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As filed with the Securities and Exchange Commission on November 14, 2022
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ADOBE INC.
(Exact name of registrant as specified in its charter)
Delaware
7372
77-0019522
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)
345 Park Avenue
San Jose, California 95110-2704
(408) 536-6000
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Daniel Durn
Executive Vice President and Chief Financial Officer
Adobe Inc.
345 Park Avenue
San Jose, California 95110
(408) 536-6000
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Allison Blais, Esq.
Adobe Inc.
3900 North Adobe Way
Lehi, Utah 84043
(408) 536-6000
Edward D. Herlihy, Esq.
Jacob A. Kling, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
(212) 403-1000
Brendan Mulligan, Esq.
Figma, Inc.
760 Market Street, Floor 10
San Francisco, California 94102
(415) 890-5404
Michael Esquivel, Esq.
Kris Withrow, Esq.
Ran D. Ben-Tzur, Esq.
Jennifer J. Hitchcock, Esq.
Stephen M. Fisher, Esq.
Fenwick & West LLP
Silicon Valley Center
801 California Street
Mountain View, California 94041
(650) 988-8500
Approximate date of commencement of proposed sale of the securities to the public:
As soon as practicable after this registration statement becomes effective and upon completion of the
transaction described in the enclosed consent solicitation statement/prospectus.
If the securities being registered on this Form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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 7(a)(2)(B) of the Securities Act.
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

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The information in this consent solicitation statement/prospectus is not complete and may be changed. We may not distribute or issue the securities being registered pursuant to this registration statement until the registration statement (of which this preliminary consent solicitation statement/prospectus is a part), as filed with the Securities and Exchange Commission, is effective. This preliminary consent solicitation statement/prospectus is not an offer to sell nor should it be considered a solicitation of an offer to buy the securities described herein in any state where the offer or sale is not permitted.
PRELIMINARY CONSENT SOLICITATION STATEMENT/PROSPECTUS — SUBJECT TO COMPLETION
DATED NOVEMBER 14, 2022
CONSENT SOLICITATION STATEMENT OF FIGMA, INC. AND PROSPECTUS OF ADOBE INC.


To Stockholders of Figma, Inc.:
As you may be aware, Figma, Inc. (“Figma”) entered into an Agreement and Plan of Merger, dated as of September 15, 2022 (the “merger agreement”), with Adobe Inc. (“Adobe”) and two of Adobe’s wholly owned subsidiaries, pursuant to which, through two successive mergers, Figma will become a wholly owned subsidiary of Adobe (collectively, the “mergers”). The transactions contemplated by the merger agreement, including the mergers, are collectively referred to as the “transaction.”
Pursuant to the terms and subject to the conditions set forth in the merger agreement, at the effective time of the first merger, each share of common stock, par value $0.00001 per share, of Figma (the “Figma common stock”), and each share of preferred stock, par value $0.00001 per share, of Figma (the “Figma preferred stock” and, together with the Figma common stock, the “Figma capital stock”), in each case, that is issued and outstanding immediately prior to the effective time (other than any treasury shares or dissenting shares as described in the accompanying consent solicitation statement/prospectus), will automatically be canceled and converted into the right to receive (i) 0.045263 shares of common stock, par value $0.0001 per share, of Adobe (the “Adobe common stock”) (with a cash payment, without interest and less any applicable withholding taxes, for any fractional shares of Adobe common stock resulting from the calculation) (the “per share closing stock consideration”) and (ii) $22.4795 in cash without interest and less any applicable withholding taxes (subject to certain adjustments and escrow provisions set forth in the merger agreement).
The per share closing stock consideration is fixed and will not be adjusted for changes in the market price of Adobe common stock prior to the consummation of the transaction. Therefore, the value of the consideration to Figma stockholders in the transaction will fluctuate between now and the completion of the mergers. See the section entitled “The Transaction—Consideration to Figma Stockholders” beginning on page 51 of the accompanying consent solicitation statement/prospectus.
Adobe common stock is traded on the Nasdaq Global Select Market (“Nasdaq”) under the ticker symbol “ADBE.” On [ ], the most recent practicable date prior to the printing of the accompanying consent solicitation statement/prospectus, the last reported sale price of Adobe common stock on Nasdaq was $[ ].
The board of directors of Figma (the “Figma board”) has considered the transaction and the terms of the merger agreement and unanimously approved and declared advisable the merger agreement and the transaction, upon the terms and conditions set forth in the merger agreement, and recommended that Figma stockholders approve and adopt the merger agreement and the transaction.
The adoption of the merger agreement requires the affirmative vote or consent of the holders of (i) at least a majority of the voting power of the outstanding shares of Figma capital stock (voting as a single class and on an as-converted to Figma common stock basis) entitled to vote thereon, (ii) at least a majority of the voting power of the outstanding shares of Figma preferred stock (voting as a single class and on an as-converted to Figma common stock basis) entitled to vote thereon, and (iii) if and to the extent required by Section 2115 of the California Corporations Code, at least a majority of the voting power of the outstanding shares of Figma common stock (voting as a single class) entitled to vote thereon (the foregoing clauses (i), (ii) and (iii), collectively, the “Figma stockholder approval”).
The Figma stockholder approval is required for the transaction to close, and you are being sent this document to ask you to approve the adoption of the merger agreement by executing and returning the written consent furnished with the accompanying consent solicitation statement/prospectus.
The Figma board has set [ ] as the record date (the “record date”) for determining Figma stockholders entitled to execute and deliver written consents with respect to this solicitation. If you are a holder of Figma capital stock on the record date, you are urged to complete, date and sign the enclosed written consent and promptly return it to Figma. See the section entitled “Solicitation of Written Consents” beginning on page 44 of the accompanying consent solicitation statement/prospectus.
Subsequent to the execution of the merger agreement, Adobe and certain stockholders of Figma, representing approximately [ ]% of the voting power of the outstanding shares of Figma capital stock, approximately [ ]% of the voting power of the outstanding shares of Figma common stock and approximately [ ]% of the voting power of the outstanding shares of Figma preferred stock, in each case as of the record date, entered into a voting and support agreement (the “key stockholder voting agreement”) under which such stockholders of Figma have agreed, promptly (and in any event within two business days) after the registration statement of which the accompanying consent solicitation statement/prospectus forms a part is declared effective by the Securities and Exchange Commission (the “SEC”), to execute and deliver written consents approving the adoption of the merger agreement and related matters with respect to all of such stockholders’ shares of Figma capital stock entitled to act by written consent with respect thereto. The execution and delivery of written consents by all parties to the key stockholder voting agreement will constitute the Figma stockholder approval and, therefore, we expect to receive a number of written consents sufficient to satisfy the Figma stockholder approval required under the merger agreement.
No vote of Adobe stockholders is required to complete the transaction.
We encourage you to read carefully the accompanying consent solicitation statement/prospectus and the documents incorporated by reference into the accompanying consent solicitation statement/prospectus in their entirety, including the section entitled “Risk Factors” beginning on page 24 of the accompanying consent solicitation statement/prospectus.
Neither the SEC nor any state securities commission has approved or disapproved of the securities to be issued under the accompanying consent solicitation statement/prospectus, or determined if the accompanying consent solicitation statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The accompanying consent solicitation statement/prospectus is dated [  ], and is first being mailed to Figma stockholders on or about [  ].
 
Dylan Field
 
Chief Executive Officer

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Figma, Inc.
760 Market Street, Floor 10
San Francisco, California 94102

Notice of Solicitation of Written Consent
To Stockholders of Figma, Inc.:
Pursuant to an Agreement and Plan of Merger, dated as of September 15, 2022 (the “merger agreement”), by and among Adobe Inc. (“Adobe”), Saratoga Merger Sub I, Inc., a wholly owned subsidiary of Adobe (“Merger Sub I”), Saratoga Merger Sub II, LLC, a wholly owned subsidiary of Adobe (“Merger Sub II”), and Figma, Inc. (“Figma”), Merger Sub I will be merged with and into Figma (the “first merger”), with Figma continuing as the surviving corporation and a wholly owned subsidiary of Adobe, and immediately following the first merger, Figma, as the surviving corporation in the first merger, will be merged with and into Merger Sub II (the “second merger” and, together with the first merger, the “mergers”), with Merger Sub II continuing as the surviving company and a wholly owned subsidiary of Adobe. The transactions contemplated by the merger agreement, including the mergers, are collectively referred to as the “transaction.”
The accompanying consent solicitation statement/prospectus is being delivered to you on behalf of the board of directors of Figma (the “Figma board”) to request that Figma stockholders as of the record date of [  ] approve the adoption of the merger agreement by executing and returning the written consent furnished with the accompanying consent solicitation statement/prospectus.
The accompanying consent solicitation statement/prospectus describes the merger agreement, the transaction and the actions to be taken in connection with the transaction and provides additional information about the parties involved. Please give this information your careful attention. A copy of the merger agreement is attached as Annex A to the accompanying consent solicitation statement/prospectus.
A summary of the appraisal and dissenters’ rights that may be available to you is described in “Appraisal and Dissenters’ Rights” beginning on page 107 of the accompanying consent solicitation statement/prospectus. Please note that if you wish to exercise appraisal or dissenters’ rights you must not sign and return a written consent approving the adoption of the merger agreement. However, so long as you do not return a written consent at all, it is not necessary to affirmatively vote against or disapprove the adoption of the merger agreement. In addition, you must take all other steps necessary to perfect your appraisal or dissenters’ rights.
The Figma board has considered the transaction and the terms of the merger agreement and unanimously approved and declared advisable the merger agreement and the transaction, upon the terms and conditions set forth in the merger agreement, and recommended that Figma stockholders approve and adopt the merger agreement and the transaction.
Please complete, date and sign the written consent furnished with the accompanying consent solicitation statement/prospectus and return it promptly to Figma by one of the means described in “Solicitation of Written Consents” beginning on page 44 of the accompanying consent solicitation statement/prospectus.
 
By Order of the Board of Directors:
 
 
 
