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Item 9A. Controls and Procedures

2022-03-10 compared with 2021-02-26 · 73 added, 35 removed, 95 unchanged (53% of the section changed)

1 unchanged sentence

Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act, which are designed to provide reasonable assurance that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2020.

Based on the evaluation of our disclosure controls and procedures as of December 31, 2020, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of December 31, 2021.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, due to the material weaknesses in our internal control over financial reporting described below, our disclosure controls and procedures were not effective at the reasonable assurance level as of December 31, 2021.

Notwithstanding the material weaknesses, management has concluded that our audited financial statements included in this Annual Report on Form 10-K are fairly stated in all material respects in accordance with U.S.

GAAP for each of the periods presented herein.

Management’s Report on Internal Control Over Financial Reporting

The management of Clarivate Plc ("Clarivate" or the "Company") is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended.

Clarivate's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S generally accepted accounting principles.

The Company's internal control over financial reporting includes those policies and procedures that:

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Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Clarivate's management assessed the effectiveness of Clarivate's internal control over financial reporting as of December 31, 2020.

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013).

Based on management's assessment and those criteria, management has concluded that Clarivate's internal control over financial reporting was effective as of December 31, 2020.

In the year ended December 31, 2020, the Company acquired Decision Resources Group ("DRG"), CPA Global, Beijing IncoPat Technology Co., Ltd.

("IncoPat"), and Hanlim IPS.

("Hanlim") in business combinations.

As permitted by related SEC staff interpretive guidance for newly acquired businesses, the Company excluded DRG, CPA Global, IncoPat, and Hanlim from management's assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2020.

DRG, CPA Global, IncoPat, and Hanlim represented 1%, 5%, 0%, and 0% of the total assets, respectively, and 15%, 13%, 0%, and 0% of total revenue of the Company as of and for the year ended December 31, 2020.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2020 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

Clarivate's management assessed the effectiveness of Clarivate's internal control over financial reporting as of December 31, 2021 using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control — Integrated Framework (2013).

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

Clarivate's management identified material weaknesses in our internal control over financial reporting related to:

(1) the lack of an effectively designed control over the communication of modifications to pre-existing compensation agreements in an acquisition transaction between the legal function and the accounting function to ensure the accounting impact of the modifications could be evaluated, and (2) the lack of an effectively designed control with a sufficient level of precision to allow for an appropriate review of the tax balances associated with the opening balance sheet of acquired entities.

The material weakness related to the communication of modifications to pre-existing compensation agreements in an acquisition transaction resulted in the restatement of the Company’s consolidated financial statements for the year ended December 31, 2020, the quarter ended December 31, 2020, and each of the quarters of 2021 related to restricted cash, prepaid expenses, goodwill, accrued expenses, other current liabilities, other non-current liabilities, treasury shares, and accumulated other comprehensive income (loss) and accumulated deficit.

The material weakness related to the review of the

tax balances associated with the opening balance sheet of acquired entities resulted in immaterial adjustments of the Company’s consolidated financial statements for the year ended December 31, 2020 and each of the quarters of 2020 and 2021 related to goodwill, deferred income tax asset, and deferred income tax liability.

Additionally, these material weaknesses could result in misstatements of the aforementioned account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

Because of these material weaknesses, management concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2021.

In the year ended December 31, 2021, the Company acquired ProQuest in a purchase business combination.

Management excluded ProQuest from our assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2021.

ProQuest represented 2% of the Company's total assets and 4% of the Company's total revenues as of and for the year ended December 31, 2021.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2021 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears under "Item 8.

Financial Statements and Supplementary Data".

Remediation Plan

Our remediation plan related to the first identified material weakness includes management designing a control to identify and communicate the inventory of pre-existing compensation agreements in an acquisition transaction to the accounting department through the transaction close date to ensure the inventory includes the current version of the agreements.

Our remediation plan will also include bring down procedures each quarter through the measurement period.

Our remediation plan related to the second identified material weakness includes management designing an enhanced control to operate periodically during the measurement period to allow for an appropriate review of the tax balances associated with the opening balance sheet of acquired entities.

Changes in Internal Control Over Financial Reporting

During the fourth quarter of 2020, excluding CPA Global, IncoPat and Hanlim, there was no change in Clarivate’s internal control over financial reporting that materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

Management is currently evaluating the impact of CPA Global, IncoPat and Hanlim on Clarivate's internal control over financial reporting.

