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Item 1A. Risk Factors

2021-03-01 compared with 2020-03-02 · 108 added, 61 removed, 424 unchanged (28% of the section changed)

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Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.

Business Risks

Summary of Risk Factors

Our business is subject to numerous risks and uncertainties, discussed in more detail in the following section.

These risks include, among others, the following key risks:

• Our overall financial results are dependent on the ability of our Affiliates to generate earnings;

Substantially all of our revenue generation is dependent on our Affiliates, who are registered investment advisers under the Investment Advisers Act of 1940, as amended, or the Advisers Act, and who receive the majority of their fees based on the market values of assets under management.

• The ability of our Affiliates to attract and retain assets under management and generate earnings is dependent on our Affiliates maintaining competitive investment performance, as well as market and other factors;

• We derive a substantial portion of our revenue from a limited number of Affiliates and investment strategies;

• Our growth strategy is dependent upon continued growth of our existing Affiliates;

• We and our Affiliates rely on certain key personnel, and our results are dependent upon our ability to retain and attract key personnel;

• Reputational harm could result in a loss of assets under management and revenues for our Affiliates and us;

• Impairment of our Affiliates’ relationships with clients and/or consultants may negatively impact their businesses and our results of operations;

• Pressure on fee levels of our Affiliates and changes to their mix of assets could impact our results of operations;

• If our techniques for managing risk are ineffective, we may be exposed to material unanticipated losses;

• Our expenses are subject to fluctuations that could materially impact our results of operations;

• Investments in non-U.S.

markets and in securities of non-U.S.

companies may involve foreign currency exchange risk, and tax, political, social and economic uncertainties, and a reduction in assets under management associated with investments in non-U.S.

equities could have a disproportionately adverse impact on our results of operations;

• Our outstanding indebtedness may impact our business and may restrict our growth and results of operations;

• Any significant limitation on the use of our facilities or the failure or security breach of our software applications or operating systems and networks, including the potential risk of cyber-attacks, could result in the accidental or unlawful destruction, loss, alteration, unauthorized disclosure of, or access to, confidential client information or personal data, damage to our reputation, additional costs, regulatory penalties and financial losses;

• The novel coronavirus (COVID-19) pandemic has disrupted and may continue to disrupt financial markets and our business;

• We operate in a highly regulated industry, and continually changing federal, state, local and foreign laws and regulations could materially adversely affect our business, financial condition and results of operations;

Risks Related to Affiliate Operations

Our overall financial results are dependent on the ability of our Affiliates to generate earnings.

Substantially all of our cash flows consist of distributions received from our Affiliates.

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Poor performance can be caused by our Affiliates’ choices in investing in sectors, industries, companies or assets that do not perform as well as others.

Additionally, companies in which our Affiliates invest may incur negative changes in their financial conditions or suffer other adverse events that could reduce the values of the Affiliates’ investments in those companies.

Additionally, companies in which our Affiliates invest may incur negative changes in their financial conditions or suffer other adverse events that could reduce the values of investments in those companies.

Net flows related to our investment strategies can be affected by investment performance relative to other competing investment strategies or to established benchmarks.

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We derive a substantial portion of our revenue from a limited number of Affiliates and investment strategies.

As of December 31, 2019 , Acadian and Barrow Hanley represented 75% of our assets under management, from which we derive a substantial portion of our revenue.

As of December 31, 2020, Acadian and Landmark represented 81% of our assets under management, from which we derive a substantial portion of our revenue.

An adverse change in the operating results of either of these Affiliates, whether as a result of poor investment performance, withdrawals of assets under management or otherwise, could have a substantial impact on our results of operations.

While our Affiliates invest in a number of asset classes, a significant portion of our assets are invested in a limited number of investment strategies.

While our Affiliates invest in a number of asset classes on behalf of their clients, a significant portion of the assets are invested in a limited number of investment strategies.

As of December 31, 2020, $68.4 billion, or 44%, of our assets under management were concentrated across five investment strategies:

Acadian ’s Emerging Markets Equity ( $21.5 billion , or 11% ), Barrow Hanley ’s Large Cap Value Equity ( $17.0 billion , or 8% ), Acadian ’s Global Managed Volatility Equity ( $13.5 billion , or 7% ), Landmark ’s Secondary Private Equity ( $11.8 billion , or 6% ) and Acadian ’s Global Equity ( $11.2 billion , or 5% ).

