all of the Scheme Participants from time to time (including those who do not attend the Scheme Meeting and those who do not vote, or vote against this Scheme, at the Scheme Meeting); and
|
(g)
|
consents to Afterpay, Square and Square Acquirer doing all things and executing all deeds, instruments, transfers or other documents as may be necessary or desirable to give full effect to this Scheme and the transactions contemplated by it.
|
Ineligible Foreign Shareholder Sale Facility
|
(a)
|
issue to a nominee appointed by Square any New Square Shares to which an Ineligible Foreign Shareholder would otherwise be entitled to (Relevant Square Shares);
|
(b)
|
procure, as soon as reasonably practicable after the Implementation Date, and in no event no more than 30 days after the Implementation Date, that the nominee:
|
(i)
|
sells or procures the sale of all of the Relevant Square Shares issued to the nominee pursuant to clause 6.6(a) (including on an aggregated or partially aggregate basis), in the ordinary course of trading on the NYSE at such price as the nominee determines in good faith; and
|
(ii)
|
remits to Square (on behalf of and at the direction of Square Acquirer) the proceeds of sale (net of any applicable brokerage, stamp duty and other selling costs, taxes and charges) (Proceeds); and
|
(c)
|
promptly after the last sale of the Relevant Square Shares in accordance with clause 6.6(b)(i), pay to each Ineligible Foreign Shareholder an amount equal to the proportion of the net proceeds of sale received by Square under clause 6.6(b)(ii) to which that Ineligible Foreign Shareholder is entitled, in full satisfaction of their entitlement to the Relevant Square Shares, in accordance with the following formula:
|
A
|
is the amount to be paid to the Ineligible Foreign Shareholder;
|
B
|
is the number of Relevant Square Shares attributable to, and that would otherwise have been issued to, that Ineligible Foreign Shareholder had it not been an Ineligible Foreign Shareholder and which are instead issued to the nominee;
|
C
|
is the total number of Relevant Square Shares attributable to, and which would otherwise have been issued to, all Ineligible Foreign Shareholders collectively and which are instead issued to the nominee; and
|
D
|
is the Proceeds (as defined in clause 6.6(b)(ii)).
|
(d)
|
None of Afterpay, Square or Square Acquirer make any representation as to the amount of proceeds of sale to be received by Ineligible Foreign Shareholders under the Ineligible Foreign Shareholder Sale Facility. Each of Afterpay, Square and Square Acquirer expressly disclaim any fiduciary duty to the Ineligible Foreign Shareholders which may arise in connection with the Ineligible Foreign Shareholder Sale Facility.
|
Orders of a Court or Governmental Authority
|
(a)
|
Afterpay may deduct and withhold from any consideration which would otherwise be provided to a Scheme Participant in accordance with this clause 6, any amount which Afterpay, Square and Square Acquirer determine is required to be deducted and withheld from that consideration under any applicable law, including any order, direction or notice made or given by a court of competent jurisdiction or by another Governmental Authority.
|
(b)
|
To the extent that amounts are so deducted or withheld, such deducted or withheld amounts will be treated for all purposes under this Scheme as having been paid to the person in respect of which such deduction and withholding was made, provided that such deducted or withheld amounts are actually remitted to the appropriate taxing agency.
|
(c)
|
If written notice is given to Afterpay of an order, direction or notice made or given by a court of competent jurisdiction or by another Governmental Authority that:
|
(i)
|
requires consideration which would otherwise be provided to a Scheme Participant in accordance with this clause 6 to instead be paid or provided to a Governmental Authority or other third party (either through payment of a sum or the issuance of a security), then Afterpay shall be entitled to procure that provision of that consideration is made in accordance with that order, direction or notice (and payment or provision of that consideration in accordance with that order, direction or notice will be treated for all purposes under this Scheme as having been paid or provided to that Scheme Participant); or
|
(ii)
|
prevents consideration being provided to any particular Scheme Participant in accordance with this clause 6, or the payment or provision of such consideration is otherwise prohibited by applicable law, Afterpay shall be entitled to (as applicable) direct Square not to issue (or procure the issue of), or to issue or provide to a trustee or nominee, such number of New Square Shares or New Square CDIs as that Scheme Participant would otherwise be entitled to under this clause 6, until such time as payment or provision of the consideration in accordance with this clause 6 is permitted by that order or direction or otherwise by law.
|
Shares to rank equally
|
(a)
|
the New Square Shares and Square A Shares underlying New Square CDIs will rank equally in all respects with all existing Square A Shares (but not Square B Shares);
|
(b)
|
it will do everything reasonably necessary to ensure that trading in the New Square Shares and the New Square CDIs commences by the first Business Day after the Implementation Date;
|
(c)
|
the New Square Shares and New Square CDIs will be duly and validly issued in accordance with applicable laws and Square’s certificate of incorporation and bylaws; and
|
(d)
|
on issue, each New Square Share and New Square CDI will be fully paid and free from any Encumbrance.
|
Joint holders
|
(a)
|
any New Square Shares or New Square CDIs (as applicable) to be issued under this Scheme must be issued and registered in the names of the joint holders and entry in the Square Register must take place in the same order as the holders’ names appear in the Register; and
|
(b)
|
any document required to be sent under this Scheme, will be forwarded to either, at the sole discretion of Afterpay, the holder whose name appears first in the Register as at the Record Date or to the joint holders.
|
Dealings in Scheme Shares
|
Determination of Scheme Participants
|
(a)
|
in the case of dealings of the type to be effected using CHESS, the transferee is registered in the Register as the holder of the relevant Scheme Shares on or before the Record Date; and
|
(b)
|
in all other cases, registrable transmission applications or transfers in registrable form in respect of those dealings are received on or before the Record Date at the place where the Register is kept.
|
Register
|
No disposals after Effective Date
|
Maintenance of Afterpay Register
|
Effect of certificates and holding statements
|
Details of Scheme Participants
|
Quotation of Afterpay Shares
|
Termination of quotation of Afterpay Shares
|
(a)
|
for termination of the official quotation of Afterpay Shares on ASX; and
|
(b)
|
to have itself removed from the official list of ASX.
|
Instructions and notification
|
(a)
|
whether dividends are to be paid by cheque or into a specific bank account;
|
(b)
|
payments of dividends on Afterpay Shares; and
|
(c)
|
notices or other communications from Afterpay (including by email),
|
Power of attorney
|
(a)
|
executing any document necessary or expedient to give effect to this Scheme including the Share Scheme Transfer;
|
(b)
|
enforcing the Deed Poll against Square and Square Acquirer,
|
Notices
|
No deemed receipt
|
Accidental omission
|
General
|
Variations, alterations and conditions
|
(a)
|
Afterpay may, with the consent of Square, by its counsel or solicitor consent on behalf of all persons concerned to any variations, alterations or conditions to this Scheme which the Court thinks fit to impose.
|
(b)
|
Each Scheme Participant agrees to any such alterations or conditions which Afterpay has consented to pursuant to clause 11.1(a).
|
Further action by Afterpay
|
Authority and acknowledgement
|
(a)
|
irrevocably consents to Afterpay, Square and Square Acquirer doing all things necessary or expedient for or incidental to the implementation of this Scheme; and
|
(b)
|
acknowledges that this Scheme binds Afterpay and all Scheme Participants (including those who do not attend the Scheme Meeting or do not vote at that meeting or vote against the Scheme at that Scheme Meeting) and, to the extent of any inconsistency and to the extent permitted by law, overrides the constitution of Afterpay.
|
No liability when acting in good faith
|
Enforcement of Deed Poll
|
Stamp duty
|
Governing law
|
Governing law and jurisdiction
|
Serving documents
|
| | |||||
| | |||||
| | | | |||
| | | | |||
| | | | |||
| | | | |||
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| | | | |||
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| | | | |||
| | | | |||
| | | | |||
| | | | |||
| | | | |||
| | | | |||
| | |||||
| |
Parties
|
| |
|
| |
|
Square
|
| |
Name
|
| |
Square, Inc.
|
|
| |
|
| |
|
|
| |
Formed in
|
| |
State of Delaware
|
|
| |
|
| |
|
|
| |
Address
|
| |
1455 Market Street, Unit 600
San Francisco, CA 94103
|
|
| |
|
| |
|
|
| |
Email
|
| |
Legal-Notices@squareup.com
|
|
| |
|
| |
|
|
| |
Attention
|
| |
Legal
|
|
| |
|
| |
|
Square
Acquirer
|
| |
Name
|
| |
Lanai (AU) 2 Pty Ltd
|
|
| |
|
| |
|
|
| |
ACN
|
| |
652 352 451
|
|
| |
|
| |
|
|
| |
Formed in
|
| |
Victoria
|
|
| |
|
| |
|
|
| |
Address
|
| |
C/- King & Wood Mallesons
Level 61, Governor Phillip Tower, 1 Farrer Place
Sydney NSW 2000, Australia
|
|
| |
|
| |
|
|
| |
Email
|
| |
Legal-Notices@squareup.com
|
|
| |
|
| |
|
|
| |
Attention
|
| |
Legal
|
|
| |
|
| |
|
In favour of
|
| |
Each registered holder of fully paid ordinary shares in Afterpay as at the Record Date.
|
|||
|
| |
|
| |
|
Governing law
|
| |
Victoria
|
| |
|
|
| |
|
| |
|
Recitals
|
| |
A
|
| |
The directors of Afterpay have resolved that Afterpay should propose the Scheme.
|
|
| |
|
| |
|
|
| |
B
|
| |
The effect of the Scheme will be that all Scheme Shares will be transferred to Square Acquirer.
|
|
| |
|
| |
|
|
| |
C
|
| |
Afterpay, Square and Square Acquirer have entered into the Scheme Implementation Deed.
|
|
| |
|
| |
|
|
| |
D
|
| |
In the Scheme Implementation Deed, Square Acquirer agreed (amongst other things) to provide (or procure the provision of) the Scheme Consideration to the Scheme Participants, subject to the satisfaction of certain conditions.
|
|
| |
|
| |
|
|
| |
E
|
| |
Square and Square Acquirer are entering into this deed poll for the purpose of covenanting in favour of Scheme Participants to perform the obligations attributed to Square and Square Acquirer in relation to the Scheme.
|
Definitions and interpretation
|
Definitions
|
General interpretation
|
Nature of deed poll
|
Conditions precedent and termination
|
Conditions precedent
|
Termination
|
(a)
|
the Scheme has not become Effective on or before the End Date; or
|
(b)
|
the Scheme Implementation Deed is terminated in accordance with its terms.
|
Consequences of termination
|
(a)
|
Square and Square Acquirer are each released from their obligations to further perform this document except those obligations contained in clause 7; and
|
(b)
|
each Scheme Participant retains the rights, powers or remedies they have against Square and Square Acquirer in respect of any breach of this document which occurs before it is terminated.
|
Performance of obligations generally
|
Scheme Consideration
|
Scheme Consideration
|
(a)
|
Square Acquirer undertakes in favour of each Scheme Participant to provide or procure as set forth in clause 4.1(b) the provision of the Scheme Consideration to each Scheme Participant;
|
(b)
|
Square Acquirer undertakes in favour of each Scheme Participant to cause Square to, and Square will at the direction of and on behalf of Square Acquirer (in satisfaction of Square Acquirer’s obligation to provide such Scheme Consideration to the Scheme Participants under clause 4.1(a)), issue the Scheme Consideration to each Scheme Participant; and
|
(c)
|
Square and Square Acquirer undertake to perform all other actions attributed to it under the Scheme,
|
New Square Shares to rank equally
|
(a)
|
rank equally with all other Square A Shares then on issue; and
|
(b)
|
be fully paid and free from Encumbrance.
|
Representations and warranties
|
(a)
|
(status) it has been incorporated or formed in accordance with the laws of its place of incorporation and remains in good standing thereunder;
|
(b)
|
(power) it has power to enter into this document, to comply with its obligations under it and exercise its rights under it;
|
(c)
|
(no contravention) the entry by it into, its compliance with its obligations and the exercise of its rights under, this document does not and will not breach:
|
(i)
|
its constituent documents or cause a limitation on its powers or the powers of its directors to be exceeded;
|
(ii)
|
any law binding or applicable to it or its assets, except where any conflict would not, individually or in the aggregate, reasonably be expected to have a Square Material Adverse Effect (as defined in the Scheme Implementation Deed); or
|
(iii)
|
any other document or agreement that is binding on any it, except where any conflict or breach would not, individually or in the aggregate, reasonably be expected to have a Square Material Adverse Effect (as defined in the Scheme Implementation Deed);
|
(d)
|
(authorisations) other than the approvals contemplated by clause 3.1 of the Scheme Implementation Deed, it has in full force and effect each authorisation necessary for it to enter into this document, to comply with its obligations and exercise its rights under it, and to allow them to be enforced;
|
(e)
|
(validity of obligations) its obligations under this document are valid and binding and are enforceable against it in accordance with its terms; and
|
(f)
|
(solvency) it is not Insolvent (as defined in the Scheme Implementation Deed).
|
Continuing obligations
|
(a)
|
Square and Square Acquirer have fully performed their obligations under this document; or
|
(b)
|
the earlier termination of this document under clause 2.2.
|
Costs
|
Costs
|
Stamp duty and registration fees
|
(a)
|
agree to pay or reimburse all stamp duty, registration fees and similar taxes payable or assessed as being payable in connection with this document or any other transaction contemplated by this document (including any fees, fines, penalties and interest in connection with any of these amounts); and
|
(b)
|
indemnify each Scheme Participant against, and agrees to reimburse and compensate it for, any liability in respect of stamp duty under clause 7.2(a).
|
Notices
|
General
|
Variation
|
(a)
|
the variation is agreed to by Afterpay and Square in writing; and
|
(b)
|
the Court indicates that the variation, alteration or amendment would not itself preclude approval of the Scheme,
|
Partial exercising of rights
|
Remedies cumulative
|
Assignment or other dealings
|
Further steps
|
Governing law and jurisdiction
|
Governing law and jurisdiction
|
Serving documents
|
(a)
|
irrevocably appoints King & Wood Mallesons as its process agent to receive any document in an action in connection with this document, and agrees that any such document may be served on Square by being delivered to or left for Square at the following address:
|
(b)
|
agrees that failure by a process agent to notify King & Wood Mallesons of any document in an action in connection with this document does not invalidate the action concerned.