Dylan Field
Chief Executive Officer

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IMPORTANT NOTE ABOUT THIS CONSENT SOLICITATION STATEMENT/PROSPECTUS
This consent solicitation statement/prospectus incorporates important business and financial information about Adobe from other documents that Adobe has filed with the United States Securities and Exchange Commission (the “SEC”) and that are contained in or incorporated by reference herein. For a listing of documents incorporated by reference herein, please see the section entitled “Where You Can Find More Information” beginning on page 116 of this consent solicitation statement/prospectus. Adobe is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and accordingly files its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other information with the SEC. As an electronic filer, Adobe’s public filings are also maintained on the SEC’s Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that website is https://www.sec.gov.
Documents incorporated by reference are available from Adobe without charge, excluding any exhibits to them unless such exhibits have been specifically incorporated by reference in this consent solicitation statement/prospectus. You may obtain documents incorporated by reference in this consent solicitation statement/prospectus free of charge through the SEC’s website or from Adobe by contacting our Investor Relations department by calling (408) 536-4700, by writing to Investor Relations, Adobe Inc., 345 Park Avenue, San Jose, California 95110-2704 or by sending an email to adobe@kpcorp.com. To ensure timely delivery of the documents, you must make your request no later than [  ], 2022.
This consent solicitation statement/prospectus, which forms part of a registration statement on Form S-4 filed with the SEC by Adobe (File No. 333-[  ]), constitutes a prospectus of Adobe under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the Adobe common stock to be issued to Figma stockholders pursuant to the merger agreement. This consent solicitation statement/prospectus also constitutes a consent solicitation statement of Figma with respect to the proposal to approve the adoption of the merger agreement.
Neither Adobe nor Figma has authorized anyone to give any information or make any representation about the transaction, Adobe or Figma that is different from, or in addition to, that contained in this consent solicitation statement/prospectus or in any of the materials that have been incorporated by reference. Therefore, neither Adobe nor Figma takes any responsibility for, or can provide any assurance as to the reliability of, any information other than the information contained in or incorporated by reference into this consent solicitation statement/prospectus.
This consent solicitation statement/prospectus is dated [  ], 2022. The information contained in this consent solicitation statement/prospectus is accurate only as of that date or, in the case of information in a document incorporated by reference, as of the date of such document, unless the information specifically indicates that another date applies. Neither the mailing of this consent solicitation statement/prospectus to Figma stockholders nor the issuance by Adobe of common stock pursuant to the merger agreement will create any implication to the contrary.
This consent solicitation statement/prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.
The information concerning Adobe contained in or incorporated by reference into this consent solicitation statement/prospectus has been provided by Adobe, and the information concerning Figma contained in this consent solicitation statement/prospectus has been provided by Figma.
The symbol “$” in this consent solicitation statement/prospectus refers to United States Dollars. Additionally, unless otherwise indicated or as the context otherwise requires, all references in this consent solicitation statement/prospectus to:
Adobe” refers to Adobe Inc., a Delaware corporation;
Adobe board” refers to the board of directors of Adobe;
Adobe common stock” refers to the shares of common stock, par value $0.0001 per share, of Adobe;
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Adobe RSU award” refers to an award of restricted stock units relating to Adobe common stock granted by Adobe;
Adobe stockholders” refers to the holders of Adobe common stock;
aggregate preliminary consideration adjustment” refers to an amount equal to (i) $0.5896 multiplied by (ii) the number of unvested shares;
allocation percentage” refers to, with respect to each Figma stockholder, a fraction, the numerator of which is the number of diluted shares held by such Figma stockholder as of immediately prior to the effective time and the denominator of which is the aggregate number of diluted shares held by all Figma stockholders as of immediately prior to the effective time;
CCC” refers to the California Corporations Code;
closing” refers to the closing of the first merger;
closing date” refers to the date on which the closing actually occurs;
DGCL” refers to the General Corporation Law of the State of Delaware;
diluted shares” refers to (a) the aggregate number of shares of Figma capital stock issued and outstanding immediately prior to the effective time (excluding any shares of Figma restricted stock, but including any shares issued pursuant to an exercise of the Figma warrant (including a cashless exercise)) plus, solely to the extent the holder of the Figma warrant executes a warrant termination agreement no later than three days prior to the effective time, (b) the number of shares of Figma capital stock subject to the Figma warrant immediately prior to the effective time;
effective time” refers to the effective time of the first merger;
escrow agent” refers to JPMorgan Chase Bank, N.A. (or such other escrow agent mutually agreeable to Adobe and Figma);
escrow agreement” refers to the escrow agreement that is to be entered into at the closing by and among Adobe, the representative and the escrow agent, substantially in the form attached to the merger agreement;
Figma” refers to Figma, Inc., a Delaware corporation;
Figma board” refers to the board of directors of Figma;
Figma capital stock” refers to, collectively, the Figma common stock and the Figma preferred stock;
Figma common stock” refers to the common stock, par value $0.00001 per share, of Figma;
Figma equity awards” refers to the Figma options, the Figma PSU awards, the Figma RSU awards and the Figma restricted stock;
Figma option” refers to each option to purchase Figma common stock issued by Figma pursuant to a Figma equity incentive plan (excluding any Figma restricted stock);
Figma preferred stock” refers to the preferred stock, par value $0.00001 per share, of Figma;
Figma PSU award” refers to each award of performance-based restricted stock units covering shares of Figma common stock issued by Figma pursuant to a Figma equity incentive plan;
Figma restricted stock” means shares of Figma capital stock that are outstanding as of immediately prior to the effective time and are not vested under the terms of any contract with Figma or are subject to a substantial risk of forfeiture or a right of repurchase by Figma (including any stock option agreement, stock option exercise agreement, holdback agreement or restricted stock purchase agreement), in each case as of immediately prior to the effective time;
Figma RSU award” refers to each award of time-based (in addition to other vesting conditions, if applicable) restricted stock units covering shares of Figma common stock issued by Figma pursuant to a Figma equity incentive plan (excluding any Figma PSU award);
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Figma stockholders” refers to the holders of Figma capital stock or, solely for purposes of the description of the merger agreement in this consent solicitation statement/prospectus and, for the avoidance of doubt, not for purposes of the section entitled “Appraisal and Dissenters’ Rights” or any description of appraisal or dissenters’ rights herein, to the extent not exercised prior to the effective time, the Figma warrant;
Figma warrant” refers to the warrant to purchase shares of Figma common stock, dated November 20, 2018;
first merger” refers to the merger of Merger Sub I with and into Figma, with Figma continuing as the surviving corporation and as a wholly owned subsidiary of Adobe;
former employee equity award holders” refers to the holders of vested Figma equity awards that are outstanding as of immediately prior to the effective time who are not former non-employee equity award holders;
former non-employee equity award holders” refers to holders of vested Figma equity awards that are outstanding as of immediately prior to the effective time who have never been employees of Figma or any of its subsidiaries;
merger agreement” refers to the Agreement and Plan of Merger, dated as of September 15, 2022, by and among Adobe, Merger Sub I, Merger Sub II, Figma and the representative, as it may be amended or supplemented from time to time;
Merger Sub I” refers to Saratoga Merger Sub I, Inc., a Delaware corporation and a wholly owned subsidiary of Adobe;
Merger Sub II” refers to Saratoga Merger Sub II, LLC, a Delaware limited liability company and a wholly owned subsidiary of Adobe;
mergers” refers to, collectively, the first merger and the second merger;
per share closing cash consideration” refers to an amount equal to (a) $22.4795 plus (b) the per share estimated consideration adjustment, minus (c) the per share escrow amount, minus (d) per share specified escrow amount and minus (e) the per share representative fund amount;
per share closing stock consideration” refers to 0.045263 shares of Adobe common stock;
per share equity award cash consideration” refers to an amount equal to (a) the per share closing cash consideration, plus (b) the per share escrow amount plus (c) the per share specified escrow amount plus (d) the per share representative fund amount;
per share equity award exchange ratio” refers to 0.106319 shares of Adobe common stock;
per share escrow amount” refers to (a) the escrow amount divided by (b) the number of diluted shares;
per share escrow release amount” refers to the release amount (as defined in the section entitled “The Merger Agreement—Escrow Funds”), if any, to be released to the exchange agent for further credit to the Figma stockholders in accordance with their allocation percentages in accordance with the applicable provisions of the merger agreement, divided by the number of diluted shares;
per share escrow resolved amount” refers to the sum of all applicable resolved amounts (as defined in the section entitled “The Merger Agreement—Escrow Funds”) with respect to outstanding claims (as defined in the section entitled “The Merger Agreement—Escrow Funds”), if any, to be released to the exchange agent for further credit to the Figma stockholders in accordance with their allocation percentages pursuant to the applicable provisions of the merger agreement, divided by the number of diluted shares;
per share estimated consideration adjustment” refers to (a) the estimated consideration adjustment (as defined in the section entitled “The Merger Agreement—Cash Consideration Adjustments”) divided by (b) the number of vested shares;
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per share representative fund amount” refers to (a) the representative fund amount (as defined in the section entitled “The Merger Agreement—Representative of Figma Stockholders”) divided by (b) the number of diluted shares;
per share representative fund release amount” refers to (a) the aggregate amount, if any, released to the exchange agent from the representative fund (as defined in the section entitled “The Merger Agreement—Representative of Figma Stockholders”) pursuant to the applicable provisions of the merger agreement divided by (b) the number of diluted shares;
per share specified escrow release amount” refers to the amount, if any, to be released to the exchange agent for further credit to the Figma stockholders in accordance with their allocation percentages pursuant to the applicable section of the Figma disclosure schedules, divided by the number of diluted shares;
per share specified escrow amount” refers to (a) the specified escrow amount (as defined in the section entitled “The Merger Agreement—Escrow Funds”) divided by (b) the number of diluted shares;
representative” refers to Fortis Advisors LLC, a Delaware limited liability company, in its capacity as the representative of the Figma stockholders as set forth in the merger agreement;
second effective time” refers to the effective time of the second merger;
second merger” refers to the merger of the surviving corporation with and into Merger Sub II, with Merger Sub II continuing as the surviving company and as a wholly owned subsidiary of Adobe;
surviving company” refers to Merger Sub II as the surviving company in the second merger;
surviving corporation” refers to Figma as the surviving corporation in the first merger;
transaction” refers to the transactions contemplated by the merger agreement, including the mergers;
unvested Figma equity awards” refers to unvested Figma options and unvested Figma RSU awards;
unvested Figma option” refers to each Figma option that is outstanding and unexercised as of immediately prior to the effective time and is not a vested Figma option;
unvested Figma PSU award” refers to the portion of the Figma PSU award held by Dylan Field, Figma’s Co-Founder and CEO as of immediately prior to the effective time, that is not a vested Figma PSU award;
unvested Figma RSU award” refers to each Figma RSU award that is outstanding as of immediately prior to the effective time and is not a vested Figma RSU award;
unvested shares” refers to the sum of (i) the aggregate number of shares of Figma restricted stock plus (ii) the aggregate number of shares of Figma capital stock underlying outstanding unvested Figma equity awards;
vested Figma equity awards” refers to vested Figma options, vested Figma PSU awards and vested Figma RSU awards;
vested Figma option” refers to each Figma option that is outstanding, vested and unexercised as of immediately prior to the effective time;
vested Figma PSU award” refers to a portion of the Figma performance-based restricted stock unit award held by Dylan Field, Figma’s Co-Founder and CEO, corresponding to 5,625,000 shares, as described in the Figma disclosure schedules, to the extent that such award is outstanding as of immediately prior to the effective time;
vested Figma RSU award” refers to each Figma restricted stock unit award that is outstanding as of immediately prior to the effective time that will vest in accordance with its terms as in effect as of the date of the merger agreement as a result of the consummation of the mergers;
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vested shares” refers to (a) the diluted shares plus (b) the aggregate number of shares of Figma capital stock underlying all vested Figma equity awards (with the number of shares of Figma common stock underlying any vested Figma PSU award calculated based on the methodology set forth the applicable provisions of the merger agreement); and
we,” “our” and “us” refer to Adobe and Figma, collectively.
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QUESTIONS AND ANSWERS
The following are some of the questions that stockholders of Adobe and Figma may have regarding the transaction and answers to those questions. These questions and answers, as well as the summary section that follows, are not meant to be a substitute for the information contained in the remainder of this consent solicitation statement/prospectus, and this information is qualified in its entirety by the more detailed descriptions and explanations contained elsewhere in this consent solicitation statement/prospectus. You are urged to read this consent solicitation statement/prospectus in its entirety. Additional important information is also contained in the Annexes to this consent solicitation statement/prospectus. You should pay special attention to the sections entitled “Risk Factors” and “Special Note Regarding Forward-Looking Statements.”
Questions and Answers about the Transaction
Why am I receiving this consent solicitation statement/prospectus?
The Figma board is providing this consent solicitation statement/prospectus to Figma stockholders as of the record date and is soliciting such stockholders’ written consent in connection with the merger agreement, pursuant to which Adobe has agreed to acquire Figma. In addition, pursuant to the registration statement of which this consent solicitation statement/prospectus forms a part, Adobe is registering shares of Adobe common stock issuable to Figma stockholders upon completion of the transaction. This consent solicitation statement/prospectus contains important information about the transaction, the merger agreement and certain related matters, and you should read this consent solicitation statement/prospectus carefully and in its entirety.
What will happen in the transaction?
Pursuant to the merger agreement, at the effective time, Merger Sub I will be merged with and into Figma, with Figma continuing as the surviving corporation in the first merger and as a wholly owned subsidiary of Adobe. Immediately following the first merger, Figma, as the surviving corporation in the first merger, will be merged with and into Merger Sub II, with Merger Sub II continuing as the surviving company in the second merger and as a wholly owned subsidiary of Adobe.
See the sections entitled “The Transaction—Structure of the Transaction” and “The Merger Agreement—The Transaction” and the merger agreement attached as Annex A to this consent solicitation statement/prospectus for more information about the transaction and the merger agreement.
What will holders of Figma capital stock receive in the first merger?
Subject to the applicable provisions of the merger agreement, at the effective time, by virtue of the first merger and without any action on the part of the parties or holders of any securities of Figma or any other person, each share of Figma capital stock issued and outstanding immediately prior to the effective time (other than treasury shares and dissenting shares (as defined under “The Merger Agreement—Dissenting Shares”)) will be converted into the right to receive, without interest: (i) the per share closing stock consideration, plus (ii) the per share closing cash consideration, plus (iii) if any, the per share escrow release amount, plus (iv) if any, the per share escrow resolved amount, plus (v) if any, the per share specified escrow release amount, plus (vi) if any, the per share representative fund release amount, subject to certain customary adjustments after closing as described in the section entitled “The Merger Agreement—Cash Consideration Adjustments.” The amount of cash and shares of Adobe common stock that each Figma stockholder is entitled to receive for such shares of Figma capital stock will be computed after aggregating the amount of cash and shares of Adobe common stock each Figma stockholder is entitled to receive for all shares of Figma capital stock that were held by such Figma stockholder immediately prior to the effective time. The amounts set forth in the foregoing clauses (iii)-(vi), if any, will be payable, if at all, at the applicable times and subject to the requirements specified in the merger agreement and the escrow agreement (if applicable) after the closing.
See the sections entitled “The Transaction—Consideration to Figma Stockholders,” “The Merger Agreement—Consideration; Effect of the Transaction on Figma Capital Stock” and “The Merger Agreement—Cash Consideration Adjustments.”
What will the holder of the Figma warrant receive in the first merger?
The Figma warrant will be canceled at the effective time unless exercised prior to such time. Subject to the applicable provisions of the merger agreement, if the holder of the Figma warrant executes a warrant termination agreement in the form attached to the merger agreement no later than three days prior to the effective time, then,
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upon the effective time, the holder of the Figma warrant will be entitled to receive, for each share of Figma capital stock subject to the Figma warrant, (i) the per share closing stock consideration, plus (ii) the excess of the per share closing cash consideration over the applicable per share exercise price of the Figma warrant, plus (iii) if any, the per share escrow release amount, plus (iv) if any, the per share escrow resolved amount, plus (v) if any, the per share specified escrow release amount, plus (vi) if any, the per share representative fund release amount, subject to certain customary adjustments after closing as described in the section entitled “The Merger Agreement—Cash Consideration Adjustments.” The amount of cash and shares of Adobe common stock the holder of the Figma warrant is entitled to receive for such shares of Figma capital stock subject to the Figma warrant will be computed after aggregating the amount of cash and shares of Adobe common stock the holder of the Figma warrant is entitled to receive for all shares of Figma capital stock subject to the Figma warrant immediately prior to the effective time. The amounts set forth in the foregoing clauses (iii)-(vi), if any, will be payable, if at all, at the applicable times and subject to the requirements specified in the merger agreement and the escrow agreement after the closing. See the section entitled “The Merger Agreement—Treatment of the Figma Warrant.”
Is any portion of the consideration otherwise payable to Figma stockholders being held back?
Yes. An aggregate amount in cash equal to $65 million otherwise deliverable to Figma stockholders at closing will be deposited with the escrow agent at closing, $40 million of which will secure any post-closing adjustment to the cash consideration and certain indemnification obligations of such holders, in each case, pursuant to the merger agreement, and $25 million of which will secure certain specified tax-related obligations pursuant to the merger agreement. These funds will be released by the escrow agent in accordance with the terms set forth in the merger agreement and the escrow agreement.
Additionally, $500,000 in cash otherwise payable to Figma stockholders at closing will be deposited with the representative, for the representative’s use in covering all losses, claims, damages, liabilities, fees, costs, judgments, fines, amounts paid in settlement or expenses incurred (including fees, disbursements and costs of counsel and other skilled professionals and in connection with seeking recovery from insurers), as and when incurred, as the representative. When determined by the representative in good faith that some or all of such amounts deposited with the representative are no longer required to cover such obligations, the representative will pay such amounts to the exchange agent for further distribution to the Figma stockholders in accordance with the terms set forth in the merger agreement.
See the sections entitled “The Merger Agreement—Cash Consideration Adjustments,” “The Merger Agreement—Escrow Fund” and “The Merger Agreement—Representative of Figma Stockholders.
What happens if the transaction is not completed?
If the transaction is not completed for any reason, Figma stockholders will not receive any merger consideration for their shares of Figma capital stock, and Figma will remain an independent company. If the merger agreement is terminated, in certain circumstances, Adobe may be required to pay Figma a reverse termination fee of $1 billion in cash, as described under the section entitled “The Merger Agreement—Expenses and Reverse Termination Fee.”
Failure to complete the transaction could negatively impact Adobe, Figma and their respective businesses, prospects, financial condition and results of operations. In addition, some costs related to the transaction must be paid by Adobe and Figma even if the transaction is not completed. Furthermore, Adobe and Figma may experience negative reactions from their respective stockholders, customers, partners, distributors, employees, vendors and/or other persons with whom Adobe or Figma has a business relationship, which could have an adverse effect on their respective businesses, financial condition and results of operations.
The merger agreement contains a non-solicitation provision that restricts the ability of Figma, its controlled affiliates and its and their respective officers, directors, employees, representatives and agents, including any investment banker, attorney or accountant engaged by any of them, during the pendency of the transaction, to directly or indirectly solicit, knowingly encourage or knowingly facilitate inquiries or proposals for, or enter into any agreement with respect to, or initiate, continue or conduct any negotiations or discussions with any person concerning, the purchase of all or a significant portion of the assets of Figma or any of its subsidiaries or any capital stock or other ownership interest in Figma or any of its subsidiaries, subject to certain limited exceptions. In addition, under the terms of the merger agreement, Figma is subject to restrictions on the conduct of its
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business prior to the completion of the transaction, including, among other things, restrictions on its ability in certain cases to incur indebtedness, make investments or capital expenditures, enter into, amend or terminate material contracts, settle litigation, acquire or dispose of assets or make changes with respect to employee matters, including compensation and benefits matters. Such limitations could adversely affect Figma’s business, strategy, operations and prospects prior to the completion of the transaction or in the event the transaction is not completed. If the transaction is not completed, the strategic alternatives available to Figma, including remaining an independent company, and the opportunities available to Figma to raise capital, including through a private or public equity issuance, may not be as favorable as they would have been in the absence of the transaction and/or may not be as favorable to Figma and its stockholders as the transaction. See the sections entitled “The Merger Agreement—Covenants and Agreements—No Solicitation by Figma,” “The Merger Agreement—Covenants and Agreements—Conduct of Business of Figma Prior to Completion of the Transaction” and “Risk Factors.”
If I am a Figma stockholder, how will I receive the consideration to which I will become entitled?
At least 10 business days prior to the closing date, a letter of transmittal will be mailed to each Figma stockholder. The merger agreement provides that each Figma stockholder’s entitlement to receive any portion of the consideration or any other payments pursuant to the merger agreement will be conditioned upon such Figma stockholder’s execution and delivery of a properly completed letter of transmittal (including acceptance of and agreement to the terms and conditions contained therein, including the indemnification and release obligations). After the transaction is completed and upon receipt by the exchange agent of a validly executed letter of transmittal, duly completed in accordance with the instructions provided by the exchange agent and any other documents reasonably required by the exchange agent, you will be entitled to receive the amount of cash and the number of shares of Adobe common stock (which will be in uncertificated book-entry form), together with any cash in lieu of fractional shares of Adobe common stock and any dividends or other distributions on shares of Adobe common stock, in each case that you have the right to receive pursuant to the applicable provisions of the merger agreement. For more information about the exchange of shares of Figma capital stock and Figma warrants for shares of Adobe common stock, see the section entitled “The Merger Agreement—Exchange Procedures.”
Are there any important risks related to the transaction or Adobe’s or Figma’s businesses of which I should be aware?
Yes, there are important risks related to the transaction and Adobe’s, Figma’s and the surviving company’s businesses. Before making any decision on how to vote, we urge you to read carefully and in its entirety the section entitled “Risk Factors.”
Are Figma stockholders entitled to seek appraisal or dissenters’ rights?
Pursuant to Section 262 of the DGCL and Chapter 13 of the CCC (if and to the extent required by Section 2115 of the CCC), Figma stockholders (and, with respect to Section 262 of the DGCL, beneficial owners) who do not deliver a written consent approving the merger agreement proposal (as defined below) and who otherwise strictly comply with the procedures set forth in Section 262 of the DGCL and Chapter 13 of the CCC, as applicable, have the right to seek appraisal of the fair value of their shares of Figma capital stock, as determined by the Delaware Court of Chancery or applicable California superior court, respectively, if the first merger is completed. The “fair value” of shares of Figma capital stock as determined by the Delaware Court of Chancery or applicable California superior court could be more or less than, or the same as, the value of the consideration that a Figma stockholder would otherwise be entitled to receive under the terms of the merger agreement.
To exercise appraisal or dissenters’ rights, Figma stockholders (or beneficial owners seeking to exercise appraisal rights under Section 262 of the DGCL) must strictly comply with the procedures prescribed by Delaware and/or California law, as applicable. These procedures are summarized in the section entitled “Appraisal and Dissenters’ Rights.” Failure to strictly comply with these provisions will result in a loss of the right of appraisal or dissent.
What are the conditions to the completion of the transaction?
Completion of the transaction is subject to the satisfaction or waiver of a number of conditions as set forth in the merger agreement, including, among others, the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations
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promulgated thereunder (the “HSR Act”), the receipt of certain required consents, authorizations, clearances and approvals under foreign antitrust laws and the expiration or termination of any applicable waiting periods in connection therewith, no law having been enacted, or order or injunction having been issued, by a governmental authority of competent jurisdiction that prohibits the completion of the mergers, the receipt of the Figma stockholder approval, the effectiveness of the registration statement of which this consent solicitation statement/prospectus forms a part, the approval for listing on Nasdaq of the shares of Adobe common stock to be issued in the first merger, there having been no material adverse effect (as defined in the section entitled “The Merger Agreement—Representations and Warranties”) on either Adobe or Figma that is continuing and, in the case of Adobe’s obligation to effect the closing, Dylan Field, Figma’s Co-Founder and Chief Executive Officer (“CEO”), continuing as an employee of Figma at the closing without having given notice of an intent to terminate his employment following the closing and the termination in full of Figma’s stockholders’ agreements. For more information, see the section entitled “The Merger Agreement—Conditions to Completion of the Transaction.”
When is the transaction expected to be completed?
Adobe and Figma currently expect the transaction to close in 2023, subject to the satisfaction or waiver of the conditions set forth in the merger agreement. Neither Adobe nor Figma can predict, however, the actual date on which the transaction will be completed, or whether it will be completed, because the transaction is subject to certain factors outside the control of each of Adobe and Figma, including whether or when the applicable waiting period under the HSR Act will expire or be terminated and whether or when certain required consents, authorizations, clearances and approvals under foreign antitrust laws will be obtained.
How will Adobe pay the cash component of the consideration payable to Figma stockholders and equity award holders?
Adobe expects the cash consideration to be financed with a combination of cash on Adobe’s balance sheet and short term debt instruments. Neither Adobe’s nor Figma’s obligation to complete the mergers is conditioned upon Adobe obtaining financing.
Who can help answer my questions?
If you are a Figma stockholder and would like additional copies of this consent solicitation statement/prospectus or a replacement written consent, or if you have questions about the transaction, the process for returning your written consent, or the other matters discussed in this consent solicitation statement/prospectus, you should contact Figma’s Investor Relations department by writing to Figma, Inc., 760 Market Street, Floor 10, San Francisco, California 94102, Attention: Investor Relations or by sending an email to ir@figma.com.
If you are an Adobe stockholder and would like additional copies of this consent solicitation statement/prospectus, or if you have questions about the transaction or the other matters discussed in this consent solicitation statement/prospectus, you should contact our Investor Relations department by calling (408) 536-4700, by writing to Investor Relations, Adobe Inc., 345 Park Avenue, San Jose, California 95110-2704 or by sending an email to adobe@kpcorp.com.
Where can I find more information about Adobe and Figma?
You can find more information about Adobe and Figma from the various sources described in the section entitled “Where You Can Find More Information.”
Why are Adobe stockholders not being asked to vote on the transaction?
In accordance with applicable law, no vote of Adobe stockholders is required in connection with the transaction. Therefore, a vote or consent of Adobe stockholders is not being sought. The purpose of the registration statement of which this consent solicitation statement/prospectus is a part is to register the shares of Adobe common stock being issued to Figma stockholders in the transaction and to provide Figma stockholders with important information about Adobe, Figma, the merger agreement and the transaction.
Did the Adobe board approve the merger agreement?
Yes. The Adobe board approved the merger agreement and the transaction, including the mergers, and determined that the merger agreement and the transaction, including the mergers, are advisable, fair to and in the best interests of Adobe and its stockholders.
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Questions and Answers for Figma Stockholders
Did the Figma board approve the merger agreement?
Yes. Following a review of the merger agreement and of the negotiations between Figma and its representatives on behalf of Figma and Adobe and its representatives on behalf of Adobe with respect to the merger agreement, the Figma board unanimously approved and declared advisable the merger agreement and the transaction, upon the terms and conditions set forth in the merger agreement, and recommended that Figma stockholders approve and adopt the merger agreement and the transaction. For a discussion of the factors considered by the Figma board in approving the merger agreement, see the section entitled “The Transaction—Figma’s Reasons for the Transaction; Recommendation of the Figma Board.”
Do any of the Figma directors or officers have interests in the transaction that may differ from or be in addition to my interests as a Figma stockholder?
Yes. Figma stockholders should be aware that some of Figma’s directors and executive officers have interests in the transaction that may be different from, or in addition to, the interests of Figma stockholders generally. The Figma board was aware of and considered these interests, among other matters, in deciding to approve the terms of the merger agreement and the transaction. For a further discussion of these interests, see the section entitled “Interests of Figma’s Directors and Executive Officers in the Transaction.”
What am I being asked to approve?
Figma stockholders are being asked to approve the adoption of the merger agreement and the transaction (the “merger agreement proposal”).
What is the recommendation of the Figma board?
The Figma board unanimously recommends that Figma stockholders approve the merger agreement proposal by executing and returning the written consent furnished with this consent solicitation statement/prospectus.
What stockholder consent is required to approve the transaction?
Adobe and Figma cannot complete the transaction unless the Figma stockholders approve the merger agreement proposal.
The approval of the merger agreement proposal requires the affirmative vote or consent of the holders of (i) at least a majority of the voting power of the outstanding shares of Figma capital stock (voting as a single class and on an as-converted to Figma common stock basis) entitled to vote thereon, (ii) at least a majority of the voting power of the outstanding shares of Figma preferred stock (voting as a single class and on an as-converted to Figma common stock basis) entitled to vote thereon, and (iii) if and to the extent required by Section 2115 of the CCC, at least a majority of the voting power of the outstanding shares of Figma common stock (voting as a single class) entitled to vote thereon (the foregoing clauses (i), (ii) and (iii), collectively, the “Figma stockholder approval”).
Subsequent to the execution of the merger agreement, Adobe and the key stockholders (as defined in the section entitled “Key Stockholder Voting Agreement”), representing approximately [  ]% of the voting power of the outstanding shares of Figma capital stock, approximately [  ]% of the voting power of the outstanding shares of Figma common stock, and approximately [  ]% of the voting power of the outstanding shares of Figma preferred stock, in each case as of the record date, entered into the key stockholder voting agreement (as defined in the section entitled “Key Stockholder Voting Agreement”). Pursuant to the key stockholder voting agreement, among other things, each of the key stockholders has agreed, promptly (and in any event within two business days) after the registration statement of which this consent solicitation statement/prospectus forms a part is declared effective under the Securities Act by the SEC, to execute and deliver a written consent approving the adoption of the merger agreement and the transaction, including the mergers, with respect to all of such key stockholder’s shares of Figma capital stock entitled to act by written consent with respect thereto. The execution and delivery of written consents by all of the key stockholders will constitute the Figma stockholder approval and, therefore, we expect to receive a number of written consents sufficient to satisfy each such approval required under the merger agreement. See the section entitled “Key Stockholder Voting Agreement.” In accordance with applicable law, no vote of Adobe stockholders is required in connection with the transaction.
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Who is entitled to give a written consent?
The Figma board has set [  ] as the record date (the “record date”) for determining the holders of Figma capital stock entitled to execute and deliver written consents with respect to this solicitation. Holders of Figma capital stock on the record date will be entitled to give or withhold a consent using the written consent furnished with this consent solicitation statement/prospectus.
How can I return my written consent?
If you hold shares of Figma capital stock as of the record date and you wish to submit your consent, you must fill out the enclosed written consent, date and sign it, and promptly return it to Figma. Once you have completed, dated and signed your written consent, deliver it to Figma by emailing a .pdf copy of your written consent to consents@figma.com or by mailing your written consent to Figma, Inc., 760 Market Street, Floor 10, San Francisco, California 94102, Attention: Vice President, Legal. Figma will not call or convene any meeting of its stockholders in connection with the Figma stockholder approval.
What happens if I do not return my written consent?
If you hold shares of Figma capital stock as of the record date and you do not return your written consent, that will have the same effect as a vote against the merger agreement proposal. However, under the key stockholder voting agreement, the key stockholders have agreed to execute and deliver their written consents promptly (and in any event within two business days) after the registration statement of which this consent solicitation statement/prospectus forms a part is declared effective by the SEC. The execution and delivery of written consents by all of the key stockholders will constitute the Figma stockholder approval and, therefore, we expect to receive a number of written consents sufficient to satisfy each such approval required under the merger agreement. Therefore, a failure of any other Figma stockholder to deliver a written consent is not expected to have any effect on the approval of the merger agreement proposal or the completion of the transaction.
What is the deadline for returning my written consent?
Figma has set [  ] as the targeted final date for receipt of written consents (such date, as it may be extended in accordance with the next sentence, the “consent deadline”). Figma reserves the right to extend the consent deadline beyond [  ]. Any such extension may be made without notice to Figma stockholders.
Can I change or revoke my written consent?
Yes. You may change or revoke your consent to the merger agreement proposal at any time before the consent deadline. However, please note that because the delivery of the written consents contemplated by the key stockholder voting agreement will constitute the Figma stockholder approval, any such change or revocation is not expected to have an effect on the outcome. If you wish to change or revoke your consent before the consent deadline, you may do so by sending in a new written consent with a later date by one of the means described in the section entitled “Solicitation of Written Consents—Submission of Written Consents.”
What do I need to do now?
Figma urges you to read carefully and consider the information contained in this consent solicitation statement/prospectus, including the Annexes, and to consider how the transaction will affect you as a Figma stockholder. Once the registration statement of which this consent solicitation statement/prospectus forms a part has been declared effective by the SEC, Figma will solicit your written consent. The Figma board unanimously recommends that all Figma stockholders approve the merger agreement proposal by executing and returning to Figma the written consent furnished with this consent solicitation prospectus/prospectus as soon as possible and no later than the consent deadline.
Who can help answer my questions?
If you have questions about the transaction or the process for returning your written consent, or if you need additional copies of this consent solicitation statement/prospectus or a replacement written consent, please contact Figma's Investor Relations department by writing to Figma, Inc., 760 Market Street, Floor 10, San Francisco, California 94102, Attention: Investor Relations or by sending an email to ir@figma.com.
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What are the U.S. federal income tax consequences of the mergers to U.S. holders of Figma capital stock?
Each of Adobe and Figma intend that the mergers, taken together, will qualify as a “reorganization” under Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Each of Adobe and Figma have agreed to report the mergers, taken together, as a “reorganization” within the meaning of Section 368(a) of the Code on their respective U.S. federal income tax returns provided that Figma’s legal counsel, Fenwick & West LLP (“Fenwick & West”) (or other nationally recognized counsel or “big four” accounting firm), delivers to Adobe an opinion (i) which is reasonably satisfactory in form and substance to Adobe, to the effect that the mergers, taken together, are at least “more likely than not” to qualify as a “reorganization” within the meaning of Section 368(a) of the Code and (ii) which has not been modified, withdrawn or adversely affected by a change in law by the date on which such tax returns are filed. Subject to provision of the opinion referenced above, the parties will file all applicable U.S. state and local income tax returns in a manner consistent with reorganization treatment, unless otherwise required by a change in applicable law or a “determination” within the meaning of Section 1313(a) of the Code.
Figma currently anticipates that its legal counsel, Fenwick & West, will deliver to Adobe an opinion that satisfies the requirements described above. That opinion, if issued, will be based on certain facts, representations, covenants, and assumptions, all of which must be consistent with the state of facts existing at the effective time of the mergers. Among those facts is that at least 40 percent of the value of the consideration received in exchange for Figma’s capital stock in the first merger will consist of Adobe common stock (as measured by the average of the daily closing prices of Adobe’s stock for the 10 consecutive trading days ending on and including the second trading day preceding the signing of the merger agreement), taking into account any adjustment to the cash consideration received by holders of Figma’s capital stock as a result of a consideration adjustment (as defined in the section entitled “The Merger Agreement—Post-Closing Adjustment to Cash Consideration”) and cash payable to holders of dissenting shares. If any of the relevant facts, representations, covenants or assumptions are, or become, inaccurate or incomplete in any respect, counsel may be unable to deliver an opinion as to the qualification of the mergers as a reorganization or any such opinion may be invalid or the conclusions reached therein could be jeopardized. There can be no assurance that an opinion that satisfies the requirements described above will be received and the closing of the transaction is not conditioned on the receipt of such opinion. An opinion of counsel represents counsel’s best legal judgment and is not binding on the Internal Revenue Service (the “IRS”) or the courts, which may not agree with the conclusions set forth in such opinion.
No ruling has been, or will be, sought by Figma or Adobe from the IRS with respect to the mergers and there can be no assurance that the mergers, taken together, will qualify as a “reorganization” under Section 368(a) of the Code. If the mergers, taken together, do not qualify as a “reorganization” under Section 368(a) of the Code, U.S. holders (as defined under “U.S. Federal Income Tax Consequences”) will be treated as if they sold their Figma capital stock in a fully taxable transaction.
Figma currently expects to deliver the opinion described above to Adobe. If, consistent with such opinion, the mergers, taken together, qualify as a “reorganization” within the meaning of Section 368(a) of the Code, (1) a U.S. holder will recognize gain to the extent of the lesser of (a) the excess of (i) the sum of the fair market value of the Adobe common stock and the cash received by the U.S. holder, over (ii) the U.S. holder’s adjusted tax basis in the Figma capital stock exchanged therefor and (b) the cash received by the holder and (2) a U.S. holder will not recognize any loss upon the exchange of Figma capital stock for Adobe common stock and cash in the mergers.
For additional information, see the section entitled “U.S. Federal Income Tax Consequences.” The tax consequences to you of the mergers will depend on your particular facts and circumstances. Please consult your own tax advisor as to the tax consequences of the mergers in your particular circumstances, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws.
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SUMMARY
This summary highlights selected information included in this consent solicitation statement/prospectus and may not contain all of the information that is important to you. To better understand the transaction, you should carefully read this entire consent solicitation statement/prospectus and its Annexes and the other documents referred to in this consent solicitation statement/prospectus. Additional important information about Adobe and Figma is also contained in the Annexes to, and the documents incorporated by reference into, this consent solicitation statement/prospectus. For a description of, and instructions as to how to obtain, this information, see the section entitled “Where You Can Find More Information” beginning on page 116 of this consent solicitation statement/prospectus. Each item in this summary includes a page reference directing you to a more complete description of that item.
Information about the Companies (page 46)
Adobe Inc.
Adobe Inc.
345 Park Avenue
San Jose, California 95110
Phone: (408) 536-6000
Founded in 1982, Adobe is one of the largest and most diversified software companies in the world. Adobe offers a line of products and services used by creative professionals, including photographers, video editors, graphic and experience designers and game developers; communicators, including content creators, students, marketers and knowledge workers; businesses of all sizes; and consumers for creating, managing, delivering, measuring, optimizing, engaging and transacting with compelling content and experiences across personal computers, smartphones, other electronic devices and digital media formats. Adobe operates in the Americas; Europe, Middle East and Africa; and Asia-Pacific.
Adobe was originally incorporated in California in October 1983 and was reincorporated in Delaware in May 1997. Adobe’s executive offices and principal facilities are located at 345 Park Avenue, San Jose, California 95110-2704. Adobe’s telephone number is 408-536-6000 and its website is www.adobe.com. Adobe completed its initial public offering in 1986. Adobe common stock is listed on Nasdaq under the ticker symbol “ADBE.”
Additional information about Adobe and its subsidiaries is included in documents incorporated by reference into this consent solicitation statement/prospectus. See the section entitled “Where You Can Find More Information.”
Saratoga Merger Sub I, Inc.
Saratoga Merger Sub I, Inc.
c/o Adobe Inc.
345 Park Avenue
San Jose, California 95110
Phone: (408) 536-6000
Saratoga Merger Sub I, Inc., a direct, wholly owned subsidiary of Adobe, is a Delaware corporation that was incorporated on September 12, 2022 for the purpose of entering into the merger agreement and effecting the first merger. At the effective time, Merger Sub I will be merged with and into Figma, with Figma continuing as the surviving corporation in the first merger and as a wholly owned subsidiary of Adobe.
Saratoga Merger Sub II, LLC
Saratoga Merger Sub II, LLC
c/o Adobe Inc.
345 Park Avenue
San Jose, California 95110
Phone: (408) 536-6000
Saratoga Merger Sub II, LLC, a direct, wholly owned subsidiary of Adobe, is a Delaware limited liability company that was formed on September 12, 2022 for the purpose of entering into the merger agreement and
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effecting the second merger. Immediately following the first merger, Figma, as the surviving corporation in the first merger, will be merged with and into Merger Sub II, with Merger Sub II continuing as the surviving company in the second merger and as a wholly owned subsidiary of Adobe. As a result of the second merger, Merger Sub II will own the legacy business of Figma.
Figma, Inc.
Figma, Inc.
760 Market Street, Floor 10
San Francisco, California 94102
Phone: (415) 890-5404
Figma’s mission is to help teams collaborate visually and Figma’s vision is to make design accessible to all. Figma is a design platform for teams who build products together. Born on the web, Figma helps teams brainstorm, design, and build better products—from start to finish. Whether it is consolidating tools, simplifying workflows, or collaborating across teams and time zones, Figma makes the design process faster, more efficient and fun while keeping everyone on the same page. Figma has a devoted community of millions of product designers, developers, students and knowledge workers around the globe.
Figma, Inc. was incorporated in Delaware in 2012.
The Transaction (page 51)
The terms and conditions of the transaction described below are contained in the merger agreement, which is attached to this consent solicitation statement/prospectus as Annex A and is incorporated by reference herein in its entirety. You are encouraged to read the merger agreement carefully, as it is the legal document that governs the transaction.
The merger agreement provides, among other matters, for the acquisition of Figma by Adobe pursuant to two successive mergers, on the terms and subject to the conditions in the merger agreement and in accordance with the DGCL and the Delaware Limited Liability Company Act (the “DLLCA”). Pursuant to the merger agreement, at the effective time, Merger Sub I will be merged with and into Figma, with Figma continuing as the surviving corporation in the first merger and as a wholly owned subsidiary of Adobe. Immediately following the first merger, Figma, as the surviving corporation in the first merger, will be merged with and into Merger Sub II, with Merger Sub II continuing as the surviving company in the second merger and as a wholly owned subsidiary of Adobe.
Figma’s Reasons for the Transaction; Recommendation of the Figma Board (page 55)
Following a review of the merger agreement and of the negotiations between Figma and its representatives on behalf of Figma and Adobe and its representatives on behalf of Adobe with respect to the merger agreement, the Figma board unanimously approved and declared advisable the merger agreement and the transaction, upon the terms and conditions set forth in the merger agreement, and recommended that Figma stockholders approve and adopt the merger agreement and the transaction. For a discussion of the factors considered by the Figma board in approving the merger agreement, see the section entitled “The Transaction—Figma’s Reasons for the Transaction; Recommendation of the Figma Board.”
Regulatory Approvals (page 58)
Under the HSR Act, the transaction cannot be completed until, among other things, Adobe and Figma each files a notification and report form with the Antitrust Division of the U.S. Department of Justice (the “DOJ”) and the U.S. Federal Trade Commission (collectively with the DOJ, the “U.S. Antitrust Agencies”) and the applicable waiting period has been terminated or has expired. A transaction notifiable under the HSR Act may not be completed until the expiration of a 30-day waiting period following the parties’ filings of their respective HSR Act notification and report forms or the early termination of that waiting period. On October 13, 2022, each of Adobe and Figma filed a notification and report form pursuant to the HSR Act with the U.S. Antitrust Agencies. On November 14, 2022, the parties each received a Request for Additional Information and Documentary Material (a “second request”) from the DOJ with respect to the transaction. Accordingly, the HSR waiting period will expire 30 days after Adobe and Figma each certify their substantial compliance with the second request, unless earlier terminated by the DOJ or extended by agreement of the parties or court order.
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At any time before or after the completion of the transaction, notwithstanding the termination or expiration of the waiting period under the HSR Act, the U.S. Antitrust Agencies could take such action under the antitrust laws as they deem necessary under the applicable statutes, including seeking to enjoin the completion of the transaction, seeking divestiture of substantial assets of the parties, or requiring the parties to license, or hold separate, assets, to terminate existing relationships and contractual rights, or to take other actions or agree to other restrictions limiting the freedom of action of the parties. In addition, at any time before or after the completion of the transaction, and notwithstanding the termination or expiration of the waiting period under the HSR Act, any state could take such action under the antitrust laws as it deems necessary. Private parties may also seek to take legal action under the antitrust laws under certain circumstances.
The transaction is also subject to clearance or approval by regulatory authorities in certain other jurisdictions. The transaction cannot be completed until Adobe and Figma obtain clearance to consummate the transaction or applicable waiting periods have expired or been terminated in each applicable jurisdiction. Adobe and Figma, in consultation and cooperation with each other, will file notifications, as required with regulatory authorities in certain other jurisdictions, as promptly as practicable after the date of the merger agreement. The relevant regulatory authorities could take such actions under the applicable regulatory laws as they deem necessary or desirable, including seeking divestiture of substantial assets of the parties or requiring the parties to license, or hold separate, assets or terminate existing relationships and contractual rights, or to take other actions or agree to other restrictions limiting the freedom of action of the parties.
There can be no assurance that a challenge to the transaction on antitrust grounds will not be made or, if such a challenge is made, what the result will be.
In connection with the transaction, the parties also intend to make all required filings with the SEC, the Delaware Secretary of State and Nasdaq, as well as any required filings with state or local licensing authorities.
Conditions to Completion of the Transaction (page 78)
As more fully described in this consent solicitation statement/prospectus and in the merger agreement, the respective obligations of Figma, Adobe, Merger Sub I and Merger Sub II to effect the mergers will be subject to the satisfaction at or prior to the closing of each of the following conditions, any and all of which may be waived in writing, in whole or in part, by Adobe, Merger Sub I and Merger Sub II, on the one hand, and Figma, on the other hand, to the extent permitted by applicable law:
the receipt of the Figma stockholder approval;
(i) the expiration or termination of any waiting period (and any extension thereof) applicable to the transaction under the HSR Act and (ii) receipt of certain required consents, authorizations, clearances and approvals under foreign antitrust laws (and the expiration or termination of any applicable waiting period (and any extension thereof));
the absence any legal restraint (as defined in the section entitled “The Merger Agreement—Conditions to Completion of the Transaction”) that, in any case, makes illegal, prohibits or prevents the consummation of the mergers;
the effectiveness of the registration statement of which this consent solicitation statement/prospectus forms a part and the absence of any stop order suspending that effectiveness or any proceedings for that purpose initiated or threatened by the SEC and not withdrawn; and
the approval for listing on Nasdaq of the shares of Adobe common stock issuable to Figma stockholders in connection with the first merger, subject to official notice of issuance.
The obligations of Adobe, Merger Sub I and Merger Sub II to effect the mergers will be further subject to the satisfaction at or prior to the closing of each of the following conditions, any and all of which may be waived in whole or in part by Adobe, Merger Sub I and Merger Sub II to the extent permitted by applicable law:
the accuracy of the representations and warranties made in the merger agreement by Figma as of the date of the merger agreement and as of the closing date (except to the extent any representations and warranties are made as of a specific date, in which case as of such specific date), subject to certain materiality thresholds;
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Figma’s performance of or compliance with, in all material respects, all of the covenants, obligations and conditions to be performed or complied with by it on or prior to or at the closing;
the absence since the date of the merger agreement of a material adverse effect (as defined in the section entitled “The Merger Agreement—Representations and Warranties”) on Figma that is continuing;
the receipt by Adobe of a certificate of an executive officer of Figma, dated as of the closing date, to the effect that certain conditions to closing have been satisfied and of a certificate related to certain tax matters;
Dylan Field’s continuation as an employee of Figma at closing without having given notice of an intent to terminate his employment following the closing; and
termination in full of Figma’s stockholders’ agreements.
The obligations of Figma to effect the mergers will be further subject to the satisfaction at or prior to the closing of each of the following conditions, any and all of which may be waived in whole or in part by Figma to the extent permitted by applicable law:
the accuracy of the representations and warranties made in the merger agreement by Adobe, Merger Sub I and Merger Sub II as of the date of the merger agreement and as of the closing date (except to the extent any representations and warranties are made as of a specific date, in which case as of such specific date), subject to certain materiality thresholds;
Adobe, Merger Sub I and Merger Sub II’s performance of or compliance with, in all material respects, all of the covenants, obligations and conditions to be performed or complied with by each of them on or prior to or at the closing;
the absence since the date of the merger agreement of a material adverse effect on Adobe that is continuing; and
the receipt by Figma of a certificate of an authorized officer of Adobe, dated as of the closing date, to the effect that certain conditions to closing have been satisfied.
Solicitation of Written Consents; Expenses (page 44)
The merger agreement provides that Figma will seek the Figma stockholder approval pursuant to this consent solicitation statement/prospectus. Figma will not call or convene any meeting of its stockholders in connection with the Figma stockholder approval. Figma stockholders are being asked to approve the merger agreement proposal by executing and delivering the written consent furnished with this consent solicitation statement/prospectus.
Only Figma stockholders of record at the close of business on [  ], the record date, will be entitled to execute and deliver a written consent. Each holder of a share of Figma Class A common stock is entitled to one vote for each such share held as of the record date. Each holder of a share of Figma Class B common stock is entitled to fifteen votes for each such share held as of the record date. Each holder of Figma preferred stock is entitled to the number of votes equal to the number of shares of Figma common stock into which the shares of Figma preferred stock held by such holder could be converted as of the record date. Each share of Figma preferred stock is currently convertible into one share of Figma Class A common stock. The holders of Figma preferred stock will vote together as a single class on an as-converted to Figma common stock basis and the holders of Figma capital stock will vote together as a single class on an as-converted to Figma common stock basis. If and to the extent Section 2115 of the CCC is required to apply to the transaction, the holders of Figma common stock will vote together as a single class for purposes of such section.
As of the close of business on the record date, there were (a) [  ] shares of Figma common stock outstanding, consisting of (i) [  ] shares of Figma Class A common stock and (ii) [  ] shares of Figma Class B common stock, and (b) [  ] shares of Figma preferred stock outstanding, in each case entitled to execute and deliver written consents with respect to the merger agreement proposal, and directors and executive officers of Figma and their affiliates owned and were entitled to consent with respect to (a) [  ] shares of Figma common stock (representing approximately [  ]% of the voting power of such shares outstanding on that date), consisting of (i) [  ] shares of Figma Class A common stock (representing approximately [  ]%
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of the voting power of such shares outstanding on that date) and (ii) [  ] shares of Figma Class B common stock (representing approximately [  ]% of the voting power of such shares outstanding on that date), and (b) [  ] shares of Figma preferred stock (representing approximately [  ]% of the voting power of such shares outstanding on that date). Figma currently expects that its directors and executive officers will deliver written consents in favor of the merger agreement proposal, although none of them has entered into any agreements obligating him or her to do so, other than Mr. Field and certain stockholders affiliated with Figma directors, who have entered into the key stockholder voting agreement.
The approval of the merger agreement proposal requires the affirmative vote or consent of the holders of (i) at least a majority of the voting power of the outstanding shares of Figma capital stock (voting as a single class and on an as-converted to Figma common stock basis) entitled to vote thereon, (ii) at least a majority of the voting power of the outstanding shares of Figma preferred stock (voting as a single class and on an as-converted to Figma common stock basis) entitled to vote thereon and (iii) if and to the extent required by Section 2115 of the CCC, at least a majority of the voting power of the outstanding shares of Figma common stock (voting as a single class) entitled to vote thereon.
Subsequent to the execution of the merger agreement, Adobe and the key stockholders entered into the key stockholder voting agreement. Pursuant to the key stockholder voting agreement, among other things, each of the key stockholders has agreed, promptly (and in any event within two business days) after the registration statement of which this consent solicitation statement/prospectus forms a part is declared effective under the Securities Act by the SEC, to execute and deliver a written consent approving the adoption of the merger agreement and related matters with respect to all of such key stockholder’s shares of Figma capital stock entitled to act by written consent with respect thereto. The shares of Figma capital stock that are owned by the key stockholders and subject to the key stockholder voting agreement represent approximately [  ]% of the voting power of the outstanding shares of Figma capital stock, approximately [  ]% of the voting power of the outstanding shares of Figma common stock, and approximately [  ]% of the voting power of the outstanding shares of Figma preferred stock, in each case as of the record date. The execution and delivery of written consents by all of the key stockholders will constitute the Figma stockholder approval and, therefore, we expect to receive a number of written consents sufficient to satisfy such approval required under the merger agreement.
You may consent to the merger agreement proposal with respect to your shares of Figma capital stock by completing and signing the written consent furnished with this consent solicitation statement/prospectus and returning it to Figma by the consent deadline. Your consent to the merger agreement proposal may be changed or revoked at any time before the consent deadline.
You may execute a written consent to approve the merger agreement proposal (which is equivalent to a vote for the proposal). If you hold shares of Figma capital stock as of the record date and you do not return your written consent, that will have the same effect as a vote against the merger agreement proposal. If you hold shares of Figma capital stock as of the record date and you return a signed written consent without indicating your decision on the merger agreement proposal, you will have given your consent to approve the proposal.
Due to the obligations of the key stockholders under the key stockholder voting agreement, a failure of any other Figma stockholder to deliver a written consent, or any change or revocation of a previously delivered written consent, is not expected to have any effect on the approval of the merger agreement proposal or the completion of the transaction.
The expense of preparing, printing and mailing these consent solicitation materials is being borne by Figma. Officers and employees of Figma may solicit consents by telephone and personally, in addition to solicitation by mail. These persons will receive their regular compensation but no special compensation for soliciting consents.
Termination of the Merger Agreement (page 79)
The merger agreement may be terminated and the mergers may be abandoned at any time prior to closing, notwithstanding the approval by the Figma stockholders, as follows and in no other manner:
by mutual written consent of Adobe and Figma;
by either Adobe or Figma, if the effective time has not occurred on or before 10:00 a.m., Pacific time, on the outside date of September 15, 2023 (subject to extension as described in the section entitled
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The Merger Agreement—Termination of the Merger Agreement”) (provided that the right to terminate the merger agreement pursuant to this bullet point will not be available to any party whose breach of any provision of the merger agreement results in or causes the failure of the closing to be consummated by such time);
by Adobe or Figma, if there is in effect a final, nonappealable legal restraint (provided that the right to terminate the merger agreement pursuant to this bullet point will not be available to any party whose breach of any provision of the merger agreement results in or causes such legal restraint); and
by either Adobe or Figma, if the other party commits a terminating breach (as defined in the section entitled “The Merger Agreement—Termination of the Merger Agreement”) (provided that, if such terminating breach is curable by the breaching party, the non-breaching party may terminate the merger agreement only if such terminating breach has not been cured prior to the earlier of (i) 30 calendar days after receipt by the breaching party of written notice from the non-breaching party of such terminating breach and (ii) the outside date (provided further that the right to terminate the merger agreement pursuant to this bullet point will not be available to any party who is then committing a terminating breach such that the other party would have the right to terminate the merger agreement if such breach were not cured prior to the earlier of (i) 30 calendar days after receipt of written notice of such breach and (ii) the outside date).
In addition, the merger agreement would have been terminable by Adobe if any key stockholder had failed to execute and deliver to Adobe the key stockholder voting agreement to which such key stockholder is a party within one day following the execution of the merger agreement. However, subsequent to the execution of the merger agreement, each of the key stockholders timely delivered to Adobe the key stockholder agreement within one day following the execution of the merger agreement.
Expenses and Reverse Termination Fee (page 80)
Expenses
As more fully described in this consent solicitation statement/prospectus and in the merger agreement, except as otherwise expressly provided in the merger agreement, each party will pay its own expenses incident to the merger agreement and the transaction.
Reverse Termination Fee
The merger agreement requires Adobe to pay or cause to be paid to Figma a reverse termination fee equal to $1 billion in cash within three business days of termination of the merger agreement if each of the following occur:
either Adobe or Figma terminates the merger agreement because either the closing has not occurred by the outside date or there is in effect a final, nonappealable legal restraint that is, or is in respect of, an antitrust law; and
at the time of such termination, one or both of the conditions relating to (i) required antitrust approvals and/or (ii) the absence of any legal restraint prohibiting the completion of the mergers (in the case of clause (ii), only if the legal restraint is, or is in respect of, any antitrust law) are not satisfied but all other conditions to closing have been satisfied or waived, as applicable (except for those conditions which by their nature are to be satisfied at the closing, provided that such conditions would be satisfied if the closing were to take place on such date).
The reverse termination fee will not be payable if the merger agreement is terminated under circumstances other than those expressly set forth above.
Key Stockholder Voting Agreement
Subsequent to the execution of the merger agreement, Adobe and the key stockholders entered into the key stockholder voting agreement. Pursuant to the key stockholder voting agreement, among other things, each of the key stockholders has agreed, promptly (and in any event within two business days) after the registration statement of which this consent solicitation statement/prospectus forms a part is declared effective under the Securities Act by the SEC, to execute and deliver a written consent approving the adoption of the merger
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agreement and the transaction, including the mergers, with respect to all of such key stockholder’s shares of Figma capital stock entitled to act by written consent with respect thereto. The execution and delivery of written consents by all of the key stockholders will constitute the Figma stockholder approval and, therefore, we expect to receive a number of written consents sufficient to satisfy each such approval required under the merger agreement. See the section entitled “Key Stockholder Voting Agreement.
Interests of Figma’s Directors and Executive Officers in the Transaction (page 88)
In considering the recommendation of the Figma board that Figma stockholders approve the adoption of the merger agreement, Figma stockholders should be aware and take into account the fact that certain Figma directors and executive officers have interests in the transaction that may be different from, or in addition to, the interests of Figma stockholders generally.
These interests include, among other things, arrangements for certain executive officers that provide for acceleration rights (in relation to the vesting of certain Figma equity-based awards) in the event that any such executive officer’s employment is terminated under certain circumstances following completion of the transaction, retention awards in the form of Adobe RSU awards, the conversion of Figma equity-based awards into Adobe equity-based awards and rights to indemnification and directors’ and officers’ liability insurance that will survive the completion of the transaction. Certain executive officers of Figma may also serve as officers or employees of the surviving company following the completion of the transaction.
The Figma board was aware of and considered these interests, among other matters, in evaluating the terms and structure of the transaction, in overseeing the negotiation of the transaction, in approving the merger agreement and the transaction and in making the Figma board recommendation.
Comparison of Stockholders’ Rights (page 91)
Both Adobe and Figma are incorporated under the laws of the State of Delaware and, accordingly, the rights of the stockholders of each are currently, and will continue to be, governed by the DGCL. However, Adobe stockholders and Figma stockholders have different rights pursuant to the constituent documents of each of Adobe and Figma. Upon the completion of the transaction, Figma stockholders will become Adobe stockholders and will have rights different from those they currently have as Figma stockholders. Certain differences between the constituent documents of Adobe and Figma are described in the section entitled “Comparison of Stockholders’ Rights.”
Accounting Treatment (page 59)
Adobe and Figma prepare their financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). The mergers will be accounted for in accordance with FASB ASC Topic 805, Business Combinations, with Adobe considered as the accounting acquirer and Figma as the accounting acquiree. Accordingly, Adobe will measure the assets acquired and liabilities assumed at their fair values including net tangible and identifiable intangible assets acquired and liabilities assumed as of the closing date, with any excess purchase price over those fair values being recorded as goodwill.
U.S. Federal Income Tax Consequences (page 83)
Each of Adobe and Figma intend that the mergers, taken together, will qualify as a “reorganization” under Section 368(a) of the Code. Each of Adobe and Figma have agreed to report the mergers, taken together, as a “reorganization” within the meaning of Section 368(a) of the Code on their respective U.S. federal income tax returns provided that Figma’s legal counsel, Fenwick & West (or other nationally recognized counsel or “big four” accounting firm), delivers to Adobe an opinion (i) which is reasonably satisfactory in form and substance to Adobe, to the effect that the mergers, taken together, are at least “more likely than not” to qualify as a “reorganization” within the meaning of Section 368(a) of the Code and (ii) which has not been modified, withdrawn or adversely affected by a change in law by the date on which such tax returns are filed. Subject to provision of the opinion referenced above, the parties will file all applicable U.S. state and local income tax returns in a manner consistent with reorganization treatment, unless otherwise required by a change in applicable law or a “determination” within the meaning of Section 1313(a) of the Code.
Figma currently anticipates that its legal counsel, Fenwick & West, will deliver to Adobe an opinion that satisfies the requirements described above. That opinion, if issued, will be based on certain facts, representations,
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covenants, and assumptions, all of which must be consistent with the state of facts existing at the effective time of the mergers. Among those facts is that at least 40 percent of the value of the consideration received in exchange for Figma capital stock in the first merger will consist of Adobe common stock (as measured by the average of the daily closing prices of Adobe’s stock for the 10 consecutive trading days ending on and including the second trading day preceding the signing of the merger agreement), taking into account any adjustment to the cash consideration received by holders of Figma’s capital stock as a result of a consideration adjustment (as defined in the section entitled “The Merger Agreement—Post-Closing Adjustment to Cash Consideration”) and cash payable to holders of dissenting shares. If any of the relevant facts, representations, covenants or assumptions are, or become, inaccurate or incomplete in any respect, counsel may be unable to deliver an opinion as to the qualification of the mergers as a reorganization or any such opinion may be invalid or the conclusions reached therein could be jeopardized. There can be no assurance that an opinion that satisfies the requirements described above will be received and the closing of the transaction is not conditioned on the receipt of such opinion. An opinion of counsel represents counsel’s best legal judgment and is not binding on the IRS or the courts, which may not agree with the conclusions set forth in such opinion.
No ruling has been, or will be, sought by Figma or Adobe from the IRS with respect to the mergers and there can be no assurance that the mergers, taken together, will qualify as a “reorganization” under Section 368(a) of the Code. If the mergers, taken together, do not qualify as a “reorganization” under Section 368(a) of the Code, U.S. holders (as defined under “U.S. Federal Income Tax Consequences”) will be treated as if they sold their Figma capital stock in a fully taxable transaction.
Figma currently expects to deliver the opinion described above to Adobe. If, consistent with such opinion, the mergers, taken together, qualify as a “reorganization” within the meaning of Section 368(a) of the Code, (1) a U.S. holder will recognize gain to the extent of the lesser of (a) the excess of (i) the sum of the fair market value of the Adobe common stock and the cash received by the U.S. holder, over (ii) the U.S. holder’s adjusted tax basis in the Figma capital stock exchanged therefor and (b) the cash received by the holder and (2) a U.S. holder will not recognize any loss upon the exchange of Figma capital stock for Adobe common stock and cash in the mergers.
For additional information, see the section entitled “U.S. Federal Income Tax Consequences.” The tax consequences to you of the mergers will depend on your particular facts and circumstances. Please consult your own tax advisor as to the tax consequences of the mergers in your particular circumstances, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws.
Appraisal and Dissenters’ Rights (page 107)
Pursuant to Section 262 of the DGCL and Chapter 13 of the CCC (if and to the extent required by Section 2115 of the CCC), Figma stockholders (and, with respect to Section 262 of the DGCL, beneficial owners) who do not deliver a written consent approving the merger agreement proposal and who otherwise strictly comply with the procedures set forth in Section 262 of the DGCL and Chapter 13 of the CCC, as applicable, have the right to seek appraisal of the fair value of their shares of Figma capital stock, as determined by the Delaware Court of Chancery or applicable California superior court, respectively, if the first merger is completed. The “fair value” of shares of Figma capital stock as determined by the Delaware Court of Chancery or applicable California superior court could be more or less than, or the same as, the value of the consideration that a Figma stockholder or beneficial owner would otherwise be entitled to receive under the terms of the merger agreement.
To exercise appraisal or dissenters’ rights, Figma stockholders (or beneficial owners seeking to exercise appraisal rights under Section 262 of the DGCL) must strictly comply with the procedures prescribed by Delaware and/or California law, as applicable. These procedures are summarized in the section entitled “Appraisal and Dissenters’ Rights.” The relevant provisions of the DGCL are included as Annex D to this consent solicitation statement/prospectus and the relevant provisions of the CCC are included as Annex E to this consent solicitation statement/prospectus. Figma stockholders and beneficial owners are encouraged to read these provisions carefully and in their entirety. Moreover, due to the complexity of the procedures for exercising and perfecting the right to seek appraisal, Figma stockholders and beneficial owners who are considering exercising and perfecting that right are encouraged to seek the advice of legal counsel. Failure to strictly comply with these provisions will result in a loss of the right of appraisal or dissent.
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Risk Factors (page 24)
In evaluating the merger agreement and transaction, you should carefully read this consent solicitation statement/prospectus and the documents incorporated by reference herein and the Annexes attached hereto. In particular, you should consider the factors discussed in the section entitled “Risk Factors.” Any of these factors could have a material adverse effect on the business, financial condition and results of Adobe, Figma and/or the surviving company. These risks include, but are not limited to, the following:
Risks Related to the Transaction
There is no assurance when or if the transaction will be completed.
The number of shares of Adobe common stock to be received in exchange for each outstanding share of Figma capital stock and each share of Figma capital stock underlying certain Figma equity awards in the transaction will not change between now and the time the transaction is completed for the purpose of reflecting changes in the trading price of Adobe common stock. Because the value of the consideration to Figma stockholders and Figma equity award holders in the transaction will fluctuate between now and the completion of the mergers, Figma stockholders and Figma equity award holders cannot be sure of the value of the shares of Adobe common stock they will receive in the transaction.
There has been no public market for Figma capital stock and the lack of a public market may make it more difficult to determine the fair market value of Figma than if there were such a public market.
Figma’s directors and executive officers have interests in the transaction that may be different from, or in addition to, the interests of Figma stockholders generally.
If the mergers, taken together, do not qualify as a “reorganization” under Section 368(a) of the Code, U.S. holders of Figma’s capital stock may be required to pay additional U.S. federal income taxes.
Adobe and Figma are subject to various uncertainties, including litigation and contractual restrictions and requirements while the transaction is pending, that could adversely affect their businesses, financial condition and results of operations.
The merger agreement contains provisions that restrict the ability of Figma to pursue alternatives to the transaction.
Certain stockholders of Figma have executed a key stockholder voting agreement that requires each such stockholder to deliver a written consent in favor of the adoption of the merger agreement, which will constitute approval of the transaction by the Figma stockholders, regardless of the Figma board’s recommendation.
Risks Related to Adobe and the Surviving Company after Completion of the Transaction
Adobe may not be able to combine with Figma successfully or manage the combined business effectively, and many of the anticipated synergies and other benefits of acquiring Figma may not be realized or may not be realized within the expected time frame.
Following the transaction, the market price of Adobe common stock may be affected by factors different from those affecting the shares of Adobe common stock or Figma capital stock currently, and Figma stockholders will hold an interest in a company with a different mix of assets, risks and liabilities, and a different financial profile and other characteristics, than the company in which they currently hold an interest.
Figma stockholders will have a significantly lower ownership and voting interest in Adobe following the transaction than they currently have in Figma and will exercise less influence over management.
The shares of Adobe common stock to be received by Figma stockholders upon completion of the transaction will have different rights from shares of Figma capital stock.
The market price of Adobe common stock may decline as a result of the transaction and the issuance of shares of Adobe common stock to Figma stockholders in the transaction may have a negative impact on Adobe’s financial results, including earnings per share.
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Risks Related to Figma’s Business
Figma has a limited operating history, which makes it difficult to evaluate Figma’s current business and future prospects.
If Figma is unable to attract new customers and renew and expand sales to existing customers, its revenue growth could be slower than it expects, and its business, operating results, financial condition and prospects would be adversely affected.
Figma's business and ongoing expansion depends largely on its ability to attract and retain talented and high-quality personnel, including senior management.
Figma has a history of losses and may not achieve or sustain profitability. If Figma cannot achieve and sustain profitability, its business, financial condition and operating results will be adversely affected.
Figma has experienced rapid growth in recent periods, and if it does not effectively manage its future growth, its business, operating results, financial condition and prospects may be adversely affected.
Figma derives, and may continue to derive, most of its revenues from a single solution.
If Figma experiences security or data privacy breaches or other unauthorized or improper access to, use of, or destruction of Figma’s or Figma’s customers’ or partners’ proprietary or confidential data, it may face loss of revenue, harm to its brand, business disruption and significant liabilities.
If Figma is not able to effectively introduce enhancements to its platform, including new products, services, features, and functionality, that achieve market acceptance, or keep pace with technological developments, its business, operating results, financial condition and prospects could be adversely affected.
If there are interruptions or performance problems associated with the technology or infrastructure used to provide Figma, organizations on Figma may experience service outages, other organizations may be reluctant to adopt Figma’s platform and Figma’s reputation could be harmed.
Figma’s failure or inability to protect its intellectual property rights, or claims by others that Figma is infringing upon or unlawfully using others’ intellectual property, could diminish the value of Figma’s brand and weaken its competitive position, and could adversely affect Figma’s business, operating results, financial condition and prospects.
Figma may have exposure to additional tax liabilities.
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MARKET PRICE AND DIVIDEND INFORMATION
Shares of Adobe common stock currently trade on the Nasdaq Global Select Market under the symbol “ADBE.” The market value of Adobe common stock on September 14, 2022, the last trading day before the announcement of the merger agreement, and on [    ], 2022, the latest practicable date prior to the date of this consent solicitation statement/prospectus, was $371.52 per share and $[  ] per share, respectively.
Figma is a privately held company and there is no public trading market for Figma common stock or Figma preferred stock.
The following table sets forth the closing sale price per share of Adobe common stock on September 14, 2022, the last trading day before the announcement of the merger agreement, and on [    ], 2022, the latest practicable date prior to the date of this consent solicitation/prospectus:
 