During the fourth quarter of 2021, there were no changes in Clarivate’s internal control over financial reporting that materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

Other Information

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The Company terminated this activity in October 2019 and does not intend to resume it.

Revenue in the reporting period attributable to the transactions or dealings by the Company described above was approximately $700 and the company incurred no expenses related to these transactions.

As such, the net profit of these transactions is approximately $700.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers and Corporate Governance

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EXHIBIT INDEX

2.1 Share Purchase Agreement, dated January 17, 2020 by and among PEL-DRG Dutch Holdco B.V., Piramal Enterprises Limited, Clarivate Analytics (US) Holdings Inc., Clarivate Analytics (Canada) Holdings Corp., Camelot UK Bidco Limited, Clarivate Analytics (Singapore) Pte.

Ltd., and, for certain limited purposes, Clarivate Analytics Plc, (incorporated by reference to Exhibit 2.4 to Clarivate's Form F-1, filed on February 3, 2020)

2.2 Purchase Agreement dated as of July 29, 2020 by and among Redtop Holdings Limited, Camelot UK Bidco Limited, Clarivate IP (US Holdings Corporation) and Clarivate Plc (incorporated by reference to Exhibit 2.1 to Clarivate's Form 8-K filed on July 29, 2020)

3.1 Amended and Restated Memorandum and Articles of Association (incorporated by reference to Exhibit 3.1 to Clarivate's Form 8-K, filed on May 8, 2020)

2.1 ProQuest Transaction Agreement (incorporated by reference to Exhibit 2.1 to Clarivate's Form 8-K filed May 17, 2021)

2.2 Amendment to ProQuest Transaction Agreement (incorporated by reference to Exhibit 2.1 to Clarivate’s Form 8-K filed July 29, 2021)

2.3 Amendment No.

2 to ProQuest Transaction Agreement (incorporated by reference to Exhibit 2.1 to Clarivate's Form 8-K filed December 1, 2021)

3.1 Amended and Restated Memorandum and Articles of Association (incorporated by reference to Exhibit 3.1 to Clarivate’s Form 8-K filed May 12, 2021)

3.2 Statement of Rights of the 5.25% Series A Mandatory Convertible Preferred Shares of Clarivate Plc, effective June 14, 2021 (incorporated by reference to Exhibit 3.1 to Clarivate’s Form 8-K filed June 14, 2021)

3.3 Form of Certificate of the 5.25% Series A Mandatory Convertible Preferred Shares (included as Exhibit A to Exhibit 3.2 hereto)

4.1* Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

4.2 Warrant Agreement between Continental Stock Transfer & Trust Company and Churchill Capital Corp (incorporated by reference to Exhibit 4.4 to Churchill Capital Corp’s Form 8-K, filed on September 12, 2018)

4.3 Indenture dated as of October 31, 2019 among Camelot Finance S.A., as Issuer, the guarantors party thereto and Wilmington Trust, National Association, as trustee governing the 4.50% Senior Secured Notes due 2026 (incorporated by reference to Exhibit 4.1 to Clarivate’s Form 6-K, filed on November 5, 2019)

4.3 Form of 4.50% Senior Secured Note due 2026 (incorporated by reference to Exhibit A to Exhibit 4.1 to Clarivate’s Form 6-K, filed on November 5, 2019)

4.4 Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.5 to Clarivate's Form 10-K, filed on March 2, 2020)

4.4 Form of 4.50% Senior Secured Note due 2026 (included as Exhibit A to Exhibit 4.3 hereto)

4.5 First Supplemental Indenture, dated as of May 15, 2020, to the indenture dated as of October 31, 2019 among Camelot Finance S.A., as Issuer, the guarantors party thereto and Wilmington Trust, National Association, as trustee governing the 4.50% Senior Secured Notes due 2026 (incorporated by reference to Exhibit 4.1 to Clarivate's From 10-Q, filed on May 10, 2021)

4.6 Second Supplemental Indenture, dated as of March 30, 2021, to the indenture dated as of October 31, 2019 among Camelot Finance S.A., as Issuer, the guarantors party thereto and Wilmington Trust, National Association, as trustee governing the 4.50% Senior Secured Notes due 2026 (incorporated by reference to Exhibit 4.2 to Clarivate's From 10-Q, filed on May 10, 2021)

