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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _______
Commission File No. 001-38911
CLARIVATE PLC
(Exact name of registrant as specified in its charter)
Jersey, Channel Islands
Not applicable
(State or other jurisdiction of
incorporation or organization) 		(I.R.S. Employer
Identification No.)
Friars House, 160 Blackfriars Road
London SE1 8EZ
United Kingdom
(Address of principal executive offices)
Not applicable
(Zip Code)
Registrant's telephone number, including area code: +44 207 4334000
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class Trading Symbol(s) Name of exchange on which registered
Ordinary Shares, no par value CLVT New York Stock Exchange
5.25% Series A Mandatory Convertible Preferred Shares, no par value CLVT PR A New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Exchange Act: None
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  
☒
   Accelerated filer  
☐
Non-accelerated filer  
☐
   Smaller reporting company  
☐
     Emerging growth company  
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    Yes ☐    No ☒
The number of ordinary shares of the Company outstanding as of July 26, 2021 was 641,455,231.
DOCUMENTS INCORPORATED BY REFERENCE
None
















TABLE OF CONTENTS     
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2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements,” within the meaning of the "safe harbor provisions" of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this quarterly report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, the ProQuest acquisition, anticipated cost savings, results of operations, financial condition, liquidity, prospects, growth, strategies and the markets in which we operate. Such forward-looking statements are based on available current market material and management’s expectations, beliefs and forecasts concerning future events impacting us. Factors that may impact such forward-looking statements include:
•our ability to make, consummate and integrate acquisitions, including the ProQuest acquisition, and realize any
expected benefits or effects of any acquisitions or the timing, final purchase price, costs associated with achieving
synergies or integration or consummation of any acquisitions, including the ProQuest acquisition;

•any significant disruption in or unauthorized access to our computer systems or those of third parties that we utilize in our operations, including those relating to cybersecurity or arising from cyber-attacks;

•our ability to maintain revenues if our products and services do not achieve and maintain broad market acceptance, or if we are unable to keep pace with or adapt to rapidly changing technology, evolving industry standards, macroeconomic market conditions and changing regulatory requirements;

•our loss of, or inability to attract and retain, key personnel;

•our ability to comply with applicable data protection and privacy laws;

•the effectiveness of our business continuity plans;

•our dependence on third parties, including public sources, for data, information and other services, and our relationships with such third parties;

•increased accessibility to free or relatively inexpensive information sources;

•our ability to derive fully the anticipated benefits from organic growth, existing or future acquisitions, joint ventures, investments or dispositions;

•our ability to compete in the highly competitive industry in which we operate, and potential adverse effects of this competition;

•our ability to maintain high annual revenue renewal rates;

•the strength of our brand and reputation;

•our exposure to risk from the international scope of our operations, and our exposure to potentially adverse tax consequences from the international scope of our operations and our corporate and financing structure;

•our substantial indebtedness, which could adversely affect our business, financial condition, and results of operations

•volatility in our earnings due to changes in the fair value of our outstanding warrants each period; and

•other factors beyond our control.
3


The forward-looking statements contained in this quarterly report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks and uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Item 1A. Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We will not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Note on Defined Terms and Presentation
We employ a number of defined terms in this quarterly report for clarity and ease of reference, which we have capitalized so that you may recognize them as such. As used throughout this quarterly report, unless otherwise indicated or the context otherwise requires, the terms “Clarivate,” the “Company,” “our,” “us” and “we” refer to Clarivate Plc and its consolidated subsidiaries; “Baring” refers to the affiliated funds of Baring Private Equity Asia Pte Ltd that from time to time hold our ordinary shares; “LGP” refers to affiliated funds of Leonard Green & Partners, L.P. that from time to time hold our ordinary shares; and “Onex” refers to the affiliates of Onex Partners Advisor LP that from time to time hold our ordinary shares.
Unless otherwise indicated, dollar amounts throughout this quarterly report are presented in thousands of dollars, except for share and per share amounts.
Website and Social Media Disclosure
We use our website (www.clarivate.com) and corporate Twitter account (@Clarivate) as routine channels of distribution of company information, including news releases, analyst presentations, and supplemental financial information, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD promulgated by the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities Act”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, investors should monitor our website and our corporate Twitter account in addition to following press releases, SEC filings, and public conference calls and webcasts. Additionally, we provide notifications of news or announcements as part of our investor relations website. Investors and others can receive notifications of new information posted on our investor relations website in real time by signing up for email alerts.
None of the information provided on our website, in our press releases, public conference calls, and webcasts, or through social media channels is incorporated into, or deemed to be a part of, this quarterly report or in any other report or document we file with the SEC, and any references to our website or our social media channels are intended to be inactive textual references only.


4

PART I. Financial Information
Item 1. Financial Statements and Supplementary Data
CLARIVATE PLC
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except share and per share data)
June 30, 2021

December 31, 2020
Assets
Current assets:
Cash and cash equivalents $ 2,559,596  $ 257,730 
Restricted cash 2,010,917  11,278 
Accounts receivable, net of allowance of $7,918 and $8,745 at June 30, 2021 and December 31, 2020, respectively
628,134  737,733 
Prepaid expenses 66,011  58,273 
Other current assets 221,905  262,494 
Total current assets 5,486,563  1,327,508 
Property and equipment, net 27,805  36,267 
Other intangible assets, net 7,197,319  7,370,350 
Goodwill 6,315,550  6,252,636 
Other non-current assets 42,145  47,944 
Deferred income taxes 27,523  29,786 
Operating lease right-of-use assets 54,965  132,356 
Total Assets $ 19,151,870  $ 15,196,847 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 86,970  $ 82,038 
Accrued expenses and other current liabilities 611,263  716,356 
Current portion of deferred revenues 664,901  707,318 
Current portion of operating lease liability 29,143  35,455 
Current portion of long-term debt 2,028,600  28,600 
Total current liabilities 3,420,877  1,569,767 
Long-term debt 3,443,927  3,457,900 
Warrant liabilities 278,965  312,751 
Non-current portion of deferred revenues 48,142  41,399 
Other non-current liabilities 62,149  67,722 
Deferred income taxes 338,659  362,261 
Operating lease liabilities 69,072  104,324 
Total liabilities 7,661,791  5,916,124 
Commitments and contingencies
Shareholders’ equity:
Preferred Shares, no par value; 14,375,000 shares authorized; 5.25% Mandatory Convertible Preferred Shares, Series A, 14,375,000 and 0 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively
1,393,222  — 
Ordinary Shares, no par value; unlimited shares authorized at June 30, 2021 and December 31, 2020; 641,419,578 and 606,329,598 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively
10,843,549  9,989,284 
Accumulated other comprehensive income 571,554  503,521 
Accumulated deficit (1,318,246) (1,212,082)
Total shareholders’ equity 11,490,079  9,280,723 
Total Liabilities and Shareholders’ Equity $ 19,151,870  $ 15,196,847 
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
5
CLARIVATE PLC
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except share and per share data)

Three Months Ended June 30,
2021 2020
(As Restated)
Revenues, net $ 445,645  $ 273,500 
Operating expenses:
Cost of revenues (136,607) (92,379)
Selling, general and administrative costs (149,814) (103,665)
Depreciation (3,253) (2,904)
Amortization (126,923) (53,241)
Restructuring and impairment (41,700) (15,846)
Other operating income, net 900  8,781 
Total operating expenses (457,397) (259,254)
(Loss) income from operations (11,752) 14,246 
Mark to market adjustment on financial instruments (21,021) (23,790)
Loss before interest expense and income tax (32,773) (9,544)
Interest expense and amortization of debt discount, net (38,569) (21,122)
Loss before income tax (71,342) (30,666)
(Provision) benefit for income taxes (10,868) 5,385 
Net loss $ (82,210) $ (25,281)
Per share:
Basic and diluted $ (0.13) $ (0.07)
Weighted average shares used to compute earnings per share:
Basic and diluted 617,419,742  375,877,260 
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
6
CLARIVATE PLC
Condensed Consolidated Statement of Operations (Unaudited)
(In thousands, except share and per share data)

Six Months Ended June 30,
2021 2020
(As Restated)
Revenues, net $ 874,075  $ 514,092 
Operating expenses:
Cost of revenues (275,348) (175,060)
Selling, general and administrative costs (261,159) (236,721)
Depreciation (6,586) (5,233)
Amortization (255,244) (102,353)
Restructuring and impairment (106,367) (23,600)
Other operating (expense) income, net (15,330) 14,813 
Total operating expenses (920,034) (528,154)
Loss from operations (45,959) (14,062)
Mark to market adjustment on financial instruments 30,194  (79,422)
Loss before interest expense and income tax (15,765) (93,484)
Interest expense and amortization of debt discount, net (75,962) (52,062)
Loss before income tax (91,727) (145,546)
Provision for income taxes (14,437) (9,368)
Net loss $ (106,164) $ (154,914)
Per share:
Basic and diluted $ (0.17) $ (0.43)
Weighted average shares used to compute earnings per share:
Basic and diluted 613,121,593  359,503,556 
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.


7
CLARIVATE PLC
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(In thousands)

Three Months Ended June 30,
2021 2020
(As Restated)
Net loss $ (82,210) $ (25,281)
Other comprehensive income (loss), net of tax:
Interest rate swaps 211  (254)
Defined benefit pension plans
(4) 25 
Foreign currency translation adjustment 47,988  (2,051)
Total other comprehensive income (loss), net of tax 48,195  (2,280)
Comprehensive loss $ (34,015) $ (27,561)

Six Months Ended June 30,
2021 2020
(As Restated)
Net loss $ (106,164) $ (154,914)
Other comprehensive income (loss), net of tax:
Interest rate swaps 1,551  (3,144)
Defined benefit pension plans
(8) (42)
Foreign currency translation adjustment 66,490  (7,564)
Total other comprehensive income (loss), net of tax 68,033  (10,750)
Comprehensive loss $ (38,131) $ (165,664)
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.


8
CLARIVATE PLC
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(In thousands, except share data)

Ordinary Shares Preferred Shares Accumulated
Other
Comprehensive
Income (Loss) 		Accumulated
Deficit 		Total
Shareholders’
 Equity
Shares Amount Shares Amount
Balance at December 31, 2020 606,329,598  $ 9,989,284  — $ —  $ 503,521  $ (1,212,082) $ 9,280,723 
Exercise of Private Placement Warrants 212,174  3,592  — —  —  —  3,592 
Exercise of stock options 835,917  5,074  — —  —  —  5,074 
Vesting of restricted stock units 15,958  —  — —  —  —  — 
Shares returned to the Company for net share settlements (434,059) (4,489) — —  —  —  (4,489)
Issuance of ordinary shares, net 4,395,638  105,509  — —  —  —  105,509 
Share-based award activity —  10,479  — —  —  —  10,479 
Net loss —  —  — —  —  (23,954) (23,954)
Other comprehensive income —  —  — —  19,838  —  19,838 
Balance at March 31, 2021 611,355,226  10,109,449  —  —  523,359  (1,236,036) 9,396,772 
Exercise of Private Placement Warrants —  —  — —  —  —  — 
Exercise of stock options 1,581,518  9,761  — —  —  —  9,761 
Vesting of restricted stock units 446,324  —  — —  —  —  — 
Shares returned to the Company for net share settlements (809,644) (17,245) — —  —  —  (17,245)
Issuance of ordinary shares, net 206,052,933  5,780,933  — —  —  —  5,780,933 
Share-based award activity —  12,816  — —  —  —  12,816 
Purchase & Retirement of Treasury Stock (177,206,779) (5,052,165) — —  —  —  (5,052,165)
Issuance of preferred shares, net —  —  14,375,000 1,393,222  —  —  1,393,222 
Net loss —  —  — —  —  (82,210) (82,210)
Other comprehensive income —  —  — —  48,195  —  48,195 
Balance at June 30, 2021 641,419,578 10,843,549 14,375,000 1,393,222 571,554 (1,318,246) 11,490,079
Balance at December 31, 2019 306,874,115  $ 2,144,372  — $ —  $ (4,879) $ (890,894) 1,248,599 
Adjustment to opening Accumulated deficit related to adoption of ASC Topic 326 —  —  — —  —  (9,319) (9,319)
Exercise of public warrants 28,880,098  277,526  — —  —  —  277,526 
Exercise of stock options 3,715,455  1,182  — —  —  —  1,182 
Vesting of restricted stock units 169,842  —  — —  —  —  — 
Shares returned to the Company for net share settlements (2,301,458) (10,302) — —  —  —  (10,302)
Issuance of ordinary shares, net 27,600,000  539,714  — —  —  —  539,714 
Share-based award activity —  16,384  — —  —  —  16,384 
Net loss (As Restated) —  —  — —  —  (129,633) (129,633)
Other comprehensive loss —  —  — —  (8,470) —  (8,470)
Balance at March 31, 2020 364,938,052  2,968,876  —  —  (13,349) (1,029,846) 1,925,681 
Exercise of stock options 3,723,332  —  — —  —  —  — 
Vesting of restricted stock units 2,528  —  — —  —  —  — 
Shares returned to the Company for net share settlements (2,311,293) (15,118) — —  —  —  (15,118)
Issuance of ordinary shares, net 20,982,500  304,030  — —  —  —  304,030 
Share-based award activity —  4,322  — —  —  —  4,322 
Net loss (As Restated) —  —  — —  —  (25,281) (25,281)
Other comprehensive loss —  —  — —  (2,280) —  (2,280)
Balance at June 30, 2020 (As Restated) 387,335,119  3,262,110  —  —  (15,629) (1,055,127) 2,191,354 
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

CLARIVATE PLC
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)


Six Months Ended June 30,
2021 2020
(As Restated)
Cash Flows From Operating Activities
Net loss $ (106,164) $ (154,914)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 261,830  107,586 
Bad debt expense 5,405  787 
Deferred income tax benefit (589) (6,641)
Share-based compensation 23,295  20,824 
Restructuring and impairment 70,043  4,771 
Gain on foreign currency forward contracts (1,912) — 
Mark to market adjustment on contingent and phantom shares (26,796) 5,763 
Mark to market adjustment on financial instruments (30,194) 79,422 
Deferred finance charges 4,716  2,072 
Other operating activities 3,565  (8,963)
Changes in operating assets and liabilities:
Accounts receivable 108,677  93,036 
Prepaid expenses (7,946) (6,693)
Other assets 51,875  58,218 
Accounts payable 5,930  (5,851)
Accrued expenses and other current liabilities (30,491) (21,142)
Deferred revenues (38,263) (6,073)
Operating lease right of use assets 11,821  4,698 
Operating lease liabilities (40,259) (5,439)
Other liabilities (2,877) (53,899)
Net cash provided by operating activities 261,666  107,562 
Cash Flows From Investing Activities
Capital expenditures (62,021) (52,651)
Acquisitions, net of cash acquired 433  (885,323)
Acquisition of intangible assets —  (5,982)
Proceeds from sale of product line, net of restricted cash —  3,751 
Net cash used in investing activities (61,588) (940,205)
Cash Flows From Financing Activities
Principal payments on term loan (14,300) (6,300)
Repayments of revolving credit facility —  (65,000)
Payment of debt issuance costs (4,389) (5,267)
Contingent purchase price payment —  (4,115)
Proceeds from issuance of debt 2,000,000  360,000 
Proceeds from issuance of ordinary shares 728,768  843,766 
Proceeds from issuance of preferred shares 1,393,222  — 
Proceeds from warrant exercises —  277,526 
Proceeds from stock options exercised 14,835  1,182 
Payments related to tax withholding for stock-based compensation (21,734) (25,538)
Net cash provided by financing activities 4,096,402  1,376,254 
Effects of exchange rates 5,025  (9,218)
Net increase in cash and cash equivalents, and restricted cash $ 4,301,505  $ 534,393 
10
CLARIVATE PLC
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)

Six Months Ended June 30,
2021 2020
(As Restated)
Beginning of period:
Cash and cash equivalents $ 257,730  $ 76,130 
Restricted cash 11,278  9 
Total cash and cash equivalents, and restricted cash, beginning of period 269,008  76,139 
Cash and cash equivalents, and restricted cash, end of period 4,570,513  610,532 
End of period:
Cash and cash equivalents 2,559,596  608,522 
Restricted cash 2,010,917  2,010 
Total cash and cash equivalents, and restricted cash, end of period $ 4,570,513  $ 610,532 
Supplemental Cash Flow Information:
Cash paid for interest $ 69,697  $ 42,187 
Cash paid for income tax $ 12,553  $ 8,028 
Capital expenditures included in accounts payable $ 3,848  $ 1,819 
Non-Cash Financing Activities:
Shares issued to Capri Acquisition Topco Limited $ 5,052,165  $ — 
Purchase & Retirement of Treasury Stock (5,052,165) — 
Shares issued as contingent stock consideration associated with the DRG acquisition
61,619  — 
Shares issued as contingent stock consideration associated with the CPA Global acquisition
43,890  — 
Total Non-Cash Financing Activities $ 105,509  $ — 

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
11
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)

Note 1: Background and Nature of Operations
Clarivate Plc (“Clarivate,” “us,” “we,” “our,” or the “Company”), is a public limited company organized under the laws of Jersey, Channel Islands. We were initially registered on January 7, 2019, and at our 2020 annual general meeting, our shareholders approved a change of our corporate name from “Clarivate Analytics Plc” to “Clarivate Plc”. Pursuant to the definitive agreement entered into to effect a merger between Camelot Holdings (Jersey) Limited ("Jersey") and Churchill Capital Corp, a Delaware corporation, ("Churchill") (the “2019 Transaction”), the Company was formed for the purposes of completing the 2019 Transaction and related transitions and carrying on the business of Jersey and its subsidiaries.
The Company is a provider of proprietary and comprehensive content, analytics, professional services and workflow solutions that enables users across government and academic institutions, life science companies and research and development (“R&D”) intensive corporations to discover, protect and commercialize their innovations. Clarivate has two reportable segments: Science and Intellectual Property ("IP"). Our segment structure is organized to address customer needs by product line. Our Science segment consists of our Academic and Life Sciences Product Lines. Both provide curated, high-value, structured information that is delivered and embedded into the workflows of our customers, which include research intensive corporations, life science organizations and universities world-wide. Our IP segment consists of our Patent, Trademark, Domain and IP Management Product Lines. These Product Lines helps manage customer's end-to-end portfolios of intellectual property from patents to trademarks to corporate website domains. See Note 21 - Segment Information, for additional information on the Company's reportable segments.
In January 2019, we entered into an Agreement and Plan of Merger (as amended by Amendment No. 1 to the Agreement and Plan of Merger, dated February 26, 2019, and Amendment No. 2 to the Agreement and Plan of Merger, dated March 29, 2019, collectively, the “Merger Agreement”) by and among Churchill, Jersey, CCC Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Clarivate (“Delaware Merger Sub”), Camelot Merger Sub (Jersey) Limited, a private limited company organized under the laws of Jersey, Channel Islands and wholly owned subsidiary of Clarivate (“Jersey Merger Sub”), and the Company, which, among other things, provided for (i) Jersey Merger Sub to be merged with and into Jersey with Jersey being the surviving company in the merger (the “Jersey Merger”) and (ii) Delaware Merger Sub to be merged with and into Churchill with Churchill being the surviving corporation in the merger (the “Delaware Merger”), and together with the Jersey Merger, the “Mergers”.
On May 13, 2019, the 2019 Transaction was consummated, and Clarivate became the sole managing member of Jersey, operating and controlling all of the business and affairs of Jersey, through Jersey and its subsidiaries. Following the consummation of the 2019 Transaction on May 13, 2019, the Company’s ordinary shares and warrants began trading on the New York Stock Exchange. All of the Company’s public warrants have subsequently been redeemed. See Note 16 - Shareholders’ Equity for further information regarding the redemption of the Company’s public warrants.
The 2019 Transaction was accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Under this method of accounting, Churchill was treated as the "acquired" company for financial reporting purposes. This determination was primarily based on post 2019 Transaction relative voting rights, composition of the governing board, size of the two entities pre-merger, and intent of the 2019 Transaction. Accordingly, for accounting purposes, the 2019 Transaction was treated as the equivalent of the Company issuing stock for the net assets of Churchill. The net assets of Churchill were stated at historical cost, with no goodwill or other intangible assets resulting from the 2019 Transaction. Reported amounts from operations included herein prior to the 2019 Transaction are those of Jersey.
In February 2020, the Company consummated a public offering of 27,600,000 ordinary shares at $20.25 per share. In June 2020, the Company consummated a public offering of 50,400,000 of our ordinary shares at a share price of $22.50 per share. Of the 50,400,000 ordinary shares, 14,000,000 were ordinary shares offered by Clarivate and 36,400,000 were ordinary shares offered by selling shareholders. The Company received approximately $304,030 in net proceeds from the sale of its ordinary shares, after deducting underwriting discounts and estimated offering expenses payable. We used the net proceeds, in conjunction with the new $1,600,000 incremental term loan facility available to Clarivate on October 1, 2020, and cash on the balance sheet to fund the repayment of CPA Global's parent company outstanding debt of $2,055,822. The Company did not receive any proceeds from the sale of ordinary shares by the selling shareholders. Additionally, in connection with the acquisition of CPA Global, on October 1, 2020, the Company issued 216,683,778 shares to Redtop Holdings Limited, a portfolio company of Leonard Green & Partners, L.P. representing approximately 35% ownership of Clarivate. After giving
12
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
effect to the Company's acquisition of CPA Global, Onex Corporation and Baring owned approximately 9.5% and 3.7%, respectively, of the Company's ordinary shares.

In June 2021, we completed an underwritten public offering of 44,230,768 of our ordinary shares at a share price of $26.00, of which 28,846,154 ordinary shares were issued and sold by Clarivate and 15,384,614 were sold by selling shareholders (which included 5,769,230 ordinary shares that the underwriters purchased pursuant to their option to purchase additional shares). The ordinary shares sold by selling shareholders included 10,562,882 ordinary shares from Onex, 4,107,787 ordinary shares from Baring and 713,945 ordinary shares from Directors, Executive Officers and other shareholders. The Company received approximately $728,768 in net proceeds from the sale of ordinary shares offered by the Company, after deducting underwriting discounts and estimated offering expenses payable. The Company did not receive any proceeds from the secondary ordinary shares sold by the selling shareholders. We intend to use the net proceeds received to finance a portion of the purchase price for the ProQuest acquisition, which we announced on May 17, 2021. See Note 26 - Subsequent Events for additional information regarding the ProQuest acquisition. If the ProQuest acquisition is not consummated, we intend to use the net proceeds received for general corporate purposes.

In June 2021, concurrently with the June 2021 Ordinary Share Offering, we completed an underwritten public offering of 14,375,000 of our 5.25% Series A Mandatory Convertible Preferred Shares ("MCPS") which included 1,875,000 of our mandatory convertible preferred shares that the underwriters purchased pursuant to their option to purchase additional shares. The Company received approximately $1,393,222 in net proceeds from the mandatory convertible preferred share offering, after deducting underwriting discounts and estimated offering expenses payable. We intend to use the net proceeds received to finance a portion of the purchase price for the ProQuest acquisition, which we announced on May 17, 2021. See Note 26 - Subsequent Events for additional information regarding the ProQuest acquisition. If the ProQuest acquisition is not consummated, we intend to use the net proceeds received for general corporate purposes.

Risks and Uncertainties

In March 2020, the World Health Organization characterized COVID-19 as a pandemic. The rapid spread of COVID-19 and the continuously evolving responses to combat it have had an increasingly negative impact on the global economy. In view of the rapidly changing business environment, market volatility and heightened degree of uncertainty resulting from COVID-19, we are currently unable to fully determine its future impact on our business. However, we continue to assess the potential effect on our financial position, results of operations, and cash flows. If the global pandemic continues to evolve into a prolonged crisis, the effects could have an adverse impact on the Company's results of operations, financial condition and cash flows.

Note 2: Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements were prepared in conformity with U.S. GAAP. The Condensed Consolidated Financial Statements do not include all of the information or notes necessary for a complete presentation in accordance with U.S. GAAP. Accordingly, these Condensed Consolidated Financial Statements should be read in conjunction with the Company’s annual financial statements as of and for the year ended December 31, 2020. The results of operations for the three and six months ended June 30, 2021 and 2020 are not necessarily indicative of the operating results for the full year.

In the opinion of management, the quarterly financial data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the quarterly periods presented. The Condensed Consolidated Financial Statements of the Company include the accounts of all of its subsidiaries. Subsidiaries are entities over which the Company has control, where control is defined as the power to govern financial and operating policies. Generally, the Company has a shareholding of more than 50% of the voting rights in its subsidiaries. The effect of potential voting rights that are currently exercisable is considered when assessing whether control exists. Subsidiaries are fully consolidated from the date control is transferred to the Company, and are de-consolidated from the date control ceases. Intercompany accounts and transactions have been eliminated in consolidation.

During the fourth quarter of 2020, the Company realigned its reporting structure and changed the manner in which performance is assessed. The two operating segments created include the Science Group and the Intellectual Property Group. The segment reporting changes were retrospectively applied to all periods presented. Certain reclassifications of prior year's data have been made to conform to the current year's presentation of reportable segment information as disclosed in Note 21 - Segment Information and financial statement line items within the Condensed Consolidated Statements of Operations.
13
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)

Note 3: Summary of Significant Accounting Policies
Our significant accounting policies are those that we believe are important to the portrayal of our financial condition and results of operations, as well as those that involve significant judgments or estimates about matters that are inherently uncertain. There have been no material changes to the significant accounting policies discussed in Item 8. – Financial Statements and Supplementary Data – Notes to the Consolidated Financial Statements – Note 3 of our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2020, which was filed with the SEC on May 10, 2021 (the "Amended Form 10-K").
Newly Adopted Accounting Standards
In June 2016, the Financial Accounting Standards Board ("FASB") issued new guidance, ASU 2016-13, related to measurement of credit losses on financial instruments which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. This new guidance replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. The Company has determined that the impact of this new accounting guidance primarily affects our accounts receivable. The Company prospectively adopted the standard on January 1, 2020. The adoption of this standard had an impact of $10,097 on the beginning Accumulated deficit balance in the Condensed Consolidated Balance Sheets as of January 1, 2020. In April 2019 and November 2019, the FASB issued ASU 2019-05 and ASU 2019-11, respectively, effective for the same period as ASU 2016-03. These updates offered options to entities intended to bring transition relief and offered clarification on the previously issued standard, respectively. The Company's accounting for credit losses did not change as a result of these two updates.
In August 2018, the FASB issued guidance, ASU 2018-14, which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The guidance is effective for all entities for fiscal years beginning after December 15, 2020. The adoption of this standard did not have a material impact on the Company’s Condensed Consolidated Financial Statements.
In August 2018, the FASB issued guidance, ASU 2018-15, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The Company prospectively adopted the standard on January 1, 2020. The adoption of this standard did not have a material impact on the Company’s Condensed Consolidated Financial Statements. All future capitalized implementation costs incurred related to these hosting arrangements will be recorded as a prepaid asset and as a charge to operating expenses over the expected life of the contract.
In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, which provides targeted improvements or clarification and correction to the ASU 2016-01 Financial Instruments Overall, ASU 2016-13 Financial Instruments Credit Losses, and ASU 2017-12 Derivatives and Hedging, accounting standards updates that were previously issued. The guidance is effective upon adoption of the related standards. The Company prospectively adopted the standard on January 1, 2020. This standard did not have a material impact on the Company’s Condensed Consolidated Financial Statements.
In November 2019, the FASB issued ASU 2019-10, Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), which provides improvements or clarification and correction to the ASU 2016-02 Leases, ASU 2016-13 Financial Instruments Credit Losses, and ASU 2017-12 Derivatives and Hedging, accounting standards updates. The guidance is effective upon adoption of the three ASUs, all of which the Company had already adopted. This standard did not have a material impact on the Company’s Condensed Consolidated Financial Statements.
In December 2019, the FASB issued ASU 2019-12, which enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. The guidance is effective for all entities for fiscal years beginning after December 15, 2020. The adoption of this standard did not have a material impact on the Company's Condensed Consolidated Financial Statements.
14
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The guidance is effective for all entities from the period March 12, 2020 through December 31, 2022. The Company has adopted this standard and elected the optional expedients for its interest rate swap agreements and debt agreements with reference to LIBOR. Upon meeting the specified criteria in the guidance, the Company will continue to account for its interest rate swaps in accordance with hedge accounting and will not apply modification accounting to its debt agreements. In January 2021, the FASB issued ASU 2021-01, which made clarifications relating to the previously issued Reference Rate Reform guidance effective for the same period as ASU 2020-04. This clarification did not have an effect on how the Company accounts for its interest rate swaps and debt agreements.
Recently Issued Accounting Standards
In June 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity as a result of complexity associated with GAAP for certain financial instruments with characteristics of liabilities and equity. This guidance is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods. The Company will adopt ASU 2020-06 effective January 1, 2022, and it is expected that the adoption will not have a material impact to the Company's Condensed Consolidated Financial Statements.

In April 2021, the FASB issued ASU 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, which provides guidance regarding the accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. This guidance is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company will adopt ASU 2021-04 effective January 1, 2022, and it is expected that the adoption will not have a material impact to the Company's Condensed Consolidated Financial Statements.

There were no other new accounting standards or updates issued or effective as of June 30, 2021, that have, or are expected to have, a material impact on the Company's Condensed Consolidated Financial Statements.

Note 4: Business Combinations
Acquisition of Decision Resources Group
On February 28, 2020, we acquired 100% of the assets, liabilities and equity interests of Decision Resources Group ("DRG"), a premier provider of high-value data, analytics and insights products and services to the healthcare industry, from Piramal Enterprises Limited ("PEL"), which is a part of global business conglomerate Piramal Group. The acquisition helps us expand our core businesses and provides us with the potential to grow in the Life Sciences Product Line.
 
The aggregate consideration paid in connection with the closing of the DRG acquisition was $964,997, comprised of $900,000 of base cash plus $6,100 of adjusted closing cash paid on the closing date and 2,895,638 of the Company's ordinary shares issued to PEL on March 5, 2021. The contingent stock consideration was valued at $58,897 on the closing date and was revalued at each period end until the issuance date. For the three and six months ended June 30, 2021, the fair value of the contingent stock consideration decreased by $24,410, which was recorded to selling, general and administrative costs in the Condensed Consolidated Statements of Operations. The corresponding liability was $86,029 as of December 31, 2020 and recorded to Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets. As the liability settled on March 5, 2021 with the Company issuing 2,895,638 ordinary shares valued at $61,619, there was no liability captured within the June 30, 2021 Condensed Consolidated Balance Sheet. See Note 22 - Commitments and Contingencies for more information. The DRG acquisition was accounted for using the acquisition method of accounting. The excess of the purchase price over the net tangible and intangible assets is recorded to Goodwill and primarily reflects the assembled workforce and expected synergies. Goodwill is not deductible for tax purposes. Due to the decrease to the fair value of the contingent stock consideration between December 31, 2020 and March 5, 2021, during the three and six months ended June 30, 2021, total transaction costs incurred in connection with the acquisition of DRG were $23 and a net gain of $24,360, respectively. Total transaction costs during the three and six months ended June 30, 2020 were $5,702 and $25,465, respectively.

The amount of Revenues, net and Net loss resulting from the acquisition that are attributable to the Company's stockholders and included in the Condensed Consolidated Statements of Operations and Comprehensive Loss were as follows:
15
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)

Three Months Ended June 30,
2021 2020
Revenues, net (1)
$ 54,965  $ 46,663 
Net income (loss) attributable to the Company's stockholders $ 18,238  $ (8,911)
(1) Includes $3,271 of a deferred revenue adjustment recognized during the three months ended June 30, 2020.
Six Months Ended June 30,
2021 2020
Revenues, net (1)
$ 99,285  $ 63,707 
Net income (loss) attributable to the Company's stockholders $ 10,407  $ (9,518)
(1) Includes $4,805 of a deferred revenue adjustment recognized during the six months ended June 30, 2020.
The following table summarizes the final purchase price allocation for this acquisition:
Total
Accounts receivable $ 52,193 
Prepaid expenses 4,295 
Other current assets 68,001 
Property and equipment, net 4,136 
Other intangible assets(1) 491,366 
Other non-current assets 2,960 
Operating lease right-of-use assets 25,099 
Total assets $ 648,050 
Accounts payable 3,474 
Accrued expenses and other current liabilities 88,561 
Current portion of deferred revenue 35,126 
Current portion of operating lease liabilities 5,188 
Deferred income taxes 47,467 
Non-current portion of deferred revenue 936 
Operating lease liabilities 20,341 
Total liabilities 201,093 
Fair value of acquired identifiable assets and liabilities $ 446,957 
Purchase price, net of cash(2)
944,220 
Less: Fair value of acquired identifiable assets and liabilities 446,957 
Goodwill $ 497,263 
(1) Includes $3,966 of internally developed software in progress acquired.
(2) The Company acquired cash of $20,777.
The identifiable intangible assets acquired are amortized on a straight-line basis over their estimated useful lives. The following table summarizes the estimated fair value of DRG’s identifiable intangible assets acquired and their remaining amortization period (in years):
16
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Fair Value as of February 28, 2020 Remaining
Range of Years
Customer relationships $ 381,000 
10-21
Database and content 50,200 
2-7
Trade names 5,200 
4-7
Purchased software 23,000 
3-8
Backlog 28,000  4
Total identifiable intangible assets $ 487,400 
During the year ended December 31, 2020, there were additional purchase accounting adjustments of $1,804. These adjustments were related to fixed assets, deferred revenue and legal accrual with a corresponding net decrease to goodwill.
Unaudited pro forma information for the Company for the periods presented as if the acquisition had occurred January 1, 2019 is as follows:
Three Months Ended June 30,
2021 2020
Pro forma revenues, net $ 445,645  $ 276,771 
Pro forma net loss attributable to the Company's stockholders(1)
$ (82,210) $ (21,865)
  (1) The Pro forma net loss attributable to the Company's stockholders for the three months ended June 30, 2020 has been restated. See Note 25 - Restatement of Previously Issued Condensed Financial Statements for more information.
Six Months Ended March 31,
2021 2020
Pro forma revenues, net 874,075  542,112 
Pro forma net loss attributable to the Company's stockholders(1)
(106,164) (141,935)
  (1) The Pro forma net loss attributable to the Company's stockholders for the six months ended June 30, 2020 has been restated. See Note 25 - Restatement of Previously Issued Condensed Financial Statements for more information.
The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved had the acquisition taken place on the date indicated, or the future consolidated results of operations of the Company. The pro forma financial information presented above has been derived from the historical condensed consolidated financial statements of the Company and from the historical accounting records of DRG.
The unaudited pro forma results include certain pro forma adjustments to revenue and net loss that were directly attributable to the acquisition, assuming the acquisition had occurred on January 1, 2019, including the following: (i) additional amortization expense that would have been recognized relating to the acquired intangible assets, (ii) adjustments to interest expense to reflect the removal of DRG debt and the additional Company borrowings in conjunction with the acquisition, (iii) acquisition-related transaction costs and other one-time non-recurring costs which reduced expenses by $1,261 and $26,187 for the three and six months ended June 30, 2020.

Acquisition of CPA Global

On October 1, 2020, we acquired 100% of the assets, liabilities and equity interests of CPA Global, a global leader in intellectual property software and tech-enabled services from Redtop Holdings Limited ("Redtop"). The acquisition helps Clarivate create a true end-to-end platform supporting the full IP lifecycle from idea generation to commercialization and protection.
17
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Clarivate acquired all of the outstanding shares of CPA Global in a cash and stock transaction. The aggregate consideration in connection with the closing of the CPA Global acquisition was $8,740,556, net of $99,043 cash acquired and including an equity holdback consideration of $46,485. The aggregate consideration was composed of (i) $6,761,515 from the issuance of up to 218,183,778 ordinary shares to Redtop Holdings Limited, a portfolio company of Leonard Green & Partners, L.P., representing approximately 35% pro forma fully diluted ownership of Clarivate and (ii) approximately $2,078,084 in cash to fund the repayment of CPA Global's parent company outstanding debt of $2,055,822 and related interest swap termination fee of $22,262. Of the 218,306,663 ordinary shares issuable in the acquisition, Clarivate issued 216,683,778 ordinary shares as of October 1, 2020.
Issuance of 218,183,778 shares
$ 6,761,515 
Cash paid for repayment of CPA Global's parent company debt and related interest rate swap termination charge 2,078,084 
Total purchase price 8,839,599 
Cash acquired (99,043)
Total purchase price, net of cash acquired $ 8,740,556 
The excess of the purchase price over the net tangible and intangible assets is recorded to Goodwill and primarily reflects the assembled workforce and expected synergies. Goodwill is not deductible for tax purposes. During the three and six months ended June 30, 2021, total transaction costs incurred in connection with the acquisition of CPA Global were $1,012 and a net gain of $2,178, respectively.
The amount of Revenues, net and Net loss resulting from the acquisition that are attributable to the Company's stockholders and included in the Condensed Consolidated Statements of Operations and Comprehensive Loss were as follows:
Three months ended
June 30, 2021
Revenues, net (1)
$ 156,628 
Net income attributable to the Company's stockholders $ 4,067 
  (1) Includes $1,347 of a deferred revenue haircut recognized during the three months ended June 30, 2021.
Six months ended
June 30, 2021
Revenues, net (1)
$ 309,204 
Net loss attributable to the Company's stockholders $ (12,985)
  (1) Includes $4,349 of a deferred revenue adjustment recognized during the six months ended June 30, 2021.
18
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
The purchase price allocation for the CPA Global acquisition as of the close date of October 1, 2020 is preliminary and may change upon completion of the determination of the fair value of assets acquired and liabilities assumed. The following table summarizes the preliminary purchase price allocation for this acquisition:
Total
Accounts receivable $ 378,863 
Prepaid expenses 27,595 
Other current assets 215,036 
Property and equipment, net 12,288 
Other intangible assets 4,920,317 
Deferred income taxes 19,310 
Other non-current assets 24,613 
Operating lease right-of-use assets 30,649 
Total assets $ 5,628,671 
Accounts payable 53,501 
Accrued expenses and other current liabilities 473,183 
Current portion of deferred revenue 179,619 
Current portion of operating lease liabilities 7,738 
Non-current portion of deferred revenue 16,786 
Deferred income taxes 287,248 
Other non-current liabilities 43,785 
Operating lease liabilities 23,615 
Total liabilities 1,085,475 
Fair value of acquired identifiable assets and liabilities $ 4,543,196 
Purchase price, net of cash(1)
$ 8,740,556 
Less: Fair value of acquired identifiable assets and liabilities 4,543,196 
Goodwill $ 4,197,360 
  (1) The Company acquired cash of $99,043.
During the six months ended June 30, 2021, the Company recorded measurement period adjustments to the purchase price allocation recorded as of the close date of October 1, 2020. The following table summarizes the measurement period adjustments recorded through June 30, 2021:

19
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Total
Accounts receivable(1)
$ 5,739 
Other current assets (328)
Total assets $ 5,411 
Accrued expenses and other current liabilities(2)
59,120 
Current portion of deferred revenue (757)
Deferred income taxes(3)
(14,698)
Total liabilities $ 43,665 
Fair value of acquired identifiable assets and liabilities $ (38,254)
Purchase price, net of cash $ (433)
Less: Fair value of acquired identifiable assets and liabilities (38,254)
Goodwill $ 37,821 
(1) The $5,739 account receivable measurement period adjustment is due to a change in the fair value of CPA Global's accounts receivable, with there being a $7,068 increase in the valuation increase offset by a $1,329 decrease.
(2) The Company recorded measurement period adjustments of $59,120 increasing accrued expenses and other current liabilities, of which, $62,001 relates to adjustments to CPA Global's accrual for claims existing prior to the date of acquisition, offset by a $2,881 reduction to CPA Global's other accruals. See Note 22 - Commitments and Contingencies for further information.
(3) The $14,698 deferred income tax measurement period adjustment is due to the tax impact of CPA Global's other measurement period adjustments detailed in the chart above.

The identifiable intangible assets acquired are amortized on a straight-line basis over their estimated useful lives. The following table summarizes the estimated fair value of CPA Global’s identifiable intangible assets acquired and their remaining amortization period (in years):

Fair Value as of October 1, 2020 Remaining
Range of Years
Customer relationships $ 4,643,306 
17-23
Technology 266,224 
6-14
Trademarks 10,787 
2-17
Total identifiable intangible assets $ 4,920,317 
Acquisition of Beijing IncoPat
On October 26, 2020, the Company acquired 100% of the equity voting interest in Beijing IncoPat Technology Co., Ltd. (“IncoPat”). IncoPat is a leading patent information service provider in China via cash on hand. IncoPat is complementary to Clarivate’s intellectual property portfolio. The Company paid $52,133 in cash to acquire IncoPat. As of June 30, 2021 and December 31, 2020, $6,313 of the consideration is held in escrow and will be paid in a future period. Until this balance is paid it will be held in restricted cash with the offsetting liability within accrued expenses and other current liabilities. The excess of the purchase price over the net tangible and intangible assets is recorded to Goodwill and primarily reflects the assembled workforce and expected synergies. Goodwill is not deductible for tax purposes. The total transaction costs were immaterial during the three and six months ended June 30, 2021, and did not have an impact on June 30, 2020 results. IncoPat contributed revenues of $2,095 and $4,331 for the three and six months ended June 30, 2021, respectively and a net loss of $906 and $979 for the three and six months ended June 30, 2021, respectively, and did not have an impact on June 30, 2020 results.
20
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
The purchase price allocation for the IncoPat acquisition as of the close date of October 26, 2020 is preliminary and may change upon completion of the determination of the fair value of assets acquired and liabilities assumed. The following table summarizes the preliminary purchase price allocation for the acquisition:
Total
Accounts receivable $ 1,107 
Prepaid expenses 168 
Other current assets 100 
Property and equipment, net 354 
Other intangible assets 21,957 
Other non-current assets 283 
Total assets $ 23,969 
Accounts payable 73 
Accrued expenses and other current liabilities 843 
Current portion of deferred revenue 6,445 
Deferred income taxes 4,802 
Other non-current liabilities 283 
Total liabilities $12,446
Fair value of acquired identifiable assets and liabilities $ 11,523 
Purchase price, net of cash(1)
52,133 
Less: Fair value of acquired identifiable assets and liabilities 11,523 
Goodwill $ 40,610 
(1) The Company acquired cash of $844.
During the six months ended June 30, 2021, the Company recorded measurement period adjustments related to the valuation of accounts receivables and deferred revenue with a corresponding net increase to goodwill in the amount of $136.