Adobe
common stock
Figma
common stock
September 14, 2022
$371.52
N/A
[    ], 2022
[  ]
N/A
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RISK FACTORS
In reviewing the transaction described in this consent solicitation statement/prospectus, you should consider carefully the following risk factors, together with general investment risks and all of the other information included in, or incorporated by reference into, this consent solicitation statement/prospectus. This consent solicitation statement/prospectus also contains forward-looking statements that involve risks and uncertainties. Please read the section entitled “Special Note Regarding Forward-Looking Statements.
The risks described below are certain material risks, although not the only risks, relating to the transaction and each of Adobe, Figma and the surviving company in relation to the transaction. The risks described below are not the only risks that Adobe or Figma currently faces or that Adobe or the surviving company will face after the completion of the transaction. Additional risks and uncertainties not currently known or that are currently expected to be immaterial may also materially and adversely affect the business, financial condition and results of operations of Adobe or the surviving company or the market price of Adobe common stock following the completion of the transaction.
If any of the following risks and uncertainties develop into actual events, these events could have a material adverse effect on the business, financial condition and results of operations of Adobe, Figma and/or the surviving company. In addition, past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods.
Risks Related to the Transaction
There is no assurance when or if the transaction will be completed.
The completion of the transaction is subject to the satisfaction or waiver of a number of conditions as set forth in the merger agreement, including, among others, the expiration or termination of the applicable waiting periods under the HSR Act, the receipt of certain required consents, authorizations, clearances and approvals from other specified governmental authorities under foreign antitrust laws and the expiration or termination of any applicable waiting periods in connection therewith, no law having been enacted, or order or injunction having been issued by a governmental authority of competent jurisdiction that prohibits the completion of the mergers, the receipt of the Figma stockholder approval, the effectiveness of the registration statement of which this consent solicitation statement/prospectus forms a part, the approval for listing on Nasdaq of the shares of Adobe common stock to be issued in the first merger, there having been no material adverse effect on either Adobe or Figma that is continuing and, in the case of Adobe’s obligation to effect the closing, Dylan Field, Figma’s Co-Founder and CEO, continuing as an employee of Figma at the closing without having given notice of an intent to terminate his employment following the closing and the termination in full of Figma’s stockholders’ agreements. There can be no assurance that the expiration or termination of the applicable waiting periods under the HSR Act or that the required consents, authorizations, clearances and approvals from other specified governmental authorities under foreign antitrust laws will be obtained, or that the other conditions to the obligations of the parties to effect the mergers will be satisfied or waived. In particular, federal, state or local governmental or regulatory authorities and, in certain instances, private parties may seek to challenge the transaction and/or impose conditions on Adobe, Figma and/or the surviving company as a condition to completion of the transaction under applicable antitrust or other laws. In addition, there can be no assurance that any consents, clearances or approvals necessary or advisable to be obtained in connection with the transaction will be obtained in a timely manner or at all, or whether they will be subject to actions, conditions, limitations or restrictions that may jeopardize or delay the completion of the transaction, materially reduce or delay the anticipated benefits of the transaction or allow the parties to terminate the merger agreement. Under the terms of the merger agreement, neither Adobe nor any of its affiliates is required to proffer, offer, commit to, consent to or agree to or effect any remedy actions (as defined in the section entitled “The Merger Agreement—Covenants and Agreements—Reasonable Best Efforts; Regulatory Filings and Other Actions”) with respect to (A) any assets, products, product lines, properties, services or businesses or portions thereof of Adobe or any of its subsidiaries (other than solely Figma and its subsidiaries, subject to the following clause (B)) or (B) any assets, products, product lines, properties, services or businesses or portions thereof of Figma or any of its subsidiaries if, in the case of this clause (B), any such remedy action would, individually or in the aggregate, reasonably be expected to be material to Figma. For a discussion of the conditions to the completion of the transaction, see the section entitled “The Merger Agreement—Conditions to Completion of the Transaction.” If the transaction, or the combination of the companies’ respective businesses, is not completed within the expected time frame, such
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delay may materially and adversely affect the synergies and other benefits that Adobe and Figma expect to achieve as a result of the transaction and could result in additional costs or liabilities, loss of revenue and other adverse effects on Adobe’s and the surviving company’s business, financial condition and results of operations.
The merger agreement may be terminated in certain circumstances, including, among others, if the first merger has not been completed by the outside date of September 15, 2023 (subject to extension as described in the section entitled “The Merger Agreement—Termination of the Merger Agreement”) or if there is in effect a final, nonappealable legal restraint (as defined in the section entitled “The Merger Agreement—Conditions to Completion of the Transaction”). Adobe and Figma can also mutually agree to terminate the merger agreement at any time prior to the effective time. Adobe will be required to pay Figma a reverse termination fee of $1 billion in cash upon termination of the merger agreement in specified circumstances. The merger agreement may also be terminated in circumstances in which such fee will not be payable. In the event that the merger agreement is terminated, the strategic alternatives available to Figma, including remaining an independent company, and the opportunities available to Figma to raise capital, including through a private or public equity issuance, may not be as favorable as they would have been in the absence of the transaction and/or may not be as favorable to Figma and its stockholders as the transaction. See the section entitled “The Merger Agreement—Termination of the Merger Agreement.”
The number of shares of Adobe common stock to be received in exchange for each outstanding share of Figma capital stock and each share of Figma capital stock underlying certain Figma equity awards in the transaction will not change between now and the time the transaction is completed for the purpose of reflecting changes in the trading price of Adobe common stock. Because the value of the consideration to Figma stockholders and Figma equity award holders in the transaction will fluctuate between now and the completion of the mergers, Figma stockholders and Figma equity award holders cannot be sure of the value of the shares of Adobe common stock they will receive in the transaction.
As a result of the first merger, each share of Figma capital stock (other than treasury shares or dissenting shares) and certain Figma equity awards issued and outstanding immediately prior to the effective time will be automatically converted into the right to receive, as part of the total mix of consideration payable in connection with the transaction, a fixed number of shares of Adobe common stock in accordance with the terms of the merger agreement. The number of shares of Adobe common stock to be issued in exchange for each share of Figma capital stock and, to the extent applicable, Figma equity awards in the first merger will not be adjusted for the purpose of reflecting changes in the trading price of Adobe common stock. The exact value of the consideration to Figma stockholders and holders of Figma equity awards will therefore depend, among other factors, on the price per share of Adobe common stock at the effective time, which may be greater or less than, or the same as, the price per share of Adobe common stock at the time of entry into the merger agreement or the date of this consent solicitation statement/prospectus. Adobe and Figma are not permitted to terminate the merger agreement as a result of any increase or decrease, in and of itself, in the market price of Adobe common stock. The market price of Adobe common stock is subject to price fluctuations and has experienced volatility in the past. Stock price changes may result from a variety of factors, including, among others, general market and economic conditions, interest rates (including changes or anticipated changes in interest rates), changes in the businesses, operations, assets, liabilities and prospects of Adobe, the effects of the novel coronavirus (“COVID-19”) pandemic and an evolving legal and regulatory landscape. The market reaction to the announcement of the mergers, market assessments of the prospects of the combined company, the benefits of the transaction and the likelihood that the transaction will be completed, as well as other factors described or referred to elsewhere in this section entitled “Risk Factors”, may also impact the market price of Adobe common stock. Many of these factors are beyond Adobe’s and Figma’s control. You should obtain current market price quotations for Adobe common stock; however, as noted above, the prices at the effective time may be greater or less than, or the same as, such price quotations.
There has been no public market for Figma capital stock and the lack of a public market may make it more difficult to determine the fair market value of Figma than if there were such a public market.
The outstanding shares of Figma capital stock are privately held and are not traded on any public market. The lack of a public market may make it more difficult to determine the fair market value of Figma than if the outstanding shares of Figma capital stock were traded publicly. The value ascribed to Figma’s securities in other contexts, including in private valuations or financings, may not be indicative of the price at which the
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outstanding shares of Figma capital stock may have traded on a public market. The consideration to be paid to Figma stockholders in the first merger was determined based on negotiations between the parties and likewise may not be indicative of the price at which the outstanding shares of Figma capital stock may have traded on a public market.
Figma’s directors and executive officers have interests in the transaction that may be different from, or in addition to, the interests of Figma stockholders generally.
Certain Figma directors and executive officers have interests in the transaction that may be different from, or in addition to, the interests of Figma stockholders generally. These interests include, among other things, arrangements for certain executive officers that provide for acceleration rights (in relation to the vesting of certain Figma equity-based awards) in the event that any such executive officer’s employment is terminated under certain circumstances following completion of the transaction, retention awards in the form of Adobe RSU awards, the conversion of Figma equity-based awards into Adobe equity-based awards and rights to indemnification and directors’ and officers’ liability insurance that will survive the completion of the transaction. Certain executive officers of Figma may also serve as officers or employees of the surviving company following the completion of the transaction.
The Figma board was aware of and considered these interests, among other matters, in evaluating the terms and structure, and in overseeing the negotiation, of the transaction, in approving the merger agreement and the transaction and in making the Figma board recommendation. The interests of Figma’s directors and executive officers are described in more detail in the section of this consent solicitation statement/prospectus entitled “Interests of Figma’s Directors and Executive Officers in the Transaction.”
If the mergers, taken together, do not qualify as a “reorganization” under Section 368(a) of the Code, U.S. holders of Figma’s capital stock may be required to pay additional U.S. federal income taxes.
The mergers, taken together, are intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. No ruling has been, or will be, sought by Adobe or Figma from the IRS with respect to the mergers, nor is an opinion of counsel regarding the qualification of the mergers, taken together, as a “reorganization” under Section 368(a) of the Code a condition to the closing of the mergers. Accordingly, there can be no assurance that the mergers, taken together, will qualify as a “reorganization.” If the mergers, taken together, fail to qualify as a “reorganization” under Section 368(a) of the Code, U.S. holders of Figma’s capital stock will be treated as if they sold their Figma capital stock in a fully taxable transaction.
For additional information, see the section entitled “U.S. Federal Income Tax Consequences.” The tax consequences to you of the mergers will depend on your particular facts and circumstances. Please consult your own tax advisor as to the tax consequences of the mergers in your particular circumstances, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws.
Adobe and Figma are subject to various uncertainties, including litigation and contractual restrictions and requirements while the transaction is pending, that could adversely affect their businesses, financial condition and results of operations.
During the pendency of the transaction, it is possible that customers, partners, distributors, employees, vendors and/or other persons with whom Adobe or Figma has a business relationship, may elect to use the services of other product design platforms or software providers, delay or defer certain business decisions or decide to seek to terminate, change or renegotiate their relationships with Adobe or Figma, as the case may be, as a result of the transaction, which could significantly reduce the expected benefits of the transaction and/or negatively affect Adobe’s or Figma’s revenues, earnings and cash flows, as well as the market price of Adobe common stock, regardless of whether the transaction is completed. Uncertainty about the effects of the transaction on employees may impair the ability to attract, retain and motivate key personnel during the pendency of the transaction and, if the transaction is completed, for a period of time thereafter. If key employees depart because of issues related to the uncertainty and difficulty of combining the businesses of Adobe and Figma or a desire not to remain with Adobe following the completion of the transaction, Adobe and Figma may have to incur significant costs in identifying, hiring and retaining replacements for departing employees and may lose significant expertise and talent. Adobe and Figma will also incur significant costs related to the transaction, some of which must be paid even if the transaction is not completed. These costs are substantial and include financial advisory, legal and accounting costs.
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Under the terms of the merger agreement, Figma is also subject to certain restrictions on the conduct of its business prior to the completion of the transaction, which may adversely affect its ability to execute certain of its business strategies, including, among other things, the ability in certain cases to incur indebtedness, make investments or capital expenditures, enter into, amend or terminate material contracts, settle litigation, acquire or dispose of assets or make certain changes with respect to employee matters, including compensation and benefits matters. Such limitations could adversely affect Figma’s business, strategy, operations and prospects, including Figma’s ability to retain and recruit service providers, prior to the completion of the transaction. Adobe is also subject to certain more limited restrictions on the conduct of its business prior to the completion of the transaction, including its ability to adjust, split, combine, subdivide or reclassify any equity securities of Adobe.
In addition, Adobe, Figma and their respective affiliates are involved in various disputes, governmental and/or regulatory inspections, investigations and proceedings and litigation matters that arise from time to time. Each of the risks described above may be exacerbated by delays or other adverse developments with respect to the completion of the transaction.
Litigation relating to the transaction may be filed against the Figma board and/or the Adobe board that could result in substantial costs or delay or prevent the completion of the transaction.
In connection with the transaction, it is possible that stockholders of Figma and/or Adobe may file putative class action lawsuits against the Figma board and/or the Adobe board. Among other remedies, these stockholders could seek damages and/or to enjoin the transaction. The outcome of any litigation is uncertain and any such potential lawsuits could prevent or delay the completion of the transaction and/or result in substantial costs. Any such actions may create uncertainty relating to the transaction and may be distracting to management. Further, the defense or settlement of any lawsuit or claim that remains unresolved at the time the transaction is completed may adversely affect Adobe’s business, financial condition and results of operations following the completion of the transaction.
The merger agreement contains provisions that restrict the ability of Figma to pursue alternatives to the transaction.
The merger agreement contains non-solicitation provisions that restrict the ability of Figma, its controlled affiliates and its and their respective officers, directors, employees, representatives and agents, including any investment banker, attorney or accountant engaged by any of them, to solicit, knowingly encourage or knowingly facilitate inquiries or proposals for, or enter into any agreement with respect to, or initiate, continue or conduct any negotiations or discussions with any person concerning, the purchase of all or a significant portion of the assets of Figma or any of its subsidiaries or of any capital stock of or other ownership interest in Figma or any of its subsidiaries, subject to certain exceptions. In addition, the merger agreement does not permit Figma to terminate the merger agreement in order to enter into an agreement providing for, or to complete, such an alternative transaction, even if the alternative transaction would provide for the payment of consideration with a higher value per share of Figma capital stock than the consideration proposed to be received or realized in the transaction. See the section entitled “The Merger Agreement—Covenants and Agreements—No Solicitation by Figma.”
Certain stockholders of Figma have executed a key stockholder voting agreement that requires each such stockholder to deliver a written consent in favor of the adoption of the merger agreement, which will constitute approval of the transaction by the Figma stockholders, regardless of the Figma board’s recommendation.
Subsequent to the execution of the merger agreement, Adobe and the key stockholders entered into the key stockholder voting agreement. Pursuant to the key stockholder voting agreement, among other things, each of the key stockholders has agreed, promptly (and in any event within two business days) after the registration statement of which this consent solicitation statement/prospectus forms a part is declared effective under the Securities Act by the SEC, to execute and deliver a written consent approving the adoption of the merger agreement and the transaction, including the mergers, with respect to all of such key stockholder’s shares of Figma capital stock entitled to act by written consent with respect thereto. The key stockholders are required to deliver such written consents regardless of the Figma board’s recommendation with respect to the merger agreement proposal. Based on the number of outstanding shares of Figma capital stock as of [  ], 2022, the
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execution and delivery of written consents by all of the key stockholders will constitute the Figma stockholder approval and, therefore, we expect to receive a number of written consents sufficient to satisfy each such approval required under the merger agreement. See the section entitled “Key Stockholder Voting Agreement.”
Risks Related to Adobe and the Surviving Company after Completion of the Transaction
Adobe may not be able to combine with Figma successfully or manage the combined business effectively, and many of the anticipated synergies and other benefits of acquiring Figma may not be realized or may not be realized within the expected time frame.
Adobe and Figma entered into the merger agreement with the expectation that the transaction would result in various benefits, including, among other things, operating efficiencies and synergies, including as a result of Figma’s products being sold with Adobe’s resources or with Adobe’s products. Achieving the anticipated benefits of the transaction is subject to a number of uncertainties, including whether the combination of the business operations, such as the go-to-market initiatives, shared product innovation and combined market intelligence of Adobe and Figma, can be achieved in an efficient and effective manner.
In addition, following the completion of the transaction, the size of Adobe’s Digital Media business will increase significantly. Adobe’s future success depends, in part, on its ability to manage this expanded combined business, which will pose certain challenges, including challenges related to the management and monitoring of new operations and increased costs and complexity.
It is possible that combining the businesses of Adobe and Figma could take longer than anticipated or that the management of the combined business could be more difficult than expected, and could result in increased attrition, the disruption of ongoing businesses, processes, systems and business relationships, or inconsistencies in standards, controls, procedures, practices, policies and compensation arrangements or the inability to comply with laws, rules, and regulations applicable to the surviving company, any of which could adversely affect Adobe’s ability to achieve the anticipated benefits of the transaction. Adobe’s results of operations could also be adversely affected by any issues attributable to either company’s operations that arise or are based on events or actions that occur before the closing. Adobe may have difficulty addressing possible differences in corporate cultures, management philosophies, business practices and technological systems, and other differences between the two companies. The process of combining Adobe’s and Figma’s businesses is subject to a number of risks and uncertainties, and no assurance can be given that the anticipated benefits of the transaction will be realized or, if realized, the timing of their realization. Failure to achieve these anticipated benefits could adversely affect Adobe and the surviving company’s future businesses, financial condition, results of operations and prospects.
Uncertainties associated with the transaction may cause a loss of management personnel and other key employees, and Adobe and the surviving company may have difficulty attracting and motivating management personnel and other key employees, which could adversely affect the future businesses and operations of Adobe and the surviving company.
Adobe and Figma are dependent on the experience and industry knowledge of their respective management personnel and other key employees to execute their business plans. Adobe’s success after the completion of the transaction will depend in part upon the ability of Adobe to attract, motivate and retain key management personnel and other key employees of Adobe and Figma. Current and prospective employees of Adobe and Figma may experience uncertainty about their roles following the completion of the transaction, which may have an adverse effect on the ability of each of Adobe and Figma to attract, motivate or retain management personnel and other key employees. In addition, no assurance can be given that Adobe will be able to attract, motivate or retain management personnel and other key employees of Adobe and Figma to the same extent that Adobe and Figma have previously been able to attract or retain their respective employees. If management personnel or other key employees terminate their employment, Adobe’s and the surviving company’s business activities may be adversely affected and management attention may be diverted from successfully combining Adobe’s and Figma’s businesses to hiring suitable replacements, all of which may cause Adobe’s and the surviving company’s businesses and operations following the completion of the transaction to suffer.
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Completion of the transaction may trigger change in control, assignment or other provisions in certain agreements to which Figma is a party, which may have an adverse impact on the surviving company’s business and results of operations.
The completion of the transaction may trigger change in control, assignment and other provisions in certain agreements to which Figma is a party. If Adobe and Figma are unable to negotiate waivers of or consents under those provisions, the counterparties may exercise their rights and remedies under the agreements, potentially terminating the agreements or seeking monetary damages or other remedies. Even if Adobe and Figma are able to negotiate waivers, the counterparties may require a fee for such waivers or seek to renegotiate the agreements on terms less favorable to Adobe or the surviving company. Any of the foregoing or similar developments may have an adverse impact on the businesses, financial condition and results of operations of Adobe and the surviving company following the completion of the transaction, or the ability to successfully combine their respective businesses and/or execute their respective strategies.
Following the completion of the transaction, the market price of Adobe common stock may be affected by factors different from those affecting the shares of Adobe common stock or Figma capital stock currently, and Figma stockholders will hold an interest in a company with a different mix of assets, risks and liabilities, and a different financial profile and other characteristics, than the company in which they currently hold an interest.
The market price of Adobe common stock after the transaction may be affected by factors different from those affecting the shares of Adobe common stock or Figma capital stock currently. In the first merger, holders of Figma capital stock will become holders of Adobe common stock. Adobe’s business and financial position differs from that of Figma in important respects. For example, while Figma focuses on collaborative design, Adobe has operations across digital media, digital experience and publishing and advertising. In addition, certain litigation risks related to Figma’s business may be different with respect to Adobe’s business, given that Adobe’s business profile and business practices differ from those of Figma. Accordingly, the results of operations of Adobe, including the surviving company, and the market price of Adobe common stock after the completion of the transaction may be affected by factors different from those currently affecting the results of operations of each of Adobe and Figma or the shares of Adobe common stock or Figma capital stock on a standalone basis, and Figma stockholders will hold an interest in a company with a different mix of assets, risks and liabilities, and a different financial profile and other characteristics, than the company in which they currently hold an interest. For a discussion of the business of Adobe and of certain factors to consider in connection with that business, see the documents incorporated by reference in this consent solicitation statement/prospectus and referred to in the section entitled “Where You Can Find More Information.”
Figma stockholders will have a significantly lower ownership and voting interest in Adobe following the completion of the transaction than they currently have in Figma and will exercise less influence over management.
Based on the consideration payable to holders of Figma capital stock pursuant to the merger agreement and the number of shares of Adobe common stock and Figma capital stock outstanding as of [  ], 2022, it is expected that, immediately after completion of the transaction, former Figma stockholders will own approximately [  ]% of the outstanding Adobe common stock. Consequently, the influence that former Figma stockholders will have over the management and policies of Adobe will be different than what they currently have over the management and policies of Figma.
The shares of Adobe common stock to be received by Figma stockholders upon completion of the transaction will have different rights from shares of Figma capital stock.
Upon completion of the transaction, Figma stockholders will no longer be stockholders of Figma, but will instead become stockholders of Adobe, and their rights as Adobe stockholders will be governed by the terms of Adobe’s restated certificate of incorporation (as amended, the “Adobe certificate”) and Adobe’s amended and restated bylaws (the “Adobe bylaws”). The terms of the Adobe certificate and the Adobe bylaws are in some respects materially different from the terms of Figma’s restated certificate of incorporation (the “Figma certificate”) and Figma’s amended and restated bylaws (the “Figma bylaws”), which, together with certain stockholders’ agreements entered into by Figma and certain holders of Figma capital stock, currently govern the rights of Figma stockholders. For a discussion of the different rights associated with shares of Figma capital stock and shares of Adobe common stock, see the section entitled “Comparison of Stockholders’ Rights.”
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Adobe will incur significant transaction and combination-related costs in connection with the transaction, which could adversely affect Adobe’s ability to execute its plan to combine Adobe’s and Figma’s businesses and achieve the anticipated benefits of the transaction.
Adobe expects to incur a number of non-recurring costs associated with the transaction and combining the operations of the two companies. Adobe continues to assess the magnitude of these transaction and combination-related costs, and additional unanticipated costs may also be incurred. These costs include legal, financial advisory, accounting, consulting and other advisory fees, severance/employee benefit-related costs, public company filing fees and other regulatory fees, printing costs and other related costs. Some of these costs are payable by Adobe regardless of whether or not the merger is completed.
The market price of Adobe common stock may decline as a result of the transaction and the issuance of shares of Adobe common stock to Figma stockholders in the transaction may have a negative impact on Adobe’s financial results, including earnings per share.
The market price of Adobe common stock may decline as a result of the transaction, and holders of Adobe common stock (including holders of Figma capital stock that receive Adobe common stock in the first merger) could see a decrease in the value of their investment in Adobe common stock, if, among other things, Adobe and the surviving company are unable to achieve the anticipated benefits, including synergies, innovation and operational efficiencies, from the transaction, or if such benefits take longer to realize than anticipated, or if the transaction and combination-related costs related to the transaction are greater than expected. The issuance of shares of Adobe common stock in the transaction could on its own have the effect of depressing the market price for Adobe common stock. In addition, some Figma stockholders may decide not to hold the shares of Adobe common stock they receive as a result of the transaction, and any such sales of Adobe common stock could have the effect of depressing the market price for Adobe common stock. Moreover, general fluctuations in stock markets could have a material adverse effect on the market for, or liquidity of, Adobe common stock, regardless of the actual operating performance of Adobe or the surviving company following the completion of the transaction.
If the first merger is completed, based on the number of outstanding shares of Figma capital stock as of [  ], 2022, approximately [  ] shares of Adobe common stock are estimated to be issuable to Figma stockholders pursuant to the merger agreement, representing approximately [  ]% of the number of shares of Adobe common stock outstanding as of [  ], 2022. Following the issuance of shares of Adobe common stock in the first merger, Adobe’s earnings per share may be lower than would have been reported by Adobe in the absence of the transaction. There can be no assurance that any increase in Adobe’s earnings per share will occur, even over the long term. Any increase in Adobe’s earnings per share as a result of the mergers requires, among other things, Adobe to successfully manage the operations of Figma and increase the consolidated earnings of Adobe after the transaction, which is subject to risks and uncertainties, as described elsewhere in this “Risk Factors” section.
Risks Related to Adobe’s Business
You should read and consider the risk factors specific to Adobe’s business that will also affect the surviving company after the completion of the transaction. These risks are described in Part I, Item 1A of Adobe’s Annual Report on Form 10-K for the fiscal year ended December 3, 2021, Part II, Item 1A of Adobe’s Quarterly Report on Form 10-Q for the quarterly period ended September 2, 2022 and in other documents that are incorporated by reference into this consent solicitation statement/prospectus. See the section entitled “Where You Can Find More Information.”
Risks Related to Figma’s Business
Figma has a limited operating history, which makes it difficult to evaluate Figma’s current business and future prospects.
Although Figma was founded in 2012, it has a limited operating history at its current scale of business. As a result, it may be difficult to evaluate Figma’s current business and its future prospects. Figma has encountered and may continue to encounter risks and difficulties frequently experienced by growing companies in rapidly changing industries, including maturing financial planning and forecasting for its business and other risks described in this section. If the assumptions regarding the risks and uncertainties that Figma uses to plan its
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business are incorrect or change, or if Figma does not address these risks successfully, Figma’s operating and financial results could differ materially from its expectations and its business could suffer. Figma cannot assure you that it will be successful in addressing these and other challenges it may face in the future.
If Figma is unable to attract new customers and renew and expand sales to existing customers, its revenue growth could be slower than it expects, and its business, operating results, financial condition and prospects would be adversely affected.
In order for Figma to improve its operating results and continue to grow its business, it is important that Figma continues to attract new customers and that existing customers continue to renew subscriptions and purchase additional subscriptions and services from Figma. Figma’s customers’ renewal rates may decline or fluctuate as a result of various factors, including their satisfaction with the Figma platform, products and services and satisfaction with those offered by competitors, Figma’s pricing or pricing structure and changes to its pricing or pricing structure particularly given Figma’s limited experience in determining the optimal prices for its solutions, the pricing or capabilities of the products and services offered by Figma’s competitors or the effects of general economic conditions and uncertainty in financial markets. While many of Figma’s subscriptions provide for automatic renewal, customers have no obligation to renew a subscription after the expiration of the contract term, and customers may not renew their subscriptions with a similar contract period, with the same or greater number of editor seats, or for the same subscription plan. If Figma’s customers do not renew their subscriptions or if they renew on terms less favorable to Figma, Figma’s revenue may decline. Further, a significant portion of Figma’s revenue growth is derived from organic growth that occurs within organizations when new users decide to use Figma’s solutions based on word-of-mouth recommendations. As Figma continues to increasingly sell to larger organizations, such customers may have more extensive internal approval requirements that prevent or delay potential users in those organizations from using Figma’s solutions, which may delay or prevent the organic growth of potential future users at the same rate as in historical periods.
Customers may choose to stay on Figma’s free product offering instead of converting into a paying customer.
Figma’s future success depends, in part, on its ability to convert users of its free product offering into paying customers by convincing organizations to convert to a paid product offering and selling additional products and services. This may require Figma to incur increased sales and marketing expense, but may not result in additional sales. In addition, the rate at which Figma’s customers purchase additional premium products and services depends on a number of factors, including the perceived need for additional products and services as well as general economic conditions. If Figma’s efforts to sell additional products and services to its customers are unsuccessful, its business and operating results may suffer.
Figma’s anticipated investments in engineering, research and development, marketing and support activities may not achieve the expected benefits which could harm its operating results.
Figma intends to continue to make long-term investments in engineering, research and development, marketing and customer support functions. Figma has recognized and will recognize costs associated with these investments earlier than most of the anticipated benefits, and the return on these investments may be lower, or may develop more slowly, than it expects. If Figma does not achieve the benefits anticipated from these investments, or if the achievement of these benefits is delayed, its business, operating results, financial condition and prospects could be adversely affected.
If Figma does not effectively hire, integrate, train, manage, and retain additional sales personnel, and expand its sales and marketing capabilities, it may be unable to increase its customer base and increase sales to its existing customers.
Figma’s ability to increase its customer base and achieve broader market adoption of its platform will depend to a significant extent on its ability to continue to expand its sales and marketing operations. Figma has dedicated and plans to continue to dedicate significant resources to sales and marketing programs and to expand its sales and marketing capabilities to target additional potential customers. If Figma is unable to find efficient ways to deploy its sales and marketing investments or if its sales and marketing programs are not effective, its business and operating results would be adversely affected.
Furthermore, there is significant competition for sales personnel with the required skills and technical knowledge. While Figma’s ability to achieve revenue growth will depend, in part, on its success in hiring,
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integrating, training, managing and retaining sufficient numbers of sales personnel (including personnel with international experience) to support its growth, particularly in international markets, there is no guarantee that Figma’s hires will become productive as quickly as it expects, or at all. Moreover, Figma’s international expansion may be slow or unsuccessful if it is unable to retain qualified personnel with international experience, language skills and cultural competencies in the geographic markets in which it operates.
If Figma is unable to hire, integrate, train, manage and retain a sufficient number of effective sales personnel, or the sales personnel it hires are not successful in obtaining new customers or increasing sales to its existing customer base, its business, operating results, financial condition and prospects will be adversely affected.
Negative publicity about Figma or negative customer reviews of its platform, products and services could diminish use of the platform and Figma’s reputation may suffer.
Figma’s growth is heavily dependent on the willingness of its customers to provide positive reviews and word-of-mouth recommendations and otherwise participate in the Figma community. Complaints or negative publicity, including through media coverage, blog posts and forum postings, about Figma or its platform, products and services, regardless of accuracy, could severely diminish consumer confidence in, and use of, its platform. If Figma does not handle the complaints of its customers effectively, they may lose confidence in Figma’s platform, products and services and Figma’s reputation may suffer.
Figma’s business and ongoing expansion depends largely on its ability to attract and retain talented and high-quality personnel, including senior management.
Figma’s future success depends on its continuing ability to attract, train, assimilate and retain highly skilled personnel, including software engineers. Figma faces intense competition for qualified individuals from numerous software and other technology companies. In addition, competition for qualified personnel, such as software engineers, is particularly intense in the San Francisco Bay Area, where the Figma headquarters are located, and in other locations where Figma maintains offices. Figma may not be able to retain its current key employees or attract, train or retain other highly skilled personnel in the future. It may incur significant costs to attract and retain highly skilled personnel, and it may lose new employees to its competitors or other technology companies before it realizes the benefit of its investment in recruiting and training them.
Figma’s future success also depends in large part on the continued services of certain key personnel, including Dylan Field, Figma’s co-founder and Chief Executive Officer. Figma’s senior management and other key personnel are all employed on an at-will basis, which means that they could terminate their employment with Figma at any time, for any reason, and without notice. Figma does not currently maintain key-person life insurance policies on any of its officers or employees. If Figma is unable to attract and retain suitably qualified individuals who are capable of meeting the company’s growing technical, operational and managerial requirements, on a timely basis or at all, or loses the services of senior management or other key personnel, or if it is unable to attract, train, assimilate, and retain the highly skilled personnel it needs, its business, operating results, financial condition and prospects could be adversely affected.
Figma has a history of losses and may not achieve or sustain profitability. If Figma cannot achieve and sustain profitability, its business, financial condition and operating results will be adversely affected.
While Figma has experienced significant growth in revenue in recent periods, Figma cannot predict when or whether it will reach or maintain profitability. As a result, Figma’s losses in future periods may be greater than the losses it would incur if it developed its business more slowly. In addition, Figma may find that these efforts are more expensive than anticipated or that they may not result in increases in Figma’s revenue.
Figma has experienced rapid growth in recent periods, and if it does not effectively manage its future growth, its business, operating results, financial condition and prospects may be adversely affected.
Figma has experienced rapid growth in its number of employees and in its operations. This growth has increased the complexity of its business and places significant strain on its management, personnel, operations, systems, technical performance, financial resources and internal financial control and reporting functions. Figma may not be able to manage future growth effectively, which could damage its reputation, limit its growth and negatively affect its operating results.
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Further, to accommodate the expected growth of its operations and personnel, Figma will need to improve its operational and financial systems, procedures and controls. Failure to effectively upgrade its technology or network infrastructure to support the expected increased demand by customers and traffic volume could result in unanticipated system disruptions, slow response times and poor experiences for customers, and could adversely affect Figma’s operations, revenue, income, growth, reputation and brand. Figma’s platform, products and services, and the technology and code on which the platform is built, are continually being modified, changed, updated and improved, which could intentionally or unintentionally affect the performance of its operations. Further, Figma operates in an industry in which customers expect a high level of service reliability. If Figma is unable to scale its systems to manage the impact of the rapid growth of its users or hire the necessary personnel to support the expansion of its business, its service reliability and its customers’ experience could be negatively impacted, potentially harming Figma’s renewal rates and its operating results. To manage the expected growth of its operations, technology and personnel and to support financial reporting requirements, Figma will need to maintain and improve its transaction processing and reporting, operational and financial systems, procedures and controls. Figma’s current and planned personnel, systems, procedures and controls may not be adequate to support its future operations. If Figma is unable to expand its operations and hire additional qualified personnel in an efficient manner, it could adversely affect Figma’s customer experience, business, operating results, prospects, reputation and brand.
Further, Figma has worked to develop a culture that empowers its employees to continuously learn, evolve, and grow, and treat each other with respect. If Figma does not continue to develop its corporate culture as it rapidly grows, including maintaining a culture that encourages a sense of ownership by its employees, it could harm Figma’s ability to foster the innovation, creativity, and teamwork it believes that it needs to support its growth.
Figma’s operating results may fluctuate significantly, which could make its future results difficult to predict and could cause its operating results to fall below expectations.
Figma’s operating results have varied significantly from period to period in the past, and its operating results may continue to vary significantly in the future such that period-to-period comparisons of its operating results may not be meaningful. Accordingly, Figma’s financial results in any one quarterly or annual period should not be relied upon as indicative of future performance. Moreover, this variability and unpredictability could result in Figma’s failure to meet its operating plan or the expectations of investors. Figma’s quarterly or annual financial results may fluctuate as a result of a number of factors, many of which are outside of its control and may be difficult to predict, including the risk factors discussed elsewhere in this section, as well as the following:
its ability to accurately forecast revenue and renewal rates, and appropriately plan its expenses;
its ability to accurately predict changes in customer demand due to matters beyond its control;
its ability to successfully expand its business;
the amount and timing of operating costs and capital expenditures related to the operation, maintenance and expansion of its business;
general economic conditions, both domestic and international;
any changes in financial accounting standards or errors in judgments relating to its critical accounting policies;
the cost and potential outcomes of ongoing or future regulatory investigations or examinations, or of future litigation; and
political, economic and social instability, and any disruption these events may cause to the global economy.
Figma derives, and may continue to derive, most of its revenues from a single solution.
Figma derives, and may continue to derive, most of its revenues from a single solution, Figma Design. As such, the continued growth in market demand for and market acceptance of Figma Design is critical to Figma’s continued success. Demand for this solution is affected by a number of factors, some of which are beyond Figma’s control, such as the rate of market adoption of product design solutions; the timing of development and
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release of competing new solutions; the development and acceptance of new features, integrations and capabilities for Figma Design; price, product and service changes by Figma or its competitors; technological changes and developments within the markets Figma serves; growth, contraction and rapid evolution of its market; and general economic conditions and trends. If Figma is unable to continue to meet the demands of its customer and potential customers or trends in preferences for design solutions or to achieve more widespread market acceptance of Figma Design, its business, operating results, financial condition and prospects would be harmed.
If Figma experiences security or data privacy breaches or other unauthorized or improper access to, use of, or destruction of Figma’s or Figma’s customers’ or partners’ proprietary or confidential data, it may face loss of revenue, harm to its brand, business disruption and significant liabilities.
Figma collects, uses and processes certain personal data, such as names and email addresses, about its customers, employees, partners, vendors and other parties. Additionally, Figma’s customers use its platform to create and store their proprietary and confidential data. Further, Figma possesses proprietary and confidential information regarding its platform and business. As such, Figma may be a target of data security attacks by third parties. Any failure to prevent or mitigate security breaches or improper access to, use of, or disclosure of any third-party or proprietary data could result in significant liability and a material loss of revenue resulting from the adverse impact on Figma’s reputation and brand, a diminished ability to retain or attract new customers, exfiltration of trade secrets or other confidential information, and disruption to its business. Figma relies on third-party service providers to host or otherwise process some of Figma’s data and that of Figma’s customers, and any failure by such third parties to prevent, mitigate or remediate security breaches, systems disruptions or improper access to, or disclosure of, such data could have similar adverse consequences for Figma.
Unauthorized access to, or other security breaches or disruptions of, Figma’s platform or the other systems or networks used in its business, including its own systems as well as those of Figma’s vendors, contractors, partners or those with which it has strategic relationships, could result in the unauthorized disclosure, loss, compromise, exfiltration, destruction, modification or corruption of customer or other personal data, including sensitive data, or proprietary information, loss of business, reputational damage adversely affecting customer confidence, regulatory investigations and orders, class action or other litigation, indemnity obligations, damages for contract breach, penalties for violation of applicable laws or regulations, notification obligations, significant costs for remediation (which may include incentives offered to customers to maintain business relationships) and other liabilities. If Figma’s security measures or those of its service providers are breached, or are perceived to have been breached, as a result of third-party action, including cyberattacks or other intentional misconduct by computer hackers, employee error, malfeasance or otherwise, and particularly if someone obtains unauthorized access to Figma’s data or other data it or its service providers maintain, including sensitive customer data, personal information, intellectual property and other confidential financial or business information, Figma could face declines in the retention rates of its current customers and the acquisition rates of new potential customers, be subject to regulatory investigations or orders, and its reputation could be severely damaged. Figma could be required to expend significant capital and dedicate efforts and other resources to alleviate any such problem, which may ultimately be unsuccessful and may exceed its existing insurance coverage. Moreover, if Figma’s platform is perceived as not being secure, regardless of whether it or its service providers’ security measures are actually breached, Figma could suffer harm to its reputation, and its business, operating results, financial condition and prospects would be negatively impacted.
Figma cannot ensure that its or its service providers’ measures to prevent security breaches or other security incidents will not result in the loss of information, litigation, regulatory investigations, indemnity obligations, penalties and other liability. Similarly, Figma cannot ensure that any limitations of liability provisions in its contracts would be enforceable or adequate or would otherwise protect it from any liabilities or damages with respect to any particular claim relating to a security breach or other security-related matters.
Moreover, cyberattacks and other malicious Internet-based activities continue to increase generally. Because the techniques used to obtain unauthorized access to or otherwise sabotage systems change frequently and generally are not identified until they are launched against a target, Figma and its service providers may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, third parties may attempt to fraudulently induce employees or customers to disclose information to gain access to Figma’s