Acadian’s Emerging Markets Equity ($21.4 billion, or 14%), TSW’s International ($12.5 billion, or 8%), Landmark’s Private Equity ($11.9 billion, or 8%), Acadian’s Global Managed Volatility Equity ($11.6 billion, or 7%) and Acadian’s All-Country World ex-U.S.

($11 billion, or 7%).

Consequently, our results of operations are dependent upon the abilities of our Affiliates that manage these investment strategies to minimize the risk of outflows through relatively strong performance over measured periods of time compared to relevant benchmarks and peer performance results.

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A relatively small change in the relative performance of one of our largest strategies, such as Acadian’s Emerging Markets Equity, could have a significant impact on the asset-weighted performance of our assets under management.

Such volatility could adversely affect investors’ perception of us.

Such volatility could adversely affect our results of operations and investors’ perception of us.

Our business model limits our ability to manage our Affiliates’ investment management practices and certain other aspects of their day-to-day operations.

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While our agreements with all of our consolidated Affiliates give us ultimate control over the business activities of those Affiliates if necessary, we generally do not become directly involved in managing their day-to-day operations, including investment management practices, policies and procedures, fee levels, marketing and product development, client relationships and employment and compensation programs.

If we fail to intervene in potentially serious matters arising out of the day-to-day operations of our Affiliates, our results of operations could be adversely affected.

If we fail to intervene in the operations of our Affiliates as needed, our results of operations could be adversely affected.

For ICM, we exercise significant influence rather than control.

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There may be instances where the interests of an Affiliate and its key employee equity-holders may not align with ours in effecting a desired outcome.

While we endeavor to assess and resolve any conflicts in a manner that is not disruptive or detrimental to us or our Affiliates, there is no assurance that a resolution may be possible or the interests of all parties can be taken into account.

There is no assurance that a resolution of any conflicts of interest may be possible or the interests of all parties can be taken into account.

Impairment of our Affiliates’ relationships with clients and/or consultants may negatively impact their businesses and our results of operations.

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As of December 31, 2020, our Affiliates’ top five client relationships represented 10% of total run rate gross management fee revenue, including our equity-accounted Affiliate, and our Affiliates’ top 25 clients represented 25% of run rate gross management fee revenue, including our equity-accounted Affiliate.

Total run rate gross management fee revenue reflects the sum for each account at each of our seven current Affiliates, of the product of (a) assets under management in each account at December 31, 2019 , multiplied by (b) the relevant management fee rate on that account.

Total run rate gross management fee revenue reflects the sum for each account at each of our five current Affiliates, of the product of (a) assets under management in each account at December 31, 2020, multiplied by (b) the relevant management fee rate on that account.

This calculation includes the management fees paid by accounts at our equity-accounted Affiliate.

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Our Affiliates derive substantially all of their revenues from the fees charged to their clients under their investment advisory agreements with those clients.

The agreements generally provide for fees to be paid on the basis of the market values of assets under management, although a portion also provide for performance-based fees to be paid on the basis of investment performance against stated benchmarks.

The agreements generally provide for fees to be paid on the basis of the values of assets under management, although a portion also provide for performance-based fees to be paid on the basis of investment performance against stated benchmarks.

An investment advisory agreement may be terminated by a client without penalty upon relatively short notice (typically no more than 30 days).

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If our techniques for managing risk are ineffective, we may be exposed to material unanticipated losses.

In order to manage the significant risks inherent in our business, we must maintain effective policies, procedures and systems that enable us to identify, monitor and control our exposure to operational, legal and reputational risks.

Our risk management methods may prove to be ineffective due to their design or implementation, or as a result of the lack of adequate, accurate or timely information or otherwise.

If our risk management efforts are ineffective, we could suffer losses that could have a material adverse effect on our financial condition or results of operations.

In order to manage the significant risks inherent in our business, we and our Affiliates must maintain effective policies, procedures and systems that enable us to identify, monitor and control our exposure to operational, legal and reputational risks.

Our or our Affiliates’ risk management methods may prove to be ineffective due to their design or implementation, or as a result of the lack of adequate, accurate or timely information or otherwise.

If our or our Affiliates’ risk management efforts are ineffective, we could suffer losses that could have a material adverse effect on our financial condition or results of operations.

The potential for some types of operational risks, including, for example, trading errors, may be increased or amplified in periods of increased volatility, which can magnify the cost of an error.

Although we have not suffered operational errors, including trading errors, of a material nature in the past, we may experience such errors in the future.

Additionally, we could be subject to litigation, particularly from our clients, and investigations and enforcement proceedings by and sanctions or fines from regulators.