The identifiable intangible assets acquired are amortized on a straight-line basis over their estimated useful lives. The following table summarizes the estimated fair value of Beijing IncoPat’s identifiable intangible assets acquired and their remaining weighted-average amortization period (in years):
Fair Value as of October 26, 2020 Remaining
Amortization
Period (in years)
Customer relationships $ 19,989  11
Existing technology $ 1,892  6
Trade names $ 76  2
Total identifiable intangible assets $ 21,957 
Acquisition of Hanlim IPS Co., LTC
On November 23, 2020, the Company acquired 100% of the equity voting interest in Hanlim IPS Co., LTC ("Hanlim IPS") Hanlim IPS is a patent research and consulting services provider in South Korea. The acquisition's purpose is to accelerate innovation in South Korea by offering a more comprehensive range of IP information and insights solutions. The Company paid $9,254 in cash to acquire Hanlim IPS. The excess of the purchase price over the net tangible and intangible assets is recorded to Goodwill and primarily reflects the assembled workforce and expected synergies. Goodwill is not deductible for tax purposes. The total transaction costs were immaterial during the three and six months ended June 30, 2021, and did not have an impact on June 30, 2020 results. Hanlim IPS contributed revenue of $685 and $976 for the three and six months ended June 30, 2021, respectively, and net income of $542 and $561 for the three and six months ended June 30, 2021, respectively, and did not have an impact on June 30, 2020 results.
21
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
The purchase price allocation for the Hanlim IPS acquisition as of the close date of November 23, 2020 is preliminary and may change upon completion of the determination of the fair value of assets acquired and liabilities assumed. The following table summarizes the preliminary purchase price allocation for this acquisition:
Total
Accounts receivable $ 44 
Prepaid expenses 7 
Other current assets 844 
Property and equipment, net 75 
Other intangible assets 8,805 
Other non-current assets 94 
Total assets $ 9,869 
Accounts payable 27 
Accrued expenses and other current liabilities 1,512 
Deferred income taxes 1,937 
Total liabilities 3,476 
Fair value of acquired identifiable assets and liabilities $ 6,393 
Purchase price, net of cash(1)
9,254 
Less: Fair value of acquired identifiable assets and liabilities 6,393 
Goodwill $ 2,861 
  (1)The Company acquired cash of $2,191.
The identifiable intangible assets acquired are amortized on a straight-line basis over their estimated useful lives. The following table summarizes the estimated fair value of Hanlim’s identifiable intangible assets acquired and their remaining amortization period (in years):
Fair Value as of November 23, 2020 Remaining
Range of Years
Customer relationships $ 7,832 
11-13
Trade name 15  2
Non-compete agreements 958  5
Total identifiable intangible assets $ 8,805 

Note 5: Assets Held for Sale and Divested Operations
On November 6, 2020, the Company completed the sale of certain assets and liabilities of the Techstreet business to The International Society of Interdisciplinary Engineers LLC for a total purchase price of $42,832, of which $4,300 will be held in escrow and paid to the Company in a future period. As a result of the sale, the Company recorded a net gain on sale of $28,140, inclusive of incurred transaction costs of $115 in connection with the divestiture during the fourth quarter of 2020. The gain on sale is included in Other operating (expense) income, net within the Consolidated Statements of Operations during the year ended December 31, 2020. As a result of the sale, the Company wrote off balances associated with Techstreet including intangible assets of $10,179 and Goodwill in the amount of $9,129. The Company used the proceeds for general business purposes.

On November 3, 2019, the Company entered into an agreement with OpSec Security for the sale of certain assets and liabilities of its MarkMonitor Product Line within its IP Group. The divestiture closed on January 1, 2020 for a total purchase price of $3,751. An impairment charge of $18,431 was recognized in the Consolidated Statements of Operations during the year ended December 31, 2019, to write down the Assets and Liabilities of the disposal group to fair value. Of the total impairment charge, $17,967 related to the write down of intangible assets and $468 to the write down of goodwill.
22
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
There was an immaterial loss on the divestiture recorded to Other operating income (expense), net during the six months ended June 30, 2020. The Company used the proceeds for general business purposes.
The divestitures of Techstreet and certain assets and liabilities of MarkMonitor did not represent a strategic shift and are not expected to have a major effect on the Company’s operations or financial results, as defined by ASC 205-20, Discontinued Operations; as a result, the divestitures do not meet the criteria to be classified as discontinued operations.

Note 6: Accounts Receivable
Our accounts receivable balance consists of the following as of June 30, 2021 and December 31, 2020:
June 30, December 31,
2021 2020
Accounts receivable $ 636,052  $ 746,478 
Less: Accounts receivable allowance (7,918) (8,745)
Accounts receivable, net $ 628,134  $ 737,733 
The Company estimates credit losses for trade receivables by aggregating similar customer types together, because they tend to share similar credit risk characteristics, taking into consideration the number of days the receivable is past due. Provision rates for the allowance for doubtful accounts are based upon the historical loss method by evaluating factors such as the length of time receivables that are past due and historical collection experience. Additionally, provision rates are based upon current and future economic and competitive environment factors that could impact the collectability of the receivable. Trade and other receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include past due status greater than 360 days or bankruptcy of the debtor. The activity in our accounts receivable allowance consists of the following for the six months ended June 30, 2021 and year ended December 31, 2020, respectively:
June 30, December 31,
2021 2020
Balance at beginning of year $ 8,745  $ 16,511 
Additional provisions 3,353  4,339 
Write-offs (4,452) (22,205)
Opening balance sheet adjustment related to ASU 2016 -13 adoption —  10,097 
Exchange differences 272  3 
Balance at the end of year $ 7,918  $ 8,745 
The potential for credit losses is mitigated because customer creditworthiness is evaluated before credit is extended.
The Company recorded write-offs against the reserve of $4,452 and $22,205 for the six months ended June 30, 2021 and year ended December 31, 2020, respectively.
We continue to monitor any impacts from the COVID-19 pandemic on our customers and various counterparties. During the six months ended June 30, 2021 and year ended December 31, 2020, the Company’s allowance for doubtful accounts and credit losses considered additional risk related to the pandemic. However, this risk to-date was not considered material.


Note 7: Leases

The Company has multiple agreements to sublease operating lease right of use assets and recognized $770 and $709 of sublease income for the three months ended June 30, 2021, and 2020, respectively, and $1,525 and $709 of sublease income for the six months ended June 30, 2021, and 2020, respectively, within Selling, general and administrative costs in the Condensed Consolidated Statements of Operations.

23
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
The Company evaluates long-lived assets for indicators of impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company considers a triggering event to have occurred upon exiting a facility if the expected undiscounted cash flows for the sublease period are less than the carrying value of the assets group. An impairment charge is recorded in the excess of each operating lease right-of-use asset's carrying amount over its estimated fair value. In connection with the Company's digital workplace transformation initiative to enable colleagues to work remotely, the Company ceased the use of select leased sites during the six months ended June 30, 2021. As a result, the Company recorded a non-cash impairment charge to Restructuring and impairment within the Condensed Consolidated Statement of Operations based on the estimate of future recoverable cash flows of $29,059 and $4,771 for the three months ended June 30, 2021, and 2020, respectively, and $70,043 and $4,771 for the six months ended June 30, 2021, and 2020, respectively. As part of the impairment charge, the carrying value of the Operating lease right of use asset was reduced by $70,043, which are non-cash charges. Additionally, the Company incurred $0 and $137 in lease termination fees during the three months ended June 30, 2021, and 2020, respectively, and $3,104 and $137 during the six months ended June 30, 2021, and 2020, respectively. See Note 24 - Restructuring and Impairment and Note 26 - Subsequent Events for further information.

Note 8: Property and Equipment, Net
Property and equipment, net consisted of the following:
June 30, December 31,
2021 2020
Computer hardware $ 40,941  $ 38,253 
Leasehold improvements 10,892  21,614 
Furniture, fixtures and equipment 13,545  13,201 
Total property and equipment, gross 65,378 73,068
Accumulated depreciation (37,573) (36,801)
Total property and equipment, net $ 27,805  $ 36,267 
Depreciation amounted to $3,253 and $2,904 for the three months ended June 30, 2021, and 2020, respectively, and $6,586 and $5,233 for the six months ended June 30, 2021, and 2020, respectively. There were $4,260 and $5,234 of impairments to leasehold improvements during the three and six months ended June 30, 2021.

Note 9: Other Intangible Assets, net and Goodwill
Other Intangible Assets, net
The following tables summarize the gross carrying amounts and accumulated amortization of the Company’s identifiable intangible assets by major class:
June 30, 2021 December 31, 2020
Gross Accumulated Amortization Net Gross Accumulated Amortization Net
Finite-lived intangible assets
Customer relationships $ 5,629,157  $ (387,672) $ 5,241,485  $ 5,598,175  $ (261,350) $ 5,336,825 
Databases and content 1,849,988  (525,877) 1,324,111  1,848,041  (464,683) 1,383,358 
Computer software 705,810  (267,333) 438,477  658,976  (209,611) 449,365 
Trade names 15,092  (4,482) 10,610  18,606  (2,360) 16,246 
Backlog 29,217  (9,563) 19,654  29,216  (5,905) 23,311 
Finite-lived intangible assets 8,229,264  (1,194,927) 7,034,337  8,153,014  (943,909) 7,209,105 
Indefinite-lived intangible assets
Trade names 162,982  —  162,982  161,245  —  161,245 
Total intangible assets $ 8,392,246  $ (1,194,927) $ 7,197,319  $ 8,314,259  $ (943,909) $ 7,370,350 
24
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Amortization amounted to $126,923 and $53,241 for the three months ended June 30, 2021, and 2020, respectively, and $255,244 and $102,353 for the six months ended June 30, 2021, and 2020, respectively.
In June 2020, the Company acquired the assets of CustomersFirst Now for a purchase price of $6,446, which was accounted for as an asset acquisition. As a result, the Company's identifiable intangible assets increased by $6,446, which consisted of $5,446 of databases and content and $1,000 of computer software. The databases and process methodology and the computer software have a remaining weighted average amortization period of 5.0 years and 3.0 years, respectively. The total remaining weighted average amortization period is 4.7 years.
Goodwill
The change in the carrying amount of goodwill is shown below:
Science Segment Intellectual Property Segment Consolidated Total
Balance as of December 31, 2019 $ 909,937  $ 418,108  $ 1,328,045 
Acquisition 497,263  4,202,875  4,700,138 
Divestiture —  (9,129) (9,129)
Impact of foreign currency fluctuations and other 607  232,975  233,582 
Balance as of December 31, 2020 $ 1,407,807  $ 4,844,829  $ 6,252,636 
Acquisition(1)
—  37,957  37,957 
Impact of foreign currency fluctuations and other (148) 25,105  24,957 
Balance as of June 30, 2021 $ 1,407,659  $ 4,907,891  $ 6,315,550 
(1) Balance represents $37,821 in purchase accounting adjustments associated with the CPA Global acquisition and $136 in purchase accounting adjustments associated with the IncoPat acquisition. Refer to Note 4 - Business Combinations for additional disclosures.

Note 10: Derivative Instruments
Effective March 31, 2017, the Company entered into interest rate swap arrangements with counterparties to reduce its exposure to variability in cash flows relating to interest payments on $300,000 of its outstanding Term Loan arrangements. Additionally, effective February 28, 2018, the Company entered into another interest rate swap relating to interest payments on $50,000 of its outstanding Term Loan arrangements. These hedging instruments matured on March 31, 2021. The Company applies hedge accounting by designating the interest rate swaps as a hedge on applicable future quarterly interest payments.
In April 2019, the Company entered into interest rate swap arrangements with counterparties to reduce its exposure to variability in cash flows relating to interest payments on $50,000 of its term loans, effective April 30, 2021. Additionally, in May 2019, the Company entered into additional interest rate swap arrangements with counterparties to reduce its exposure to variability in cash flows relating to interest payments on $100,000 of its term loan, effective March 2021. Both of these derivatives have notional amounts that amortize downward, and both have a maturity of September 2023. The Company will apply hedge accounting by designating the interest rate swaps as a hedge in applicable future quarterly interest payments.
Changes in the fair value are recorded in Accumulated other comprehensive income(loss) ("AOCI") and the amounts reclassified out of AOCI are recorded to Interest expense, net. The fair value of the interest rate swaps is recorded in Other current assets or Accrued expenses and other current liabilities and Other non-current assets or liabilities, according to the duration of related cash flows. The total fair value of the interest rate swaps was a liability of $3,084 as of June 30, 2021 and a liability of $5,159 as of December 31, 2020.
In March 2020, the Company amended all of its interest rate derivatives to reduce the 1% LIBOR floor to a 0% LIBOR floor. For the current derivatives, all other terms and conditions remain unchanged. The Company collected $1,737 in the year ended December 31, 2020, for the amendments of these derivatives. For the two forward starting swaps, an adjustment was made to reduce the weighted average fixed rate from 2.183% at December 31, 2019 to 1.695% at the amendment date.
25
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
The Company had a period of ineffectiveness related to the cash flow hedges in the three months ended March 31, 2020. The ineffectiveness was due to a drop in LIBOR rates below the LIBOR floor defined per the credit facilities, which were amended on March 31, 2020, resulting in a highly effective hedge. As a result of the ineffectiveness, the Company recognized a loss of $0 and $978 for the three and six months ended June 30, 2020, respectively, which was recorded to Interest expense, net on the Consolidated Statements of Operations. As of June 30, 2021, there was no hedge ineffectiveness associated with the Company’s interest rate swaps.
In March 2021, the Company entered into interest rate swap arrangements with counterparties to reduce its exposure to variability in cash flows relating to interest payments on $350,000 of its term loans and replaced the interest rate swaps that matured during March 2021. These interest rate swap arrangements are effective March 31, 2021 and have a maturity date of March 31, 2024.
The following table summarizes the changes in AOCI (net of tax) related to cash flow hedges for the three and six months ended June 30, 2021:
AOCI Balance at December 31, 2020 $ (3,756)
Derivative gains recognized in Other comprehensive loss 192 
Amount reclassified out of Other comprehensive loss to Net loss 1,148 
AOCI Balance at March 31, 2021 $ (2,416)
Derivative losses recognized in Other comprehensive loss (403)
Amount reclassified out of Other comprehensive loss to Net loss 614 
AOCI Balance at June 30, 2021 $ (2,205)

The following table summarizes the changes in AOCI (net of tax) related to cash flow hedges for the three and six months ended June 30, 2020:
AOCI Balance at December 31, 2019 $ (2,778)
Derivative losses recognized in Other comprehensive loss (3,160)
Amount reclassified out of Other comprehensive loss to Net loss 270 
AOCI Balance at March 31, 2020 $ (5,668)
Derivative losses recognized in Other comprehensive loss (1,109)
Amount reclassified out of Other comprehensive loss to Net loss 855 
AOCI Balance at June 30, 2020 $ (5,922)

Foreign Currency Forward Contracts

The Company periodically enters into foreign currency contracts. The purpose of these derivative instruments is to help manage the Company’s exposure to foreign exchange rate risks within the acquired CPA Global business. These contracts generally do not exceed 180 days in duration. The Company recognized a gain from the mark to market adjustment of $762 and $0, for the three months ended June 30, 2021, and 2020, respectively, and $1,785 and $0 for the six months ended June 30, 2021, and 2020, respectively, in Other operating income, net on the Condensed Consolidated Statements of Operations. The nominal amount of outstanding foreign currency contracts was $352,849 and $354,751 as of June 30, 2021, and December 31, 2020, respectively.

The Company accounts for these forward contracts at fair value and recognizes the associated realized and unrealized gains and losses in Other operating (expense) income, net in the Condensed Consolidated Statements of Operations, as the contracts are not designated as accounting hedges under the applicable sections of ASC Topic 815. The total fair value of the forward contracts represented an asset balance of $324 and $8,574 and a liability balance of $3,959 and $106 as of June 30, 2021, and December 31, 2020, respectively, which was classified within Other current assets and Accrued expenses and other current liabilities, respectively, on the Condensed Consolidated Balance Sheets. The Company recognized gains from the mark to market adjustment of $762 and $0 for the three months ended June 30, 2021 and 2020, respectively, and $1,785
26
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
and $0 for the six months ended June 30, 2021 and 2020, respectively, in Other operating (expense) income, net on the Condensed Consolidated Statements of Operations.    

See Note 11 - Fair Value Measurements for additional information on derivative instruments.

Note 11: Fair Value Measurements
The Company records certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy that prioritizes the inputs used to measure fair value is described below. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
•Level 1 — Quoted prices in active markets for identical assets or liabilities.
•Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
•Level 3 — Unobservable inputs that are supported by little or no market activity. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
Below is a summary of the valuation techniques used in determining fair value:
Derivatives - Derivatives consist of foreign exchange contracts and interest rate swaps. The fair value of foreign exchange contracts is based on observable market inputs of spot and forward rates or using other observable rates. The fair value of the interest rate swaps is the estimated amount that the Company would receive or pay to terminate such agreements, taking into account market interest rates and the remaining time to maturities or using market inputs with mid-market pricing as a practical expedient for bid-ask spread. See Note 10 - Derivative Instruments for additional information.
Contingent Consideration - The Company values contingent cash consideration related to business combinations using a weighted probability calculation of potential payment scenarios discounted at rates reflective of the risks associated with the expected future cash flows. Key assumptions used to estimate the fair value of contingent consideration include revenue, net new business and operating forecasts and the probability of achieving the specific targets. The Company values contingent stock consideration related to business combinations using observable market data, adjusted for indemnity losses and claims for indemnity losses valued using other indirect market inputs observable in the marketplace.
Cash and Cash Equivalents, Restricted Cash, Accounts Receivable, Accounts Payable, and Other Accruals - The carrying value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and other accruals readily convertible into cash approximate fair value because of the short-term nature of the instruments.
Debt - The carrying value of the Company's variable interest rate debt, excluding unamortized debt issuance costs and original issue discount, approximates fair value due to the short-term nature of the interest rate benchmark rates. The fair value of the fixed rate debt is estimated based on market observable data for debt with similar prepayment features. The fair value of the Company's debt was $5,592,332 and $3,574,282 at June 30, 2021 and December 31, 2020, respectively. The fair value is considered Level 2 under the fair value hierarchy.
Private Placement Warrants - The Company has determined that the Private Placement Warrants are subject to accounting treatment as a liability. The Company has determined that the fair value of each Private Placement Warrant issued using a Monte Carlo simulation approach for valuations performed through the August 14, 2019 modification described in Note 17 - Employment and Compensation Arrangements, and a Black-Scholes option valuation model thereafter. Accordingly, the warrants issued are classified as Level 3 financial instruments. The assumptions in the models include, but are not limited to, risk-free interest rate, expected volatility of the Company’s and the peer group’s stock prices, dividend yield, and a discount for lack of marketability (“DLOM”) was applied to shares that are subject to remaining post vesting lock up restrictions.
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
27
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Forward Contracts and Interest Rate Swaps - The Company has determined that its forward contracts, included in other current assets, along with its interest rate swaps, included in Accrued expenses and other current liabilities and Other non-current liabilities according to the duration of related cash flows, reside within Level 2 of the fair value hierarchy.
The Company enters into foreign currency contracts that are not designated as hedges as defined under ASC 815. The purpose of these derivative instruments is to help manage the Company's exposure to foreign exchange rate risks. These contracts are initially recognized at fair value at the date the contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. These contracts generally do not exceed 180 days in duration, and these instruments are carried as assets when the fair value is positive (Other current assets on the Consolidated Balance Sheets), and as liabilities when the fair value is negative (Other current liabilities on the Consolidated Balance Sheets) The resulting gain or loss is recognized in profit or loss (other operating income (expense), net) immediately.
The Company assesses the fair value of these instruments, considering current and anticipated movements in future interest rates and the relevant currency spot and future rates available in the market. The Company receives third party valuation reports to corroborate our determination of fair value. Accordingly, these instruments are classified as Level 2 inputs.
Earn-Outs - In accordance with ASC 805, we estimated the fair value of the earn-outs using a Monte Carlo simulation. The amount of the earn-outs approximate fair value due to the short term nature of their remaining payments as of June 30, 2021 and December 31, 2020. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in ASC 820. As of December 31, 2020, the Company paid the remaining earn-out liabilities related to Publons and TrademarkVision. These acquisitions occurred in 2017 and 2018, respectively. The amounts payable were contingent upon the achievement of certain company specific milestones and performance metrics including number of cumulative users, cumulative reviews and annual revenue over a 1-year and 3-year period. Changes in the earn-out are recorded to Selling, general and administrative costs in the Consolidated Statements of Operations.
As part of the DRG acquisition, the Company maintained a contingent stock liability based on observable market data relating to the DRG acquisition that occurred on February 28, 2020. Changes in the contingent stock liability were recorded to Selling, general and administrative costs in the Consolidated Statements of Operations. The contingent stock liability was recorded in Accrued expenses and other current liabilities and is classified as Level 2 in the fair value hierarchy. The liability was settled by the issuance of ordinary shares on March 5, 2021. This fair value measurement is based on observable market data and other indirect observable market inputs and thus represents a Level 2 measurement as defined in ASC 820.
As part of the CPA Global acquisition, the Company maintained a contingent stock liability based on observable market data relating to the CPA Global acquisition that occurred on October 1, 2020. Changes in the contingent stock liability were recorded to Selling, general and administrative costs in the Consolidated Statements of Operations. The contingent stock liability was recorded in Accrued expenses and other current liabilities and is classified as Level 2 in the fair value hierarchy. The liability was settled by the issuance of ordinary shares on January 21, 2021. This fair value measurement is based on observable market data and other indirect observable market inputs and thus represents a Level 2 measurement as defined in ASC 820.
Employee Phantom Share Plan - As of June 30, 2021 and December 31, 2020, the Company maintains an employee phantom share plan receivable asset and liability, including an accrued liability for the employer's portion of payroll withholding taxes, which was recorded in connection with the acquisition opening balance sheet. The legacy CPA Global phantom share plan contained a change in control provision for an exit event which included the sale of CPA Global. Upon the exit event, the phantom shares converted into the Company's ordinary shares and the funds were placed into an employee benefit trust to be passed to the Company for payment to the respective employees via Clarivate payroll. The Company is required to withhold employee payroll taxes and will be required to fund and pay employer payroll taxes. The associated asset and liability balances are based on observable market data relating to the CPA Global acquisition that occurred on October 1, 2020. Changes in the receivable asset and liability are recorded to Selling, general and administrative costs in the Consolidated Statements of Operations. The current and non-current portions of the liability are recorded in Accrued expenses and other current liabilities and Other non-current liabilities, respectively. The current and non-current portions of the receivable asset is recorded in Other current assets and Other non-current assets, respectively. The balances are classified as Level 2 in the fair value hierarchy. This fair value measurement is based on observable market data and other indirect observable market inputs and thus represents a Level 2 measurement as defined in ASC 820.    
28
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
The following table summarizes the changes in Private Placement Warrant liability for the three and six months ended June 30, 2021 and 2020:
Balance at December 31, 2020 $ 312,751 
Mark to market adjustment on financial instruments (51,215)
Exercise of Private Placement Warrants (3,592)
Balance at March 31, 2021 $ 257,944 
Mark to market adjustment on financial instruments 21,021 
Exercise of Private Warrants — 
Balance at June 30, 2021 $ 278,965 
Balance at December 31, 2019 $ 111,813 
Mark to market adjustment on financial instruments 55,632 
Exercise of Private Placement Warrants — 
Balance at March 31, 2020 $ 167,445 
Mark to market adjustment on financial instruments 23,790 
Exercise of Private Warrants — 
Balance at June 30, 2020 $ 191,235 

For the three and six months ended June 30, 2021, there was no earn-out liability related to Publons and TrademarkVision (see Note 22 - Commitments and Contingencies for further details). The following table presents the changes in the Level 3 earn-out for the three and six months ended June 30, 2020:
Balance at December 31, 2019 $ 11,100 
Payment of earn-out liability (1)
(8,000)
Revaluations included in earnings 380 
Balance at March 31, 2020 $ 3,480 
Payment of earn-out liability — 
Revaluations included in earnings 130 
Balance at June 30, 2020 $ 3,610 
(1) See Note 22 - Commitments and Contingencies for further details.
29
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
The following table provides a summary of the Company’s assets and liabilities that were recognized at fair value on a recurring basis as at June 30, 2021 and December 31, 2020:
June 30, 2021
Level 1 Level 2 Level 3 Total Fair Value
Assets
Forward contracts asset $ —  $ 324  $ —  $ 324 
Employee phantom share receivable asset —  175,263  —  175,263 
—  175,587  —  175,587 
Liabilities
Warrant liability —  —  278,965  278,965 
Employee phantom share liability - current —  179,315  —  179,315 
Employee phantom share liability - non-current —  17,299  —  17,299 
Forward contracts liability —  3,959  —  3,959 
Interest rate swap liability —  3,084  —  3,084 
Total $ —  $ 203,657  $ 278,965  $ 482,622 
December 31, 2020
Level 1 Level 2 Level 3 Total Fair Value
Assets
Forward contracts asset $ —  $ 8,574  $ —  $ 8,574 
Employee phantom share receivable asset —  188,770  —  188,770 
—  197,344  —  197,344 
Liabilities
Warrant liability —  —  312,751  312,751 
Employee phantom share liability - current —  193,162  —  193,162 
Employee phantom share liability - non-current —  18,670  —  18,670 
Forward contracts liability —  106  —  106 
Interest rate swap liability —  5,159  —  5,159 
Contingent stock liability —  130,594  —  130,594 
Total $ —  $ 347,691  $ 312,751  $ 660,442 
Non-Financial Assets Valued on a Non-Recurring Basis
The Company’s long-lived assets, including goodwill, indefinite-lived intangible and finite-lived intangible assets subject to amortization, are measured at fair value on a non-recurring basis. These assets are measured at cost but are written-down to fair value, if necessary, as a result of impairment.
Finite-lived Intangible Assets — If a triggering event occurs, the Company determines the estimated fair value of finite-lived intangible assets by determining the present value of the expected cash flows.
Indefinite-lived Intangible Asset — If a qualitative analysis indicates that it is more likely than not that the estimated fair value is less than the carrying value of an indefinite-lived intangible asset, the Company determines the estimated fair value of the indefinite-lived intangible asset (trade name) by determining the present value of the estimated royalty payments on an after-tax basis that it would be required to pay the owner for the right to use such trade name. If the carrying amount exceeds the estimated fair value, an impairment loss is recognized in an amount equal to the excess.
30
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Goodwill — Goodwill represents the difference between the purchase price and the fair value of the identifiable tangible and intangible net assets resulting from business combinations. The Company evaluates its goodwill for impairment at the reporting unit level, defined as an operating segment or one level below an operating segment, annually as of October 1 or more frequently if impairment indicators arise in accordance with ASC Topic 350. The Company performs qualitative analysis of macroeconomic conditions, industry and market considerations, internal cost factors, financial performance, fair value history and other company specific events. If this qualitative analysis indicates that it is more likely than not that the estimated fair value is less than the book value for the respective reporting unit, the Company applies a one-step impairment test in which the Company determines whether the estimated fair value of the reporting unit is in excess of its carrying value. If the carrying value of the net assets assigned to the reporting unit exceeds the estimated fair value of the reporting unit, the Company performs the second step of the impairment test to determine the implied estimated fair value of the reporting unit’s goodwill. The Company determines the implied estimated fair value of goodwill by determining the present value of the estimated future cash flows for each reporting unit and comparing the reporting unit’s risk profile and growth prospects to selected, reasonably similar publicly traded companies.
Right of Use Asset — The guidance in ASC 360-10 requires three steps to identify, recognize and measure the impairment of a long-lived asset (asset group) to be held and used. The Company evaluates whether there are indicators of impairment present (i.e., whether there are any events or changes in circumstances that indicate that the carrying amount of the long-lived asset (group) might not be recoverable, including the ceased use of the leased property). The Company performs tests for recoverability and if indicators of impairment are present, the Company perform a recoverability test by comparing the sum of the estimated undiscounted future cash flows attributable to the long-lived asset (asset group) in question to the carrying amount of the long-lived asset (asset group). If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of the long-lived asset (asset group), the Company determines the fair value of the long-lived asset (asset group) and recognizes an impairment loss if the carrying amount of the long-lived asset (asset group) exceeds its fair value. For the six months ended June 30, 2021, an impairment charge was recorded where the carrying value of the operating lease right of use asset was reduced by $70,043, which are non-cash charges. Additionally, the Company incurred $0 and $137 in lease termination fees during the three months ended June 30, 2021 and 2020, respectively, and $3,104 and $137 during the six months ended June 30, 2021 and 2020, respectively. Fair value assumptions including sublease probabilities and the present value factor were used in the impairment calculation.

Note 12: Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities, consisted of the following as of June 30, 2021 and December 31, 2020:

June 30, December 31,
2021 2020
Employee phantom share plan liability (1)
$ 179,315  $ 193,162 
Contingent stock liability(2)
—  130,594 
Employee related accruals(3)
78,962  98,481 
Accrued professional fees(4)
61,225  67,628 
Accrued legal liability(5)
65,800  — 
Tax related accruals (6)
35,908  45,119 
Other accrued expenses and other current liabilities(7)
190,053  181,372 
Total accrued expenses and other current liabilities $ 611,263  $ 716,356 

(1)See Note 11 - Fair Value Measurements for further information with respect to the employee phantom share plan liabilities.
(2)Represents contingent stock consideration associated with the CPA Global and DRG acquisitions. See Note 4 - Business Combinations and Note 22 - Commitments and Contingencies for further information.
(3)Employee related accruals include accrued payroll, bonus and employee commissions.
(4)Professional and outside service related fees include accrued legal fees, audit fees, outside services, technology, and contractor fees.
(5)See Note 22 - Commitments and Contingencies for further information with respect to the accrued legal liability.
(6)Tax related accruals include value-added tax payable and other current taxes payable.
31
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
(7)Includes current liabilities due to customers, royalty accruals, interest payable, and a collection of miscellaneous other current liabilities.

Note 13: Pension and Other Post‑Retirement Benefits
The components of net periodic benefit cost changes in plan assets and benefit obligations recognized as follows:
Three Months Ended June 30,
2021 2020
Service cost $ 368  $ 226 
Interest cost 82  79 
Expected return on plan assets (52) (40)
Amortization of actuarial gains (2) 14 
Net periodic benefit cost $ 396  $ 279 
Six Months Ended June 30,
2021 2020
Service cost $ 736  $ 444 
Interest cost 164  157 
Expected return on plan assets (104) (79)
Amortization of actuarial gains (8) (52)
Net periodic benefit cost $ 788  $ 470 

Interest cost and expected return on plan assets are recorded in Interest expense, net on the accompanying Interim Condensed Consolidated Statements of Operations.
Note 14: Debt
The following is a summary of the Company’s debt:
June 30, 2021 December 31, 2020
Type Maturity Effective
Interest
Rate 		Carrying
Value 		Effective
Interest
Rate 		Carrying
Value
Senior Notes (2029) 2029 4.875  % $ 1,000,000  —  % $ — 
Senior Secured Notes (2028) 2028 3.875  % 1,000,000  —  % — 
Senior Secured Notes (2026) 2026 4.500  % 700,000  4.500  % 700,000 
Term Loan Facility (2026) 2026 3.608  % 2,833,100  3.626  % 2,847,400 
Revolving Credit Facility 2024 —  % —  —  % — 
Total debt outstanding 5,533,100  3,547,400 
Debt issuance costs (51,395) (51,309)
Term Loan Facility, discount (9,178) (9,591)
Short-term debt, including current portion of long-term debt (2,028,600) (28,600)
Long-term debt, net of current portion and debt issuance costs $ 3,443,927  $ 3,457,900 
32
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Term Loan Facility (2026)
In connection with the DRG acquisition, the Company incurred an incremental $360,000 of borrowings under our term loan facility and used the net proceeds from such borrowings to fund a portion of the DRG acquisition and to pay related fees and expenses.
In addition, the Company secured the backstop of a $950,000 fully committed bridge facility in connection with the DRG acquisition. However, the Company obtained all required financing with proceeds from the additional term loan borrowings and through a primary equity offering in February 2020. As such, the bridge facility remained undrawn through its expiration on closing of the acquisition.
On October 1, 2020, in connection with the CPA Global acquisition, the Company incurred an incremental $1,600,000 of borrowings under our term loan facility and used the net proceeds from such borrowings to fund the repayment of CPA Global's parent company outstanding debt of $2,055,822. Previously, the Company had secured the backstop of a $1,500,000 fully committed bridge facility. However, the Company obtained all required financing with proceeds from the additional term loan borrowings and the bridge facility remained undrawn through its expiration on closing of the acquisition.
Revolving Credit Facility

On October 1, 2020, the Company borrowed $60,000 on the existing Revolving Credit Facility and used the net proceeds from such borrowings to fund the debt extinguishment costs in connection with funding of the repayment of CPA Global's parent company outstanding debt. The amount was repaid in the fourth quarter of 2020 and the revolving credit facility has remained undrawn in the period subsequent to the pay down. The revolving credit facility is subject to a commitment fee of 0.375% per annum.

With respect to the Credit Facilities, the Company may be subject to certain negative covenants, including either a fixed charge coverage ratio, total first lien net leverage ratio, or total net leverage ratio if certain conditions are met. As of June 30, 2021, the company was not required to perform these covenants as we are in compliance with the conditions for the credit facilities.
The obligations of the borrowers under the Credit Agreement are guaranteed by UK Holdco and certain of its restricted subsidiaries and are collateralized by substantially all of UK Holdco’s and certain of its restricted subsidiaries’ assets (with customary exceptions described in the Credit Agreement). UK Holdco and its restricted subsidiaries are subject to certain covenants including restrictions on UK Holdco’s ability to pay dividends, incur indebtedness, grant a lien over its assets, merge or consolidate, make investments, or make payments to affiliates.
As of June 30, 2021, letters of credit totaling $7,725 were collateralized by the Revolving Credit Facility. Notwithstanding the Revolving Credit Facility, as of June 30, 2021 the Company had an unsecured corporate guarantee outstanding for $10,654 and cash collateralized letters of credit totaling $1,769, all of which were not collateralized by the Revolving Credit Facility. The Company did not have any borrowings against the Revolving Credit Facility as of June 30, 2021 and December 31, 2020, to support current operations.
Senior Notes (2029) and Senior Secured Notes (2028)
In June 2021, we issued a private placement offering of $1,000,000 in aggregate principal amount of Senior Secured Notes due June 30, 2028 (the "Secured Notes") and $1,000,000 in aggregate principle amount of Senior Notes due June 30, 2029 (the "Unsecured Notes" and, together with the Secured Notes, the "Notes") bearing interest at a rate of 3.875% and 4.875% per annum, respectively. The interest is payable semi-annually to holders of record on June 30 and December 30 of each year, commencing on December 30, 2021. The Notes due 2028 and 2029 were issued by Clarivate Science Holdings Corporation (the "Issuer"), an indirect wholly-owned subsidiary of Clarivate.
33
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
We intend to use the net proceeds to finance a portion of the purchase price for the announced ProQuest acquisition, which we announced on May 17, 2021, and to pay related fees and expenses. See Note 26 - Subsequent Events for additional information regarding the ProQuest acquisition. Concurrently with the closing of this offering, the Issuer deposited the gross proceeds into segregated escrow accounts. If the escrow conditions (which include conditions relating to the consummation of the ProQuest acquisition) are not satisfied on or prior to November 8, 2021, or if it is otherwise determined that any of the applicable escrow release conditions will not be satisfied, the Notes will be redeemed at a price equal to 100% of the initial issue price of the Notes, plus accrued and unpaid interest, if any, from June 24, 2021 (the "Issue Date" of the Notes), up to, but excluding, the date of such special mandatory redemption. Prior to closing of the ProQuest acquisition, the Notes are not guaranteed but are secured by a first-priority security interest in the escrow accounts. Given the conditions related to the consummation of the ProQuest acquisition, we have classified the debt as a Current Liability on our Condensed Consolidated Balance Sheet and the amount held in escrow as Restricted Cash.
Upon consummation of the ProQuest acquisition, the Notes will be guaranteed on a joint and several basis by each of Clarivate’s indirect subsidiaries that is an obligor or guarantor under Clarivate’s existing credit facilities and senior secured notes due 2026. The Secured Notes are secured on a first-lien pari passu basis with borrowings under the existing credit facilities and senior secured notes, and the Unsecured Notes are the Issuer’s and such guarantors’ unsecured obligations. At this time, the debt will be reclassified as Long-term debt on our Condensed Consolidated Balance Sheet and the amount released from escrow as Cash and cash equivalents.
The carrying value of the Company’s variable interest rate debt, excluding unamortized debt issuance costs, approximates fair value due to the short-term nature of the interest rate benchmark rates. The fair value of the fixed rate debt is estimated based on market observable data for debt with similar prepayment features. The fair value of the Company’s debt was $5,592,332 and $3,574,282 at June 30, 2021 and December 31, 2020, respectively. The debt is considered a Level 2 liability under the fair value hierarchy.

Note 15: Revenue
Disaggregated Revenues
The tables below show the Company’s disaggregated revenue for the periods presented:
Three Months Ended June 30,
2021 2020
Subscription revenues $ 243,562  $ 216,569 
Transactional revenues 89,769  60,363 
Re-occurring revenues 113,683  — 
Total revenues, gross 447,014  276,932 
Deferred revenues adjustment(1)
(1,369) (3,432)
Total revenues, net $ 445,645  $ 273,500 
(1) Reflects the deferred revenue adjustment as a result of purchase accounting.
Six Months Ended June 30,
2021 2020
Subscription revenues $ 478,654  $ 409,804 
Transactional revenues 173,946  109,602 
Re-occurring revenues 225,868  — 
Total revenues, gross 878,468  519,406 
Deferred revenues adjustment(1)
(4,393) (5,314)
Total revenues, net $ 874,075  $ 514,092 
(1) Reflects the deferred revenue adjustment as a result of purchase accounting.
34
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Contract Balances
Accounts receivable, net Current portion of deferred revenues Non-current portion of deferred revenues
Opening (1/1/2021) $ 737,733  $ 707,318  $ 41,399 
Closing (06/30/2021) 628,134  664,901  48,142 
(Increase)/decrease $ 109,599  $ 42,417  $ (6,743)
Opening (1/1/2020) $ 333,858  $ 407,325  $ 19,723 
Closing (06/30/2020) 279,160  424,187  19,116 
(Increase)/decrease $ 54,698  $ (16,862) $ 607 
The amount of revenue recognized in the period that was included in the opening deferred revenues balances was $377,919 and $181,146 for the six months ended June 30, 2021 and 2020, respectively. This revenue consists primarily of subscription revenues.
Transaction Price Allocated to the Remaining Performance Obligation
As of June 30, 2021, approximately $76,708 of revenue is expected to be recognized in the future from remaining performance obligations, excluding contracts with duration of one year or less. The Company expects to recognize revenue on approximately 49.2% of these performance obligations over the next 12 months. Of the remaining 50.8%, 24.9% is expected to be recognized within the following year, 19.8% is expected to be recognized within three to five years, with the final 6.1% expected to be recognized within six to ten years.

Note 16: Shareholders’ Equity
Pre-2019 Transaction
In March 2017, the Company formed the Management Incentive Plan under which certain employees of the Company may be eligible to purchase shares of the Company. In exchange for each share purchase subscription, the purchaser is entitled to a fully vested right to an ordinary share. Additionally, along with a subscription, employees receive a corresponding number of options to acquire additional ordinary shares subject to five years vesting. See Note 17 - Employment and Compensation Arrangements for additional detail related to the options. There were no share subscriptions received prior to or following the close of the 2019 Transaction for the three and six months ended June 30, 2021.
Post-2019 Transaction
Immediately prior to the closing of the 2019 Transaction, there were 87,749,999 shares of Churchill ordinary stock issued and outstanding, consisting of (i) 68,999,999 public shares (Class A) and (ii) 18,750,000 founder shares (Class B). On May 13, 2019, in connection with the 2019 Transaction, all of the Class B ordinary stock converted into Class A ordinary stock of the post-combination company on a one-for-one basis, and effected the reclassification and conversion of all of the Class A ordinary stock and Class B ordinary stock into a single class of ordinary stock of Clarivate Plc. One stockholder elected to have one share redeemed in connection with the 2019 Transaction.
In June 2019, the Company formed the 2019 Incentive Award Plan under which employees of the Company may be eligible to purchase shares of the Company. See Note 17 - Employment and Compensation Arrangements for additional detail related to the 2019 Incentive Award Plan. In exchange for each share subscription purchased, the purchaser is entitled to a fully vested right to an ordinary share. At June 30, 2021 there were unlimited shares of ordinary stock authorized, and 641,419,578 shares issued and outstanding, with a par value of $0.00. The Company did not hold any shares as treasury shares as of June 30, 2021 or December 31, 2020. The Company’s ordinary stockholders are entitled to one vote per share.
Warrants
35
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Upon consummation of the 2019 Transaction, the Company had warrants outstanding to purchase an aggregate of 52,800,000 ordinary shares. Each outstanding whole warrant of Churchill represents the right to purchase one ordinary share of the Company in lieu of one share of Churchill ordinary stock upon closing of the 2019 Transaction at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing upon the later of (i) 30 days after the completion of the 2019 Transaction and (ii) September 11, 2019. The holder does not have the right to exercise the Warrants to the extent that they would beneficially own in excess of 4.9% or 9.8% (as specified by the holder) of the shares of ordinary stock outstanding immediately after giving effect to such exercise. As of December 31, 2019, 100,114 warrants had been exercised.
During the period January 1, 2020 through February 21, 2020, 24,132,666 of the Company’s outstanding public warrants were exercised for one ordinary share per whole public warrant at a price of $11.50 per share. On February 20, 2020, we announced the redemption of all of our outstanding public warrants to purchase our ordinary shares that were issued as part of the units sold in the Churchill Capital Corp initial public offering that remained outstanding at 5:00 p.m. New York City time on March 23, 2020, for a redemption price of $0.01 per public warrant. In addition, our board of directors elected that, upon delivery of the notice of the redemption on February 20, 2020, all public warrants were to be exercised only on a “cashless basis.” Accordingly, by virtue of the cashless exercise of public warrants, exercising public warrant holders received 0.4626 of an ordinary share for each public warrant, and 4,747,432 ordinary shares were issued for public warrants exercised on a cashless basis and 4,649 public warrants were redeemed for $0.01 per public warrant. As of December 31, 2020, no public warrants were outstanding.
Merger Shares
Upon consummation of the 2019 Transaction, there were 7,000,000 ordinary shares of Clarivate that are issuable to persons designated by Messrs. Stead and Klein, including themselves, if the last sale price of Clarivate’s ordinary shares is at least $20.00 for 40 days over a 60 consecutive trading day period on or before the sixth anniversary of the closing of the 2019 Transaction. On January 31, 2020, our Board agreed to waive all performance vesting conditions associated with the Merger Shares (as defined below). The Merger Shares were issued as ordinary shares to persons designated by Jerre Stead and Michael Klein on June 1, 2020 as part of the June 2020 underwritten public offering. These shares were issued during the year ended December 31, 2020. See Note 17 - Employment and Compensation Arrangements for additional detail related to the Merger Shares.
DRG Acquisition Shares
In connection with the DRG acquisition, 2,895,638 ordinary shares of the Company were issued to PEL in March 2021. See Note 4 - Business Combinations for additional details.
CPA Global Acquisition Shares
In connection with the CPA Global acquisition, on October 1, 2020, the Company issued as part of the purchase consideration, 216,683,778 ordinary shares of the Company. In January 2021, the Company issued 1,500,000 ordinary shares to Redtop pursuant to a holdback clause within the purchase agreement. See Note 4 - Business Combinations for additional details.