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data or Figma’s customers’ or other partners’ data. This could lead to fewer customers using and paying for Figma’s platform and result in reduced revenue and earnings. The costs Figma would incur to address and respond to these security incidents, and to prevent them thereafter, would increase Figma’s expenses.
Figma faces intense competition and could lose customers to its competitors, which would adversely affect its business, operating results, financial condition and prospects.
The industry in which Figma participates is rapidly evolving, fragmented and highly competitive, and if Figma does not compete effectively, its business, operating results, financial condition and prospects could be adversely impacted. Figma competes against a variety of companies within its industry to attract and retain customers. Figma expects to continue to face intense competition from current competitors, as well as from new entrants. If Figma is unable to anticipate or react to these challenges, its competitive position could weaken, and it could experience a decline in revenue or reduced revenue growth, and loss of customers that could adversely affect its business, financial condition and operating results.
Problems with the quality, reliability or integrity of Figma’s platform, products and services could adversely affect its business, operating results, financial condition and prospects.
Figma’s platform, products and services rely on advanced algorithms, proprietary software and other complex technologies. Figma’s platform, products and services, or the open-source or other third-party software utilized in building and operating them, may contain undetected errors, bugs or vulnerabilities. There can be no assurance that Figma’s quality assurance measures will be adequate to detect all issues that could interfere with, or weaken the efficiency, integrity, reliability or quality of, its platform, products and services, and some errors in Figma’s software may only be discovered after it has been deployed or may never generally be known. Any inability to prevent or cure a defect could result in interruptions in data or platform availability, malfunctioning of products or services, or data breaches and thereby result in customer dissatisfaction, damage to Figma’s reputation, or software reengineering expenses, any of which could adversely affect its business, operating results, financial condition and prospects.
If Figma is not able to effectively introduce enhancements to its platform, including new products, services, features, and functionality, that achieve market acceptance, or keep pace with technological developments, its business, operating results, financial condition and prospects could be adversely affected.
The area of design products and services is characterized by rapidly changing technologies, frequent new product and service introductions and evolving industry standards and consumer demands. The rapid growth and intense competition in Figma’s industry exacerbate these characteristics. Figma’s future success will depend on its ability to adapt to rapidly changing technologies by continually improving the performance features and reliability of its platform, products and services. Figma may experience difficulties that could delay or prevent the successful development, introduction or marketing of platform updates and new products and services.
Figma has made investments to develop, launch, and maintain new offerings and technologies, such as its product launches of Figma plugins, Figma Community and FigJam, and it intends to continue investing significant resources in developing and launching new technologies, tools, features, services, products and offerings. If Figma does not spend its development budget efficiently or effectively on commercially successful and innovative technologies and successfully integrate those technologies into its platform, including providing a consistently secure and reliable offering, it may not realize the expected benefits of its strategy. Further, Figma’s development efforts with respect to new products, offerings and technologies may not gain sufficient traction or market acceptance to generate revenue to offset new expenses associated with these new investments, could distract management from current operations, and will divert capital and other resources from Figma’s more established products, offerings and technologies. If Figma does not realize the expected benefits of its investments, its business, operating results, financial condition and prospects could be adversely affected.
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If Figma fails to successfully maintain and enhance its brand or if it incurs significant expenses in promoting its name or brand, its business could be harmed.
Figma’s success depends on the value and reputation of its brand. Maintaining, promoting and positioning Figma’s brand will largely depend on the success of its marketing efforts, its ability to provide a consistent, high-quality experience on its platform and customer satisfaction with, among other things, the user experience, service and support and the software updates that Figma provides. If Figma’s efforts to build and maintain a positive brand and name identity do not succeed, its business could be seriously harmed.
Further, Figma’s platform supports collaborative features that allow its customers to create and share user-generated content and open-sourced design that is available to other customers. From time to time, objectionable or offensive content may be visible on Figma’s platform through these features. Although Figma attempts to moderate objectionable or offensive content, it may be subject to customer backlash, which may lead to decreased sales or harmed reputation, as a result of Figma’s customers posting offensive content or as a result of Figma’s moderation efforts if its customers perceive such efforts as under- or over-reaching.
If there are interruptions or performance problems associated with the technology or infrastructure used to provide Figma, organizations on Figma may experience service outages, other organizations may be reluctant to adopt Figma’s platform and Figma’s reputation could be harmed.
Figma’s continued growth depends, in part, on the ability of existing and potential customers to access Figma’s platform without interruption or degradation of performance. Figma has in the past or may in the future experience system interruptions, disruptions, delays, data loss, outages and other performance problems with Figma’s infrastructure due to a variety of factors, including infrastructure changes, introductions of new functionality, human or software errors, capacity constraints, denial-of-service attacks, ransomware attacks or other security-related incidents. In some instances, Figma may not be able to identify the cause or causes of these performance problems immediately or in short order or provide sufficient customer support in connection with those incidents. Figma may not be able to maintain the level of service uptime and performance required by organizations, especially during peak usage times and as Figma’s user traffic increases. Figma has in the past incurred additional costs and made additional investments in order to meet the demands of increased customer usage of Figma and to expand the capacity of Figma’s infrastructure, and Figma may not be able to accommodate these demands in the future. If Figma is unavailable or if organizations are unable to access Figma within a reasonable amount of time, Figma’s business would be harmed and, in some instances, it may be required to provide credits to certain paid customers under Figma’s service level agreements, harming Figma’s operating results and financial condition.
Any of the above circumstances or events may harm Figma’s reputation, reduce the attractiveness of Figma’s platform, cause organizations on Figma to terminate their agreements with it, impair Figma’s ability to obtain subscription renewals from organizations on Figma, impair Figma’s ability to grow the base of users and organizations on Figma, subject Figma to financial penalties and liabilities under Figma’s service level agreements with its paid customers and otherwise harm Figma’s business, operating results, financial condition and prospects.
Figma currently relies on a small number of partners and third-party service providers to provide its platform, product and services to its customers, and any interruptions or delays in services from these partners and third parties or deterioration in Figma’s relationships with such partners and third parties could harm its business.
Figma relies on strategic partnerships and third-party service providers in connection with the development, operation, improvement and provision of its platform, product and services, including third-party hosting services provided by Amazon Web Services. Such partners and third parties provide services to key aspects of its operations, and Figma’s future growth and its ability to deliver its platform, product and services to its customers depends on its ability to maintain, develop and grow these relationships, and to build relationships with new partners and service providers. Figma does not control the operation, physical security or data security of any of the partners or third-party providers it relies upon. Despite Figma’s efforts to use commercially reasonable diligence in the selection and retention of partners and third-party providers, and although it may have indemnification and other contractual provisions designed to allocate risks with such parties, such efforts may be insufficient or inadequate to prevent or mitigate such risks, and the facilities of such parties may be subject to intrusions, computer viruses, denial-of-service attacks, human error, sabotage, acts of vandalism, acts of terrorism and other misconduct. They are also vulnerable to damage or interruption from power loss, telecommunications
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failures, fires, floods, earthquakes, hurricanes, tornadoes and similar events. Although Figma currently has a business continuity and disaster recovery plan in place, it may not be sufficient nor do its systems provide absolute assurance of complete redundancy of data storage or processing. As a result, the occurrence of any of these events, a decision by Figma’s partners or third-party service providers to close their data center facilities without adequate notice or other unanticipated problems could result in loss of data as well as a significant interruption in Figma’s platform, products and services, costly litigation and damage to Figma’s business, revenue, reputation and brand.
Figma’s long-term success depends, in part, on its ability to expand the use of its platform, products and services to customers located outside of the United States and Figma’s current, and any further, expansion of its international operations exposes it to risks that could have an adverse effect on its business, operating results, financial condition and prospects.
Figma conducts its business activities in various foreign countries and currently has operations in North America, Europe, and Asia. Figma’s ability to manage its business and conduct its operations internationally requires considerable management attention and resources, including financial resources, and is subject to the particular challenges of supporting a rapidly growing business in an environment of multiple cultures, customs, legal systems, regulatory systems and commercial infrastructures. Figma’s operations in international markets may not develop at a rate that supports its level of investment. Expanding internationally may subject Figma to new risks that it has not faced before or increase risks that it currently faces, including risks associated with:
recruiting and retaining talented and capable employees in foreign countries;
providing Figma’s platform to customers from different cultures, which may require Figma to adapt to sales practices, modify its platform, translate its services into local languages and provide features necessary to effectively serve users locally;
the burden of complying with a wide variety of laws, including those relating to labor matters, permanent establishment, payroll tax and other tax considerations;
compliance with privacy, data protection, encryption, biometric and information security laws, such as the California Consumer Privacy Act, European Union Data Protection Directive and the European General Data Protection Regulation;
currency exchange rate fluctuations;
compliance with the laws of numerous taxing jurisdictions, both foreign and domestic, in which Figma conducts business, potential double taxation of its international earnings, and potentially adverse tax consequences due to changes in applicable U.S. and foreign tax laws; and
increased costs to establish and maintain effective controls at foreign locations.
Figma’s failure or inability to protect its intellectual property rights, or claims by others that Figma is infringing upon or unlawfully using others’ intellectual property, could diminish the value of Figma’s brand and weaken its competitive position, and could adversely affect Figma’s business, operating results, financial condition and prospects.
Figma currently relies on a combination of patent, copyright, trademark, trade secret, and unfair competition laws, as well as confidentiality agreements and procedures and licensing arrangements, to establish and protect its proprietary technologies, brands and other intellectual property. While it is Figma’s policy to protect and defend its intellectual property, the steps Figma takes to obtain, maintain, protect and enforce its intellectual property may be inadequate to prevent infringement, misappropriation, dilution or other potential violations of its intellectual property rights. Figma may be unable to register its intellectual property rights in all jurisdictions in which it conducts, or plans to conduct, business, and intellectual property protection may be unavailable or limited in some foreign countries where laws or law enforcement practices may not protect Figma’s intellectual property rights as fully as in the United States. In addition, the process of obtaining patent or trademark protection can be expensive and time-consuming and Figma may therefore determine in certain circumstances not to pursue registered protection for its brands, products, software, databases or other technologies. In such circumstances, Figma relies in part on laws governing the protection of unregistered intellectual property rights, including trade secret laws, and confidentiality agreements with its employees, independent contractors, partners
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and other advisors, which may limit the remedies available to Figma in the event of unauthorized use by third parties. These agreements may be breached or otherwise not effectively prevent disclosure of confidential information and may not provide adequate recourse in the event of unauthorized disclosure of confidential information.
Even if Figma seeks registration for its intellectual property rights, third parties may contest its applications, and even if it is able to obtain registrations, third parties may challenge the validity or enforceability of the registered intellectual property. Further, Figma’s patents, registered trademarks or other intellectual property rights may not be of sufficient scope or strength to provide it with meaningful protection or competitive advantage. Further, unauthorized parties may attempt to reverse engineer Figma’s technology to develop applications with the same or similar functionality as its solutions, and competitors and other third parties may also adopt trade names or trademarks similar to Figma’s. Monitoring and policing unauthorized use of Figma’s technologies, brands and other intellectual property rights can be expensive, difficult and may not always be effective. Figma may in the future bring claims against third parties for infringing its intellectual property rights. Costly and time-consuming administrative proceedings or litigation could be necessary to enforce and determine the scope of Figma’s proprietary rights, and there can be no assurances that a favorable outcome will be obtained. Figma’s failure or inability to obtain or maintain intellectual property protection or otherwise protect its proprietary rights could adversely affect its business, operating results, financial condition and prospects.
From time to time, Figma has received and may in the future receive letters from third parties alleging it is infringing upon others’ intellectual property rights or inviting Figma to license third-party intellectual property rights. Moreover, Figma is and may in the future be subject to claims or lawsuits in various jurisdictions alleging the infringement or other violation of third-party patent, trademark, and other intellectual property rights, and it cannot be certain that its platform, products, services or activities do not violate the patents, trademarks or other intellectual property rights of third-party claimants. Companies in the technology industry and other patent-, copyright- and trademark-holders seeking to profit from royalties in connection with grants of licenses own large numbers of patents, copyrights, trademarks, domain names and trade secrets and frequently commence litigation based on allegations of infringement, misappropriation or other violations of intellectual property or other rights.
Figma’s use of open source software could adversely affect its ability to offer its platform, products and services and develop its intellectual property assets, and could subject Figma to costly litigation.
Figma uses open source software in connection with its platform, products and services and expects to continue to use open source software in the future. From time to time, companies that use open source software have faced claims challenging the use of open source software and/or compliance with open source license terms. Few of the licenses applicable to open source software have been interpreted by courts, and there is a risk that these licenses could be construed in a manner that could impose unanticipated conditions or restrictions on Figma’s ability to commercialize its offerings. Some open source licenses may subject Figma to certain requirements that may adversely affect Figma’s rights in its proprietary software, including requirements to offer such software at no cost, to make publicly available the source code for modifications or derivative works based upon, incorporating, linking to or using open source software (which could include valuable proprietary code), and to license such modifications or derivative works under the terms of applicable open source licenses. While Figma monitors its use of open source software and tries to ensure that none is used in a manner that would require Figma to disclose its proprietary source code or that would otherwise breach the terms of an open source license, such use could inadvertently occur, in part because open source license terms are often ambiguous. Any requirement to disclose Figma’s proprietary source code or pay damages for breach of contract could be harmful to Figma’s business, operating results, financial condition and prospects, could adversely impact the value or enforceability of Figma’s intellectual property and could help competitors develop platforms, products or services that are similar to or better than Figma’s platform, products and services. To the extent the Figma platform depends upon the successful operation of open source software, any undetected errors or defects in such software could prevent the deployment or impair the functionality of the platform, delay the introduction of new offerings and injure Figma’s reputation.
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Any future litigation against Figma could be costly and time-consuming to defend.
In addition to intellectual property litigation, Figma has in the past and may in the future become subject to legal proceedings and claims or regulatory inquiries or proceedings that arise in the ordinary course of business, and Figma’s insurance might not cover such claims or might not provide sufficient payments to cover all the costs to resolve one or more such claims. Litigation might result in substantial costs and may divert management’s attention and resources, which could adversely affect Figma’s business, operating results, financial condition and prospects.
Acquisitions could be difficult to identify, pose integration challenges, divert the attention of management, disrupt Figma’s business, dilute stockholder value and adversely affect Figma’s operating results and financial condition.
Figma has acquired in the past, and may in the future seek to acquire, businesses, products, teams or technologies that it believes could complement or expand Figma’s platform, products and services, enhance Figma’s technical capabilities or otherwise offer growth opportunities. Any acquisition may divert the attention of management and cause Figma to incur various expenses in identifying, investigating and pursuing suitable acquisitions, whether or not the acquisitions are completed, and may result in unforeseen operating difficulties and expenditures. In particular, Figma may encounter difficulties assimilating or integrating the businesses, technologies, products, personnel or operations of acquired companies, particularly if the key personnel of an acquired company choose not to work for Figma, if an acquired company’s software is not easily adapted to work with Figma’s platform or if Figma has difficulty retaining the customers of an acquired company. Acquisitions may also disrupt Figma’s business, divert its resources and require significant management attention that would otherwise be available for development of Figma’s existing business. Any acquisitions that Figma is able to complete may not result in any synergies or other benefits Figma had expected to achieve, which could result in impairment charges that could be substantial. Further, Figma may not be able to find and identify desirable acquisition targets or be successful in entering into an agreement with any particular target. Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect Figma’s operating results. In addition, if an acquired business fails to meet Figma’s expectations, Figma’s business, operating results, financial condition and prospects may suffer or Figma may be exposed to unknown risks or liabilities.
Figma may be subject to new and existing laws and regulations, both in the United States and internationally.
Figma is subject to a wide variety of foreign and domestic laws. Laws, regulations, and standards governing issues that may affect Figma, such as employment, intellectual property, consumer protection, taxation, privacy, data security, anti-corruption, anti-money laundering, export controls and sanctions are often complex and subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their enforcement and application in practice may change or develop over time through judicial decisions or as new guidance or interpretations are provided by regulatory and governing bodies, such as federal and state administrative agencies. Jurisdictions are also increasingly imposing data localization laws, which may require personal information of citizens of a jurisdiction to be, among other data processing operations, initially collected, stored and modified locally within such jurisdiction. These regulations may deter customers from using services such as Figma’s platform and may inhibit Figma’s ability to expand into those markets or prohibit it from continuing to offer services in those markets without significant additional costs.
Figma is subject to privacy and security laws, regulations, standards and policies that are constantly changing, as well as contractual obligations related to data privacy and security. Figma’s actual or perceived failure to comply with such obligations could lead to government enforcement actions, a disruption of Figma’s services, private litigation, changes to Figma’s business practices, increased costs of operations, adverse publicity, limitations on the use or adoption of Figma’s platform, products and services and other negative effects on Figma’s business, operating results, financial condition and prospects.
Figma’s customers store personal, business and other proprietary information on Figma’s platform. In addition, Figma receives, stores, and otherwise processes personal and business information and other data, including proprietary or confidential information from and about actual and prospective customers, in addition to Figma’s employees and service providers. Figma’s handling of such information is subject to a variety of evolving privacy and security laws and regulations, including regulation by various government agencies, such as
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the U.S. Federal Trade Commission and various state, local and foreign governments. Moreover, Figma is subject to the terms of its privacy and security policies, representations, certifications, standards, publications, contracts and other obligations to third parties. These and other requirements could require Figma to incur additional costs to achieve compliance, necessitate the acceptance of more onerous obligations in Figma’s contracts, restrict Figma’s ability to use, store, transfer and process information, impact Figma’s ability to process or use information in order to support the provision of Figma’s products and services, affect Figma’s ability to offer Figma’s platform, products and services in certain locations, result in increased expenses, reduce overall demand for Figma’s platform, products and services, and make it more difficult to meet expectations of relevant stakeholders. In the United States, numerous federal and state laws and regulations, including state personal information laws, state data breach notification laws, and federal and state consumer protection laws and regulations govern the collection, use, disclosure and protection of personal information.
The scope and interpretation of the laws that are or may be applicable to Figma are often uncertain and may be conflicting, as a result of the rapidly evolving regulatory framework for privacy issues worldwide. As a result of the laws that are or may be applicable to Figma, and due to the proprietary nature of the information Figma collects, Figma has implemented policies and procedures designed to preserve and protect Figma’s data and Figma’s customers’ data against loss, misuse, corruption, misappropriation caused by systems failures or unauthorized access. If Figma’s policies, procedures or measures relating to privacy, data protection, information security, marketing or customer communications fail to comply with laws, regulations, policies, legal obligations or industry standards, Figma may be subject to governmental enforcement actions, litigation, regulatory investigations, fines, penalties and negative publicity, and it could cause Figma’s application providers, customers and partners to lose trust in Figma, which could adversely affect Figma’s business, operating results, financial condition and prospects. In addition, major technology platforms on which Figma relies, privacy advocates and industry groups have regularly proposed, and may propose in the future, platform requirements or self-regulatory standards by which Figma is legally or contractually bound. If Figma fails to comply with these contractual obligations or standards, Figma may lose access to technology platforms on which Figma relies and face substantial regulatory enforcement, liability and fines.
Any failure or perceived failure by Figma to comply with laws, regulations, policies, legal, or contractual obligations, industry standards or regulatory guidance relating to privacy, data protection or information security, may result in governmental investigations and enforcement actions, litigation, fines and penalties or adverse publicity, and could cause Figma’s customers and partners to lose trust in Figma, which could have an adverse effect on Figma’s reputation and business. Furthermore, there can be no assurance that the limitations of liability in Figma’s contracts would be enforceable or adequate or would otherwise protect Figma from liabilities or damages if it fails to comply with applicable privacy and security laws, privacy policies or data protection obligations related to information security or security breaches. Figma also cannot be sure that Figma’s insurance coverage will be adequate or sufficient to protect Figma from or to mitigate liabilities arising out of Figma’s privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims.
Figma expects that there will continue to be new proposed laws, regulations and industry standards relating to privacy, data protection, information security, marketing and consumer communications, and Figma cannot determine the impact such future laws, regulations and standards may have on its business. Future laws, regulations, standards and other obligations or any changed interpretation of existing laws or regulations could impair Figma’s ability to develop and market new functionality and maintain and grow Figma’s customer base and increase revenue. Future restrictions on the collection, use, sharing or disclosure of data, or additional requirements for express or implied consent of Figma’s customers and partners for the use and disclosure of such information could require Figma to incur additional costs or modify its platform, possibly in a material manner, and could limit Figma’s ability to develop new functionality.
If Figma is not able to comply with these laws or regulations, or if Figma becomes liable under these laws or regulations, Figma’s business, financial condition or reputation could be harmed, and Figma may be forced to implement new measures to reduce its exposure to this liability. This may require Figma to expend substantial resources or to discontinue certain products or services, which would negatively affect Figma’s business, operating results, financial condition and prospects. In addition, the increased attention focused upon liability
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issues as a result of lawsuits, regulatory investigations and legislative proposals could harm Figma’s reputation or otherwise adversely affect the growth of Figma’s business. Furthermore, any costs incurred as a result of this potential liability could adversely affect Figma’s business, operating results, financial condition and prospects.
Figma may be adversely affected by natural disasters and other catastrophic events that could disrupt Figma’s business operations and its business continuity and disaster recovery plans may not adequately protect it from a serious disaster.
Natural disasters or other catastrophic events, including global pandemics such as the COVID-19 pandemic, may also cause damage or disruption to Figma’s operations, Figma’s customers’ operations, international commerce and the global economy, and could have an adverse effect on Figma’s business, operating results, financial condition and prospects. Figma’s business operations are subject to interruption by natural disasters, fire, power shortages, pandemics and other events beyond Figma’s control. In addition, acts of terrorism and other geopolitical unrest could cause disruptions in Figma’s business or the businesses of Figma’s partners or the economy as a whole. In the event of a natural disaster, including a major earthquake or other catastrophic event such as a fire, power loss or telecommunications failure, Figma may be unable to continue its operations and may endure system interruptions, reputational harm, lengthy interruptions in service, breaches of data security and loss of critical data, all of which could have an adverse effect on Figma’s future operating results. For example, Figma’s corporate offices are located in California, a state that frequently experiences earthquakes. Additionally, all of the aforementioned risks may be further increased if Figma does not implement an adequate disaster recovery plan or Figma’s partners’ disaster recovery plans prove to be inadequate.
Figma provides service level commitments under certain of its paid customer contracts. If Figma fails to meet these contractual commitments, Figma could be obligated to provide credits for future service, which could harm Figma’s business, operating results, financial condition and prospects.
Certain of Figma’s paid customer agreements contain service level agreements, under which Figma guarantees specified minimum availability of Figma. From time to time, Figma has granted, and in the future will continue to grant, credits to paid customers pursuant to the terms of these agreements. Any failure of or disruption to Figma’s infrastructure could make Figma unavailable to organizations on Figma. If Figma is unable to meet the stated service level commitments to Figma’s paid customers or suffers extended periods of unavailability of Figma, Figma may be contractually obligated to provide paid customers with service credits for future subscriptions. Figma’s revenue, operating results and financial condition could be harmed if Figma suffers unscheduled downtime that exceeds the service level commitments under its agreements with its paid customers, and any extended service outages could adversely affect Figma’s business and reputation as paid customers may elect not to renew and Figma could lose future sales.
Figma may have exposure to additional tax liabilities.
Figma is subject to complex tax laws and regulations in the United States and certain foreign jurisdictions. Figma’s determination of its tax liability is subject to review by applicable U.S. and foreign tax authorities. Any adverse outcome of such a review could harm Figma’s operating results and financial condition. The determination of Figma’s worldwide provision for income taxes and other tax liabilities requires significant judgment and, in the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is complex and uncertain. In addition, Figma’s future effective tax rates could be favorably or unfavorably affected by changes in tax rates, changes in the valuation of its deferred tax assets or liabilities, the effectiveness of Figma’s tax planning strategies or changes in tax laws or their interpretation. Such changes could have an adverse impact on Figma’s financial condition.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This consent solicitation statement/prospectus and the documents incorporated by reference herein contain forward-looking statements within the meaning of applicable securities laws, including statements regarding the expected timing, completion and effects of the proposed transaction, product plans, future growth, market opportunities, strategic initiatives, industry positions, and customer acquisition and retention. Words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “hope,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would,” “looks for,” or “looks to,” including variations of such words or similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. All statements other than statements of historical fact included in this consent solicitation statement/prospectus are forward-looking statements. These forward-looking statements are based on information available to Adobe as of the date of this consent solicitation statement/prospectus and represent management’s current views and assumptions. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from these forward-looking statements. Factors that may cause or contribute to such differences include, but are not limited to, the following:
the transaction may not be completed on the terms or timeline currently contemplated, or at all, including because Adobe and/or Figma may be unable to satisfy the closing conditions or obtain the approvals required to complete the transaction, including the requisite approval of Figma stockholders, or such approvals may be delayed or contain material restrictions or conditions, or the merger agreement may be terminated;
failure to complete the transaction could adversely affect the market price of Adobe common stock, as well as its and Figma’s respective business, financial condition and results of operations;
certain Figma directors and executive officers have interests in the transaction that may be different from, or in addition to, those of other Figma stockholders;
the consideration to be issued to Figma stockholders in the transaction will not be adjusted if there is a change in the trading price of Adobe common stock;
the combination of Figma’s business with Adobe’s business may not be as successful as anticipated;
Adobe may fail to realize some or all of the anticipated benefits of the transaction;
expected revenues, cost savings, synergies and other benefits from the proposed transaction, such as Adobe’s ability to enhance Creative Cloud by adding Figma’s collaboration-first product design capabilities and the effectiveness of Figma’s technology, might not be realized within the expected time frames or at all and costs or difficulties relating to combining the businesses of Adobe and Figma, including but not limited to customer and employee retention, might be greater than expected;
the market price for shares of Adobe common stock before and after the completion of the transaction may be affected by factors different from, or in addition to, those that historically have affected or currently affect the market price of shares of Adobe common stock and the value of shares of Figma common stock;
Adobe and Figma must obtain clearance under the HSR Act and required consents, authorizations, clearances and approvals from other specified governmental authorities under foreign antitrust laws to complete the transaction, which, if delayed, not granted or granted with burdensome conditions, or if there are other challenges to the transaction under antitrust or other laws, could prevent, substantially delay or impair the completion of the transaction, result in additional expenditures of money and resources or reduce the anticipated benefits of the transaction;
failure to attract, motivate and retain senior management and other key employees could diminish the anticipated benefits of the transaction;
each of Adobe and Figma may incur significant transaction costs in connection with the transaction;
third parties may terminate or alter existing relationships with Adobe or Figma;
while the transaction is pending, Figma is subject to certain interim operating covenants, including a covenant that requires Figma to use commercially reasonable efforts to maintain its business in the
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ordinary course, which could prohibit Figma from taking certain actions that might otherwise be beneficial to Figma and its stockholders and covenants relating to incurrences of indebtedness, initiation or settlement of litigation, employee matters and other matters;
ongoing challenges and uncertainties posed by the COVID-19 pandemic for businesses and governments around the world;
national, international, regional and local economic and political climates;
changes in global financial markets, interest rates and foreign currency exchange rates;
business disruption may occur following or in connection with the proposed transaction;
Adobe’s or Figma’s businesses may experience disruptions due to transaction-related uncertainty or other factors making it more difficult to maintain relationships with employees, customers, other business partners or governmental entities;
diversion of management’s attention from ongoing business operations and opportunities as a result of the transaction;
the risk of litigation or regulatory actions related to the transaction; and
other businesses, financial, operational and legal risks and uncertainties detailed from time to time in Adobe’s SEC filings.
The foregoing list of factors is not exclusive. Additional information concerning these and other risk factors is contained in Adobe’s most recently filed Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other SEC filings. All cautionary statements made or referred to herein should be read as being applicable to all forward-looking statements wherever they appear. You should consider the risks and uncertainties described or referred to herein and should not place undue reliance on any forward-looking statements. The forward-looking statements speak only as of the date made, and Adobe and Figma undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this consent solicitation statement/prospectus or to reflect new information, actual results, revised expectations, or the occurrence of unanticipated events, except as required by law.
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SOLICITATION OF WRITTEN CONSENTS
Purpose of the Consent Solicitation; Recommendation of the Figma Board
The Figma board is providing this consent solicitation statement/prospectus to Figma stockholders. Figma stockholders are being asked to approve the merger agreement proposal by executing and delivering the written consent furnished with this consent solicitation statement/prospectus.
Following a review of the merger agreement and of the negotiations between Figma and its representatives on behalf of Figma and Adobe and its representatives on behalf of Adobe with respect to the merger agreement, the Figma board unanimously approved and declared advisable the merger agreement and the transaction, upon the terms and conditions set forth in the merger agreement, and recommended that Figma stockholders approve and adopt the merger agreement and the transaction. The Figma board unanimously recommends that Figma stockholders approve the merger agreement proposal. For a discussion of the factors considered by the Figma board in approving the merger agreement, see the section entitled “The Transaction—Figma’s Reasons for the Transaction; Recommendation of the Figma Board.”
Figma Stockholders Entitled to Consent
Figma stockholders of record as of the close of business on [ ], the record date, will be entitled to execute and deliver a written consent. As of the close of business on the record date, there were (a) [ ] shares of Figma common stock outstanding, consisting of (i) [ ] shares of Figma Class A common stock and (ii) [ ] shares of Figma Class B common stock, and (b) [ ] shares of Figma preferred stock outstanding in each case entitled to execute and deliver written consents with respect to the merger agreement proposal, and directors and executive officers of Figma and their affiliates owned and were entitled to consent with respect to (a) [ ] shares of Figma common stock (representing approximately [ ]% of the voting power of such shares outstanding on that date), consisting of (i) [ ] shares of Figma Class A common stock (representing approximately [ ]% of the voting power of such shares outstanding on that date) and (ii) [ ] shares of Figma Class B common stock (representing approximately [ ]% of the voting power of such shares outstanding on that date), and (b) [ ] shares of Figma preferred stock (representing approximately [ ]% of the voting power of such shares outstanding on that date). Figma currently expects that its directors and executive officers will deliver written consents in favor of the merger agreement proposal, although none of them has entered into any agreements obligating him or her to do so, other than Mr. Field and certain stockholders affiliated with Figma directors, who have entered into the key stockholder voting agreement.
Each holder of a share of Figma Class A common stock is entitled to one vote for each such share held as of the record date. Each holder of a share of Figma Class B common stock is entitled to fifteen votes for each such share held as of the record date. Each holder of Figma preferred stock is entitled to the number of votes equal to the number of shares of Figma common stock into which the shares of Figma preferred stock held by such holder could be converted as of the record date. Each share of Figma preferred stock is currently convertible into one share of Figma Class A common stock.
The holders of Figma preferred stock will vote together as a single class on an as-converted to Figma common stock basis and the holders of Figma capital stock will vote together as a single class on an as-converted to Figma common stock basis. If and to the extent Section 2115 of the CCC is required to apply to the transaction, the holders of Figma common stock will vote together as a single class for purposes of such section.
Written Consents; Required Written Consents
The approval of the merger agreement proposal requires the affirmative vote or consent of the holders of (i) at least a majority of the voting power of the outstanding shares of Figma capital stock (voting as a single class and on an as-converted to Figma common stock basis) entitled to vote thereon, (ii) at least a majority of the voting power of the outstanding shares of Figma preferred stock (voting as a single class and on an as-converted to Figma common stock basis) entitled to vote thereon, and (iii) if and to the extent required by Section 2115 of the CCC, at least a majority of the voting power of the outstanding shares of Figma common stock (voting as a single class) entitled to vote thereon. Subsequent to the execution of the merger agreement, Adobe and the key stockholders entered into the key stockholder voting agreement. Pursuant to the key stockholder voting agreement, each of the key stockholders has agreed, promptly (and in any event within two business days) after
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the registration statement of which this consent solicitation statement/prospectus forms a part is declared effective under the Securities Act by the SEC, to execute and deliver a written consent approving the adoption of the merger agreement and related matters with respect to all of such key stockholder’s shares of Figma capital stock entitled to act by written consent with respect thereto. The shares of Figma capital stock that are owned by the key stockholders and subject to the key stockholder voting agreement represent approximately [ ]% of the voting power of the outstanding shares of Figma capital stock, approximately [ ]% of the voting power of the outstanding shares of Figma common stock, and approximately [ ]% of the voting power of the outstanding shares of Figma preferred stock, in each case as of the record date. The execution and delivery of written consents by all of the key stockholders will constitute the Figma stockholder approval and, therefore, we expect to receive a number of written consents sufficient to satisfy each such approval required under the merger agreement.
Submission of Written Consents
You may consent to the merger agreement proposal with respect to your shares of Figma capital stock by completing, dating and signing the written consent enclosed with this consent solicitation statement/prospectus and returning it to Figma by the consent deadline.
If you hold shares of Figma capital stock as of the close of business on the record date and you wish to give your written consent, you must fill out the enclosed written consent, date and sign it, and promptly return it to Figma. Once you have completed, dated and signed the written consent, you may deliver it to Figma, Inc. by emailing a .pdf copy to consents@figma.com or by mailing your written consent to Figma, Inc., 760 Market Street, Floor 10, San Francisco, California 94102, Attention: Vice President, Legal.
Figma has set [ ] as the consent deadline. Figma reserves the right to extend the consent deadline beyond [ ]. Any such extension may be made without notice to Figma stockholders.
Executing Written Consents; Revocation of Written Consents
You may execute a written consent to approve the merger agreement proposal (which is equivalent to a vote for the proposal). If you hold shares of Figma capital stock as of the record date and you do not return your written consent, that will have the same effect as a vote against the merger agreement proposal. If you hold shares of Figma capital stock as of the record date and you return a signed written consent without indicating your decision on the merger agreement proposal, you will have given your consent to approve the proposal.
Your consent to the merger agreement proposal may be changed or revoked at any time before the consent deadline; however, such change or revocation is not expected to have any effect, as the delivery of the written consents contemplated by the key stockholder voting agreement will constitute the Figma stockholder approval at the time of such delivery. If you wish to change or revoke your consent before the consent deadline, you may do so by sending a new written consent with a later date or by delivering a notice of revocation, in either case by emailing a .pdf copy to consents@figma.com or by mailing your new written consent to Figma, Inc., 760 Market Street, Floor 10, San Francisco, California 94102, Attention: Vice President, Legal.
Due to the obligations of the key stockholders under the key stockholder voting agreement, a failure of any other Figma stockholder to deliver a written consent, or any change or revocation of a previously delivered written consent by any other Figma stockholder, is not expected to have any effect on the approval of the merger agreement proposal or the completion of the transaction.
Solicitation of Written Consents; Expenses
The expense of preparing, printing and mailing these consent solicitation materials is being borne by Figma. Officers and employees of Figma may solicit consents by telephone and personally, in addition to solicitation by mail. These persons will receive their regular compensation but no special compensation for soliciting consents.
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INFORMATION ABOUT THE COMPANIES
Adobe Inc.
Adobe Inc.
345 Park Avenue
San Jose, California 95110
Phone: (408) 536-6000
Founded in 1982, Adobe is one of the largest and most diversified software companies in the world. Adobe offers a line of products and services used by creative professionals, including photographers, video editors, graphic and experience designers and game developers; communicators, including content creators, students, marketers and knowledge workers; businesses of all sizes; and consumers for creating, managing, delivering, measuring, optimizing, engaging and transacting with compelling content and experiences across personal computers, smartphones, other electronic devices and digital media formats. Adobe operates in the Americas; Europe, Middle East and Africa; and Asia-Pacific.
Adobe was originally incorporated in California in October 1983 and was reincorporated in Delaware in May 1997. Adobe’s executive offices and principal facilities are located at 345 Park Avenue, San Jose, California 95110-2704. Adobe’s telephone number is 408-536-6000 and its website is www.adobe.com. Adobe completed its initial public offering in 1986. Adobe common stock is listed on Nasdaq under the ticker symbol “ADBE.”
Additional information about Adobe and its subsidiaries is included in documents incorporated by reference into this consent solicitation statement/prospectus. See the section entitled “Where You Can Find More Information.”
Saratoga Merger Sub I, Inc.
Saratoga Merger Sub I, Inc.
c/o Adobe Inc.
345 Park Avenue
San Jose, California 95110
Phone: (408) 536-6000
Saratoga Merger Sub I, Inc., a direct, wholly owned subsidiary of Adobe, is a Delaware corporation that was incorporated on September 12, 2022 for the purpose of entering into the merger agreement and effecting the first merger. At the effective time, Merger Sub I will be merged with and into Figma, with Figma continuing as the surviving corporation in the first merger and as a wholly owned subsidiary of Adobe.
Saratoga Merger Sub II, LLC
Saratoga Merger Sub II, LLC
c/o Adobe Inc.
345 Park Avenue
San Jose, California 95110
Phone: (408) 536-6000
Saratoga Merger Sub II, LLC, a direct, wholly owned subsidiary of Adobe, is a Delaware limited liability company that was formed on September 12, 2022 for the purpose of entering into the merger agreement and effecting the second merger. Immediately following the first merger, Figma, as the surviving corporation in the first merger, will be merged with and into Merger Sub II, with Merger Sub II continuing as the surviving company in the second merger and as a wholly owned subsidiary of Adobe. As a result of the second merger, Merger Sub II will own the legacy business of Figma.
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Figma, Inc.
Figma, Inc.
760 Market Street, Floor 10
San Francisco, California 94102
Phone: (415) 890-5404
Figma’s mission is to help teams collaborate visually and Figma’s vision is to make design accessible to all. Figma is a design platform for teams who build products together. Born on the web, Figma helps teams brainstorm, design, and build better products—from start to finish. Whether it is consolidating tools, simplifying workflows, or collaborating across teams and time zones, Figma makes the design process faster, more efficient and fun while keeping everyone on the same page. Figma has a devoted community of millions of product designers, developers, students and knowledge workers around the globe.
Figma, Inc. was incorporated in Delaware in 2012.
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PRINCIPAL STOCKHOLDERS OF FIGMA
The following table and the related footnotes set forth, to the best of Figma’s knowledge, information on the beneficial ownership of Figma’s capital stock as of the close of business on September 30, 2022 by:
each stockholder, or group of affiliated stockholders, known by Figma to beneficially own more than five percent of its voting securities;
each of Figma’s current directors;
each of Figma’s executive officers; and
all of Figma’s current directors and executive officers as a group.
The percentage of ownership is based on 79,379,849 shares of Figma Class A common stock outstanding, 90,911,305 shares of Figma Class B common stock outstanding, and 247,818,792 shares of Figma preferred stock outstanding, in each case, as of September 30, 2022. Each holder of a share of Figma Class A common stock is entitled to one vote for each such share held as of the record date. Each holder of a share of Figma Class B common stock is entitled to fifteen votes for each such share held as of the record date. Each holder of Figma preferred stock is entitled to the number of votes equal to the number of shares of Figma common stock into which the shares of Figma preferred stock held by such holder could be converted as of the record date. Each share of Figma preferred stock is currently convertible into one share of Figma Class A common stock. In light of the voting requirements to approve the merger agreement proposal, the following table sets forth information on the beneficial ownership of the Figma common stock and the Figma preferred stock by such persons, assuming that none of the outstanding Figma preferred stock is converted into Figma common stock.
Except as indicated in the footnotes to the table below, Figma believes that the stockholders named in the table have sole voting and investment power with respect to all shares of Figma capital stock shown to be beneficially owned by them, based on information provided to Figma by such stockholders. Unless otherwise indicated, the address for each stockholder listed is: c/o Figma, Inc., 760 Market Street, Floor 10, San Francisco, California 94102.
 
