Sprout Social, Inc. 10-Q

Item 5. Other Information. Securities Trading Plans of Directors and Executive Officers During the fiscal quarter ended September 30, 2023, the following directors and officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted, modified or terminated “Rule 10b5-1 trading arrangements” (as defined in Item 408 of Regulation S-K of the Exchange Act), which are intended to satisfy the affirmative defense conditions under 10b5-1(c) under the Exchange Act: 54 Type of Trading Arrangement Name and Position Action (Adoption / Termination) Adoption / Termination Date Rule 10b5-1* Non- Rule 10b5-1** Total Shares and Class of Common Stock to be Sold Expiration Date Justyn Howard , Chief Executive Officer & Chairman of the Board of Directors Adoption 08/10/2023 X 240,000 shares of Class B Common Stock (1) 10/10/2024 Aaron Rankin , Chief Technology Officer & Member of the Board of Directors Adoption 08/25/2023 X 1,010,000 shares of Class B Common Stock (1)(2) 11/5/2024 Ryan Barretto , President Adoption 8/31/2023 X 97,200 shares of Class A Common Stock (1) 12/31/2024 Joe Del Preto , Chief Financial Officer & Treasurer Adoption 8/16/2023 X 18,000 shares of Class A Common Stock 11/5/2024 * Contract, instruction or written plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. ** “Non-Rule 10b5-1 trading arrangement” as defined in Item 408(c) of Regulation S-K under the Exchange Act. (1) All or a portion of the sale of these shares is subject to limit orders, which may result in all or a portion of such shares remaining unsold. (2) The weighted average of the price of the limit orders in Mr. Rankin’s August 25, 2023 trading plan is $102.03. The number of shares subject to Mr. Rankin’s August 25, 2023 trading plan is lower than the aggregate number of shares subject to the prior plans of Mr. Rankin and his spouse which expired in August 2023. In addition, our officers (as defined in Rule 16a-1(f) under the Exchange Act), other than Mr. Howard, have entered into sell-to-cover arrangements, which constitute “non-Rule 10b5-1 trading arrangements,” authorizing the pre-arranged sale of shares to satisfy tax withholding obligations of the Company arising exclusively from the vesting of restricted stock units and the related issuance of shares. The amount of shares to be sold to satisfy the Company’s tax withholding obligations under these arrangements is dependent on future events which cannot be known at this time, including the future trading price of the Company’s Class A common stock. The expiration date relating to these arrangements is dependent on future events which cannot be known at this time, including the final vest date of the applicable restricted stock units and the officer’s termination of service. Severance Plan On November 1, 2023, the Compensation Committee (the “Compensation Committee”) of the Board of Directors (the “Board”) of the Company approved and adopted the Sprout Social, Inc. Severance Plan (the “Severance Plan”), pursuant to which certain of the Company’s executive officers will be eligible to receive certain severance and/or change in control benefits. Each participant in the Severance Plan will be designated as a “Tier 1 Covered Executive,” “Tier 2 Covered Executive” or “Tier 3 Covered Executive.” With respect to each Tier 2 Covered Executive, pursuant to the Severance Plan, if, within the three-month period prior to, or the 12-month period following, a “change in control” (as defined in the Severance Plan), the Company terminates the employment of the applicable executive without “cause” (excluding death or “disability”) or such executive resigns for “good reason” (each, as defined in the Severance Plan) and within no more than 45 days of such termination the executive executes and does not revoke a separation agreement and release of claims, such executive will be entitled to receive (i) cash severance in an amount equal to 12 months of the executive’s then-current base salary and 100% of the executive’s target annual bonus for the calendar year in which such termination occurs (less any portion of the annual bonus which has previously been paid for such year), payable, less applicable withholdings and deductions, in the form of continuation payments in regular installments over the 12-month period following the date of such 55 termination, in accordance with the Company’s normal payroll practices, (ii) payment of premiums to maintain group health insurance continuation benefits pursuant to COBRA for such executive and such executive’s eligible dependents for up to 12 months, and (iii) vesting acceleration as to 100% of the then-unvested shares subject to each of such executive’s then outstanding equity awards (and in the case of awards subject to performance-based vesting conditions, such performance-based awards shall vest assuming a target level of performance for each applicable performance objective). With respect to each Tier 2 Covered Executive, pursuant to the Severance Plan, if, outside of the three-month period prior to, or the 12-month period following, a “change in control,” the Company terminates the employment of the applicable executive without “cause” (excluding death or “disability”) or such executive resigns for “good reason” and within no more than 45 days of such termination the executive executes and does not revoke a separation agreement and release of claims, such executive will be entitled to receive (i) cash severance in an amount equal to six months of the executive’s then-current base salary, payable, less applicable withholdings and deductions, in the form of continuation payments in regular installments over the six-month period following the date of such termination, in accordance with the Company’s normal payroll practices and (ii) payment of premiums to maintain group health insurance continuation benefits pursuant to COBRA for such executive and such executive’s eligible dependents for up to six months. Each of Ryan Barretto, the Company’s President and Joe Del Preto, the Company’s Chief Financial Officer and Treasurer has been designated to participate in the Severance Plan as a Tier 2 Covered Executive. The foregoing description of the Severance Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the Severance Plan, a copy of which is filed as Exhibit 10.4 to this Quarterly Report on Form 10-Q and is incorporated by reference herein. 56 Item 6. Exhibits INDEX TO EXHIBITS 3.1 Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to Sprout Social’s Current Report on form 8-K (File No. 001-39156) filed on December 17, 2019). 3.2 Amended and Restated Bylaws of the Registrant (Incorporated by reference to Exhibit 3.1 to Sprout Social’s Current Report on form 8-K (File No. 001-39156 filed on October 31, 2022). 10.1 Agreement and Plan of Merger, dated August 2, 2023, by and among Sprout Social, Inc., Tag Merger Sub, Inc., Tagger Media, Inc., and Shareholder Representative Services LLC (Incorporated by reference to Exhibit 10.1 to Sprout Social’s Current Report on Form 8-K (File No. 001-39156) filed on August 2, 2023). 10.2 Credit Agreement, dated as of August 1, 2023, by and among Sprout Social, Inc., the banks and other financial institutions or entities party thereto as lenders and MUFG Bank, LTD. as administrative agent and collateral agent (Incorporated by reference to Exhibit 10.2 to Sprout Social’s Current Report on Form 8-K (File No. 001-39156) filed on August 2, 2023). 10.3 † Form of Notice of Grant of Restricted Stock Units and Restricted Stock Unit Agreement pursuant to the Sprout Social, Inc. 2019 Incentive Award Plan, approved October 25, 2023. 10.4† Sprout Social, Inc. 2023 Executive Severance Plan, approved November 1, 2023. 31.1 Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certifications of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2* Certifications of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101 The following information from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Loss, (iv) Condensed Consolidated Statements of Stockholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows and (vi) Notes to Condensed Consolidated Financial Statements 104 The cover page from the Quarterly Report on Form 10-Q, formatted as Inline XBRL. ________________ † Indicates a management contract or compensatory plan or arrangement. * Furnished, not filed. *** 57 SIGNATURE 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. Sprout Social, Inc. November 3, 2023 By: /s/ Joe Del Preto Joe Del Preto Chief Financial Officer and Treasurer (Principal Financial and Principal Accounting Officer) 58