|
SIGNED, SEALED AND DELIVERED
|
| |
)
|
| |
|
by LANAI (AU) 2 PTY LTD (ACN 652
|
| |
)
|
| |
|
352 451) in accordance with section
|
| |
)
|
| |
|
127(1) of the Corporations Act 2001
|
| |
)
|
| |
|
(Cth) by authority of its directors:
|
| |
)
|
| |
|
|
| |
)
|
| |
|
|
| |
)
|
| |
Signature of director/company secretary*
|
|
| |
)
|
| |
*delete whichever is not applicable
|
Signature of director
|
| |
)
|
| |
|
|
| |
)
|
| |
|
|
| |
)
|
| |
|
|
| |
)
|
| |
Name of director/company secretary*
|
Name of director (block letters)
|
| |
|
| |
(block letters)
|
|
| |
|
| |
*delete whichever is not applicable
|
|
| |
|
| |
|
| |
Page
|
| | ||||||||
| | ||||||||
| | ||||||||
| | ||||||||
| | ||||||||
|
| | | | | | |||
| | ||||||||
|
| | | | | | |||
|
| | | | | | |||
|
| | | | | | |||
|
| | | | | | |||
|
| | | | | | |||
| | ||||||||
|
| | | | | | |||
|
| | | | | | |||
|
| | | | | | |||
|
| | | | | | |||
|
| | | | | | |||
|
| | | | | | |||
| | ||||||||
|
| | | | | | |||
|
| | | | | | |||
|
| | | | | | |||
|
| | | | | | |||
|
| | | | | | |||
| | ||||||||
|
| | | | | | |||
|
| | | | | | |||
| | ||||||||
|
| | | | | | |||
|
| | | | | | |||
|
| | | | | | |||
|
| | | | | | |||
| | ||||||||
|
| | | | | | |||
| |
For the year ended 30 June
|
| |
Note
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Afterpay income
|
| |
2
|
| |
822,258
|
| |
433,815
|
| |
200,868
|
Pay Now revenue
|
| |
2
|
| |
13,788
|
| |
16,493
|
| |
17,095
|
Other income
|
| |
3
|
| |
88,624
|
| |
68,843
|
| |
46,149
|
Total income
|
| |
|
| |
924,670
|
| |
519,151
|
| |
264,112
|
Cost of sales
|
| |
|
| |
(249,564)
|
| |
(134,295)
|
| |
(59,562)
|
Gross profit
|
| |
|
| |
675,106
|
| |
384,856
|
| |
204,550
|
|
| |
|
| |
|
| |
|
| |
|
Depreciation and amortisation expenses1
|
| |
4
|
| |
(38,989)
|
| |
(30,035)
|
| |
(22,371)
|
Employment expenses
|
| |
4
|
| |
(150,911)
|
| |
(86,129)
|
| |
(51,445)
|
Share-based payment expenses
|
| |
|
| |
(59,003)
|
| |
(30,454)
|
| |
(30,545)
|
Receivables impairment expenses
|
| |
8
|
| |
(195,056)
|
| |
(94,493)
|
| |
(58,675)
|
Net loss on financial liabilities at fair value
|
| |
16
|
| |
(96,835)
|
| |
(1,999)
|
| |
—
|
Operating expenses
|
| |
4
|
| |
(298,596)
|
| |
(146,305)
|
| |
(73,210)
|
Operating loss
|
| |
|
| |
(164,284)
|
| |
(4,559)
|
| |
(31,696)
|
|
| |
|
| |
|
| |
|
| |
|
Share of loss of associate
|
| |
|
| |
(2,271)
|
| |
(1,101)
|
| |
—
|
Gain on dilution of shareholding in associate
|
| |
19
|
| |
5,683
|
| |
—
|
| |
—
|
Finance income
|
| |
|
| |
965
|
| |
1,408
|
| |
563
|
Finance costs1
|
| |
|
| |
(34,307)
|
| |
(22,530)
|
| |
(11,653)
|
Loss before tax
|
| |
|
| |
(194,214)
|
| |
(26,782)
|
| |
(42,786)
|
|
| |
|
| |
|
| |
|
| |
|
Income tax benefit / (expense)
|
| |
5
|
| |
34,819
|
| |
3,925
|
| |
(1,013)
|
Loss after tax
|
| |
|
| |
(159,395)
|
| |
(22,857)
|
| |
(43,799)
|
|
| |
|
| |
|
| |
|
| |
|
Other comprehensive loss
|
| |
|
| |
|
| |
|
| |
|
Other comprehensive loss to be reclassified to profit or loss in subsequent periods (net of tax)
|
| |
|
| |
|
| |
|
| |
|
Exchange differences on translation of foreign operations
|
| |
|
| |
(31,323)
|
| |
(17,904)
|
| |
(776)
|
Total comprehensive loss, net of tax
|
| |
|
| |
(190,718)
|
| |
(40,761)
|
| |
(44,575)
|
|
| |
|
| |
|
| |
|
| |
|
Loss after tax attributable to:
|
| |
|
| |
|
| |
|
| |
|
Ordinary shareholders of Afterpay Limited
|
| |
|
| |
(156,298)
|
| |
(19,780)
|
| |
(42,861)
|
Non-controlling interests
|
| |
|
| |
(3,097)
|
| |
(3,077)
|
| |
(938)
|
|
| |
|
| |
|
| |
|
| |
|
Earnings per share for loss attributable to the ordinary shareholders of the company
|
| |
6
|
| |
$
|
| |
$
|
| |
$
|
Basic loss per share
|
| |
|
| |
(0.55)
|
| |
(0.08)
|
| |
(0.18)
|
Diluted loss per share
|
| |
|
| |
(0.55)
|
| |
(0.08)
|
| |
(0.18)
|
1.
|
The Group adopted IFRS 16 Leases using the modified retrospective method as of 1 July 2019 and has not restated comparatives for 2019. The 2019 comparatives are not comparable to 2020 for recognition and measurement. Refer to Note 24 for further details.
|
|
| |
|
| |
|
Elana Rubin, AM
|
| |
Anthony Eisen
|
| |
Nick Molnar
|
Independent Chair
|
| |
Co-Chief Executive Officer and Managing Director
|
| |
Co-Chief Executive Officer and Managing Director
|
As at 30 June
|
| |
Note
|
| |
2021
$’000
|
| |
2020
$’000
|
| |
2019
$'000
|
ASSETS
|
| |
|
| |
|
| |
|
| |
|
Current Assets
|
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents
|
| |
7
|
| |
1,147,147
|
| |
606,041
|
| |
231,456
|
Receivables
|
| |
8
|
| |
1,454,072
|
| |
781,895
|
| |
452,699
|
Other financial assets
|
| |
9
|
| |
26,788
|
| |
10,660
|
| |
3,003
|
Other assets
|
| |
|
| |
18,780
|
| |
6,695
|
| |
9,130
|
Income tax receivable
|
| |
|
| |
10,970
|
| |
—
|
| |
—
|
Total Current Assets
|
| |
|
| |
2,657,757
|
| |
1,405,291
|
| |
696,288
|
Non-Current Assets
|
| |
|
| |
|
| |
|
| |
|
Property, plant and equipment
|
| |
10
|
| |
8,112
|
| |
5,127
|
| |
4,213
|
Right-of-use assets1
|
| |
11
|
| |
33,958
|
| |
6,999
|
| |
—
|
Intangible assets
|
| |
12
|
| |
227,513
|
| |
106,589
|
| |
89,072
|
Deferred tax assets
|
| |
5
|
| |
156,127
|
| |
78,291
|
| |
27,280
|
Investment in associate
|
| |
19
|
| |
23,578
|
| |
5,166
|
| |
—
|
Other financial assets
|
| |
9
|
| |
3,217
|
| |
893
|
| |
3,035
|
Other assets
|
| |
|
| |
5,965
|
| |
170
|
| |
580
|
Total Non-Current Assets
|
| |
|
| |
458,470
|
| |
203,235
|
| |
124,180
|
TOTAL ASSETS
|
| |
|
| |
3,116,227
|
| |
1,608,526
|
| |
820,468
|
LIABILITIES
|
| |
|
| |
|
| |
|
| |
|
Current Liabilities
|
| |
|
| |
|
| |
|
| |
|
Trade and other payables
|
| |
|
| |
306,259
|
| |
182,613
|
| |
111,753
|
Employee benefit provision
|
| |
|
| |
10,323
|
| |
5,279
|
| |
2,585
|
Other provisions
|
| |
|
| |
501
|
| |
—
|
| |
—
|
Contract liabilities
|
| |
|
| |
3,636
|
| |
224
|
| |
100
|
Lease liabilities1
|
| |
14
|
| |
2,201
|
| |
4,278
|
| |
—
|
Income tax payable
|
| |
|
| |
2,477
|
| |
1,158
|
| |
5,370
|
Total Current Liabilities
|
| |
|
| |
325,397
|
| |
193,552
|
| |
119,808
|
Non-Current Liabilities
|
| |
|
| |
|
| |
|
| |
|
Employee benefit provision
|
| |
|
| |
672
|
| |
513
|
| |
317
|
Other provisions
|
| |
|
| |
1,222
|
| |
305
|
| |
565
|
Lease liabilities1
|
| |
14
|
| |
31,999
|
| |
3,167
|
| |
342
|
Borrowings
|
| |
15
|
| |
1,286,383
|
| |
461,600
|
| |
49,881
|
Other financial liabilities
|
| |
16
|
| |
166,648
|
| |
3,038
|
| |
1,039
|
Total Non-Current Liabilities
|
| |
|
| |
1,486,924
|
| |
468,623
|
| |
52,144
|
TOTAL LIABILITIES
|
| |
|
| |
1,812,321
|
| |
662,175
|
| |
171,952
|
NET ASSETS
|
| |
|
| |
1,303,906
|
| |
946,351
|
| |
648,516
|
EQUITY
|
| |
|
| |
|
| |
|
| |
|
Issued capital
|
| |
13
|
| |
2,204,450
|
| |
975,317
|
| |
674,769
|
Accumulated losses
|
| |
|
| |
(246,653)
|
| |
(90,355)
|
| |
(70,575)
|
Reserves
|
| |
|
| |
(654,704)
|
| |
58,711
|
| |
41,365
|
Equity attributable to the ordinary shareholders of Afterpay Limited
|
| |
|
| |
1,303,093
|
| |
943,673
|
| |
645,559
|
Non-controlling interests
|
| |
|
| |
813
|
| |
2,678
|
| |
2,957
|
TOTAL EQUITY
|
| |
|
| |
1,303,906
|
| |
946,351
|
| |
648,516
|
1.
|
The Group adopted IFRS 16 Leases using the modified retrospective method as of 1 July 2019 and has not restated comparatives for 2019. The 2019 comparatives are not comparable to 2020 for recognition and measurement. Refer to Note 24 for further details.