Shares Beneficially Owned(1)
% of
Total
Voting
Power(1)
Name and Address
of Beneficial Owner
Figma Class A Common
Stock(1)
Figma Class B Common
Stock(1)
Figma Preferred Stock
 
Shares
%
Shares
%
Shares
%
5% Stockholders
 
 
 
 
 
 
 
Entities affiliated with Greylock Partners(2)
778,842
*
60,716,278
24.5
3.6
Entities affiliated with ICQ Investments(3)
17,879,715
7.2
1.1
Entities affiliated with Index Ventures(4)
3,699,448
4.7
62,166,077
25.1
3.9
KPCB Holdings, Inc., as nominee(5)
3,518,616
4.4
50,070,083
20.2
3.2
Entities affiliated with Sequoia Capital(6)
4,106,123
5.2
19,332,982
7.8
1.4
Wu Wallace Family Trust(7)
40,957,815
45.1
36.3
Directors and Executive Officers
 
 
 
 
 
 
 
Dylan Field(8)
49,953,490
54.9
44.3
Shares subject to voting proxy(9)
40,957,815
45.1
36.3
Total(8)(9)
90,911,305
100.0
80.6
Praveer Melwani(10)
844,942
1.1
**
Kris Rasmussen(11)
5,754,370
7.2
**
Shaunt Voskanian
Kelly Kramer
John Lilly(12)
Danny Rimer(13)
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Shares Beneficially Owned(1)
% of
Total
Voting
Power(1)
Name and Address
of Beneficial Owner
Figma Class A Common
Stock(1)
Figma Class B Common
Stock(1)
Figma Preferred Stock
 