MCPS

In June 2021, concurrently with the June 2021 Ordinary Share Offering (see Note 1 - Background and Nature of Operations), we completed an underwritten public offering of 14,375,000 of our 5.25% Series A MCPS (which included 1,875,000 of our MCPS that the underwriters purchased pursuant to their option to purchase additional shares). Based upon the agreement provisions and accounting guidance in ASC 480 - Distinguishing Liabilities from Equity and ASC 815-40 - Derivatives and Hedging, the Company concluded that the preferred stock should be classified as permanent equity within the Condensed Consolidated Balance Sheet.

Dividends on our convertible preferred shares are payable, as and if declared by our board of directors, at an annual rate of 5.25% of the liquidation preference of $100.00 per share. We may pay declared dividends on March 1, June 1, September 1 and December 1 of each year, commencing on September 1, 2021 and ending on, and including, June 1, 2024. Each of our convertible preferred shares has a liquidation preference of $100.00. See Note 22 - Commitments and Contingencies for further details.

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CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Each of our MCPS will automatically convert on the second business day immediately following the last trading day of the "Settlement Period" (the 30 consecutive Trading Day period commencing on, and including, the 31st Scheduled Trading Day immediately preceding June 1, 2024) into between 3.2052 and 3.8462 of our ordinary shares (respectively, the “Minimum Conversion Rate” and “Maximum Conversion Rate”), each subject to anti-dilution adjustments. The number of our ordinary shares issuable on conversion of the convertible preferred shares will be determined based on an Average VWAP per ordinary share over the Settlement Period. At any time prior to June 1, 2024, holders may elect to convert each convertible preferred share into ordinary shares at the Minimum Conversion Rate.

Holders of the Preferred Stock have the right to convert all or any portion of their shares at any time until the close of business on the mandatory conversion date. Early conversions that are not in connection with a “Make-Whole Fundamental Change” will be settled at the minimum conversion rate. If a Make-Whole Fundamental Change occurs, holders of the Preferred Stock will, in certain circumstances, be entitled to convert their shares at an increased conversion rate for a specified period of time and receive an amount to compensate them for certain unpaid accumulated dividends and any remaining future scheduled dividend payments.

The Preferred Stock will not be redeemable at our election before the mandatory conversion date. The holders of the Preferred Stock will not have any voting rights, with limited exceptions. In the event that Preferred Stock dividends have not been declared and paid in an aggregate amount corresponding to six or more dividend periods, whether or not consecutive, the holders of the Preferred Stock will have the right to elect two new directors until all accumulated and unpaid Preferred Stock dividends have been paid in full, at which time that right will terminate.

Note 17: Employment and Compensation Arrangements
Employee Incentive Plans
Prior to the 2019 Transaction, the Company operated under its 2016 Equity Incentive Plan, which provided for certain employees of the Company to be eligible to participate in equity ownership in the Company. On May 8, 2019, in anticipation of the 2019 Transaction, the Board adopted the 2019 Incentive Award Plan, which was an amendment, restatement and continuation of the 2016 Equity Incentive Plan. Upon closing of the 2019 Transaction, awards under the 2016 Equity Incentive Plan were converted using the exchange ratio established during the 2019 Transaction and assumed into the 2019 Incentive Award Plan (See Note 4 - Business Combinations). The 2019 Incentive Award Plan permits the granting of awards in the form of incentive stock options, non-qualified stock options, share appreciation rights, restricted shares, restricted share units and other stock-based or cash based awards. Equity awards may be issued in the form of restricted shares or restricted share units with dividend rights or dividend equivalent rights subject to vesting terms and conditions specified in individual award agreements. The Company’s Management Incentive Plan provides for employees of the Company to be eligible to purchase shares of the Company. See Note 16 - Shareholders’ Equity for additional information.
A maximum aggregate amount of 60,000,000 ordinary shares are reserved for issuance under the 2019 Incentive Award Plan. Equity awards under the 2019 Incentive Award Plan may be issued in the form of options to purchase shares of the Company which are exercisable upon the occurrence of conditions specified within individual award agreements. As of June 30, 2021 and December 31, 2020, 41,488,983 and 42,785,926, respectively, awards have not been granted. The 2020 figure includes PSU awards at grant. Refer to the PSU section below for specifications of payout of these awards deemed probable.
Total share-based compensation expense, inclusive of cash and non-cash expense, included in the Consolidated Statements of Operations amounted to $15,861 and $6,856 for the three months ended June 30, 2021 and 2020, respectively, and $26,521 and $24,325 for the six months ended June 30, 2021 and 2020, respectively. The total associated tax benefits recognized amounted to $4,435 and $2,791 for the three months ended June 30, 2021 and 2020, respectively, and $5,835 and $2,793 for the six months ended June 30, 2021 and 2020, respectively.
In the three months ended June 30, 2021 and 2020, the Company recognized additional Share-based compensation expense related to the modification of certain awards under the 2019 Incentive Award Plan. As of June 30, 2021 and December 31, 2020, there was no unrecognized compensation cost related to outstanding stock options.
Stock Options
The Company’s stock option activity is summarized below:
37
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Number of
Options 		Weighted
Average Exercise
Price per Share 		Weighted-Average
Remaining
Contractual Life
(in years) 		Aggregate
Intrinsic
Value
Balance at December 31, 2020 7,860,618  $ 12.95  6.2 $ 131,956 
Granted —  —  0 — 
Expired —  —  0 — 
Forfeited —  —  0 — 
Exercised (2,417,435) 12.02  0 (35,985)
Outstanding as of June 30, 2021 5,443,183  $ 13.37  6 $ 77,641 
Vested and exercisable at June 30, 2021 5,443,183  $ 13.37  6 $ 77,641 
The aggregate intrinsic value in the table above represents the difference between the Company’s most recent valuation and the exercise price of each in-the-money option on the last day of the period presented. 1,581,518 and 3,723,332 stock options were exercised in the three months ended June 30, 2021 and 2020, respectively, and 2,417,435 and 7,438,787 stock options were exercised during the six months ended June 30, 2021 and 2020, respectively. The total intrinsic value of stock options exercised was approximately $35,985 and $83,654 during the six months ended June 30, 2021 and 2020, respectively.
The Company accounts for awards issued under the 2019 Incentive Award Plan as additional contributions to equity. Share-based compensation includes expense associated with stock option grants which is estimated based on the grant date fair value of the award issued.
The Company uses the Black-Scholes option pricing model to estimate the fair value of options granted. The Black-Scholes model takes into account the fair value of an ordinary share and the contractual and expected term of the stock option, expected volatility, dividend yield, and risk-free interest rate. Prior to becoming a public company, the fair value of the Company’s ordinary shares were determined utilizing an external third-party pricing specialist.
The contractual term of the option ranges from one year to ten years. Expected volatility is the average volatility over the expected terms of comparable public entities from the same industry. The risk-free interest rate is based on a treasury rate with a remaining term similar to the contractual term of the option. The Company is recently formed and at this time does not expect to distribute any dividends to the holders of the Company's common shares. The Company recognizes forfeitures as they occur.
Restricted Stock Units (“RSUs”)

RSUs typically vest from one year to three years and are generally subject to either cliff vesting or graded vesting. RSUs do not have non-forfeitable rights to dividends or dividend equivalents. The fair value of RSUs is typically based on the fair value of our ordinary shares on the date of grant. We amortize the value of these awards to expense over the vesting period on a graded-scale basis. The Company recognizes forfeitures as they occur.
Number of Shares Weighted Average Grant Date Fair Value per Share
Outstanding as of December 31, 2020 1,810,546  $ 19.30 
Granted 2,179,078  23.94 
Vested (462,282) 20.54 
Forfeited (223,595) 23.32 
Outstanding as of June 30, 2021 3,303,747  $ 23.45 
The total fair value of RSUs that vested during the three months ended June 30, 2021 and 2020 was $9,134 and $56, respectively, and $9,495 and $2,920 during the six months ended June 30, 2021 and 2020, respectively.

38
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Performance Stock Units (“PSUs”)
The Company began granting PSUs (the "Original PSUs") to certain members of management on April 1, 2020 under the 2019 Incentive Award Plan. The Original PSUs typically vest over three years and are subject to performance conditions with a modifier of relative TSR as compared to the S&P 500 for vesting. The fair value of the PSUs is based on the fair value of our ordinary shares on the date of grant and valued using a Monte Carlo simulation. In years one and two of the three year vesting period, it was not possible to predict the likelihood of achieving the target and therefore, the performance condition was deemed not probable as of June 30, 2021. Accordingly, no compensation expense was recognized for the three and six months ended June 30, 2021.
During December of 2020, the Human Resources and Compensation Committee (the “HRCC”) considered the need to continue to align the interests of our named executive officers with those of Clarivate’s shareholders and to compensate our named executive officers for the significant value created for shareholders in 2020. In addition, the HRCC considered the effects of the Covid-19 pandemic on the value of the Original PSUs granted to our named executive officers earlier in 2020, which are eligible to vest based on the achievement of certain three-year financial performance metrics. In choosing the primary performance goals for the Original PSUs, the HRCC had not anticipated the Covid-19 pandemic and its impact on certain elements of performance, which significantly reduced the anticipated value of the Original PSUs.
The Company made a one-time grant of additional PSUs to certain key employees, including its named executive officers on December 17, 2020 under the 2019 Incentive Award Plan. The PSUs are eligible to vest based upon Clarivate’s three-year total shareholder return (“TSR”) as compared to the TSR of the S&P 500 for the same period (the “TSR PSUs”). The TSR PSUs cover the period from January 1, 2020 to December 31, 2022 and have a payout range of 0% to 120% of target. The TSR PSU grants vest over three years and are subject to market conditions for vesting. The probability of achieving the market conditions are incorporated into the fair value of the award, and related expense is recognized over the vesting period. The fair value of the PSUs is based on the fair value of our ordinary shares on the date of grant and valued using a Monte Carlo simulation. Accordingly, the Company recognized $1,113 and $2,258 of compensation expense for the three and six months ended June 30, 2021. In the event that the Original PSUs vest, the TSR PSUs will be forfeited.

On March 1, 2021 and May 15, 2021 the Company granted 499,141 and 28,577 PSUs to key employees under the 2019 Incentive Award Plan. These PSUs are eligible to vest based on Clarivate's three-year total shareholder return ("TSR") as compared to the TSR of the S&P 500 for the same period as well as the Company's performance against forecasted results. These PSUs cover from January 1, 2021 through December 31, 2023 and have a payout range of 0% to 200%. These PSUs vest over three years and are subject to market conditions. The probability of achieving the market conditions are incorporated into the fair value of the award, and related expense is recognized over the vesting period. The fair value of the PSUs is based on the fair value of our ordinary shares on the date of grant and valued using a Monte Carlo simulation. Accordingly, the Company recognized $336 and $434 of compensation expense for the three and six months ended June 30, 2021.

Number
of
Shares (1)
Weighted
Average Grant Date Fair Value per Share
Outstanding as of December 31, 2020 873,325  $ 25.84 
Granted 527,718  23.80 
Forfeited (23,165) 22.74 
Outstanding as of June 30, 2021 1,377,878  $ 25.11 
(1) The PSUs number of shares are at grant amount and are not reflective of the maximum shares that may ultimately be issued, if any.
Warrants
In connection with the acquisition of Churchill Capital Corp consummated on May 13, 2019, the Company had warrants outstanding for certain individuals to purchase an aggregate of 52,800,000 ordinary shares with an exercise price of $11.50 per share, consisting of 34,500,000 public warrants and 18,300,000 Private Placement Warrants. As of December 31, 2020, no public warrants were outstanding. On January 21, 2021, one warrant holder exercised warrants for 212,174 ordinary shares through a cashless redemption in which 80,610 shares were withheld to cover the exercise price. The net impact of the redemption was an issuance of 131,564 shares. As of June 30, 2021, there were 17,813,826 ordinary shares outstanding for Private Placement Warrants.
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CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)

The following table summarizes the changes in Private Placement Warrant shares outstanding as of June 30, 2021 and June 30, 2020.

Number of Shares Weighted Average Fair Value per Share
Outstanding at December 31, 2019 18,300,000  $ 6.11 
Exercise of Private Placement Warrants —  — 
Outstanding at June 30, 2020
18,300,000  $ 10.45 
Outstanding at December 31, 2020 18,026,000  $ 17.35 
Exercise of Private Placement Warrants (212,174) 16.93
Outstanding at June 30, 2021
17,813,826  $ 15.66 

2019 Transaction Related Awards

Upon consummation of the 2019 Transaction, there were 7,000,000 ordinary shares of Clarivate (the "Merger Shares") issuable if the last sale price of Clarivate’s ordinary shares is at least $20.00 for 40 days over a 60 consecutive trading day period on or before the sixth anniversary of the closing of the 2019 Transaction. In accordance with the terms of the Sponsor Agreement and in connection with our merger with Churchill in 2019, the Merger Shares were issued to persons designated by Messrs. Stead and Klein. On January 31, 2020, our Board agreed to waive the performance vesting condition, and the Merger Shares became issuable on or prior to December 31, 2020 to persons designated by Messrs. Stead and Klein. We engaged a third party specialist to fair value the awards at the modification date using the Monte Carlo simulation approach. The assumptions in the model included, but were not limited to, risk-free interest rate, 1.33%; expected volatility of the Company's and its peer group's stock prices, 20.00%; and dividend yield, 0.00%. The Company has evaluated and recorded additional stock compensation expense as required upon the assignment of Merger Shares as applicable. The Merger Shares were issued as ordinary shares to persons designated by Jerre Stead and Michael Klein on June 1, 2020 as part of the June 2020 underwritten public offering. The Company recognized $13,720 of expense during the year ended December 31, 2020, in Share-based compensation expense as a result of the waived performance vesting conditions.
The Sponsor Agreement provided that certain ordinary shares of Clarivate available for distribution to persons designated in the Sponsor Agreement in connection with the Transactions, and certain Clarivate warrants available for distribution to such persons, in each case, were subject to certain time and performance-based vesting provisions described below.
The vesting conditions added to certain ordinary shares include the following:
5,309,713 ordinary shares of Clarivate held by persons designated in the Sponsor Agreement, will vest in three equal annual installments on the first, second and third anniversaries of the closing of the 2019 Transaction, respectively, and are not contingent on continuing or future service of the respective holders to the Company.
2,654,856 ordinary shares of Clarivate held by such persons will vest at such time as the last sale price of Clarivate’s ordinary shares is at least $15.25 on or before the date that is 42 months after the closing of the 2019 Transaction; provided that none of such Clarivate ordinary shares will vest prior to the first anniversary of the closing of the 2019 Transaction, not more than 1/3 of such Clarivate warrants will vest prior to the second anniversary of the closing of the 2019 Transaction, and not more than 2/3 of such Clarivate warrants will vest prior to the third anniversary of the closing of the 2019 Transaction. Further, such vesting is not contingent on continuing or future service of the respective holders to the Company.
2,654,856 ordinary shares of Clarivate held by such persons will vest at such time as the last sale price of Clarivate’s ordinary shares is at least $17.50 on or before the fifth anniversary of the closing of the 2019 Transaction; provided that none of such Clarivate ordinary shares will vest prior to the first anniversary of the closing of the 2019 Transaction, not more than 1/3 of such Clarivate warrants will vest prior to the second anniversary of the closing of the 2019 Transaction, and not more than 2/3 of such Clarivate warrants will vest prior to the third anniversary of the closing of the 2019
40
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Transaction. Further, such vesting is not contingent on continuing or future service of the respective holders to the Company.
The vesting conditions added to certain warrants include the following:
17,265,826 of certain warrants held by persons designated in the Sponsor Agreement, will vest at such time as the last sale price of Clarivate’s ordinary shares is at least $17.50 on or before the fifth anniversary of the closing of the 2019 Transaction; provided that none of such Clarivate warrants will vest prior to the first anniversary of the closing of the 2019 Transaction, not more than 1/3 of such Clarivate warrants will vest prior to the second anniversary of the closing of the 2019 Transaction, and not more than 2/3 of such Clarivate warrants will vest prior to the third anniversary of the closing of the 2019 Transaction. Further, such vesting is not contingent on continuing or future service of the respective holders to the Company.
In considering the terms of the transaction related awards, the Company notes that the time based vesting restrictions were not conditioned on any continuing or future service of the holders to the Company, and reflect “lock-up” periods of the issuable shares. Further, the above mentioned performance-based restrictions were considered market conditions pursuant to ASC 718, and are contemplated in the value of the awards. As such vesting restrictions were contemplated in conjunction with the granting of the merger shares (See Note 16 - Shareholders’ Equity), the Company considered such terms of the total basket of transaction awards in determination of the fair value of the awards. As no continued or future service was required by the holders of such awards, the Company recognized compensation expense in the second quarter of 2019 based on the fair value of such awards upon closing of the 2019 Transaction. The Company recognized $25,013 expense, net in Share-based compensation expense as of the date of the 2019 Transaction in accordance with the issuance of the merger shares offset by the addition of vesting terms to certain ordinary shares and warrants, as described above. The expense included the increases in value of $48,102 for the granting of merger shares, the increase in value of $1,193 for ordinary shares with only time vesting conditions, and the increase in value of shares purchased by the Founders immediately prior to the transaction of $4,411, all offset by the reduction in value of $9,396 for ordinary shares with performance vesting condition of $15.25, the reduction in value of $13,101 for ordinary shares with performance vesting condition of $17.50 and the reduction in value of $6,297 related to warrants. Pursuant to the Sponsor Agreement, certain founders of Churchill Capital Corp purchased an aggregate of 1,500,000 shares of Class B ordinary stock of Churchill immediately prior to the closing of the 2019 Transaction for an aggregate purchase price of $15,000.
We used a third-party specialist to fair value the awards at the 2019 Transaction close date of May 13, 2019 using the Monte Carlo simulation approach. The assumptions included in the model include, but are not limited to, risk-free interest rate, 2.20%; expected volatility of the Company’s and the peer group’s stock prices, 20.00%; and dividend yield, 0.00%. A discount for lack of marketability (“DLOM”) was applied to shares that are subject to remaining post vesting lock up restrictions. The DLOM was between 3% - 7% dependent on the length of the post vesting restriction period.
On August 14, 2019, Clarivate (on its behalf and on behalf of its subsidiaries) agreed to waive the performance and time vesting conditions, described above, subject to the consummation of the secondary offering. These shares and warrants nevertheless remain subject to a lock-up for a period ranging from two years to three years following the closing of the Mergers. We used a third-party specialist to fair value the awards at the modification date using the Monte Carlo simulation approach. The assumptions included in the model include, but are not limited to, risk-free interest rate, 1.42%; expected volatility of the Company’s and the peer group’s stock prices, 20.00%; and dividend yield, 0.00%. A DLOM was applied to shares that are subject to remaining post vesting lock up restrictions. The DLOM was between 3% - 7% dependent on the length of the post vesting restriction period.

Note 18: Income Taxes
During the three months ended June 30, 2021 and 2020, the Company recognized an income tax provision of $10,868 on loss before income tax of $71,342 and a benefit of $5,385 on loss before income tax of $30,666, respectively. During the six months ended June 30, 2021 and 2020, the Company recognized an income tax provision of $14,437 on loss before income tax of $91,727 and $9,368 on loss before income tax of $145,546, respectively. The tax provision in each period three and six months ended June 30, 2021 and 2020, respectively, reflects the mix of taxing jurisdictions in which pre-tax profits and losses were recognized.
    

41
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Note 19: Earnings Per Share
Basic net earnings per common share from continuing operations (“EPS”) is calculated by taking Income (loss) available to ordinary stockholders divided by the weighted average number of common shares outstanding for the applicable period. Diluted net EPS is computed by taking net earnings divided by the weighted average number of common shares outstanding increased by the number of additional shares which have a dilutive effect. Due to the Company being in a loss position during three and six month period ended June 30, 2021, all potentially dilutive instruments were seen to be anti-dilutive and excluded from the dilutive calculation.

Potential ordinary shares of 27,890,846 and 35,797,137 of Private Placement Warrants, options, RSUs, and PSUs related to the 2019 Incentive Award Plan were excluded from diluted EPS for the three and six months ended June 30, 2021 and 2020, respectively, as the Company had a net loss and their inclusion would have been anti-dilutive or their performance metric was not met. See Note 16 - Shareholders’ Equity and Note 17 - Employment and Compensation Arrangements for additional information.
The potential dilutive effect of our MCPS outstanding during the period was calculated using the if-converted method assuming the conversion as of the earliest period reported or at the date of issuance, if later. The resulting common shares related to our MCPS are not included in the dilutive weighted-average common shares outstanding calculation for the three and six months ended June 30, 2021 as their effect would be anti-dilutive given the net loss incurred in the period.
The basic and diluted EPS computations for our ordinary stock are calculated as follows (in thousands, except share and per share amounts):
Three Months Ended June 30,
2021 2020
(As Restated)
Basic/Diluted EPS
Loss available to ordinary stockholders $ (82,210) $ (25,281)
Basic and diluted weighted-average number of ordinary shares outstanding 617,419,742  375,877,260 
Basic and diluted EPS $ (0.13) $ (0.07)
Six Months Ended June 30,
2021 2020
(As Restated)
Basic/Diluted EPS
Loss available to ordinary stockholders $ (106,164) $ (154,914)
Basic and diluted weighted-average number of ordinary shares outstanding 613,121,593  359,503,556 
Basic and diluted EPS $ (0.17) $ (0.43)

Note 20: Other Operating Income (Expense), Net

Other operating income (expense), net, consisted of the following for the three and six months ended June 30, 2021 and 2020:

42
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Three Months Ended June 30,
2021 2020
Net foreign exchange gain $ 168  $ 8,032 
Miscellaneous income, net 732  749 
Other operating income $ 900  $ 8,781 
Six Months Ended June 30,
2021 2020
Net foreign exchange (loss) gain $ (15,813) $ 13,895 
Miscellaneous income, net 483  918 
Other operating (expense) income, net $ (15,330) $ 14,813 

Note 21: Segment Information
The Chief Executive Officer is the Company’s Chief Operating Decision Maker (“CODM”). Prior to the fourth quarter of 2020, the Company’s CODM previously assessed the Company-wide performance and allocated resources based on consolidated financial information. During the fourth quarter of 2020, in connection with the CPA Global combination, the company realigned its reporting structure and changed the manner in which the CODM allocates resources and assesses performance. The CODM organizes the Company within products lines and, as a result, two new operating segments were created including the Science Group and Intellectual Property Group. The segment reporting changes were retrospectively applied to all periods presented. The CODM evaluates segment performance based primarily on revenue and segment Adjusted EBITDA, as described below. The CODM does not review assets by operating segment for the purposes of assessing performance or allocated resources.
Each of the Company’s reportable segments, Science Group and Intellectual Property Group, recognizes revenue in accordance with the revenue recognition policy within Note 3 - Summary of Significant Accounting Policies in the Company's Form 10-K/A. Below is the overview of the product lines within each reportable segment.

Science: The Science segment consists of our Academic and Life Sciences Product Lines. Both provide curated, high-value, structured information that is delivered and embedded into the workflows of our customers, which include research-intensive corporations, life science organizations and universities world-wide.

Intellectual Property: The Intellectual Property segment consists of our Patent, Trademark, Domain, and IP Management Product Lines. These Product Lines help manage customer’s end-to-end portfolio of intellectual property from patents to trademarks to corporate website domains.

Each of the two operating segments represent the segments for which discrete financial information is available and upon which operating results are regularly evaluated by the CODM in order to assess performance and allocate resources. The CODM evaluates performance based primarily on revenue and segment Adjusted EBITDA. Adjusted EBITDA represents net (loss) income before provision for income taxes, depreciation and amortization, interest income and expense adjusted to exclude acquisition or disposal-related transaction costs (such costs include net income from continuing operations before provision for income taxes, depreciation and amortization and interest income and expense from divestitures), losses on extinguishment of debt, stock-based compensation, unrealized foreign currency gains/(losses), costs associated with the transition services agreement with Thomson Reuters, separation and integration costs, transformational and restructuring expenses, acquisition-related adjustments to deferred revenues, costs related to our merger with Churchill Capital Corp in 2019, non-cash income/(loss) on equity and cost method investments, non-operating income or expense, the impact of certain non-cash, legal settlements and other items that are included in net income for the period that the Company does not consider indicative of its ongoing operating performance and certain unusual items impacting results in a particular period.

The following table summarizes revenue by reportable segment for the periods indicated:
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CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Three Months Ended June 30,
2021 2020
Science Segment $ 202,271  $ 180,379 
Intellectual Property Segment
243,374  93,121 
Total Revenues $ 445,645  $ 273,500 
Six Months Ended June 30,
2021 2020
Science Segment $ 393,559  $ 326,073 
Intellectual Property Segment
480,516  188,019 
Total Revenues $ 874,075  $ 514,092 
Adjusted EBITDA by segment

The following table presents segment profitability and a reconciliation to net income for the periods indicated:
44
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Three Months Ended June 30,
2021 2020
(As Restated)
Science Segment Adjusted EBITDA $ 100,754  $ 79,287 
Intellectual Property Segment Adjusted EBITDA 88,232  20,832 
Total Adjusted EBITDA $ 188,986  $ 100,119 
(Provision) benefit for income taxes (10,868) 5,385 
Depreciation and amortization (130,176) (56,145)
Interest, net (38,569) (21,122)
Deferred revenues adjustment (1,369) (3,432)
Transaction related costs (13,189) (8,527)
Share-based compensation expense (15,861) (6,856)
Restructuring and impairment (41,700) (15,846)
Mark to market adjustment on financial instruments (21,021) (23,790)
Other 1,557  4,933 
Net income attributable to Clarivate $ (82,210) $ (25,281)
Six Months Ended June 30,
2021 2020
(As Restated)
Science Segment Adjusted EBITDA $ 191,348  $ 143,241 
Intellectual Property Segment Adjusted EBITDA 162,471  35,100 
Total Adjusted EBITDA $ 353,819  $ 178,341 
Provision for income taxes (14,437) (9,368)
Depreciation and amortization (261,830) (107,586)
Interest, net (75,962) (52,062)
Deferred revenues adjustment (4,393) (5,314)
Transaction related costs 13,450  (35,216)
Share-based compensation expense (26,521) (24,325)
Restructuring and impairment (106,367) (23,600)
Mark to market adjustment on financial instruments 30,194  (79,422)
Other (14,117) 3,638 
Net income attributable to Clarivate $ (106,164) $ (154,914)

Note 22: Commitments and Contingencies
The Company does not have any recorded or unrecorded guarantees of the indebtedness of others.
Lawsuits and Legal Claims
The Company is engaged in various legal proceedings, claims, audits and investigations that have arisen in the ordinary course of business. These matters may include among others, antitrust/competition claims, intellectual property infringement claims, employment matters and commercial matters. The outcome of all of the matters against the Company is subject to future resolution, including the uncertainties of litigation.

From time to time, we are involved in litigation in the ordinary course of our business, including claims or contingencies that may arise related to matters occurring prior to our acquisition of businesses. At the present time, primarily because the matters are generally in early stages, we can give no assurance as to the outcome of any pending litigation to which we are currently a party, and we are unable to determine the ultimate resolution of these matters or the effect they may have on us.
45
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Our best estimate of the Company's potential liability for the larger legal claims is $65,800, which includes estimated legal costs and accrued interest. The recorded probable loss is an estimate and the actual costs arising from our litigation could be materially lower or higher. We do not expect the outcome of such proceedings to have a material adverse effect on our results of operations or financial condition. We have and will continue to vigorously defend ourselves against these claims. We maintain appropriate insurance that we expect is likely to provide coverage for some of these liabilities or other losses that may arise from these litigation matters.

Warrant Liabilities
Under Accounting Standards Codification 815, Derivatives and Hedging, ("ASC 815"), warrant instruments that do not meet the criteria to be considered indexed to an entity's own stock shall be initially classified as a liability at their estimated fair values, regardless of the likelihood that such instruments will ever be settled in cash. In periods subsequent to issuance, changes in the estimated fair value of the liabilities are reported through earnings.
Contingent Liabilities
In conjunction with the acquisition of Publons, the Company agreed to pay former shareholders up to an additional $9,500 through 2020. Amounts payable were contingent upon Publons’ achievement of certain milestones and performance metrics. As a result of Publons achieving the first tier of milestones and performance metrics during 2020, the earn-out was settled at that time. As such, the Company had an outstanding liability of $0 related to the estimated fair value of this contingent consideration as of December 31, 2020.
In conjunction with the acquisition of Kopernio, the Company paid former shareholders $2,184 during the six months ended June 30, 2020, due to the achievement of certain milestones and performance metrics. As a result of the payment, no further obligations exist as of December 31, 2020.
In conjunction with the acquisition of TrademarkVision, the Company agreed to pay former shareholders a potential earn-out dependent upon achievement of certain milestones and financial performance metrics through 2020. Amounts payable were contingent upon TrademarkVision’s achievement of certain milestones and performance metrics. During the six months ended June 30, 2020, the Company paid $8,000 of the contingent purchase price to complete the earn-out. Due to the earn-out being settled during 2020, the outstanding liability as of December 31, 2020 was $0.
In conjunction with the acquisition of DRG, the Company agreed to pay up to 2,895,638 shares as contingent stock consideration, valued at $58,897 on the closing date of the acquisition. See Note 4 - Business Combinations for more information on the contingent stock consideration. Amounts payable were contingent upon any indemnity losses or claims to indemnity losses occurring within that one-year period. During March 2021, the Company issued 2,895,638 shares as per the purchase agreement for the acquisition of DRG for a total of $61,619 which was satisfied. The issuance of these shares represents a non-cash financing activity on the statement of cash flows.
In conjunction with the acquisition of CPA Global, the Company agreed to pay up to 1,500,000 shares as contingent stock consideration, valued at $46,485 on the closing date of the acquisition. See Note 4 - Business Combinations for more information on the contingent stock consideration. The amount was payable 110 days after the acquisition date and was contingent upon any indemnity losses or claims for indemnity losses as defined in the purchase agreement. During January 2021, the Company issued 1,500,000 shares as per the purchase agreement for the acquisition of CPA Global related to a hold-back clause for a total of $43,890 which was satisfied. The issuance of these shares represents a non-cash financing activity on the statement of cash flows.

ProQuest Acquisition Contingent Fees

Upon consummation of the acquisition of ProQuest, which we announced on May 17, 2021 (see Note 26 - Subsequent Events for additional information regarding the ProQuest acquisition), the Company agreed to pay 46,910,923 of our ordinary shares to the sellers to fund a portion of the estimated purchase price.

Additionally, certain payments are contingent upon the consummation of the ProQuest acquisition, including $27,500 associated with the discount on debt for the underwriter's fee, which once incurred, will be netted against the balance of funds received, as well as $83,250 of transaction-related fees.


46
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
MCPS Dividends

As noted in Note 16 - Shareholders’ Equity, dividends on our convertible preferred shares will be payable on a cumulative basis when, as and if declared by our board of directors, or an authorized committee of our board of directors, at an annual rate of 5.25% of the liquidation preference of $100.00 per share. On July 15, 2021, the Board of Directors declared a dividend of $1.12 per share on Preferred Stock payable on September 1, 2021 to holders of record of the Preferred Stock.


Note 23: Related Party and Former Parent Transactions
The Company had an outstanding liability of $4 and $4 to Onex as of June 30, 2021 and December 31, 2020, respectively.
In connection with the 2016 Transaction, Bidco and a subsidiary of the Former Parent entered into the Transition Service Agreement, which became effective on October 3, 2016, pursuant to which such subsidiary of the Former Parent will, or will cause its affiliates and/or third-party service providers to, provide Bidco, its affiliates and/or third-party service providers with certain technology, facilities management, human resources, sourcing, financial, accounting, data management, marketing and other services to support the operation of the IP&S business as an independent company. Such services are provided by such subsidiary of the Former Parent or its affiliates and/or third-party service providers for various time periods and at various costs based upon the terms set forth in the Transition Service Agreement.
Two controlled affiliates of Baring are vendors of ours. Total expenses incurred for these vendors were $276 and $273 for the three months ended June 30, 2021 and 2020, respectively, and $468 and $332 for the six months ended June 30, 2021 and 2020, respectively. The Company had an outstanding liability of $198 and $237 as of June 30, 2021 and December 31, 2020, respectively.
A controlled affiliate of Onex is a customer of ours. The net revenue from this customer during the period was $221 and $468 for the three months ended June 30, 2021 and 2020, respectively, and $808 and $936 for the six months ended June 30, 2021 and 2020, respectively. The Company had no outstanding receivables as of June 30, 2021 and December 31, 2020.
Three controlled affiliates of Leonard Green & Partners, L.P. are customers of ours. The net revenue from these customers during the period was $32, $11,024 and $0 for the three months ended June 30, 2021 and $63, $20,645 and $70 for the six months ended June 30, 2021. The Company had an outstanding receivable of $32, $62,963 and $0 as of June 30, 2021 and $31, $54,656 and $264 as of December 31, 2020. These customers were not a related party for the three and six months ended June 30, 2020.
Three controlled affiliates of Leonard Green & Partners, L.P. ("LGP") are vendors of ours. Total expenses incurred for these vendors were $382, $7,902 and $1,981 for the three months ended June 30, 2021 and $628, $15,485 and $1,981 for the six months ended June 30, 2021. The Company had an outstanding liability of $0, $0 and $0 as of June 30, 2021 and $0, $0 and $1,995 as of December 31, 2020. These vendors were not a related party for the three and six months ended June 30, 2020.
One of our independent directors has an immediate family member who is a member of management within one of Clarivate’s customers. Total revenue from the Customer was $332 and $297 for the three months ended June 30, 2021 and 2020, respectively, and $499 and $319 for the six months ended June 30, 2021 and 2020, respectively. The Company had $2 and $100 outstanding receivables as of June 30, 2021 and December 31, 2020, respectively.
On May 15, 2021, Clarivate entered into an agreement with Capri Acquisition Topco Limited (“Capri”) and Solaro ExchangeCo Limited (“NewCo”), and for certain limited purposes, LGP. Capri and NewCo are controlled by LGP and held the Clarivate ordinary shares beneficially owned by LGP and certain other existing shareholders. Under the agreement, Capri contributed 177,206,779 of its Clarivate ordinary shares to NewCo. Clarivate then acquired NewCo in exchange for the issuance of the same number of Clarivate ordinary shares to Capri. This transaction did not involve any change in beneficial ownership of Clarivate’s ordinary shares and the issuance of the new ordinary shares to Capri were exempt from the registration requirements of the Securities Act under Section 4(a)(2) thereof. Pursuant to authority granted to Clarivate by shareholders at its 2021 Annual General Meeting, following its acquisition of Newco, Clarivate purchased the ordinary shares held by Newco for a nominal price and then canceled such shares. This was a non-cash financing transaction that had a net immaterial impact on the Condensed Consolidated Financial Statements.


47
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Note 24: Restructuring and Impairment
During 2020, we engaged a strategic consulting firm to assist us in optimizing our structure and cost base. As a result, we have implemented several cost-saving and margin improvement programs designed to generate substantial incremental cash flow including the Operation, Simplification and Optimization Program, the DRG Acquisition Integration Program, the CPA Global Acquisition Integration and Optimization Program, and most recently the One Clarivate Program. In connection with the CPA Global Acquisition restructuring program, a social plan was entered into in Belgium. Liabilities for non-retirement post-employment benefits that fall under ASC 712 are recognized when the severance liability was determined to be probable of being paid and reasonably estimable.
Operation Simplification and Optimization Program
During the fourth quarter of 2019, the Company approved restructuring actions designed to streamline our operations by simplifying our organization and focusing on two segments in planned phases. Restructuring charges included actions to reduce operational costs. Components of the pre-tax charges include $972 and $4,865 in severance costs and $234 and $7,657 in other costs incurred during the three months ended June 30, 2021 and 2020, respectively. Costs incurred during the six months ended June 30, 2021 and 2020 include $1,224 and $11,438 in severance costs and $411 and $8,838 in other costs. The Science and IP segments incurred $417 and $789 of the expense, respectively, during the three months ended June 30, 2021 and $574 and $1,061 during the six months ended June 30, 2021, respectively. The table below summarizes the activity related to the restructuring reserves across each of Clarivate's cost-saving's programs.
DRG Acquisition Integration Program
During the second quarter of 2020, the Company approved restructuring actions designed to eliminate duplicative costs following the acquisition of DRG in planned phases. Restructuring charges included actions to reduce operational costs. Components of the pre-tax charges include $235 and $3,312 in severance costs and $0 and $12 in other costs incurred during the three months ended June 30, 2021 and 2020, respectively. Costs incurred during the six months ended June 30, 2021 and 2020 include $427 and $3,312 in severance costs and $75 and $12 in other costs. The Science and IP segments incurred $81 and $154 of the expense, respectively, during the three months ended June 30, 2021 and $176 and $326 during the six months ended June 30, 2021, respectively. The table below summarizes the activity related to the restructuring reserves across each of Clarivate's cost-saving's programs.
CPA Global Acquisition Integration and Optimization Program
During the fourth quarter of 2020, the Company approved restructuring actions designed to eliminate duplicative costs following the acquisition of CPA Global and to streamline our operations simplifying our organization and reducing our leasing portfolio. Restructuring charges included actions to reduce operational costs. Components of the pre-tax charges include $13,982 and $0 in severance costs and $24,233 and $0 in other costs incurred during the three months ended June 30, 2021 and 2020, respectively. Costs incurred during the six months ended June 30, 2021 and 2020 include $32,546 and $0 in severance costs and $69,640 and $0 in other costs. The Science and IP segments incurred $13,416 and $24,799 of the expense, respectively, during the three months ended June 30, 2021 and $36,212 and $65,974 during the six months ended June 30, 2021. The table below summarizes the activity related to the restructuring reserves across each of Clarivate's cost-saving's programs.
One Clarivate Program
During the second quarter 2021, the Company approved restructuring actions to streamline operations within targeted areas of the Company. The program will result in a reduction in operational costs, with the primary cost savings driver being from a reduction in workforce. Components of the pre-tax charges include $2,044 and $0 in severance costs and $0 and $0 in other costs incurred during the three months ended June 30, 2021 and 2020, respectively. Costs incurred during the six months ended June 30, 2021 and 2020 include $2,044 and $0 in severance costs and $0 and $0 in other costs. The Science and IP segments incurred $707 and $1,337 of the expense, respectively, during the three and six months ended June 30, 2021. The table below summarizes the activity related to the restructuring reserves across each of Clarivate's cost-saving's programs.
48
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Restructuring Programs Severance and Related Benefit Costs
Costs Associated with Exit and Disposal Costs (1)
Total
Reserve Balance as of December 31, 2019 $ 9,506  $ —  $ 9,506 
Expenses recorded 6,574  1,180  7,754 
Payments made (6,647) —  (6,647)
Reserve Balance as of March 31, 2020 9,433  1,180  10,613 
Expenses recorded 8,177  7,669  15,846 
Payments made (5,549) (199) (5,748)
Asset Impairment Charge —  (4,908) (4,908)
Reserve Balance as of June 30, 2020 $ 12,061  $ 3,742  $ 15,803 
Reserve Balance as of December 31, 2020 $ 17,169  $ 4,475  $ 21,644 
Expenses recorded 19,008  45,659  64,667 
Payments made (15,926) (1,111) (17,037)
Asset Impairment Charge (1,409) (40,806) (42,215)
Reserve Balance as of March 31, 2021 $ 18,842  $ 8,217  $ 27,059 
Expenses recorded 17,233  24,467  41,700 
Payments made (10,686) (2,196) (12,882)
Asset Impairment Charge —  (20,584) (20,584)
Reserve Balance as of June 30, 2021 $ 25,389  $ 9,904  $ 35,293 
  (1) Relates primary to lease exit costs and legal and advisory fees.
The following table is a summary of charges incurred related to the Company's restructuring programs for the three and six months ended June 30, 2021 and 2020.
Three Months Ended June 30,
2021 2020
Severance and related benefit costs $ 17,233  $ 8,177 
Costs associated with exit and disposal activities (1)
1,791  2,761 
Costs associated with lease exit costs including impairment (2)
22,676  4,908 
Total restructuring and impairment $ 41,700  $ 15,846 
Six Months Ended June 30,
2021 2020
Severance and related benefit costs $ 36,241  $ 14,750 
Costs associated with exit and disposal activities (1)
2,233  3,942 
Costs associated with lease exit costs including impairment (2)
67,893  4,908 
Total restructuring and impairment $ 106,367  $ 23,600 
  (1) Relates primarily to contract exit costs, legal and advisory fees.
  (2) Relates primary to lease exit costs.