4.7 Third Supplemental Indenture dated as of December 1, 2021, to the indenture dated as of October 31, 2019 among Camelot Finance S.A., as Issuer, the guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent, governing the Issuer's 4.50% Senior Secured Notes due 2026 (incorporated by reference to Exhibit 4.1 to Clarivate's Form 8-K, filed on December 1, 2021)

4.8 Indenture, dated August 19, 2021, between Clarivate Science Holdings Corporation, as Issuer, and Wilmington Trust, National Association, as trustee and collateral agent, relating to the Issuer’s 3.875% senior secured notes due 2028 (incorporated by reference to Exhibit 4.1 to Clarivate's Form 8-K filed August 19, 2021)

4.9 Form of 3.875% senior secured note due 2028 (included as Exhibit A to Exhibit 4.8 hereto)

4.1 First Supplemental Indenture dated as of December 1, 2021, to the indenture dated as of August 19, 2021 among Clarivate Science Holdings Corporation, as Issuer, the guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent, governing the Issuer's 3.875% Senior Secured Notes due 2028 (incorporated by reference to Exhibit 4.2 to Clarivate's Form 8-K, filed on December 1, 2021)

4.11 Indenture, dated August 19, 2021, between Clarivate Science Holdings Corporation, as Issuer, and Wilmington Trust, National Association, as trustee, relating to the Issuer’s 4.875% senior notes due 2029 (incorporated by reference to Exhibit 4.2 to Clarivate's Form 8-K filed August 19, 2021)

4.12 Form of 4.875% senior note due 2029 (included as Exhibit A to Exhibit 4.11 hereto)

4.13 First Supplemental Indenture dated as of December 1, 2021, to the indenture dated as of August 19, 2021 among Clarivate Science Holdings Corporation, as Issuer, the guarantors party thereto and Wilmington Trust, National Association, as trustee, governing the Issuer's 4.875% Senior Notes due 2029 (incorporated by reference to Exhibit 4.3 to Clarivate's Form 8-K, filed on December 1, 2021)

10.1 Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.4 to Amendment No.

2 to Clarivate’s Registration Statement on Form F-4, filed on April 15, 2019)

10.2 Termination Agreement dated as of July 29, 2020 by and among Clarivate Plc, Churchill Capital Corp, Camelot Holdings (Jersey) Limited, and certain additional parties listed therein (incorporated by reference to Exhibit 10.3 to Clarivate's Form 8-K filed on July 29, 2020)

10.2 Investor Rights Agreement dated as of October 1, 2020 (incorporated by reference to Exhibit 10.1 to Clarivate's Form 8-K filed October 1, 2020)

10.3 Registration Rights Agreement dated as of October 1, 2020 (incorporated by reference to Exhibit 10.2 to Clarivate's Form 8-K filed October 1, 2020)

10.4 Amendment No.

1 to the Registration Rights Agreement dated as of December 1, 2021 (incorporated by reference to Exhibit 10.1 to Clarivate’s Form 8-K, filed December 1, 2021)

10.5 Director Nomination Agreement dated as of December 1, 2021 (incorporated by reference to Exhibit 10.2 to Clarivate's Form 8-K, filed December 1, 2021)

10.6 Capri Transaction Agreement (incorporated by reference to Exhibit 10.2 to Clarivate’s Form 8-K, filed May 17, 2021)

10.5 Director Acknowledgement Letter (Stead) (incorporated by reference to Exhibit 10.12 to Clarivate’s Registration Statement on Form F-4, filed on February 27, 2019)

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10.9 Amendment to Credit Agreement dated October 1, 2020 (incorporated by reference to Exhibit 10.4 to Clarivate's Form 8-K filed October 1, 2020)

10.10 Amendment to the Credit Agreement dated as of November 30, 2021 to Credit Agreement dated as of October 31, 2019 (incorporated by reference to Exhibit 10.3 to Clarivate's Form 8-K, filed on December 1, 2021)

10.11+ Clarivate Analytics Plc 2019 Incentive Award Plan - Amended and Restated as of May 11, 2020