Shares
%
Shares
%
Shares
%
Mamoon Hamid(14)
3,518,616
4.4
50,070,083
20.2
3.2
Lynn Vojvodich(15)
817,145
1.0
32,525
*
**
All Executive Officers and Directors as a group
(9 persons)(16)
10,935,073
13.6
90,911,305
100.0
50,102,608
20.2
84.2
*
Amount represents less than 1% of the applicable class or series of Figma capital stock.
**
Amount represents less than 1% of the total voting power of Figma capital stock.
(1)
Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Shares of Figma common stock subject to Figma options that are currently exercisable or expected to become exercisable within 60 days of September 30, 2022 or issuable pursuant to Figma restricted stock units that are subject to vesting and settlement conditions expected to occur within 60 days of September 30, 2022 are deemed to be outstanding and to be beneficially owned by the person holding the Figma options or Figma restricted stock units for the purpose of computing the percentage ownership of that person and for the purpose of computing the percentage ownership of all executive officers and directors as a group. These shares are not deemed to be outstanding, however, for the purpose of computing the percentage ownership of any other person.
(2)
Consists of (i) 700,958 shares of Figma Class A common stock and 54,644,628 shares of Figma preferred stock held of record by Greylock XIV Limited Partnership (“Greylock XIV”), (ii) 38,942 shares of Figma Class A common stock and 3,035,825 shares of Figma preferred stock held of record by Greylock XIV-A Limited Partnership (“Greylock XIV-A”), and (iii) 38,942 shares of Figma Class A common stock and 3,035,825 shares of Figma preferred stock held of record by Greylock XIV Principals LLC (“XIV Principals”). Greylock XIV GP LLC is the General Partner or Manager of each of Greylock XIV, Greylock XIV-A and XIV Principals and as such may be deemed to share voting and dispositive power with regard to the shares held directly by each of Greylock XIV, Greylock XIV-A and XIV Principals. The address of each of the entities is 2550 Sand Hill Road, Menlo Park, California 94025.
(3)
Consists of (i) 14,240,145 shares of Figma preferred stock held of record by ICQ Investments, LP (Series IX) and (ii) 3,639,570 shares of Figma preferred stock held of record by ICQ Investments, LP (Series XXII). The address of each of the entities is 394 Pacific Avenue, 2nd Floor, San Francisco, California 94111.
(4)
Consists of (i) 2,470,740 shares of Figma Class A common stock and 50,878 shares of Figma preferred stock held of record by Index Ventures Growth IV (Jersey), L.P., (ii) 1,150,401 shares of Figma Class A common stock and 1,128,085 shares of Figma preferred stock held of record by Index Ventures Growth V (Jersey), L.P., (iii) 58,998,575 shares of Figma preferred stock held of record by Index Ventures VI (Jersey), L.P., (iv) 1,190,880 shares of Figma preferred stock held of record by Index Ventures VI Parallel Entrepreneur Fund (Jersey), L.P., and (v) 78,307 shares of Figma Class A common stock and 797,659 shares of Figma preferred stock held of record by Yucca (Jersey) SLP. Index Ventures Growth Associates IV Limited is the managing general partner of Index Ventures Growth IV (Jersey), L.P. and may be deemed to have voting and dispositive power over the shares held by such fund. Index Venture Growth Associates V Limited is the managing general partner of Index Ventures Growth V (Jersey), L.P. and may be deemed to have voting and dispositive power over the shares held by such fund. Index Venture Associates VI Limited is the managing general partner of Index Ventures VI (Jersey), L.P. and Index Ventures VI Parallel Entrepreneur Fund (Jersey), L.P. and may be deemed to have voting and dispositive power over the shares held by such funds. Yucca (Jersey) SLP is the administrator of the Index co-investment vehicles that are contractually required to mirror the relevant Index funds’ investment, and Index Ventures Growth Associates IV Limited, Index Venture Growth Associates V Limited and Index Venture Associates VI Limited may be deemed to have voting and dispositive power over their respective allocation of shares held by Yucca (Jersey) SLP. The address of each of the entities identified in this footnote is 44 Esplanade, 5th Floor, St. Helier, Jersey JE1 3FG, Channel Islands.
(5)
Consists of (i) 3,409,412 shares of Figma Class A common stock and 47,655,543 shares of Figma preferred stock held by Kleiner Perkins Caufield & Byers XVII, LLC (“KPCB XVII”), (ii) 109,204 shares of Figma Class A common stock and 1,560,137 shares of Figma preferred stock held by KPCB XVII Founders Fund, LLC (“KPCB XVII Founders”), (iii) 829,882 shares of Figma preferred stock held by Kleiner Perkins Select Fund, LLC (“KP Select”), and (iv) 24,521 shares of Figma preferred stock held by Kleiner Perkins Select Founders, LLC (“KP Select Founders”). All shares are held for convenience in the name of “KPCB Holdings, Inc., as nominee” for the accounts of such entities. The managing member of KPCB XVII and KPCB XVII Founders is KPCB XVII Associates, LLC (“KPCB XVII Associates”). Theodore E. Schlein, Beth Seidenberg, Wen Hsieh, Mamoon Hamid, and Ilya Fushman, the managing members of KPCB XVII Associates, exercise shared voting and dispositive control over the shares held by KPCB XVII and KPCB XVII Founders. Such managing members disclaim beneficial ownership of all shares held by KPCB XVII and KPCB XVII Founders except to the extent of their pecuniary interest therein. The managing member of KP Select and KP Select Founders is Kleiner Perkins Select Associates, LLC (“KP Select Associates”). Wen Hsieh, Mamoon Hamid, and Ilya Fushman, the managing members of KP Select Associates, exercise shared voting and dispositive control over the shares held by KP Select and KP Select Founders. Such managing members disclaim beneficial ownership of all shares held by KP Select and KP Select Founders except to the extent of their pecuniary interest therein. The principal business address for all entities and individuals affiliated with Kleiner Perkins Caufield & Byers is c/o Kleiner Perkins Caufield & Byers, LLC, 2750 Sand Hill Road, Menlo Park, California 94025.
(6)
Consists of 4,106,123 shares of Figma Class A common stock and 19,332,982 shares of Figma preferred stock held of record by Sequoia Capital U.S. Growth Fund VIII, L.P. SC US (TTGP), Ltd. is the general partner of SC U.S. Growth VIII Management, L.P., which is the general partner of Sequoia Capital U.S. Growth Fund VIII, L.P. As a result, SC US (TTGP), Ltd. may be deemed to share voting and dispositive power with respect to the shares held by Sequoia Capital U.S. Growth Fund VIII, L.P. The address for each of the persons and entities identified in this footnote is 2800 Sand Hill Road, Suite 101, Menlo Park, California 94025.
(7)
Consists of 40,957,815 shares of Figma Class B common stock over which Mr. Field holds an irrevocable proxy, pursuant to an irrevocable proxy and power of attorney between Mr. Field, Evan Wallace, and the Wu-Wallace Family Trust.
(8)
Consists of (i) 32,812,637 shares of Figma Class B common stock of which 1,840,406 shares are unvested and subject to repurchase by
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Figma, and (ii) 1,122,908 shares of Figma Class B common stock held of record by the Field 2021 Descendants Trust (the “Field Trust”). Bryn Mawr Trust Company of Delaware is the trustee of the Field Trust and may be replaced as trustee at Mr. Field’s discretion. In addition, includes 16,017,945 shares of Figma Class B common stock held of record by LLL Investments LLC which is associated with Mr. Field.
(9)
Consists of 40,957,815 shares of Figma Class B common stock held of record by the Wu-Wallace Family Trust. All of the shares of Figma Class B common stock held by the Wu-Wallace Family Trust are subject to the irrevocable proxy and power of attorney in favor of Mr. Field referred to in footnote 7 above.
(10)
Consists of 844,942 shares of Figma Class A common stock of which 80,152 shares are unvested and subject to repurchase by Figma.
(11)
Consists of 5,754,370 shares of Figma Class A common stock of which 542,734 shares are unvested and subject to repurchase by Figma.
(12)
John Lilly, who is a member of the Figma board, is an affiliate of Greylock Partners, but does not hold voting or dispositive power over the shares held of record by the Greylock Partners. See footnote 2 above for more information regarding Greylock Partners.
(13)
Danny Rimer, who is a member of the Figma board, is a partner at Index Ventures, but does not have voting or dispositive power with respect to any of the shares described in footnote 4 above.
(14)
Consists of the shares described in footnote 5 above. Mamoon Hamid, who is a member of the Figma board, is a managing member of KPCB XVII Associates and KP Select Associates, and as such may be deemed to have voting and dispositive power with respect to such shares.
(15)
Consists of (i) 817,145 shares underlying options to purchase Figma Class A common stock that are exercisable within 60 days of September 30, 2022, and (ii) 32,525 shares of Figma preferred stock held of record by The Radakovich Family Trust dated January 8, 2020.
(16)
Consists of (i) 10,117,928 shares of Figma Class A common stock of which 622,886 shares are unvested and subject to repurchase by Figma, (ii) 90,911,305 shares of Figma Class B common stock of which 1,840,406 shares are unvested and subject to repurchase by Figma, (iii) 50,102,608 shares of Figma preferred stock, and (iv) 817,145 shares underlying options to purchase Figma Class A common stock that are exercisable within 60 days of September 30, 2022.
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THE TRANSACTION
The following is a description of certain material aspects of the transaction. This description may not contain all of the information that is important to you. Adobe and Figma encourage you to carefully read this entire consent solicitation statement/prospectus, including the merger agreement attached to this consent solicitation statement/prospectus as Annex A, for a more complete understanding of the transaction.
Structure of the Transaction
The merger agreement provides, among other matters, for the acquisition of Figma pursuant to two successive mergers, on the terms and subject to the conditions in the merger agreement and in accordance with the DGCL and the DLLCA. Pursuant to the merger agreement, at the effective time, Merger Sub I will be merged with and into Figma, with Figma continuing as the surviving corporation in the first merger and as a wholly owned subsidiary of Adobe. Immediately following the first merger, Figma, as the surviving corporation in the first merger, will be merged with and into Merger Sub II, with Merger Sub II continuing as the surviving company in the second merger and as a wholly owned subsidiary of Adobe.
Consideration to Figma Stockholders
Subject to the applicable provisions of the merger agreement, at the effective time, by virtue of the first merger and without any action on the part of the parties or holders of any securities of Figma or any other person, each share of Figma capital stock issued and outstanding immediately prior to the effective time (other than treasury shares and dissenting shares (as defined under “The Merger Agreement—Dissenting Shares”)) will be converted into the right to receive, without interest: (i) the per share closing stock consideration, plus (ii) the per share closing cash consideration, plus (iii) if any, the per share escrow release amount, plus (iv) if any, the per share escrow resolved amount, plus (v) if any, the per share specified escrow release amount, plus (vi) if any, the per share representative fund release amount, subject to certain customary adjustments after closing (as described in the section entitled “The Merger Agreement—Cash Consideration Adjustments”). The amount of cash and shares of Adobe common stock that each Figma stockholder is entitled to receive for such shares of Figma capital stock will be computed after aggregating the amount of cash and shares of Adobe common stock each Figma stockholder is entitled to receive for all shares of Figma capital stock that were held by such Figma stockholder immediately prior to the effective time. The amounts set forth in the foregoing clauses (iii)-(vi), if any, will be payable, if at all, at the applicable times and subject to the requirements specified in the merger agreement and the escrow agreement (if applicable) after the closing.
Background of the Transaction
Figma periodically evaluates opportunities to achieve its long-term operational and financial goals and to enhance stockholder value, including through potential strategic transactions such as business combinations, divestitures, acquisitions and similar transactions. Figma’s ongoing evaluation of such opportunities has included, from time to time, among other things, (i) raising additional capital through private placements or public markets, (ii) strategic partnerships and alliances, (iii) acquisitions or business combinations to grow Figma’s business and operations and (iv) a possible sale of, or business combination involving, Figma.
Since Figma’s formation in 2012, Dylan Field, Figma’s co-founder and chief executive officer, and certain executive officers of Adobe have had discussions from time to time and discussed potential transactions involving Figma and Adobe, including, among other things, potential strategic partnerships between Figma and Adobe and a potential acquisition of Figma by Adobe, but no price or other material terms of any potential transaction were discussed or negotiated at such times.
In early 2020, Mr. Field met with Scott Belsky, Adobe’s chief product officer and executive vice president, Creative Cloud. Mr. Belsky and Mr. Field discussed the possibility of Adobe and Figma partnering or combining. Following these discussions, Mr. Field notified representatives of Adobe that Figma was not interested in continuing discussions at that time.
On April 29, 2020, Figma closed its Series D preferred stock financing.
In early 2021, Mr. Field met with Shantanu Narayen, Adobe’s chairman and chief executive officer, in which they discussed their respective businesses and the potential of an acquisition of Figma by Adobe. Following these discussions, Mr. Field notified Mr. Narayen that Figma was not interested in continuing discussions regarding a potential acquisition transaction at that time.
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On June 23, 2021, Figma closed its Series E preferred stock financing.
On April 20, 2022, David Wadhwani, president of Adobe’s Digital Media business, and Scott Belsky asked Mr. Field if he would be interested in discussing the possibility of Adobe acquiring Figma. Mr. Field expressed openness to understanding the terms of a potential acquisition of Figma by Adobe, and Mr. Field, Mr. Belsky and Mr. Wadhwani continued their discussion of the potential benefits of a combination the following week.
On May 5, 2022, Figma and Adobe entered into a confidentiality agreement, and Figma provided Adobe with certain confidential information to enable Adobe to further evaluate Figma and the terms of any potential transaction.
Throughout May and June 2022, representatives of Figma and Adobe continued to discuss a potential acquisition transaction, including Figma’s potential value given its growth trajectory and prospects, and Figma provided additional confidential information to Adobe.
On May 25, 2022, the Figma board met, together with representatives of Fenwick & West, Figma’s legal counsel. During the meeting, Mr. Field updated the Figma board on his ongoing discussions with representatives of Adobe regarding a potential acquisition transaction. After the update, the Figma board discussed, among other things, the best way to maximize value for Figma’s stockholders if the Figma board decided to pursue a sale of Figma. During such discussion, the Figma board considered, among other things, engaging an outside financial advisor to assist the Figma board in evaluating any potential proposal by Adobe to acquire Figma and approaching other third parties who might be interested in acquiring Figma and that would have the financial resources to deliver an offer that would maximize value for Figma’s stockholders. The Figma board also considered the risks and merits of approaching third parties about a potential offer to acquire Figma, including the likelihood that such outreach would generate a superior offer or create a competitive process that could cause Adobe to increase the price of its offer, and the risks of conducting such outreach, including the risk of a media leak that could disrupt Figma’s current business operations or cause Adobe to abandon discussions about a potential acquisition transaction. After such discussions, the Figma board directed Mr. Field to continue discussions with representatives of Adobe, engage an outside financial advisor and to reach out to a strategic party that the Figma board determined would be most likely to deliver an offer that could provide similar or greater value to Figma’s stockholders than a potential offer from Adobe.
On May 28, 2022, Figma engaged Qatalyst Partners LLC (“Qatalyst Partners”) as its financial advisor with respect to a potential acquisition transaction. Figma engaged Qatalyst Partners based, among other things, on its reputation, experience and familiarity with Figma’s business and Adobe’s business.
On May 28 and May 29, 2022, Mr. Field informed representatives of a publicly-traded technology company (“Party A”) that Figma may receive an acquisition offer and asked whether Party A would be interested in making an offer to acquire Figma.
On May 30, 2022, representatives of Qatalyst Partners had a follow-up conversation with a representative of Party A to assess Party A’s interest in a potential strategic transaction with Figma. The representative of Party A offered to execute a confidentiality agreement and requested a management meeting.
On June 1, 2022, Figma and Party A entered into a confidentiality agreement, and Figma provided Party A with certain confidential information to enable Party A to further evaluate whether it would submit a proposal to acquire Figma and the terms of such a proposal.
On June 5, 2022, Mr. Field and Praveer Melwani, Figma’s chief financial officer, met with Mr. Narayen, Mr. Wadhwani and Dan Durn, Adobe’s chief financial officer, to further discuss a potential acquisition transaction involving Adobe and Figma. Later that day, Mr. Field and Mr. Melwani provided certain members of the Figma board with an update on the conversation.
On June 6 and June 7, 2022, Figma provided confidential information regarding its business to Adobe and Party A in order to enable such parties to evaluate Figma and the terms of any potential transaction.
On June 19, 2022, representatives of Adobe delivered a non-binding indication of interest to acquire Figma (the “June 19 proposal”). The June 19 proposal provided that Adobe would acquire all of Figma’s issued and outstanding equity interests for $20 billion in total acquisition consideration (the “acquisition price”). The June 19 proposal also provided that approximately 50% of the acquisition price would be payable in cash and the
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remainder in Adobe equity securities. The June 19 proposal did not specify how the Adobe equity would be valued or provide for any termination fees or indemnification terms. In addition, the June 19 proposal provided that Adobe would grant retention equity awards valued at up to approximately $2 billion to Figma employees, including Mr. Field (the “retention pool”).
On June 20, 2022, representatives of Party A informed Mr. Field that Party A was not interested in further pursuing a potential acquisition of Figma.
On June 21, 2022, the Figma board met, together with representatives of Qatalyst Partners, to discuss the terms of the June 19 proposal. After the discussion, the Figma board directed Mr. Field to continue negotiations with Adobe, and to seek an increase in Adobe’s proposed acquisition price.
On June 22, 2022, Mr. Field discussed the June 19 proposal with Mr. Wadhwani, and conveyed the Figma board’s view that the June 19 proposal provided insufficient value for Figma’s stockholders.
On June 30, 2022, Mr. Field had another call with Mr. Wadhwani. During the call, Mr. Field proposed a $23 billion acquisition price and a retention pool valued at approximately $3 billion (the “June 30 counterproposal”). The next day, Mr. Wadhwani informed Mr. Field that Adobe was not willing to increase its proposed acquisition price, but that it may consider increasing the amount of the retention pool given the importance of Figma’s employees to the success of any potential combination.
On July 4, 2022, Mr. Wadhwani delivered to Mr. Field a revised non-binding indication of interest to acquire Figma (the “July 4 proposal”). The July 4 proposal provided, among other things, for a $20 billion acquisition price, with approximately 50% of the acquisition price payable in cash and the remainder in Adobe equity securities. The July 4 proposal also provided that the acquisition price would be on a cash- and debt-free basis net of transaction expenses, without any net working capital adjustment, and for a retention pool valued at approximately $2.3 billion, including the amount that would be allocated to Mr. Field. The July 4 proposal did not specify how the Adobe equity would be valued or provide for any termination fees or indemnification terms. Mr. Wadhwani also delivered a draft exclusivity agreement (the “exclusivity agreement”), which provided that Figma would negotiate exclusively with Adobe regarding a potential strategic transaction until 45 days after the execution of the exclusivity agreement.
Later on July 4, 2022, the Figma board met, together with representatives of Figma’s senior management, Fenwick & West and Qatalyst Partners. During the meeting, the Figma board discussed the terms of the July 4 proposal and its potential response. After the discussion, the Figma board directed Mr. Field to continue to negotiate with Adobe regarding the material terms set forth in the July 4 proposal, including potentially increasing the acquisition price.
On July 5, 2022, Mr. Field delivered to Mr. Wadhwani a revised non-binding indication of interest (the “July 5 counterproposal”). The July 5 counterproposal provided, among other things, for a $21.5 billion acquisition price on a cash- and debt-free basis net of transaction expenses and without a net working capital adjustment, with approximately 50% of the acquisition price payable in cash and the remainder in Adobe equity securities, and a retention pool valued at approximately $2.3 billion. The July 5 counterproposal also provided that Adobe equity securities would be valued according to a fixed exchange ratio with a collar, with each share of Adobe stock issuable in the transaction being valued based on a specified average price of Adobe’s shares prior to the execution of the merger agreement (the “signing average price”), and that the valuation of such stock would increase or decrease by 10% if a specified average price of Adobe’s shares prior to the closing of the merger was 10% or more higher or 10% or more lower than the signing average price. In addition, the July 5 counterproposal provided that Adobe would agree to pay Figma a reverse termination fee in the event the transaction failed to close due to a failure to receive any required antitrust approvals (the “reverse termination fee”). Finally, the July 5 counterproposal provided that Adobe’s sole recourse for any breach of the merger agreement would be a representation and warranty insurance policy in favor of Adobe and a retention escrow equal to the lesser of $25 million and 50% of the retention of such insurance policy.
Later on July 5, 2022, Mr. Wadhwani informed Mr. Field that Adobe's proposed acquisition price was firm at $20 billion and would not be increased.
On July 6, 2022, Mr. Narayen met with Mr. Field and reiterated Adobe's position on the acquisition price.
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On July 14, 2022, representatives of Adobe delivered to Figma a revised non-binding indication of interest to acquire Figma (the “July 14 proposal”). The July 14 proposal provided, among other things, for an acquisition price of $20 billion on a cash- and debt-free basis net of transaction expenses and without a net working capital adjustment, with approximately 50% of the acquisition price payable in cash and the remainder in Adobe equity securities, and a retention pool valued at approximately $2.3 billion, including the amount that would be allocated to Mr. Field. The July 14 proposal also provided that the Adobe stock issued in the transaction would be valued according to a fixed exchange ratio based on the signing average price, with no collar. In addition, the July 14 proposal provided that Adobe would pay a reverse termination fee to Figma, with the parties to agree on the amount of such reverse termination fee, and requested clarification on the indemnification terms set forth in the July 5 counterproposal.
On July 16, 2022, the Figma board met with representatives of Figma’s senior management, Fenwick & West and Qatalyst Partners. During the meeting, the Figma board discussed the July 14 proposal and the best course of action in responding, appreciating that based on input from Adobe, that any further insistence on increasing the acquisition price or undue delay in executing the exclusivity agreement would likely cause Adobe to abandon its proposal to acquire Figma. After such discussion, the Figma board directed Figma’s senior management to accept the acquisition price of $20 billion on a cash- and debt-free basis and the value of the retention pool set forth in the July 14 proposal, but to continue to negotiate the amount of the reverse termination fee and other terms of a proposed acquisition, including indemnification terms.
On July 17, 2022, the Figma board met, together with representatives of Fenwick & West. During the meeting, the Figma board unanimously approved entering into exclusive negotiations with Adobe regarding an acquisition of Figma by Adobe for an acquisition price of $20 billion on a cash- and debt-free basis net of transaction expenses and without a net working capital adjustment provided that the parties could come to an agreement on the other key terms of the indication of interest, including the reverse termination fee and indemnification.
Also on July 17, 2022, representatives of Fenwick & West delivered a revised non-binding indication of interest (the “July 17 counterproposal”) to representatives of Adobe and Wachtell, Lipton, Rosen & Katz, Adobe’s legal advisor (“Wachtell Lipton”). The July 17 counterproposal provided, among things, for the same acquisition price as set forth in the July 14 proposal, the reverse termination fee and clarified that with respect to indemnification Figma’s proposal was subject to specific matters to be mutually agreed in the merger agreement following due diligence.
On July 18, 2022, representatives of Figma, Fenwick & West, Adobe and Wachtell Lipton met via videoconference to negotiate the July 17 counterproposal, including the amount of the reverse termination fee. That same day, representatives of Adobe delivered to representatives of Figma and Fenwick & West a revised non-binding indication of interest. Thereafter, representatives of Adobe and Wachtell Lipton and representatives of Figma and Fenwick & West continued to discuss the terms of the indication of interest.
On July 20, 2022, representatives of Adobe delivered to representatives of Figma and Fenwick & West a revised non-binding indication of interest to acquire Figma (the “July 20 proposal”), which provided for, among other things, a $20 billion acquisition price on a cash- and debt-free basis net of transaction expenses and without a net working capital adjustment, with approximately 50% of the acquisition price payable in cash and the remainder in Adobe equity securities and a retention pool valued at approximately $2.3 billion. The July 20 proposal also provided that the Adobe stock issued in the transaction would be valued at the signing average price, and that Adobe would agree to a $1 billion reverse termination fee.
Also on July 20, 2022, representatives of Fenwick & West delivered a revised draft of the exclusivity agreement to representatives of Adobe and Wachtell Lipton, which provided that Figma’s exclusivity obligations would automatically terminate if Adobe proposed terms that were materially less favorable to Figma and its stockholders than the terms set forth in the July 20 proposal, including any proposal to reduce the acquisition price. Later that day, Figma and Adobe executed the exclusivity agreement.
On July 22, 2022, representatives of Adobe delivered a detailed due diligence request list to Figma.
On July 27, 2022, Figma made an electronic data room available to Adobe and its advisors, which contained confidential information to enable Adobe to conduct its due diligence review of Figma.
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From July 28, 2022 to September 14, 2022, Figma provided additional due diligence materials to Adobe and its advisors in the electronic data room, and Adobe and its advisors continued their due diligence review of Figma, including reviewing such information in the electronic data room and holding numerous in-person and telephonic meetings with Figma’s senior management.
On July 30, 2022, representatives of Wachtell Lipton delivered to Fenwick & West an initial draft of the merger agreement.
From August 5, 2022 to August 24, 2022, representatives of Fenwick & West and Wachtell Lipton exchanged revised drafts of the merger agreement.
On August 19, 2022, representatives of Wachtell Lipton delivered an initial draft of the key stockholder voting agreement to Fenwick & West.
On August 26, 2022, representatives of Figma, Fenwick & West, Adobe and Wachtell Lipton met to further negotiate the terms of the draft merger agreement, including among other things the method for calculating the exchange ratios and the size and terms of indemnification escrows.
From August 26, 2022 until September 14, 2022, representatives of Figma and Adobe, together with representatives of their respective advisors, continued to negotiate the terms of merger agreement, key stockholder voting agreement and the other transaction documents, and Fenwick & West and Wachtell Lipton exchanged drafts of such agreements. Representatives of Figma’s senior management, Fenwick & West and Qatalyst Partners provided regular updates to the Figma board on the status of negotiations with respect to such agreements.
On September 13, 2022, representatives of Figma and Adobe met, together with representatives of their outside legal and financial advisors. During the meeting, representatives of Adobe provided information responsive to Figma’s reverse due diligence queries regarding Adobe.
On September 14, 2022, the parties finalized the drafts of the merger agreement, key stockholder voting agreement and other transaction documents.
Also on September 14, 2022, the Figma board met, together with representatives of Fenwick & West and Qatalyst Partners. At the meeting, a representative of Qatalyst Partners reviewed with the Figma board the economic terms of the merger agreement, including the information provided by representatives of Adobe relating to Adobe’s past financial performance. Representatives of Fenwick & West then reviewed with the Figma board the terms of the merger agreement and the resolutions to approve the merger agreement, the mergers and the related transactions.
After deliberation, including consideration of the factors described in the section entitled “—Figma’s Reasons for the Transaction; Recommendation of the Figma board,” the Figma board unanimously (i) approved and authorized the execution and delivery of the merger agreement, (ii) approved the consummation of the transactions contemplated by the merger agreement, including the mergers, (iii) determined that the execution and delivery of the merger agreement and the consummation of the transactions contemplated thereby were advisable, (iv) recommended that Figma’s stockholders approve and adopt the merger agreement and the other transactions contemplated thereby, including the mergers, and (v) directed that the merger agreement and the principal terms of the transactions contemplated thereby be submitted to Figma’s stockholders for their approval and adoption.
On September 15, 2022, prior to the open of trading on Nasdaq, Figma and Adobe executed the merger agreement and publicly announced the transaction.
Figma’s Reasons for the Transaction; Recommendation of the Figma Board
At a meeting held on September 14, 2022, the Figma board considered the transaction and the terms of the merger agreement and unanimously approved and declared advisable the merger agreement and the transaction, upon the terms and conditions set forth in the merger agreement, and unanimously determined that the merger agreement and the transaction are fair to and in the best interests of Figma and its stockholders. The Figma board unanimously recommends that Figma stockholders approve the merger agreement proposal by executing and returning the written consent furnished with this consent solicitation statement/prospectus.
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In arriving at this determination and recommendation, the Figma board, in consultation with Figma management and Figma’s financial and legal advisors, engaged in numerous discussions regarding the transaction, received materials for their review and consideration, and considered a variety of factors.
The following are some of the significant factors that supported the Figma board’s decision to approve the merger agreement (which are not in any relative order of importance):
the fact that, upon completion of the transaction, Figma would be part of a much larger organization that would enable Figma the opportunity to accelerate growth;
the fact that the terms of the merger agreement and related transaction documents reflected extensive negotiations between the parties and their respective advisors, and the Figma board’s belief that the economic and other terms of the merger agreement and related transaction documents, taken as a whole, were the best that Adobe would be willing to offer to Figma stockholders;
the fact that Figma had explored other potential strategic alternatives, including other potential business combination transactions, remaining an independent private company or pursuing an IPO, and the Figma board’s belief that the transaction with Adobe would provide superior value to Figma stockholders as compared to the value expected to result from such other strategic alternatives;
the fact that, upon completion of the transaction, Figma stockholders would receive cash as a component of the merger consideration, which offers Figma stockholders an opportunity to realize immediate value for a portion of their investment and provides a level of price certainty and downside protection;
the fact that, upon completion of the transaction, Figma stockholders would receive Adobe common stock as a component of the merger consideration, and would therefore have an opportunity to participate in the potential for value accretion and potential synergies created by the transaction, when, if and as achieved by Adobe;
the complementary nature of the cultures of the two companies, including with respect to corporate purpose and product vision, and the Figma board’s belief that the complementary cultures will facilitate the successful combination and implementation of the transaction and future growth for Figma;
the fact that the Adobe stock consideration was calculated by reference to the average 10-day closing price for one share of Adobe common stock as of September 13, 2022, and, as a result, Figma stockholders would have the opportunity to benefit from any increase in the trading price of Adobe common stock during or following the closing of the transaction;
the fact that the transaction provides Figma stockholders with liquidity at the closing of the transaction, given both the cash consideration and that the stock consideration will be registered on a registration statement on Form S-4 and will not be subject to any lock-up or restrictions;
the expected treatment of the combination as a tax-free reorganization under Section 368(a) of the Code for U.S. federal income tax purposes, subject to certain requirements set forth in and as more fully described in the section entitled “U.S. Federal Income Tax Consequences”;
information and discussions with Figma’s management and advisors regarding Adobe’s business, assets, financial condition, results of operations, strategy and prospects, including the expected pro forma effect of the transaction on the combined company;
the Figma board’s and management’s assessment of Figma’s future financial performance and prospects on a standalone basis, taking into account, among other things, certain business, financial and execution risks, and certain other risks associated with continuing as an independent company;
the financial advice provided by Qatalyst Partners;
the review by the Figma board with its legal and financial advisors, as applicable, of the financial and other terms of the merger agreement and related transaction documents;
the Figma board’s assessment of the likelihood that the transaction would be completed based on, among other things, the conditions to closing and the assessment of the Figma board, after consulting with counsel, regarding the likelihood of obtaining all required regulatory approvals;
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the termination and remedy provisions under the merger agreement in the event that the transaction is not completed due to the failure to obtain required regulatory approvals, including Adobe’s obligation to pay the reverse termination fee to Figma upon termination of the merger agreement in specified circumstances (as more fully described in the section entitled “The Merger Agreement—Expenses and Reverse Termination Fees”);
the fact that Adobe’s obligation to complete the transaction is not subject to any financing condition or similar financing contingency; and
the right of each of Adobe and Figma to specific performance to prevent breaches and to enforce the terms of the merger agreement (as more fully described in the section entitled “The Merger Agreement—Specific Performance”).
In the course of its deliberations, the Figma board also considered a variety of risks and other potentially negative factors, including the following (which are not in any relative order of importance):
the possibility that the transaction may not be completed or may be unduly delayed for reasons beyond the control of Figma and/or Adobe, including the potential length of the regulatory review process and the risk that applicable regulatory authorities may seek to enjoin the transaction or otherwise impose conditions on Figma and/or Adobe in order to obtain clearance for the transaction that could jeopardize or delay the completion of, or reduce or delay the anticipated benefits of, the transaction;
the uncertainty around the potential state of Figma’s business and the availability of alternative liquidity transactions, including a potential IPO, in the event the transaction is not completed;
the fact that the merger agreement does not provide Figma with a price-based termination right or other similar protection in favor of Figma or its stockholders in such circumstances;
the potential effects of the public announcement of the transaction, including the: (i) effects on Figma’s employees, community, business partners, and operating results; (ii) potential effects on the stock price of Adobe; (iii) impact on Figma’s ability to attract and retain key employees, including engineering talent; and (iv) potential for litigation in connection with the transaction;
the fact that, if the transaction is not completed, Figma will have expended significant human and financial resources on a failed transaction;
the potential for diversion of management and employee attention and for increased employee attrition during the period prior to completion of the transaction, and the potential effect of the transaction on Figma’s business and relations with its customers, community, prospective employees, merchants and strategic partners;
the restrictions on the conduct of Figma’s business prior to completion of the transaction contained in the merger agreement, which, among other things, require Figma to use commercially reasonable efforts to conduct its business in the ordinary course of business, subject to certain qualifications, which could, among other things, delay or prevent Figma from undertaking business opportunities that may arise pending completion of the transaction and could negatively impact Figma’s ability to attract and retain employees and decisions of customers, merchants, and strategic partners;
the transaction costs and retention costs to be incurred in connection with the transaction, regardless of whether the transaction is completed;
the fact that Figma is not permitted to terminate the merger agreement, notwithstanding receipt of a proposal for a more favorable transaction, and the anticipation that subsequent to the execution of the merger agreement, the key stockholders would execute a voting agreement requiring them to execute and deliver a written consent approving the adoption of the merger agreement and related matters with respect to all of their shares of Figma capital stock entitled to act by written consent with respect thereto, which written consent would constitute the Figma stockholder approval (as more fully described in the section entitled “Key Stockholder Voting Agreement”);
the fact that the stock consideration to be issued to Figma stockholders in the transaction will not be adjusted if there is a change in the trading price of Adobe common stock, and, depending on the closing price per share of Adobe common stock as of the closing date, the value of the merger
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consideration that holders of Figma capital stock are entitled to receive at the closing in accordance with the merger agreement may be less than the value that would be received based on the value of Adobe common stock as of the date of the merger agreement; and
various other risks associated with the transaction and the businesses of Figma, Adobe and the combined company following the completion of the transaction described in the sections entitled “Risk Factors” and “Special Note Regarding Forward-Looking Statements.”
In addition to considering the factors described above, the Figma board considered the fact that some of Figma’s directors and executive officers have other interests in the transaction that may be different from, or in addition to, the interests of Figma stockholders generally, as more fully described in the section entitled “Interests of Figma’s Directors and Executive Officers in the Transaction.”
The Figma board concluded that the risks, uncertainties and potentially negative factors associated with the transaction were outweighed by the potential benefits that it expected Figma and its stockholders would achieve as a result of entering into the transaction. Accordingly, the Figma board unanimously approved and declared advisable the merger agreement and the transaction, upon the terms and conditions set forth in the merger agreement, and unanimously determined that the merger agreement and the transaction are fair to and in the best interests of Figma and its stockholders.
The foregoing discussion of the factors considered by the Figma board includes the principal positive and negative factors, but is not intended to be exhaustive and may not include all of the factors considered by the Figma board. In view of the wide variety of factors considered by the Figma board in connection with its evaluation of the transaction and the complexity of these matters, in reaching its decision to approve the merger agreement and the transaction and to make its recommendation to Figma stockholders, the Figma board did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors and/or considered other factors altogether. The Figma board considered each of the applicable factors as a whole in context of the transaction, including thorough discussions with Figma management and Figma’s financial and legal advisors, and overall considered such factors to be favorable to, and to support, its determination. It should be noted that this explanation of the reasoning of the Figma board and certain information presented in this section is forward-looking in nature and, therefore, that information should be read in light of the factors discussed in the sections entitled “Risk Factors” and “Special Note Regarding Forward-Looking Statements.”
Regulatory Approvals
Under the HSR Act, the transaction cannot be completed until, among other things, Adobe and Figma each file a notification and report form with the U.S. Antitrust Agencies and the applicable waiting period has been terminated or has expired. A transaction notifiable under the HSR Act may not be completed until the expiration of a 30-day waiting period following the parties’ filings of their respective HSR Act notification and report forms or the early termination of that waiting period. On October 13, 2022, each of Adobe and Figma filed a notification and report form pursuant to the HSR Act with the U.S. Antitrust Agencies. On November 14, 2022, the parties each received a second request from the DOJ with respect to the transaction. Accordingly, the HSR waiting period will expire 30 days after Adobe and Figma each certify their substantial compliance with the second request, unless earlier terminated by the DOJ or extended by agreement of the parties or court order.
At any time before or after the completion of the transaction, notwithstanding the termination or expiration of the waiting period under the HSR Act, the U.S. Antitrust Agencies could take such action under the antitrust laws as they deem necessary under the applicable statutes, including seeking to enjoin the completion of the transaction, seeking divestiture of substantial assets of the parties, or requiring the parties to license, or hold separate, assets, to terminate existing relationships and contractual rights, or to take other actions or agree to other restrictions limiting the freedom of action of the parties. In addition, at any time before or after the completion of the transaction, and notwithstanding the termination or expiration of the waiting period under the HSR Act, any state could take such action under the antitrust laws as it deems necessary. Private parties may also seek to take legal action under the antitrust laws under certain circumstances.
The transaction is also subject to clearance or approval by regulatory authorities in certain other jurisdictions. The transaction cannot be completed until Adobe and Figma obtain clearance to consummate the transaction or applicable waiting periods have expired or been terminated in each applicable jurisdiction. Adobe
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and Figma, in consultation and cooperation with each other, will file notifications, as required with regulatory authorities in certain other jurisdictions, as promptly as practicable after the date of the merger agreement. The relevant regulatory authorities could take such actions under the applicable regulatory laws as they deem necessary or desirable, including seeking divestiture of substantial assets of the parties or requiring the parties to license, or hold separate, assets or terminate existing relationships and contractual rights, or to take other actions or agree to other restrictions limiting the freedom of action of the parties.
There can be no assurance that a challenge to the transaction on antitrust grounds will not be made or, if such a challenge is made, what the result will be.
In connection with the transaction, the parties also intend to make all required filings with the SEC, the Delaware Secretary of State and Nasdaq, as well as any required filings with state or local licensing authorities.
Listing of Adobe Common Stock
It is a condition to the closing that the shares of Adobe common stock to be issued to Figma stockholders in the first merger have been approved for listing on Nasdaq, subject to official notice of issuance, prior to the closing date. It is expected that, following the completion of the transaction, the Adobe common stock will continue to trade on Nasdaq under the ticker symbol “ADBE.”
Key Stockholder Voting Agreement
Subsequent to the execution of the merger agreement, Adobe and the key stockholders (as defined in the section entitled “Key Stockholder Voting Agreement”) entered into the key stockholder voting agreement (as defined in the section entitled “Key Stockholder Voting Agreement”). Pursuant to the key stockholder voting agreement, among other things, each of the key stockholders has agreed, promptly (and in any event within two business days) after the registration statement of which this consent solicitation statement/prospectus forms a part is declared effective under the Securities Act by the SEC, to execute and deliver a written consent approving the adoption of the merger agreement and the transaction, including the mergers, with respect to all of such key stockholder’s shares of Figma capital stock entitled to act by written consent with respect thereto. The execution and delivery of written consents by all of the key stockholders will constitute the Figma stockholder approval and, therefore, we expect to receive a number of written consents sufficient to satisfy each such approval required under the merger agreement. See the section entitled “Key Stockholder Voting Agreement.”
Directors and Management Following the Completion of the Transaction
There will be no change to the Adobe board as a result of the mergers, and the directors of Adobe as of immediately prior to the effective time will continue to serve as the directors of Adobe after completion of the mergers. The executive officers of Adobe immediately prior to the effective time will continue to serve as the executive officers of Adobe after completion of the mergers.
Accounting Treatment
Adobe and Figma prepare their financial statements in accordance with GAAP. The mergers will be accounted for in accordance with FASB ASC Topic 805, Business Combinations, with Adobe considered as the accounting acquirer and Figma as the accounting acquiree. Accordingly, Adobe will measure the assets acquired and liabilities assumed at their fair values including net tangible and identifiable intangible assets acquired and liabilities assumed as of the closing date, with any excess purchase price over those fair values being recorded as goodwill.
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THE MERGER AGREEMENT
The following section summarizes certain material provisions of the merger agreement, which is included in this consent solicitation statement/prospectus as Annex A and is incorporated by reference herein. The summary of the merger agreement below and elsewhere in this consent solicitation statement/prospectus is qualified in its entirety by reference to the merger agreement. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. This section is not intended to provide you with any factual information about Adobe or Figma. The rights and obligations of Adobe and Figma are governed by the merger agreement and not by this summary or any other information contained in or incorporated by reference into this consent solicitation statement/prospectus. Adobe stockholders and Figma stockholders are urged to read the merger agreement carefully and in its entirety, as well as this consent solicitation statement/prospectus and the information incorporated by reference into this consent solicitation statement/prospectus.
Explanatory Note Regarding the Merger Agreement