|
For the year ended 30 June 2021
|
| |
Issued
Capital
$’000
|
| |
Accumulated
Losses
$’000
|
| |
Foreign
Currency
Translation
Reserve
$’000
|
| |
Other reserves
(Note 13)
$’000
|
| |
Total
$’000
|
| |
Non-
Controlling
Interest
$’000
|
| |
Total
$’000
|
At 1 July 2020
|
| |
975,317
|
| |
(90,355)
|
| |
(18,725)
|
| |
77,436
|
| |
943,673
|
| |
2,678
|
| |
946,351
|
Loss after tax
|
| |
—
|
| |
(156,298)
|
| |
—
|
| |
—
|
| |
(156,298)
|
| |
(3,097)
|
| |
(159,395)
|
Other comprehensive loss
|
| |
—
|
| |
—
|
| |
(31,323)
|
| |
—
|
| |
(31,323)
|
| |
—
|
| |
(31,323)
|
Total comprehensive loss
|
| |
—
|
| |
(156,298)
|
| |
(31,323)
|
| |
—
|
| |
(187,621)
|
| |
(3,097)
|
| |
(190,718)
|
Transactions
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Issue of share capital
|
| |
786,167
|
| |
—
|
| |
—
|
| |
—
|
| |
786,167
|
| |
—
|
| |
786,167
|
Issue of ordinary shares, as consideration for a business combination, net of transaction costs and tax
|
| |
1,737
|
| |
—
|
| |
—
|
| |
—
|
| |
1,737
|
| |
—
|
| |
1,737
|
Share and APT Convertible Notes issue expenses (net of tax)
|
| |
(11,741)
|
| |
—
|
| |
—
|
| |
(4,705)
|
| |
(16,446)
|
| |
—
|
| |
(16,446)
|
Share options, RSUs and loan shares exercised (net of tax)
|
| |
51,617
|
| |
—
|
| |
—
|
| |
(316,466)
|
| |
(264,849)
|
| |
415
|
| |
(264,434)
|
Share-based payments
|
| |
—
|
| |
—
|
| |
—
|
| |
41,319
|
| |
41,319
|
| |
817
|
| |
42,136
|
FY21 US ESOP Modification (Note 20)
|
| |
401,353
|
| |
—
|
| |
—
|
| |
(195,579)
|
| |
205,774
|
| |
—
|
| |
205,774
|
Matrix Transaction (Note 20)
|
| |
—
|
| |
—
|
| |
—
|
| |
(372,465)
|
| |
(372,465)
|
| |
—
|
| |
(372,465)
|
Issue of APT Convertible Notes (net of tax) (Note 15)
|
| |
—
|
| |
—
|
| |
—
|
| |
165,804
|
| |
165,804
|
| |
—
|
| |
165,804
|
At 30 June 2021
|
| |
2,204,450
|
| |
(246,653)
|
| |
(50,048)
|
| |
(604,656)
|
| |
1,303,093
|
| |
813
|
| |
1,303,906
|
For the year ended 30 June 2020
|
| |
Issued
Capital
$’000
|
| |
Accumulated
Losses
$’000
|
| |
Foreign
Currency
Translation
Reserve
$’000
|
| |
Other reserves
(Note 13)
$’000
|
| |
Total
$’000
|
| |
Non-
Controlling
Interest
$’000
|
| |
Total
$’000
|
At 1 July 2019
|
| |
674,769
|
| |
(70,575)
|
| |
(821)
|
| |
42,186
|
| |
645,559
|
| |
2,957
|
| |
648,516
|
Loss after tax
|
| |
—
|
| |
(19,780)
|
| |
—
|
| |
—
|
| |
(19,780)
|
| |
(3,077)
|
| |
(22,857)
|
Other comprehensive loss
|
| |
—
|
| |
—
|
| |
(17,904)
|
| |
—
|
| |
(17,904)
|
| |
—
|
| |
(17,904)
|
Total comprehensive loss
|
| |
—
|
| |
(19,780)
|
| |
(17,904)
|
| |
—
|
| |
(37,684)
|
| |
(3,077)
|
| |
(40,761)
|
Transactions
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Issue of share capital
|
| |
233,012
|
| |
—
|
| |
—
|
| |
—
|
| |
233,012
|
| |
—
|
| |
233,012
|
Share issue expenses (net of tax)
|
| |
(1,782)
|
| |
—
|
| |
—
|
| |
—
|
| |
(1,782)
|
| |
—
|
| |
(1,782)
|
Share options and loan shares exercised (net of tax)
|
| |
69,318
|
| |
—
|
| |
—
|
| |
6,637
|
| |
75,955
|
| |
957
|
| |
76,912
|
Share-based payments
|
| |
—
|
| |
—
|
| |
—
|
| |
28,613
|
| |
28,613
|
| |
1,841
|
| |
30,454
|
At 30 June 2020
|
| |
975,317
|
| |
(90,355)
|
| |
(18,725)
|
| |
77,436
|
| |
943,673
|
| |
2,678
|
| |
946,351
|
For the year ended 30 June 2019
|
| |
Issued
Capital
$’000
|
| |
Accumulated
Losses
$’000
|
| |
Foreign
Currency
Translation
Reserve
$’000
|
| |
Other reserves
(Note 13)
$’000
|
| |
Total
$’000
|
| |
Non-
Controlling
Interest
$’000
|
| |
Total
$’000
|
At 1 July 2018
|
| |
192,628
|
| |
(22,195)
|
| |
(45)
|
| |
13,167
|
| |
183,555
|
| |
—
|
| |
183,555
|
Initial application of IFRS 15 and IFRS 9
|
| |
—
|
| |
(5,519)
|
| |
—
|
| |
—
|
| |
(5,519)
|
| |
—
|
| |
(5,519)
|
At 1 July 2018 (restated)
|
| |
192,628
|
| |
(27,714)
|
| |
(45)
|
| |
13,167
|
| |
178,036
|
| |
—
|
| |
178,036
|
Loss after tax
|
| |
—
|
| |
(42,861)
|
| |
—
|
| |
—
|
| |
(42,861)
|
| |
(938)
|
| |
(43,799)
|
Other comprehensive loss
|
| |
—
|
| |
—
|
| |
(776)
|
| |
—
|
| |
(776)
|
| |
—
|
| |
(776)
|
Total comprehensive loss
|
| |
—
|
| |
(42,861)
|
| |
(776)
|
| |
—
|
| |
(43,637)
|
| |
(938)
|
| |
(44,575)
|
Transactions
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Issue of share capital
|
| |
459,269
|
| |
—
|
| |
—
|
| |
—
|
| |
459,269
|
| |
—
|
| |
459,269
|
Share issue expenses (net of tax)
|
| |
(10,050)
|
| |
—
|
| |
—
|
| |
—
|
| |
(10,050)
|
| |
—
|
| |
(10,050)
|
Issue of ordinary shares, as consideration for a business combination, net of transaction costs and tax
|
| |
17,826
|
| |
—
|
| |
—
|
| |
—
|
| |
17,826
|
| |
—
|
| |
17,826
|
Non-controlling interest on acquisition of subsidiary
|
| |
—
|
| |
—
|
| |
—
|
| |
(1,039)
|
| |
(1,039)
|
| |
1,981
|
| |
942
|
Share options and loan shares exercised (net of tax)
|
| |
15,096
|
| |
—
|
| |
—
|
| |
(3,678)
|
| |
11,418
|
| |
372
|
| |
11,790
|
Share-based payments
|
| |
—
|
| |
—
|
| |
—
|
| |
33,736
|
| |
33,736
|
| |
1,542
|
| |
35,278
|
At 30 June 2019
|
| |
674,769
|
| |
(70,575)
|
| |
(821)
|
| |
42,186
|
| |
645,559
|
| |
2,957
|
| |
648,516
|
For the year ended
|
| |
Note
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Cash flows from operating activities
|
| |
|
| |
|
| |
|
| |
|
Receipts from customers
|
| |
|
| |
18,645,746
|
| |
9,954,963
|
| |
4,823,012
|
Payments to employees
|
| |
|
| |
(146,483)
|
| |
(80,895)
|
| |
(39,827)
|
Payments to merchants and suppliers
|
| |
|
| |
(19,068,588)
|
| |
(10,103,761)
|
| |
(4,916,304)
|
Income taxes paid
|
| |
|
| |
(1,870)
|
| |
(4,260)
|
| |
(9,073)
|
Net cash outflow from operating activities
|
| |
7
|
| |
(571,195)
|
| |
(233,953)
|
| |
(142,192)
|
|
| |
|
| |
|
| |
|
| |
|
Cash flows from investing activities
|
| |
|
| |
|
| |
|
| |
|
Interest received
|
| |
|
| |
949
|
| |
1,476
|
| |
686
|
(Increase)/decrease in short-term deposits
|
| |
|
| |
(12,653)
|
| |
560
|
| |
(866)
|
Payments for development of intangible assets
|
| |
|
| |
(60,734)
|
| |
(40,754)
|
| |
(21,055)
|
Purchase of intangibles
|
| |
|
| |
(5,502)
|
| |
(1,452)
|
| |
(485)
|
Purchase of plant and equipment
|
| |
|
| |
(4,353)
|
| |
(3,389)
|
| |
(2,070)
|
Acquisition of subsidiaries, net of cash acquired
|
| |
|
| |
(13,616)
|
| |
—
|
| |
—
|
Proceeds from sale of business
|
| |
|
| |
—
|
| |
—
|
| |
7,500
|
Contributions to associate
|
| |
|
| |
(15,000)
|
| |
(5,088)
|
| |
—
|
Net cash outflow from investing activities
|
| |
|
| |
(110,909)
|
| |
(48,647)
|
| |
(16,290)
|
|
| |
|
| |
|
| |
|
| |
|
Cash flows from financing activities
|
| |
|
| |
|
| |
|
| |
|
Proceeds from borrowings
|
| |
|
| |
793,268
|
| |
1,386,247
|
| |
414,988
|
Repayment of borrowings
|
| |
|
| |
(1,226,098)
|
| |
(970,826)
|
| |
(526,493)
|
Issue of APT Convertible Note
|
| |
|
| |
1,500,000
|
| |
—
|
| |
—
|
Matrix Transaction, net of transaction costs
|
| |
20
|
| |
(377,647)
|
| |
—
|
| |
—
|
Cash settlement of FY21 US ESOP Modification
|
| |
20
|
| |
(202,587)
|
| |
—
|
| |
—
|
Proceeds from issue of shares
|
| |
|
| |
786,167
|
| |
233,012
|
| |
459,269
|
Share and APT Convertible Notes issue expenses
|
| |
|
| |
(46,041)
|
| |
(5,208)
|
| |
(11,424)
|
(Increase)/decrease in restricted cash
|
| |
|
| |
(12,271)
|
| |
494
|
| |
21,711
|
Proceeds from exercise of share options
|
| |
|
| |
27,400
|
| |
30,550
|
| |
13,631
|
Payment of lease liabilities1
|
| |
|
| |
(6,209)
|
| |
(5,307)
|
| |
—
|
Interest and bank fees paid
|
| |
|
| |
(15,581)
|
| |
(19,514)
|
| |
(14,549)
|
Net cash inflow from financing activities
|
| |
|
| |
1,220,401
|
| |
649,448
|
| |
357,133
|
|
| |
|
| |
|
| |
|
| |
|
Net increase in cash and cash equivalents
|
| |
|
| |
538,297
|
| |
366,848
|
| |
198,651
|
Foreign exchange on cash balance
|
| |
|
| |
2,809
|
| |
7,737
|
| |
246
|
Cash and cash equivalents at beginning of the year
|
| |
|
| |
606,041
|
| |
231,456
|
| |
32,559
|
Cash and cash equivalents at end of the year
|
| |
7
|
| |
1,147,147
|
| |
606,041
|
| |
231,456
|
1.
|
Group adopted IFRS 16 Leases using the modified retrospective method as of 1 July 2019 and has not restated comparatives for 2019. The 2019 comparatives are not comparable to 2020 for recognition and measurement. Refer to Note 24 for further details.
|
Basis of preparation
|
•
|
have been prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB);
|
•
|
have been prepared on a going concern basis using historical cost basis, except for the revaluation of certain financial instruments that are measured at fair value;
|
•
|
are presented in Australian dollars. All values are rounded to the nearest thousand ($’000), except when otherwise indicated;
|
•
|
where necessary, comparative information has been restated to conform to changes in presentation in the current year; and
|
•
|
apply significant accounting policies consistently to all periods presented, unless otherwise stated.
|
•
|
Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)
|
•
|
Exposure, or rights, to variable returns from its involvement with the investee
|
•
|
The ability to use its power over the investee to affect its returns
|
•
|
The contractual arrangement(s) with the other vote holders of the investee
|
•
|
Rights arising from other contractual arrangements
|
•
|
The Group’s voting rights and potential voting rights
|
•
|
Note 5 Taxation;
|
•
|
Note 8 Receivables;
|
•
|
Note 12 Intangible assets;
|
•
|
Note 16 Other financial liabilities; and
|
•
|
Note 20 Share-based payment plans.
|
Segment information
|
•
|
Afterpay Asia Pacific: Comprises the Afterpay platforms in Australia, New Zealand and Asia;
|
•
|
Afterpay North America: Comprises the Afterpay platforms in the United States of America and Canada;
|
•
|
Clearpay: Comprises the Clearpay platforms in the United Kingdom and Europe;
|
•
|
Pay Now: Comprises Mobility, Health and e-Services; and
|
•
|
Corporate: Comprises Group expenses that are not directly attributable or allocated to the Afterpay, Clearpay or Pay Now segments.
|
•
|
Afterpay ANZ has been renamed to Afterpay Asia Pacific to reflect changes to the Group’s operating model during the year;
|
•
|
Afterpay Canada, which launched in August 2020, is included within Afterpay North America (previously referred to as Afterpay US); and
|
•
|
Clearpay Europe, which launched in March 2021, is included within the Clearpay segment.
|
For the year ended 30 June 2021
|
| |
Afterpay Asia
Pacific
$’000
|
| |
Afterpay North
America
$’000
|
| |
Clearpay
$’000
|
| |
Pay Now
$’000
|
| |
Corporate
$’000
|
| |
Total Segments
$’000
|
Total segment income1
|
| |
427,384
|
| |
390,841
|
| |
92,657
|
| |
13,788
|
| |
—
|
| |
924,670
|
Segment EBITDA (excl. significant items)2
|
| |
195,232
|
| |
(101,078)
|
| |
13,559
|
| |
8,794
|
| |
(77,778)
|
| |
38,729
|
Foreign currency gains
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
9,865
|
Share-based payment expenses
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(59,003)
|
Net loss on financial liabilities at fair value
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(96,835)
|
Share of loss of associate
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(2,271)
|
Gain on dilution of shareholding in associate
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
5,683
|
One-off items
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(18,051)
|
EBITDA
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(121,883)
|
Net finance cost
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(33,342)
|
Depreciation and amortisation
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(38,989)
|
Loss before tax
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(194,214)
|
Income tax benefit
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
34,819
|
Loss after tax
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(159,395)
|
For the year ended 30 June 2020
|
| |
Afterpay Asia
Pacific
$’000
|
| |
Afterpay North
America
$’000
|
| |
Clearpay
$’000
|
| |
Pay Now
$’000
|
| |
Corporate
$’000
|
| |
Total Segments
$’000
|
Total segment income1
|
| |
313,687
|
| |
162,724
|
| |
26,247
|
| |
16,493
|
| |
—
|
| |
519,151
|
Segment EBITDA (excl. significant items)2
|
| |
142,177
|
| |
(47,000)
|
| |
(12,922)
|
| |
6,532
|
| |
(44,387)
|
| |
44,400
|
Foreign currency gains
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
19,948
|
Share-based payment expenses
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(30,454)
|
Net loss on financial liabilities at fair value
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(1,999)
|
Share of loss of associate
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(1,101)
|
Gain on dilution of shareholding in associate
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
—
|
One-off items
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(6,419)
|
EBITDA
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
24,375
|
Net finance cost
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(21,122)
|
Depreciation and amortisation
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(30,035)
|
Loss before tax
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(26,782)
|
Income tax benefit
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
3,925
|
Loss after tax
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(22,857)
|
1.
|
Total segment income includes Afterpay income, Pay Now revenue and Other income.
|
2.
|
Segment EBITDA (excluding significant items) excludes the impact of share-based payment expenses, foreign currency gains, net loss on financial liabilities at fair value, share of loss of associate, gain on dilution of shareholding in associate, and one-off items. No government grants or other benefits relating to COVID-19 have been recognised in the year (2020: nil, 2019: nil).
|
For the year ended 30 June 2019
|
| |
Afterpay Asia
Pacific
$’000
|
| |
Afterpay North
America
$’000
|
| |
Clearpay
$’000
|
| |
Pay Now
$’000
|
| |
Corporate
$’000
|
| |
Total Segments
$’000
|
Total segment income1
|
| |
207,870
|
| |
39,002
|
| |
145
|
| |
17,095
|
| |
—
|
| |
264,112
|
Segment EBITDA (excl. significant items)2
|
| |
87,860
|
| |
(24,554)
|
| |
(4,402)
|
| |
4,930
|
| |
(38,119)
|
| |
25,715
|
Foreign currency gains
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
2,961
|
Share-based payment expenses
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(30,545)
|
One-off items
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(7,456)
|
EBITDA
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(9,325)
|
Net finance cost
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(11,090)
|
Depreciation and amortisation
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(22,371)
|
Loss before tax
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(42,786)
|
Income tax expense
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(1,013)
|
Loss after tax
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(43,799)
|
1.
|
Total segment income includes Afterpay income, Pay Now revenue and Other income.
|
2.
|
Segment EBITDA (excluding significant items) excludes the impact of share-based payment expenses, foreign currency gains, net loss on financial liabilities at fair value, share of loss of associate, gain on dilution of shareholding in associate, and one-off items. No government grants or other benefits relating to COVID-19 have been recognised in the year (2020: nil, 2019: nil).