We may experience operational errors, including trading errors, in the future.

Additionally, we or our Affiliates could be subject to litigation, particularly from our clients, and investigations and enforcement proceedings by and sanctions or fines from regulators.

Our Affiliates’ techniques for managing operational, legal and reputational risks in client portfolios may not fully mitigate the risk exposure in all economic or market environments, including exposure to risks that we might fail to identify or anticipate.

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Our support of our Affiliates extends to the commitment of seed and co-investment capital to launch new products and investment capital to financially support new growth initiatives.

As of December 31, 2019, we have approximately $124 million committed to seed capital, which is currently invested in 21 products across 7 different asset classes.

As of December 31, 2020, we had approximately $24 million committed to seed capital, which is currently invested in 6 products across 4 different asset classes.

We also provide co-investment capital (currently a $46 million portfolio) to support the formation of closed-end, long-term partnerships managed by our Affiliates.

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The capital utilized in the seed and co-investment portfolios may be subject to liquidity constraints over certain time periods and is subject to market conditions.

A decline in the value of our seed and co-investment capital may adversely impact our results of operations or financial condition.

A decline in the value of our seed and co-investment capital would adversely impact our results of operations or financial condition.

The cost of insuring our business is meaningful and may increase.

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Since 76% of our Affiliates’ total assets under management as of December 31, 2020 were invested in global, international and emerging markets equities, a significant reduction in assets under management associated with such investments could have a disproportionately adverse impact on our results of operations.

Our Affiliates’ non-U.S.

distribution initiatives may be unsuccessful, may expose us to other tax and regulatory risks and may not facilitate the growth of our business.

One of the primary opportunities for growth lies in expanding the geographic regions in which our Affiliates’ investment products and services are distributed.

To assist our Affiliates in their non-U.S.

distribution, we offer the assistance of our Global Distribution team.

The success of these non-U.S.

initiatives is therefore dependent upon the ability of our and our Affiliates’ teams to successfully partner in non-U.S.

distribution efforts and to structure products that appeal to the global markets.

The inability of the Global Distribution team and our Affiliates to successfully execute on their non-U.S.

initiatives is dependent upon the ability of our Affiliates’ teams to structure products that appeal to the global markets.

The inability of our Affiliates to successfully execute on their non-U.S.

distribution plans may adversely impact the growth prospects of our Affiliates.

distribution initiative has required and will continue to require us to incur a number of up-front expenses, including those associated with obtaining regulatory approvals, as well as additional ongoing expenses, including those associated with the employment of additional support staff and regulatory compliance.

Our employees routinely travel outside the U.S.

in connection with our distribution efforts and may spend extended periods of time in one or more non-U.S.

distribution initiatives of our Affiliates has required and will continue to require the incurence of a number of up-front expenses, including those associated with obtaining regulatory approvals, as well as additional ongoing expenses, including those associated with the employment of additional support staff and regulatory compliance.

Our Affiliates’ employees travel outside the U.S.

in connection with distribution efforts and may spend extended periods of time in one or more non-U.S.

jurisdictions.

Their activities outside the U.S.

on our behalf may raise both tax and regulatory issues.

If we are incorrect in our analysis of the applicability or the extent of the impact of non-U.S.

tax or regulatory requirements, we could incur costs, penalties or be the subject of an enforcement or other action.

We also expect that operating our business in non-U.S.

may raise both tax and regulatory issues.

If our Affiliates are incorrect in their analysis of the applicability or the extent of the impact of non-U.S.

tax or regulatory requirements, such Affiliates could incur costs, penalties or be the subject of an enforcement or other action.

In addition, operating our business in non-U.S.

markets generally will be more expensive than in the U.S.

To the extent that our revenues do not increase as much as our expenses in connection with our distribution initiatives outside the U.S., our profitability could be adversely affected.

To the extent that our revenues do not increase as much as our expenses in connection with distribution initiatives outside the U.S., our profitability could be adversely affected.

Expanding our distribution initiatives into non-U.S.

markets may also place significant demands on our existing infrastructure and employees.

markets may also place significant demands on our or our Affiliates’ existing infrastructure and employees.

Our outstanding indebtedness may impact our business and may restrict our growth and results of operations.

As of December 31, 2019, we have $393.8 million of long-term bonds outstanding, $140.0 million of debt outstanding under our revolving credit facility with third-party lenders and $35.0 million outstanding under our non-recourse seed capital facility.

For additional information regarding our revolving credit facility, our non-recourse seed capital facility and our long-term bonds, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Resources and Liquidity—Working Capital and Long-Term Debt.”