49
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Note 25: Restatement of Previously Issued Condensed Financial Statements

As disclosed in the Form 10-K/A filed with the Securities and Exchange Commission on May 10, 2021, subsequent to the original issuance of its Consolidated Financial Statements, the Company identified certain errors in its historical annual Consolidated Financial Statements, related to the accounting treatment of warrants. As such the restated audited Consolidated Financial Statements for the years ended December 31, 2020 and 2019, and the unaudited interim Condensed Consolidated Financial Statements for the quarterly periods within these years commencing with the second quarter of 2019, are defined as the “Restated Periods."

See Note 2 - Basis of Presentation, Note 26 - Quarterly Financial Data (Unaudited), and Note 28 - Restatement of Prior Period Financial Statements, to the Consolidated Financial Statements in the Amended Form 10-K for additional information related to the restatements.

In connection with the filing of this Quarterly Report on Form 10-Q, the Company has restated the accompanying interim Condensed Consolidated Financial Statements as of and for the quarter ended June 30, 2020 to correct for the impact of the misstatements. The applicable notes to the accompanying financial statements have also been corrected to reflect the impact of the restatement. Below, we have presented a reconciliation from the "As Originally Reported" to the "As Restated" amounts for each of our interim Condensed Consolidated Financial Statements as of and for the three and six months ended June 30, 2020. The amounts "As Originally Reported" are from the "As Originally Reported" amounts as disclosed in Note 26 - Quarterly Financial Data (Unaudited) in the Amended Form 10-K.


50
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Interim Condensed Consolidated Statements of Operations (Unaudited)
Three months ended June 30, 2020
As Originally Reported Reclassification (a) Restatement Impacts Restatement Reference As Reclassified and Restated
Revenues, net $ 273,500  $ —  $ —  $ 273,500 
Operating expenses:
Cost of revenues (90,859) (1,520) —  (92,379)
Selling, general and administrative costs (88,482) (15,183) —  (103,665)
Share-based compensation expense (6,856) 6,856  — 
Depreciation (2,904) —  —  (2,904)
Amortization (53,241) —  —  (53,241)
Transaction expenses (8,527) 8,527  —  — 
Transition, integration and other related expenses (1,320) 1,320  —  — 
Restructuring and impairment (15,846) —  —  (15,846)
Other operating income, net 8,781  —  —  8,781 
Total operating expenses (259,254) —  —  (259,254)
Income from operations 14,246  —  —  14,246 
Mark to market on financial instruments —  —  (23,790) (b) (23,790)
Income (Loss) before interest expense and income tax 14,246  —  (23,790) (9,544)
Interest expense and amortization of debt discount, net (21,122) —  —  (21,122)
Loss before income tax (6,876) —  (23,790) (b) (30,666)
Provision for income taxes 5,385  —  —  5,385 
Net loss $ (1,491) $ —  $ (23,790) (b) $ (25,281)
Per share:
Basic and diluted $ 0.00  $ (0.06) $ (0.07)
Weighted average shares used to compute earnings per share:
Basic and diluted 375,877,260  375,877,260  375,877,260 
(a) Reclassifications - The reclassifications are needed to conform to the current financial statement line items on the Condensed Consolidated Statements of Operations.
(b) Mark to market adjustment on financial instruments - The correction of these misstatements resulted in an adjustment of $(23,790) that was recorded through the Statement of Operations, increasing the Net loss for the three months ended June 30, 2020.
51
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Interim Condensed Consolidated Statements of Operations (Unaudited)
Six months ended June 30, 2020
As Originally Reported Reclassification (a) Restatement Impacts Restatement Reference As Reclassified and Restated
Revenues, net $ 514,092  $ —  $ —  $ 514,092 
Operating expenses:
Cost of revenues (173,258) (1,802) —  (175,060)
Selling, general and administrative costs (175,430) (61,291) —  (236,721)
Share-based compensation expense (24,325) 24,325  —  — 
Depreciation (5,233) —  —  (5,233)
Amortization (102,353) —  —  (102,353)
Transaction expenses (35,216) 35,216  —  — 
Transition, integration and other related expenses (3,552) 3,552  —  — 
Restructuring and impairment (23,600) —  —  (23,600)
Other operating income, net 14,813  —  —  14,813 
Total operating expenses (528,154) —  —  (528,154)
Loss from operations (14,062) —  —  (14,062)
Mark to market on financial instruments —  —  (79,422) (b) (79,422)
Loss before interest expense and income tax (14,062) —  (79,422) (93,484)
Interest expense and amortization of debt discount, net (52,062) —  —  (52,062)
Loss before income tax (66,124) —  (79,422) (b) (145,546)
Provision for income taxes (9,368) —  —  (9,368)
Net loss $ (75,492) $ —  $ (79,422) (b) $ (154,914)
Per share:
Basic and diluted $ (0.21) $ (0.22) $ (0.43)
Weighted average shares used to compute earnings per share:
Basic and diluted 359,503,556  359,503,556  359,503,556 

(a) Reclassifications - The reclassifications are needed to conform to the current financial statement line items on the Condensed Consolidated Statements of Operations.
(b) Mark to market adjustment on financial instruments - The correction of these misstatements resulted in an adjustment of $(79,422) that was recorded through the Statement of Operations, increasing the Net loss for the six months ended June 30, 2020.

52
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Interim Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Three months ended June 30, 2020
As Originally Reported Restatement Impacts As Restated
Net loss $ (1,491) (23,790) $ (25,281)
Other comprehensive income (loss), net of tax:
Interest rate swaps (254) —  (254)
Defined benefit pension plans, net of tax 25  —  25 
Foreign currency translation adjustment (2,051) —  (2,051)
Total other comprehensive loss, net of tax (2,280) —  (2,280)
Comprehensive loss $ (3,771) $ (23,790) $ (27,561)
Six months ended June 30, 2020
As Originally Reported Restatement Impacts As Restated
Net loss $ (75,492) $ (79,422) $ (154,914)
Other comprehensive income (loss), net of tax:
Interest rate swaps (3,144) —  (3,144)
Defined benefit pension plans, net of tax (42) —  (42)
Foreign currency translation adjustment (7,564) —  (7,564)
Total other comprehensive loss, net of tax (10,750) —  (10,750)
Comprehensive loss $ (86,242) $ (79,422) $ (165,664)

53
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Interim Condensed Consolidated Statement of Changes in Equity (Unaudited)
Share Capital Accumulated
Other
Comprehensive
Income (Loss) 		Accumulated
Deficit 		Total
Shareholders’
 Equity
Restatement Reference Shares Amount
Balance at December 31, 2019 306,874,115  $ 2,144,372  $ (4,879) $ (890,894) $ 1,248,599 
Adjustment to opening Accumulated deficit related to adoption of ASC Topic 326 —  —  —  (9,319) $ (9,319)
Exercise of public warrants (As Restated) 28,880,098  277,526  —  —  $ 277,526 
Exercise of stock options 3,715,455  1,182  —  —  $ 1,182 
Vesting of restricted stock units 169,842  —  —  —  $ — 
Shares returned to the Company for net share settlements (2,301,458) (10,302) —  —  $ (10,302)
Issuance of ordinary shares, net 27,600,000  539,714  —  —  $ 539,714 
Share-based award activity —  16,384  —  —  $ 16,384 
Net loss (As Restated) (c) —  —  —  $ (129,633) $ (129,633)
Other comprehensive income (loss) —  —  (8,470) —  $ (8,470)
Balance at March 31, 2020 (As Restated) (c) 364,938,052  2,968,876  (13,349) (1,029,846) 1,925,681 
Exercise of stock options 3,723,332  —  —  —  — 
Vesting of restricted stock units 2,528  —  —  —  — 
Shares returned to the Company for net share settlements (2,311,293) (15,118) —  —  (15,118)
Issuance of ordinary shares, net 20,982,500  304,030  —  —  304,030 
Share-based award activity —  4,322  —  —  4,322 
Net loss (As Restated) (c) —  —  —  (25,281) (25,281)
Other comprehensive income (loss) —  —  (2,280) —  (2,280)
Balance at June 30, 2020 (As Restated) (c) 387,335,119  $ 3,262,110  $ (15,629) $ (1,055,127) $ 2,191,354 
(c) The correction of these misstatements include the mark to market adjustment on financial instruments. The correction of these misstatements resulted in an adjustment of $(23,790) and $(79,422) for the three and six months ended June 30, 2020, respectively, that was recorded through the Statement of Operations, increasing the Net (loss).

54
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)

Interim Condensed Consolidated Statement of Cash Flows (Unaudited)

Six months ended June 30, 2020
As Originally Reported Restatement Impacts As Restated
Cash Flows From Operating Activities
Net loss $ (75,492) (79,422) $ (154,914)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 107,586  —  107,586 
Bad debt expense 787  —  787 
Gain on sale of line of business (395) (395)
Restructuring and impairment 4,771  —  4,771 
Deferred income tax benefit (6,641) —  (6,641)
Share-based compensation 20,824  —  20,824 
Mark to market adjustment on contingent and phantom shares (1)
5,763  —  5,763 
Mark to market adjustment on financial instruments (As Restated) —  79,422  79,422 
Deferred finance charges 2,072  —  2,072 
Other operating activities (8,568) —  (8,568)
Changes in operating assets and liabilities:
Accounts receivable 93,036  —  93,036 
Prepaid expenses (6,693) —  (6,693)
Other assets 58,218  —  58,218 
Accounts payable (5,851) —  (5,851)
Accrued expenses and other current liabilities (1)
(21,142) —  (21,142)
Deferred revenues (6,073) —  (6,073)
Operating lease right of use assets 4,698  —  4,698 
Operating lease liabilities (5,439) —  (5,439)
Other liabilities (53,899) —  (53,899)
Net cash provided by operating activities 107,562  —  107,562 
Cash Flows From Investing Activities
Capital expenditures (52,651) —  (52,651)
Acquisitions, net of cash acquired (885,323) —  (885,323)
Acquisition of intangible assets (5,982) —  (5,982)
Proceeds from sale of product line, net of restricted cash 3,751  —  3,751 
Net cash used in investing activities (940,205) —  (940,205)
Cash Flows From Financing Activities
Principal payments on term loan (6,300) —  (6,300)
Repayments of revolving credit facility (65,000) —  (65,000)
Payment of debt issuance costs (5,267) —  (5,267)
Contingent purchase price payment (4,115) —  (4,115)
Proceeds from issuance of debt 360,000  —  360,000 
Proceeds from issuance of ordinary shares 843,766  —  843,766 
Proceeds from warrant exercises 277,526  —  277,526 
55
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Proceeds from stock options exercised 1,182  —  1,182 
Payments related to tax withholding for stock-based compensation (25,538) —  (25,538)
Net cash provided by (used in) financing activities $ 1,376,254  —  1,376,254 
Effects of exchange rates (9,218) —  (9,218)
Net increase in cash and cash equivalents, and restricted cash 534,393  —  534,393 
Beginning of period:
Cash and cash equivalents 76,130  —  76,130 
Restricted cash 9  —  9 
Total cash and cash equivalents, and restricted cash, beginning of period 76,139  —  76,139 
Cash and cash equivalents, and restricted cash, end of period 610,532  —  610,532 
End of period:
Cash and cash equivalents 608,522  —  608,522 
Restricted cash 2,010  —  2,010 
Total cash and cash equivalents, and restricted cash, end of period $ 610,532  $ —  $ 610,532 
Supplemental Cash Flow Information
Cash paid for interest $ 42,187  $ —  $ 42,187 
Cash paid for income tax $ 8,028  $ —  $ 8,028 
Capital expenditures included in accounts payable $ 1,819  $ —  $ 1,819 
(1) "Accrued expenses and other current liabilities" of $(15,379) has been updated to $(21,142), which represents a change of $(5,763). This amount has been reclassified to "Mark to market adjustment on contingent and phantom shares" in order to conform to the current financial statement line items presented on the Interim Condensed Consolidated Statement of Cash Flows (Unaudited).
56
CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Note 26: Subsequent Events
On May 17, 2021, the Company announced it had entered into an agreement to acquire ProQuest, a leading global software, data and analytics provider to academic, research and national institutions, from Cambridge Information Group (“CIG”), Atairos and certain other equity holders (the “Seller Group”) for approximately $4,000,000 in cash and 46,910,923 Clarivate ordinary shares. Closing of the ProQuest transaction is subject to customary conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
On July 28, 2021, Clarivate received a second request for documents and other information from the Federal Trade Commission (the “FTC”), which is reviewing the ProQuest acquisition pursuant to authority under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. In view of receiving the FTC’s second request, on July 28, 2021, Clarivate and the Seller Group entered into an amendment (the “Amendment”) to the Transaction Agreement extending the outside date for completion of the acquisition from November 8, 2021 to December 31, 2021. Although the Company hopes to be in a position to complete the proposed acquisition in the second half of 2021, the Company and the Seller Group each have the option to extend the new outside date to April 29, 2022.

If the ProQuest acquisition is not completed by November 8, 2021, Clarivate Science Holdings Corporation would be obligated to redeem all outstanding Senior Notes (2029) and Senior Secured Notes (2028) whether or not Clarivate expects the ProQuest acquisition to be completed within the timetable contemplated by the Amendment. Clarivate has obtained a $2,000,000 unsecured bridge facility to provide certainty of funds for completion of the ProQuest acquisition. The bridge facility has a variable contingent fee structure based on the length of time the commitment is outstanding. The facility matures within 1 year of the funding.

Management has evaluated the impact of events that have occurred subsequent to June 30, 2021. Based on this evaluation, other than disclosed within these Condensed Consolidated Financial Statements and related notes, the Company has determined no other events were required to be recognized or disclosed.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our Annual Report on Form 10-K/A and the unaudited Condensed Consolidated Financial Statements, including the notes thereto, included elsewhere in this report. Certain statements in this section are forward-looking statements that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations and intentions. Our future results and financial condition may differ materially from those we currently anticipate as a result of the factors we describe under Item 1A. Risk Factors. Certain income statement amounts discussed herein are presented on an actual and on a constant currency basis. We calculate constant currency by converting the non-U.S. dollar income statement balances for the most current year to U.S. dollars by applying the average exchange rates of the preceding year. Certain amounts that appear in this section may not sum due to rounding.
Restatement of Previously Issued Consolidated Financial Statements
As disclosed in our Amended Form 10-K, we have restated our previously issued consolidated financial statements contained in the Original Form 10-K. In addition, we have restated certain previously reported financial information at December 31, 2020 and for the three and six months period ended June 30, 2020 in this Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, including but not limited to information within the Results of Operations, Non-GAAP Financial Measures and Liquidity and Capital Resource sections.

See Note 25 - Restatement of Previously Issued Condensed Financial Statements, in Item 1, Financial Statements and Supplementary Data, for additional information related to the restatement, including descriptions of the misstatements and the impacts to previously reported financial information.

Overview
We offer a collection of high quality, market leading information and analytic products and solutions through our Science segment and Intellectual Property (“IP”) segment, which are also our reportable segments. Our Science segment consists of our Academic and Life Sciences Product Lines, and our IP segment consists of our Patents, Trademarks, Domains and IP Management Product Lines. Our highly curated Web of Science products are offered primarily to universities, helping them navigate scientific literature, facilitate research and evaluate and measure the quality of researchers, institutions and scientific journals across various academic disciplines. Our Life Sciences Product Line offerings serve the content and analytical needs of pharmaceutical and biotechnology companies across the drug development lifecycle, including content on discovery and pre-clinical research, competitive intelligence, regulatory information and clinical trials. Our Patents Product Line offerings help patent and legal professionals in R&D intensive businesses evaluate the novelty and patentability of new ideas and products to help protect and research patents. Our Trademark Product Line allow businesses and legal professionals to access our comprehensive trademark database. Our Domains Product Line offerings include enterprise web domain portfolio management products and services. Finally, our IP Management Product Line provides technology solutions and legal support services across the IP lifecycle, including renewal and validation of IP rights on behalf of customers and the development and provision of IP management software, as well as other patent activities including patent searching, IP filing, prosecution support and trademark watching.

Factors Affecting the Comparability of Our Results of Operations
The disclosures set forth below updates, and should be read together with, the disclosures in the Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Factors Affecting the Comparability of Our Results of Operations section, in our Annual Report on Form 10-K/A.
Strategic Acquisitions
Acquisition of Decision Resources Group
On February 28, 2020, we acquired 100% of the assets, liabilities and equity interests of Decision Resources Group ("DRG"), a premier provider of high-value data, analytics and insights products and services to the healthcare industry, from Piramal Enterprises Limited ("PEL"), which is a part of global business conglomerate Piramal Group. The acquisition helps us expand our core businesses and provides us with the potential to grow in the Life Sciences Product Line.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
The aggregate consideration paid in connection with the closing of the DRG acquisition was $964,997, composed of $900,000 of base cash plus $6,100 of adjusted closing cash paid on the closing date and 2,895,638 of the Company's ordinary shares issued to PEL in March 2021. The contingent stock consideration was valued at $58,897 on the closing date and was revalued at each period end until its issuance date and was included in Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets.
Acquisition of CPA Global
On October 1, 2020, we acquired 100% of the assets, liabilities and equity interests of CPA Global, a global leader in intellectual property software and tech-enabled services. Clarivate acquired all of the outstanding shares of CPA Global in a cash and stock transaction. The aggregate consideration in connection with the closing of the CPA Global acquisition was $8,740,556, net of $99,043 cash acquired, including an equity hold-back consideration of $46,485. The aggregate consideration was composed of (i) $6,761,515 from the issuance of up to 218,183,778 ordinary shares to Redtop Holdings Limited, a portfolio company of Leonard Green & Partners, L.P., representing approximately 35% pro forma fully diluted ownership of Clarivate and (ii) approximately $2,078,084 in cash to fund the repayment of CPA Global's parent company outstanding debt of $2,055,822 and related interest swap termination fee of $22,262. Of the 218,306,663 ordinary shares issuable in the acquisition, Clarivate issued 216,683,778 ordinary shares on October 1, 2020.
In conjunction with the closing of the transaction, the Company incurred an incremental $1,600,000 of term loans under our term loan facility and used the net proceeds from such borrowings, together with cash on hand, to fund the transaction. As a result of the additional term loan and the additional term loan associated with the DRG acquisition, we had $2,833,100 outstanding on our term loan facility at June 30, 2021.

Acquisition of Beijing IncoPat Technology Co, Ltd.
On October 26, 2020, we acquired 100% of the assets, liabilities and equity interests of Beijing IncoPat Technology Co., Ltd. (“IncoPat”), a leading patent information service provider in China via cash on hand for $52,133. IncoPat is complementary to Clarivate’s intellectual property portfolio.

Acquisition of Hanlim IPS. Co., Ltd.

On November 23, 2020, we acquired 100% of the assets, liabilities and equity interests of Hanlim IPS. Co., Ltd. ("Hanlim"), a leading patent renewal and information service provider in South Korea via cash on hand for $9,254. Hanlim is complementary to Clarivate’s intellectual property portfolio.

Dispositions
Disposition of Techstreet

On November 6, 2020, the Company completed the sale of certain assets and liabilities of certain non-core assets and liabilities within the IP segment for a total purchase price of $42,832. A gain of $28,140 was recognized in the Consolidated Statements of Operations within Other operating (expense) income, net during the four quarter of 2020.

Public Ordinary and Mandatory Convertible Preferred Share Offerings

February 2020 Ordinary Share Offering
In February 2020, we completed an underwritten public offering of 27,600,000 of our ordinary shares, generating proceeds of $540,736, which we used to fund a portion of the cash consideration for the DRG acquisition. In addition, we incurred an incremental $360,000 of term loans under our term loan facility and used the net proceeds from such borrowings, together with cash on hand, to fund the remainder of the cash consideration for the DRG acquisition and to pay related fees and expenses.
June 2020 Ordinary Share Offering
In June 2020, we completed an underwritten public offering of 50,400,000 of our ordinary shares (including 2,400,000 ordinary shares pursuant to the underwriters' option to purchase up to an additional 7,200,000 ordinary shares from certain selling shareholders) at a share price of $22.50. Of the 50,400,000 ordinary shares, 14,000,000 ordinary shares were offered by Clarivate and 36,400,000 ordinary shares were offered by selling shareholders, including 20,821,765 ordinary shares
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
from Onex, 8,097,354 ordinary shares from Baring and 7,480,881 ordinary shares from Directors, Executive Officers and other shareholders. The underwriters' option to purchase the remaining 4,800,000 ordinary shares from certain selling shareholders expired on July 3, 2020.
The Company received approximately $304,030 in net proceeds from the sale of ordinary shares offered by the Company, after deducting underwriting discounts and estimated offering expenses payable. We used the net proceeds, in conjunction with the new $1,600,000 incremental term loan facility available to Clarivate on October 1, 2020, to fund the repayment of CPA Global parent company's outstanding debt. The Company did not receive any proceeds from the secondary ordinary shares sold by the selling shareholders.
June 2021 Ordinary Share Offering
In June 2021, we completed an underwritten public offering of 44,230,768 of our ordinary shares at a share price of $26.00, of which 28,846,154 ordinary shares were issued and sold by Clarivate and 15,384,614 were sold by selling shareholders (which included 5,769,230 ordinary shares that the underwriters purchased pursuant to their option to purchase additional shares). The ordinary shares sold by selling shareholders included 10,562,882 ordinary shares from Onex, 4,107,787 ordinary shares from Baring and 713,945 ordinary shares from Directors, Executive Officers and other shareholders.
The Company received approximately $728,768 in net proceeds from the sale of ordinary shares offered by the Company, after deducting underwriting discounts and estimated offering expenses payable. We intend to use the net proceeds to finance a portion of the purchase price for the ProQuest acquisition, if consummated, which we announced on May 17, 2021. If the ProQuest acquisition is not consummated, Clarivate intends to use the net proceeds received by it from the Offerings for general corporate purposes. The Company did not receive any proceeds from the secondary ordinary shares sold by the selling shareholders.
June 2021 Mandatory Convertible Preferred Share Offering ("MCPS")
In June 2021, concurrently with the June 2021 Ordinary Share Offering, we completed an underwritten public offering of 14,375,000 of our 5.25% Series A Mandatory Convertible Preferred Shares (which included 1,875,000 of our MCPS that the underwriters purchased pursuant to their option to purchase additional shares).

The Company received approximately $1,393,222 in net proceeds from the sale of our MCPS offered by the Company, after deducting underwriting discounts and estimated offering expenses payable. We intend to use the net proceeds to finance a portion of the purchase price for the ProQuest acquisition, if consummated, which we announced on May 17, 2021. If the ProQuest acquisition is not consummated, Clarivate intends to use the net proceeds received by it from the Offerings for general corporate purposes.

Dividends on the MCPS will be payable on a cumulative basis when declared by Clarivate’s board of directors, at an annual rate of 5.25% of the liquidation preference of $100.00 per share. Clarivate may pay declared dividends in cash or, subject to certain limitations, in Clarivate ordinary shares, or in any combination of cash and ordinary shares, on March 15, June 15, September 15 and December 15 of each year, commencing on September 15, 2021 and ending on June 1, 2024.

Private Placement Notes Offering - June 2021 Senior Secured Notes and Senior Notes Offering
In June 2021, we issued a private placement offering of $1,000,000 in aggregate principal amount of Senior Secured Notes due June 30, 2028 (the "Secured Notes") and $1,000,000 in aggregate principle amount of Senior Notes due June 30, 2029 (the "Unsecured Notes" and, together with the Secured Notes, the "Notes") bearing interest at a rate of 3.875% and 4.875% per annum, respectively. The interest is payable semi-annually to holders of record on June 30 and December 30 of each year, commencing on December 30, 2021.The Notes due 2028 and 2029 were issued by Clarivate Science Holdings Corporation (the "Issuer"), an indirect wholly-owned subsidiary of Clarivate.
We intend to use the net proceeds to finance a portion of the purchase price for the ProQuest acquisition, which we announced on May 17, 2021, and to pay related fees and expenses. Concurrently with the closing of this offering, the Issuer deposited the gross proceeds into segregated escrow accounts. If the escrow conditions (which include conditions relating to the consummation of the ProQuest acquisition) are not satisfied on or prior to November 8, 2021, or if it is otherwise determined that any of the applicable escrow release conditions will not be satisfied, the Notes will be redeemed at a price equal to 100% of the initial issue price of the Notes, plus accrued and unpaid interest, if any, from June 24, 2021 (the "Issue Date" of the Notes), up to, but excluding, the date of such special mandatory redemption. Prior to closing of the ProQuest acquisition, the Notes are not guaranteed, but have been secured by a first-priority security interest in the escrow accounts.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
Upon consummation of the ProQuest acquisition, the Notes will be guaranteed on a joint and several basis by each of Clarivate’s indirect subsidiaries that is an obligor or guarantor under Clarivate’s existing credit facilities and senior secured notes due 2026. The Secured Notes are secured on a first-lien pari passu basis with borrowings under the existing credit facilities and senior secured notes, and the Unsecured Notes are the Issuer’s and such guarantors’ unsecured obligations.

Restructuring
During 2020 and 2019, we engaged a strategic consulting firm to assist us in optimizing our structure and cost base. As a result, we have implemented several cost-saving and margin improvement programs designed to generate substantial incremental cash flow including the Operation Simplification and Optimization Program, the DRG Acquisition Integration Program and the CPA Global Acquisition Integration and Optimization Program. During 2021, we approved the One Clarivate restructuring plan, which streamlines operations within targeted areas of the Company. The program will result in a reduction in operational costs, with the primary driver of the cost saving being from a reduction in workforce.

Operation Simplification and Optimization Program

During the fourth quarter of 2019, the Company approved restructuring actions designed to streamline our operations by simplifying our organization and focusing on two segments in planned phases. Approximately $43,952 costs have been incurred to date under the program which was substantially complete as of June 30, 2021.

During the three months ended June 30, 2021 and 2020, the Company recorded pre-tax charges of $1,206 and $12,522 recognized within Restructuring and impairment in the Consolidated Statements of Operations. These charges were composed of $972 and $8,177 of severance and related benefit costs, $0 and $2,761 of contract exit costs and legal and advisory fees, and $234 and $4,908 of lease impairment and location exit costs. During the six months ended June 30, 2021 and 2020, the Company recorded pre-tax charges of $1,635 and $20,276 recognized within Restructuring and impairment in the Consolidated Statements of Operations. These charges were composed of $1,224 and $11,438 of severance and related benefit costs, $49 and $3,930 of contract exit costs and legal and advisory fees, and $362 and 4,908 of lease impairment and location exit costs.

DRG Acquisition Integration Program

During the second quarter of 2020, the Company approved restructuring actions designed to eliminate duplicative costs in planned phases following the acquisition of DRG. Approximately $7,099 of costs have been incurred to date under the program which was substantially complete as of June 30, 2021.

During the three months ended June 30, 2021 and 2020, the Company recorded pre-tax charges of $235 and $3,324 recognized within Restructuring and impairment in the Consolidated Statements of Operations. These charges were composed of $235 and $3,312 of severance and related benefit costs and $0 and $12 of contract exit costs and legal and advisory fees. During the six months ended June 30, 2021 and 2020, the Company recorded pre-tax charges of $502 and $3,324 recognized within Restructuring and impairment in the Consolidated Statements of Operations. These charges were composed of $427 and $3,312 of severance and related benefit costs, $0 and $12 of contract exit costs and legal and advisory fees, and $75 and $0 of lease impairment and location exit costs.

CPA Global Acquisition Integration and Optimization Program

During the fourth quarter of 2020, the Company approved restructuring actions designed to eliminate duplicative costs following the acquisition of CPA Global and to streamline our operations simplifying our organization and reducing our leasing portfolio. As a result of these actions, the company expects to record total pre-tax restructuring charges of approximately $124,414 for all phases of the program. Approximately $116,434 of costs have been incurred to date under the program and $7,980 are expected to be incurred in a future period. This estimate includes approximately $3,715 for severance related charges, approximately $4,265 of estimated maximum lease exit costs.

During the three months ended June 30, 2021, and 2020, the Company recorded pre-tax charges of $38,215 and $0 recognized within Restructuring and impairment in the Consolidated Statements of Operations. These charges were composed of $13,982 and $0 of severance and related benefit costs, $1,790 and $0 of contract exit costs and legal and advisory fees, and $22,443 and $0 of lease impairment and location exit costs. During the six months ended June 30, 2021, and 2020, the Company recorded pre-tax charges of $102,186 and $0 recognized within Restructuring and impairment in the
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
Consolidated Statements of Operations. These charges were composed of $32,546 and $0 of severance and related benefit costs, $2,183 and $0 of contract exit costs and legal and advisory fees, and $67,457 and $0 of lease impairment and location exit costs.

One Clarivate Program

During the second quarter of 2021, the Company approved restructuring actions to streamline operations within targeted areas of the Company. The program will result in a reduction in operational costs, with the primary driver of the cost saving being from a reduction in workforce. As a result of these actions, the company expects to record total pre-tax restructuring charges of approximately $5,000 for all approved phases of the program. Approximately $2,044 of costs have been incurred to date under the program and $2,956 are expected to be incurred in a future period, all related to severance charges.
During the three and six months ended June 30, 2021, and 2020, the Company recorded pre-tax charges of $2,044 and $0 recognized within Restructuring and impairment in the Consolidated Statements of Operations. These charges were composed of $2,044 and $0 of severance and related benefit costs during the three and six months ended June 30, 2021, and 2020, respectively.

Key Performance Indicators
We regularly monitor the following key performance indicators to evaluate our business and trends, measure our performance, prepare financial projections and make strategic decisions.
Adjusted Revenues
We present Adjusted Revenues, which excludes the impact of the deferred revenue purchase accounting adjustments, which is allowable under the Company's debt covenant calculation, and revenues from divestitures. We present these measures because we believe it is useful to readers to better understand the underlying trends in our operations. See - Certain Non-GAAP Measures - Adjusted Revenues below for important information on the limitations of Adjusted Revenues and their reconciliation to the respective revenues measures under U.S. GAAP.

Adjusted EBITDA and Adjusted EBITDA margin
Adjusted EBITDA is presented because it is a basis upon which our management assesses our performance, and we believe it is useful for investors to understand the underlying trends of our operations. See Certain Non-GAAP Measures - Adjusted EBITDA and Adjusted EBITDA margin for important information on the limitations of Adjusted EBITDA and its reconciliation to our Net loss under U.S. GAAP. Adjusted EBITDA represents net loss before provision for income taxes, depreciation and amortization, interest income and expense adjusted to exclude acquisition or disposal-related transaction costs (such costs include net income from continuing operations before provision for income taxes, depreciation and amortization and interest income and expense from divestitures), stock-based compensation, unrealized foreign currency gains/(losses), costs associated with the transition services agreement with Thomson Reuters, which we entered into in connection with our separation from Thomson Reuters in 2016, separation and integration costs, transformational and restructuring expenses, acquisition-related adjustments to deferred revenues, costs related to our merger with Churchill Capital Corp in 2019, non-operating income or expense, the impact of certain non-cash, mark to market adjustments on financial instruments and other items that are included in net income for the period that the Company does not consider indicative of its ongoing operating performance and certain unusual items impacting results in a particular period. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by Adjusted Revenues.
Annualized Contract Value
Annualized Contract Value (“ACV”), at a given point in time, represents the annualized value for the next 12 months of subscription-based client license agreements, assuming that all expiring license agreements during that period are renewed at their current price level. License agreements may cover more than one product and the standard subscription period for each license agreement typically runs for no less than 12 months. The renewal period for our subscriptions starts 90 days before the end of the current subscription period, during which customers must provide notice of whether they intend to renew or cancel the license agreement.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
An initial subscription period for new customers may be for a term of less than 12 months, in certain circumstances. Most of our customers, however, opt to enter into a full 12-month initial subscription period, resulting in renewal periods spread throughout the calendar year. Customers that license more than one subscription-based product may, at any point during the renewal period, provide notice of their intent to renew only certain subscriptions within the license agreement and cancel other subscriptions, which we typically refer to as a downgrade. In other instances, customers may upgrade their license agreements by adding additional subscription-based products to the original agreement. Our calculation of ACV includes the impact of downgrades, upgrades, price increases, and cancellations that have occurred as of the reporting period. For avoidance of doubt, ACV does not include fees associated with transactional and re-occurring revenues.
We monitor ACV because it represents a leading indicator of the potential subscription revenues that may be generated from our existing customer base over the upcoming 12-month period. Measurement of subscription revenues as a key operating metric is particularly relevant because a majority of our revenues are generated through subscription-based and re-occurring revenues, which accounted for 79.9% and 78.2% of our total revenues for the three months ended June 30, 2021 and 2020 and 80.2% and 78.9% for the six months ended June 30, 2021, and 2020, respectively. We calculate and monitor ACV for each of our segments, and use the metric as part of our evaluation of our business and trends.
The amount of actual subscription revenues that we earn over any 12-month period are likely to differ from ACV at the beginning of that period, sometimes significantly. This may occur for numerous reasons, including subsequent changes in annual revenue renewal rates, impact of price increases (or decreases), cancellations, upgrades and downgrades, and acquisitions and divestitures.
We calculate the ACV on a constant currency basis to exclude the effect of foreign currency fluctuations.
The following table presents ACV as of the dates indicated:
  June 30, Change
(dollars in thousands) 2021   2020   2021 vs. 2020
Annualized Contract Value $ 924,366    $ 852,837    $ 71,529    8.4  %
Annual Revenue Renewal Rates
Our revenues are primarily subscription based, which leads to high revenue predictability. Our ability to retain existing subscription customers is a key performance indicator that helps explain the evolution of our historical results and is a leading indicator of our revenues and cash flows for the subsequent reporting period.
“Annual revenue renewal rate” is the metric we use to determine renewal levels by existing customers across all of our Segments, and is a leading indicator of renewal trends, which impact the evolution of our ACV and results of operations. We calculate the annual revenue renewal rate for a given period by dividing (a) the annualized dollar value of existing subscription product license agreements that are renewed during that period, including the value of any product downgrades, by (b) the annualized dollar value of existing subscription product license agreements that come up for renewal in that period. “Open renewals,” which we define as existing subscription product license agreements that come up for renewal, but are neither renewed nor canceled by customers during the applicable reposting period, are excluded from both the numerator and denominator of the calculation. We calculate the annual revenue renewal rate to reflect the value of product downgrades but not the value of product upgrades upon renewal, because upgrades reflect the purchase of additional services.
The impact of upgrades, new subscriptions and product price increases is reflected in ACV, but not in annual revenue renewal rates. Our annual revenue renewal rates were 90.8% and 92.6% for the six months ended June 30, 2021 and 2020, respectively.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
Key Components of Our Results of Operations
Revenues, net
The Company disaggregates revenue based on revenue recognition pattern. Subscription based revenues recognize revenue over time, whereas our transactional and re-occurring revenues recognize revenue at a point in time. The Company believes subscription, transaction and re-occurring is reflective of how the Company manages the business.

Subscription-based revenues are recurring revenues that are earned under annual, multi-year, or evergreen contracts, pursuant to which we license the right to use our products to our customers or provide professional services. Revenues from the sale of subscription data and analytics solutions are typically invoiced annually in advance and recognized ratably over the year as revenues are earned. Subscription revenues are driven by annual revenue renewal rates, new subscription business, price increases on existing subscription business and subscription upgrades and downgrades from recurring customers. Substantially all of our historical deferred revenues purchase accounting adjustments are related to subscription revenues.

Transactional revenues are earned under contracts for specific deliverables that are typically quoted on a product, data set or project basis and often derived from repeat customers, including customers that also generate subscription-based revenues. Transactional products and services are invoiced according to the terms of the contract, typically in arrears. Transactional content revenues are usually delivered to the customer instantly or in a short period of time, at which time revenues are recognized. Transactional revenues also include, to a lesser extent, professional services, which are typically performed under contracts that vary in length from several months to years for multi-year projects and are typically invoiced based on the achievement of milestones. The most significant components of our transactional revenues include our “clearance searching” and “backfiles” products. Recurring revenues are earned under contracts for specific deliverables that are typically quoted on a product, data set or project basis and often derived from repeat customers. These contracts include either evergreen clauses, in which at least six month advance notice is required prior to cancellation, or the contract is for multiple years.

Re-occurring revenues are earned under contracts for specific deliverables that are typically quoted on a product, data set, or project basis and often derived from repeat customers purchasing cyclical products. These contracts include either evergreen clauses, in which at least six month advance notice is required prior to cancellation, or the contract is for multiple years. Due to the cyclical nature of the Company’s re-occurring products, and there typically being upfront setup time with the customer, the re-occurring revenue stream benefits from an established customer base, with minimal customer attrition. A primary driver of the re-occurring revenue stream is the ‘renewal’ business obtained from the CPA global acquisition. Revenue from this revenue stream is typically recognized upon delivery.

Cost of Revenues
Cost of revenues consists of costs related to the production, servicing and maintenance of our products and are composed primarily of related personnel costs, such as salaries, benefits and bonuses for employees, fees for contracted labor, and data center services and licensing costs. Cost of revenues also includes the costs to acquire or produce content, royalties payable and non-capitalized R&D expenses. Cost of revenues does not include production costs related to internally generated software, which are capitalized.
Selling, General and Administrative
Selling, general and administrative costs consist primarily of salaries, benefits, commission and bonuses for the executive, finance and accounting, human resources, administrative, sales and marketing personnel, third-party professional services fees, such as legal and accounting expenses, facilities rent and utilities and technology costs associated with our corporate infrastructure. Also included within these costs are transaction expenses including costs incurred to complete business combination transactions, including acquisitions, dispositions and capital market activities and include advisory, legal, and other professional and consulting costs.
Depreciation
Depreciation expense relates to our fixed assets, including mainly computer hardware and leasehold improvements, furniture and fixtures. These assets are depreciated over their expected useful lives, and in the case of leasehold improvements over the shorter of their useful life or the duration of the related lease.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
Amortization
Amortization expense relates to our finite-lived intangible assets, including mainly databases and content, customer relationships, internally generated computer software and trade names. These assets are amortized over periods of between two and twenty three years. Definite-lived intangible assets are tested for impairment when indicators are present, and, if impaired, are written down to fair value based on discounted cash flows.
Restructuring and Impairment
Restructuring and impairment expense includes costs associated with involuntary termination benefits provided to employees under the terms of a one-time benefit arrangement, ongoing benefit arrangements, certain contract termination costs, other costs associated with an exit or disposal activity and impairment charges associated with right of use assets in which the Company has ceased the use of during the period.
Other Operating Income (Expense), Net
Other operating income (expense), net consists of gains or losses related to the disposal of our assets, asset impairments or write-downs and the consolidated impact of re-measurement of the assets and liabilities of our company, sublease income, gain recognized on foreign exchange contract settlement and our subsidiaries that are denominated in currencies other than each relevant entity's functional currency.
Mark to Market Adjustment on Financial Instruments
Mark to market adjustment on financial instruments consists of the mark to market accounting adjustments related to certain of the Company's warrants issued to the founders of Churchill Capital Corp, a special purpose acquisition company or “SPAC” with which the Company consummated a business combination transaction in May 2019.
Interest Expense and Amortization of Debt Discount, Net
Interest expense, net consists of expense related to interest on our borrowings under our term loan facility and our secured notes due 2026, senior unsecured notes due in 2029 and senior secured notes due in 2028, the amortization and write off of debt issuance costs and original discount, and interest related to certain derivative instruments.
Provision for Income Taxes
A provision for income tax is calculated for each of the jurisdictions in which we operate. The benefit or provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The benefit or provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the book and tax bases of assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Interest accrued related to unrecognized tax benefits and income tax related penalties are included in the provision for income taxes.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
Results of Operations
The following table presents the results of operations for the three months ended June 30, 2021, and 2020:
Three months ended June 30, Change
2021 vs. 2020
(in thousands, except percentages) 2021 2020
(As Restated) 		$ %
Revenues, net $ 445,645  $ 273,500  $ 172,145  62.9  %
Operating expenses:
Cost of revenues (136,607) (92,379) 44,228  47.9  %
Selling, general and administrative costs (149,814) (103,665) 46,149  44.5  %
Depreciation (3,253) (2,904) 349  12.0  %
Amortization (126,923) (53,241) 73,682  138.4  %
Restructuring and impairment (41,700) (15,846) 25,854  163.2  %
Other operating income, net 900  8,781  (7,881) (89.8) %
Total operating expenses (457,397) (259,254) 198,143  76.4  %
(Loss) income from operations (11,752) 14,246  25,998  182.5  %
Mark to market adjustment on financial instruments (21,021) (23,790) (2,769) (11.6) %
Loss before interest expense and income tax (32,773) (9,544) 23,229  243.4  %
Interest expense and amortization of debt discount, net (38,569) (21,122) 17,447  82.6  %
Loss before income tax (71,342) (30,666) 40,676  132.6  %
(Provision) benefit for income taxes (10,868) 5,385  16,253  301.8  %
Net loss $ (82,210) $ (25,281) $ 56,929  225.2  %
The following table presents the results of operations for the six months ended June 30, 2021, and 2020:
Six Months Ended June 30, Change
2021 vs. 2020
(in thousands, except percentages) 2021 2020
(As Restated) 		$ %
Revenues, net $ 874,075  $ 514,092  $ 359,983  70.0  %
Operating expenses:
Cost of revenues (275,348) (175,060) 100,288  57.3  %
Selling, general and administrative costs (261,159) (236,721) 24,438  10.3  %
Depreciation (6,586) (5,233) 1,353  25.9  %
Amortization (255,244) (102,353) 152,891  149.4  %
Restructuring and impairment (106,367) (23,600) 82,767  350.7  %
Other operating (expense) income, net (15,330) 14,813  (30,143) (203.5) %
Total operating expenses (920,034) (528,154) 391,880  74.2  %
Loss from operations (45,959) (14,062) 31,897  226.8  %
Mark to market adjustment on financial instruments 30,194  (79,422) (109,616) (138.0) %
Loss before interest expense and income tax (15,765) (93,484) (77,719) (83.1) %
Interest expense and amortization of debt discount, net (75,962) (52,062) 23,900  45.9  %
Loss before income tax (91,727) (145,546) (53,819) (37.0) %
Provision for income taxes (14,437) (9,368) 5,069  54.1  %
Net loss $ (106,164) $ (154,914) $ (48,750) (31.5) %
66
CLARIVATE PLC
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
Revenues, net
Total Revenue
Revenues, net of $445,645 for the three months ended June 30, 2021, increased by $172,145, or 62.9%, from $273,500 for the three months ended June 30, 2020. On a constant currency basis, Revenues, net increased by $160,125, or 58.5% for the three months ended June 30, 2021. Revenues, net of $874,075 for the six months ended June 30, 2021, increased by $359,983, or 70.0%, from $514,092 for the six months ended June 30, 2020. On a constant currency basis, Revenues, net increased by $340,054, or 66.1% for the six months ended June 30, 2021.
Adjusted Revenues of $447,014, which excludes the impact of the deferred revenues adjustment as a result of purchase accounting, in the three months ended June 30, 2021 increased by $170,082, or 61.4%, from $276,932 for the three months ended June 30, 2020. On a constant currency basis, Adjusted Revenues increased by $158,062, or 57.1% for the three months ended June 30, 2021. Adjusted Revenues of $878,468, for the six months ended June 30, 2021 increased by $359,062, or 69.1%, from $519,406 for the six months ended June 30, 2020. On a constant currency basis, Adjusted Revenues increased by $339,133, or 65.3% for the six months ended June 30, 2021. For an explanation of our calculation of Adjusted Revenues and the limitations as to its usefulness, see Certain Non-GAAP Measures - Adjusted Revenues.