|
Other income
|
For the year ended 30 June
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Late fees
|
| |
87,306
|
| |
68,843
|
| |
46,149
|
Money by Afterpay
|
| |
909
|
| |
—
|
| |
—
|
Other
|
| |
409
|
| |
—
|
| |
—
|
Total other income
|
| |
88,624
|
| |
68,843
|
| |
46,149
|
Expenses
|
For the year ended 30 June
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Depreciation and amortisation expenses
|
| |
|
| |
|
| |
|
Depreciation
|
| |
(9,592)
|
| |
(7,607)
|
| |
(1,978)
|
Amortisation
|
| |
(29,397)
|
| |
(22,428)
|
| |
(20,393)
|
Total depreciation and amortisation expenses
|
| |
(38,989)
|
| |
(30,035)
|
| |
(22,371)
|
|
| |
|
| |
|
| |
|
Employment expenses
|
| |
|
| |
|
| |
|
Wages and salaries
|
| |
(131,348)
|
| |
(74,113)
|
| |
(42,429)
|
Employee on-costs
|
| |
(19,563)
|
| |
(12,016)
|
| |
(9,016)
|
Total employment expenses
|
| |
(150,911)
|
| |
(86,129)
|
| |
(51,445)
|
|
| |
|
| |
|
| |
|
Operating expenses
|
| |
|
| |
|
| |
|
Debt recovery costs, including chargebacks
|
| |
(25,018)
|
| |
(17,135)
|
| |
(9,721)
|
Consulting and contractor costs
|
| |
(55,614)
|
| |
(32,896)
|
| |
(17,177)
|
Marketing expenses
|
| |
(168,809)
|
| |
(70,520)
|
| |
(22,877)
|
Communication and technology
|
| |
(29,563)
|
| |
(18,536)
|
| |
(8,202)
|
Operating lease expenses1
|
| |
(236)
|
| |
(1,159)
|
| |
(4,122)
|
Foreign currency gains
|
| |
9,865
|
| |
19,948
|
| |
2,961
|
AUSTRAC related costs
|
| |
—
|
| |
(3,723)
|
| |
(1,079)
|
Impairment2
|
| |
(4,790)
|
| |
—
|
| |
—
|
Net gain on sale of business3
|
| |
—
|
| |
—
|
| |
1,271
|
General and administrative expenses
|
| |
(24,431)
|
| |
(22,284)
|
| |
(14,264)
|
Total operating expenses
|
| |
(298,596)
|
| |
(146,305)
|
| |
(73,210)
|
1.
|
Includes expenses relating to short-term leases and leases of low value assets. The 2019 comparatives relate to operating lease expenses recognised under IAS 17 Leases. IAS 17 was replaced with IFRS 16 Leases from 1 July 2019. Refer to Note 24 for further details.
|
2.
|
Includes goodwill impairment expense of $4.3 million (note 12) (2020: nil, 2019: nil).
|
3.
|
Represents the net gain on sale of the European e-Services business, which was completed on 1 November 2018. The European e-Services business did not represent a separate major line of business or geographical area of operations.
|
Taxation
|
For the year ended 30 June
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
The major components of income tax expense:
|
| |
|
| |
|
| |
|
Current income tax charge
|
| |
|
| |
|
| |
|
Current income tax expense
|
| |
(42,096)
|
| |
(21,945)
|
| |
(15,263)
|
Adjustments in respect of current income tax of previous years
|
| |
333
|
| |
734
|
| |
55
|
|
| |
|
| |
|
| |
|
Deferred income tax
|
| |
|
| |
|
| |
|
Relating to origination/reversal of temporary differences
|
| |
70,537
|
| |
25,619
|
| |
14,082
|
Adjustment in relation to deferred income tax of previous years
|
| |
6,045
|
| |
(483)
|
| |
113
|
Income tax benefit / (expense)
|
| |
34,819
|
| |
3,925
|
| |
(1,013)
|
For the year ended 30 June
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Current income tax related to share-based payments
|
| |
(122,942)
|
| |
(46,420)
|
| |
—
|
Deferred income tax related to APT Convertible Notes
|
| |
71,059
|
| |
—
|
| |
—
|
Deferred income tax related to capital raising costs
|
| |
(5,032)
|
| |
(764)
|
| |
(4,293)
|
Deferred income tax related to opening retained earnings adjustment for IFRS 16
|
| |
—
|
| |
—
|
| |
(2,362)
|
Total income tax related to items credited directly to equity
|
| |
(56,915)
|
| |
(47,184)
|
| |
(6,655)
|
For the year ended 30 June
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Loss before tax
|
| |
(194,214)
|
| |
(26,782)
|
| |
(42,786)
|
At the Group's corporate tax rate of 30% (2020: 30%, 2019: 30%)
|
| |
58,264
|
| |
8,035
|
| |
12,836
|
Expenditure not allowed for income tax purposes
|
| |
(27,591)
|
| |
(2,199)
|
| |
(12,150)
|
Foreign tax rate differential
|
| |
401
|
| |
(1,339)
|
| |
(1,911)
|
Amount over provided in prior years
|
| |
6,378
|
| |
252
|
| |
168
|
Non-recoverable foreign taxes
|
| |
(259)
|
| |
(824)
|
| |
—
|
Tax losses not recognised
|
| |
(2,374)
|
| |
—
|
| |
—
|
Utilisation of tax losses not previously recognised
|
| |
—
|
| |
—
|
| |
44
|
Income tax benefit / (expense)
|
| |
34,819
|
| |
3,925
|
| |
(1,013)
|
As at 30 June
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Deferred tax liabilities
|
| |
|
| |
|
| |
|
Capitalisation of development expenditure
|
| |
3,019
|
| |
—
|
| |
47
|
Acquired intangibles
|
| |
2,554
|
| |
1,530
|
| |
1,805
|
Unrealised foreign exchange
|
| |
1,295
|
| |
1,331
|
| |
758
|
Deferred receivables
|
| |
12,071
|
| |
5,772
|
| |
1,449
|
APT Convertible Notes
|
| |
67,113
|
| |
—
|
| |
—
|
Other
|
| |
455
|
| |
2,312
|
| |
1,217
|
Gross deferred tax liabilities
|
| |
86,507
|
| |
10,945
|
| |
5,276
|
Deferred tax assets
|
| |
|
| |
|
| |
|
Capitalisation of development expenditure
|
| |
4,303
|
| |
708
|
| |
—
|
Employee benefits
|
| |
16,053
|
| |
5,768
|
| |
3,754
|
Other provisions
|
| |
1,722
|
| |
580
|
| |
1,429
|
Capital raising costs
|
| |
6,140
|
| |
3,314
|
| |
3,790
|
Research and development offsets
|
| |
3,763
|
| |
1,000
|
| |
—
|
Property, plant and equipment
|
| |
843
|
| |
640
|
| |
—
|
Provision for expected credit losses
|
| |
29,252
|
| |
10,028
|
| |
8,328
|
Deferred receivables
|
| |
2,993
|
| |
2,583
|
| |
2,305
|
Losses
|
| |
175,284
|
| |
63,434
|
| |
11,774
|
Other
|
| |
2,281
|
| |
1,181
|
| |
1,176
|
Gross deferred tax assets
|
| |
242,634
|
| |
89,236
|
| |
32,556
|
Net deferred tax assets
|
| |
156,127
|
| |
78,291
|
| |
27,280
|
•
|
when the sales tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
|
•
|
receivables and payables are stated with the amount of sales tax included.
|
Earnings per share (EPS)
|
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Loss attributable to ordinary shareholders of Afterpay Limited
|
| |
(156,298)
|
| |
(19,780)
|
| |
(42,861)
|
|
| |
No.'000
|
| |
No.'000
|
| |
No.'000
|
Weighted average number of ordinary shares for basic EPS
|
| |
284,713
|
| |
259,147
|
| |
231,919
|
Adjustment for calculation of diluted EPS1
|
| |
2,832
|
| |
6,839
|
| |
11,827
|
Weighted average number of ordinary shares adjusted for the effect of dilution
|
| |
287,545
|
| |
265,986
|
| |
243,746
|
1.
|
Includes the effect of dilution from share options, loan shares and rights (e.g. restricted stock units) if they are not anti-dilutive.
|
•
|
50% of the Equity Value above €45 million (subject to certain adjustments), up to €100 million, plus
|
•
|
40% of the Equity Value above €100 million, up to €150 million, plus
|
•
|
10% of the Equity Value above €150 million.
|
Cash and cash equivalents
|
As at 30 June
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Cash at bank
|
| |
1,136,441
|
| |
512,984
|
| |
121,365
|
Short-term deposits
|
| |
10,706
|
| |
93,057
|
| |
110,091
|
Total cash and cash equivalents
|
| |
1,147,147
|
| |
606,041
|
| |
231,456
|
For the year ended 30 June
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Loss before tax
|
| |
(194,214)
|
| |
(26,782)
|
| |
(42,786)
|
Adjustments for:
|
| |
|
| |
|
| |
|
Depreciation and amortisation expenses
|
| |
38,989
|
| |
30,035
|
| |
22,371
|
Share-based payment expenses
|
| |
59,003
|
| |
30,454
|
| |
30,545
|
Net loss on financial liabilities at fair value
|
| |
96,835
|
| |
1,999
|
| |
—
|
Share of loss of associate
|
| |
2,271
|
| |
1,101
|
| |
—
|
Gain on dilution of shareholding in associate
|
| |
(5,683)
|
| |
—
|
| |
—
|
Finance costs
|
| |
34,307
|
| |
22,530
|
| |
11,653
|
Finance income
|
| |
(965)
|
| |
(1,408)
|
| |
(563)
|
Foreign currency gains
|
| |
(9,865)
|
| |
(19,948)
|
| |
(2,535)
|
Impairment
|
| |
4,790
|
| |
—
|
| |
—
|
Net gain on sale of business
|
| |
—
|
| |
—
|
| |
(1,271)
|
Changes in assets and liabilities:
|
| |
|
| |
|
| |
|
Increase in total receivables
|
| |
(672,177)
|
| |
(329,196)
|
| |
(221,478)
|
(Increase)/decrease in other working capital assets
|
| |
(11,407)
|
| |
(11,981)
|
| |
2,861
|
Increase in working capital liabilities
|
| |
93,105
|
| |
73,503
|
| |
68,084
|
Acquired net working capital
|
| |
(4,314)
|
| |
—
|
| |
—
|
Tax paid
|
| |
(1,870)
|
| |
(4,260)
|
| |
(9,073)
|
Net cash outflow from operating activities
|
| |
(571,195)
|
| |
(233,953)
|
| |
(142,192)
|
Receivables
|
As at 30 June
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Consumer receivables - face value
|
| |
1,555,774
|
| |
816,812
|
| |
482,123
|
Consumer receivables - recognised over time1
|
| |
(22,387)
|
| |
(16,678)
|
| |
(9,647)
|
Consumer receivables
|
| |
1,533,387
|
| |
800,134
|
| |
472,476
|
|
| |
|
| |
|
| |
|
Provision for expected credit losses - consumer receivables
|
| |
(99,605)
|
| |
(33,951)
|
| |
(27,760)
|
Trade and other receivables
|
| |
20,290
|
| |
15,712
|
| |
7,983
|
Total receivables
|
| |
1,454,072
|
| |
781,895
|
| |
452,699
|
|
| |
|
| |
|
| |
|
Provision for expected credit losses - consumer receivables
|
| |
|
| |
|
| |
|
Opening balance
|
| |
(33,951)
|
| |
(27,760)
|
| |
(18,054)
|
Provided in the year
|
| |
(195,056)
|
| |
(94,493)
|
| |
(58,675)
|
Debts written off/collected
|
| |
129,402
|
| |
88,302
|
| |
48,969
|
Total provision for expected credit losses - consumer receivables
|
| |
(99,605)
|
| |
(33,951)
|
| |
(27,760)
|
1.
|
Recognised over time represents the consumer transactions completed by period end but earned over the collection period of the consumer receivables. Refer to Note 2 for further details.
|
Stage
|
| |
Ageing
|
| |
Measurement basis
|
Stage 1
|
| |
Not yet due
|
| |
While the Consumer receivables are not yet due, an ECL has been determined based on a probability of a default event occurring over the life of the Consumer receivables.
|
Stage 2
|
| |
1 to 61 days past due
|
| |
Although there is usually no objective evidence of impairment, when a consumer has not paid by the due date, it is an indication that credit risk has increased. As a result, the loss allowance for that Consumer receivable is measured at an amount equal to the lifetime ECL for increased credit risk. Lifetime ECL is the expected credit losses that result from all possible default events over the expected life of the Consumer receivables.
|
Stage 3
|
| |
Greater than 61 days past due
|
| |
When the Consumer receivable is greater than 61 days past due, there is considered to be objective evidence of impairment. Ageing greater than 61 days is considered to have an adverse impact on the estimated future cash flows of the Consumer receivable.
|
As at 30 June 20211
|
| |
Stage 1
$'000
|
| |
Stage 2
$'000
|
| |
Stage 3
$'000
|
| |
Total
$'000
|
Consumer receivables - face value2
|
| |
1,447,729
|
| |
81,579
|
| |
26,466
|
| |
1,555,774
|
Provision for expected credit losses
|
| |
(16,365)
|
| |
(57,749)
|
| |
(25,491)
|
| |
(99,605)
|
Net consumer receivables
|
| |
1,431,364
|
| |
23,830
|
| |
975
|
| |
1,456,169
|
As at 30 June 20201
|
| |
Stage 1
$'000
|
| |
Stage 2
$'000
|
| |
Stage 3
$'000
|
| |
Total
$'000
|
Consumer receivables - face value2
|
| |
783,679
|
| |
25,007
|
| |
8,126
|
| |
816,812
|
Provision for expected credit losses
|
| |
(11,473)
|
| |
(14,910)
|
| |
(7,568)
|
| |
(33,951)
|
Net consumer receivables
|
| |
772,206
|
| |
10,097
|
| |
558
|
| |
782,861
|
As at 30 June 20191
|
| |
Stage 1
$'000
|
| |
Stage 2
$'000
|
| |
Stage 3
$'000
|
| |
Total
$'000
|
Consumer receivables - face value2
|
| |
453,266
|
| |
21,880
|
| |
6,977
|
| |
482,123
|
Provision for expected credit losses
|
| |
(6,434)
|
| |
(14,440)
|
| |
(6,886)
|
| |
(27,760)
|
Net consumer receivables
|
| |
446,832
|
| |
7,440
|
| |
91
|
| |
454,363
|
1.
|
The simplified approach prescribed in IFRS 9 is used for Trade receivables, therefore the related provision for expected credit losses is excluded from the ECL staging table for 2021, 2020 and 2019. While the general approach is used for other receivables, staging has not been provided as all balances that are at risk of non-recovery have been written off. The provision for expected credit losses related to Trade and other receivables was $0.3 million (2020: nil, 2019: nil).
|
2.
|
ECL for Consumer receivables is calculated on the Consumer receivables – face value.