As of December 31, 2020, we have $394.3 million of long-term bonds outstanding and $0.0 million of debt outstanding under our revolving credit facility with third-party lenders.

For additional information regarding our revolving credit facility and our long-term bonds, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Resources and Liquidity—Working Capital and Long-Term Debt.”

We may incur additional indebtedness in the future for a variety of business reasons, including in relation to our share repurchases, for seed or co-investment capital, or for other strategic reasons.

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In July 2016 we issued an aggregate of $400 million of long-term bonds.

In July 2017, we entered into a non-recourse seed capital facility collateralized by its seed capital holdings pursuant to which we can borrow up to $65.0 million, subject to certain conditions.

On August 20, 2019, we entered into a $450 million senior unsecured revolving credit facility with third party lenders.

Our ability to finance our operations through borrowing from our lenders under the credit facilities or through future issuances of long-term bonds, and our ability to repay maturing obligations under our credit facilities and long-term bonds, will be dependent in large part on the profitability of our Affiliates and our future operating performance.

In February 2021, we assigned this credit facility to Acadian and the available borrowings were decreased to $125 million in connection with the assignment.

Accordingly, this credit facility is no longer available to us for future borrowings.

Our ability to finance our operations, strategic initiatives and maturing obligations under our long-terms bonds is therefore dependent on future issuances of long-term bonds and the profitability of our Affiliates and our future operating performance.

Any future inability to obtain financing on reasonable terms and with reasonable restrictions on the operation of our business could impair our liquidity, have a negative impact on our growth and that of our Affiliates and negatively impact our financial condition.

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Insurance and other safeguards might not be available or might only partially reimburse us for our losses.

Although we have back-up systems and disaster recovery programs in place and test their uses periodically, there can be no assurance that the recovery programs will be sufficient to mitigate any harm that may result from a disruption or disaster.

Although we and our Affiliates have back-up systems and disaster recovery programs in place and test their uses periodically, there can be no assurance that the recovery programs will be sufficient to mitigate any harm that may result from a disruption or disaster.

Additionally, it is possible that any such disruption or disaster could have a significant impact on the general economy, domestic and local financial and capital markets or specific industries, including the financial services industry.

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The United Kingdom exit from the European Union (“Brexit”) could adversely impact our business.

On March 29, 2017, the United Kingdom formally notified the European Council of its intention to leave the European Union (“Brexit”).

Under the process for leaving the European Union contemplated in Article 50 of the Treaty on the Functioning of the European Union, the United Kingdom left the European Union on January 31, 2020 and entered an 11-month transitional period.

During the transitional period, the United Kingdom and the European Union will negotiate the terms of their future relationship and during this period most European Union law will continue to apply to the United Kingdom.

There is no guarantee that an agreement between the United Kingdom and the European Union will be reached.

Although one cannot predict the full effect of Brexit, it could have a significant adverse impact on United Kingdom, European and global macroeconomic conditions and could lead to prolonged political, legal, regulatory, tax and economic uncertainty.

This uncertainty is likely to continue to impact the global economic climate and may impact opportunities, pricing, availability and cost of bank financing, regulation, values or exit opportunities of companies or assets based, doing business, or having service or other significant relationships in, the United Kingdom or the European Union, including companies or assets held by us or considered by as a prospective investment.

The future application of European Union-based legislation to the investment management industry in the United Kingdom and the European Union will ultimately depend on how the United Kingdom renegotiates its relationship with the European Union.

The United Kingdom left the European Union on January 31, 2020 (commonly referred to as “Brexit”).

During an 11-month transition period, the United Kingdom and the European Union agreed to a Trade and Cooperation Agreement which sets out the agreement for certain parts of the future relationship between the European Union and the United Kingdom from January 1, 2021.

The Trade and Cooperation Agreement does not provide the United Kingdom with the same level of rights or access to all goods and services in the European Union as the United Kingdom previously maintained as a member of the European Union and during the transition period.

In particular the Trade and Cooperation Agreement does not include an agreement on financial services which is yet to be agreed.

Accordingly, uncertainty remains in certain areas as to the future relationship between the United Kingdom and the European Union.

From January 1, 2021, European Union laws ceased to apply in the United Kingdom.

However, many European Union laws have been transposed into English law and these transposed laws will continue to apply until such time that they are repealed, replaced or amended.

Depending on the terms of any future agreement between the European Union and the United Kingdom on financial services, substantial amendments to English law may occur, and it is impossible to predict the consequences of this on us and our investments.