The merger agreement is attached to this consent solicitation statement/prospectus as Annex A and described in this summary to provide you with information regarding its terms. The merger agreement contains representations and warranties by Figma, on the one hand, and by Adobe, Merger Sub I and Merger Sub II, on the other hand, which were made solely for the benefit of the other parties for purposes of the merger agreement. The representations, warranties and covenants made in the merger agreement by Figma, Adobe, Merger Sub I and Merger Sub II were qualified and subject to important limitations agreed to by Figma, Adobe, Merger Sub I and Merger Sub II in connection with negotiating the terms of the merger agreement. In particular, in your review of the representations and warranties contained in the merger agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purpose of allocating risk between the parties to the merger agreement, rather than establishing matters as facts about Figma or Adobe or any other person at the time they were made or otherwise. The representations and warranties may also be subject to a contractual standard of materiality different from that generally applicable to reports and documents filed with the SEC, and some were qualified by the matters contained in the confidential disclosure schedules (the “Figma disclosure schedules”) that Figma and Adobe each delivered in connection with the merger agreement and certain documents filed with the SEC. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this consent solicitation statement/prospectus, may have changed since the date of the merger agreement. Accordingly, the representations and warranties and other provisions of the merger agreement should not be read alone, but instead should be read together with the information provided elsewhere in this consent solicitation statement/prospectus and in the documents incorporated by reference into this consent solicitation statement/prospectus. See the section entitled “Where You Can Find More Information.”
The Transaction
The merger agreement provides, among other matters, for the acquisition of Figma pursuant to two successive mergers, on the terms and subject to the conditions in the merger agreement and in accordance with the DGCL and the DLLCA. At the effective time, Merger Sub I will be merged with and into Figma, with Figma continuing as the surviving corporation in the first merger and as a wholly owned subsidiary of Adobe. Immediately following the first merger, Figma, as the surviving corporation in the first merger, will be merged with and into Merger Sub II, with Merger Sub II continuing as the surviving company in the second merger and as a wholly owned subsidiary of Adobe.
At the effective time, the certificate of incorporation and the bylaws of the surviving corporation will be amended to read the same as the certificate of incorporation and bylaws, respectively, of Merger Sub I as in effect immediately prior to the effective time until thereafter changed or amended, except that the name of the surviving corporation will be “Figma, Inc.” and references to the incorporator will be deleted. At the second effective time, the certificate of formation and the limited liability company agreement of Merger Sub II, as in effect immediately prior to the second effective time, will be the certificate of formation and the limited liability company agreement of the surviving company, until thereafter changed or amended, except that the name of the surviving company will be “Figma, LLC.”
Unless otherwise determined by Adobe prior to the effective time, the officers and directors of Merger Sub I immediately prior to the effective time will be the initial officers and directors of the surviving corporation, until
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their successors are duly elected or appointed and qualified, and the officers and managing member of Merger Sub II immediately prior to the second effective time will be the initial officers and managing member of the surviving company, until their respective successors are duly elected or appointed and qualified.
Closing; Effective Time
The closing will take place at Adobe’s offices or remotely by exchange of documents and signatures, at 10:00 a.m., Pacific time, on the third business day after the satisfaction or, to the extent permitted, waiver of the conditions to closing (other than any such conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or, to the extent permitted, waiver of such conditions at the closing), unless another date or place is agreed to in writing by Figma and Adobe. If the closing would otherwise occur on a date that is less than 10 days prior to the last day of any Adobe fiscal quarter, at Adobe’s written election provided to Figma no later than two business days prior to the date on which the closing would have otherwise occurred, the closing will instead take place at 10:00 a.m., Pacific time, on the first business day after the last day of such fiscal quarter, subject to the satisfaction or, to the extent permitted, waiver of the conditions to closing (other than any such conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or, to the extent permitted, waiver of such conditions at the closing), unless another date or place is agreed to in writing by Figma and Adobe.
On the closing date, the parties will cause a certificate of merger with respect to the first merger and a certificate of merger with respect to the second merger to be duly executed and filed with the Secretary of State of the State of Delaware as provided under the DGCL and the DLLCA and make any other filings, recordings or publications required to be made under the DGCL and the DLLCA in connection with the mergers. The first merger will become effective at such time as the first certificate of merger is duly filed with the Secretary of State of the State of Delaware or at such other later time as may be agreed to by Figma and Adobe and specified in the first certificate of merger. The second merger will become effective at such time as the second certificate of merger is duly filed with the Secretary of State of the State of Delaware or at such other later time as may be agreed to by Figma and Adobe and specified in the second certificate of merger.
Consideration; Effect of the Transaction on Figma Capital Stock
Subject to the applicable provisions of the merger agreement, at the effective time, by virtue of the first merger and without any action on the part of the parties or holders of any securities of Figma or any other person, each share of Figma capital stock issued and outstanding immediately prior to the effective time (other than treasury shares and dissenting shares (as defined under “—Dissenting Shares”)) will be converted into the right to receive, without interest: (i) the per share closing stock consideration, plus (ii) the per share closing cash consideration, plus (iii) if any, the per share escrow release amount, plus (iv) if any, the per share escrow resolved amount, plus (v) if any, the per share specified escrow release amount, plus (vi) if any, the per share representative fund release amount, subject to certain customary adjustments after closing (as described in the section entitled “—Cash Consideration Adjustments”). The amount of cash and shares of Adobe common stock that each Figma stockholder is entitled to receive for such shares of Figma capital stock will be computed after aggregating the amount of cash and shares of Adobe common stock each Figma stockholder is entitled to receive for all shares of Figma capital stock that were held by such Figma stockholder immediately prior to the effective time. The amounts set forth in the foregoing clauses (iii)-(vi), if any, will be payable, if at all, at the applicable times and subject to the requirements specified in the merger agreement and the escrow agreement (if applicable) after the closing.
Also at the effective time, (a) each share of Figma common stock held in treasury by Figma will be canceled without payment of any consideration therefor, and (b) each share of capital stock of Merger Sub I issued and outstanding immediately prior to the effective time will be converted into and become one share of common stock of the surviving corporation (“surviving corporation stock”).
At the second effective time, by virtue of the second merger and without any action on the part of the holder thereof, (a) each limited liability company interest of Merger Sub II issued and outstanding immediately prior to the second effective time will remain outstanding as a limited liability company interest of the surviving company and (b) each share of surviving corporation stock issued and outstanding immediately prior to the second effective time will be canceled without payment of any consideration therefor.
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Treatment of the Figma Warrant
The Figma warrant will be canceled at the effective time unless exercised prior to such time. Subject to the applicable provisions of the merger agreement, if the holder of the Figma warrant executes a warrant termination agreement in the form attached to the merger agreement no later than three days prior to the effective time, then, upon the effective time, the holder of the Figma warrant will be entitled to receive, for each share of Figma capital stock subject to the Figma warrant, (i) the per share closing stock consideration, plus (ii) the excess of the per share closing cash consideration over the applicable per share exercise price of the Figma warrant, plus (iii) if any, the per share escrow release amount, plus (iv) if any, the per share escrow resolved amount, plus (v) if any, the per share specified escrow release amount, plus (vi) if any, the per share representative fund release amount, subject to certain customary adjustments after closing as described in the section entitled “—Cash Consideration Adjustments.” The amount of cash and shares of Adobe common stock the holder of the Figma warrant is entitled to receive for such shares of Figma capital stock subject to the Figma warrant will be computed after aggregating the amount of cash and shares of Adobe common stock the holder of the Figma warrant is entitled to receive for all shares of Figma capital stock subject to the Figma warrant immediately prior to the effective time. The amounts set forth in the foregoing clauses (iii)-(vi), if any, will be payable, if at all, at the applicable times and subject to the requirements specified in the merger agreement and the escrow agreement after the closing.
Treatment of Figma Equity Awards
Treatment of Vested Figma Equity Awards
At the effective time, without interest and less applicable withholding taxes:
each vested Figma option will be canceled in exchange for the right to receive, for each share of Figma common stock subject to such option, (i) a cash payment equal to the per share equity award cash consideration, less the applicable per share exercise price and (ii) the per share closing stock consideration;
each vested Figma RSU award will be canceled in exchange for the right to receive, for each share of Figma common stock subject to such award, (i) a cash payment equal to the per share equity award cash consideration and (ii) the per share closing stock consideration; and
each vested Figma PSU award will be canceled in exchange for the right to receive, for each share of Figma common stock subject to such award, (i) a cash payment equal to the per share equity award cash consideration and (ii) the per share closing stock consideration.
Treatment of Unvested Figma Equity Awards
At the effective time:
each unvested Figma option will be canceled and converted into an Adobe RSU award that will settle into a number of shares of Adobe common stock equal to the product (rounded down to the nearest whole number of shares) of (i) the number of shares of Figma common stock subject to such option (reduced by the number of full and partial shares of Figma capital stock with a value equal to the aggregate exercise price of such option) and (ii) the per share equity award exchange ratio, with a vesting schedule that is no less favorable than the vesting schedule that applied to such option immediately prior to the effective time;
each unvested Figma RSU award will be canceled and converted into an Adobe RSU award that will settle into a number of shares of Adobe common stock equal to the product (rounded down to the nearest whole number of shares) of (i) the number of shares of Figma common stock subject to such award and (ii) the per share equity award exchange ratio, with a vesting schedule that is no less favorable than the vesting schedule that applied to such Figma RSU award immediately prior to the effective time;
the shares of Figma restricted stock held by each holder will be canceled and converted into a restricted stock award (or, if certain conditions with respect to Section 83(b) election are not met, a restricted stock unit award) relating to a number of shares of Adobe common stock equal to the product
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(rounded down to the nearest whole number of shares) of (i) the number of shares of Figma restricted stock held by such holder and (ii) the per share equity award exchange ratio, with a vesting schedule that is no less favorable than the vesting schedule that applied to such shares of Figma restricted stock immediately prior to the effective time; and
each unvested Figma PSU award will be canceled without consideration.
Cash Consideration Adjustments
Closing Adjustment to Cash Consideration
No later than five business days prior to the anticipated closing date, Figma must deliver to Adobe a statement (the “estimated closing statement”) prepared in accordance with the definitions and accounting principles set forth in the merger agreement and including a good faith estimate of:
the estimated aggregate amount of cash held by Figma and its subsidiaries, calculated in accordance with the merger agreement, as of immediately prior to the closing (the “estimated closing cash”);
the estimated aggregate amount of indebtedness of Figma and its subsidiaries, calculated in accordance with the merger agreement, as of immediately prior to the closing (the “estimated closing indebtedness”);
the estimated aggregate amount of transaction expenses incurred by Figma and its subsidiaries in connection with the transaction that remain unpaid as of immediately prior to the closing, calculated in accordance with the merger agreement (the “estimated company expenses”); and
the amount equal to the estimated closing cash, minus the estimated closing indebtedness, minus the estimated company expenses (the “estimated consideration adjustment”).
Until the business day prior to the closing date, Adobe may provide Figma with comments to the estimated closing statement and Figma must consider such comments in good faith and revise the estimated closing statement by no later than the business day prior to the closing date if, based on its good faith assessment of Adobe’s comments, Figma determines such changes are warranted, which revised statement will be deemed the estimated closing statement for all purposes of the merger agreement.
As used in this consent solicitation statement/prospectus:
the term “cash” means (i) the aggregate amount of all cash and cash equivalents (including liquid marketable securities that can be converted to cash) of Figma and its wholly owned subsidiaries as of immediately prior to the closing, as determined in accordance with the merger agreement and without giving effect to the mergers; provided that cash will (a) be calculated net of (x) restricted balances (such as security deposits, customer deposits, bond guarantees, collateral reserve accounts and amounts held in escrow) and (y) outstanding outbound checks, draws, ACH debits and wire transfers and (b) include inbound checks, draws, ACH credits and wire transfers that have been deposited or initiated by a third-party payor and in transit; provided that in each case that such amounts are promptly received by Figma (including such amounts paid to Figma’s and its wholly owned subsidiaries’ Stripe account by third parties that have been received by Stripe but have not yet been remitted to Figma or its wholly owned subsidiaries by Stripe, net of any chargebacks or related reserves and provided that such amounts are received by Figma within five business days) minus (ii) the aggregate preliminary consideration adjustment;
the term “indebtedness” means, collectively, with respect to Figma and its subsidiaries, without duplication, the sum of all amounts owing by Figma or its subsidiaries to repay in full amounts due and terminate all obligations with respect to (i) all indebtedness for borrowed money or funded indebtedness or obligations issued in substitution or exchange for borrowed money or funded indebtedness of Figma or its subsidiaries, and all obligations evidenced by bonds, debentures, notes or other similar instruments, (ii) all obligations under acceptance credit, letters of credit or similar facilities, in each case solely to the extent drawn, (iii) all obligations under capital or direct financing leases determined in accordance with GAAP and purchase money and/or vendor financing, (iv) any obligations with respect to an interest rate hedging agreements, swap agreements, forward rate agreements, interest rate cap or collar agreements or other derivative agreement, (v) any obligations of the type referred to in clauses (i) through (iv) above or (vi) through (vii) below secured by a lien (other
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than certain permitted liens) on property or assets owned by Figma or its subsidiaries, (vi) any deferred rent obligations, (vii) all guarantee, endorsement, assumption, contingent or keep well obligations in respect of obligations of the kind referred to in clauses (i) through (vi) above, including, in each case of clauses (i) through (vii) above, principal and accrued and unpaid interest on any of the foregoing and any breakage costs, penalties, additional interest, premiums, fees and other costs and expenses associated with prepayment or redemption of any of the foregoing to the extent such costs, penalties, additional interest, premiums, fees or other costs and expenses would actually be payable in connection with the termination or repayment of the related obligations at the time at which such indebtedness is measured, (viii) all current liabilities for certain specified taxes, (ix) any liabilities of Figma or its subsidiaries in respect of bonuses that are (I) actually payable upon or before the closing and (II) accrued or required to be accrued in accordance with GAAP (which, for clarity, will not include any liabilities in respect of commissions), (x) unfunded or underfunded defined benefit pension liabilities or retiree health or welfare benefits, (xi) vested liabilities under deferred compensation plans or arrangements, (xii) any declared but unpaid dividends and any deferred purchase price related to property, services, asset purchases and/or acquisitions (including any earn-out or contingent payment obligations, but for the avoidance of doubt excluding deferred revenue), (xiii) any unpaid contractual severance payments and associated amounts that are actually due by Figma prior to the closing and (xiv) the employer portion of any payroll, employment or similar taxes related to clauses (ix) through (xi) or clause (xiii); provided that indebtedness will not include (I) any liabilities included in the calculation of transaction expenses (as defined below) in accordance with the applicable provisions of the merger agreement, (II) any double trigger award payments (as defined below) or (III) certain specified liabilities of Figma; and
the term “transaction expenses” means, to the extent not paid by Figma or any of its subsidiaries prior to the closing and regardless of whether or not accrued or due and whether or not billed or invoiced prior to the closing, (a) all costs, fees and expenses with respect to outside legal counsel, accountants, advisors, brokers, consultants, investment bankers, financial advisors and other third parties which are incurred by Figma or any of its subsidiaries in connection with the negotiation and execution of the merger agreement and the consummation of the transaction, (b) any premium in respect of the directors’ and officers’ insurance obtained pursuant to the applicable provisions of the merger agreement, (c) the portion of the R&W insurance policy costs being borne by Figma in accordance with the merger agreement, (d) any “single trigger” cash bonus, sale, retention, transaction or similar payments or compensation of Figma or any of its subsidiaries that are payable, accelerated, vested or accrued as a result of the mergers and the transaction that does not constitute a double trigger award payment (as defined below) (each, a “single trigger award payment”); provided that no Figma RSU award or Figma PSU award that, by its terms, vests (in whole or in part) upon the closing accordance with the applicable provisions of the merger agreement will be deemed a single trigger award payment and (e) the employer-paid portion of any related employment and payroll taxes in respect of (i) the single trigger award payments and (ii) in respect of payment of consideration to holders of certain vested Figma equity awards in accordance with the applicable provisions of the merger agreement; provided that transaction expenses will not include (x) any amounts reflected as liabilities in closing indebtedness in accordance with the applicable provisions of the merger agreement, (y) any “double trigger” bonus, sale, retention, transaction or similar payments or compensation that are payable, accelerated, vested or accrued as a result of the mergers and the transaction in combination with any actions taken by Adobe or its subsidiaries after the closing (each, a “double trigger award payment”) or (z) certain specified liabilities of Figma.
Post-Closing Adjustment to Cash Consideration
As soon as practicable and no later than 90 calendar days after the closing date, Adobe must prepare and deliver to the representative a statement substantially in the form of the estimated closing statement prepared in accordance with the definitions and accounting principles in the merger agreement and including a good faith estimate of a proposed calculation of:
the aggregate amount of cash held by Figma and its subsidiaries, calculated in accordance with the merger agreement, as of immediately prior to the closing (the “closing cash”);
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the aggregate amount of indebtedness of Figma and its subsidiaries, calculated in accordance with the merger agreement, as of immediately prior to the closing (the “closing indebtedness”);
the aggregate amount of transaction expenses incurred by Figma and its subsidiaries in connection with the transaction that remain unpaid as of immediately prior to the closing, calculated in accordance with the merger agreement (the “company expenses”); and
the amount equal to the closing cash, minus the closing indebtedness, minus the company expenses (the “consideration adjustment” and, collectively with the closing cash, the closing indebtedness and the company expenses, the “closing date calculations”).
If the representative disagrees with the closing date calculations, Adobe and the representative will determine the final calculations through a customary dispute resolution process. The actual adjustment to the aggregate cash consideration will be calculated by subtracting the estimated consideration adjustment from the final agreed consideration adjustment (the “actual adjustment”).
If the actual adjustment is a positive amount, Adobe will pay to the exchange agent (for further credit to the Figma stockholders in accordance with their allocation percentages) the lesser of (x) the full amount of the actual adjustment and (y) the escrow amount (as defined in the section entitled “—Escrow Funds”) within five business days after the date on which the consideration adjustment is finally determined pursuant to the applicable provisions of the merger agreement. If the actual adjustment exceeds the escrow amount, none of the representative, the Figma stockholders nor any other person will have any right or claim to, or any recourse against Adobe, the surviving corporation, the surviving company or any of their respective affiliates for, such excess amount, and the Figma stockholders’ sole and exclusive rights and remedies in respect of the actual adjustment will be receipt of their portion of the amounts set forth in the preceding sentence.
If the actual adjustment is a negative amount, then within five business days after the date on which the consideration adjustment is finally determined pursuant to the applicable provisions of the merger agreement, Adobe and the representative will deliver joint written instructions to the escrow agent to release to Adobe from the escrow account the lesser of (a) the absolute value of the full amount of the actual adjustment and (b) the escrow amount. Other than in respect of fraud, recovery from the escrow account will be the sole and exclusive remedy available to Adobe arising out of or relating to any negative actual adjustment, and neither Adobe, the surviving corporation, the surviving company nor any of their respective affiliates will have any claim against the Figma stockholders or equity award holders in respect thereof.
Equitable Adjustments to Prevent Dilution
If, at any time prior to closing, there is a change in the number of shares of Figma capital stock or shares of Adobe common stock, or securities convertible or exchangeable into shares of Figma capital stock or shares of Adobe common stock, in each case, as a result of a reclassification, stock split (including a reverse stock split), stock dividend or stock distribution (or cash dividend or distribution resulting in such a change, including with respect to the Figma equity awards), recapitalization, merger, subdivision or other similar transaction, the per share closing cash consideration, per share closing stock consideration, per share equity award cash consideration and per share equity award exchange ratio will be equitably adjusted to provide Figma stockholders and equity award holders with the same economic effect as contemplated by the merger agreement prior to such event (provided that there will not be more than one such adjustment for any single action).
Escrow Funds
At the effective time, Adobe will deposit, or cause to be deposited, an amount in cash equal to $65 million with the escrow agent, of which $40 million (the “escrow amount”) will be held in an escrow account (the “escrow account”) to secure any post-closing adjustment to the purchase price and certain indemnification obligations of the Figma stockholders, in each case, pursuant to the merger agreement and the escrow agreement, and $25 million (the “specified escrow amount” and, together with the escrow amount, the “escrow funds”) will be held in a specified escrow account (the “specified escrow account”) to secure certain specified tax-related obligations pursuant to the merger agreement and the escrow agreement.
No later than 5:00 p.m. Pacific time on the fifth business day following the one-year anniversary of the closing date (the “release date”), Adobe and the representative will instruct the escrow agent to pay the amount equal to (i) the balance remaining in the escrow account as of the release date, minus (ii) the sum of all claimed
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losses under then-pending indemnification claims subject to claim notices or demands for indemnification pursuant to the merger agreement (the “outstanding claims”) as of the release date (such amount, the “release amount”). The escrow agent will disburse the release amount to the exchange agent for further distribution to the Figma stockholders in accordance with their allocation percentages as set forth in the merger agreement and the escrow agreement. When any such outstanding claim is resolved, Adobe and the representative will instruct the escrow agent to pay, from the escrow account, any amount owed to the Adobe indemnitees (as defined below) in respect of such outstanding claim, and the applicable resolved amount with respect to such outstanding claim to the exchange agent for further distribution to the Figma stockholders in accordance with their allocation percentages as set forth in the merger agreement and the escrow agreement. As used in this consent solicitation statement/prospectus, resolved amount means, with respect to any outstanding claim that is resolved, an amount equal to the lesser of (i) difference of (x) the amount claimed by the Adobe indemnitees with respect to such outstanding claim, minus (y) all amounts released from the escrow account to the Adobe indemnitees with respect to such outstanding claim and (ii) the greater of (x) as of immediately following the time at which all amounts released from the escrow account to the Adobe indemnitees with respect to such outstanding claim have been released, the difference of (1) the balance of funds remaining in the escrow account, minus (2) the sum of all amounts claimed by the Adobe indemnitees with respect to all other outstanding claims and (y) zero dollars ($0).
No later than 5:00 p.m. Pacific time on the fifth business day following the three-year anniversary of the closing date (the “specified release date”), Adobe and the representative will instruct the escrow agent to pay the amount equal to (i) the balance remaining in the specified escrow account as of the specified release date, minus (ii) the sum of (x) certain specified taxes paid by Adobe or any of its subsidiaries (including Figma and its subsidiaries) after closing and not previously indemnified or taken into account as a liability in determining closing indebtedness, in each case, pursuant to the applicable provisions of the merger agreement and (y) certain specified taxes that are the subject of a pending tax proceeding as of such date and not taken into account as a liability in determining closing indebtedness pursuant to the applicable provisions of the merger agreement (the “specified matters release amount”). The escrow agent will disburse the specified matters release amount to the exchange agent for further distribution to the Figma stockholders in accordance with their allocation percentages as set forth in the merger agreement and the escrow agreement. The balance of the funds in the specified escrow account will be released to Adobe and to the exchange agent (for further distribution to the Figma stockholders in accordance with their allocation percentages as set forth in the merger agreement and the escrow agreement), as applicable, upon the resolution of all tax proceedings relating such specified taxes according to the procedures set forth in the merger agreement and the escrow agreement.
The right of Figma stockholders to receive their applicable portion of the escrow funds is conditioned on such Figma stockholders having completed the requirements applicable to payments from the closing consideration fund as contemplated by the applicable provisions of the merger agreement, including having delivered a properly completed and executed letter of transmittal.
Exchange Procedures
Exchange Procedures for Figma Stockholders
Prior to the effective time, Adobe will appoint Broadridge Corporate Issuer Solutions, Inc. or another paying agent reasonably acceptable to Figma to act as the paying agent in connection with the first merger (the “exchange agent”). At the effective time, Adobe will deposit with the exchange agent for the sole benefit of the Figma stockholders (other than any dissenting stockholders) and certain holders of Figma equity awards, as applicable, the closing consideration fund (excluding an amount equal to the aggregate amount of the per share equity award cash consideration that is payable in respect of all vested company equity awards held by former employee equity award holders, which amount Adobe will pay directly to the surviving company on the closing date). At least 10 business days prior to the closing date, the exchange agent will deliver a letter of transmittal in substantially the form attached to this consent solicitation statement/prospectus as Annex B (the “letter of transmittal”) to each Figma stockholder. Each Figma stockholder’s entitlement to receive any portion of the consideration or any other payments pursuant to the merger agreement is conditioned upon the execution and delivery of a properly completed letter of transmittal (including acceptance of and agreement to the terms and conditions contained therein, including the indemnification and release obligations).
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The exchange procedures applicable to a Figma stockholder who is the record holder of shares of Figma capital stock as of the closing date and who delivers a properly completed and executed letter of transmittal are as follows:
If the letter of transmittal is delivered at least three business days prior to the closing date, then such Figma stockholder will be delivered, on the closing date, in exchange for such Figma stockholder’s shares of Figma capital stock, whole shares of Adobe common stock and cash equal to that portion of the closing consideration fund attributable to such Figma stockholder’s shares of Figma capital stock set forth on such Figma stockholder’s letter of transmittal, in each case, which such Figma stockholder is entitled to receive pursuant to the applicable provisions of the merger agreement (subject to any applicable withholding) (the “Figma stockholder consideration”).
If the letter of transmittal is delivered at any time after three business days prior to the closing date, then such Figma stockholder will be delivered, as soon as reasonably practicable following the closing date, in exchange for such Figma stockholder’s shares of Figma capital stock, the Figma stockholder consideration.
If payment or delivery is to be made to a person other than the person in whose name the shares of Figma capital stock are registered in Figma’s books and records, then it is a condition of payment or delivery, as applicable, that along with the letter of transmittal, the person requesting such payment must pay any transfer or other taxes required by reason of the payment to a person other than the registered holder of shares of Figma capital stock or establish to the reasonable satisfaction of Adobe that such tax has been paid or is not applicable.
Until the delivery of a properly completed and executed letter of transmittal, each share of Figma capital stock (other than shares held in Figma’s treasury and dissenting shares) will at any time after the effective time represent only the right to receive, upon such delivery, the consideration which such Figma stockholder has the right to receive pursuant to the applicable provisions of the merger agreement. No interest will be paid or will accrue on any consideration payable pursuant to the merger agreement.
After the effective time, there will be no transfers on the stock transfer books of the surviving corporation or the surviving company of the Figma capital stock or the Figma equity awards that were outstanding immediately prior to the effective time. Adobe may cause the exchange agent to deliver to Adobe the portion of the closing consideration fund that remains undistributed on the 12-month anniversary of the deposit of such amount with the exchange agent. If a properly completed and executed letter of transmittal is not delivered to the exchange agent prior to the date that the closing consideration fund would otherwise become subject to any abandoned property, escheat or similar law, unclaimed amounts thereof, to the extent permitted by law, will become the property of Adobe and may be commingled with the general funds of Adobe, free and clear of all claims or interest to the extent permitted by law. Any Figma stockholders who have not theretofore complied with the applicable provisions of the merger agreement may thereafter look only to Adobe and its affiliates, and only as general creditors thereof, for payment for their claims in the form and amounts to which such Figma stockholders are entitled.
All shares of Adobe common stock to be issued in connection with the first merger will be deemed issued and outstanding as of the effective time and whenever a dividend or other distribution is declared by Adobe in respect of Adobe common stock, the record date for which is after the effective time, that declaration will include dividends or other distributions in respect of all shares of Adobe common stock issuable pursuant to the merger agreement. No dividends or other distributions in respect of Adobe common stock will be paid to any Figma stockholder until such Figma stockholder has delivered a properly completed and executed letter of transmittal. Subject to applicable laws, following such surrender, there will be issued or paid to the holder of record of the whole shares of Adobe common stock issued in exchange for a Figma stockholder’s shares of Figma capital stock in accordance with the applicable provisions of the merger agreement, without interest, (i) at the time of such surrender, the dividends or other distributions with a record date after the effective time theretofore payable with respect to such whole shares of Adobe common stock and not paid and (ii) at the appropriate payment date, the dividends or other distributions payable with respect to such whole shares of Adobe common stock with a record date after the effective time but with a payment date subsequent to surrender.
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Exchange Procedures for Vested Company Equity Award Holders
On the closing date, Adobe will pay (or cause to be paid) to the surviving company out of the closing consideration fund, an amount equal to the aggregate amount of the per share equity award cash consideration that is payable in respect of all vested company equity awards held by former employee equity award holders. Adobe will cause the surviving company to pay to each former employee equity award holder an amount equal to the aggregate amount of the per share equity award cash consideration that is payable in respect of all vested company equity awards held by such former employee equity award holder no later than 30 days following the effective time, less applicable taxes required to be withheld with respect to such payments. Adobe will, and the surviving company will cooperate with Adobe to, cause to be delivered to each former employee equity award holder a number of shares of Adobe common stock equal to the aggregate amount of the per share closing stock consideration that is payable in respect of all vested company equity awards held by such former employee equity award holder no later than 30 days following the effective time.
The exchange agent will pay to the former non-employee equity award holders out of the closing consideration fund the aggregate amount of the per share equity award cash consideration and per share closing stock consideration that is payable in respect of all vested company equity awards held by former non-employee equity award holders, which will be paid in accordance with the terms of the exchange agent agreement entered into by and between Adobe and the exchange agent (and following receipt of any customary documentation and information required by the exchange agent).
No Fractional Shares
Adobe will not issue fractional shares of Adobe common stock in the transaction, and no Adobe RSU award will be issued that settles into a fractional share of Adobe common stock. Each person who would otherwise have been entitled to receive a fraction of a share of Adobe common stock (after taking into account all shares of Adobe common stock to be issued to such person pursuant to the first merger) or an Adobe RSU award that would settle into a fractional share of Adobe common stock will in lieu thereof receive in cash (rounded to the nearest whole cent), without interest, an amount equal to such fractional amount multiplied by the Adobe closing share price.
As used in this consent solicitation statement/prospectus, the term “Adobe closing share price” means the simple average closing sale price of one (1) share of Adobe common stock on Nasdaq (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source mutually selected by the parties) for the 30 consecutive trading days ending on (and including) the second to last trading day immediately preceding the closing date (as adjusted as appropriate to reflect any stock splits, stock dividends, combinations, reorganizations, reclassifications or similar events).
Withholding Rights
Each of Adobe, Figma, the surviving corporation, the surviving company, the exchange agent and the escrow agent will be entitled to deduct and withhold from any amounts paid or payable pursuant to the merger agreement such amount as such party is required to deduct and withhold with respect to such payment under the Code or any provision of law. With respect to any payment of a noncompensatory amount, Adobe, Figma, the surviving corporation, the surviving company, the exchange agent and the escrow agent, as applicable, will use reasonable efforts to provide advance notice of any such deduction or withholding and to provide the payee an opportunity to eliminate or reduce any such deduction or withholding. To the extent that amounts are so deducted and withheld and paid over to the appropriate governmental authority, such deducted and withheld amounts will be treated for all purposes of the merger agreement as having been paid to the person in respect of which such deduction and withholding was made.
Dissenting Shares
Each share of Figma capital stock issued and outstanding immediately prior to the effective time held by stockholders or owned by beneficial owners who have properly exercised (and have not effectively withdrawn or forfeited) their appraisal rights with respect thereto under Section 262 of the DGCL or otherwise (“dissenting shares”) will not be converted into the right to receive the applicable form of consideration pursuant to the first merger, and such stockholder or beneficial owner will be entitled to receive payment of the fair value of such shares in accordance with the provisions of Section 262 of the DGCL and applicable law. Each dissenting
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share held by a stockholder or owned by a beneficial owner who thereafter withdraws his or her demand for appraisal or who fails to perfect or otherwise waives or loses his or her right to such payment as provided in such Section 262 or applicable law will be deemed to be converted, as of the effective time, into the right to receive the applicable consideration in the form such holder or beneficial owner otherwise would have been entitled to receive as a result of the first merger. Figma will enforce any contractual waivers that its stockholders have granted regarding appraisal rights that would apply to the mergers. For information about the procedure for exercising appraisal or dissenters’ rights, see the section entitled “Appraisal and Dissenters’ Rights.”
Representations and Warranties
The merger agreement contains representations and warranties by Figma, Adobe, Merger Sub I and Merger Sub II that are subject to certain exceptions and qualifications (including exceptions and qualifications related to knowledge, materiality and material adverse effect).
The merger agreement contains representations and warranties by Figma relating to, among other things, the following:
due organization, valid existence, good standing and qualification to do business;
subsidiaries;
corporate power and authority;
governmental and other third-party consents and absence of certain conflicts;
capitalization;
financial statements;
internal controls and procedures;
absence of undisclosed liabilities;
absence of certain developments;
properties and assets;
compliance with laws and permits;
absence of certain legal proceedings and governmental orders;
tax matters;
environmental matters;
employees and employee benefit plans and labor matters;
intellectual property, technology, data privacy and data security matters;
material contracts;
customers and suppliers;
insurance coverage;
indebtedness;
related-party transactions;
inapplicability of anti-takeover laws;
absence of undisclosed finders’ or brokers’ fees; and
accuracy of information supplied for inclusion in disclosure documents to be filed with the SEC in connection with the transaction.
The merger agreement includes a more limited set of representations and warranties by Adobe, Merger Sub I and Merger Sub II relating to, among other things, the following:
due organization, valid existence, good standing and qualification to do business;
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no Merger Sub I or Merger Sub II activity;
subsidiaries;
corporate or limited liability company power and authority;
valid issuance of Adobe common stock in connection with the transaction;
governmental and other third-party consents and absence of certain conflicts;
capitalization;
SEC reporting and financial statements;
absence of certain impediments in connection with the tax treatment of the mergers;
absence of undisclosed liabilities;
absence of certain legal proceedings;
absence of certain developments;
compliance with laws;
absence of undisclosed finders’ or brokers’ fees;
availability of funds at the closing; and
conditional binding of a representations and warranty insurance policy.
Many of the representations and warranties in the merger agreement are qualified by a “materiality” or “material adverse effect” standard (that is, they will not be deemed to be untrue or incorrect unless their failure to be true or correct would be material to, or have a material adverse effect on, the applicable party).
For purposes of the merger agreement, a “material adverse effect” means, with respect to Figma or Adobe, any change, effect, event, occurrence, state of facts or development that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the business, financial condition, assets, liabilities or results of operations of such party and its subsidiaries, taken as a whole. However, none of the following will be deemed, either alone or in combination, to constitute, and none of the following will be taken into account in determining whether there has been, or would reasonably be expected to be, a material adverse effect:
in the case of Adobe, any change, in and of itself, in the trading price or volume of Adobe’s securities or, in the case of either party, any failure, in and of itself, by either party to meet any internal or published projections, forecasts, or revenue or earnings predictions, including, in the case of Adobe, those made available to Figma prior to the date of the merger agreement (but not the underlying reasons for such change in trading price or failure to meet projections, forecasts or revenue or earnings predictions to the extent they are not otherwise excluded from the definition of material adverse effect);
the execution and delivery of the merger agreement, the public announcement of the merger agreement or the pendency of the transaction including any loss or threatened loss of, or disruption or threatened disruption in, the relationship of each of the parties or any of their subsidiaries with respect to their respective customers, employees, financing sources, suppliers, strategic partners or similar relationships resulting therefrom (except with respect to any representation or warranty that is intended to address the consequences of the execution and delivery of the merger agreement, the public announcement of the merger agreement or the pendency of the transaction);
any adverse change, effect, event, occurrence, state of facts or development after the date of the merger agreement attributable to conditions generally affecting (i) the industry in which either party and its subsidiaries operate or propose to operate in during the pre-closing period, (ii) national or international economies or (iii) national or international financial, credit, banking or securities markets or other capital markets conditions;
any adverse change, effect, event, occurrence, state of facts or development in GAAP or other accounting requirements or principles or any change in any laws (including any law or any scheme,
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program, arrangement or measures introduced or enacted by any governmental authority in response to or in connection with the COVID-19 pandemic, including any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester, safety or similar measures, and any tax laws introduced, or recommendations promulgated by any governmental authority, including the World Health Organization, as a result of the COVID-19 pandemic (“COVID-19 law”), or the authoritative interpretation or enforcement thereof and including any action required to be taken by either party or its subsidiaries to comply with any such changes, in each case, after the date of the merger agreement;
any “Act of God,” weather occurrence, earthquake or other natural disasters or acts of nature, national or international political or social conditions, pandemics (including the COVID-19 pandemic), hostilities, acts of war, sabotage or terrorism or military actions upon the United States or any other country, or any of their respective territories, possessions, or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States or any other country or group or any escalation or material worsening of any such hostilities, acts of war, sabotage or terrorism or military actions which are existing or underway as of the date of the merger agreement; or
any action by either party or its subsidiaries which is required by the express terms of the merger agreement (other than, in the case of Figma, any such obligation to operate in the ordinary course of business),
except, (i) in the case of the third, fourth and fifth bullet points above, to the extent any such effect has had a disproportionate impact on such party or any of its subsidiaries relative to other persons operating in the industry in which such party and its subsidiaries operate, and (ii) in the case of the fifth bullet point above, such comparison will only be made relative to other similarly situated persons operating in similarly impacted geographic areas in which such party and its subsidiaries principally operate.
Survival; Indemnification
Subject to certain limitations set forth in the merger agreement, the Figma stockholders will indemnify, defend and hold harmless (on a several and not joint basis based on their allocation percentages) Adobe, the surviving corporation, the surviving company and their affiliates, and each of their respective officers, directors, employees, agents and other representative (each, an “Adobe indemnitee”) from and after the closing for (i) inaccuracies or breaches of Figma’s representations and warranties, as of the date of the merger agreement or as of the closing date as though made as of the closing date (or, to the extent any representations and warranties are made as of a specific date, as of such specific date); (ii) breaches or nonfulfillment of any pre-closing covenants, agreements or obligations of Figma in the merger agreement; (iii) any claims initiated by purported former holders of equity securities of Figma to the extent arising from such purported former holders’ alleged prior ownership interest in Figma (the “purported holder claims”); (iv) certain capitalization-related matters (the “capitalization matters”), including (1) amounts payable in respect of dissenting shares in excess of the amount that would have been payable in respect of such dissenting shares under the merger agreement if they had not been dissenting shares, (2) claims made, or actions initiated, in each case by or on behalf of any former holder of equity securities of Figma with respect to pre-closing matters and (3) inaccuracies or deficiencies in the consideration spreadsheet provided by Figma in connection with the closing and setting forth, among other things, each Figma stockholder’s allocation percentage and applicable portion of the closing consideration fund; and (v) certain taxes, including pre-closing taxes of Figma.
To the extent available and subject to exclusions, coverage limitations and the applicable retention or deductible amount under the representation and warranty insurance policy obtained by Adobe (the “R&W insurance policy”), the Adobe indemnitees must use commercially reasonable efforts to seek recourse for any losses with respect to taxes or breaches of representations and warranties from and against the R&W insurance policy before seeking recourse against the Figma stockholders. Except for claims resulting from inaccuracies in Figma’s fundamental representations or in respect of fraud committed by Figma with respect to the representations and warranties of the Company in the merger agreement, the Adobe indemnitees (1) are entitled to indemnification for breaches of representations and warranties solely and exclusively by disbursements from and out of the escrow account and (2) may not recover any losses for breaches of representations and warranties until the aggregate amount of all such indemnifiable losses exceeds $40,000,000, at which point, subject to other limitations in the merger agreement, the Adobe indemnitees may only recover losses in excess of such
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deductible. Except for claims in respect of fraud committed by a Figma stockholder and subject to certain other exceptions (1) the Adobe indemnitees must first make claims for indemnification under the merger agreement against the escrow account or the specified escrow account, as applicable, until all funds are exhausted, and only then may the Adobe indemnitees obtain recovery from the Figma stockholders, and (2) the Figma stockholders’ indemnification obligations are generally capped at the aggregate value (calculated using the Adobe closing share price) of the aggregate consideration that a Figma stockholder is entitled to receive in connection with the mergers; provided that such obligations for claims in respect of breaches of pre-closing covenants, certain taxes and purported holder claims are capped at 5% of such aggregate value.