|
Other financial assets
|
As at 30 June
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Restricted cash
|
| |
13,808
|
| |
1,536
|
| |
2,030
|
Short-term deposits
|
| |
16,101
|
| |
3,448
|
| |
4,008
|
Other
|
| |
96
|
| |
6,569
|
| |
—
|
Total other financial assets
|
| |
30,005
|
| |
11,553
|
| |
6,038
|
|
| |
|
| |
|
| |
|
Total Current
|
| |
26,788
|
| |
10,660
|
| |
3,003
|
Total Non-Current
|
| |
3,217
|
| |
893
|
| |
3,035
|
Total other financial assets
|
| |
30,005
|
| |
11,553
|
| |
6,038
|
Property, plant and equipment
|
Right-of-use assets
|
|
| |
Commercial
property leases
$'000
|
| |
Other
$'000
|
| |
Total
$'000
|
Cost
|
| |
|
| |
|
| |
|
At 1 July 20191
|
| |
8,614
|
| |
—
|
| |
8,614
|
Additions
|
| |
4,480
|
| |
—
|
| |
4,480
|
Modifications
|
| |
(749)
|
| |
—
|
| |
(749)
|
Cessations
|
| |
(1,255)
|
| |
—
|
| |
(1,255)
|
At 30 June 2020
|
| |
11,090
|
| |
—
|
| |
11,090
|
Additions
|
| |
32,946
|
| |
—
|
| |
32,946
|
Additions through business combinations
|
| |
716
|
| |
77
|
| |
793
|
Modifications
|
| |
(218)
|
| |
—
|
| |
(218)
|
Cessations
|
| |
(3,010)
|
| |
—
|
| |
(3,010)
|
Foreign exchange movement
|
| |
172
|
| |
1
|
| |
173
|
At 30 June 2021
|
| |
41,696
|
| |
78
|
| |
41,774
|
|
| |
|
| |
|
| |
|
Accumulated depreciation
|
| |
|
| |
|
| |
|
At 1 July 20191
|
| |
—
|
| |
—
|
| |
—
|
Depreciation
|
| |
(5,338)
|
| |
—
|
| |
(5,338)
|
Disposals
|
| |
1,247
|
| |
—
|
| |
1,247
|
At 30 June 2020
|
| |
(4,091)
|
| |
—
|
| |
(4,091)
|
Depreciation
|
| |
(6,741)
|
| |
(10)
|
| |
(6,751)
|
Cessations
|
| |
3,010
|
| |
—
|
| |
3,010
|
Foreign exchange movement
|
| |
16
|
| |
—
|
| |
16
|
At 30 June 2021
|
| |
(7,806)
|
| |
(10)
|
| |
(7,816)
|
|
| |
|
| |
|
| |
|
Net book value
|
| |
|
| |
|
| |
|
At 30 June 2020
|
| |
6,999
|
| |
—
|
| |
6,999
|
At 30 June 2021
|
| |
33,890
|
| |
68
|
| |
33,958
|
1.
|
Group adopted IFRS 16 Leases using the modified retrospective method as of 1 July 2019 and has not restated comparatives for 2019. Refer to Note 24 for further details.
|
•
|
the amount of the initial measurement of lease liability (see Note 14);
|
•
|
any lease payments made at or before the commencement date less any lease incentives received; and
|
•
|
any initial direct costs.
|
Intangible assets
|
|
| |
Core Technology
$'000
|
| |
Customer Contracts
and Relationships
$'000
|
| |
Other Intangibles
$'000
|
| |
Goodwill
$'000
|
| |
Total
$'000
|
Cost
|
| |
|
| |
|
| |
|
| |
|
| |
|
At 1 July 2018
|
| |
53,803
|
| |
15,352
|
| |
140
|
| |
23,575
|
| |
92,870
|
Additions - internally generated
|
| |
21,538
|
| |
—
|
| |
—
|
| |
—
|
| |
21,538
|
Other additions
|
| |
—
|
| |
—
|
| |
689
|
| |
—
|
| |
689
|
Acquisition of a subsidiary
|
| |
—
|
| |
—
|
| |
3,985
|
| |
16,232
|
| |
20,217
|
Disposals
|
| |
(6,473)
|
| |
(1,248)
|
| |
—
|
| |
—
|
| |
(7,721)
|
At 30 June 2019
|
| |
68,868
|
| |
14,104
|
| |
4,814
|
| |
39,807
|
| |
127,593
|
Additions - internally generated
|
| |
38,884
|
| |
—
|
| |
228
|
| |
—
|
| |
39,112
|
Other additions
|
| |
—
|
| |
—
|
| |
834
|
| |
—
|
| |
834
|
At 30 June 2020
|
| |
107,752
|
| |
14,104
|
| |
5,876
|
| |
39,807
|
| |
167,539
|
Additions - internally generated
|
| |
60,342
|
| |
—
|
| |
—
|
| |
—
|
| |
60,342
|
Other additions
|
| |
4,544
|
| |
—
|
| |
1,140
|
| |
—
|
| |
5,684
|
Acquisition of a subsidiary
|
| |
6,566
|
| |
2,862
|
| |
4,726
|
| |
75,917
|
| |
90,071
|
Impairment
|
| |
(678)
|
| |
(250)
|
| |
(111)
|
| |
(4,325)
|
| |
(5,364)
|
Disposals
|
| |
(8,546)
|
| |
—
|
| |
(296)
|
| |
—
|
| |
(8,842)
|
Foreign exchange
|
| |
(1,458)
|
| |
—
|
| |
—
|
| |
897
|
| |
(561)
|
At 30 June 2021
|
| |
168,522
|
| |
16,716
|
| |
11,335
|
| |
112,296
|
| |
308,869
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Amortisation
|
| |
|
| |
|
| |
|
| |
|
| |
|
At 1 July 2018
|
| |
(15,473)
|
| |
(4,882)
|
| |
(20)
|
| |
—
|
| |
(20,375)
|
Amortisation
|
| |
(13,369)
|
| |
(4,605)
|
| |
(2,419)
|
| |
—
|
| |
(20,393)
|
Disposals
|
| |
1,692
|
| |
555
|
| |
—
|
| |
—
|
| |
2,247
|
At 30 June 2019
|
| |
(27,150)
|
| |
(8,932)
|
| |
(2,439)
|
| |
—
|
| |
(38,521)
|
Amortisation
|
| |
(19,029)
|
| |
(2,591)
|
| |
(809)
|
| |
—
|
| |
(22,429)
|
At 30 June 2020
|
| |
(46,179)
|
| |
(11,523)
|
| |
(3,248)
|
| |
—
|
| |
(60,950)
|
Amortisation
|
| |
(25,308)
|
| |
(2,969)
|
| |
(1,120)
|
| |
—
|
| |
(29,397)
|
Disposals
|
| |
8,546
|
| |
—
|
| |
296
|
| |
—
|
| |
8,842
|
Foreign exchange
|
| |
151
|
| |
—
|
| |
(2)
|
| |
—
|
| |
149
|
At 30 June 2021
|
| |
(62,790)
|
| |
(14,492)
|
| |
(4,074)
|
| |
—
|
| |
(81,356)
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Net book value
|
| |
|
| |
|
| |
|
| |
|
| |
|
At 30 June 2019
|
| |
41,718
|
| |
5,172
|
| |
2,375
|
| |
39,807
|
| |
89,072
|
At 30 June 2020
|
| |
61,573
|
| |
2,581
|
| |
2,628
|
| |
39,807
|
| |
106,589
|
At 30 June 2021
|
| |
105,732
|
| |
2,224
|
| |
7,261
|
| |
112,296
|
| |
227,513
|
•
|
the technical feasibility of completing the intangible asset so that the asset will be available for use or sale;
|
•
|
its intention to complete, and its ability to use or sell the asset;
|
•
|
how the asset will generate future economic benefits;
|
•
|
the ability to reliably measure the expenditure during development; and
|
•
|
the ability to use the intangible asset generated.
|
|
| |
Note
|
| |
Afterpay
AU
$'000
|
| |
Afterpay
Asia
$'000
|
| |
Clearpay
UK
$'000
|
| |
Clearpay
EU
$'000
|
| |
Pay
Now
$'000
|
| |
Total
$'000
|
Goodwill allocation
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
At 1 July 2018
|
| |
|
| |
21,220
|
| |
—
|
| |
—
|
| |
—
|
| |
2,355
|
| |
23,575
|
Additions - business combinations
|
| |
18
|
| |
—
|
| |
—
|
| |
16,232
|
| |
—
|
| |
—
|
| |
16,232
|
At 30 June 2019
|
| |
|
| |
21,220
|
| |
—
|
| |
16,232
|
| |
—
|
| |
2,355
|
| |
39,807
|
Additions - business combinations
|
| |
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
At 30 June 2020
|
| |
|
| |
21,220
|
| |
—
|
| |
16,232
|
| |
—
|
| |
2,355
|
| |
39,807
|
Additions - business combinations
|
| |
18
|
| |
—
|
| |
1,970
|
| |
—
|
| |
73,947
|
| |
—
|
| |
75,917
|
Impairment
|
| |
|
| |
—
|
| |
(1,970)
|
| |
—
|
| |
—
|
| |
(2,355)
|
| |
(4,325)
|
Foreign exchange
|
| |
|
| |
—
|
| |
—
|
| |
—
|
| |
897
|
| |
—
|
| |
897
|
At 30 June 2021
|
| |
|
| |
21,220
|
| |
—
|
| |
16,232
|
| |
74,844
|
| |
—
|
| |
112,296
|
Risk weighted pre-tax discount rate
|
| |
|
| |
8.4%
|
| |
n/a
|
| |
10.3%
|
| |
n/a
|
| |
n/a
|
| |
n/a
|
Risk adjusted growth rate
|
| |
|
| |
2%
|
| |
n/a
|
| |
n/a
|
| |
n/a
|
| |
n/a
|
| |
n/a
|
Revenue exit multiple
|
| |
|
| |
n/a
|
| |
n/a
|
| |
35.4x
|
| |
n/a
|
| |
n/a
|
| |
n/a
|
Equity
|
As at 30 June
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Issued and fully paid
|
| |
2,204,450
|
| |
975,317
|
| |
674,769
|
|
| |
Note
|
| |
No.'000
|
| |
$'000
|
At 1 July 2018
|
| |
|
| |
216,204
|
| |
192,628
|
Shares issued
|
| |
|
| |
22,131
|
| |
459,269
|
Share options and loan shares exercised
|
| |
|
| |
12,157
|
| |
15,096
|
Issue of ordinary shares, as consideration for a business combination
|
| |
|
| |
1,000
|
| |
17,826
|
Capital raising costs (net of tax)
|
| |
|
| |
—
|
| |
(10,050)
|
At 30 June 20191
|
| |
|
| |
251,492
|
| |
674,769
|
Shares issued
|
| |
|
| |
8,453
|
| |
233,012
|
Share options and loan shares exercised
|
| |
|
| |
7,680
|
| |
69,318
|
Capital raising costs (net of tax)
|
| |
|
| |
—
|
| |
(1,782)
|
At 30 June 20201
|
| |
|
| |
267,625
|
| |
975,317
|
Shares issued
|
| |
|
| |
11,919
|
| |
786,167
|
Share options, RSUs and loan shares exercised
|
| |
|
| |
6,271
|
| |
51,617
|
Issue of ordinary shares, as consideration for a business combination
|
| |
|
| |
23
|
| |
1,737
|
FY21 US ESOP Modification
|
| |
20
|
| |
3,493
|
| |
401,353
|
Capital raising costs (net of tax)
|
| |
|
| |
—
|
| |
(11,741)
|
At 30 June 20211
|
| |
|
| |
289,331
|
| |
2,204,450
|
1.
|
The total number of ordinary shares on issue excludes 0.3 million loan shares (2020: 0.4 million, 2019: 1.1 million).
|
For the year ended 30 June
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Institutional placement
|
| |
650,000
|
| |
200,000
|
| |
434,300
|
Share purchase plan (SPP)
|
| |
136,167
|
| |
33,012
|
| |
25,000
|
Total
|
| |
786,167
|
| |
233,012
|
| |
459,300
|
As at 30 June
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Share-based payments reserve
|
| |
(764,716)
|
| |
78,475
|
| |
43,225
|
Convertible debt option reserve
|
| |
161,099
|
| |
—
|
| |
—
|
Other
|
| |
(1,039)
|
| |
(1,039)
|
| |
(1,039)
|
Total other reserves
|
| |
(604,656)
|
| |
77,436
|
| |
42,186
|
Lease liabilities
|
As at 30 June1
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Commercial property leases
|
| |
34,133
|
| |
7,445
|
| |
342
|
Other
|
| |
67
|
| |
—
|
| |
—
|
Total lease liabilities
|
| |
34,200
|
| |
7,445
|
| |
342
|
|
| |
|
| |
|
| |
|
Total Current
|
| |
2,201
|
| |
4,278
|
| |
—
|
Total Non-Current
|
| |
31,999
|
| |
3,167
|
| |
342
|
Total lease liabilities
|
| |
34,200
|
| |
7,445
|
| |
342
|
1.
|
Group adopted IFRS 16 Leases using the modified retrospective method as of 1 July 2019 and has not restated comparatives for 2019. The 2019 comparatives are not comparable to 2020 for recognition and measurement. Refer to Note 24 for further details.