Revenue by Transaction Type

The following tables present the amounts of our subscription, transactional and re-occurring revenues for the periods indicated, as well the drivers of the variances between periods, including as a percentage of such revenues.
Variance Increase/(Decrease)
Percentage of Factors Increase/(Decrease)
Three months ended June 30,
Total Variance (Dollars)
Total Variance (Percentage)
Acquisitions
Disposals
FX Impact
Organic
(in thousands, except percentages) 2021 2020
Subscription revenues $ 243,562  $ 216,569  $ 26,993  12.5  % 10.8  % (4.3) % 4.6  % 1.4  %
Re-occurring revenues 113,683  —  113,683  100.0  % 100.0  % —  % —  % —  %
Transactional revenues 89,769  60,363  29,406  48.7  % 37.2  % (7.7) % 3.4  % 15.8  %
Deferred revenues adjustment (1)
(1,369) (3,432) 2,063  60.1  % (39.2) % —  % —  % 99.4  %
Revenues, net $ 445,645  $ 273,500  $ 172,145  62.9  % 57.8  % (5.1) % 4.4  % 5.8  %
Deferred revenues adjustment (1)
1,369  3,432  (2,063) (60.1) % 39.2  % —  % —  % (99.4) %
Adjusted revenues, net $ 447,014  $ 276,932  $ 170,082  61.4  % 57.6  % (5.0) % 4.3  % 4.5  %
(1)Reflects the deferred revenues adjustment made as a result of purchase accounting
Subscription revenues of $243,562 for the three months ended June 30, 2021, increased by $26,993, or 12.5% from $216,569 for the three months ended June 30, 2020. On a constant currency basis, subscription revenues increased by $17,034, or 7.9%. Acquisitive subscription growth was primarily generated from the CPA Global Transaction. Disposal subscription revenues reduction was derived from the Techstreet Transaction. Organic subscription revenues increased 1.4% on a constant currency basis, due to the normalization of timing benefits realized in the first quarter of 2021 (organic subscription revenues increased 6.1% in the first quarter of 2021), as well as more disciplined operating procedures. For the first six months ended June 30, 2021, organic subscription revenues increased 3.6% at constant currency, compared to the prior year period.

Re-occurring revenues of $113,683 for the three months ended June 30, 2021, increased by $113,683, or 100.0% from the three months ended June 30, 2020 due to acquisitive growth generated from the CPA Global Transaction.
Transactional revenues of $89,769 for the three months ended June 30, 2021, increased by $29,406, or 48.7% from $60,363 for the three months ended June 30, 2020. On a constant currency basis, transactional revenues increased by $27,345, or 45.3%. Acquisitive transactional growth was primarily generated from the CPA Global Transaction. Disposal transactional reduction was derived from the Techstreet Transaction. Organic transactional revenues increased due to an increase in trademark search volumes, stronger back file and custom data sales and strength in our professional services business lines.

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CLARIVATE PLC
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
Variance Increase/(Decrease)
Percentage of Factors Increase/(Decrease)
Six Months Ended June 30,
Total Variance (Dollars)
Total Variance (Percentage)
Acquisitions
Disposals
FX Impact
Organic
(in thousands, except percentages) 2021 2020
Subscription revenues $ 478,654  $ 409,804  $ 68,850  16.8  % 13.5  % (4.3) % 4.0  % 3.6  %
Re-occurring revenues 225,868  —  225,868  100.0  % 100.0  % —  % —  % —  %
Transactional revenues 173,946  109,602  64,344  58.7  % 52.1  % (9.7) % 3.1  % 13.3  %
Deferred revenues adjustment (1)
(4,393) (5,314) 921  17.3  % (81.8) % —  % —  % 99.2  %
Revenues, net $ 874,075  $ 514,092  $ 359,983  70.0  % 64.9  % (5.5) % 3.9  % 6.8  %
Deferred revenues adjustment (1)
4,393  5,314  (921) (17.3) % (81.8) % —  % —  % (99.2) %
Adjusted revenues, net $ 878,468  $ 519,406  $ 359,062  69.1  % 65.1  % (5.5) % 3.8  % 5.7  %
(1)Reflects the deferred revenues adjustment made as a result of purchase accounting
Subscription revenues of $478,654 for the six months ended June 30, 2021, increased by $68,850, or 16.8% from $409,804 for the six months ended June 30, 2020. On a constant currency basis, subscription revenues increased by $52,291, or 12.8%. Acquisitive subscription growth was primarily generated from the CPA Global Transaction and the DRG Transaction. Disposal subscription revenues reduction was derived from the Techstreet Transaction. Organic subscription revenues increased primarily due to price increases, the benefit of net installations in prior year and the timing benefits due to more disciplined operating procedures.

Re-occurring revenues of $225,868 for the six months ended June 30, 2021, increased by $225,868, or 100.0% from the six months ended June 30, 2020 due to acquisitive growth generated from the CPA Global Transaction.
Transactional revenues of $173,946 for the six months ended June 30, 2021, increased by $64,344, or 58.7% from $109,602 for the six months ended June 30, 2020. On a constant currency basis, transactional revenues increased by $60,974, or 55.6%. Acquisitive transactional growth was primarily generated from the DRG Transaction and CPA Global Transaction. Disposal transactional reduction was derived from the Techstreet Transaction. Organic transactional revenues increased due to an increase in trademark search volumes, stronger back file and custom data sales and strength in our professional services business lines.
Revenue by Geography
The below tables present our revenues split by geographic region, separating the impacts of the deferred revenues adjustment:
Variance Increase/(Decrease)
Percentage of Factors Increase/(Decrease)
Three months ended June 30,
Total Variance (Dollars)
Total Variance (Percentage)
Acquisitions
Disposals
FX Impact
Organic
(in thousands, except percentages)
2021 2020
Americas
$ 221,387  $ 142,586 
 
$ 78,801  55.3  % 53.2  % (7.2) % 0.7  % 8.6  %
Europe/Middle East/Africa
133,461  73,850 
 
59,611  80.7  % 73.5  % (2.8) % 9.6  % 0.4  %
Asia Pacific
92,166  60,496 
 
31,670  52.4  % 48.3  % (2.7) % 6.6  % 0.2  %
Deferred revenues adjustment (1)
(1,369) (3,432) 2,063  60.1  % (39.2) % —  % —  % 99.4  %
Revenues, net
$ 445,645  $ 273,500  $ 172,145  62.9  % 57.8  % (5.1) % 4.4  % 5.8  %
Deferred revenues adjustment (1)
1,369  3,432  (2,063) (60.1) % 39.2  % —  % —  % (99.4) %
Adjusted revenues, net $ 447,014  $ 276,932  $ 170,082  61.4  % 57.6  % (5.0) % 4.3  % 4.5  %
(1)Reflects the deferred revenues adjustment made as a result of purchase accounting

Acquisitive growth for all regions was primarily related to the CPA Global Transaction. Disposal reduction for all regions was derived from the Techstreet Transaction. On a constant currency basis, Americas revenues increased by $77,848, or 54.6%, with organic growth due to improved subscription and transactional revenues. Transactional revenue increased primarily due to trademark search volumes, stronger back file and custom data sales and strength in our professional
68
CLARIVATE PLC
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
services business lines. On a constant currency basis, Europe/Middle East/Africa revenues increased by $52,516, or 71.1%, primarily due to acquisitive growth and improved transactional revenues. Subscription revenue was impacted by normalization of timing benefits realized in the first quarter of 2021. On a constant currency basis, Asia Pacific revenues increased by $27,698, or 45.8%, primarily due to acquisitive growth.
Variance Increase/(Decrease)
Percentage of Factors Increase/(Decrease)
Six Months Ended June 30,
Total Variance (Dollars)
Total Variance (Percentage)
Acquisitions
Disposals
FX Impact
Organic
(in thousands, except percentages)
2021 2020
Americas
$ 424,620  $ 259,578 
 
$ 165,042  63.6  % 63.3  % (8.2) % 0.6  % 7.9  %
Europe/Middle East/Africa
265,546  140,645 
 
124,901  88.8  % 80.0  % (3.0) % 8.4  % 3.4  %
Asia Pacific
188,302  119,183 
 
69,119  58.0  % 51.5  % (2.6) % 5.6  % 3.4  %
Deferred revenues adjustment (1)
(4,393) (5,314) 921  17.3  % (81.8) % —  % —  % 99.2  %
Revenues, net
$ 874,075  $ 514,092  $ 359,983  70.0  % 64.9  % (5.5) % 3.9  % 6.8  %
Deferred revenues adjustment (1)
4,393  5,314  (921) (17.3) % 81.8  % —  % —  % (99.2) %
Adjusted revenues, net $ 878,468  $ 519,406  $ 359,062  69.1  % 65.1  % (5.5) % 3.8  % 5.7  %
(1)Reflects the deferred revenues adjustment made as a result of purchase accounting

Acquisitive growth for all regions was primarily related to the DRG Transaction and CPA Global Transaction. Disposal reduction for all regions was derived from the Techstreet Transaction. On a constant currency basis, Americas revenues increased by $163,583, or 63.0%, with organic growth due to improved subscription and transactional revenues. Transactional revenue increased primarily due to custom data sales and new product release. On a constant currency basis, Europe/Middle East/Africa revenues increased by $113,145, or 80.4%, primarily due to acquisitive growth and improved subscription revenues and transactional revenues. Subscription revenue growth reflects the benefit of net installations in prior year and the timing benefits due to more disciplined operating procedures. On a constant currency basis, Asia Pacific revenues increased by $62,405, or 52.4%, primarily due to acquisitive growth and improved subscription and transactional revenues.

Revenue by Segment

The following tables, and the discussions that follow, present our revenues by segment for the periods indicated.
Variance Increase/(Decrease)
Percentage of Factors Increase/(Decrease)

Three months ended June 30,
Total Variance (Dollars)
Total Variance (Percentage)
Acquisitions
Disposals
FX Impact
Organic
(in thousands, except percentages) 2021 2020
Science Segment $ 202,281  $ 183,671  $ 18,610  10.1  % —  % —  % 4.9  % 5.2  %
IP Segment 244,733  93,261  151,472  162.4  % 170.9  % (14.9) % 3.2  % 3.2  %
Deferred revenues adjustment(1)
(1,369) (3,432) 2,063  60.1  % (39.2) % —  % —  % 99.4  %
Revenues, net $ 445,645  $ 273,500  $ 172,145  62.9  % 57.8  % (5.1) % 4.4  % 5.8  %
Deferred revenues adjustment (1)
1,369  3,432  (2,063) (60.1) % 39.2  % —  % —  % (99.4) %
Adjusted revenues, net $ 447,014  $ 276,932  $ 170,082  61.4  % 57.6  % (5.0) % 4.3  % 4.5  %
(1)Reflects the deferred revenues adjustment made as a result of purchase accounting

Science Segment: Revenues of $202,281 for the three months ended June 30, 2021 increased by $18,610, or 10.1%, from $183,671 for the three months ended June 30, 2020. On a constant currency basis, revenues increased by $9,570, or 5.2%, primarily due to organic transactional revenue growth due to stronger back file and custom data sales and strength in professional services business lines. Organic subscription revenues growth reflected the normalization of timing benefits realized in the first quarter of 2021 due to more disciplined operating procedures.

69
CLARIVATE PLC
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
Intellectual Property Segment: Revenues of $244,733 for the three months ended June 30, 2021, increased by $151,472, or 162.4%, from $93,261 for the three months ended June 30, 2020. On a constant currency basis, revenues increased by $148,492, or 159.2%. Acquisitive growth was generated from the CPA Global Transaction, IncoPat Transaction, and the Hanlim Transaction. Disposal reduction was derived from the Techstreet Transaction. Organic revenues, on a constant currency basis grew due to growth in transactional revenue primarily due to improved trademark search volumes.

Variance Increase/(Decrease)
Percentage of Factors Increase/(Decrease)

Six Months Ended June 30,
Total Variance (Dollars)
Total Variance (Percentage)
Acquisitions
Disposals
FX Impact
Organic
(in thousands, except percentages) 2021 2020
Science Segment $ 393,579  $ 330,931  $ 62,648  18.9  % 7.1  % —  % 4.4  % 7.4  %
IP Segment 484,889  188,475  296,414  157.3  % 166.9  % (15.1) % 2.9  % 2.6  %
Deferred revenues adjustment(1)
(4,393) (5,314) 921  17.3  % (81.8) % —  % —  % 99.2  %
Revenues, net $ 874,075  $ 514,092  $ 359,983  70.0  % 64.9  % (5.5) % 3.9  % 6.8  %
Deferred revenues adjustment (1)
4,393  5,314  (921) (17.3) % 81.8  % —  % —  % (99.2) %
Adjusted revenues, net $ 878,468  $ 519,406  $ 359,062  69.1  % 65.1  % (5.5) % 3.8  % 5.7  %
(1)Reflects the deferred revenues adjustment made as a result of purchase accounting

Science Segment: Revenues of $393,579 for the six months ended June 30, 2021 increased by $62,648, or 18.9%, from $330,931 for the six months ended June 30, 2020. On a constant currency basis, revenues increased by $48,154, or 14.6%, primarily due to acquisitive growth and organic subscription and transactional revenue growth. Acquisitive growth was generated from the DRG Transaction and included a full six months of growth in 2021. Organic revenues increased due to favorable timing as well as growth resulting from stronger back file and custom data sales and strength in our professional services business lines.

Intellectual Property Segment: Revenues of $484,889 for the six months ended June 30, 2021, increased by $296,414, or 157.3%, from $188,475 for the six months ended June 30, 2020. On a constant currency basis, revenues increased by $290,979, or 154.4%. Acquisitive growth was generated from the CPA Global Transaction, IncoPat Transaction, and the Hanlim Transaction. Disposal reduction was derived from the Techstreet Transaction. Organic revenues, on a constant currency basis increased primarily due to growth in transactional revenue on improved trademark search transactional volumes.

Cost of Revenues

Cost of revenues of $136,607 for the three months ended June 30, 2021, increased by $44,228, or 47.9%, from $92,379 for the three months ended June 30, 2020. Cost of revenues of $275,348 for the six months ended June 30, 2021, increased by $100,288, or 57.3%, from $175,060 for the six months ended June 30, 2020. On a constant currency basis, cost of revenues increased by $41,594, or 45.0%, for the three months ended June 30, 2021. On a constant currency basis, cost of revenues increased by $95,759, or 54.7%, for the six months ended June 30, 2021. The increase for the three and six months ended June 30, 2021 was primarily due to additional costs related to the CPA Global Transaction, which was acquired in October 2020, as well as an increase in share-based compensation expenses, partially offset by the Techstreet divestiture in Q4 2020.
Selling, General and Administrative
Selling, general and administrative expense of $149,814 for the three months ended June 30, 2021, increased by $46,149, or 44.5%, from $103,665 for the three months ended June 30, 2020. On a constant currency basis, selling, general and administrative expense increased by $43,416, or 41.9%, for the three months ended June 30, 2021. The increase for the three months ended June 30, 2021 was due to increased costs associated with the CPA Global Transaction, partially offset by the Techstreet divestiture in Q4 2020. Selling, general and administrative expense of $261,159 for the six months ended June 30, 2021, increased by $24,438, or 10.3%, from $236,721 for the six months ended June 30, 2020. On a constant currency basis, selling, general and administrative expense increased by $20,079, or 8.5%, for the six months ended June 30, 2021. The increase for the six months ended June 30, 2021 was primarily due increased costs associated with the CPA Global Transaction, partially offset by a reduction in transaction expenses associated with the DRG acquisition in Q1 of 2020, the
70
CLARIVATE PLC
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
Techstreet divestiture in Q4 2020, a gain associated with the mark to market adjustment on contingent and phantom shares, and a reduction in employee related costs and outside services including consulting fees and marketing costs.
Depreciation
Depreciation expense of $3,253 for the three months ended June 30, 2021, increased by $349, or 12.0%, from $2,904 for the three months ended June 30, 2020. Depreciation expense of $6,586 for the six months ended June 30, 2021, increased by $1,353, or 25.9%, from $5,233 for the six months ended June 30, 2020. The increase for the three and six months ended June 30, 2021 was driven by the additional depreciation on assets acquired through the DRG Transaction and CPA Global Transaction.
Amortization
Amortization expense of $126,923 for the three months ended June 30, 2021, increased by $73,682, or 138.4%, from $53,241 for the three months ended June 30, 2020. Amortization expense of $255,244 for the six months ended June 30, 2021, increased by $152,891, or 149.4%, from $102,353 for the six months ended June 30, 2020. The increase for the three and six months ended June 30, 2021 was driven by an increase in the amortization of intangible assets acquired through the DRG Transaction, CPA Global Transaction, IncoPat Transaction, and Hanlim Transaction. This increase was offset by a decrease in amortization related to the Techstreet divestiture in Q4 2020.
Restructuring and Impairment
Restructuring and impairment charges of $41,700 for the three months ended June 30, 2021, increased by $25,854, or 163.2%, from $15,846 for the three months ended June 30, 2020. Restructuring and impairment charges of $106,367 for the six months ended June 30, 2021, increased by $82,767, or 350.7%, from $23,600 for the six months ended June 30, 2020. The increase for the three and six months ended June 30, 2021 was primarily driven by the acquisitions of DRG in February 2020 and CPA Global in October 2020, to streamline our operations by simplifying our organization and focusing on two segments, as well as costs associated with the One Clarivate Program, in which the Company approved restructuring actions to streamline operations within targeted areas of the Company. Additionally, during the three and six months ended June 30, 2021, we incurred impairment charges taken on right-of-use assets of $29,059 and $70,043, respectively, relating the exit and ceased use of leased properties, which were also significant drivers of the increase. The increase was partially offset by the wind down of cost initiatives following our merger with Churchill Capital Corp in 2019.
Other Operating Income (Expense), Net
Other operating income of $900 for the three months ended June 30, 2021, decreased by $7,881, or 89.8%, from other operating income of $8,781 for the three months ended June 30, 2020. Other operating expense of $15,330 for the six months ended June 30, 2021, increased by $30,143, or 203.5%, from other operating income of $14,813 for the six months ended June 30, 2020. The fluctuations were primarily driven by the consolidated impact of the remeasurement of the assets and liabilities of our Company that are denominated in currencies other than each relevant entity’s functional currency.
Mark to Market Adjustment on Financial Instruments
The mark to market adjustment relates to the Private Placement Warrants issued in a private placement concurrently with the Churchill Capital Corp initial public offering and still held by the initial holders. The mark to market adjustment on financial instruments resulted in a loss of $21,021 for the three months ended June 30, 2021, a change of 2,769, or 11.6%, compared to a loss of $23,790 for the three months ended June 30, 2020. The mark to market adjustment on financial instruments resulted in a gain of $30,194 for the six months ended June 30, 2021, a change of $109,616, or 138.0%, compared to a loss of $79,422 for the six months ended June 30, 2020. The fluctuations were primarily driven by the Black-Scholes option valuation model and change in the Company's share price for the three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020.
Interest Expense, Net
Interest expense, net of $38,569 for the three months ended June 30, 2021, increased by $17,447, or 82.6%, from $21,122 for the three months ended June 30, 2020. Interest expense, net of $75,962 for the six months ended June 30, 2021, increased by $23,900, or 45.9%, from $52,062 for the six months ended June 30, 2020. The increase was primarily attributed to the additional $360,000 incremental term loan borrowing in connection with the DRG Transaction in February
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CLARIVATE PLC
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
2020 and the $1,600,000 incremental term loan borrowing in connection with the CPA Global Transaction in October 2020. In addition, $1,447 of interest was attributable to the June 2021 private placement offering of $1,000,000 in aggregate principal amount of Secured Notes due June 30, 2028 and $1,000,000 in aggregate principle amount of Senior Notes due June 30, 2029, which will be paid irrespective of the consummation of the ProQuest acquisition.
Provision (benefit) for Income Taxes
Provision for income taxes of $10,868 on a pre-tax book loss of $71,342 for the three months ended June 30, 2021, increased by $16,253 from a benefit of $5,385 on a pre-tax book loss of $30,666 for the three months ended June 30, 2020. Provision for income taxes of $14,437 on a pre-tax book loss of $91,727 for the six months ended June 30, 2021, increased by $5,069 from a provision of $9,368 on a pre-tax book loss of $145,546 for the six months ended June 30, 2020. The effective tax rate being (15.7%)% for the six months ended June 30, 2021, compared to (6.4)% for the six months ended June 30, 2020. The overall increase in tax expense is due to the mix of taxing jurisdictions in which pre-tax profits and losses were recognized. The current year effective tax rate may not be indicative of our effective tax rates for future periods.

Certain Non-GAAP Measures
We include non-GAAP measures in this quarterly report, including Adjusted Revenues, Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow because they are a basis upon which our management assesses our performance and we believe they reflect the underlying trends and indicators of our business by allowing management to focus on the most meaningful indicators of our continuous operational performance.
Although we believe these measures are useful for investors for the same reasons, we recommend users of the financial statements to note these measures are not a substitute for GAAP financial measures or disclosures. We provide reconciliations of these non-GAAP measures to the corresponding most closely related GAAP measure.
Adjusted Revenues
We present Adjusted Revenues, which excludes the impact of the deferred revenues purchase accounting adjustments as a result of businesses that we have acquired. We present this measure because we believe it is useful to readers to better understand the underlying trends in our operations. Our presentation of Adjusted Revenues is for informational purposes only and is not necessarily indicative of our future results.

The following table presents our calculation of Adjusted Revenues for the three and six months ended June 30, 2021 and 2020, and a reconciliation of this measure to our Revenues, net for the same periods:

Three Months Ended June 30, Variance
(in thousands, except percentages) 2021 2020 $ %
Revenues, net $ 445,645  $ 273,500  $ 172,145  62.9  %
Deferred revenues adjustment 1,369  3,432  (2,063) (60.1) %
Adjusted revenues $ 447,014  $ 276,932  $ 170,082  61.4  %
  Six Months Ended June 30, Variance
(in thousands, except percentages) 2021 2020   $ %
Revenues, net $ 874,075  $ 514,092    $ 359,983    70.0  %
Deferred revenues adjustment 4,393  5,314    (921)   (17.3) %
Adjusted revenues $ 878,468    $ 519,406    $ 359,062    69.1  %
Adjusted EBITDA and Adjusted EBITDA margin
Adjusted EBITDA is presented because it is a basis upon which our management assesses our performance, and we believe it is useful for investors to understand the underlying trends of our operations. See Certain Non-GAAP Measures - Adjusted EBITDA and Adjusted EBITDA margin for important information on the limitations of Adjusted EBITDA and its reconciliation to our Net loss under GAAP. Adjusted EBITDA represents net (loss) income before provision for income taxes, depreciation and amortization, interest income and expense adjusted to exclude acquisition or disposal-related transaction costs (such costs include net income from continuing operations before provision for income taxes, depreciation
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CLARIVATE PLC
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
and amortization and interest income and expense from divestitures), stock-based compensation, unrealized foreign currency gains/(losses), costs associated with the transition services agreement with Thomson Reuters, which we entered into in connection with our separation from Thomson Reuters in 2016, separation and integration costs, transformational and restructuring expenses, acquisition-related adjustments to deferred revenues, costs related to our merger with Churchill Capital Corp in 2019, non-operating income or expense, the impact of certain non-cash, mark to market adjustments on financial instruments and other items that are included in net income for the period that the Company does not consider indicative of its ongoing operating performance and certain unusual items impacting results in a particular period. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by Adjusted Revenues.
Our presentation of Adjusted EBITDA and Adjusted EBITDA margin should not be construed as an inference that our future results will be unaffected by any of the adjusted items, or that our projections and estimates will be realized in their entirety or at all. In addition, because of these limitations, Adjusted EBITDA should not be considered as a measure of liquidity or discretionary cash available to us to fund our cash needs, including investing in the growth of our business and meeting our obligations.
The following table presents our calculation of Adjusted EBITDA for the three and six months ended June 30, 2021 and 2020, and reconciles these measures to our Net loss for the same periods:
  Three Months Ended June 30, Six Months Ended June 30,
(in thousands, except percentages) 2021 2020
(As Restated) 		2021 2020
(As Restated)
Net loss $ (82,210) $ (25,281) $ (106,164)   $ (154,914)
Provision (benefit) for income taxes 10,868    (5,385) 14,437    9,368 
Depreciation and amortization 130,176    56,145  261,830    107,586 
Interest expense and amortization of debt discount, net 38,569    21,122  75,962    52,062 
Deferred revenues adjustment(1)
1,369    3,432  4,393    5,314 
Transaction related costs(2)
13,189    8,527  (13,450)   35,216 
Share-based compensation expense 15,861    6,856  26,521    24,325 
Restructuring and impairment(3)
41,700  15,846  106,367  23,600 
Mark to market adjustment on financial instruments(4)
21,021 23,790 (30,194) 79,422 
Other(5)
(1,557)   (4,933) 14,117    (3,638)
Adjusted EBITDA $ 188,986  $ 100,119  $ 353,819  $ 178,341 
Adjusted EBITDA margin 42.3  % 36.2  % 40.3  % 34.3  %
(1)Reflects the deferred revenues adjustment as a result of purchase accounting associated with businesses that were acquired.
(2)Includes costs incurred to complete business combination transactions, including acquisitions, dispositions and capital market activities and include advisory, legal, and other professional and consulting costs. This also includes the mark to market adjustments on the contingent stock consideration associated with the CPA Global and DRG acquisitions, as well as the mark to market adjustment associated with the CPA phantom share liability plan.
(3)Reflects costs related to restructuring and impairment associated with the acquisition of primarily DRG and CPA Global in 2020. This also includes costs incurred in connection with the initiative, following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two segments. During 2021, the CPA Global plan continued as well as the addition of a new One Clarivate Program, which was an approved restructuring action to streamline operations within targeted areas of the Company. Additionally, during the three and six months ended June 30, 2021, we incurred impairment charges taken on right-of-use assets of $29,059 and $70,043, respectively, relating the exit and ceased use of leased properties.
(4)Reflects mark to market adjustments on financial instruments under Accounting Standards Codification 815, Derivatives and Hedging, ("ASC 815"). Warrant instruments that do not meet the criteria to be considered indexed to an entity's own stock shall be initially classified as a liability at their estimated fair values, regardless of the likelihood that such instruments will ever be settled in cash. In periods subsequent to issuance, changes in the estimated fair value of the liabilities are reported through earnings.
(5)Includes primarily the net impact of foreign exchange gains and losses related to the re-measurement of balances and other items that do not reflect our ongoing operating performance. The 2020 detail also includes costs relates to a transition services agreement and
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CLARIVATE PLC
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
offset by the reverse transition services agreement from the sale of MarkMonitor and costs incurred in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These costs include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in selling, general and administrative costs in our income statement, as well as expenses related to the restructuring and transformation of our business following our separation from Thomson Reuters in 2016 mainly related to the integration of separate business units into one functional organization and enhancements in our technology. These costs were largely wound down by the end of December 31, 2020.
Free Cash Flow
We use free cash flow in our operational and financial decision-making and believe free cash flow is useful to investors because similar measures are frequently used by securities analysts, investors, ratings agencies and other interested parties to evaluate our competitors and to measure the ability of companies to service their debt. Our presentation of free cash flow should not be construed as a measure of liquidity or discretionary cash available to us to fund our cash needs, including investing in the growth of our business and meeting our obligations.
We define free cash flow as net cash provided by operating activities less capital expenditures. For further discussion on free cash flow, including a reconciliation to cash flows provided by operating activities, refer to Liquidity and Capital Resources - Cash Flows below.

Liquidity and Capital Resources
Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, capital expenditures, debt service, acquisitions, other commitments and contractual obligations. Our principal sources of liquidity include cash from operating activities, cash and cash equivalents on our Consolidated Balance Sheets and amounts available under our revolving credit facility. We consider liquidity in terms of the sufficiency of these resources to fund our operating, investing and financing activities for a period of 12 months after the financial statement issuance date.
Our cash flows from operations are generated primarily from payments from our subscription and re-occurring transaction customers. As described above, the standard term of a subscription is typically 12 months. When a customer enters into a new subscription agreement, or submits a notice to renew their subscription, we typically invoice for the full amount of the subscription period, record the balance to deferred revenues, and ratably recognize the deferral throughout the subscription period. As a result, we experience cash flow seasonality throughout the year, with a heavier weighting of operating cash inflows occurring during the first half, and particularly first quarter, of the year, when most subscription invoices are sent, as compared to the second half of the year.
We require and will continue to need significant cash resources to, among other things, meet our debt service requirements under our credit facilities, the unsecured notes due 2029, the secured notes due 2028, the secured notes due 2026 and any future indebtedness, fund our working capital requirements, make capital expenditures (including related to product development), and expand our business through acquisitions. Based on our forecasts, we believe that cash flow from operations, available cash on hand and available borrowing capacity under our revolving credit facility will be adequate to service debt, meet liquidity needs and fund necessary capital expenditures for at least the next 12 months. Our future capital requirements will depend on many factors, including the number of future acquisitions and the timing and extent of spending to support product development efforts. We could be required, or could elect, to seek additional funding through public or private equity or debt financings; however, additional funds may not be available on terms acceptable to us.
Unrestricted cash and cash equivalents was $2,559,596 and $257,730 as of June 30, 2021 and December 31, 2020, respectively. Restricted cash increased from $11,278 as of December 31, 2020 to $2,010,917 as of June 30, 2021 due to the restrictive conditions placed on the use of cash received from our June 2021 Senior Secured Notes and Senior Notes Offering. The gross proceeds were deposited by the Issuer, and are currently held, in segregated escrow accounts. Refer to Note 14 - Debt in Item 1, Financial Statements and Supplementary Data, for additional information. As of June 30, 2021, we had approximately $5,533,100 of debt, consisting primarily of $2,833,100 in borrowings under our term loan facility, $1,000,000 in outstanding principal of our senior notes due 2029, $1,000,000 in outstanding principal of our senior secured notes due 2028, $700,000 in outstanding principal of senior secured notes due 2026 and $0 of borrowings under our revolving credit facility.

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CLARIVATE PLC
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
On June 24, 2021, we issued a private placement offering of $1,000,000 in aggregate principal amount of Senior Secured Notes due June 30, 2028 (the "Secured Notes") and $1,000,000 in aggregate principle amount of Senior Notes due June 30, 2029 (the "Unsecured Notes" and, together with the Secured Notes, the "Notes") bearing interest at a rate of 3.875% and 4.875% per annum, respectively. We intend to use the net proceeds to finance a portion of the purchase price for the ProQuest acquisition, which we announced on May 17, 2021. On October 1, 2020, in connection with the CPA Global acquisition, the Company incurred an incremental $1,600,000 of borrowings under our term loan facility and used the net proceeds from such borrowings to fund a portion of the repayment of CPA Global's outstanding debt. See Debt Profile below.

Cash Flows

The following table discloses our consolidated cash flows provided by (used in) operating, investing and financing activities for the periods presented:
Six Months Ended June 30, Change
2021 vs. 2020
(in thousands) 2021 2020 $ %
Net cash provided by operating activities $ 261,666  $ 107,562  $ 154,104  143  %
Net cash used in investing activities (61,588) (940,205) (878,617) (93) %
Net cash provided by financing activities 4,096,402  1,376,254  2,720,148  198  %
Effect of exchange rates
5,025  (9,218) 14,243  155  %
Net increase in cash and cash equivalents, and restricted cash 4,301,505 
 
534,393  3,767,112  705  %
Cash and cash equivalents, and restricted cash beginning of the year
269,008  76,139  192,869  253  %
Cash and cash equivalents, and restricted cash end of the period
$ 4,570,513 
 
$ 610,532  $ 3,959,981  649  %

Cash Flows Provided by Operating Activities
Net cash provided by operating activities consists of net loss adjusted for non-cash items, such as: depreciation and amortization of property and equipment and intangible assets, deferred income taxes, share-based compensation, mark to market adjustments on financial instruments, mark to market adjustment on contingent and phantom shares, deferred finance charges and for changes in net working capital assets and liabilities.

Net cash provided by operating activities was $261,666 and $107,562 for the six months ended June 30, 2021 and 2020, respectively. The increase of $154,104 in net cash provided by operating activities was primarily due to an increase in the source of cash for net working capital, as well as an increase in net income after adjustment for non-cash items such as the mark to market adjustment on financial instruments, the mark to market adjustment on contingent and phantom shares, restructuring and impairment charges, and share-based compensation.

Net Working Capital
(in thousands, except ratio) June 30, 2021

December 31, 2020 June 30, 2020 December 31, 2019
Current assets 5,486,563  1,327,508  960,092  493,076 
Current liabilities 3,420,877  1,569,767  711,396  650,998 
Net Working Capital 2,065,686  (242,259) 248,696  (157,922)

Cash Flows Used in Investing Activities
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CLARIVATE PLC
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
Net cash used in investing activities was $61,588 and $940,205 for the six months ended June 30, 2021 and 2020, respectively. The $878,617 decrease in cash used in investing activities was primarily due acquisitions, net of cash acquired primarily due to the acquisition of DRG in February 2020 and acquisition of intangible assets due to key business intangible assets acquired from CustomerFirst Now in June 2020. The decrease in cash used in investing activities was offset by an increase in capital expenditures and cash flows provided by the divestiture related to the sale of MarkMonitor AntiFraud, Antipiracy, and Brand Protection Products in January 2020.
Our capital expenditures in both 2021 and 2020 consisted primarily of capitalized labor, consulting and other costs associated with product development.

Cash Flows Provided by Financing Activities
Net cash provided by financing activities was $4,096,402 and $1,376,254 for the six months ended June 30, 2021 and 2020, respectively. The $2,720,148 increase in cash provided by financing activities was primarily due: (i) increase in proceeds from the issuance of debt due to the private placement offering of $1,000,000 in aggregate principal amount of Senior Secured Notes due 2028 and $1,000,000 in aggregate principle amount of Senior Notes due 2029 in June 2021 compared to the $360,000 of borrowings under our term loan facility in February 2020; (ii) increase in proceeds from the issuance of our 5.25% Series A MCPS in June 2021; (iii) decrease in repayment of borrowings under the revolving credit facility; (iv) decrease in contingent purchase price payments related to the TradeMark Vision contingent earn out in the first quarter of 2020; (v) increase in proceeds from the issuance of stock options; and (vi) decrease in the payment of debt issuance costs compared to the prior period. The increase in cash provided by financing activities was offset by: (i) decrease in proceeds from the exercise of the Company's outstanding public warrants in the first quarter of 2020; (ii) decrease in proceeds from the issuance of ordinary shares driven by the Company's public offerings of 27,600,000 ordinary shares at $20.25 per share in February 2020 and 50,400,000 of our ordinary shares at a share price of $22.50 per share, of which 14,000,000 were ordinary shares offered by Clarivate and 36,400,000 were ordinary shares offered by selling shareholders in June 2020 compared to the public offering of 44,230,768 of our ordinary shares at a share price of $26.00, of which 28,846,154 ordinary shares were issued and sold by Clarivate and 15,384,614 were sold by selling shareholders in June 2021; (iii) increase in payments related to tax withholding for share-based compensation; and (iv) increase in principal payments on the term loan.
In February 2020, we completed an underwritten public offering of 27,600,000 of our ordinary shares, generating net proceeds of $540,736, which we used to fund a portion of the cash consideration for the DRG acquisition. In addition, we incurred an incremental $360,000 of term loans under our term loan facility and used the net proceeds from such borrowings, together with cash on hand, to fund the remainder of the cash consideration for the DRG acquisition and to pay related fees and expenses.

In June 2020, we completed an underwritten public offering of 50,400,000 of our ordinary shares at a share price of $22.50. Of the 50,400,000 ordinary shares, 14,000,000 were primary ordinary shares offered by Clarivate and 36,400,000 were secondary ordinary shares offered by selling shareholders including 20,821,765 ordinary shares from Onex, 8,097,354 ordinary shares from Baring and 7,480,881 ordinary shares from Directors, Executive Officers and other shareholders. The Company did not receive any proceeds from the sale of secondary ordinary shares by the selling shareholders. The Company received approximately $304,030 in net proceeds from the sale of ordinary shares offered by the Company, after deducting underwriting discounts and estimated offering expenses payable, for general corporate purposes.

In June 2021, we completed an underwritten public offering of 44,230,768 of our ordinary shares at a share price of $26.00, of which 28,846,154 ordinary shares were issued and sold by Clarivate and 15,384,614 were sold by selling shareholders (which included 5,769,230 ordinary shares that the underwriters purchased pursuant to their option to purchase additional shares). The ordinary shares sold by selling shareholders included 10,562,882 ordinary shares from Onex, 4,107,787 ordinary shares from Baring and 713,945 ordinary shares from Directors, Executive Officers and other shareholders. The Company received approximately $728,768 in net proceeds from the sale of ordinary shares offered by the Company, after deducting underwriting discounts and estimated offering expenses payable. We intend to use the net proceeds to finance a portion of the purchase price for the ProQuest acquisition, which we announced on May 17, 2021. If the ProQuest acquisition is not consummated, Clarivate intends to use the net proceeds received by it from the Offerings for general corporate purposes. The Company did not receive any proceeds from the secondary ordinary shares sold by the selling shareholders.

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CLARIVATE PLC
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
In June 2021, concurrently with the June 2021 Ordinary Share Offering, we completed an underwritten public offering of 14,375,000 of our 5.25% Series A MCPS (which included 1,875,000 of our MCPS that the underwriters purchased pursuant to their option to purchase additional shares). The Company received approximately $1,393,222 in net proceeds from the sale of our MCPS offered by the Company, after deducting underwriting discounts and estimated offering expenses payable. We intend to use the net proceeds to finance a portion of the purchase price for the ProQuest acquisition, which we announced on May 17, 2021. If the ProQuest acquisition is not consummated, Clarivate intends to use the net proceeds received by it from the Offerings for general corporate purposes.

Dividends on the MCPS will be payable on a cumulative basis when declared by Clarivate’s board of directors, or an authorized committee of Clarivate’s board of directors, at an annual rate of 5.25% of the liquidation preference of $100.00 per share. Clarivate may pay declared dividends in cash or, subject to certain limitations, in Clarivate ordinary shares, or in any combination of cash and ordinary shares, on March 15, June 15, September 15 and December 15 of each year, commencing on September 15, 2021 and ending on June 1, 2024.

