As previously announced, on August 1, 2021 (Pacific Daylight
Time) / August 2, 2021 (Australian Eastern Standard Time),
Square, Inc. (“Square”), Lanai (AU) 2 Pty Ltd, an Australian
proprietary company limited by shares and an indirect wholly owned
subsidiary of Square (“Lanai”), and Afterpay Limited, an Australian
public company limited by shares and listed on the Australian
Securities Exchange (“Afterpay”), entered into a Scheme
Implementation Deed pursuant to which, subject to the satisfaction
or waiver of the conditions set forth therein, Square will acquire
(indirectly through Lanai) all Afterpay ordinary shares pursuant to
a court-approved scheme of arrangement under Part 5.1 of
Australia’s Corporations Act 2001 (Cth) (the “Transaction”). On
October 5, 2021, Square filed with the Securities and Exchange
Commission (the “SEC”) a definitive proxy statement (the
“Definitive Proxy Statement”) with respect to the special meeting
of Square stockholders scheduled to be held on November 3,
2021 in connection with the Transaction (the “Special
Litigation Related to the
In connection with the Transaction, eight lawsuits were filed
between October 13 and October 25, 2021 against one or
more of Square and the directors of Square (collectively, the
“Defendants”). One complaint, Bushansky v. Square, Inc. et al., C.A.
No. 3:21-cv-08013 (the “Bushansky
Complaint”), was filed in the U.S. District Court for the Northern
District of California; one complaint, Duenas v. Square, Inc. et al., C.A. No.
1:21-cv-05822 (the “Duenas
Complaint”), was filed in the U.S. District Court for the Eastern
District of New York; three complaints, Fetting v. Square, Inc. et al., C.A. No.
1:21-cv-08589 (the “Fetting
Complaint”), Dunlap v. Square, Inc.
et al., C.A. No. 1:21-cv-08612 and Franchi v. Square, Inc. et al., C.A. No.
1:21-cv-08673 (the “Franchi
Complaint”), were filed in the U.S. District Court for the Southern
District of New York; two complaints, Rosenblatt v. Square, Inc. et al., C.A.
No. 1:21-cv-01471 and Sabatini v. Square, Inc. et al., C.A.
No. 1:21-cv-01482 (the “Sabatini
Complaint”), were filed in the U.S. District Court for the District
of Delaware; and one complaint, Shumacher v. Square, Inc. et al., C.A.
No. 2:21-cv-04665, was filed in the
U.S. District Court for the Eastern District of Pennsylvania.
The complaints generally allege, among other things, that the
Defendants disseminated a false or misleading proxy statement
regarding the Transaction in violation of Sections 14(a) and 20(a)
of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and SEC Rule 14a-9
promulgated thereunder. The complaints allege (1) that the
Definitive Proxy Statement filed by Square omitted or
misrepresented material information regarding the financial
valuation analyses performed by Square’s financial advisor in
support of its fairness opinion, and in the cases of the Bushansky
Complaint, the Duenas Complaint, the Fetting Complaint and the
Sabatini Complaint, the deliberations of Square’s board of
directors leading up to the Transaction, as well as in the cases of
the Duenas Complaint, the Fetting Complaint and the Franchi
Complaint, potential conflicts of interest involving Square’s
financial advisor, and (2) that disclosure of material
information is necessary for Square’s stockholders to make an
informed decision regarding whether to vote in favor of the
issuance of shares of Square Class A common stock in
connection with the Transaction. The complaints further allege that
Square’s directors are liable for alleged violations as
“controlling persons” of Square under Section 20(a) of the
Exchange Act. Additionally, two purported Square stockholders sent
demand letters alleging similar purported insufficiencies in the
disclosures in the Definitive Proxy Statement on October 8 and
October 22, 2021 respectively (such letters, the “Demand
Letters” and together with the lawsuits, the “Matters”).
Among other relief, the complaints generally seek injunctive
relief, including enjoining the Transaction unless and until the
Defendants disclose the allegedly omitted material information and
rescinding the Transaction in the event the Defendants consummate
the Transaction (or awarding rescissory damages), declaratory
judgment that the Defendants violated Sections 14(a) and 20(a) of
the Exchange Act and SEC Rule 14a-9 promulgated thereunder, damages,
and an award of attorneys’ and experts’ fees.
Square believes that the claims asserted in the Matters are without
merit and that no further disclosure is required under applicable
law. However, in order to avoid the risk of the Matters delaying or
adversely affecting the Transaction and to minimize the costs,
risks, and uncertainties inherent in litigation, and without
admitting any liability or wrongdoing, Square has determined to
voluntarily supplement the Definitive Proxy Statement as described
in this Current Report on Form 8-K. Nothing in this Current Report on
Form 8-K shall be deemed an
admission of the legal necessity or materiality under applicable
laws of any of the disclosures set forth herein. To the contrary,
Square specifically denies all allegations in the Matters that any
additional disclosure was or is required.