|
•
|
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
|
•
|
variable lease payment that are based on an index or a rate;
|
•
|
amounts expected to be payable by the lessee under residual value guarantees;
|
•
|
the lease component of contracts that include non-lease components and other services, within the lease liability;
|
•
|
the extension option if the lessee is reasonably certain to exercise that option; and
|
•
|
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
|
Borrowings
|
As at 30 June
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Secured interest bearing borrowings
|
| |
33,330
|
| |
461,444
|
| |
—
|
Senior unsecured notes
|
| |
—
|
| |
—
|
| |
49,737
|
Matrix Convertible Notes
|
| |
99
|
| |
156
|
| |
144
|
APT Convertible Notes
|
| |
1,252,954
|
| |
—
|
| |
—
|
Total borrowings
|
| |
1,286,383
|
| |
461,600
|
| |
49,881
|
|
| |
|
| |
|
| |
|
Total Current
|
| |
—
|
| |
—
|
| |
—
|
Total Non-Current
|
| |
1,286,383
|
| |
461,600
|
| |
49,881
|
Total borrowings
|
| |
1,286,383
|
| |
461,600
|
| |
49,881
|
As at 30 June 2021
Facility
|
| |
Carrying
value of
receivable
$’000
|
| |
Provider
|
| |
Maturity
date
|
| |
Weighted
average
interest rate
|
| |
Facility
Limit
$’000
|
| |
Facility
drawn
$’000
|
Afterpay AU
|
| |
595,912
|
| |
NAB
|
| |
Dec 2023
|
| |
0.09%
|
| |
300,000
|
| |
—
|
|
Citi
|
| |
Dec 2023
|
| |
200,000
|
| |
—
|
||||||||
Afterpay US
|
| |
664,154
|
| |
Citi
|
| |
May 2024
|
| |
1.69%
|
| |
266,454
|
| |
—
|
|
Goldman Sachs
|
| |
Dec 2022
|
| |
266,454
|
| |
—
|
||||||||
Afterpay NZ
|
| |
66,816
|
| |
BNZ
|
| |
Jun 2023
|
| |
1.64%
|
| |
93,119
|
| |
32,591
|
Clearpay UK
|
| |
114,830
|
| |
NAB
|
| |
Feb 2023
|
| |
nil
|
| |
92,166
|
| |
—
|
|
Citi
|
| |
Feb 2023
|
| |
230,415
|
| |
—
|
||||||||
Total
|
| |
|
| |
|
| |
|
| |
|
| |
1,448,606
|
| |
32,591
|
Accrued interest
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
949
|
Capitalised borrowing costs
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(210)
|
Total Secured interest bearing borrowings
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
33,330
|
As at 30 June 2020
Facility
|
| |
Carrying
value of
receivable
$’000
|
| |
Provider
|
| |
Maturity
date
|
| |
Weighted
average
interest
rate
|
| |
Facility
Limit
$’000
|
| |
Facility
drawn
$’000
|
Afterpay AU
|
| |
368,028
|
| |
NAB
|
| |
Dec 2022
|
| |
2.20%
|
| |
300,000
|
| |
79,973
|
|
Citi
|
| |
Dec 2022
|
| |
200,000
|
| |
75,000
|
||||||||
Afterpay US
|
| |
329,889
|
| |
Citi
|
| |
May 2022
|
| |
3.20%
|
| |
291,418
|
| |
5,872
|
|
Goldman Sachs
|
| |
Dec 2021
|
| |
291,418
|
| |
281,218
|
||||||||
Afterpay NZ
|
| |
35,390
|
| |
BNZ
|
| |
Mar 2022
|
| |
1.65%
|
| |
46,716
|
| |
23,358
|
Total
|
| |
|
| |
|
| |
|
| |
|
| |
1,129,552
|
| |
465,421
|
Accrued interest
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
962
|
Capitalised borrowing costs
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(4,939)
|
Total Secured interest bearing borrowings
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
461,444
|
As at 30 June 2019
Facility
|
| |
Carrying
value of
receivable
$’000
|
| |
Provider
|
| |
Maturity
date
|
| |
Weighted
average
interest rate
|
| |
Facility
Limit
$’000
|
| |
Facility
drawn
$’000
|
Afterpay AU
|
| |
346,919
|
| |
NAB
|
| |
Nov 2020
|
| |
3.60%
|
| |
300,000
|
| |
—
|
|
Citi
|
| |
Aug 2020
|
| |
200,000
|
| |
—
|
||||||||
Afterpay US
|
| |
85,923
|
| |
Citi
|
| |
May 2021
|
| |
0.00%
|
| |
399,042
|
| |
—
|
Afterpay NZ
|
| |
18,177
|
| |
ASB
|
| |
Mar 2021
|
| |
0.00%
|
| |
18,594
|
| |
—
|
Total
|
| |
|
| |
|
| |
|
| |
|
| |
917,637
|
| |
—
|
Accrued interest
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
—
|
Capitalised borrowing costs
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
—
|
Total Secured interest bearing borrowings
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
—
|
As at 30 June
|
| |
2021
$'000
|
Face value of APT Convertible Notes issued
|
| |
1,500,000
|
Value of conversion rights recognised in equity
|
| |
(236,863)
|
Capitalised borrowing costs
|
| |
(23,336)
|
Finance cost1
|
| |
13,153
|
APT Convertible Notes
|
| |
1,252,954
|
1.
|
Finance cost is calculated by applying the effective interest rate of 3.83% per annum to the liability component. The increase in the liability due to passage of time over the term of the APT Convertible Notes is recognised as a finance cost in the Consolidated Statement of Comprehensive Income.
|
Other financial liabilities
|
As at 30 June
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Clearpay Put Option
|
| |
99,873
|
| |
3,038
|
| |
1,039
|
Pagantis Contingent Consideration
|
| |
6,398
|
| |
—
|
| |
—
|
Pagantis Deferred Consideration
|
| |
60,377
|
| |
—
|
| |
—
|
Total other financial liabilities
|
| |
166,648
|
| |
3,038
|
| |
1,039
|
|
| |
|
| |
|
| |
|
Total Current
|
| |
—
|
| |
—
|
| |
—
|
Total Non-Current
|
| |
166,648
|
| |
3,038
|
| |
1,039
|
Total other financial liabilities
|
| |
166,648
|
| |
3,038
|
| |
1,039
|
•
|
50% of the Equity Value above €45 million (subject to certain adjustments), up to €100 million, plus
|
•
|
40% of the Equity Value above €100 million, up to €150 million, plus
|
•
|
10% of the Equity Value above €150 million.
|
As at 30 June
|
| |
2021
|
| |
2020
|
| |
2019
|
|||
|
| |
Clearpay Put
Option
|
| |
Pagantis
Contingent
Consideration
|
| |
Clearpay Put
Option
|
| |
Clearpay Put
Option
|
Discount rate
|
| |
10.25%
|
| |
18.30%
|
| |
34.80%
|
| |
40.70%
|
Revenue exit multiple
|
| |
35.4x
|
| |
n/a
|
| |
1.4x
|
| |
1.6x
|
Volatility
|
| |
n/a
|
| |
60%
|
| |
n/a
|
| |
n/a
|
|
| |
Fair value of liability
(Higher)/Lower
|
| |
Loss for the year
Higher/(Lower)
|
||||||||||||
Judgements of reasonable possible movements:
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
-1.0% Discount rate (2020, 2019: -2.5%)
|
| |
(19,242)
|
| |
(250)
|
| |
(107)
|
| |
19,242
|
| |
250
|
| |
107
|
+1.0% Discount rate (2020, 2019: +2.5%)
|
| |
14,724
|
| |
235
|
| |
101
|
| |
(14,724)
|
| |
(235)
|
| |
(101)
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
-1.0x Revenue exit multiple (2020, 2019: -0.1x)
|
| |
22,376
|
| |
677
|
| |
273
|
| |
(22,376)
|
| |
(677)
|
| |
(273)
|
+1.0x Revenue exit multiple (2020, 2019: +0.1x)
|
| |
(22,376)
|
| |
(677)
|
| |
(273)
|
| |
22,376
|
| |
677
|
| |
273
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
-10% Volatility
|
| |
626
|
| |
n/a
|
| |
n/a
|
| |
(626)
|
| |
n/a
|
| |
n/a
|
+10% Volatility
|
| |
(424)
|
| |
n/a
|
| |
n/a
|
| |
424
|
| |
n/a
|
| |
n/a
|
|
| |
|
| |
Cash movements
|
| |
Non-cash movements
|
| |
Closing
balance
|
|||||||||
|
| |
|
| |
Opening
balance
|
| |
Cash
flows(2)
|
| |
Interest and
amortisation
|
| |
Other(1)
|
| |
Fair value
gain or loss
|
| ||
2021
|
| |
Note
|
| |
$'000
|
| |
$'000
|
| |
$'000
|
| |
$'000
|
| |
$'000
|
| ||
Secured interest bearing borrowings3
|
| |
15
|
| |
461,444
|
| |
(447,708)
|
| |
19,019
|
| |
575
|
| |
—
|
| |
33,330
|
Matrix Convertible Notes
|
| |
15
|
| |
156
|
| |
(377,647)
|
| |
29
|
| |
377,561
|
| |
—
|
| |
99
|
APT Convertible Notes
|
| |
15
|
| |
—
|
| |
1,475,438
|
| |
14,379
|
| |
(236,863)
|
| |
—
|
| |
1,252,954
|
Total borrowings
|
| |
|
| |
461,600
|
| |
650,083
|
| |
33,427
|
| |
141,273
|
| |
—
|
| |
1,286,383
|
Lease liabilities4
|
| |
14
|
| |
7,445
|
| |
(6,209)
|
| |
343
|
| |
32,621
|
| |
—
|
| |
34,200
|
Other financial liabilities
|
| |
16
|
| |
3,038
|
| |
—
|
| |
—
|
| |
66,775
|
| |
96,835
|
| |
166,648
|
Total liabilities arising from financing activities
|
| |
|
| |
472,083
|
| |
643,874
|
| |
33,770
|
| |
240,669
|
| |
96,835
|
| |
1,487,231
|
|
| |
|
| |
Cash movements
|
| |
Non-cash movements
|
| |
Closing
balance
|
|||||||||
|
| |
|
| |
Opening
balance
|
| |
Cash flows(2)
|
| |
Interest and
amortisation
|
| |
Other(1)
|
| |
Fair value gain
or loss
|
| ||
2020
|
| |
Note
|
| |
$'000
|
| |
$'000
|
| |
$'000
|
| |
$'000
|
| |
$'000
|
| ||
Secured interest bearing borrowings3
|
| |
15
|
| |
—
|
| |
449,638
|
| |
5,567
|
| |
6,239
|
| |
—
|
| |
461,444
|
Senior unsecured notes
|
| |
|
| |
49,737
|
| |
(50,000)
|
| |
263
|
| |
—
|
| |
—
|
| |
—
|
Matrix Convertible Notes
|
| |
15
|
| |
144
|
| |
—
|
| |
12
|
| |
—
|
| |
—
|
| |
156
|
Total borrowings
|
| |
|
| |
49,881
|
| |
399,638
|
| |
5,842
|
| |
6,239
|
| |
—
|
| |
461,600
|
Lease liabilities4
|
| |
14
|
| |
342
|
| |
(4,867)
|
| |
—
|
| |
11,970
|
| |
—
|
| |
7,445
|
Other financial liabilities
|
| |
16
|
| |
1,039
|
| |
—
|
| |
—
|
| |
—
|
| |
1,999
|
| |
3,038
|
Total liabilities arising from financing activities
|
| |
|
| |
51,262
|
| |
394,771
|
| |
5,842
|
| |
18,209
|
| |
1,999
|
| |
472,083
|
|
| |
|
| |
Cash movements
|
| |
Non-cash movements
|
| |
Closing
balance
|
| |||||||||
|
| |
|
| |
Opening
balance
|
| |
Cash flows(2)
|
| |
Interest and
amortisation
|
| |
Other(1)
|
| |
Fair value gain
or loss
|
| |||
2019
|
| |
Note
|
| |
$'000
|
| |
$'000
|
| |
$'000
|
| |
$'000
|
| |
$'000
|
| |
|
|
Secured interest bearing borrowings3
|
| |
15
|
| |
111,593
|
| |
(111,593)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Senior unsecured notes
|
| |
|
| |
49,491
|
| |
—
|
| |
246
|
| |
—
|
| |
—
|
| |
49,737
|
|
Matrix Convertible Notes
|
| |
15
|
| |
128
|
| |
—
|
| |
8
|
| |
8
|
| |
—
|
| |
144
|
|
Total borrowings
|
| |
|
| |
161,212
|
| |
(111,593)
|
| |
254
|
| |
8
|
| |
—
|
| |
49,881
|
|
Lease liabilities 4
|
| |
|
| |
393
|
| |
(94)
|
| |
43
|
| |
|
| |
—
|
| |
342
|
|
Other financial liabilities
|
| |
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
1,039
|
| |
1,039
|
|
Total liabilities arising from financing activities
|
| |
|
| |
161,605
|
| |
(111,687)
|
| |
297
|
| |
8
|
| |
1,039
|
| |
51,262
|
|
1.
|
Includes movements recorded directly in equity, new or modified lease arrangements, liabilities recognised as a result of business combinations (Note 18), foreign exchange movements and other non-cash movements.
|
2.
|
Movements include the net cash inflows (e.g. drawdowns) and outflows (e.g. repayments and interest payments).
|
3.
|
Other includes foreign exchange movement of $0.6 million (2020: $6.2 million, 2019: nil).
|
4.
|
Other includes foreign exchange movement of $0.2 million (2020: $0.0 million, 2019: nil) and additions via acquisitions of $0.8 million (2020: nil, 2019: nil). Remaining relates to new or modified lease arrangements. 2020 includes the impact of adoption of IFRS 16 Leases (Note 24).
|
Financial risk management objectives and policies
|
(a)
|
Interest rate risk
|
As at 30 June
|
| |
Note
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Financial Assets
|
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents
|
| |
7
|
| |
1,147,147
|
| |
606,041
|
| |
231,456
|
Other financial assets
|
| |
|
| |
3,222
|
| |
2,693
|
| |
6,038
|
Total financial assets
|
| |
|
| |
1,150,369
|
| |
608,734
|
| |
237,494
|
|
| |
|
| |
|
| |
|
| |
|
Financial Liabilities
|
| |
|
| |
|
| |
|
| |
|
Secured interest bearing borrowings
|
| |
15
|
| |
(33,330)
|
| |
(461,444)
|
| |
—
|
Total financial liabilities
|
| |
|
| |
(33,330)
|
| |
(461,444)
|
| |
—
|
Net Exposure
|
| |
|
| |
1,117,039
|
| |
147,290
|
| |
237,494
|
|
| |
Loss after tax
(Higher)/Lower
|
| |
Equity
(Higher)/Lower
|
||||||||||||
Judgements of reasonably possible movements:
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
-0.25% (25 basis points)
|
| |
(1,955)
|
| |
(258)
|
| |
(416)
|
| |
1,955
|
| |
258
|
| |
416
|
+1.00% (100 basis points)
|
| |
7,819
|
| |
1,031
|
| |
1,662
|
| |
(7,819)
|
| |
(1,031)
|
| |
(1,662)
|
(b)
|
Foreign currency risk
|
|
| |
Loss after tax
(Higher)/Lower
|
| |
Equity
Higher/(Lower)
|
||||||||||||
Judgements of reasonably possible movements:
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
AUD/NZD +10%
|
| |
(3,337)
|
| |
(1,492)
|
| |
(1,213)
|
| |
3,337
|
| |
1,492
|
| |
1,213
|
AUD/NZD -5%
|
| |
1,932
|
| |
864
|
| |
703
|
| |
(1,932)
|
| |
(864)
|
| |
(703)
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
AUD/USD +10%
|
| |
(52,834)
|
| |
(9,277)
|
| |
(4,868)
|
| |
52,834
|
| |
9,277
|
| |
4,868
|
AUD/USD -5%
|
| |
30,588
|
| |
5,371
|
| |
2,818
|
| |
(30,588)
|
| |
(5,371)
|
| |
(2,818)
|
|
| |
Loss after tax
(Higher)/Lower
|
| |
Equity
Higher/(Lower)
|
||||||||||||
Judgements of reasonably possible movements:
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
AUD/GBP +10%
|
| |
(10,374)
|
| |
(3,930)
|
| |
(196)
|
| |
10,374
|
| |
3,930
|
| |
196
|
AUD/GBP -5%
|
| |
6,006
|
| |
2,275
|
| |
114
|
| |
(6,006)
|
| |
(2,275)
|
| |
(114)
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
AUD/EUR +10%
|
| |
2,994
|
| |
—
|
| |
—
|
| |
(2,994)
|
| |
—
|
| |
—
|
AUD/EUR -5%
|
| |
(1,733)
|
| |
—
|
| |
—
|
| |
1,733
|
| |
—
|
| |
—
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
AUD/CAD +10%
|
| |
(2,841)
|
| |
15
|
| |
—
|
| |
2,841
|
| |
(15)
|
| |
—
|
AUD/CAD -5%
|
| |
1,645
|
| |
(9)
|
| |
—
|
| |
(1,645)
|
| |
9
|
| |
—
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
AUD/Other +10%
|
| |
(23)
|
| |
—
|
| |
—
|
| |
23
|
| |
—
|
| |
—
|
AUD/Other -5%
|
| |
13
|
| |
—
|
| |
—
|
| |
(13)
|
| |
—
|
| |
—
|
(c)
|
Credit risk
|
(d)
|
Liquidity risk
|
•
|
sufficient funds on hand to meet its working capital and investment objectives;
|
•
|
is focused on improving operational cash flow; and
|
•
|
adequate flexibility in financing facilities to balance the growth objectives with short-term and long-term liquidity requirements.