During the period January 1, 2020 through February 21, 2020, 24,132,666 of the Company’s outstanding warrants were exercised for one ordinary share per whole warrant at a price of $11.50 per share. On February 20, 2020, we announced the redemption of all of our outstanding public warrants to purchase our ordinary shares that were issued as part of the units sold in the Churchill Capital Corp initial public offering that remained outstanding at 5:00 p.m. New York City time on March 23, 2020, for a redemption price of $0.01 per public warrant. In addition, our board of directors elected that, upon delivery of the notice of the redemption on February 20, 2020, all public warrants were to be exercised only on a “cashless basis.” Accordingly, by virtue of the cashless exercise of public warrants, exercising public warrant holders received 0.4626 of an ordinary share for each public warrant, and 4,747,432 ordinary shares were issued for public warrants exercised on a cashless basis and 4,649 public warrants were redeemed for $0.01 per public warrant. As of June 30, 2021, no public warrants were outstanding.
Free Cash Flow (non-GAAP measure)
The following table reconciles free cash flow measure, which is a non-GAAP measure, to net cash provided by operating activities:
Six Months Ended June 30,
2021 2020
Net cash provided by operating activities $ 261,666  $ 107,562 
Capital expenditures
(62,021) (52,651)
Free cash flow
$ 199,645 
 
$ 54,911 
Free cash flow was $199,645 for the six months ended June 30, 2021, compared to $54,911 for the six months ended June 30, 2020. The increase in free cash flow was primarily due to higher net cash provided by operating activities due to an increase in the source of cash for net working capital, as well as an increase in net income after adjustment for non-cash items such as mark to market adjustment on financial instruments, mark to market adjustment on contingent and phantom shares, restructuring and impairment, and share-based compensation. The increase in free cash flow was partially offset by an increase in capital expenditures primarily driven by the acquired CPA business in Q4 2020.
Required Reported Data - Standalone Adjusted EBITDA
We are required to report Standalone Adjusted EBITDA, which is identical to Consolidated EBITDA and EBITDA as such terms are defined under our credit facilities, dated as of October 31, 2019 and the indenture governing our secured notes due 2026 issued by Camelot Finance S.A. and guaranteed by certain of our subsidiaries, respectively. In addition, the credit facilities and the indenture contain certain restrictive covenants that govern debt incurrence and the making of restricted payments, among other matters. These restrictive covenants utilize Standalone Adjusted EBITDA as a primary component of the compliance metric governing our ability to undertake certain actions otherwise proscribed by such covenants. Standalone Adjusted EBITDA reflects further adjustments to Adjusted EBITDA for cost savings already implemented and excess standalone costs.
Because Standalone Adjusted EBITDA is required pursuant to the terms of the reporting covenants under the credit facilities and the indenture and because this metric is relevant to lenders and noteholders, management considers Standalone Adjusted
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CLARIVATE PLC
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
EBITDA to be relevant to the operation of its business. It is also utilized by management and the compensation committee of the Board as an input for determining incentive payments to employees.
Excess standalone costs are the difference between our actual standalone company infrastructure costs, and our estimated steady state standalone infrastructure costs. We make an adjustment for the difference because we have had to incur costs under the transition services agreement with Thomson Reuters after we had implemented the infrastructure to replace the services provided pursuant to the transition services agreement, thereby incurring dual running costs. Furthermore, there has been a ramp up period for establishing and optimizing the necessary standalone infrastructure. Since our separation from Thomson Reuters, we have had to transition quickly to replace services provided under the transition services agreement, with optimization of the relevant standalone functions typically following thereafter. Cost savings reflect the annualized “run rate” expected cost savings, net of actual cost savings realized, related to restructuring and other cost savings initiatives undertaken during the relevant period. These costs wound down at the end of December 31, 2020.
Standalone Adjusted EBITDA is calculated under the credit facilities and the indenture by using our consolidated net income (loss) for the trailing 12-month period (defined in the credit facilities and the indenture as our U.S. GAAP net income adjusted for certain items specified in the credit facilities and the indenture) adjusted for items including: taxes, interest expense, depreciation and amortization, non-cash charges, expenses related to capital markets transactions, acquisitions and dispositions, restructuring and business optimization charges and expenses, consulting and advisory fees, run-rate cost savings to be realized as a result of actions taken or to be taken in connection with an acquisition, disposition, restructuring or cost savings or similar initiatives, “run rate” expected cost savings, operating expense reductions, restructuring charges and expenses and synergies related to the transition projected by us, costs related to any management or equity stock plan, other adjustments of the type that were presented in the offering memorandum used in connection with the issuance of the secured notes due 2026 and earn-out obligations incurred in connection with an acquisition or investment.
78
CLARIVATE PLC
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
The following table reconciles Standalone Adjusted EBITDA to our Net loss for the periods presented:
Twelve Months Ended June 30,
2021   2020
(As Restated)
(in thousands)
Net loss $ (263,119) $ (250,340)
Provision for income taxes 2,767  15,617 
Depreciation and amortization 457,394  206,908 
Interest, net 135,814  139,182 
Deferred revenues adjustment(1)
22,180  5,457 
Transaction related costs(2)
48,833  48,002 
Share-based compensation expense 43,846  38,600 
Gain on sale of Techstreet (28,140) — 
Restructuring and impairment(3)
130,362  39,270 
Legal Settlement —  (39,399)
Impairment on assets held for sale —  18,431 
Mark to market adjustment on financial instruments(4)
95,446  100,891 
Other(5)
16,695  17,345 
Adjusted EBITDA 662,078  339,964 
Realized foreign exchange gain 1,500  (6,805)
DRG Adjusted EBITDA impact(6)
—  35,848 
CPA Adjusted EBITDA impact(6)
58,707  — 
IncoPat Adjusted EBITDA impact(6)
180  — 
Hanlim Adjusted EBITDA impact(6)
173  — 
Cost savings(7)
70,276    39,733 
Excess standalone costs(8)
—  30,079 
Standalone Adjusted EBITDA $ 792,914    $ 438,819 
(1)Reflects the deferred revenues adjustments recorded as a result of purchase accounting for acquired businesses.
(2)Includes costs incurred to complete business combination transactions, including acquisitions, dispositions and capital market activities and include advisory, legal, and other professional and consulting costs.
(3)Reflects costs related to restructuring and impairment of right of use assets associated with the acquisition of DRG and CPA Global in 2020, and related lease optimization plans, as well as the approved One Clarivate restructuring program in 2021. This also includes costs incurred in connection with the initiative, following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two segments.
(4)Reflects mark to market adjustments on financial instruments recorded under Accounting Standards Codification 815, Derivatives and Hedging, ("ASC 815"). Warrant instruments that do not meet the criteria to be considered indexed to an entity's own stock shall be initially classified as a liability at their estimated fair values, regardless of the likelihood that such instruments will ever be settled in cash. In periods subsequent to issuance, changes in the estimated fair value of the liabilities are reported through earnings.
(5)Includes primarily the net impact of foreign exchange gains and losses related to the re-measurement of balances and other items that do not reflect our ongoing operating performance. The 2020 detail also includes costs relates to a transition services agreement and offset by the reverse transition services agreement from the sale of MarkMonitor and costs incurred in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These costs include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in selling, general and administrative costs in our income statement, as well as expenses related to the restructuring and transformation of our business following our separation from Thomson Reuters in 2016 mainly related to the integration of separate business units into one functional organization and enhancements in our technology. These costs were largely wound down by the end of December 31, 2020.
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CLARIVATE PLC
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
(6)Represents the acquisition Adjusted EBITDA for the period beginning July 1, 2020 through the respective acquisition date of each acquired business to reflect the company's Standalone Adjusted EBITDA as though acquisitions occurred at the beginning of the presented period.
(7)Reflects the estimated annualized run-rate cost savings, net of actual cost savings realized, related to restructuring and other cost savings initiatives undertaken during the period (exclusive of any cost reductions in our estimated standalone operating costs), including synergies related to acquisitions.
(8)Reflects the difference between our actual standalone company infrastructure costs, and our estimated steady operating costs, which were summarized in the below table. These costs wound down by the end of fiscal year 2020.
  Twelve Months Ended June 30,
(in thousands) 2021   2020
Actual standalone company infrastructure costs $ —    $ 164,037 
Steady state standalone cost estimate —    (133,958)
Excess standalone costs $ —    $ 30,079 
The foregoing adjustments (6) and (7) are estimates and are not intended to represent pro forma adjustments presented within the guidance of Article 11 of Regulation S-X. Although we believe these estimates are reasonable, actual results may differ from these estimates, and any difference may be material. See Cautionary Statement Regarding Forward-Looking Statements.
Debt Profile
There have been no material changes to the debt profile associated with our business previously disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity section in our Annual Report on Form 10-K/A, except as set forth below. The disclosures set forth below updates, and should be read together with, the disclosures in the Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity - Debt Profile section, in our Annual Report on Form 10-K/A.
Senior Secured Notes and Senior Notes due 2028 and 2029, respectively

On June 24, 2021, we issued a private placement offering of $1,000,000 in aggregate principal amount of Senior Secured Notes due June 30, 2028 (the "Secured Notes") and $1,000,000 in aggregate principle amount of Senior Notes due June 30, 2029 (the "Unsecured Notes" and, together with the Secured Notes, the "Notes") bearing interest at a rate of 3.875% and 4.875% per annum, respectively. The interest is payable semi-annually to holders of record on June 30 and December 30 of each year, commencing on December 30, 2021. The Notes due 2028 and 2029 were issued by Clarivate Science Holdings Corporation (the "Issuer"), an indirect wholly-owned subsidiary of Clarivate.
We intend to use the net proceeds to finance a portion of the purchase price for the ProQuest acquisition, which we announced on May 17, 2021, and to pay related fees and expenses. Concurrently with the closing of this offering, the Issuer deposited the gross proceeds into segregated escrow accounts. If the escrow conditions (which include conditions relating to the consummation of the ProQuest acquisition) are not satisfied on or prior to November 8, 2021, or if it is otherwise determined that any of the applicable escrow release conditions will not be satisfied, the Notes will be redeemed at a price equal to 100% of the initial issue price of the Notes, plus accrued and unpaid interest, if any, from June 24, 2021 (the "Issue Date" of the Notes), up to, but excluding, the date of such special mandatory redemption. Prior to closing of the ProQuest acquisition, the Notes are guaranteed and are secured by a first-priority security interest in the escrow accounts.
Upon consummation of the ProQuest acquisition, the Notes will be guaranteed on a joint and several basis by each of Clarivate’s indirect subsidiaries that is an obligor or guarantor under Clarivate’s existing credit facilities and senior secured notes due 2026. The Secured Notes are secured on a first-lien pari passu basis with borrowings under the existing credit facilities and senior secured notes, and the Unsecured Notes are the Issuer’s and such guarantors’ unsecured obligations.
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CLARIVATE PLC
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
The indentures governing the Notes due 2028 and 2029 contain covenants which, among other things, limit the occurrence of additional indebtedness (including acquired indebtedness), issuance of certain preferred stock, the payment of dividends, making restricted payments and investments, the purchase or acquisition or retirement for value of any equity interests, the provision of loans or advances to restricted subsidiaries, the sale or lease or transfer of any properties to any restricted subsidiaries, the transfer or sale of assets, and the creation of certain liens. As of the date of this quarterly report, we believe we were in compliance with the indentures' covenants.
Credit Facilities
The credit facilities are secured by substantially all of our assets and the assets of all of our U.S. restricted subsidiaries and certain of our non-U.S. subsidiaries, including those that are or may be borrowers or guarantors under the Credit Facilities, subject to customary exceptions. As Clarivate Science Holdings Corporation remains an unrestricted subsidiary until the consummation of the ProQuest acquisition, the current debt recorded on their balance sheet as of June 30, 2021 is excluded from our consolidated coverage and leverage ratios. The credit facilities contain customary events of default and restrictive covenants that limit us from, among other things, incurring certain additional indebtedness, issuing preferred stock, making certain restricted payments and investments, certain transfers or sales of assets, entering into certain affiliate transactions or incurring certain liens. These credit facilities limitations are subject to customary baskets, including certain limitations on debt incurrence and issuance of preferred stock, subject to compliance with a consolidated coverage ratio of Consolidated EBITDA (as defined in the credit facilities), a measure identical to our Standalone Adjusted EBITDA disclosed above under - Required Reported Data - Standalone Adjusted EBITDA, to interest and other fixed charges on certain debt (as defined in the credit facilities) of 2.00 to 1.00. In addition, the credit facilities require us to comply with a springing financial covenant pursuant to which, as of the third quarter of 2019, we must not exceed a total first lien net leverage ratio (as defined under the credit facilities) of 7.25 to 1.00, to be tested on the last day of any quarter only when more than 30% of the revolving credit facility (excluding (i) non-cash collateralized, issued and undrawn letters of credit in an amount up to $10,000 and (ii) any cash collateralized letters of credit) is utilized at such date. As of June 30, 2021, our consolidated coverage ratio was 6.34 to 1.00 and our consolidated leverage ratio was 1.23 to 1.00. As of the date of this Report, we are in compliance with the covenants in the credit facilities. During the six months ended June 30, 2021, the Company paid down $0 drawn on the revolving credit facility. On February 28, 2020, we incurred an incremental $360,000 of term loans under our term loan facility and used the net proceeds from such borrowings to fund a portion of the cash consideration for the DRG acquisition. On October 1, 2020, in connection with the CPA Global acquisition, the Company incurred an incremental $1,600,000 of borrowings under our term loan facility and used the net proceeds from such borrowings to fund the repayment of CPA Global's parent company outstanding debt.

Commitments and Contingencies
Our contingent liabilities consist primarily of letters of credit and performance bonds and other similar obligations in the ordinary course of business.
The Company maintained a contingent stock liability based on observable market data relating to the CPA Global acquisition that occurred on October 1, 2020. The amount was settled on January 21, 2021 through the issuance of ordinary shares. The contingent stock liability was $0 and $44,565 as of June 30, 2021 and December 31, 2020, recorded in Accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheet. The Company recognized a gain related to the changes in the contingent stock liability of $0 for the three months ended June 30, 2021 and 2020, respectively, and $675 and $0 for the six months ended June 30, 2021 and 2020, respectively, recorded within Selling, general and administrative costs on the Condensed Consolidated Statement of Operations.
The Company maintained a contingent stock liability based on observable market data relating to the DRG acquisition that occurred on February 28, 2020. The amount was settled on March 5, 2021 through the issuance of ordinary shares. The contingent stock liability was $0 and $86,029 as of June 30, 2021 and December 31, 2020, recorded in Accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheet. The Company recognized (income) expense related to the changes in the contingent stock liability of $0 and $4,576 for the three months ended June 30, 2021 and 2020, respectively, and $(24,410) and $5,763 for the six months ended June 30, 2021 and 2020, respectively, recorded within Selling, general and administrative costs on the Condensed Consolidated Statement of Operations.
The Company will be subject to certain payments that are contingent upon the consummation of the ProQuest acquisition. See Note 22 - Commitments and Contingencies in Item 1, Financial Statements and Supplementary Data, for additional information.
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CLARIVATE PLC
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except share and per share data, option prices, ratios or as noted)
Dividends on our convertible preferred shares are payable, as and if declared by our board of directors, at an annual rate of 5.25% of the liquidation preference of $100.00 per share. We may pay declared dividends in cash or, subject to certain limitations, in our ordinary shares, or in any combination of cash and ordinary shares, on March 1, June 1, September 1 and December 1 of each year, commencing on September 1, 2021 and ending on, and including, June 1, 2024. See Note 22 - Commitments and Contingencies in Item 1, Financial Statements and Supplementary Data, for additional information.
The Company is engaged in various legal proceedings and claims that have arisen in the ordinary course of business. We have taken what we believe to be adequate reserves related to the litigation and threatened claims. We maintain appropriate insurance policies in place, which are likely to provide some coverage for these liabilities or other losses that may arise from these litigation matters. See Note 22 - Commitments and Contingencies in Item 1, Financial Statements and Supplementary Data, for additional information.

Off Balance Sheet Arrangements
We do not currently have any off-balance sheet arrangements.

Contractual Obligations

We have various contractual obligations and commercial commitments that are recorded as liabilities in our financial statements. Other items, such as purchase obligations and other executory contracts, are not recognized as liabilities in our consolidated financial statements, but are required to be disclosed.

There have been no other material changes, outside of the ordinary course of business, to our contractual obligations as previously disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity - Contractual Obligations section, in our Annual Report on Form 10-K/A.

Critical Accounting Policies, Estimates and Assumptions
There have been no material changes from the critical accounting policies, estimates, and assumptions previously disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies, Estimates and Assumptions section in our Annual Report on Form 10-K/A.
Recently Issued and Adopted Accounting Pronouncements
For recently issued and adopted accounting pronouncements, see Note 3 - Summary of Significant Accounting Policies in Item 1, Financial Statements and Supplementary Data.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk
For information regarding our exposure to certain market risks, see “Item 7A. Quantitative and Qualitative Disclosures About Market Risk,” in the Annual Report on Form 10-K/A.
Interest Rate Risk
Our interest rate risk arises primarily from our borrowings at floating interest rates. Borrowings under our credit facilities are subject to floating base interest rates, plus a margin. As of June 30, 2021, we had $2,833,100 of floating rate debt outstanding under our credit facilities, consisting of borrowings under the revolving and term loan facilities for which the base rate was one-month LIBOR (subject, with respect to the term loan facility only, to a floor of 0.00% for $1,241,100 and 1.00% for $1,592,000), which stood at 0.10% at June 30, 2021. Of this amount, we hedged $449,750 of our principal amount of our floating rate debt under hedges using interest rate derivatives. As a result, $2,383,350 of our outstanding borrowings effectively bore interest at floating rates. A 100 basis point increase or decrease in the applicable base interest rate under our credit facilities would have an annual impact of $388 and $725 on our cash interest expense for the three and six months ended June 30, 2021, respectively. For additional information on our outstanding debt and related hedging, see Item 1. Financial Statements and Supplementary Data - Notes to the Consolidated Financial Statements - Note 10 - Derivative Instruments and Note 14 - Debt.

Item 4. Controls and Procedures
Evaluation of disclosure controls and procedures
Pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer, concluded that, as of June 30, 2021, due to the material weakness in our internal control over financial reporting described below, our disclosure controls and procedures were not effective to provide reasonable assurance that the information required to be disclosed in the reports required to be filed or submitted under the Securities Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.

Management has identified a material weakness in our internal control over financial reporting related to a lack of an effectively designed control over the evaluation of settlement features used to determine the classification of warrant instruments, as disclosed in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2020.

Remediation Plan

Our remediation plan includes evaluating our controls over the accounting for warrants and assessing whether we have effectively designed controls that are relevant to warrant instruments issued by the Company.

Notwithstanding the identified material weakness, management believes that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, our financial position, results of operations, and cash flows as of and for the periods presented in accordance with U.S. GAAP.

Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. Other Information

Item 1. Legal Proceedings
From time to time, we are a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. While the outcomes of these matters are uncertain, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial position, results of operations or cash flows. For additional discussion of legal proceedings, see Item 1. Financial Statements and Supplementary Data - Notes to Condensed Consolidated Financial Statements - Note 22 in this Report.

Item 1A. Risk Factors
There have been no material changes to the risk factors associated with our business as disclosed in Part I, Item 1A of our 2020 annual report on Form 10-K/A.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Period Total Number of Shares Purchased (1) Price Paid Per Share Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs Number of Shares that May Yet Be Purchased Under Plans or Programs
January 1, 2021-January 31, 2021 8,250  $ 16.98  —  — 
February 1, 2021-February 28, 2021 33,559  $ 13.05  —  — 
March 1, 2021-March 31, 2021 311,640  $ 12.65  —  — 
April 1, 2021-April 30, 2021 200,199  $ 10.97 
May 1, 2021-May 31, 2021 298,624  $ 13.00 
June 1, 2021-June 30, 2021 310,821  $ 16.56 
Total 1,163,093  — 

(1) Includes shares withheld to satisfy tax withholding obligations on behalf of employees that occur upon vesting and delivery of outstanding shares underlying stock options and restricted stock units under the 2019 Incentive Award Plan.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures
Not applicable.

Item 5. Other Information
On July 26, 2021, the Company entered into separation agreements with Jeffrey Roy, President, IP Group, and Stephen Hartman, General Counsel and Global Head of Corporate Development. Mr. Roy will be departing the Company effective July 31, 2021 and Mr. Hartman will be departing the Company effective October 30, 2021. Pursuant to the terms of their respective separation agreements, Messrs. Roy and Hartman are entitled to the following: (i) cash payments equal to $1,650
84

for Mr. Roy and approximately $1,255 for Mr. Hartman (converted from pounds (GBP), at the exchange rate as of July 26, 2021), each payable in six quarterly installments; (ii) for Mr. Hartman, a lump-sum cash payment equal to approximately $440 (converted from pounds (GBP), at the exchange rate as of July 26, 2021); (iii) for Mr. Roy, a lump sum payment totaling $21, representing reimbursement for the average monthly cost of COBRA for 18 months; and (iv) accelerated vesting of 16,903 and 19,411 unvested restricted stock units for Messrs. Roy and Hartman, respectively. In addition, the period of time during which vested stock options will remain exercisable will be extended to December 31, 2023.

Pursuant to their respective separation agreements, Messrs. Roy and Hartman have agreed to various restrictive covenants, including a post-termination non-compete and a post-termination prohibition on the solicitation of Company customers or service providers.

The foregoing descriptions of the agreements with Messrs. Roy and Hartman contained herein does not purport to be complete and is qualified in its entirety by reference to the complete text of their agreements, attached as Exhibits 10.3 and 10.4, respectively, to this Quarterly Report on Form 10-Q.

Item 6. Exhibits and Financial Statement Schedules
85

EXHIBIT INDEX
2.1
3.1
3.2
4.1
4.2
4.3
4.4
4.5
10.1
10.2
10.3*
10.4*
10.5*
31*
32*
101* The following information from our Form 10-Q for the quarterly period ended June 30, 2021, formatted in Inline eXtensible Business Reporting Language: (i) Condensed Consolidated Statement of Comprehensive Income (unaudited), (ii) Condensed Consolidated Balance Sheet (unaudited), (iii) Condensed Consolidated Statement of Changes in Equity (unaudited), (iv) Condensed Consolidated Statement of Cash Flows (unaudited), and (v) the Notes to the Condensed Consolidated Financial Statements (unaudited).
104* The cover page from the Company's Annual Report on Form 10-Q for the quarter ended June 30, 2021, formatted in Inline XBRL

*    Filed herewith.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized in the City of London, United Kingdom on July 29, 2021.
CLARIVATE PLC
By: /s/ Richard Hanks
Name: Richard Hanks
Title: Chief Financial Officer
87
Exhibit 10.3
Separation Agreement and General

July 24, 2021

Jeff Roy
[ADDRESS REDACTED]

Dear Jeff:

This Separation Agreement and General Release (the “Agreement”) is between you and the Clarivate group of companies and each of their past, present, and future employees, officers, directors, agents, parents, subsidiaries, branches, divisions, predecessors, successors, assigns and/or affiliated or related organizations (the “Company”) (you and the Company are collectively referred to as the “Parties”).

This Agreement will confirm our conversation concerning the termination of your employment effective July 31, 2021 (the “Termination Date”). This Agreement shall become effective upon the Effective Date as defined in Paragraph 23. The Parties acknowledge that entering into this Agreement does not constitute an admission of wrongdoing, fault or liability by either party. In connection with entering into this Agreement, you acknowledge and agree that you hereby, automatically and without further action on your part or any other person or entity, resign from all offices, board of directors (or similar governing bodies) and committees of the Company. You further acknowledge and agree that you will execute such further documents and instruments as may be reasonably necessary or appropriate to carry out the intent of the immediately preceding sentence.

You will continue to be paid, as applicable, pursuant to the Company’s payroll and/or other benefit policies and practices through the Termination Date.

1.In consideration of your agreement to the terms and conditions of this Agreement and upon subsequent acceptance of the terms and conditions of Attachment A on or after your Termination Date and provided you do not revoke your acceptance of this Agreement or Attachment A, the Company will provide you with the following benefits, in lieu of any other company benefits, and by signing this Agreement and Attachment A you acknowledge that such benefits are more valuable than the benefits to which you would otherwise be entitled:

A.You agree that from now until the Termination Date, you will remain an employee in good standing, and you shall continue to receive your regular paychecks from the Company. Subject to the terms of this Agreement, from now to the Termination Date (the “Garden Leave Period”), you will be placed on garden or paid leave and your access to all Company systems, including your company email, will be cutoff. During the Garden Leave Period, you will be expected to be available to answer and otherwise appropriately respond to questions (if any) reasonably related to the work you performed for the Company but will otherwise not perform work for and/or on behalf of the Company.

B.Severance Pay totaling $1,650,000.00, less applicable deductions and withholdings. The Severance Pay will be paid to you in six installments as follows: (i) the first $275,000.00, within thirty (30) days of the General Release Effective Date, defined in Attachment A; (ii) the second $275,000.00, within ninety (90) days of the General Release Effective Date, defined in Attachment A; (iii) the third $275,000.00, within one hundred eighty (180) days of the General Release Effective Date, defined in Attachment A; (iv) the fourth $275,000.00, within two hundred seventy (270) days of the General Release Effective Date; (v) the fifth $275,000.00, within three hundred six-five (365) days of the General Release Effective Date; and (vi) the sixth $275,000.00, within four hundred fifty-five (455) days of the General Release Effective Date. The Severance Pay will be paid to you using the same method you


have elected, as of the Termination Date, to receive your regular paychecks from the Company. In the event of your breach of the obligations referenced in Paragraph 8 of this Agreement, the Company may unilaterally discontinue or refuse to make the payments described in this Paragraph, in addition to and without limiting any other available rights and remedies the Company has, in law or equity, in connection with your breach of this Agreement, including but not limited to Paragraph 8, below.

C.To the extent you were granted restricted stock units, or RSUs, or performance stock units, or PSUs, as part of the Company’s Incentive Award Plan (the “Plan”), except as otherwise noted in this paragraph, all unvested RSUs and PSUs will be forfeited on the Termination Date. Notwithstanding the foregoing, the following unvested and outstanding RSUs will vest and become available on the fifteenth (15th) day of the month that is immediately after the month of the General Release Effective Date: 5,216 unvested RSUs originally granted on April 1, 2020 and 11,687 unvested RSUs originally granted on March 1, 2021. Except as otherwise noted in this paragraph, the terms of the Plan and any Restricted Share Unit Agreement or Performance Share Unit Agreement that may apply to you remain in full force and effect.

For purposes of the Option Agreements with a grant date of August 16, 2017 and September 5, 2017 (the “Option Agreements”), the timeframe set forth in the Option Agreements regarding the exercise of options shall be extended to December 31, 2023. Except as noted in this paragraph, all other terms of the Option Agreements remain unchanged and in place.

D.To the extent you were enrolled in the Company’s medical, dental, vision, and/or health savings account as of your Termination Date, your enrollment in these plans will end on the last day of the month which includes the Termination Date. All other applicable employee benefits including, without limitation, participation in the following Company plans shall terminate as of the Termination Date (if it has not already been terminated as of the Termination Date): 401(k) plan, dependent care flexible spending account, health care flexible spending account, life insurance, short-and long-term disability, management incentive, and any paid time off programs. On the first day of the month following the Termination Date you will not be entitled to receive any employee benefits, except for group health coverage continuation in accordance with COBRA and 401(k) benefits, if any.

E.The Company will reimburse you for the average monthly amount, based on your current benefits elections as of the Termination Date, of eighteen (18) months of COBRA costs in one lump sum provided that you elect to continue coverage under COBRA. This lump sum totaling $21,075.00, less applicable deductions and withholdings, will be paid to you within thirty (30) days of the General Release Effective Date, defined in Attachment A. The lump sum payment described in this paragraph will be referred to as the "COBRA Reimbursement Amount.” Unless you elect another method, the COBRA Reimbursement Amount will be paid to you using the same method you have elected, as of the Termination Date, to receive your regular paychecks from the Company. You will receive additional information regarding COBRA and other benefits under separate cover.

2.In addition to any other remedies the Company may have, the Company’s obligations under Paragraph 1 shall terminate if you breach any of the provisions of this Agreement. If, prior to the Termination Date, you voluntarily terminate or give notice of your intent to voluntarily terminate your employment with the Company or are terminated for cause, as determined in the Company’s sole and absolute discretion, you will be ineligible to receive the Severance Pay, the special treatment of RSUs provided in Section 1.C above or any other benefits under this Agreement. For avoidance of doubt, Attachment A will be null and void and you will be ineligible for Severance Pay and the other benefits outlined in this Agreement if, prior to the Termination Date, you voluntarily terminate or give notice of your intent to voluntarily terminate your employment with


the Company or are terminated for cause, as determined in the Company’s sole and absolute discretion.

3.The Company will pay you for accrued, unused vacation time through the Termination Date. The Company will reimburse you for any authorized business expenses incurred through your actual last day worked, provided they were incurred and submitted in a timely manner and otherwise in accordance with the Company’s policy.

4.You agree to treat as confidential and not disclose the terms, contents, or execution of this Agreement, except as required by law, other than to your spouse, legal counsel, or tax advisor, with the understanding that he or she will maintain the confidentiality thereof. Notwithstanding the foregoing or anything else in this Agreement, nothing in this Agreement shall be construed to prohibit you from filing a charge or complaint with the Equal Employment Opportunity Commission (or equivalent state agency) or other administrative agency or cooperating in an official investigation, although you waive your right to any monetary relief or monetary damages in connection therewith.

5.You agree to treat as confidential and not to use or disclose any Trade Secrets or Confidential Information which you learned of or discovered during your employment with the Company. You also expressly acknowledge and understand the continuing and ongoing nature of your confidentiality obligations under any agreement you signed with the Company. You agree that the Company is engaged in highly competitive businesses and the Company’s involvement in these businesses has required and continues to require the expenditure of substantial amounts of money and the use of skills developed over long periods of time and has developed certain valuable Trade Secrets and Confidential Information that are unique to the Company’s business and the disclosure of which would cause the Company great and irreparable harm. These investments also give the Company a competitive advantage over companies that have not made comparable investments, and that otherwise have not been as successful as the Company in developing their businesses. Solely by virtue of your employment with the Company, you have become privy to the Company’s Trade Secrets and Confidential Information and become intertwined with the Company’s goodwill. It would be unfair for you to exploit the information and goodwill you obtained during and as a result of your employment by the Company. In addition to any remedies the Company may have in law or in equity, you will forfeit all benefits under this Agreement in the event you engage in any of the prohibited activities described in this paragraph and you may be obligated to repay the Company for any benefits previously paid under this Agreement.

The Parties understand and acknowledge that nothing in this Agreement limits your ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission, or any other federal, state or local governmental agency or commission (“Government Agencies”). The Parties further understand and acknowledge that this Agreement does not limit your ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. This Agreement does not limit your right to engage in future activities protected under whistleblower statutes. The Parties further understand and acknowledge that (i) the Company may not retaliate against you for any of these activities, and nothing in this Agreement or otherwise requires you to waive any monetary award or other payment that you might become entitled to from the Securities Exchange Commission, and (ii) nothing in this Agreement or otherwise prohibits you from notifying the Company that you will make a report or disclosure to law enforcement.

6.You agree that, without additional compensation, you will promptly make full written disclosure to the Company and hereby irrevocably assign to Clarivate, or its designee, all of your right, title and


interest throughout the world in and to any and all Intellectual Property and Inventions (as each such term is defined below), which you have solely or jointly conceived or developed or reduced to practice, or caused to be conceived or developed or reduced to practice, while employed by the Company, during or after regular hours of you employment (collectively referred to as “Company Inventions”), except for any Inventions and Intellectual Property that you developed entirely on your own time without using the Company’s equipment, supplies, facilities, or Intellectual Property and that do not either relate at the time of conception or reduction to practice of the Invention or Intellectual Property either to the Company’s business, or actual or demonstrably anticipated research or development of the Company, or resulting from any work performed by you for the Company. You further acknowledge that all Company Inventions which were made by you (solely or jointly with others) within the scope of and during your employment with the Company are “works made for hire” (to the greatest extent permitted by applicable law). If for any reason such Company Inventions would not be considered a “work made for hire” under applicable law, you hereby assign and transfer to Clarivate, or its designee, the entire right, title and interest in and to such Company Inventions. The assignment above includes assignment of all income, royalties, damages, claims and payments now or hereafter due or payable with respect thereto, and in and to all causes of action, either in law or in equity for past, present, or future infringement based on the Company Inventions, and in and to all rights corresponding to the foregoing throughout the world. For purposes of this Agreement, “Intellectual Property” means patents, invention disclosures, invention registrations, trademarks, service marks, trade names, trade dress, logos, domain names, copyrights, mask works, trade secrets, know-how and all other intellectual property and proprietary rights recognized by any applicable law of any jurisdiction, and all registrations and applications for registration of, and all goodwill associated with, the foregoing. For purposes of this Agreement, “Inventions” means all inventions, discoveries, concepts, information, works, materials, processes, methods, data, software, programs, apparatus, designs and the like.

You agree to assist the Company, or its designee, at the Company’s expense, in every proper way to secure the Company’s rights in the Company Inventions in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments, recordations, and all other instruments which the Company shall deem necessary in order to apply for, obtain, maintain and transfer such rights and in order to assign and convey to the Company, its successors, assigns and nominees the sole and exclusive rights, title and interest in and to such Company Inventions. If the Company is unable for any reason to secure your signature, including because of your refusal to do so, to apply for or to pursue any application for any United States or foreign patents or copyright registrations covering Company Inventions, then you hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as your agent and attorney in fact, to act for and on your behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the application for, prosecution, issuance, maintenance or transfer of letters patent or copyright registrations thereon with the same legal force and effect as if originally executed by you. You hereby waive and irrevocably quitclaim to the Company any and all claims, of any nature whatsoever, which you now or hereafter have for infringement of any and all rights in the Company Inventions.

To the extent you may do so under applicable law, you hereby waive and agree never to assert any Moral Rights that you may have in or with respect to any Company Inventions. As used in this Agreement, “Moral Rights” means any rights to claim authorship of a work, to object to or prevent the modification or destruction of a work, or to withdraw from circulation or control the publication or distribution of a work, and any similar right, existing under any applicable law of any jurisdiction, regardless of whether or not such right is denominated or generally referred to as a “moral right.”



7.In addition to any remedies the Company may have in law or in equity, you will forfeit all benefits under this Agreement – including but not limited to the Severance Pay, the special treatment of RSUs and vested options provided in Section 1.C above or any other benefits under this Agreement – or the Option Agreements in the event you engage in any of the activities prohibited by the following paragraphs related to post-employment obligations and you may be obligated to repay the Company for any benefits previously paid under this Agreement.

8.Non-Competition and Non-Solicitation Protections. As noted above, you agree that the Company is engaged in a highly competitive business, and the Company’s involvement in these businesses has required and continues to require the expenditure of substantial amounts of money and the use of skills developed over long periods of time. As a result of these investments of money, skill and time, the Company has developed and will continue to develop certain valuable Trade Secrets and Confidential Information that are unique to the Company’s businesses and the unauthorized disclosure of which would cause the Company great and irreparable harm. These investments also give the Company a competitive advantage over companies that have not made comparable investments and that otherwise have not been as successful as the Company in developing their businesses. Solely by virtue of your employment with the Company, you have become privy to the Company’s Trade Secrets and Confidential Information and have become intertwined with the goodwill the Company has developed, cultivated and maintained within its highly competitive industry and with its customers and prospective customers. It would be unfair for you to exploit the information, specifically including Confidential Information and Trade Secrets, and goodwill you obtained during and as a result of your employment by the Company.

A.Definitions.

i.Confidential Information. For purposes of this Paragraph, “Confidential Information” shall mean information that the Company has obtained in connection with its present or planned business, including information you developed in the performance of your duties for the Company, the disclosure of which could result in a competitive or other disadvantage to the Company. “Confidential Information” includes some of the Company’s most valuable assets, such as: innovations, inventions, and ideas including patentable or copyrightable subject matter; pricing policies; business plans and outlooks; brand formulations; nonpublic financial results; new product developments or plans; customer lists; author or consultant contracts; subscription lists; software or computer programs; merger, acquisition or divestiture plans; personnel acquisition plans or major management changes; and Trade Secrets (defined below). Confidential Information includes all information received by the Company under an obligation of confidentiality to another person or entity.

ii.Trade Secrets. For purposes of this Paragraph, “Trade Secrets” shall mean all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing by the Company. The Company confirms, and you understand, that the Company is the owner of its Trade Secrets, that the Company has taken reasonable steps, under the circumstances, to protect and maintain the secrecy of its Trade Secrets, and that the Company derives economic value, both tangible and intangible, from its Trade Secrets.

B.You agree that during the remainder of the term of your employment with the Company, and for a period of eighteen (18) consecutive months immediately following the


Termination Date (the “Non-Compete Period”), you will not, directly or indirectly, individually or through an entity, as an owner, part owner, partner, employee, agent or otherwise:

i.Provide to a Competitive Enterprise the same or similar services that you performed during your employment with the Company. For purposes of this Agreement, “Competitive Enterprise” shall mean any company, entity, or organization (other than the Company) that engages in: (A) any business of the Company (1) which you were actively involved with at any time during the twenty-four (24) months immediately before the Termination Date or (2) about which you held or had access to Confidential Information and/or Trade Secrets during the twenty-four (24) months immediately before Termination Date (whether or not you worked in that business directly); or (B) any business under development by the Company as of the Termination Date and which you were involved or had knowledge about in the twelve (12) months immediately before the Termination Date; or

ii.Act in any capacity for another entity or engage in any conduct if in such capacity or due to such conduct you would inevitably use and/or disclose Confidential Information or Trade Secrets; or

iii. Own more than 5% of a Competitive Enterprise.

C.You acknowledge that (i) the Company is involved in a global business; (ii) you provided services in and have a material presence or influence in and outside the United States, or in certain territories within and outside the United States; and (iii) it is reasonable and necessary to protect the Company’s legitimate business interests for the provisions of this Paragraph 8 to apply to the United States and in any other country where you provided services for and/or on behalf of the Company during the twenty-four (24) months prior to the Termination Date.
D.You agree that while employed by the Company, you had contact with and became aware of some, most or all of the Company’s customers, representatives of those customers, their names and addresses, specific customer needs and requirements, and leads and references to prospective customers. You further agree that the loss of such customers will cause the Company great and irreparable harm. You agree that during the remainder of the term of your employment with the Company and for twenty-four (24) months immediately following the Termination Date, you will not directly or indirectly solicit, contact, call upon, communicate with or attempt to communicate with any customer, former customer, or prospective customer of the Company for the purpose of providing or obtaining any product or service reasonably deemed competitive with any product or service then offered by the Company. This restriction shall apply only to (i) any customer, former customer, or prospective customer of the Company with whom you had contact with during the last twenty-four (24) months of your employment with the Company or (ii) any customer, former customer, or prospective customer of the Company about which you had access to the Company’s Confidential Information or Trade Secrets concerning such customer, former customer or prospective customer during the last twenty-four (24) months of employment with the Company.
E.For the purposes of sub-paragraph 8.D., “contact” means any interaction whatsoever between you and the customer, former customer, or prospective customer which takes place to further a business relationship.



F.You agree that during the remainder of your employment and for twenty-four (24) months after the Termination Date, you will not directly or indirectly, whether for your benefit or the benefit of a third party (i) hire or cause a third party to hire: any employees, consultants or independent contractors of the Company or any persons who held such positions during the six (6) month period prior to the termination of your employment; (ii) recruit, solicit or induce, or attempt to hire, recruit, solicit or induce: any employees, consultants or independent contractors of the Company or any persons who held such positions during the six (6) month period prior to the termination of your employment, to terminate, alter or modify their employment or other relationship with the Company; (iii) interfere with the contractual or business relationship between the Company and any manufacturer, distributor, supplier, vendor or customer of the Company; or (iv) recruit, solicit or induce, or attempt to recruit, solicit or induce any manufacturer, distributor, supplier or customer of the Company to terminate, alter or modify their relationship with the Company.

G.You understand, acknowledge, and agree that in the event you breach and/or threaten to breach of any of the covenants and provisions contained in this Paragraph 8, the Company shall suffer irreparable injury for which there is no adequate remedy at law. The Company will therefore be entitled to injunctive relief from the courts without bond, enjoining you from engaging in activities in breach of this Agreement.

9.You further acknowledge and agree that the running of the periods during which you may not engage in the activities specified in Paragraph 8 shall be extended by any period in which there is pending litigation concerning the breach of Paragraph 8. If it is later determined by a court of competent jurisdiction that injunctive relief is warranted to prevent you from engaging in certain post-employment conduct, then the restrictive periods set forth in Paragraph 8 shall be tolled for the period of time that you had already been engaging in the prohibited conduct prior to the injunction. The Parties to this Agreement intend that the Company shall be entitled to receive the benefit of the full restrictive periods set forth in Paragraph 8.

10.You agree that the temporal restrictions set forth in Paragraph 8 are fair and reasonably required to protect the Company’s legitimate business interests in light of your substantial role as an employee of the Company. You acknowledge and agree that if any aspect of Paragraph 8 is judicially determined to be unreasonable or unenforceable in any respect, a court shall limit or modify the provision only to the extent necessary to render it reasonable under the law and shall specifically enforce the provision as so limited.

11.The post-employment obligations set forth in Paragraph 8 supersede any non-compete and/or non-solicit obligations set forth in any prior agreement with the Company.

12.You agree that, during the Garden Leave Period and at any time following the Termination Date, you will not engage in any disparagement of the Company and will refrain from making any false, negative or critical statement, implied or expressed, concerning the Company including, but not limited to, management or communication style, methods of doing business, the quality of products or services, or role in the community. You further agree to do nothing that would damage the Company’s business reputation or goodwill or the reputation of the Company.

The Company agrees that it will not engage in any disparagement of you and will otherwise refrain from making any false, negative, or critical statements, implied or express, concerning you and that it will not authorize any of its then current officers, directors, employees, and/or agents to make any such statements about you.
13.Notwithstanding anything in this Agreement to the contrary or otherwise, the Parties hereto acknowledge and understand that, pursuant to the Defend Trade Secrets Act of 2016, you may


not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (i) is made (A) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. Furthermore, the Parties hereto acknowledge and understand that if you file a lawsuit for retaliation by the Company for reporting a suspected violation of law, you may disclose the Company’s trade secrets to your attorney and use the trade secret information in the court proceeding if you: (i) file any document containing the trade secret under seal; and (ii) do not disclose the trade secret, except pursuant to court order.

14.You represent that on or before the Termination Date, you will return all materials, equipment and/or property of the Company, including all Confidential Information and Trade Secrets, and have not/will not retain any copies, whether in hard copy or electronic form. Further, you represent that on or before the Termination Date you will settle all amounts owed to the Company and any personal expenses owed to the Company’s third-party vendors unless waived in writing by the Company. If requested by the Company you will acknowledge to the Company in writing and under oath that you have complied with the terms of this Agreement.

15.You hereby acknowledge that, subject to applicable law, in its discretion, the Company can reduce the Severance Pay and any other amounts payable under this Agreement by any overpayment you receive or any amounts you owe the Company or any personal expenses you owe to the Company’s third party vendors. The Company retains the right to pursue a claim against you to the extent you receive any benefits outlined above but have not executed this Agreement and/or Attachment A or have revoked your acceptance thereof, to the extent permissible by applicable law.

16.In consideration for the payments and benefits described herein, on behalf of yourself, your predecessors, heirs, executors, administrators, successors and assigns, you hereby irrevocably and unconditionally release and discharge the Company and its and their past, present, and future parents, subsidiaries, branches, divisions, and affiliates, and its and their past, present, and future shareholders, employees, officers, directors, agents, representative, fiduciaries and attorneys, individually and in their official capacities (collectively, the “Released Parties”), from any and all causes of action, suits, debts, claims, liabilities, demands, costs, expenses, attorneys’ fees, damages, indemnities and obligations of any kind or nature, in law, equity or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, foreseeable and unforeseeable, which have existed or may have existed, or which do exist, at any time prior to and including the date on which you sign this Agreement, other than any claims that cannot lawfully be waived. This release includes, but is not limited to, any claims for employment discrimination including, but not limited to, any claims under federal, state or local fair employment laws or practices or other employee relations statutes and amendments (including without limitation the Civil Rights Act of 1866, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Lilly Ledbetter Fair Pay Act of 2009, the Americans with Disabilities Act, the Family and Medical Leave Act, the Occupational Safety and Health Act, and the Sarbanes-Oxley Act of 2002) and the employment laws and regulations of any state, including Massachusetts; any claims arising under the Worker Adjustment and Retraining Notification Act (WARN), and any applicable state laws that provide for benefits similar to WARN; any claims pursuant to any other federal, state or local statutes, regulations, ordinances or executive orders; any claims based on any rule, common law or public policy; any claims based in contract, whether oral or written, express or implied; any claims based in tort, or any other obligation. You confirm that you have not filed any claim in a civil action or complaint in an administrative action against the Company, that no claims or complaints or other proceedings are pending in any court or other forum relating directly or indirectly to your employment with the Company and/or separation from employment, and that you have not raised a claim of discrimination or harassment with the Company. You affirm that you have been provided and/or have not been


denied any leave requested under the Family and Medical Leave Act or applicable state law. You further affirm that you have been paid and received all compensation, wages, bonuses, commissions and benefits due to you as of the date you sign this Agreement. You specifically acknowledge that, by executing this Agreement, you are releasing any and all claims you have, or may have, under the Massachusetts Wage Act, M.G.L. c. 149, §§ 148, 150, and the Massachusetts Overtime Statute, M.G.L. c. 151, § 1A – including any claims for alleged unpaid wages and/or treble damages – and that your release of claims under the Massachusetts Wage Act and Overtime Statute is stated in clear and understandable terms, is plainly worded, and that you understand you are specifically waiving any rights or claims you have, or may have, against the Released Parties under the Massachusetts Wage Act, Overtime Statute, and/or any wage payment laws. You confirm and acknowledge that this Agreement, including Attachment A, reflects any and all separation and/or severance payments to which you are entitled under any applicable plan, agreement or practice.