Although one cannot predict the full effect of Brexit, it could have a significant adverse impact on the United Kingdom, European and global macroeconomic conditions and could lead to prolonged political, legal, regulatory, tax and economic uncertainty.

There can be no assurance that any renegotiated terms or regulations will not have an adverse impact on us and our investments, including our ability to achieve our investment objectives.

Brexit may result in significant market dislocation, heightened counterparty risk, an adverse effect on the management of market risk and, in particular, asset and liability management due in part to redenomination of financial assets and liabilities, an adverse effect on our ability to manage, operate and invest, and increased legal, regulatory or compliance burden for us and our Affiliates, each of which may have a negative impact on our operations, financial condition, returns or prospects.

Political parties in several other Member States of the European Union have proposed that a similar referendum be held on their country’s membership in the European Union.

It is unclear whether any other Member States of the European Union will hold such referendums, but if they do, further disruption can be expected.

Areas where the uncertainty created by the United Kingdom’s vote to withdraw from the European Union is relevant include, but are not limited to, trade within Europe, foreign direct investment in Europe, the scope and functioning of European regulatory frameworks, industrial policy pursued within European countries, immigration policy pursued within European Union countries, the regulation of the provision of financial services within and to persons in Europe and trade policy within European countries and internationally.

The volatility and uncertainty caused by the referendum may adversely affect the value of our investments and the ability to achieve our investment objectives.

Areas where the uncertainty created by the United Kingdom’s withdrawal from the European Union is relevant include, but are not limited to, trade within Europe, foreign direct investment in Europe, the scope and functioning of European regulatory frameworks, industrial policy pursued within European countries, immigration policy pursued within European Union countries, the regulation of the provision of financial services within and to persons in Europe and trade policy within European countries and internationally.

The volatility and uncertainty caused by the withdrawal may adversely affect the value of our investments and the ability to achieve our investment objectives.

The novel coronavirus (COVID-19) pandemic has disrupted and may continue to disrupt financial markets and our business.

The outbreak of COVID-19 and the related containment and mitigation measures put in place have had, and may continue to have, a serious impact on the economy and the financial and securities markets.

As a result, the investment results of our Affiliates have been, and may continue to be, negatively affected, resulting in decreases to our assets under management and related revenue and earnings in the first half of 2020.

In addition, the economic conditions caused by the COVID-19 pandemic may increase our funding costs or limit our access to the capital markets, which could impact our ability to finance our operations through borrowing.

As the potential impact of COVID-19 is impossible to predict, the extent to which COVID-19 could negatively affect our and our Affiliates’ operating results or the duration of any potential business disruption is uncertain.

In addition, our operations and the operations of our Affiliates, as well as third-party service providers on whom we rely, have been, and are expected to continue to be, significantly impacted by the COVID-19 pandemic.

No assurance can be given that the steps we have taken with respect to business continuity plans will be effective or appropriate.

While our employees have been successful in working remotely, operational challenges may arise in the future.

In the event that our workforce, the workforce of one or more Affiliates, or the workforces of our or our Affiliates’ key service providers were to experience significant illness levels, our ability to operate our business normally could be materially disrupted.

Any such material disruptions to our business operations could have a material adverse impact on our results of operation or financial condition.

We may not achieve the expected strategic and financial benefits of current or potential divestitures.

In 2020, we divested our affiliates Barrow Hanley and Copper Rock and, in early 2021, we have agreed to the divestiture of our affiliate ICM.

We effected these divestitures because we believe that it better positioned our business and the consideration received was additive to shareholder value.

We may in the future divest additional investments in the event we believe there is a similarly strong strategic and financial rationale for such divestitures.

There can be no assurances, however, that we will be able to achieve the expected strategic and financial benefits from these divestitures.

We may be adversely affected by the phase-out of, or changes in the method of determining, the London Interbank Offered Rate (“LIBOR”) or the replacement of LIBOR with a different reference rate.

LIBOR is the basic rate of interest used in lending between banks on the London interbank market and is widely used as a reference for setting the interest rate on U.S.

dollar-denominated loans globally.

Our credit facility, originally entered into on August 20, 2019 and assigned to Acadian on February 23, 2021, uses LIBOR a a reference rate such that the interest due to our creditors under the facility is calculated using LIBOR.

On July 27, 2017, the U.K.’s Financial Conduct Authority (the authority that administers LIBOR) announced that it intends to phase out LIBOR by the end of 2021.

It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021, or if alternative rates or benchmarks will be adopted.