|
As at 30 June 2021
|
| |
< 1 year
$'000
|
| |
1-2 years
$'000
|
| |
2-3 years
$'000
|
| |
> 3 years
$'000
|
| |
Total
$'000
|
Financial assets
|
| |
|
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents
|
| |
1,147,147
|
| |
—
|
| |
—
|
| |
—
|
| |
1,147,147
|
Receivables
|
| |
1,576,064
|
| |
—
|
| |
—
|
| |
—
|
| |
1,576,064
|
Other financial assets
|
| |
26,788
|
| |
3,217
|
| |
—
|
| |
—
|
| |
30,005
|
Total financial assets
|
| |
2,749,999
|
| |
3,217
|
| |
—
|
| |
—
|
| |
2,753,216
|
Financial liabilities
|
| |
|
| |
|
| |
|
| |
|
| |
|
Trade and other payables
|
| |
306,259
|
| |
—
|
| |
—
|
| |
—
|
| |
306,259
|
Secured interest bearing borrowings
|
| |
1,483
|
| |
33,125
|
| |
—
|
| |
—
|
| |
34,608
|
Matrix Convertible Notes
|
| |
—
|
| |
—
|
| |
99
|
| |
—
|
| |
99
|
APT Convertible Notes
|
| |
—
|
| |
—
|
| |
—
|
| |
1,500,000
|
| |
1,500,000
|
Financial liabilities
|
| |
—
|
| |
—
|
| |
166,648
|
| |
—
|
| |
166,648
|
Lease liabilities
|
| |
2,206
|
| |
10,009
|
| |
9,561
|
| |
13,450
|
| |
35,226
|
Total financial liabilities
|
| |
309,948
|
| |
43,134
|
| |
176,308
|
| |
1,513,450
|
| |
2,042,840
|
Net maturity
|
| |
2,440,051
|
| |
(39,917)
|
| |
(176,308)
|
| |
(1,513,450)
|
| |
710,376
|
As at 30 June 2020
|
| |
< 1 year
$'000
|
| |
1-2 years
$'000
|
| |
2-3 years
$'000
|
| |
> 3 years
$'000
|
| |
Total
$'000
|
Financial assets
|
| |
|
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents
|
| |
606,041
|
| |
—
|
| |
—
|
| |
—
|
| |
606,041
|
Receivables
|
| |
832,524
|
| |
—
|
| |
—
|
| |
—
|
| |
832,524
|
Other financial assets
|
| |
10,660
|
| |
893
|
| |
—
|
| |
—
|
| |
11,553
|
Total financial assets
|
| |
1,449,225
|
| |
893
|
| |
—
|
| |
—
|
| |
1,450,118
|
Financial liabilities
|
| |
|
| |
|
| |
|
| |
|
| |
|
Trade and other payables
|
| |
182,613
|
| |
—
|
| |
—
|
| |
—
|
| |
182,613
|
Secured interest bearing borrowings
|
| |
6,499
|
| |
316,947
|
| |
157,705
|
| |
—
|
| |
481,151
|
Matrix Convertible Notes
|
| |
—
|
| |
—
|
| |
—
|
| |
207
|
| |
207
|
Financial liabilities
|
| |
—
|
| |
—
|
| |
—
|
| |
3,038
|
| |
3,038
|
Lease liabilities
|
| |
4,517
|
| |
1,774
|
| |
1,003
|
| |
573
|
| |
7,867
|
Total financial liabilities
|
| |
193,629
|
| |
318,721
|
| |
158,708
|
| |
3,818
|
| |
674,876
|
Net maturity
|
| |
1,255,596
|
| |
(317,828)
|
| |
(158,708)
|
| |
(3,818)
|
| |
775,242
|
As at 30 June 2019
|
| |
< 1 year
$'000
|
| |
1-2 years
$'000
|
| |
2-3 years
$'000
|
| |
> 3 years
$'000
|
| |
Total
$'000
|
Financial assets
|
| |
|
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents
|
| |
231,456
|
| |
—
|
| |
—
|
| |
—
|
| |
231,456
|
Receivables
|
| |
452,699
|
| |
—
|
| |
—
|
| |
—
|
| |
452,699
|
Other financial assets
|
| |
3,003
|
| |
—
|
| |
3,035
|
| |
—
|
| |
6,038
|
Total financial assets
|
| |
687,158
|
| |
—
|
| |
3,035
|
| |
—
|
| |
690,193
|
Financial liabilities
|
| |
|
| |
|
| |
|
| |
|
| |
|
Trade and other payables
|
| |
111,753
|
| |
—
|
| |
—
|
| |
—
|
| |
111,753
|
Senior unsecured notes
|
| |
3,625
|
| |
3,625
|
| |
53,625
|
| |
—
|
| |
60,875
|
Matrix Convertible Notes
|
| |
—
|
| |
—
|
| |
—
|
| |
199
|
| |
199
|
Financial liabilities
|
| |
—
|
| |
—
|
| |
—
|
| |
1,039
|
| |
1,039
|
Lease liabilities
|
| |
94
|
| |
94
|
| |
258
|
| |
—
|
| |
446
|
Total financial liabilities
|
| |
115,472
|
| |
3,719
|
| |
53,883
|
| |
1,238
|
| |
174,312
|
Net maturity
|
| |
571,686
|
| |
(3,719)
|
| |
(50,848)
|
| |
(1,238)
|
| |
515,881
|
As at 30 June
|
| |
Note
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Cash and cash equivalents
|
| |
|
| |
1,147,147
|
| |
606,041
|
| |
231,456
|
Restricted cash
|
| |
|
| |
13,808
|
| |
1,536
|
| |
2,030
|
Borrowings
|
| |
|
| |
(1,286,383)
|
| |
(461,600)
|
| |
(49,881)
|
Net (debt)/cash
|
| |
|
| |
(125,428)
|
| |
145,977
|
| |
183,605
|
•
|
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
|
•
|
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and
|
•
|
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
|
As at 30 June 2021
|
| |
Level 1
$'000
|
| |
Level 2
$'000
|
| |
Level 3
$'000
|
| |
Total
$'000
|
Clearpay Put Option (Note 16)
|
| |
—
|
| |
—
|
| |
99,873
|
| |
99,873
|
Pagantis Contingent Consideration (Note 16)
|
| |
—
|
| |
—
|
| |
6,398
|
| |
6,398
|
Total financial liabilities
|
| |
—
|
| |
—
|
| |
106,271
|
| |
106,271
|
As at 30 June 2020
|
| |
Level 1
$'000
|
| |
Level 2
$'000
|
| |
Level 3
$'000
|
| |
Total
$'000
|
Clearpay Put Option (Note 16)
|
| |
—
|
| |
—
|
| |
3,038
|
| |
3,038
|
Total financial liabilities
|
| |
—
|
| |
—
|
| |
3,038
|
| |
3,038
|
As at 30 June 2019
|
| |
Level 1
$'000
|
| |
Level 2
$'000
|
| |
Level 3
$'000
|
| |
Total
$'000
|
Clearpay Put Option (Note 16)
|
| |
—
|
| |
—
|
| |
1,039
|
| |
1,039
|
Total financial liabilities
|
| |
—
|
| |
—
|
| |
1,039
|
| |
1,039
|
Year ended 30 June
|
| |
Note
|
| |
2021
$'000
|
| |
2020
$'000
|
| |
2019
$'000
|
Opening balance
|
| |
|
| |
3,038
|
| |
1,039
|
| |
—
|
Additions
|
| |
|
| |
6,317
|
| |
—
|
| |
1,039
|
Net loss on financial liabilities at fair value recognised in the Consolidated Statement of Comprehensive Income
|
| |
|
| |
96,835
|
| |
1,999
|
| |
—
|
Foreign exchange loss
|
| |
|
| |
81
|
| |
—
|
| |
—
|
Closing balance
|
| |
|
| |
106,271
|
| |
3,038
|
| |
1,039
|
Business combinations
|
•
|
Upfront consideration - €5 million in cash paid at completion;
|
•
|
Deferred consideration - €45 million payable in cash, 3 years post completion (Pagantis Deferred Consideration); and
|
•
|
Contingent consideration – if the equity value of Pagantis 3 years post completion exceeds €45 million, any excess is calculated using a sliding scale payable in cash or shares in Afterpay Limited at Afterpay’s election (Pagantis Contingent Consideration).
|
|
| |
Note
|
| |
Provisional Fair value
recognised on acquisition
$'000
|
Assets
|
| |
|
| |
|
Cash and cash equivalents
|
| |
|
| |
3,833
|
Receivables1
|
| |
|
| |
10,845
|
Other current assets
|
| |
|
| |
1,120
|
Intangible assets
|
| |
|
| |
12,875
|
Right-of-use assets
|
| |
|
| |
793
|
Other non-current assets
|
| |
|
| |
203
|
Total assets
|
| |
|
| |
29,669
|
Liabilities
|
| |
|
| |
|
Trade and other payables
|
| |
|
| |
(15,014)
|
Other current liabilities
|
| |
|
| |
(1,265)
|
Lease liabilities
|
| |
|
| |
(793)
|
Deferred tax liabilities
|
| |
|
| |
(3,219)
|
Other non-current liabilities
|
| |
|
| |
(9,404)
|
Net assets acquired at fair value
|
| |
|
| |
(26)
|
Goodwill acquired on acquisition
|
| |
12
|
| |
73,947
|
Total identifiable net assets at fair value
|
| |
|
| |
73,921
|
|
| |
|
| |
|
Purchase consideration
|
| |
|
| |
|
Cash consideration paid
|
| |
|
| |
7,837
|
Pagantis Deferred Consideration
|
| |
|
| |
59,767
|
Pagantis Contingent Consideration
|
| |
16, 17(d)
|
| |
6,317
|
Total purchase consideration
|
| |
|
| |
73,921
|
1.
|
Gross contractual receivables at the Pagantis acquisition date was $11.9 million. A provision for expected credit losses of $1.1 million reflects the best estimate of the contractual cash flows not expected to be collected.
|
•
|
23,235 ($1.7 million) APT shares valued using the APT 30-day VWAP share price, paid upon completion; and
|
•
|
US$0.5 million shares valued using the APT 30-day VWAP share price (up to and including the trading day before the date the Indonesian Business License is received), contingent upon the Indonesian Business Licence being received and subject to any final adjustments to the acquired net assets.
|
|
| |
Note
|
| |
Provisional Fair value
recognised on acquisition
$'000
|
Assets
|
| |
|
| |
|
Current assets
|
| |
|
| |
355
|
Intangible assets
|
| |
|
| |
3,985
|
Total assets
|
| |
|
| |
4,340
|
Liabilities
|
| |
|
| |
|
Trade and other payables
|
| |
|
| |
(52)
|
Deferred tax liabilities
|
| |
|
| |
(713)
|
Net assets acquired at fair value
|
| |
|
| |
3,575
|
Non-controlling interest
|
| |
|
| |
(1,981)
|
Goodwill acquired on acquisition
|
| |
12
|
| |
16,232
|
Purchase consideration paid
|
| |
|
| |
17,826
|
Related party disclosure
|
|
| |
Country of
incorporation
|
| |
% Equity interest
|
||||||
Name
|
| |
30 June 2021
|
| |
30 June 2020
|
| |
30 June 2019
|
|||
Afterpay Holdings Pty Ltd
|
| |
Australia
|
| |
100%
|
| |
100%
|
| |
100%
|
Afterpay Australia Pty Ltd
|
| |
Australia
|
| |
100%
|
| |
100%
|
| |
100%
|
Afterpay Touch Group Employee Share Plan Trust
|
| |
Australia
|
| |
100%
|
| |
100%
|
| |
100%
|
Afterpay NZ Limited
|
| |
New Zealand
|
| |
100%
|
| |
100%
|
| |
100%
|
Afterpay International Holdings Pty Ltd (formerly Afterpay Touch Group No.2 Pty Ltd)
|
| |
Australia
|
| |
100%
|
| |
100%
|
| |
100%
|
Afterpay US, Inc.1
|
| |
United States
|
| |
99%
|
| |
96%
|
| |
99%
|
Afterpay Canada Limited
|
| |
Canada
|
| |
100%
|
| |
100%
|
| |
0%
|
Setelah Bayar Pte. Ltd3
|
| |
Singapore
|
| |
100%
|
| |
0%
|
| |
0%
|
PT Empat Kali Indonesia3,4
|
| |
Indonesia
|
| |
85%
|
| |
0%
|
| |
0%
|
Clearpay (International) Limited2
|
| |
United Kingdom
|
| |
100%
|
| |
0%
|
| |
0%
|
Clearpay (Europe) Limited2
|
| |
United Kingdom
|
| |
100%
|
| |
0%
|
| |
0%
|
Clearpay Technology, S.L3 (formerly PMT Technology SLA)
|
| |
Spain
|
| |
100%
|
| |
0%
|
| |
0%
|
Clearpay, S.A.U3 (formerly Pagantis SAU)
|
| |
Spain
|
| |
100%
|
| |
0%
|
| |
0%
|
Clearpay Finance Limited
|
| |
United Kingdom
|
| |
90%
|
| |
90%
|
| |
90%
|
Touchcorp Limited
|
| |
Bermuda
|
| |
100%
|
| |
100%
|
| |
100%
|
Touch Holdings Pty Ltd
|
| |
Australia
|
| |
100%
|
| |
100%
|
| |
100%
|
Touch Australia Pty Ltd
|
| |
Australia
|
| |
100%
|
| |
100%
|
| |
100%
|
Afterpay Corporate Services Australia Pty Ltd (formerly known as Touch Networks Australia Pty Ltd)
|
| |
Australia
|
| |
100%
|
| |
100%
|
| |
100%
|
Touch Networks Pty Ltd
|
| |
Australia
|
| |
100%
|
| |
100%
|
| |
100%
|
Afterpay China Holdings Pty Ltd
|
| |
Australia
|
| |
100%
|
| |
100%
|
| |
0%
|
Afterpay Information Technology Service (Shanghai) Co., Ltd
|
| |
China
|
| |
100%
|
| |
100%
|
| |
0%
|
Afterpay Asia Pte. Ltd (formerly known as Touchcorp Singapore Pte Ltd)
|
| |
Singapore
|
| |
100%
|
| |
100%
|
| |
100%
|
1.