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10.13+ Clarivate Analytics Plc 2019 Incentive Award Plan - Form of Performance Share Unit Agreement (incorporated by reference to Exhibit 10.4 to Clarivate's Quarterly Report on Form 10-Q, filed on July 30, 2020)

10.13+ Agreement by and between Clarivate Analytics and Richard Hanks, dated March 1, 2017 (incorporated by reference to Exhibit 10.5 to Clarivate's Quarterly Report on Form 10-Q, filed on July 30, 2020)

10.14*+ Separation Agreement, dated December 10, 2021, by and between Clarivate Plc and Richard Hanks

10.15*+ Offer Letter, dated November 29, 2021, by and between Clarivate Plc and Jonathan Collins

10.16+ Offer Letter, dated October 4, 2021, by and between Clarivate Plc and Heather Matzke-Hamlin (incorporated by reference to Exhibit 10.1 to Clarivate’s Form 8-K filed October 5, 2021)

10.17+ Agreement by and between Clarivate Analytics and Mukhtar Ahmed, dated January 1, 2018 (incorporated by reference to Exhibit 10.6 to Clarivate's Quarterly Report on Form 10-Q, filed on July 30, 2020)

10.15+ Agreement by and between Clarivate Analytics and Jeff Roy, dated September 5, 2017 (incorporated by reference to Exhibit 10.7 to Clarivate's Quarterly Report on Form 10-Q, filed on July 30, 2020)

10.16+ Agreement by and between Clarivate Analytics and Stephen Hartman, dated April 22, 2013 (incorporated by reference to Exhibit 10.8 to Clarivate's Quarterly Report on Form 10-Q, filed on July 30, 2020)

10.18+ Executive Agreement, entered into as of July 26, 2021 by and between Clarivate Plc.

and Jeffrey Roy (incorporated by reference to Exhibit 10.3 to Clarivate's Quarterly Report on Form 10-Q, filed on July 29, 2021)

10.19+ Executive Agreement, entered into as of July 26, 2021 by and between Clarivate Plc.

and Stephen Hartman (incorporated by reference to Exhibit 10.4 to Clarivate's Quarterly Report on Form 10-Q, filed on July 29, 2021)

10.20+ Executive Severance Plan of Clarivate Plc (incorporated by reference to Exhibit 10.5 to Clarivate's Quarterly Report on Form 10-Q, filed on July 29, 2021)

21.1* Subsidiaries of the Registrant

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Not applicable.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized in the City of London, United Kingdom on February 26, 2021.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized in the City of London, United Kingdom on March 10, 2022.

CLARIVATE PLC

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Executive Chairman and Chief Executive Officer

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Jerre Stead, Richard Hanks and Stephen Hartman, and each of them, individually, as the undersigned’s true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for the undersigned and in the undersigned’s name, place and stead in any and all capacities, in connection with this annual report, including to sign in the name and on behalf of the undersigned, this annual report and any and all amendments hereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or his substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed below by the following persons on February 26, 2021 on behalf of the registrant and in the capacities indicated.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Jerre Stead, Jonathan M.

Collins and Jas Chahal, and each of them, individually, as the undersigned’s true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for the undersigned and in the undersigned’s name, place and stead in any and all capacities, in connection with this annual report, including to sign in the name and on behalf of the undersigned, this annual report and any and all amendments hereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or his substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed below by the following persons on March 10, 2022 on behalf of the registrant and in the capacities indicated.

/s/ Jerre Stead Executive Chairman and Chief Executive Officer

Jerre Stead (Principal Executive Officer)

/s/ Richard Hanks Chief Financial Officer

Richard Hanks (Principal Financial Officer)

/s/ Christie Archbold Chief Accounting Officer

Christie Archbold (Principal Accounting Officer)

/s/ Jonathan M.

Collins Executive Vice President and Chief Financial Officer

Collins (Principal Financial Officer)

/s/ Heather Matzke-Hamlin Acting Chief Accounting Officer

Heather Matzke-Hamlin (Acting Principal Accounting Officer)

/s/ Valeria Alberola Director

Valeria Alberola

/s/ Michael J.

Angelakis Director

/s/ Sheryl von Blucher Director

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Roedel Director

/s/ Andrew M.

Snyder Director

/s/ Roxane White Director

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 9A. Controls and Procedures