You understand that by signing this Agreement, you are providing a complete waiver of all claims that may have arisen, whether known or unknown, up until the time that this Agreement is executed by you, other than any claims that cannot lawfully be waived. It is understood that this Agreement does not constitute an admission of liabilities on the part of the Released Parties, by whom any liability is expressly denied, but is instead made to terminate any controversy or potential controversy with respect to your employment or the cessation of your employment with the Company.

This Agreement does not affect or limit your rights to any benefits to which you may otherwise be entitled pursuant to (1) any relevant 401(k) savings and/or health and welfare plans (if any) and (2) workers’ compensation or unemployment insurance.

In further consideration for the payments and benefits described herein, you agree to execute (i) the General Release attached hereto as Attachment A within twenty-one (21) days of the Termination Date. For the avoidance of doubt, you cannot execute or attempt to execute Attachment A prior to the Termination Date.

17.In further consideration for the payments and benefits described herein, following the Termination Date, you agree to make yourself available (with reasonable notice from the Company) and to cooperate in good faith with the Company at any time following the Termination Date, in responding to inquiries and subpoenas and conducting investigations, whether involving the Company or a third party, as well as preparation for, and defense of, any lawsuit, arbitration, government inquiry or potential government inquiry, or any other action or proceeding filed or claim made against the Company, its direct or indirect corporate parents and their respective subsidiaries, divisions, affiliates, agents, directors, officers and employees, whether currently pending or asserted in the future. The Company will reimburse you for reasonable travel costs related to such participation.

18.In the event that any unaffiliated third party seeks a reference regarding you from the Company, you will refer the third party to the Clarivate employment verification service provider, The Work Number, at 1-800-367-5690 or www.theworknumber.com, which will only provide the dates of your employment at the Company, the position(s) held by you at the Company and income information (if authorized by you).

19.The Company does not guarantee the tax treatment of any payments or benefits under this Agreement including, without limitation, under the Internal Revenue Code and/or any other federal, state, municipal, local or foreign laws. You shall be solely responsible for all taxes that result from any payments due to you under this Agreement. The Parties intend that to the maximum extent permitted under all applicable law that this Agreement will be interpreted and administered to be exempt from or conform to the requirements of Internal Revenue Code


Section 409A. The Agreement is intended to be exempt from or comply with the provisions of Code Section 409A so as to prevent the imposition of tax pursuant to Section 409A, and shall be interpreted and/or amended to avoid a violation of 409A.

20.The laws of the Commonwealth of Massachusetts will apply to any dispute concerning this Agreement, except where preempted by federal law. Should any provision of this Agreement be declared illegal or unenforceable by any court of competent jurisdiction and cannot be modified to be enforceable, excluding the general release language above and/or Attachment A and the post-employment obligations described above, such provision shall immediately become null and void, leaving the remainder of the Agreement in full force and effect. Should the general release above and/or Attachment A be declared unlawful or unenforceable by a court of competent jurisdiction, you agree to sign a new general release which is in a form acceptable to the Company for no additional consideration. The post-employment obligations shall be interpreted and enforced in accordance with the terms contained in those provisions.

21.This Agreement represents the entire agreement of the parties. All prior understandings relating to the subject matter of this Agreement, whether oral or written, are hereby superseded by this Agreement other than any documents expressly referenced in this Agreement or incorporated herein by reference. If applicable, information regarding the status of your work visa, following the Termination Date, will be provided separately. The Company’s failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenants or condition.

22.Subject to the Revocation Period defined below, you have from the receipt of this Agreement through July 27, 2021 to consider executing this Agreement. You may not execute this Agreement before July 24, 2021 or after July 27, 2021. If you choose not to execute this Agreement between July 24, 2021 and July 27, 2021, you understand that you will forfeit the right to receive the Severance Pay and all benefits provided in Section 1 of this Agreement. For avoidance of doubt, if you attempt to execute this Agreement prior to July 24, 2021 or after July 27, 2021, this Agreement will be deemed to be automatically withdrawn and of no legal effect.

23.You understand that you may revoke your acceptance of this Agreement after signing it by delivering a written notice of your decision to revoke within seven (7) calendar days after the Acceptance Date (the “Revocation Period”). You also understand that your written revocation must be sent to Julie Wilson at Julie.Wilson@Clarivate.com and that this Agreement and your right to receive the Severance Pay and other benefits outlined in this Agreement shall be forfeited if you revoke your signature within the seven (7) calendar day Revocation Period. You acknowledge and agree that this Agreement shall become effective on the first day after the seven (7) calendar day Revocation Period (the "Effective Date").

You also acknowledge that but for this Agreement, including Attachment A, you would not be entitled to the Severance Pay and other benefits set forth in Paragraph 1. If you fail to sign and return Attachment A within twenty-one (21) days of the Termination Date, and/or if you revoke this Agreement and/or Attachment A then, in either case, this Agreement will be deemed to be automatically withdrawn and of no legal effect.

* * *

Since the execution of this Agreement releases the Company and the Released Parties from all claims you may have, the Company advises you to take time to consider this Agreement and to consult with an attorney of your choice prior to signing it. Please indicate your understanding, acceptance and approval of this Agreement by signing your name and dating your signature where indicated below.



BY SIGNING BELOW, YOU ACKNOWLEDGE THAT YOU HAVE READ AND UNDERSTOOD THE TERMS AND CONDITIONS OF THIS AGREEMENT, THAT YOU HAVE BEEN ADVISED TO CONSULT WITH COUNSEL OF YOUR CHOICE AND THAT YOU KNOWINGLY AND VOLUNTARILY ENTER INTO THIS AGREEMENT INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS YOU HAVE OR MIGHT HAVE AGAINST THE COMPANY AND THE RELEASED PARTIES UP TO THE DATE YOU SIGNED THIS AGREEMENT.

This Agreement may be executed in one or more counterparts and a photocopy, PDF or other electronic form of the Agreement is as valid and effective as an original, provided it contains your handwritten signature. Kindly return the executed Agreement to Julie Wilson at Julie.Wilson@Clarivate.com.

Let me take this opportunity to express my personal thanks for your services and support and to wish you every success in your future endeavors.

                            Sincerely,



                            Jerre Stead
                            Executive Chairman and Chief Executive Officer
                            Clarivate

                            





Accepted and Agreed by:


___________________________
Jeff Roy


Date_______________________



Attachment “A”

General Release

Pursuant to Paragraph 16 of the Separation Agreement and General Release (the “Separation Agreement”) to which this General Release (the “Release”) is attached I hereby agree as follows:

1.In consideration for the payments and benefits described herein and within the Separation Agreement, on behalf of myself, my predecessors, heirs, executors, administrators, successors and assigns, I hereby irrevocably and unconditionally release and discharge the Company (as that term is defined in the Separation Agreement) and its and their past, present, and future parents, subsidiaries, branches, divisions, and affiliates, and its and their past, present, and future shareholders, employees, officers, directors, agents, representatives, fiduciaries and attorneys, individually and in their official capacities (collectively, the “Released Parties”), from any and all causes of action, suits, debts, claims, liabilities, demands, costs, expenses, attorneys’ fees, damages, indemnities and obligations of any kind or nature, in law, equity or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, foreseeable and unforeseeable, which have existed or may have existed, or which do exist, at any time prior to and including the date on which I sign this Release, other than any claims that cannot lawfully be waived. This Release includes, but is not limited to any claims for employment discrimination, including, but not limited to, any claims under federal, state or local fair employment laws or practices or other employee relations statutes and amendments (including without limitation the Civil Rights Act of 1866, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Lilly Ledbetter Fair Pay Act of 2009, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Occupational Safety and Health Act, and the Sarbanes- Oxley Act of 2002), and the employment laws and regulations of the Commonwealth of Massachusetts; any claims arising under the Worker Adjustment and Retraining Notification Act (WARN), and any applicable state laws that provide for benefits similar to WARN; any claims pursuant to any other federal, state or local statutes, regulations, ordinances or executive orders; any claims based on any rule, common law or public policy; any claims based in contract, whether oral or written, express or implied; any claims based in tort, or any other obligation. I confirm that I have not filed any claim in a civil action or compliant in an administrative action against the Company, that no claims or complaints or other proceedings are pending in any court or other forum relating directly or indirectly to my employment with the Company and/or separation from employment, and that I have not raised a claims of discrimination or harassment with the Company. I affirm that I have been provided and/or have not been denied any leave requested under the Family and Medical Leave Act or applicable state law. I further affirm that I have been paid and received all compensation, wages, bonuses, commissions and benefits due to me, except as provided in the Separation Agreement. I specifically acknowledge that, by executing this Attachment A, I am releasing any and all claims I have, or may have, under the Massachusetts Wage Act, M.G.L. c. 149, §§ 148, 150, and the Massachusetts Overtime Statute, M.G.L. c. 151, § 1A – including any claims for alleged unpaid wages and/or treble damages – and that my release of claims under the Massachusetts Wage Act and Overtime Statute is stated in clear and understandable terms, is plainly worded, and that I understand I am specifically waiving any rights or claims I have, or may have, against the Released Parties under the Massachusetts Wage Act, Overtime Statute, and/or any wage payment laws. I confirm and acknowledge that the Separation Agreement reflects any and all separation, severance, bonus, compensation, and/or other payments to which I am entitled under any applicable plan, agreement or practice.



2.I understand that by signing this Release, I am providing a complete waiver of all claims that may have arisen, whether known or unknown, up until the time that this Release is executed by me, other than any claims that cannot lawfully be waived. I understand that this Release does not constitute an admission of liabilities on the part of the Released Parties, by whom any liability is expressly denied, but is instead made to terminate any controversy or potential controversy with respect to my employment or the cessation of my employment with the Company.

Notwithstanding the foregoing or anything else in this Release, nothing in this Release shall be construed to prohibit you from filing a charge or complaint with the Equal Employment Opportunity Commission (or equivalent state agency) or other administrative agency or cooperating in an official investigation, although you waive your right to any monetary relief or monetary damages in connection therewith

3.This Agreement does not affect or limit my rights to any benefits to which I may otherwise be entitled pursuant to (1) any relevant 401(k) savings and/or health and welfare plans (if any) and (2) workers’ compensation or unemployment insurance.

4.I understand that I have twenty-one (21) days from the Termination Date (as defined in the Separation Agreement) to consider executing this Release (the “Consideration Period”). I understand that I may execute this Release at any time within the Consideration Period (the “Acceptance Date”). If I choose not to execute this Release within the Consideration Period, I understand that I will forfeit the right to receive the Severance Pay and all benefits provided in Section 1 of the Separation Agreement. I further understand that I may revoke my acceptance of this Release after signing it by delivering a written notice of my decision to revoke within seven (7) calendar days after the Acceptance Date (the “Revocation Period”). I also understand that my written revocation must be sent to Julie Wilson at Julie.Wilson@Clarivate.com and that this Release and my right to receive the Severance Pay and other benefits outlined in the Separation Agreement shall be forfeited if I revoke my signature within the seven (7) calendar day Revocation Period. I acknowledge and agree that this Release shall become effective on the first day after the seven (7) calendar day Revocation Period (the "General Release Effective Date").

I acknowledge and agree that my execution of this Release releases the Company and the Released Parties from all claims I may have, and that the Company advised me to take time to consider this Release and to consult with an attorney of my choice prior to signing it.

BY SIGNING BELOW, I ACKNOWLEDGE THAT I HAVE READ AND UNDERSTOOD THE TERMS AND CONDITIONS OF THIS RELEASE, THAT I HAVE BEEN ADVISED TO CONSULT WITH COUNSEL OF MY CHOICE AND THAT I KNOWINGLY AND VOLUNTARILY ENTER INTO THIS RELEASE INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS I HAVE OR MIGHT HAVE AGAINST THE COMPANY AND THE RELEASED PARTIES UP TO THE DATE I SIGN THIS RELEASE.

This Release may be executed in one or more counterparts and a photocopy, PDF or other electronic form of this Release is as valid and effective as an original, provided it contains my handwritten signature. I acknowledge and agree that I must return an executed copy of this Release to Julie Wilson at Julie.Wilson@Clarivate.com.





Accepted and Agreed by:


IMAGE_0.JPG
Jeff Roy

Date     

Exhibit 10.4
THIS SETTLEMENT AGREEMENT is dated July 26, 2021 and is made between Camelot UK Bidco Limited of Friars House, 160 Blackfriars Road, Southwark, London, SE1 8EZ (the "Company") and Stephen Hartman of [ADDRESS REDACTED] (“you” and “your”).
1.Your employment with the Company will terminate on 30 October 2021 (the "Termination Date"). Between the date of this Agreement and the Termination Date (the “Handover Period”), you agree that the Company may place you on garden leave in accordance with clause 2 of this Agreement. You are entitled to six months’ notice under the Contract of Employment and the Company shall pay you in lieu of your notice period in accordance with clause 3 below.
2.     If the Company places you on garden leave at any stage during the Handover Period, then:
(a)the Company shall be under no obligation to provide any work to, or vest any powers in, you, who shall have no right to perform any services for the Company or any Group Company;
(b)the Company may at its discretion require you to perform duties (that could be required under the Contract of Employment) at any time;
(c)you shall continue to receive your salary and all contractual benefits in the usual way (subject to the rules of the relevant benefit schemes in force from time to time and subject to the terms of this Agreement);
(d)you shall remain an employee of the Company bound by your terms and conditions of employment, including duties of fidelity, (save as modified by this clause);
(e)you shall provide such handover of your duties as the Company may require;
(f)you shall not attend your place of work or any other premises of the Company or Group Company or access the IT systems of the Company or Group Company without the prior written consent of the Company;
(g)you shall not contact or deal with (or attempt to contact or deal with) any officer, employee, consultant, client, customer, supplier, agent, distributor, shareholder, adviser or other business contact of the Company or any Group Company without the prior written consent of the Company; and
(h)not without the prior permission of the Company make any comment regarding the Company, any Group Company or your employment on Facebook, LinkedIn or other social or professional networking sites.
3.     Without admission of liability and subject to and conditional upon your compliance with your obligations under this Agreement and the warranties given by you in this Agreement being true and accurate, the Company shall pay you, in accordance with clause 4, the following sums:
(a)£319,324.95 by way of payment in lieu of:
(i)basic pay (including pro rata annual bonus payable under AIP Scheme at target) of £298,144.00 in respect of your 6 month notice period under the Contract of Employment;
(ii)£19,657.85 in respect of annual leave which you would have accrued during your 6 month notice period; and
    1    


(iii)£1,523.10 in respect of allowance and benefits which you would have accrued during your 6 month notice period
such payments being subject to the deduction of income tax and national insurance contributions;
(b)payment in lieu of any accrued holiday as at the Termination Date which will be subject to the deduction of income tax and national insurance contributions;
(c)£909,796.02 by way of compensation for loss of employment (the "Compensation Payment"). The parties believe that the first £30,000 of the Compensation Payment may be paid to you without deductions for income tax and national insurance contributions and the Company will pay it on that basis. The balance of this sum will be subject to the deduction of income tax and national insurance contributions. The Company will deduct from the net Compensation Payment any outstanding sums which are owed by you to the Company;
(d)£100 subject to the deduction of income tax and national insurance contributions in respect of the obligations at clause 12 below; and
(e)the Company will arrange for Right Management to provide you with outplacement assistance being taken up within six months of the Termination Date.
4.     Provided that you’ve been in compliance with the terms of this Agreement through the Termination Date, the payments in clause 3(a) will be paid on the Termination Date. The payments at clauses 3(b) and 3(d) above shall be paid to you within 30 days of the later of (a) the date of this Agreement, (b) the next available payroll date following the Termination Date, (c) receipt by the Company of a copy of this Agreement signed by you with a completed solicitor's certificate attached to it in the form set out in Schedule 2 of this Agreement, or (d) receipt by the Company of the Reaffirmation Certificate required under clause 39. Subject to your compliance with the terms of this Agreement, the Compensation Payment shall be paid to you in six instalments as follows: (i) £151,632.67 within thirty (30) days of the Termination Date; (ii) £151,632.67 within ninety (90) days of Termination Date; (iii) £151,632.67 within one hundred eighty (180) days of the Termination Date; (iv) 151,632.67 within two hundred seventy (270) days of the Termination Date; (v) £151,632.67 within three hundred six-five (365) days of the Termination Date; and (vi) £151,632.67 within four hundred fifty-five (455) days of the Termination Date. For the avoidance of doubt, if the Company fails to timely receive a copy of both this Agreement signed by you with a completed solicitor's certificate attached to it in the form set out in Schedule 2 and the Reaffirmation Certificate required under clause 39, you will not be entitled to receive any portion of the Compensation Payment and any portion of the Compensation Payment paid to you shall be repayable on demand and as a debt. If any amount payable under clause 3 remains outstanding upon a Change of Control then such outstanding amount shall become immediately payable and shall be paid within 60 days of completion of the transaction that causes the Change of Control. “Change of Control” shall bear the meaning set out in clause 3 of you 2019 Restricted Share Unit Grant Notice.
5.     To the extent you were granted restricted stock units, or RSUs, or performance stock units, or PSUs, as part of the Clarivate Incentive Award Plan (the "Plan"), except as otherwise noted in this clause, all unvested RSUs and PSUs will be forfeited on the Termination Date. Notwithstanding the foregoing and provided the Company has timely received a copy of both this Agreement signed by you with a completed solicitor's certificate attached to it in the form set out in Schedule 2 and the Reaffirmation Certificate required under clause 39, the following unvested and outstanding RSUs will vest and become available on the fifteenth (15th) day of the month that is immediately
    2    


after the month that includes the Termination Date: 7,512 unvested RSUs originally granted on April 1, 2020 and 11,899 unvested RSUs originally granted on March 1, 2021. Except as otherwise noted in this clause, the terms of the Plan and any Restricted Share Unit Agreement or Performance Share Unit Agreement that may apply to you remain in full force and effect. There may be tax implications associated with the rights granted under this clause and under the Plan in respect of which you shall need to take your own advice. The Company is not providing any tax advice.
For purposes of the option agreements with grant dates of 3 March 2017, 23 May 2017, and 13 November 2018 (the "Option Agreements"), the timeframe set forth in the Option Agreements regarding the exercise of options shall be extended to December 31, 2023, subject to applicable blackout restrictions. Except as noted in this clause, all other terms of the Option Agreements remain unchanged and in place. There may be tax implications associated with the rights granted under this clause and under the Option Agreements in respect of which you shall need to take your own advice. The Company is not providing any tax advice.
6.     You confirm that, save as expressly provided in this Agreement, the Company has paid and provided you with all contractual payments and contractual benefits accrued and owing to you as at the date of this Agreement.
7.     The Company makes no warranty as to the taxable status of the Compensation Payment or of any other payments or benefits provided to you under this Agreement. You shall indemnify the Company and any Group Company on a continuing basis in respect of any tax and national insurance contributions (save for employer's national insurance contributions) due in respect of the Compensation Payment and the other payments and benefits under this Agreement (including those under clause 5) and any related interest, penalties, costs and expenses except where any related interest, penalties, costs and expenses occur due to the default of or an unreasonable delay by the Company. The Company shall, where possible, give you reasonable notice of any demand made of it for tax which may lead to liabilities to you under this indemnity and shall provide you with reasonable access to any documentation you may reasonably require to dispute such a claim (provided that nothing in this clause shall prevent the Company or any Group Company from complying with its legal obligations with regard to HM Revenue and Customs, any other tax authority or other competent body, including by paying or settling any such demand or taking any other action in connection with it as the Company or Group Company may in its absolute discretion decide).
8.     The Company agrees to reimburse you for any outstanding expenses, properly incurred in the course of employment in accordance with its usual expenses procedure, provided that you submit a final expenses claim (with such evidence of such expenses as the Company may reasonably require) within 14 days of the Termination Date.
9.     In response to a written request made directly to them from a prospective employer, the Chief People Officer of Clarivate plc will provide a written reference for you in the terms set out in Schedule 1. No other written or verbal reference will be given by the Company. If, following the Termination Date, the Company obtains information concerning you which would have affected its decision to provide such a reference, it shall inform you and may decline to give a reference and/or update any reference previously provided.
10.     You undertake not to make, publish or otherwise communicate, whether directly or indirectly, any disparaging or derogatory statement(s), whether in writing or otherwise, concerning the Company or any of its Group Companies or its/their officers, directors shareholders, employees or agents or former officers, directors, shareholders, employees or agents. The Company will not authorize any of its then current officers,
    3    


directors, shareholders, employees, or agents to make any disparaging or derogatory statement(s), whether in writing or otherwise, concerning you.
11.     You agree to keep the circumstances surrounding the termination of your employment and the fact and contents of this Agreement strictly confidential and not to disclose, communicate or otherwise make public the same to anyone save to your professional advisers, your immediate family or otherwise as may be permitted or required by law or by the relevant tax and/or regulatory authorities. You shall ensure that the members of your immediate family keep the fact and contents of this Agreement strictly confidential. In the event that your immediate family and/or professional advisers engage in conduct that would breach this clause, such conduct shall constitute a breach of this clause just as if you had engaged in such conduct.
Except for disclosures required by law, including any disclosures the Company determines it is required to make as a public company or as part of any filings with the Securities and Exchange Commission and/or other government agencies, the Company agrees to keep the fact and contents of this Agreement strictly confidential and not to disclose, communicate or otherwise make public the same to anyone save to its professional advisers including, but not limited to, its outside counsel and/or outside auditors.
12.     As a fundamental condition of this Agreement and in consideration of the payment at clause 3(c) and 3(d) above, you:
(a)agree to be bound by the restrictive covenants set out in Schedule 3 to this Agreement;
(b)shall not, at any time, divulge or communicate to any person; use for your own purposes or for the purposes of any person other than the Company or any Group Company; or through any failure to exercise due care and diligence cause any unauthorised disclosure of any Confidential Information provided that these restrictions shall cease to apply to any information which shall become available to the public generally otherwise than through any breach of this clause by you; and
(c)agree that any Intellectual Property (including without limitation designs, trademarks, logos, get up, domain name, copyright works, database rights and moral rights) created by you in the course of your employment or in any way affecting or relating to the business of the Company or any Group Company or capable of being used or adapted for use in it/them shall belong to and be the absolute property of the Company. To the extent that they do not automatically vest in the Company by the operation of law, you hereby assign absolutely to the Company all present and future rights in any such Intellectual Property together with the right to claim damages or other remedies for infringements. Nothing in this clause shall be construed as limiting or excluding your rights or those of the Company under sections 39-43 Patents Act 1977 (as amended by Patents Act 2004 or otherwise from time to time).
13.     You shall, at the Company’s request and, in any event, before the Termination Date, return all documents, property and information belonging to the Company or any Group Company which is in your possession or under your control to the Company in good working order and you warrant that you have not taken or retained, and will not take or retain, any copies, extracts or notes of any documents, files or correspondence.
14.     You shall, at the Company’s request and, in any event, before the Termination Date, inform the Company of all passwords used by you in relation to any computers, systems or applications belonging to or used by the Company or any Group Company. You further agree that, having complied with clause 13, you will procure that any information relating to the business of the Company and/or any Group Company (and all matter
    4    


derived from such information) that is or was stored on any personal computer, iPad, laptop, tablet, USB device, MP3 player, floppy disk, zip drive or other storage media or otherwise in any electronic form outside of the premises of the Company and which is or was in your possession, custody or control will be irretrievably deleted and you shall produce such evidence of having done so as the Company may require and/or shall allow the Company to inspect any such computer, laptop, tablet, smartphone or other device. It is has been agreed that you can retain your Company phone and that the Company will ensure that you are able to retain the current number, including assisting you in obtaining the relevant ‘PAX’ number (or other information needed) to enable the phone provider to transfer the number into an account in your name.
15.     Subject to clause 16, the arrangements set out in this Agreement are in full and final settlement of claims or complaints that you have or may have against the Company and any Group Company (and any of its or their officers, directors shareholders, employees or agents or former officers, directors, shareholders, employees or agents) whether arising directly or indirectly out of or in connection with your employment with the Company, its termination or otherwise and whether arising under common law, tort, statute or otherwise and whether arising in the United Kingdom or in any other country in the world and including (but not limited to) the claims identified at clause 17, any claim for breach of contract (including without limitation any claim in respect of any profit-sharing, bonus or incentive or share option arrangements and/or any redundancy payment), payment in lieu of accrued holiday and/or any claim under the Relevant Legislation or any claim under any directive or other legislation which is applicable or enforceable in the United Kingdom by virtue of the United Kingdom's membership of the European Union and any other claim in respect of which a conciliation officer is authorised to act.
16.     The Company confirms that clause 15 does not include any claims to enforce this Agreement and/or any claims for personal injury or latent personal injury (other than any claims for personal injury or latent personal injury arising out of or in connection with any discrimination claim you may have) and/or any claims for accrued pension rights which you are not, and could not reasonably be, aware of as at the date of this Agreement. You warrant that you are not aware of any facts or circumstances which may give rise to a claim for personal injury, latent personal injury or accrued pension rights at the date of this Agreement.
17.     The particular claims, complaints or rights of action that you may have against the Company and any Group Company (and any of its/their officers, directors shareholders, employees or agents or former officers, directors, shareholders, employees or agents ) and which the parties wish to settle by way of this Agreement relate to claims of unfair dismissal, wrongful dismissal, breach of contract (including any claims in relation to bonus, share, share option and incentive arrangements), unlawful deductions from wages and holiday pay.
18.     You understand and agree that clause 15 is intended to have effect irrespective of whether or not you are or could be aware of such claims or have such claims in your express contemplation.
19.     You warrant that:
(a)you have received independent legal advice from Vanessa James of Ashfords LLP, 1 New Fetter Lane, London EC4A 1AN (the "Adviser");
(b)you have instructed the Adviser to advise on whether you have or may have any claims, including statutory claims, against the Company or any Group Company (or any of its or their officers, directors, shareholders, employees or agents or former officers, directors, shareholders, employees or agents) arising
    5    


directly or indirectly out of or in connection with your employment with the Company, its termination or otherwise;
(c)you have provided the Adviser with all available information which the Adviser requires or may require in order to advise you whether you have any such claims;
(d)you have not issued or given instructions to any person to issue proceedings against the Company or any Group Company of a kind set out in clauses 15 and 17 and undertake that neither you nor anyone acting on your behalf will issue such claims;
(e)having taken independent legal advice, you are not aware of any facts or circumstances which might give rise to a claim against the Company, any Group Company (or any of its or their officers, employees or agents) other than those identified at clause 17; and
(f)you are not aware of any reason, which if disclosed to the Company, would entitle or have entitled the Company to terminate your employment summarily.
20.     You will procure that, on the date of completion of this Agreement, the Adviser provides the Company with a signed, dated and completed solicitor's certificate in the form set out in Schedule 2 of this Agreement.
21.     You warrant that you have received independent legal advice from the Adviser, who is a relevant independent adviser for the purposes of the legislation referred to at clause 22, as to the terms and effect of this Agreement and in particular its effect on your ability to pursue your rights, if any, before an Employment Tribunal. You have been advised by the Adviser that there is in force and was in force at the time you received the advice referred to above, a contract of insurance or an indemnity provided by a professional body covering the risk of a claim by you in respect of loss arising in consequence of that advice.
22.     This Agreement satisfies the conditions relating to settlement agreements and compromise agreements contained in sections 203(3) of the Employment Rights Act 1996, 77(4A) of the Sex Discrimination Act 1975, 72(4A) of the Race Relations Act 1976, 288(2B) Trade Union and Labour Relations (Consolidation) Act 1992, paragraph 2(2), Schedule 3A, Disability Discrimination Act 1995, 35(3) Working Time Regulations 1998, 49(4) National Minimum Wage Act 1998, Regulation 41 of the Transnational Information and Consultation of Employees Regulations 1999, Regulation 9 of the Part Time Workers (Prevention of Less Favourable Treatment) Regulations 2000, Regulation 10 of the Fixed Term Employees (Prevention of Less Favourable Treatment Regulations 2002), paragraph 2(2), Schedule 4, Employment Equality (Sexual Orientation) Regulations 2003, paragraph 2(2), Schedule 4, Employment Equality (Religion or Belief) Regulations 2003, Regulation 40 of the Information and Consultation of Employees Regulations 2004, paragraph 2(2), Schedule 5, Employment Equality (Age) Regulations 2006, paragraph 13 to the Schedule to the, Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006, regulation 62 of the Companies (Cross-Border Mergers) Regulations 2007, section 58 of the Pensions Act 2008 and section 147(3) of the Equality Act 2010.
23.     The Company has entered into this Agreement in reliance on the warranties given by you and your agreement to the obligations contained in this Agreement. If you breach any of these warranties or obligations, without prejudice to any other rights or remedies of the Company or any Group Company arising from such action, the Company may terminate this Agreement with immediate effect, will have no obligation to make any payment of any sums due but not already paid or provide any benefit to you or procure any beneficial treatment for you (including in relation to shares and share options), and will be entitled to demand immediate repayment as a debt of all or any part of any sums
    6    


already paid under this Agreement. Any delay by the Company in exercising this right of termination shall not constitute a waiver of it.
24.     You agree, without prejudice to any other rights or remedies of the Company or any Group Company arising from such action, that if you institute or continue any proceedings against the Company or any Group Company (or any of its or their officers, directors, shareholders, employees or agents or former officers, directors, shareholders, employees or agents) of a kind referred to in clauses 15 and 17 and, if an award is made to you in respect of such proceedings, you shall repay to the Company immediately upon demand the lesser of (a) the Compensation Payment after such deductions of tax and national insurance as were made by the Company at source; or (b) such amount of the Compensation Payment as is equivalent to the total amount of the compensation or damages (including interest) awarded, together with the full amount of any legal fees incurred by the Company and Group Company in defending such proceedings. Any part of the Compensation Payment which remain outstanding shall cease to be payable under this Agreement with effect from the date of commencement of such proceedings.
25.     Without prejudice to any other provision in this Agreement, you agree that in the event that the validity of this Agreement or any aspect of the waiver is challenged, you will enter into a COT3 agreement with the Company in full and final settlement of all claims and/or take such other step(s) as the Company may reasonably require to give effect to the intention of the parties referred to above without further payment.
26.     You agree that you will not submit any grievances to the Company or any Group Company arising directly or indirectly out of or in connection with your employment with the Company, its termination or otherwise and you will not make a data subject access request under any data protection legislation to the Company or any Group Company. You agree not to pursue any grievance or appeal which may have been raised by you and/or any subject access requests outstanding at the date of this Agreement and all such grievances, appeal and/or requests shall be deemed to have been withdrawn by you as at the date of this Agreement.
27.     You shall, on the Termination Date or at the Company’s earlier request, resign all your directorships, trusteeships, company secretarial positions and other offices in the Company and all Group Companies using a letter in the form set out in Schedule 5 of this Agreement.
28.     You agree to make yourself available to provide assistance to, and to cooperate with, the Company or any Group Company or its or their advisers in any internal investigation or any administrative, regulatory, judicial or quasi-judicial proceedings or enquiry as reasonably requested by the Company. You acknowledge that this could involve, but is not limited to, responding to or defending any regulatory or legal process, providing information in relation to any such process, preparing witness statements and giving evidence in person on behalf of the Company. The Company shall reimburse any reasonable expenses incurred by you as a consequence of complying with your obligations under this clause, provided that such expenses are approved in advance by the Company and supported by evidence of expenditure which is satisfactory to the Company.
29.     The parties acknowledge that nothing in this Agreement shall prevent you from making a protected disclosure within the meaning of Section 43A of the Employment Rights Act 1996, making a disclosure to a regulator regarding any misconduct, wrongdoing or serious breach of regulatory requirements, reporting a criminal offence to any law enforcement agency or co-operating with a criminal investigation or prosecution.
30.     This Agreement sets out the entire agreement between the parties and shall be in substitution for and shall supersede any prior agreement, arrangement or
    7    


understanding (whether oral or written) relating to the subject matter of this Agreement. No variation of this Agreement shall be effective unless it is in writing and signed by the parties (or their authorised representatives).
31.     You agree that you have not entered into this Agreement in reliance upon any statement, representation, assurance or warranty (whether made innocently or negligently) which is not set out in this Agreement.
32.     This Agreement, although marked "without prejudice and subject to contract" will, upon signature by all parties, be treated as an open document evidencing an agreement binding on the parties.
33.     This Agreement may be entered into in any number of counterparts and by the parties to it on separate counterparts, each of which when so executed and delivered shall be an original, but all the counterparts shall together constitute one and the same agreement.
34.     This Agreement shall be governed by and construed in accordance with English law and the parties submit to the exclusive jurisdiction of the English courts.
35.     This Agreement shall be valid, binding and enforceable against a party only when executed by an authorised individual on behalf of the party by means of:
(a)a DocuSign® or other electronic signature;
(b)an original, manual signature; or
(c)a scanned or photocopied manual signature, and
each DocuSign® or other electronic, scanned or photocopied manual signature shall for all purposes have the same validity, legal effect and admissibility in evidence as an original manual signature and the parties hereby waive any objection to the contrary.
36.     If any provision of this Agreement is found by any court or other authority of competent jurisdiction to be illegal, invalid or unenforceable, that provision or part-provision shall, to the extent required, be deemed not to form part of this Agreement, but that shall not affect the legality, validity or enforceability of any other provision of this Agreement.
37.     No person who is not a party to this Agreement shall have any rights under the Contracts (Rights of Third Parties) Act 1999 except that the benefits conferred by this Agreement in favour of any Group Company or any officers, directors, shareholders, employees or agents or former officers, directors, shareholders, employees or agents of the Company or any Group Company (“Relevant Party”) may be enforced by any Group Company and any Relevant Party, and any Group Company may enforce any rights, benefits or causes of action conferred by this Agreement on behalf of the Company. The parties agree that they may amend or vary any or all of the terms of this Agreement or terminate this Agreement without the consent of any Group Company and any Relevant Party.
38.     The Company agrees to pay your solicitors, following its receipt of an invoice addressed to you but marked payable by the Company with the accompanying address: HR Department, Clarivate Analytics, Friars House, 160 Blackfriars Road, London, SE1 8EZ, the sum of up to £4,000 plus VAT in respect of your legal expenses incurred only in connection with the taking of advice in relation to the termination of your employment and this Agreement.
39.     It is a condition of this Agreement that, on or within 7 days after the Termination Date, you will execute and provide to the Company the reaffirmation certificate (“Reaffirmation Certificate”) set out at Schedule 4. No payment shall be made to you, or benefit
    8    


provided to (or beneficial treatment obtained for) you, under this Agreement until a valid Reaffirmation Certificate has been provided.
40.     You must only sign this Agreement during the period from 24 July 2021 to 27 July 2021 inclusive (“Signature Period”). If you sign the Agreement outside the Signature Period, then:
(a)if the Company has signed the Agreement, the Agreement will immediately be null and void and shall have no legal effect;
(b)if the Company has not signed the Agreement, the Agreement will be deemed to be automatically withdrawn and of no legal effect;
and, in both cases, you shall not be entitled to any payment and/or compensation and agree that you have no basis to bring a claim against the Company or any Relevant Party.
41.     In this Agreement the following expressions shall have the following meanings:
"Confidential Information" means trade secrets or information of a confidential nature which is important to and belongs or relates to the Company or any Group Company (or their clients or customers) which you may have received or obtained as a result of or in any way in connection with your employment and includes but is not limited to information relating to clients or customers or potential clients or customers, suppliers, agents, business partners, products, affairs, finances, employees, shareholders, managers or distributors, of the Company or any Group Company, commercial, financial or marketing information, business development or business planning information, customer lists, technical information and know-how comprising trade secrets and information which you are/have been told is confidential, or can be reasonably be expected to be confidential;
“Contract of Employment” means your contract of employment dated 30 April 2013;
"Intellectual Property" means designs, trade marks, logos, get-up, domain names, copyright works, database rights, moral rights, confidential information, know-how, inventions, utility models, semi-conductor topography rights and all rights of a similar nature in any part of the world whether or not registered or capable of registration and, in respect of such rights which are registrable, the right to apply for registration and all applications for any of the above rights;
"Group" the Company, the ultimate Holding Company of the Company and any Subsidiary of the Company or the ultimate Holding Company of the Company from time to time, Camelot Holdings (Jersey) Limited and its direct and indirect subsidiaries, or any company that is a successor (including, without limitation, by change of name, dissolution, merger, consolidation, reorganisation, sale or other disposition) to any such company, Clarivate Plc, Clarivate Analytics (UK) Limited, Clarivate Analytics (Compumark) Limited, Clarivate Analytics (International Limited), Clarivate Analytics (IP&S) Limited and any other company within the Clarivate group; and "Group Company" shall be construed accordingly;

"Holding Company" means a holding company (as defined by section 1159 of the Companies Act 2006) or a parent undertaking (as defined by section 1162 of the Companies Act 2006);

"Relevant Legislation" means the Employment Rights Act 1996, including without limitation its provisions relating to unfair dismissal, the right to a statement of employment particulars under Part I, unlawful deduction from wages or unlawful receipt of payments from you under Part II, guarantee payments under Part III, protected disclosures under Part IVA, unlawful detriment under Part V, breach of the right to time
    9    


off work under Part VI, remuneration or alternative work on suspension under Part VII, a redundancy payment under Part XI and Chapters II and V, and any other rights under the Employment Rights Act 1996, the Sex Discrimination Act 1975, the Race Relations Act 1976, the Disability Discrimination Act 1995, the Employment Equality (Sexual Orientation) Regulations 2003, the Employment Equality (Religion or Belief) Regulations 2003, the Employment Equality (Age) Regulations 2006, the Equality Act 2010, including without limitation provisions relating to direct or indirect discrimination, disability-related discrimination, discrimination arising from disability, a failure to make reasonable adjustments, victimisation or harassment, the Equal Pay Act 1970, the Trade Union and Labour Relations (Consolidation) Act 1992, the Protection from Harassment Act 1997, the Data Protection Act 2018, the Working Time Regulations 1998, the National Minimum Wage Act 1998, the Human Rights Act 1998, the Employment Relations Act 1999, the Transnational Information and Consultation of Employees Regulations 1999, the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000, the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002, the Information and Consultation of Employees Regulations 2004, the Transfer of Undertakings (Protection of Employment) Regulations 2006 and the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006, Companies (Cross-Border Mergers) Regulations 2007, the Pensions Act 2008, Employment Relations Act 1999 (Blacklists) Regulations 2010 and Agency Workers Regulations 2010.
"Subsidiary" means a subsidiary (as defined by section 1159 of the Companies Act 2006) or a subsidiary undertaking (as defined by section 1162 of the Companies Act 2006);
Where the context allows, references to any statute or provision of a statute shall be construed as references to the statute or the provisions as amended, modified, considered or re-enacted and to any subordinate legislation made from time to time under that provision.

SIGNED for and on behalf of        )
the Company                )    ………………………………………………

SIGNED by                )
Stephen Hartman            )    ………………………………………………



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Schedule 1- Reference

Dear Sir/Madam

Re: Stephen Hartman

Thank you for you enquiry regarding Stephen Hartman.

Stephen Hartman was employed by us from 30 June 1997 to 30 October 2021. He held the position of General Counsel and Head of Corporate Development

Whilst the above information is given in confidence and good faith, no responsibility or liability can, however, be accepted by the Company or any of its employees for any omissions or inconsistencies in the information or for any loss or damage that may result from reliance being placed on it.  The information is given in confidence and should not be disclosed to a third party.

Yours faithfully,



Julie Wilson
Chief People Officer of Clarivate plc






    11    




Schedule 2
Letter from Adviser on headed notepaper
To:
I, Vanessa James of Ashfords LLP, 1 New Fetter Lane, London EC4A 1AN, confirm that I have given Stephen Hartman independent legal advice as to the terms and effect of the Settlement Agreement between Clarivate Analytics (UK) Limited and Stephen Hartman dated [insert date] and in particular its effect on his ability to pursue his rights before an Employment Tribunal.
I confirm that I am a relevant independent adviser (as defined by Section 203 of the Employment Rights Act 1996) and that there is and was at the time the advice was given, a contract of insurance or an indemnity provided for members of a profession or professional body covering the risk of a claim by Stephen Hartman in respect of any loss arising in consequence of that advice.