|
The Group’s equity interest in Afterpay US, Inc is less than 100% due to vested and exercised options under the US ESOP. Refer to Note 20 for further information.
|
2.
|
New legal entity established during the year.
|
3.
|
Acquired during the year. Refer to Note 18 for further details.
|
4.
|
15% of PT Empat Kali Indonesia’s shares are owned by a local employee, as required by Indonesian Law. There are no voting rights attached to these shares and PT Empat Kali Indonesia is considered fully controlled by the Group.
|
|
| |
2021
|
| |
2020
|
||||||
For the year ended 30 June
|
| |
Sales to related
parties
$'000
|
| |
Purchases from related
parties
$'000
|
| |
Sales to related
parties
$'000
|
| |
Purchases from related
parties
$'000
|
Associate
|
| |
|
| |
|
| |
|
| |
|
AP Ventures Limited
|
| |
—
|
| |
—
|
| |
1,180
|
| |
—
|
|
| |
2021
$'000
|
| |
2020
$'000
|
Investment in associate
|
| |
|
| |
|
At 1 July
|
| |
5,166
|
| |
—
|
Contributions to associate
|
| |
15,000
|
| |
6,587
|
Share of loss of associate
|
| |
(2,271)
|
| |
(1,101)
|
Gain on dilution of shareholding in associate
|
| |
5,683
|
| |
—
|
Other
|
| |
—
|
| |
(320)
|
At 30 June
|
| |
23,578
|
| |
5,166
|
Share-based payment plans
|
(a)
|
Purpose of incentive plans
|
•
|
Attract, retain and motivate world-class talent from the global technology talent pool to deliver on the Group’s growth aspirations;
|
•
|
Align the interests of employees with the Group’s shareholders; and
|
•
|
Encourage long term decision making and drive sustainable performance in the interests of the Group’s shareholders, customers and other stakeholders.
|
(b)
|
Plans operating during the years
|
•
|
Awards over APT equity comprising of options and restricted stock units (RSUs) under the Group’s Afterpay Equity Incentive Plan;
|
•
|
Awards over APT equity comprising of options, loan shares and performance rights under the Group’s legacy remuneration plan, the Afterpay Employee Incentive Plan (which was adopted prior to listing in July 2017);
|
•
|
Equity in APT issued to participating employees in the Group’s Employee Share Matching Plan which was launched in November 2020;
|
•
|
Equity in Afterpay US, Inc. (a subsidiary of Afterpay Limited) under the Afterpay US, Inc. 2018 Equity Incentive Plan (US ESOP); and
|
•
|
Equity in Clearpay Finance Limited (Clearpay) (a subsidiary of Afterpay Limited) under the Clearpay Finance Limited 2020 Share Option Plan (UK ESOP).
|
|
| |
FY21
|
| |
FY20
|
| |
FY19
|
| |
FY21
|
| |
FY20
|
| |
FY19
|
| |
FY21
|
|
| |
APT ESOP
|
| |
US ESOP
|
| |
UK ESOP
|
||||||||||||
Expected volatility
|
| |
60−80%
|
| |
50−80%
|
| |
50%
|
| |
N/A
|
| |
60%
|
| |
60%
|
| |
60%
|
Risk-free interest rate
|
| |
0.40%
|
| |
1.00%
|
| |
2.20%
|
| |
N/A
|
| |
1.39%
|
| |
2.51%
|
| |
0.29%
|
Expected life of share options (years)
|
| |
3
|
| |
4
|
| |
4
|
| |
N/A
|
| |
5
|
| |
5
|
| |
3
|
Dividend yield
|
| |
0%
|
| |
0%
|
| |
0%
|
| |
N/A
|
| |
0%
|
| |
0%
|
| |
0%
|
Weighted average fair value
|
| |
$51.91
|
| |
$12.96
|
| |
$10.31
|
| |
N/A
|
| |
$1.72
|
| |
$0.27
|
| |
$0.18
|
(a)
|
Overview
|
|
| |
2021
|
| |
2020
|
| |
2019
|
| |
2021
|
| |
2020
|
| |
2019
|
| |
2021
|
| |
2020
|
| |
2019
|
||||||||||||||||||
|
| |
Share options
|
| |
Loan shares
|
| |
Rights1 & RSUs
|
||||||||||||||||||||||||||||||||||||
|
| |
No.
’000
|
| |
WAEP
$
|
| |
No.
’000
|
| |
WAEP
$
|
| |
No.
’000
|
| |
WAEP
$
|
| |
No.
’000
|
| |
WAEP
$
|
| |
No.
’000
|
| |
WAEP
$
|
| |
No.
’000
|
| |
WAEP
$
|
| |
No.
’000
|
| |
No.
’000
|
| |
No.
’000
|
Outstanding at the beginning of the year
|
| |
9,391
|
| |
10.28
|
| |
14,907
|
| |
5.49
|
| |
21,005
|
| |
1.66
|
| |
419
|
| |
4.50
|
| |
1,143
|
| |
3.91
|
| |
1,910
|
| |
3.62
|
| |
998
|
| |
—
|
| |
35
|
Granted during the year
|
| |
85
|
| |
97.95
|
| |
1,341
|
| |
32.85
|
| |
5,444
|
| |
10.31
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
774
|
| |
1,006
|
| |
—
|
Forfeited during the year
|
| |
(438)
|
| |
18.37
|
| |
(63)
|
| |
21.61
|
| |
(187)
|
| |
1.08
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(213)
|
| |
(8)
|
| |
—
|
Exercised during the year
|
| |
(5,763)
|
| |
4.31
|
| |
(6,794)
|
| |
4.12
|
| |
(11,355)
|
| |
0.80
|
| |
(127)
|
| |
3.38
|
| |
(724)
|
| |
3.56
|
| |
(767)
|
| |
3.18
|
| |
(387)
|
| |
—
|
| |
(35)
|
Outstanding at the end of the year
|
| |
3,275
|
| |
21.59
|
| |
9,391
|
| |
10.28
|
| |
14,907
|
| |
5.49
|
| |
292
|
| |
4.99
|
| |
419
|
| |
4.50
|
| |
1,143
|
| |
3.91
|
| |
1,172
|
| |
998
|
| |
—
|
Exercisable at the end of the year
|
| |
1,660
|
| |
13.46
|
| |
5,668
|
| |
3.65
|
| |
7,589
|
| |
1.93
|
| |
222
|
| |
4.71
|
| |
264
|
| |
3.69
|
| |
813
|
| |
3.46
|
| |
—
|
| |
—
|
| |
—
|
1.
|
Performance rights relating to legacy remuneration arrangements were fully exercised in the prior comparable period and no further awards have been granted. Granted during the year includes 3,852 share rights that were awarded under the Afterpay Share Matching Plan. It does not include 709,289 restricted APT shares issued to US employees who participated in the FY21 US ESOP Modification (see below), of which 133,483 vested prior to year-end.
|
(a)
|
Overview
|
(b)
|
FY21 US ESOP Modification
|
•
|
The aggregate number of a participants’ vested shares and vested options; or
|
•
|
The number of vested shares and vested options which was equal to 25% of all the participant’s eligible shares and options.
|
•
|
Purchase of 2,009,106 vested shares and vested options from US ESOP participants for $202.6 million;
|
•
|
Exchange of 3,874,478 vested shares for 2,784,186 APT shares; and
|
•
|
Exchange of 987,058 unvested shares for 709,289 restricted APT shares (restricted until original vesting period concludes).
|
(c)
|
Detail of US ESOP awards during the period
|
|
| |
2021
|
| |
2020
|
| |
2019
|
|||||||||
|
| |
Share options
|
|||||||||||||||
|
| |
No.
’000
|
| |
WAEP1
$
|
| |
No.
’000
|
| |
WAEP1
$
|
| |
No.
’000
|
| |
WAEP1
$
|
Outstanding at the beginning of the year
|
| |
5,764
|
| |
0.42
|
| |
8,998
|
| |
0.27
|
| |
6,992
|
| |
0.25
|
Granted during the year
|
| |
—
|
| |
—
|
| |
392
|
| |
2.64
|
| |
4,078
|
| |
0.27
|
Forfeited during the year
|
| |
(80)
|
| |
0.36
|
| |
(756)
|
| |
0.30
|
| |
(428)
|
| |
—
|
Exercised during the year
|
| |
(2,307)
|
| |
0.39
|
| |
(2,870)
|
| |
0.30
|
| |
(1,644)
|
| |
0.27
|
Outstanding at the end of the year2
|
| |
3,377
|
| |
0.45
|
| |
5,764
|
| |
0.42
|
| |
8,998
|
| |
0.27
|
Exercisable at the end of the year
|
| |
319
|
| |
0.59
|
| |
1,136
|
| |
0.43
|
| |
382
|
| |
0.27
|
1.
|
The exercise price is set on a periodic basis by reference to a third-party valuation of Afterpay US, Inc. which is conducted for US tax purposes.
|
2.
|
This number includes options that have been exercised early but remain subject to vesting and a re-purchase right by Afterpay US, Inc.
|
(a)
|
Overview
|
(b)
|
Detail of UK ESOP awards during the period
|
|
| |
2021
|
|||
|
| |
Share options
|
|||
|
| |
No.
’000
|
| |
WAEP
$
|
Outstanding at the beginning of the year
|
| |
—
|
| |
—
|
Granted during the year
|
| |
1,860
|
| |
0.18
|
Forfeited during the year
|
| |
(40)
|
| |
0.16
|
Exercised during the year
|
| |
—
|
| |
—
|
Outstanding at the end of the year
|
| |
1,820
|
| |
0.17
|
Exercisable at the end of the year
|
| |
1,050
|
| |
0.17
|
Compensation of Executive Key Management Personnel and Non-executive Directors
|
For the year ended 30 June
|
| |
2021
$
|
| |
2020
$
|
| |
2019
$
|
Short-term employee benefits
|
| |
2,803,465
|
| |
3,083,648
|
| |
2,997,685
|
Post-employment benefits
|
| |
88,364
|
| |
115,174
|
| |
107,316
|
Other long-term benefits
|
| |
22,873
|
| |
24,796
|
| |
10,257
|
Share-based payment
|
| |
2,697,562
|
| |
4,269,242
|
| |
17,530,018
|
Total compensation
|
| |
5,612,264
|
| |
7,492,860
|
| |
20,645,276
|
Commitments and contingencies
|
(a)
|
Contingent liabilities – AUSTRAC
|
(b)
|
Legal commitments and claims
|
(c)
|
Bank guarantees
|
Events occurring after the reporting period
|
Other significant accounting policies
|
(a)
|
New and amended standards adopted during the year ended 30 June 2021
|
•
|
IFRIC agenda decision Configuration or Customisation Costs in a Cloud Computing Arrangement
|
•
|
Amendments to IAS 1 Classification of Liabilities as Current or Non-current
|
•
|
Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting Policies
|
(b)
|
New and amended standards adopted during the year ended 30 June 2020
|
•
|
IFRS 16 Leases; and
|
•
|
IFRIC 23 Uncertainty over Income Tax Treatments.
|
•
|
Amendments to IAS 1 and IAS 8 Definition of material.
|
|
| |
Note
|
| |
30 June 2019
$'000
|
| |
Impact of IFRS 16
$'000
|
| |
1 July 2019
$'000
|
Other assets
|
| |
|
| |
9,710
|
| |
(398)
|
| |
9,312
|
Property, plant and equipment
|
| |
10
|
| |
4,213
|
| |
(320)
|
| |
3,893
|
Right-of-use assets
|
| |
11
|
| |
—
|
| |
8,596
|
| |
8,596
|
Other provisions
|
| |
|
| |
(565)
|
| |
248
|
| |
(317)
|
Lease liabilities
|
| |
14
|
| |
(342)
|
| |
(8,126)
|
| |
(8,468)
|
Accumulated losses
|
| |
|
| |
70,575
|
| |
—
|
| |
70,575
|
•
|
the use of a single discount rate to a portfolio of leases with reasonably similar characteristics;
|
•
|
reliance on previous assessments on whether leases are onerous;
|
•
|
the accounting for leases with a remaining lease term of less than 12 months as at 1 July 2019 as short-term leases;
|
•
|
the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application; and
|
•
|
the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
|
|
| |
2725 Sand Hill Road
Suite 200
Menlo Park, CA 94025
|
1)
|
Reviewed certain publicly available financial statements and other business and financial information of the Company and the Buyer, respectively;
|
2)
|
Reviewed certain internal financial statements and other financial and operating data concerning the Company and the Buyer, respectively;
|
3)
|
Reviewed certain financial projections of the Company prepared by the management of the Buyer;
|
4)
|
Reviewed information relating to certain strategic, financial and operational benefits anticipated from the Transaction, prepared by the management of the Buyer;
|
5)
|
Discussed the past and current operations and financial condition and the prospects of the Buyer, including information relating to certain strategic, financial and operational benefits anticipated from the Transaction, with senior executives of the Buyer;
|
6)
|
Reviewed the pro forma impact of the Transaction on the Buyer’s earnings per share, cash flow, consolidated capitalization and certain financial ratios;
|
7)
|
Reviewed the reported prices and trading activity for the Company Stock and the Buyer Class A Common Stock;
|
8)
|
Compared the financial performance of the Company and the Buyer and the prices and trading activity of the Company Stock and the Buyer Class A Common Stock with that of certain other publicly traded companies comparable with the Company and the Buyer, respectively, and their securities;
|
9)
|
Participated in certain discussions and negotiations among representatives of the Company and the Buyer and their financial and legal advisors;
|
10)
|
Reviewed the Transaction Agreement and certain related documents; and
|
11)
|
Performed such other analyses, reviewed such other information and considered such other factors as we have deemed appropriate.
|
|
| |
Very truly yours,
|
|||
|
| |
|
| |
|
|
| |
MORGAN STANLEY & CO. LLC
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Anthony Armstrong
|
|
| |
Name:
|
| |
Anthony Armstrong
|
|
| |
Title:
|
| |
Managing Director
|