The amount of any and all losses will be determined net of payments actually received by the Adobe indemnitees under any insurance policy (other than the R&W insurance policy) and any other recovery actually received by the Adobe indemnitees, in each case, with respect to such losses. For purposes of determining whether there has been a breach or inaccuracy of a representation or warranty and the amount of resulting losses, representations and warranties that are qualified by references to “materiality” and “material adverse effect” are generally deemed to have been made without such qualifications.
Figma’s representations and warranties and pre-closing covenants under the merger agreement and any certificates delivered in connection therewith survive until the one-year anniversary of the closing date, except that (i) certain fundamental representations and warranties (including representations related to corporate organization and qualification, corporate authorization, absence of certain conflicts, capitalization and brokers’ and finders’ fees) survive until the earlier of the expiration of the applicable statute of limitations and the five-year anniversary of the closing date, (ii) tax representations survive until the date that is 30 days following the expiration of the full period of all statutes of limitations (giving effect to any extensions thereof) and (iii) claims in respect of purported holder claims and capitalization matters survive until the three-year anniversary of the closing date. All covenants and agreements that are to be performed at or after the closing will survive the closing and remain in full force and effect for the period provided in such covenants and agreements, if any, or until fully performed.
Adobe’s fundamental representations and warranties (including representations related to corporate organization, corporate authorization, capitalization and brokers’ and finders’ fees, but excluding Adobe’s representations related to the absence of a material adverse effect on Adobe’s business since December 31, 2021) (the “specified representations”) under the merger agreement and any certificates delivered in connection therewith survive until the one-year anniversary of the closing date. All other representations and warranties and all pre-closing covenants and agreements of Adobe, Merger Sub I and Merger Sub II will not survive the closing. Except in the case of fraud by Adobe, Adobe’s liability for breaches of the specified representations is capped at $500,000,000.
The indemnification provisions of the merger agreement are the sole and exclusive remedy of the Adobe indemnitees for money damages from claims arising out of or relating to the merger agreement, the mergers and certain related ancillary documents following the closing, except for (i) claims by Adobe against a party to any letter of transmittal, the key stockholder voting agreement or the written consent of the Figma stockholders and (ii) fraud committed by a Figma stockholder with respect to the merger agreement and any transaction agreement to which such Figma stockholder is a party.
Covenants and Agreements
Conduct of Business of Figma Prior to Completion of the Transaction
Figma has agreed that, between the date of the merger agreement and the earlier of the closing or the date, if any, on which the merger agreement is validly terminated, subject to specified exceptions and except as expressly required by the merger agreement, as required by applicable law (including COVID-19 laws) or as consented to in advance in writing by Adobe, Figma will use commercially reasonable efforts to, and will cause each of its subsidiaries to use commercially reasonable efforts to (i) carry on its business in the ordinary course of business (provided that any commercially reasonable action taken, or omitted to be taken that (1) is required by a COVID-19 law or (2) is determined by Figma in good faith, after prior written notice to, and good faith consultation with, Adobe, to be in its best interest in response to COVID-19, will be deemed to be in the ordinary course of business); and (ii) use commercially reasonable efforts to (A) preserve intact its business organization and relationships with customers, suppliers, licensors, licensees, governmental authorities with jurisdiction over its operations and other third parties having material business relationships with Figma or any
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such subsidiary, (B) keep available the services of its present directors, officers and employees (other than any terminations for cause or voluntary resignations) and (C) maintain in effect all material permits (or enter into new permits to cover those that may lapse).
Without limiting the generality of the foregoing, subject to specified exceptions and except as expressly required by the merger agreement, as required by applicable law (including COVID-19 laws) or as consented to in advance in writing by Adobe, Figma agrees that it will not, and will not permit any of its subsidiaries to:
cause any amendments to the organizational documents of Figma or any material amendments to the organizational documents of its subsidiaries;
(i) merge or consolidate with any person, (ii) acquire (including by merger, consolidation, or acquisition of stock or assets of a person) any interest in any other corporation, partnership, other business organization or any division thereof or any assets, equity interests or property (other than purchases of goods and services in the ordinary course) that are in excess of $20,000,000 individually or $100,000,000 in the aggregate, (iii) incorporate, establish, form or otherwise create any legal entity (including any subsidiary) or (iv) adopt or publicly propose a plan of complete or partial liquidation, dissolution, recapitalization or restructuring, or resolutions providing for or authorizing such a liquidation, dissolution, recapitalization or restructuring of Figma;
(i) other than in the ordinary course of business, sell, transfer, lease, offer to sell, abandon or otherwise dispose of any of its material tangible properties or assets (other than sales of inventory or obsolete assets), or (ii) grant or suffer to exist any lien (other than certain permitted liens) on any of its properties or assets, except for incurring indebtedness that would not be prohibited by the ninth bullet point below;
make capital expenditures that exceed Figma’s capital expenditure budget by more than 5%;
change its financial accounting methods, principles or practices, except as required by GAAP, applicable law or official interpretations thereof;
issue, deliver, grant, sell, dispose of or encumber any equity securities of Figma (other than (i) issuances of Figma common stock upon the exercise or vesting of Figma equity awards or the Figma warrant or the conversion of Figma preferred stock, in each case outstanding as of the date of the merger agreement in accordance with their terms in effect as of the date of the merger agreement, (ii) issuances of Figma capital stock in connection with permitted acquisitions, and (iii) issuances of Figma RSU awards in connection with offer letters with Figma employees, equity grant refreshes, retention incentives, promotions of Figma employees and specified promised equity awards (the “interim Figma RSU awards”); provided that (1) the aggregate number of shares of Figma capital stock issued in connection with such permitted acquisitions or underlying the interim Figma RSU awards may not exceed 13,952,454 shares of Figma capital stock (the “initial equity pool”) through December 31, 2022, and (2) commencing on the earlier of (A) April 1, 2023, and (B) the first day of the month following such time as all shares of Figma capital stock and interim Figma RSU awards comprising the initial equity pool have been issued (but no earlier than January 1, 2023), the initial equity pool will be increased by (x) 1,207,334 shares of Figma capital stock on the first day of each calendar month and (y) in all cases following the date of the merger agreement by the aggregate amount of certain unvested Figma equity awards and/or promised equity awards that are canceled (or not actually granted) in connection with the departure of any Figma employee (or failure of any applicable person to commence employment with Figma or its subsidiaries));
declare, set aside, make or pay any dividend or other distribution on or in respect of, or redeem, purchase or otherwise acquire any equity securities of Figma or any of its subsidiaries except (x) for any such transaction involving only wholly owned subsidiaries of Figma, (y) for any transaction involving non-U.S. subsidiaries of Figma in connection with a de minimis amount of director nominee shares if required by law or (z) other than to effect the repurchase of unvested Figma equity awards (including shares of restricted stock) pursuant to their terms in connection with a termination of service; provided that Figma may declare and pay a cash dividend or other distribution if and to the extent that Figma determines in good faith that such a dividend or other distribution is reasonably necessary to assure that the mergers, taken together, qualify as a “reorganization” within the meaning
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of Section 368(a) of the Code; provided, further, that, if such dividend is declared and paid it shall constitute a transaction requiring an equitable adjustment to the per share closing cash consideration, per share closing stock consideration, per share equity award cash consideration and per share equity award exchange ratio;
adjust, split, combine, subdivide or reclassify any equity securities of Figma or any of its subsidiaries (other than equity securities of any of Figma’s wholly owned subsidiaries in the ordinary course of business);
incur, assume or permit to exist any indebtedness, other than indebtedness not to exceed $100,000,000 in the aggregate, which in each case satisfies all of the following requirements: is (i) borrowed from banks (or similar financial institutions), (ii) reasonably necessary for general corporate purposes or to fund capital expenditures in a manner consistent with the budget for capital expenditures set forth in the Figma disclosure schedules, (iii) prepayable at par at any time without premium or penalty and (iv) not comprised of debt securities or calls, options, warrants or other rights to acquire any debt securities (directly, contingently or otherwise);
make any loans, advances or capital contributions to, or investments in, any other person, other than to Figma or any of its subsidiaries or a current Figma employee for routine expense advances in the ordinary course of business;
other than as required by the terms of any Figma employee plan as in effect on the date of the merger agreement, (A) establish, adopt, enter into, amend, modify, accelerate rights under, or terminate any Figma employee plan, (B) pay or agree to pay, or grant or agree to grant, any bonus, Figma equity award, other equity or equity-based award, or special compensation to any Figma employee, (C) increase or agree to increase the salaries, wage rates, or other compensation or benefits of any Figma employee, or (D) accelerate the vesting of, or amend or modify, the terms of any Figma equity award;
(A) hire, engage, promote or terminate (other than for cause or by the Figma employee) the employment or service relationship of any Figma employee who is or would be at a level of Vice President or above or (B) with respect to any jurisdiction in which Figma does not have active Figma employees as of the date of the merger agreement, hire or engage any Figma employee in such jurisdiction, or transfer, or provide consent to the transfer of, any Figma employee to such jurisdiction;
make, change or revoke any material tax election, change any tax accounting period, change any material method of tax accounting, settle or compromise any material tax liability or right to a material tax refund, surrender any right to claim a material refund of taxes, amend any material tax return, enter into any closing agreement with a governmental authority with respect to taxes, apply for any tax ruling or waive or extend any statute of limitations in respect of taxes (other than with respect to an automatically granted extension obtained in the ordinary course of business);
(i) enter into any contract that would, if entered into prior to the date of the merger agreement, be a specified type of material contract, (ii) except in the ordinary course of business, terminate (other than expirations and/or non-renewals pursuant to their terms), materially modify, materially amend, or intentionally waive, release or assign any material rights or claims under any material contract or (iii) except in the ordinary course of business, enter into any contract (other than any contract described in clause (i)) that would, if entered into prior to the date of the merger agreement, be a material contract;
settle or compromise any litigation or other disputes (whether or not commenced prior to the date of the merger agreement), other than a settlement or compromise that meets each of the following requirements: (i) the terms of such settlement or compromise do not impose any obligation other than the payment of money and customary confidentiality and release of claims provisions, (ii) the settlement or compromise does not involve any admission of guilt by Figma or any affiliated person and does not create an adverse precedent with respect to any potential future litigation or disputes that would be material to Figma and (iii) the amount payable pursuant to such settlement or compromise is, in each case, less than $2,000,000 individually and less than $5,000,000 in the aggregate for all such settlements and compromises, and such amount is paid in full prior to the closing;
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(i) sell, assign, abandon, allow to lapse, transfer or otherwise dispose of, or create or incur any lien (other than certain permitted liens) on, any material intellectual property of Figma, or (ii) except for nonexclusive licenses in the ordinary course of business, sell, license or sublicense any material intellectual property of Figma;
change in any material respect, (i) its working capital and/or cash management practices or its policies, practices or procedures with respect to collection of accounts receivable, (ii) prepayment of expenses and payment of accounts payable of Figma or its subsidiaries (in each case including the timing thereof), including with respect to any acceleration of the collection of accounts receivable or (iii) the manner in which Figma or its subsidiaries extend discounts or credits to customers;
(i) enter into any material new business line or (ii) open or voluntarily close any physical office (other than closures required or recommended by any COVID-19 law);
(i) voluntarily cancel or terminate any of Figma’s or its subsidiaries’ insurance policies or fail to pay the premiums on such insurance policies, other than any cancellation or termination in the ordinary course of business, or (ii) fail to maintain such insurance policies in a manner that is consistent with the ordinary course of business; or
enter into, authorize, resolve, commit or agree, whether in writing or otherwise, to do any of the foregoing.
Conduct of Business of Adobe Prior to Completion of the Transaction
Adobe has agreed that, between the date of the merger agreement and the earlier of the closing or the date, if any, on which the merger agreement is validly terminated, subject to certain specified exceptions and except as expressly required by the merger agreement, as required by applicable law (including COVID-19 laws) or as consented to in advance in writing by Figma, Adobe will not, and will not permit any of its subsidiaries to:
cause or permit any amendments to the organizational documents of Adobe or its subsidiaries in a manner that would materially and adversely affect the Figma stockholders and equity holders disproportionately relative to other holders of Adobe common stock;
adjust, split, combine, subdivide or reclassify any equity securities of Adobe;
declare, set aside, make or pay any extraordinary dividend or other extraordinary distribution on or in respect of any equity securities of Adobe; or
agree to take, make any commitment to take, or adopt any resolutions of its board of directors or similar governing body in support of, any of the foregoing prohibited actions.
No Solicitation by Figma
Figma has agreed not to, and to cause its controlled affiliates and its and its controlled affiliates’ respective officers, directors, employees, representatives and agents, including any investment banker, attorney or accountant engaged by any of them, not to, directly or indirectly solicit, knowingly encourage or knowingly facilitate inquiries or proposals for, or enter into any agreement with respect to, or initiate, continue or conduct any negotiations or discussions with any person concerning, the purchase of all or a significant portion of the assets of Figma or any of its subsidiaries or of any capital stock of or other ownership interest in Figma or any of its subsidiaries (other than (i) issuances of Figma common stock upon the exercise or vesting of Figma equity awards or the Figma warrant or the conversion of Figma preferred stock, in each case outstanding as of the date of the merger agreement in accordance with their terms in effect as of the date of the merger agreement or (ii) any issuance that is not prohibited by the interim operating covenants in the merger agreement or any merger or business combination involving Figma or any of its subsidiaries) (each, an “acquisition proposal”), or furnish any confidential information to any person contacting them or making an inquiry with respect to a potential acquisition proposal.
Reasonable Best Efforts; Regulatory Filings and Other Actions
Subject to the terms and conditions of the merger agreement, each party will use its reasonable best efforts to take or cause to be taken all action and promptly to do or cause to be done all things necessary, proper or advisable to consummate and make effective the transaction.
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Each party has agreed to (i) make an appropriate filing required pursuant to the HSR Act with respect to the transaction, and each filed a notification and report form pursuant to the HSR Act with the U.S. Antitrust Agencies on October 13, 2022, and (ii) make any other required filings pursuant to other applicable laws with respect to the transaction as promptly as reasonably practicable. Each party has agreed to supply as promptly as reasonably practicable any additional information or documentary material that may be requested pursuant to the HSR Act or any other applicable laws and use its reasonable best efforts to take all other reasonable actions necessary, proper or advisable to cause the expiration or termination of the applicable waiting periods under the HSR Act and any other applicable laws in connection with the transaction as soon as practicable, including using its reasonable best efforts to promptly take steps necessary to avoid, eliminate or resolve any impediment to obtaining the expiration of any applicable waiting period or any other required consent, clearance or approval under the HSR Act or any other applicable laws so as to enable the consummation of the transaction by the outside date.
Each party has agreed that their obligation to use reasonable best efforts includes negotiating, committing to and effecting by consent decree, hold separate orders, or otherwise, the sale, divestiture, hold separate, license or other disposition of any assets, products, product lines, properties or services or businesses of Figma or any of its subsidiaries necessary to eliminate each and every impediment to close the transaction prior to the outside date (such actions, the “remedy actions”); provided that, notwithstanding anything in the merger agreement to the contrary, (i) neither Adobe nor any of its affiliates will be required to proffer, offer, commit to, consent to or agree to or effect any remedy action with respect to (A) any assets, products, product lines, properties, services or businesses or portions thereof of Adobe or any of its subsidiaries (other than solely Figma and its subsidiaries, subject to the following clause (B)) or (B) any assets, products, product lines, properties, services or businesses or portions thereof of Figma or any of its subsidiaries if, in the case of this clause (B), any such remedy action would, individually or in the aggregate, reasonably be expected to be material to Figma, and (ii) in no event will Adobe, Figma or their respective subsidiaries be required to proffer, offer, commit to, consent to or agree to or effect any remedy action unless such remedy action is conditioned upon the consummation of the closing of the transaction.
If any administrative or judicial action or proceeding, including any proceeding by a private party, is instituted (or threatened to be instituted) challenging any transaction contemplated by the merger agreement, including the mergers, as violative of any antitrust law, the parties have agreed to use reasonable best efforts to contest and resist any such action or proceeding and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the transaction.
Subject to applicable law, the parties have agreed to use their reasonable best efforts to cooperate with the other in the preparation and filing of any applications, notices, registrations and responses to requests for additional information from any governmental authority in connection with the transaction, including providing such information as may be reasonably necessary for inclusion in such applications, notices, registrations and responses.
The parties have agreed that Adobe will have principal control over devising the ultimate strategy for obtaining any applicable clearances, consents, expiration of waiting periods or approvals of governmental authorities and responding to inquiries by governmental authorities, including taking the lead in connection with any filings, submissions and communications with or to any governmental authority in connection therewith, taking into account in good faith any comments of Figma relating to such strategy; provided that Adobe and Figma have agreed to consider in good faith all reasonable comments of the other party (or as appropriate such party’s outside counsel) with respect to filings, submissions and communications prior to delivery of the same to any governmental authority.
Director and Officer Indemnification and Insurance
The parties to the merger agreement have agreed that, for a period of six years from and after the effective time, Figma will, and Adobe will cause the surviving company to:
indemnify, defend and hold harmless all past and present directors and officers of Figma and its subsidiaries, or persons who are or were serving at the request of Figma or any of its subsidiaries as a director or officer of another person against any damages, losses, expenses, judgments, fines and amounts paid in settlement in connection with any threatened or actual action based in whole or in part
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on, or arising in whole or in part out of, or pertaining in whole or in part to (i) the fact that such person is serving or did serve in that capacity, (ii) the merger agreement and (iii) any acts or omissions by such person in such capacity that occurred at or prior to the effective time, to the fullest extent permitted by applicable law; and
fulfill its indemnification, exculpation and expense advancement obligations to each such person pursuant to the terms of Figma’s governing documents and certain specified indemnification agreements as in effect on the date of the merger agreement.
In addition, at or prior to the closing date, Figma will purchase a six-year “tail” policy for directors’ and officers’ liability insurance, on mutually agreeable terms, with at least the same coverage and amount and containing terms and conditions that are not less advantageous to the directors and officers of Figma as to Figma’s existing policies with respect to claims arising out of or relating to events which occurred before or at the effective time (including in connection with the transaction).
Employee Matters
The merger agreement provides that for the period commencing at the effective time and ending 12 months after the effective time, Adobe will provide each Figma employee who remains a Figma employee or becomes an employee of Adobe or its subsidiaries immediately following the effective time (each, a “continuing employee”) with base salary, target cash bonus, and other employee benefits (but excluding severance, defined benefit, change in control, retention, long-term incentive, incentive equity or equity-based benefits) (collectively, “employee benefits”) that are no less favorable in the aggregate than the employee benefits provided to such continuing employee by Figma immediately prior to the closing.
For purposes of vesting, eligibility and determining the level of benefits under the employee benefit plans made available to any continuing employees after the effective time, each continuing employee will be credited with his or her years of service with Figma and its subsidiaries and their respective predecessors before the effective time, to the same extent service was recognized for the same purpose under the comparable Figma benefit plans, subject to certain customary exclusions. However, there will be no duplication of benefits.
If requested by Adobe in writing not less than 20 business days prior to the closing date, Figma will terminate any and all 401(k) plans effective as of the day immediately preceding the closing date.
No later than five days prior to the closing date, Figma will solicit from Figma’s stockholders a vote, in accordance with Section 280G of the Code and the regulations thereunder (the “280G stockholder vote”), with respect to any “excess parachute payment” pursuant to Section 280G of the Code on behalf of each “disqualified individual” (within the meaning of Section 280G of the Code) of Figma. Prior to the distribution of the 280G stockholder vote materials, Figma will take all actions necessary to obtain a waiver from each such disqualified individual; provided that, if the 280G stockholder vote is not approved, then no payments or benefits that would constitute excess parachute payments with respect to such disqualified individual in the absence of such approval shall be payable to the extent such excess parachute payments would not be deductible by reason of the application of Section 280G of the Code.
Adobe has committed to grant an Adobe RSU award relating to 2,911,316 shares of Adobe common stock to Dylan Field, Figma’s Co-Founder and CEO vesting over four years following the closing. In addition, Adobe has committed to grant Adobe RSU awards relating to an aggregate of 3,175,981 shares of Adobe common stock to Figma employees other than Mr. Field. Such Adobe RSU awards will be granted in accordance with Adobe’s standard terms and conditions, including equity grant guidelines and time-based vesting requirements (generally vesting over four years following the closing), or as mutually agreed between Mr. Field and Adobe to promote employee retention.
Tax Matters
Subject to certain limitations set forth in the merger agreement, the Figma stockholders will indemnify the Adobe indemnitees from and against certain taxes, including pre-closing taxes of Figma, together with reasonable costs and expenses (including outside attorneys’ and other advisors’ fees) incurred, paid or otherwise suffered, directly or indirectly, by the relevant Adobe indemnitee as a result of any indemnified taxes. The merger
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agreement provides certain covenants relating to the preparation and filing of tax returns, timing of indemnity payments, cooperation in tax matters (including record retention and conduct of tax proceedings), termination of tax sharing agreements and coordination of tax matters with the survival and indemnification covenants discussed above under the heading “—Survival; Indemnification.”
The merger agreement also provides that the mergers, taken together, are intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. If, on or after the closing date and prior to the due date for filing the U.S. federal income tax return in respect of the taxable year of Figma ending on the closing date, the representative delivers to Adobe an opinion of Fenwick & West LLP or other nationally recognized counsel (or “big four” accounting firm), which opinion (i) is reasonably satisfactory in form and substance to Adobe, to the effect that the mergers, taken together, are at least “more likely than not” to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and (ii) has not been modified, withdrawn or adversely affected by a change in law after the date thereof, then each of Adobe and Figma will report the mergers, taken together, as a “reorganization” within the meaning of Section 368(a) of the Code on their respective U.S. federal income tax returns for the taxable year that includes or ends on the closing date (as applicable) and will file all applicable U.S. state and local income tax returns in a manner consistent with such treatment, unless otherwise required by a change in applicable law or a “determination” within the meaning of Section 1313(a) of the Code. Adobe and Figma agreed that neither would knowingly take any action (or fail to take any action) which action (or failure to act) would reasonably be expected to prevent the mergers, taken together, from being treated as a “reorganization” within the meaning of Section 368(a) of the Code, other than any actions that are required by the provisions of the merger agreement.
Certain Additional Covenants and Agreements
The merger agreement contains certain other covenants and agreements, including, among others, covenants relating to access to information and notices of certain events, public announcements relating to the merger agreement and the transaction, preparation and filing of the registration statement of which this consent solicitation statement/prospectus forms a part, delivery of certain quarterly financial statements of Figma, exemption from takeover laws, certain director resignations, the listing of the shares of Adobe common stock to be issued in the first merger, treatment of Figma indebtedness, financing cooperation, termination of affiliate agreements, certain matters related to the R&W insurance policy and certain obligations with respect to security deposits existing as of the closing.
Conditions to Completion of the Transaction
The respective obligations of Figma, Adobe, Merger Sub I and Merger Sub II to effect the mergers will be subject to the satisfaction at or prior to the closing of each of the following conditions, any and all of which may be waived in writing, in whole or in part, by Adobe, Merger Sub I and Merger Sub II, on the one hand, and Figma, on the other hand, to the extent permitted by applicable law:
the receipt of the Figma stockholder approval;
(i) the expiration or termination of any waiting period (and any extension thereof) applicable to the transaction under the HSR Act and (ii) receipt of certain required consents, authorizations, clearances and approvals under foreign antitrust laws (and the expiration or termination of any applicable waiting period (and any extension thereof);
the absence of (i) any temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other governmental authority having jurisdiction over any party that makes illegal, prohibits or prevents the consummation of the mergers and continues to be in effect and (ii) any law enacted, entered, promulgated, enforced or deemed applicable by any governmental authority having jurisdiction over any party (any such order, injunction or law, a “legal restraint”) that, in any case, makes illegal, prohibits or prevents the consummation of the mergers;
the effectiveness of the registration statement of which this consent solicitation statement/prospectus forms a part and the absence of any stop order suspending that effectiveness or any proceedings for that purpose initiated or threatened by the SEC and not withdrawn; and
the approval for listing on Nasdaq of the shares of Adobe common stock issuable to Figma stockholders in connection with the first merger, subject to official notice of issuance.
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The obligations of Adobe, Merger Sub I and Merger Sub II to effect the mergers will be further subject to the satisfaction at or prior to the closing of each of the following conditions, any and all of which may be waived in whole or in part by Adobe, Merger Sub I and Merger Sub II to the extent permitted by applicable law:
the accuracy of the representations and warranties made in the merger agreement by Figma as of the date of the merger agreement and as of the closing date (except to the extent any representations and warranties are made as of a specific date, in which case as of such specific date), subject to certain materiality thresholds;
Figma’s performance of or compliance with, in all material respects, all of the covenants, obligations and conditions to be performed or complied with by it on or prior to or at the closing;
the absence since the date of the merger agreement of a material adverse effect on Figma that is continuing;
the receipt by Adobe of a certificate of an executive officer of Figma, dated as of the closing date, to the effect that certain conditions to closing have been satisfied and of a certificate related to certain tax matters;
Dylan Field’s continuation as an employee of Figma at closing without having given notice of an intent to terminate his employment following the closing; and
the termination in full of Figma’s stockholders’ agreements.
The obligations of Figma to effect the mergers will be further subject to the satisfaction at or prior to the closing of each of the following conditions, any and all of which may be waived in whole or in part by Figma to the extent permitted by applicable law:
the accuracy of the representations and warranties made in the merger agreement by Adobe, Merger Sub I and Merger Sub II as of the date of the merger agreement and as of the closing date (except to the extent any representations and warranties are made as of a specific date, in which case as of such specific date), subject to certain materiality thresholds;
Adobe, Merger Sub I and Merger Sub II’s performance of or compliance with, in all material respects, all of the covenants, obligations and conditions to be performed or complied with by each of them on or prior to or at the closing;
the absence since the date of the merger agreement of a material adverse effect on Adobe that is continuing; and
the receipt by Figma of a certificate of an authorized officer of Adobe, dated as of the closing date, to the effect that certain conditions to closing have been satisfied.
Termination of the Merger Agreement
The merger agreement may be terminated and the mergers may be abandoned at any time prior to the closing, notwithstanding the approval by the Figma stockholders, as follows and in no other manner:
by mutual written consent of Adobe and Figma;
by either Adobe or Figma, if the effective time has not occurred on or before 10:00 a.m., Pacific time, on September 15, 2023 (the “initial outside date”) (provided that the initial outside date will automatically be extended to 10:00 a.m., Pacific time, on December 15, 2023 (the “first extended outside date”)), and the first extended outside date will automatically be extended to 10:00 a.m., Pacific time, on March 15, 2024, if, on December 15, 2023, or March 15, 2024, as applicable, the only conditions not satisfied or waived (other than those conditions that by their nature are to be satisfied at the closing, provided that such conditions shall then be capable of being satisfied if the closing were to take place on such date) are the conditions relating to (i) required antitrust approvals and/or (ii) the absence of any legal restraint prohibiting the completion of the mergers (in the case of this clause (ii), only if the failure to satisfy the condition is attributable to any antitrust law) (as so extended, the “outside date”) (provided that the right to terminate the merger agreement pursuant to this bullet point will not be available to any party whose breach of any provision of the merger agreement results in or causes the failure of the closing to be consummated by such time);
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by Adobe or Figma, if there is in effect a final, nonappealable legal restraint (provided that the right to terminate the merger agreement pursuant to this bullet point will not be available to any party whose breach of any provision of the merger agreement results in or causes such legal restraint); and
by either Adobe or Figma, if the other party breaches any representation or warranty (or any such representation or warranty ceases to be true) or any covenant or agreement contained in the merger agreement which would result in a failure of an applicable condition to the other parties’ obligation to effect the mergers if existing as of the closing date (a “terminating breach”) (provided that, if such terminating breach is curable by the breaching party, the non-breaching party may terminate the merger agreement only if such terminating breach has not been cured prior to the earlier of (i) 30 calendar days after receipt by the breaching party of written notice from the non-breaching party of such terminating breach and (ii) the outside date (provided, further, that the right to terminate the merger agreement pursuant to this bullet point will not be available to any party who is then committing a terminating breach such that the other party would have the right to terminate the merger agreement if such breach were not cured prior to the earlier of (i) 30 calendar days after receipt of written notice of such breach and (ii) the outside date).
In addition, the merger agreement would have been terminable by Adobe if any key stockholder had failed to execute and deliver to Adobe the key stockholder voting agreement to which such key stockholder is a party within one day following the execution of the merger agreement. However, subsequent to the execution of the merger agreement, each of the key stockholders timely delivered to Adobe the key stockholder agreement within one day following the execution of the merger agreement.
In the event of the valid termination of the merger agreement, all rights and obligations of the parties under the merger agreement will terminate and no party will have any liability to any other party, except that (i) certain specified provisions, including certain provisions described below under “—Expenses and Reverse Termination Fee,” will survive termination, and (ii) no such termination will relieve any party of liability or damages for fraud or willful breach of any of its representations, warranties, covenants or agreements contained in the merger agreement prior to termination, except that the reverse termination fee described below will be Figma’s sole and exclusive remedy in circumstances in which such fee is payable and is paid by Adobe.
Expenses and Reverse Termination Fee
Expenses
Except as otherwise expressly provided in the merger agreement, each party will pay its own expenses incident to the merger agreement and the transaction. Adobe will pay all filing fees under the HSR Act and other antitrust and foreign investment filings and all costs, premiums and expenses of the escrow agent and the exchange agent. Any transfer taxes incurred in connection with the consummation of the transaction will be borne 50% by the Figma stockholders as set forth in the merger agreement and 50% by Adobe.
Reverse Termination Fee
The merger agreement requires Adobe to pay or cause to be paid to Figma a reverse termination fee equal to $1 billion in cash (the “reverse termination fee”) within three business days of termination of the merger agreement if each of the following occur:
either Adobe or Figma terminates the merger agreement because either the closing has not occurred by the outside date or there is in effect a final, nonappealable legal restraint that is, or is in respect of, an antitrust law; and
at the time of such termination, one or both of the conditions relating to (i) required antitrust approvals and/or (ii) the absence of any legal restraint prohibiting the completion of the mergers (in the case of this clause (ii), only if the legal restraint is, or is in respect of, any antitrust law) are not satisfied but all other conditions to closing have been satisfied or waived, as applicable (except for those conditions which by their nature are to be satisfied at the closing, provided that such conditions would be satisfied if the closing were to take place on such date).
In no event will Adobe be obligated to pay the reverse termination fee on more than one occasion, and under no circumstance will Figma be entitled to receive both a grant of specific performance which results in the
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consummation of the closing and the payment of damages or all or any portion of the reverse termination fee. Upon payment of the reverse termination fee, none of Adobe, any of its subsidiaries or any of their former, current or future officers, directors, partners, stockholders, managers, members, affiliates, agents or representatives will have any further liability whatsoever with respect to the merger agreement or the transaction to Figma or any of its affiliates or representatives, and such payment of the reverse termination fee will be the sole and exclusive remedy of Figma and its affiliates.
Representative of Figma Stockholders
Fortis Advisors LLC is serving as the representative of the Figma stockholders under the merger agreement, and in such capacity will represent the interests of the Figma stockholders following the closing with respect to certain matters under the merger agreement, including, but not limited to, acting on behalf of the Figma stockholders in any proceeding involving the merger agreement and acting for the Figma stockholders with regard to certain matters pertaining to indemnification as provided in the merger agreement. Pursuant to the merger agreement, at the closing, $500,000 (the “representative fund amount” and such fund, the “representative fund”) otherwise payable to the Figma stockholders will be deposited with the representative, and the representative can use the representative fund to cover all losses, claims, damages, liabilities, fees, costs, judgments, fines, amounts paid in settlement or expenses incurred (including fees, disbursements and costs of counsel and other skilled professionals and in connection with seeking recovery from insurers), as and when incurred, as the representative. When determined by the representative in good faith that some or all of the representative fund is no longer required to cover such obligations, the representative will pay such amounts to the exchange agent for further distribution to the Figma stockholders in accordance with the terms set forth in the merger agreement.
Amendments and Waivers
The merger agreement may be amended by written agreement of Adobe, Merger Sub I, Merger Sub II and Figma at any time prior to the effective time.
At any time prior to the effective time, the parties may (i) extend the time for the performance of any of the obligations or other acts of the other parties, (ii) waive any inaccuracy in the representations and warranties of any other party and (iii) waive compliance with any of the agreements of any other party or conditions contained in the merger agreement.
No Third-Party Beneficiaries
The merger agreement is not intended to and will not be construed to give any person other than the parties to the merger agreement and their respective heirs, successors and permitted assigns any rights, remedies or claims, subject to limited specified exceptions.
Specific Performance
In addition to any other applicable remedies at law or equity, the parties are entitled to an injunction or injunctions, without proof of damages or posting of any bond, to prevent breaches of the merger agreement and to enforce specifically the terms and provisions of the merger agreement.
Governing Law
The merger agreement is governed by Delaware law, without giving effect to any conflicts of laws rules or principles that would require or permit the application of another jurisdiction’s laws.
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KEY STOCKHOLDER VOTING AGREEMENT
The following section summarizes material provisions of the key stockholder voting agreement, which is included in this consent solicitation statement/prospectus as Annex C, incorporated by reference herein in its entirety, and qualifies the following summary in its entirety. The rights and obligations of Adobe and the key stockholders are governed by the key stockholder voting agreement and not by this summary or any other information contained in or incorporated by reference into this consent solicitation statement/prospectus. Adobe and Figma stockholders are urged to read the key stockholder voting agreement carefully and in its entirety, as well as this consent solicitation statement/prospectus and the information incorporated by reference into this consent solicitation statement/prospectus.
Shortly after the execution of the merger agreement, certain stockholders of Figma (each, a “key stockholder”) entered into a voting and support agreement (the “key stockholder voting agreement”) with Adobe, pursuant to which, among other things, and subject to the terms and conditions of the key stockholder voting agreement, each key stockholder agreed to (i) following the effectiveness of the registration statement of which this consent solicitation statement/prospectus forms a part, promptly (and in any event within two business days) execute and deliver (or cause to be executed and delivered) to Figma, with a copy to Adobe, a written consent approving the adoption of the merger agreement and the transaction, including the mergers, with respect to all of such key stockholder’s shares of Figma capital stock entitled to act by written consent thereto, and (ii) vote or cause to be voted all of such key stockholder’s shares of Figma capital stock against any acquisition proposal or any action or agreement that is intended, or would reasonably be expected, to impede, interfere with, delay, postpone, adversely affect or prevent the consummation of the transaction, including the mergers, in any material respect.
The key stockholder voting agreement contains customary transfer restrictions restricting the key stockholders from transferring their shares of Figma capital stock during the pendency of the transaction, subject to limited exceptions. In addition, pursuant to the key stockholder voting agreement, each key stockholder agreed to, among other things, (i) effective as of the effective time, release each of Adobe, Merger Sub I, Merger Sub II, Figma, the representative, the surviving corporation and each of their respective past and present subsidiaries, affiliates, predecessors, officers, directors, stockholders, members, managers, partners, employees, representatives, agents, heirs, estates, successors, assigns and agents from any and all past, present and future claims arising out of or relating to such key stockholder’s capacity as a stockholder of Figma and/or such key stockholder’s direct or indirect ownership interest in Figma, (ii) refrain from soliciting any alternative transaction, (iii) waive any appraisal or dissenters’ rights and similar rights, including under Section 262 of the DGCL, and any rights of first refusal, redemption rights, rights of notice and similar rights relating to the transaction and (iv) indemnify Adobe, the surviving corporation, the surviving company and their affiliates and each of their respective officers, directors, employees, agents and other representatives in accordance with the applicable indemnification provisions set forth in the merger agreement.
The key stockholder voting agreement will terminate and will have no further force or effect with respect to a key stockholder upon the earliest to occur of (i) the effective time, (ii) the termination of the merger agreement and (iii) any amendment to the merger agreement without the prior written consent of such key stockholder if such amendment materially reduces the per share closing stock consideration or the per share closing cash consideration, or alters the form of consideration payable in the first merger. As of the date of the key stockholder voting agreement, the key stockholders collectively owned, of record or beneficially, a majority of the voting power of (1) the outstanding shares of Figma capital stock and (2) the outstanding shares of Figma preferred stock. As of the record date, the key stockholders collectively owned approximately [   ]% of the outstanding shares of Figma capital stock, approximately [   ]% of the outstanding shares of Figma preferred stock and approximately [    ]% of the outstanding shares of Figma common stock. Accordingly, the execution and delivery of written consents by all of the key stockholders will constitute the Figma stockholder approval and, therefore, we expect to receive a number of written consents sufficient to satisfy each such approval, which will therefore satisfy the closing condition in the merger agreement relating to approval of the Figma stockholders required under the merger agreement.
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U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain U.S. federal income tax consequences of the mergers to U.S. holders (as defined below) that exchange their shares of Figma capital stock for shares of Adobe common stock and cash in the mergers. The following summary is based upon the provisions of the Code, its legislative history, existing and proposed U.S. Treasury Regulations promulgated thereunder and rulings and other administrative pronouncements issued by the IRS and judicial decisions, all as currently in effect as of the date hereof, and all of which are subject to change, and to differing interpretations possibly with retroactive effect. Any such change or interpretation could affect the accuracy of the statements and conclusions set forth in this discussion.
This discussion addresses only U.S. holders who hold Figma capital stock as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion proceeds on the basis that the mergers will be completed in accordance with the merger agreement and as described in this consent solicitation statement/prospectus. Holders of Figma capital stock that are not U.S. holders should consult their own tax advisors as to the tax consequences of the mergers. Moreover, this discussion does not address any U.S. federal tax consequences other than income tax consequences (such as estate, gift or other non-income tax consequences) or any state, local or non-U.S. income or non-income tax consequences. In addition, this discussion does not purport to be a complete analysis of all of the U.S. federal income tax consequences (such as the Medicare contribution tax on net investment income, any withholding considerations under the Foreign Account Tax Compliance Act of 2010 (including the Treasury regulations issued thereunder and intergovernmental agreements entered into pursuant thereto or in connection therewith) or any alternative minimum tax) that may be relevant to U.S. holders in light of their particular circumstances and does not address all of the U.S. federal income tax consequences that may be relevant to particular holders of Figma capital stock that are subject to special rules, including, but not limited to:
financial institutions;
partnerships or other pass-through entities (or other entities or arrangements treated as partnerships or pass-through entities for U.S. federal income tax purposes) or investors in such partnerships or pass-through entities;
mutual funds;
S corporations or investors in such S corporations;
insurance companies;
tax-exempt organizations or governmental organizations;
dealers or brokers in securities or currencies;
traders in securities that elect to use a mark-to-market method of accounting;
persons that immediately before the mergers directly, indirectly or constructively owned at least 5% of all Figma capital stock (by vote or value);
regulated investment companies;