Signed    …………………………………………..
    Vanessa James



    12    


Schedule 3
Restrictive covenants

1. In this Schedule 3 the following definitions shall apply:
(a)"Prospective Customer" means any person, firm, company or other organisation whatsoever with whom or which the Company or any relevant Group Company shall have had negotiations or material discussions regarding the possible distribution, sale or supply any Restricted Products as at the Termination Date or during the 12 months immediately preceding the Termination Date and with whom or which, during such period:
(i)you had business dealings; or
(ii)any employee of the Group who was under your direct or indirect supervision shall have had business dealings;
(b)"Restricted Area" means the United Kingdom and any other country in the world where, on the Termination Date, the Company (or any relevant Group Company) was involved or concerned to a material extent in the production, development, manufacture, distribution, sale or supply of Restricted Products;
(c)"Restricted Business" means any business of the Company (or any relevant Group Company) with which you were involved or concerned to a material extent during the 12 months immediately preceding the Termination Date;
(d)"Restricted Customer" means any person to whom or which the Company (or any relevant Group Company) distributed, sold or supplied Restricted Products as at the Termination Date or during the 12 months immediately preceding the Termination Date and with whom or which you shall have had business dealings during such period or with whom or which any employee under your control shall to your knowledge have had business dealings during such period;
(e)"Restricted Employee" means anyone employed or engaged by the Company (or any relevant Group Company) and who could, whether on their own or with others, materially damage the interests of the Company (or any relevant Group Company) if they were involved in any capacity in any business concern which competes with any Restricted Business and with whom you shall have dealt with to a material extent in the course of your employment in the 12 months immediately preceding the Termination Date. You acknowledge that this could include individuals, for whom you had direct or indirect responsibility, in the legal, compliance, risk and corporate development teams;
(f)"Restricted Products" means any product, goods or services produced, developed, manufactured, distributed, sold or supplied by the Company (or any relevant Group Company) with which you were involved or concerned to a material extent, or for which you were responsible, during the 12 months immediately preceding the Termination Date, or products, goods or services of a similar kind;
(g)"Restricted Supplier" means any person who or which supplied goods or services to the Company (or any relevant Group Company) as at the Termination Date or during the 12 months immediately preceding the Termination Date and with or whom you shall have had business dealings or with whom or which any employee under your control shall to your knowledge have had business dealings during such period; and
    13    


(h)"Senior Employee" means any person who was on the Termination Date a director of the Company (or any relevant Group Company) or otherwise engaged by the Company (or any relevant Group Company) in a senior capacity. You acknowledge that this could include individuals, for whom you had direct or indirect responsibility, in the legal, compliance, risk and corporate development teams;
2.     All other capitalised terms used in this Schedule 3 but not defined in this Schedule shall have the meaning given in clause 41 of the Agreement.
3.     You hereby undertake to the Company (for itself and as trustee and agent for each Group Company) that you shall not during the period of 12 months following the Termination Date (less any period when you are placed on garden leave in accordance with clause 2 of this Agreement), without the prior written consent of the Company (or relevant Group Company), whether by yourself or through your employees, agents or any other person and whether on your own behalf or on behalf of or in conjunction with any other person directly or indirectly be employed or engaged or otherwise interested in any trade, business, occupation or other activity which is in competition with the Restricted Business in the Restricted Area.
4.     You hereby undertake with the Company (for itself and as trustee and agent for each Group Company) that you shall not during the period of 12 months following the Termination Date (less any period when you are placed on garden leave in accordance with clause 2 of this Agreement), without the prior written consent of the Company (or relevant Group Company), whether by yourself, through your employees, agents or any other person and whether on your own behalf or on behalf of any other person, and whether via social media or by any other means, directly or indirectly;
(a)in competition with the Company (or relevant Group Company), solicit business from or canvass any Restricted Customer or Prospective Customer in respect of Restricted Products;
(b)in competition with the Company or relevant Group Company), accept orders for Restricted Products from any Restricted Customer or Prospective Customer or have any business dealings concerning Restricted Products with any Restricted Customer or Prospective Customer;
5.     You hereby undertake to the Company (for itself and as trustee and agent for each Group Company) that you shall not during the period of 12 months following the Termination Date (less any period when you are placed on garden leave in accordance with clause 2 of this Agreement), without the prior written consent of the Company (or relevant Group Company), whether by yourself or through your employers, employees, agents or any other person and whether on your own behalf or on behalf of or in conjunction with any other person, and whether via social media or by any other means, directly or indirectly:
(a)employ or engage, or otherwise facilitate the employment or engagement of, any person who on the Termination Date is a Restricted Employee and/or a Senior Employee whether or not any such person would thereby commit a breach of contract; and/or
(b)solicit or induce (or endeavour to solicit or induce) any person who on the Termination Date is a Restricted Employee and/or a Senior Employee to cease working for or providing services to the Company (or relevant Group Company), whether by offering to employ or engage such a person or by otherwise endeavouring to entice such a person away from the Company (or relevant Group Company), and whether or not any such person would thereby commit a breach of contract; and/or
    14    


(c)seek to entice a Restricted Supplier away from the Company (or relevant Group Company) or interfere with the relationship between the Company (or relevant Group Company) and a Restricted Supplier.
6.     Nothing contained in clauses 3, 4 or 5 of this Schedule 3 shall be deemed:
(a)to prohibit you from the seeking or doing of any activities not in direct or indirect competition with the Restricted Business; or
(b)prohibit you (or your nominees) from holding for investment purposes only not more than 5% of the issued shares or securities of any company whose shares or other capital are listed on or dealt on or under the rules of an exchange which is a "recognised investment exchange" or a "recognised overseas investment exchange" pursuant to section 285 or section 292 of the Financial Services and Markets Act 2000.
7.     You will on the Company's request promptly enter into a deed of restrictive covenants in a form acceptable to the Company with any Group Company in order to give such Group Company the same protection given to the Company pursuant to this Schedule 3.
8.     Each of the undertakings and covenants contained in this Schedule 3 shall be construed as a separate and independent covenant and if one or more of the covenants is found to be void or unenforceable the validity of the remaining covenants shall not be affected.
9.     You agree that in the event of your receiving from any person an offer of employment or other engagement (whether oral or in writing and whether accepted or not) either during the Handover Period or during the continuance in force of all or any of restrictions set out in this Schedule 3, you shall as soon as possible after any such offer is made notify the Company and make the substance of the restrictions contained in this Schedule 3 known to the person making such offer.
10.     You hereby undertake with the Company that you will not at any time:
(a)during the Handover Period, or after the Termination Date, engage in any trade or business or be associated with any person, firm or company engaged in any trade or business using the name(s) Clarivate or incorporating such words;
(b)during the Handover Period, or after the Termination Date, engage in any trade or business or be associated with any person, firm or company engaged in any trade or business using or incorporating any variation of any of the names set out at clause 10(a) above that could reasonably be deemed to obtain or confer a business advantage by virtue of being similar to any such names and, as a result of such business advantage, could materially damage the interests of the Company or any Group Company; and
(c)after the Termination Date claim, represent or otherwise indicate (whether via social media or otherwise) any present association with the Company or any Group Company or for the purpose of carrying on or retaining any business or custom, claim, represent or otherwise indicate (whether via social media or otherwise) any past association with the Company or any Group Company to its detriment.
11.     The restrictions in this Schedule 3 (on which you have had the opportunity to take independent advice) are considered to be reasonable by the parties and necessary for the protection of the legitimate interests of the Company and, if appropriate, of any Group Company but if any restriction(s) shall be found to be void or voidable but would be valid and enforceable if part or parts of the wording were deleted, the relevant
    15    


restriction(s) shall apply with such deletion(s) as may be necessary to make it or them valid and enforceable.
12.     The Company reserves the right to assign its rights under this Schedule 3 to any successor in business to the Company or to any of its subsidiaries or associates.

    16    




Schedule 4
Reaffirmation Certificate
(A)       I hereby confirm and agree that, in consideration of the Company's obligations under the Settlement Agreement between me and the Company (as defined in such Settlement Agreement) dated [insert date agreement signed] and having taken legal advice, there are no matters or circumstances that give rise or may give rise to any claims by me in connection with my employment by the Company or its termination which fall under the claims identified and specified in Clauses 15 and 17 in such Settlement Agreement which have arisen since the date of such Settlement Agreement or, if there are any such matters, I confirm and agree that they are settled by the Settlement Agreement and/or this certificate.
(B)       In particular and without prejudice to the preceding wording, I hereby agree to waive any and all claims arising from the termination of my employment on the Termination Date (as defined in the Settlement Agreement), as are identified in Clauses 15 and 17 of the Settlement Agreement.
(C)       I confirm that I have received independent legal advice from Vanessa James of Ashfords LLP, 1 New Fetter Lane, London EC4A 1AN is a relevant independent adviser for the purposes of the legislation referred to in Clause 22 of the Settlement Agreement, as to the terms and effect of the Settlement Agreement and this certificate and in particular its effect on my ability to pursue my rights if any before an employment tribunal.  I have been advised that there is in force and was in force when I received such advice, a contract of insurance or an indemnity provided by a professional body covering the risk of a claim by me in respect of loss arising in consequence of that advice.
(D)       I confirm that the Company has paid to me all my contractual payments and that it has provided me with all contractual benefits accrued and owing to me up to the Termination Date.
(E)       This certificate satisfies the conditions regulating settlement agreements contained in the statutory provisions set out in Clause 22 of the Settlement Agreement.
EXECUTED AS A DEED by    )    ………………………………………….
Stephen Hartman        )
in the presence of        )
Witness Signature
Witness Full Name
Witness Address

Date                )    ………………………………………….

    17    


Schedule 5

Resignation Letter

Dear Sirs

I hereby resign from the office of [director] [company secretary] of [insert name of company] (the “Company”) with immediate effect.

I acknowledge and confirm that I have no claim of whatsoever kind, whether contractual or otherwise, outstanding against the Company, any member of its Group (as defined below) or any of their officers, directors, shareholders, employees or agents in respect of the termination of my appointment. To the extent that any such claim or right of action exists or may exist, I irrevocably waive such claim or right of action and release and discharge the Company, each member of its Group and their officers, directors, shareholders, employees and agents from any and all liability whatsoever in respect thereof.

In this letter "Group" means the Company, the ultimate Holding Company of the Company and any Subsidiary of the Company or the ultimate Holding Company of the Company from time to time; "Holding Company" means a holding company (as defined by section 1159 of the Companies Act 2006) or a parent undertaking (as defined by section 1162 of the Companies Act 2006); and "Subsidiary" means a subsidiary (as defined by section 1159 of the Companies Act 2006) or a subsidiary undertaking (as defined by section 1162 of the Companies Act 2006).

Yours faithfully


Stephen Hartman

    18    

Exhibit 10.5
EXECUTIVE SEVERANCE PLAN
OF CLARIVATE PLC
AND SUMMARY PLAN DESCRIPTION
Effective June 30, 2021































EXECUTIVE SEVERANCE PAY PLAN

I.PURPOSE
Clarivate Plc (the “Company”) has established this Executive Severance Pay Plan of Clarivate Plc (the “Plan”) for the benefit of the Executive Officers and the Executive Leadership Team, other than the Executive Chairman and/or Chief Executive Officer, of the Company, its Affiliates, and its Subsidiaries. The purpose of the Plan is to provide severance pay and certain other benefits to the Executives when their employment terminates under circumstances covered by the Plan. Benefits under the Plan are conditioned on the termination of Executive’s employment under circumstances covered by the Plan and the execution of a Severance Agreement, which shall include a general release of all claims against the Company, its Affiliates, and other specified persons, and may include restrictive covenant agreements and such other terms and conditions deemed appropriate by the Administrator.
Nothing in this Plan should be read or interpreted as changing the Company policy that all covered employees are employed at will, and the Company continues to retain the absolute right and power to terminate any employee with or without good cause and with or without prior notice. Furthermore, nothing contained in this Plan confers any right or guarantee of continued employment on any employee. The Company retains the right to make changes to this Plan and any other benefit plans it offers at any time for any reason with or without notice
II.DEFINITIONS
For the purposes of this Plan, the following terms shall have the meanings set forth below:
a.“Affiliate” shall have the meaning set forth in Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”).
b.“Administrator” means Clarivate Analytics (US) LLC (“Clarivate”) or the Committee established by Clarivate and to which Clarivate has delegated administrative authority pursuant to Article VI.
c.“Annual Incentive Plan” means the annual incentive plan sponsored by the Company in effect at the time of the Executive’s termination of employment.
d.“Base Salary” means Executive’s annual base salary at the rate in effect on the date of:
i.if there has been a Change in Control, the date of the Change in Control, or if greater, the rate in effect immediately prior to Executive’s termination of employment with the Company; or
ii.if there has not been a Change in Control, the rate in effect immediately prior to Executive’s termination of employment.
e.“Board” means the Board of Directors of the Company.
f.“Cause” means with respect to each Executive, “Cause” as defined in the applicable employment agreement between the Executive and the Company or, if no such agreement exists or such agreement does not contain a definition of Cause, then Cause shall mean:
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i.the Executive’s unauthorized use or disclosure of confidential information or trade secrets of the Company;
ii.the Executive’s material breach of a written agreement between the Executive and the Company including, without limitation, any employment, confidentiality, non-compete, non-solicit, or similar agreement;
iii.the Executive’s commission of, indictment for, or entry of a plea of guilty or nolo contendere by the Executive to a felony under the laws of the United States or any state thereof for any crime involving fraud, dishonesty, theft, embezzlement or moral turpitude, or any similar crime in any jurisdiction outside of the United States;
iv.the Executive’s negligence or willful misconduct in the performance of their duties or the Executive’s willful or repeated failure or refusal to substantially perform duties reasonably requested or assigned by the Executive’s supervisor or the Board;
v.the Executive’s commission of any act of fraud, embezzlement, material misappropriation or dishonesty against the Company; or
vi.the Executive’s acts, omissions, or statements which the Company reasonably determines to be materially detrimental or damaging to the reputation, operations, prospects, or business relations of the Company.
g.“Code” means the Internal Revenue Code of 1986, as amended.
h. “Committee” means the committee, if any, established by Clarivate and to which Clarivate has delegated administrative authority pursuant to Article VI.
i.“Change in Control” shall mean the occurrence of any of the following events:
i.any person (as defined in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, “Person”), other than (A) any employee plan established by the Company or any Subsidiary, (B) the Company or any of its Affiliates, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) an entity owned, directly or indirectly, by shareholders of the Company in substantially the same proportions as their ownership of the Company, is (or becomes, during any twelve (12)-month period) the beneficial owner (as defined in Rule 13d-3 under the Exchange Act, “Beneficial Owner”), directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates other than in connection with the acquisition by the Company or its Affiliates of a business) representing 50% or more of the total voting power of the stock of the Company; provided that the provisions of this subsection (i) are not intended to apply to or include as a Change in Control any transaction that is specifically excepted from the definition of Change in Control under subsection (iii) below;
ii.a change in the composition of the Board such that, during any twelve (12)-month period, the individuals who, as of the beginning of such period, constitute the Board (the “Existing Board”) cease for any reason to constitute at least 50% of the Board; provided, however, that any individual becoming a member of the Board subsequent to the
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beginning of such period whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the Board immediately prior to the date of such appointment or election shall be considered as though such individual were a member of the Existing Board; provided further, that, notwithstanding the foregoing, no individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 or Regulation 14A promulgated under the Exchange Act or successor statutes or rules containing analogous concepts) or other actual or threatened solicitation of proxies or consents by or on behalf of an individual, corporation, partnership, group, associate, or other entity or Person other than the Board, shall in any event be considered to be a member of the Existing Board;
iii.the consummation of a merger, amalgamation or consolidation of the Company with any other corporation or other entity, or the issuance of voting securities in connection with such a transaction pursuant to applicable stock exchange requirements; provided that immediately following such transaction the voting securities of the Company outstanding immediately prior thereto do not continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity of such transaction or parent entity thereof) 50% or more of the total voting power and total fair market value of the Company’s stock (or, if the Company is not the surviving entity of such merger or consolidation, 50% or more of the total voting power and total fair market value of the stock of such surviving entity or parent entity thereof); and provided, further, that such a transaction effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates other than in connection with the acquisition by the Company or its affiliates of a business) representing 50% or more of either the then-outstanding ordinary Shares or the combined voting power and total fair market value of the Company’s then-outstanding voting securities shall not be considered a Change in Control; or
iv.the sale or disposition by the Company of all or substantially all of the Company’s assets in which any Person acquires (or has acquired during the twelve (12)-month period ending on the date of the most recent acquisition by such Person) assets from the Company that have a total gross fair market value equal to more than 50% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions.
Notwithstanding the foregoing, (1) no Change in Control shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of the Shares immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns substantially all of the assets of the Company immediately prior to such transaction or series of transactions and (2) no Change in Control shall be deemed to have occurred upon the acquisition of additional control of the Company by any Person that is considered to effectively control the Company.
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Notwithstanding the foregoing, to the extent necessary to comply with Section 409A of the Code with respect to the payment of “nonqualified deferred compensation,” “Change in Control” shall be limited to a “change in control event” as defined under Section 409A of the Code.
j.“Disability” means the Executive is disabled within the meaning of such term under the Company’s long-term disability plan in effect at the relevant time.
k.“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
l.“Executive” means any individual comprising the Executive officers of the Company or the Executive Leadership Team of the Company other than the Executive Chairman and/or Chief Executive Officer of the Company. The Company may designate additional eligible participants for benefits under all or any portion of this Plan, regardless of whether such individual is a member of the Executive Leadership Team, and once so designated such individual shall be referred to as an “Executive” herein.
m.“Executive Leadership Team” means the Company’s Executive Leadership Team other than the Executive Chairman and/or Chief Executive Officer of the Company and any other individual serving in any other position who is specifically approved by the Committee for participation in the Plan as a member of the Executive Leadership Team.
n. “Severance Agreement” means the written agreement between the Company and the Executive made pursuant to the guidelines of this Plan and setting forth the severance benefits payable to the Executive under the Plan, the form and timing of such payments, any conditions to payment, and such other terms and conditions deemed appropriate or necessary by the Administrator.
o.“Share” means an ordinary share in the capital of the Company.
p.“Subsidiary” means any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbroken chain beneficially owns, at the time of the determination, securities or interests representing at least 50% of the total combined voting power of all classes of securities or interests in one of the other entities in such chain.
III.TERMINATION OF EMPLOYMENT (NO CHANGE IN CONTROL)
If the Company terminates the Executive’s employment without Cause at any time other than during the twelve (12)-month period immediately following a Change in Control, the Company shall provide severance benefits to the departing Executive that shall not be less than the cumulative severance benefits provided for in any employment agreement otherwise entered into between the Company and the Executive, or if none exists, shall otherwise be based on the following guidelines as deemed appropriate by the Company and reflected in the Severance Agreement:
a.Severance.
i.A cash amount equal to:
i.eighteen (18) months of Base Salary; plus
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ii.an amount reflecting eighteen (18) months of bonus target under the Annual Incentive Plan assuming the target bonus had been met at 100% for a full eighteen (18) month period, with such amount to be calculated based on the Executive’s target bonus and Base Salary as of the termination of employment.
ii.This cash severance amount shall be paid in accordance with the terms and conditions as set out in the relevant Severance Agreement.
b.Equity and Equity Based Awards.
i.Any unvested outstanding awards of Restricted Stock Units under the Clarivate Plc 2019 Incentive Award Plan (the “Equity Plan”) shall become vested to the extent such Restricted Stock Units would have otherwise vested had the Executive’s employment continued over the eighteen (18) month period following the Executive’s termination date. Except as noted in this paragraph, all other terms of any award agreements governing the terms of the Executive’s outstanding Restricted Stock Units shall otherwise remain unchanged and in place.
ii.No enhanced vesting shall apply to outstanding awards of Performance Share Units under the Equity Plan, which shall be forfeited and cancelled as provided in such plan and underlying award agreements.
iii.For purposes of any Option Agreement Executive may have signed, the timeframe for exercise of any outstanding option shall be extended to the date that is the two (2)-year anniversary of December 31st of the year in which the Executive experiences his or her termination of employment, or, if earlier, the expiration date of such option. Except as noted in this paragraph, all other terms of any Option Agreement shall remain unchanged and in place.
c.Other Benefits.
i.To the extent the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) applies, the Executive shall be entitled to a lump sum payment equal to the applicable monthly COBRA premium payment for the group medical plan in which the Executive was enrolled as of the termination of employment date, multiplied by eighteen (18). This lump sum amount shall be paid as soon as administratively feasible following the Executive’s termination from employment but, in any event, no later than March 15th of the year in which the Executive’s termination from employment occurs.
ii.The Executive shall not be entitled to any benefits other than those expressly provided for in this Plan and the Award Agreement provided thereunder.
IV.TERMINATION OF EMPLOYMENT IN CONNECTION WITH A CHANGE IN CONTROL
If the Company terminates the Executive’s employment without Cause during the twelve (12)-month period immediately following a Change in Control, the Company shall provide severance benefits to the departing Executive that shall not be less than the cumulative severance benefits provided for in any employment or severance agreement otherwise entered into between the Company and the Executive, or if none exists, shall otherwise not be less than an amount based on the following guidelines:
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a.Severance.
i.A cash amount equal to:
i.twenty-four (24) months of Base Salary; plus
ii.an amount reflecting twenty-four (24) months of bonus target under the Annual Incentive Plan assuming the target bonus had been met at 100% for a full twenty-four (24)-month period, with such amount to be calculated based on the Executive’s Base Salary as of the termination of employment.
ii.This severance amount shall be paid in accordance with the terms and conditions as set out in the relevant Severance Agreement.
b.Equity and Equity-Based Awards.
i.Any unvested outstanding awards of Restricted Stock Units or Performance Share Units under the Equity Plan shall be eligible for treatment in accordance with the terms of the Equity Plan and any underlying award agreements.
ii.For purposes of any Option Agreement Executive may have signed, the timeframe for exercise of any outstanding option shall be extended to the date that is the two (2)-year anniversary of December 31st of the year in which the Executive experiences his or her termination of employment, or, if earlier, the expiration date of such option. Except as noted in this paragraph, all other terms of any Option Agreement shall remain unchanged and in place.
c.Other Benefits.
i.To the extent COBRA applies, the Executive shall be entitled to lump sum payment equal to the applicable monthly COBRA premium payment for the group medical plan in which the Executive was enrolled as of the termination of employment date, multiplied by twenty-four (24). This lump sum amount shall be paid as soon as administratively feasible following the Executive’s termination from employment but, in any event, no later than the two and one-half (2½) months after the end of the year in which the termination from employment occurs.
ii.The Executive shall not be entitled to any benefits other than those expressly provided for in this Plan and the Award Agreement provided thereunder.
V.GENERALLY APPLICABLE PROVISIONS
a.Administrator Discretion. Notwithstanding anything herein to the contrary, the Administrator reserves the right to provide for benefits under Article III or Article IV that are different in amount or value that those listed above and the Administrator need not treat each Executive uniformly under this Plan. Any exercise of such discretion will be detailed in the applicable Severance Agreement.
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b.Death or Disability. If the Executive dies or incurs a Disability while employed by the Company and prior to any event that would entitle Executive to any payment or benefits under this Plan, Executive will not be entitled to any payment under this Plan.
c.Beneficiary. Executive shall be entitled to designate a beneficiary in the event he dies while receiving benefits under this Plan but prior to full payment of such benefits. Such beneficiary designation shall be in a form and manner as prescribed by the Administrator. In the event Executive fails to designate a beneficiary, payment shall be made to Executive’s estate.
d.Impact on Other Benefits. Under no circumstances may the Executive receive severance benefits under more than one severance plan, program, policy, practice, or agreement maintained from time to time by the Company for the benefit of its employees. For purposes of this provision, a severance plan is a plan designed primarily to provide benefits payable in cash upon an employee’s involuntary termination from employment and not a plan that provides either ancillary benefits upon an involuntary termination from employment (such as accelerated vesting under an incentive equity program) or retirement benefits.
e.General Release and Restrictive Covenants. As a condition to receiving any benefits under this Plan other than the Accrued Obligations, the Executive must sign and return a Severance Agreement, which shall include a general release of claims in the form substantially similar to that required of similarly situated employees of the Company, within forty-five (45) days after the termination of Executive’s employment and not revoke such release within the time permitted by law (which consideration period and revocation period together may not exceed sixty (60) days following termination of Executive’s employment). Such Severance Agreement and release may include any restrictive covenants deemed necessary or advisable by the Administrator or may require repayment of any benefits under this Plan if Executive is later found to have committed acts that would have justified a termination for Cause. For the avoidance of doubt, payment of the Accrued Obligations to an Executive shall not be contingent on his or her execution of a Severance Agreement and release.
f.Funding. No Executive shall acquire by reason of the Plan any right in or title to any assets, funds, or property of the Company. Any amounts payable under the Plan are unfunded obligations of the Company and shall be paid from the general assets of the Company. No officer, director, or agent of the Company guarantees in any manner the payment of benefits under the Plan.
g.Non-Assignment. Benefits payable under the Plan shall not be subject to alienation, pledge, sale, transfer, assignment, attachment, execution, or encumbrance or any kind and any attempt to do so shall be void, except as required by law.
h.Tax Withholding. Any payments that an Executive receives under this Plan shall be subject to all required tax withholding. The Executive will bear the cost of any taxes not withheld on benefits provided under this Plan, regardless of whether withholding is required.
i.Section 409A of the Code.
i.The amounts payable or benefits to be provided pursuant to this Plan generally are intended to be separate payments that are exempt from Section 409A of the Code by reason of the “short-term deferral” exception set forth in Section 1.409A-1(b)(4), the
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involuntary separation pay exception set forth in Section 1.409A-1(b)(9)(iii), or certain other separation pay exceptions set forth in Section 1.409A-1(b)(9)(v) of the Treasury Regulations. Notwithstanding the foregoing, if a general release is required then no payment shall be made until the end of the forty-five (45)-day determination period and the expiration of the revocation period described under Section V.d (which consideration period and revocation period together may not exceed sixty (60) days following termination of the Executive’s employment); such determination shall not preclude application of the Section 409A short-term deferral exception. To the extent that an amount payable or benefits to be provided under this Plan does not comply with any of the foregoing exceptions or other exceptions or exemptions from Code Section 409A, including but not limited to the de minimis exception, the exception for certain indemnification and liability insurance plans, and the like under the Treasury Regulations, then the amount shall be subject to the following rules:
ii.Notwithstanding anything contained in this Plan to the contrary, if on the date of termination of the Executive’s employment the Executive is a “specified employee,” within the meaning of Section 409A of the Code and the Company’s policy for determining specified employees, then to the extent required in order to comply with Section 409A of the Code, all payments, benefits, or reimbursements paid or provided under this Plan that constitute a “deferral of compensation” within the meaning of Section 409A of the Code, that are provided as a result of a “separation from service” within the meaning of Section 409A and that would otherwise be paid or provided during the first six (6) months following the date of such termination of employment shall be accumulated through and paid or provided (together with interest at the applicable federal rate under Section 7872(f)(2)(A) of the Code in effect on the date of termination of employment) within thirty (30) days after the first business day following the six (6)-month anniversary of such termination of employment (or, if the Executive dies during such six (6)-month period, within thirty (30) days after the Executive’s death), if and to the extent required by Code Section 409A.
iii.For purposes of this Plan, the phrase “termination of employment” or words or phrases of similar import shall mean a “separation from service” with the Company within the meaning of Section 409A of the Code. In this regard, the Company and the Executive shall take all steps necessary (including with regard to any post-termination services by the Executive) to ensure that (A) any termination of employment under this Plan constitutes a “separation from service” within the meaning of Section 409A of the Code, and (B) the date on which such separation from service takes place shall be the date of the termination of employment for purposes of this Plan.
iv.The Executive’s right to receive any installment payments pursuant to this Plan shall be treated as a right to receive a series of separate and distinct payments.
v.It is intended that the payments and benefits provided under this Plan shall either be exempt from the application of, or comply with, the requirements of Section 409A of the Code. This Plan shall be construed, administered, and governed in a manner that effects such intent, and the Company shall not take any action that would be inconsistent with such intent. Without limiting the foregoing, the payments and benefits provided under this Plan may not be deferred, accelerated, extended, paid out, or modified in a manner that would result in the imposition of an additional tax under Section 409A of the Code
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upon Executive. Although the Company shall use its best efforts to avoid the imposition of taxation, interest, and penalties under Section 409A of the Code, the tax treatment of the benefits provided under this Plan is not warranted or guaranteed. Neither the Company, its Affiliates, nor their respective directors, officers, employees, or advisers shall be held liable for any taxes, interest, penalties, or other monetary amounts owed by the Executive or other taxpayers as a result of the failure of this Plan to be exempt from or comply with Section 409A of the Code.
j.No Employment Contract. Nothing contained in this Plan shall be construed to be an employment contract between the Executive and the Company. Executive is employed at will, and the Company and the Executive may terminate the Executive’s employment at any time, for any reason or no reason whatsoever.
k.No Shareholder Rights. Neither the action of the Company in establishing this Plan nor any action taken by it or the Committee under the provisions hereof, nor any provision of the Plan, shall be construed as giving to any Executive the legal or equitable rights of a shareholder. This Plan is intended to compensate key executives for their past and future performance on behalf of the Company.
l.Amendment and Termination. This Plan may be modified, amended, suspended or terminated, at any time and from time to time, only by resolution adopted by the Board or its delegate; provided, however, that (i) no amendment that has the effect of reducing the rights or potential rights of any Executive, and no termination of the Plan or any portions thereof, will be effective in either case as to the affected Executive until the first (1st) year anniversary of the date on which such resolution is adopted, (ii) no amendment or termination of the Plan shall affect the rights of any Executive receiving benefits under the Plan whose employment has terminated prior to the date on which such resolution is adopted, and (iii) this Plan may not be terminated or amended in a manner which would adversely affect the rights or potential rights of any Executive if such action is taken in connection with, in anticipation of, on, or during the twelve (12)-month period following, a Change in Control.
m.Severability. If any provision of the Plan is held illegal or invalid for any reason, the illegality or invalidity of such provision shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provisions had been excluded.
n.Successors. This Plan shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, representatives, and successors. Any reference in this Plan to the Company shall be deemed a reference to any successor (whether direct or indirect, by purchase of stock or assets, merger or consolidation, or otherwise) to all or substantially all of the business and/or assets of the Company; provided that Executive’s employment by a successor employer shall not be deemed a termination of Executive’s employment with the Company.
o.Governing Law. The interpretation, performance and enforcement of this Plan shall be governed by the laws of the State of Delaware, without giving effect to the principles of conflict of laws thereof.
VI.ADMINISTRATION
a.Administrator. Clarivate is the Administrator of the Plan and, for purposes of Executives subject to ERISA’s protections (i.e., U.S.-based Executives), the Clarivate is the “named fiduciary”
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within the meaning of ERISA. Clarivate may at any time delegate the authority to administer the Plan to a Committee.
b.Powers of the Administrator. The Administrator shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan. The Administrator shall have the discretionary authority to interpret and construe the terms of the Plan and determine all questions arising in the administration, interpretation, and application of the Plan; such determinations to be presumptively conclusive and binding on all persons to the maximum extent allowed by law, and uniformly and consistently applied to all persons in similar circumstances; adopt such rules and procedures as it deems necessary, desirable or appropriate for the administration of the Plan; appoint such agents, counsel, accountants, consultants and other persons as may be required to administer the Plan; determine all claims for benefits, and take such further action as the Administrator shall deem advisable in the administration of the Plan.
c.Delegation. The Administrator shall have the discretionary authority to delegate such of its duties and may engage such experts and other persons as it deems appropriate in connection with administering the Plan. In the event Clarivate delegated administrative authority to a Committee, the Committee may delegate its duties and engage experts and other persons as it deems appropriate in connection with administering the Plan. The Administrator shall be entitled to rely in good faith upon any opinions or reports furnished to it by any such experts or other persons.
d.Change in Control. Notwithstanding any other provision of the Plan, upon a Change in Control, the Committee, as constituted immediately before the Change in Control, with such changes in the membership thereof as may be approved from time to time following the Change in Control by a majority of such Committee as constituted immediately before the Change in Control, shall have sole and exclusive authority and responsibility (i) to control and manage the operation and administration of the Plan, with respect to Executives participating in the Plan immediately prior to the Change in Control, (ii) for determining the amount of payments and benefits to which Executives may become entitled on or following the Change in Control, and (iii) to amend or terminate the Plan with respect to such Executives. Clarivate shall not have the right to appoint members to or to remove members from such Committee following, or otherwise in connection with, the Change in Control.









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APPENDIX A
ERISA INFORMATION FOR U.S. BASED EXECUTIVES
The Plan is an unfunded welfare benefit plan for purposes of the Employee Retirement Income Security Act of 1974 (“ERISA”) and a severance pay plan within the meaning of United States Department of Labor regulations section 2510.3-2(b). This document serves as both the Plan document and the Summary Plan Description for the Plan for all purposes under ERISA. This Appendix A shall not apply to Executives outside of the United States who are otherwise subject to local law regarding terms and conditions of employee benefits.
I.    CLAIMS PROCEDURES
a.Claim for Benefits. No Participant, Beneficiary or any other person or entity is required to file a formal claim to receive any benefits to which he is entitled under the Plan. However, each Participant, beneficiary or any other person or entity who believes that he is entitled to a benefit under the Plan which he has not received (“Claimant”) must file a written claim for such benefits under the Plan with the Administrator to claim any such benefits. A Claimant shall furnish the Administrator with such documents, evidence, data, or information in support of his claim as he considers necessary or desirable. A Claimant may appoint a representative to pursue any claim or appeal of an adverse benefit determination on his behalf, provided that he furnishes the Administrator with a written notice, signed by the Claimant, authorizing the representative to act on his behalf in pursuing a benefit claim or appeal.
b.Initial Claim Review. The Administrator shall review the claim when filed and advise the Claimant as to whether the claim is approved or denied. If the claim is wholly or partially denied, the Administrator shall furnish a written or electronic denial within a reasonable period of time, but not later than ninety (90) days after receipt of the claim by the Plan, unless the Administrator determines that special circumstances require an extension of time for processing the claim. If the Administrator determines that an extension of time for processing a claim is required, written notice of the extension shall be furnished to the Claimant prior to the expiration of the initial ninety (90)-day period, which shall indicate the special circumstances requiring an extension of time and the date by which Plan expects to render a decision. In no event shall such extension exceed a period of ninety (90) days from the end of the initial period. If the Administrator denies the claim for a benefit in whole or in part, the Administrator shall provide the Claimant a written or electronic notice of the adverse benefit determination. The notification shall set forth, in a manner calculated to be understood by the Claimant: (i) the specific reason or reasons for the adverse benefit determination; (ii) reference to the specific Plan provisions on which the determination is based; (iii) a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why such material or information is necessary; and (iv) a description of the Plan’s review procedures and the time limits applicable to such procedures, including a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review
c.Appeal of Adverse Benefit Determination. If the claim is denied, a Claimant may appeal the denial of the claim to the Administrator within sixty (60) days after receipt of the adverse benefit determination. The appeal shall be in writing addressed to the Administrator and shall state the reason why the Administrator should grant the appeal. The Claimant may submit written comments, documents, records, and other information relating to his claim for benefits. Upon request, the Claimant shall be provided free of charge and reasonable access to, and copies of, all documents, records and other information relevant to his claim, as determined under subsection (f). The
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Administrator shall conduct a full and fair review of the claim that takes into account all comments, documents, records, and other information submitted by the Claimant or his authorized representative relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The review shall not afford deference to the initial benefit determination and shall be conducted by one or more individuals who are neither those who made the adverse benefit determination that is the subject of the appeal, nor the subordinates of such individuals.
d.Timing of Review on Appeal. The Administrator shall notify the Claimant of the determination on review within a reasonable period of time, but not later than sixty (60) days after receipt of the appeal unless the Administrator determines that special circumstances require an extension of time for processing the claim. If the Administrator determines that an extension of time for processing is required, the Administrator shall notify the Claimant in writing prior to the termination of the initial sixty (60)-day period, indicating the special circumstances that require an extension of time and the date the Plan expects to render a determination on appeal. In no event shall such extension exceed a period of sixty (60) days from the end of such initial period. Notwithstanding the foregoing, if the Administrator holds quarterly meetings, the Administrator shall instead make a benefit determination no later than the date of the meeting that immediately follows the Plan’s receipt of a request for review, unless the request for review is filed within thirty (30) days preceding the date of such meeting. In such case, a benefit determination may be made no later than the date of the second meeting following the Plan’s receipt of the request for review. If special circumstances (such as the need to hold a hearing) require a further extension of time for processing, a benefit determination shall be rendered not later than the third meeting of the Administrator following the Plan’s receipt of the request for review. If such an extension of time for review is required because of special circumstances, the Administrator shall provide the Claimant with written notice of the extension, describing the special circumstances and the date as of which the benefit determination will be made, prior to the commencement of the extension.
e.Denial on Appeal. If the Administrator denies the claim on appeal, it shall furnish the Claimant a written or electronic adverse benefit determination, stating the reasons for the denial in a manner calculated to be understood by the Claimant, and shall make specific references to the pertinent Plan provisions on which the benefit determination is based. The notification of the benefit determination also shall include a statement of the Claimant’s right to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s claim for benefits and to bring a civil action under section 502(a) of ERISA no later than one (1) year after the final adverse determination on appeal. The Administrator’s decision upon appeal, or the Administrator’s initial decision if no appeal is taken, shall be final, conclusive, and binding on all parties, subject to review or correction pursuant to a civil action under Section 502(a) of ERISA only to the extent that such decision is shown by clear and convincing evidence to be arbitrary and capricious.
f.Review Following a Change in Control. Notwithstanding the foregoing, following a Change in Control (and thereafter to the extent the issue in question relates to a termination of employment on or following the Change in Control of Executives participating in the Plan immediately prior to the Change in Control), with respect to Executives participating in the Plan immediately prior to the Change in Control, the committee described in Section VI.d. of the Plan shall review and administer all claims, and any appeals of claim denials, of Executives participating in the Plan immediately prior to the Change in Control, and any such decisions with respect to Executives participating in the Plan immediately prior to the Change in Control shall be subject to de novo review in the courts.
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g.Relevant Documents and Records. For purposes of the foregoing claim procedures, a document, record or other information is “relevant” if it: (i) was relied on in making the claim decision; (ii) was submitted, considered or generated in making the decision; or (iii) demonstrates compliance with the Plan’s procedural and administrative safeguards.
h.Exhaustion of Claims Procedures. Completion of the claims procedures described in Section VI of the Plan is a condition precedent to the commencement of any legal or equitable action in connection with a claim for benefits under the Plan by any current or former Participant, beneficiary or any other person or entity claiming rights in connection with the Plan. After exhaustion of the Plan’s claims procedures, any further legal action taken against the Plan or its fiduciaries by the Claimant for benefits under the Plan shall be filed in a court of law no later than one (1) year after the final adverse determination on appeal. No action at law or in equity shall be brought to recover benefits under this Plan until the appeal rights provided in this Appendix A, Section I have been exercised and the Plan benefits requested in such appeal have been denied in whole or in part.
II.    ERISA RIGHTS
Eligible Executives in the Plan are entitled to certain rights and protection under ERISA. ERISA provides that all Plan participants shall be entitled to:
Receive Information about the Plan and Benefits
•Examine, without charge, at the Plan Administrator’s office, all documents governing the Plan, and a copy of the latest annual report (Form 5500 Series) filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration.
•Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan, copies of the latest annual report (Form 5500 Series) and an updated summary plan description. The Plan Administrator may make a reasonable charge for the copies.
•Receive a summary of the Plan’s annual financial report (if any). The Plan Administrator may be required by law to furnish each participant with a copy of this summary annual report.

Prudent Actions of Fiduciaries

In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the Plan. The people who operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of Plan participants and beneficiaries. No one, including the Employer or any other person, may fire or otherwise discriminate against a Plan participant under the Plan or prevent the participant from obtaining a Plan benefit or exercising a right under ERISA.
Enforcing Rights
If the claim for a Plan benefit is denied or ignored, in whole or in part, a participant has a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.
Under ERISA, there are steps a participant can take to enforce the above rights. For instance, if the participant requests a copy of the Plan documents or the latest annual report from the Plan Administrator
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and does not receive them within thirty (30) days, the participant may file suit in a federal court. In such case, the court may require the Plan Administrator to provide the materials and pay the participant up to $110 a day until the participant receives the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator.
If the participant has a claim for benefits that is denied after exhaustion of the appeal process, or is ignored, in whole or in part, the participant may file suit in a state or federal court. If it should happen that Plan fiduciaries misuse the Plan’s money, or if a participant is discriminated against for asserting the participant’s rights, the participant may seek assistance from the U.S. Department of Labor or file suit in a federal court. The court will decide who should pay court costs and legal fees. If the participant is successful, the court may order the person the participant sued to pay these costs and fees. If the participant loses, the court may order the participant to pay these costs and fees, for example, if it finds the claim is frivolous.
Assistance with Questions
If a participant has any questions about the Plan, the participant should contact the Plan Administrator. If a participant has any questions about this statement or about rights under ERISA, or if needs assistance in obtaining documents from the Plan Administrator, the participant should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in the telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210. Participants may also obtain certain publications about participant rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.
III.    GENERAL PLAN INFORMATION

Plan Name: Executive Severance Pay Plan of Clarivate Plc
Type of Plan: The Plan is an unfunded severance pay plan, which is a welfare benefit plan under ERISA
Plan Number: 505
Plan Sponsor: Clarivate Analytics (US) LLC
Plan Sponsor’s Employer
Identification Number:
23-1569117
Plan Administrator:
Clarivate Analytics (US) LLC
1500 Spring Garden Street
4th Floor
Philadelphia, PA 19130
Agent for Service of Legal Process:
Corporation Service Company
251 Little Falls Drive
Wilmington, DE 19808
Plan Year Calendar year

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Exhibit 31
CERTIFICATION
I, Jerre Stead, certify that:
1.    I have reviewed this Report on Form 10-Q of Clarivate Plc;
2.    Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
3.    Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;
4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
d)    Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 29, 2021 /s/ Jerre Stead
Jerre Stead
Executive Chairman and Chief Executive Officer


CERTIFICATION
I, Richard Hanks, certify that:
1.    I have reviewed this Report on Form 10-Q of Clarivate Plc;
2.    Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
3.    Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;
4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
d)    Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 29, 2021 /s/ Richard Hanks
Richard Hanks
Chief Financial Officer

Exhibit 32
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Clarivate Plc (the “Company”) on Form 10-Q for the quarter ended June 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jerre Stead, Executive Chairman and Chief Executive Officer of the Company, certify to my knowledge, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:
1.    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 29, 2021 /s/ Jerre Stead
Jerre Stead
Executive Chairman and Chief Executive Officer

























CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Clarivate Plc (the “Company”) on Form 10-Q for the quarter ended June 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard Hanks, Chief Financial Officer of the Company, certify to my knowledge, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:
1.    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 29, 2021 /s/ Richard Hanks
Richard Hanks
Chief Financial Officer