Changes in the method of calculating LIBOR, or the replacement of LIBOR with an alternative rate or benchmark, may adversely affect interest rates and result in higher borrowing costs.

This could materially and adversely affect our results of operations, cash flows, and liquidity.

We cannot predict the effect of the potential changes to LIBOR or the establishment and use of alternative rates or benchmarks.

Industry Risks

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It also may make it difficult for other shareholders to replace management and may adversely impact the trading price of our common stock because investors often perceive disadvantages in owning common stock in companies with significant shareholders.

Additional repurchases of our common stock could, without any action by Paulson, further increase Paulson’s concentration of ownership.

Additionally, Paulson has the right to appoint two directors so long as Paulson holds at least 20% of our outstanding common stock and has the right to appoint one director so long as Paulson holds at least 7% of our outstanding common stock.

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and other jurisdictions could change in the future, and such changes could cause a material change in our effective tax rate and otherwise adversely affect our results of operations.

For example, the Tax Cuts and Jobs Act, which was enacted in December 2017 and became effective January 1, 2018 (the “Tax Act”), introduced various measures of domestic and international corporate tax reform that affect us and our Affiliates, including reduction of the federal statutory corporate tax rate, new limitations on the utilization, carryback and carryforward of net operating losses, limitations on the deductibility of interest expense, immediate expensing of certain capital expenditures, a one-time tax on mandatory deemed repatriation of non-U.S.

earnings, and new taxes assessed on foreign earnings.

The application of the Tax Act is not clear in all respects.

Additional administrative guidance is anticipated regarding the application of certain provisions in the Tax Act and such additional guidance may have an adverse effect on our tax rate or increase our tax liabilities.

As a result of the recent presidential and congressional elections in the United States, there could be significant changes in tax law and regulations.

While the likelihood and nature of any such legislation or regulations is uncertain, the new administration may pursue tax policies seeking to increase the corporate tax rate and further limit the deductibility of interest, among other things.

Such changes could materially increase the amount of taxes we are required to pay.

Further, pursuant to ongoing efforts to encourage global tax compliance, the U.S.

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In addition, the OECD is working on a BEPS 2.0 initiative, which is aimed at (i) shifting taxing rights to the jurisdiction of the consumer and (ii) ensuring all companies pay a global minimum tax.

New rules could be recommended by the end of 2020 and if implemented could impact us and our Affiliates.

New rules could be recommended in 2021 and if implemented could impact us and our Affiliates.

The timing and scope of any provisions are subject to significant uncertainty.

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Sales or distributions of substantial amounts of our common stock, including shares issued in connection with an acquisition, or the perception that such sales or distributions could occur, may cause the market price of our common stock to decline.

Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.

Our amended and restated certificate of incorporation provides that, unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or (iv) any action asserting a claim that is governed by the internal affairs doctrine, in each case subject to the Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein and the claim not being one which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery or for which the Court of Chancery does not have subject matter jurisdiction.

Any person purchasing or otherwise acquiring any interest in any shares of our capital stock shall be deemed to have notice of and to have consented to this provision of our amended and restated certificate of incorporation.

This choice of forum provision may limit our stockholders’ ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and our directors, officers, employees and agents.

Alternatively, if a court were to find this provision of our restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.

The exclusive forum provision described above does not impact the Federal courts’ exclusive jurisdiction over Exchange Act claims or the Federal and state courts’ concurrent jurisdiction over Securities Act claims.

General Risk Factors

The market price of our common stock and the broader equity markets have been, and may continue to be, volatile.

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Our ability to pay regular dividends to our stockholders is subject to the discretion of our Board of Directors and may be limited by our structure and applicable provisions of Delaware law.

Any declaration of dividends will be at the discretion of our Board of Directors, and will depend on our financial condition, earnings, cash needs, regulatory constraints, capital requirements and any other factors that our Board of

Directors deems relevant in making such a determination.

However, our ability to make such distributions will be subject to our operating results, which are impacted by the ability of our Affiliates to make distributions to us, cash requirements and financial condition, the applicable provisions of Delaware law that may limit the amount of funds available for distribution, our compliance with covenants and financial ratios related to existing or future indebtedness, including under our notes and our credit facilities, and our other agreements with third parties.

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Moreover, if at any time we are not able to comply with the requirements of Section 404 in a timely manner, or if we identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the NYSE, the SEC or other regulatory authorities, which would require additional financial and management resources.

Alternatively, if a court were

to find this provision of our restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.

Unresolved Staff Comments.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors