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Skillsoft (SKIL)

Filed: 25 Feb 22, 9:40pm
 Filed pursuant to Rule 424(b)(3)
 Registration No. 333-257718
PROSPECTUS SUPPLEMENT No. 6
(to Prospectus dated August 2, 2021)
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70,250,000 Shares of Class A Common Stock
33,966,667 Warrants to Purchase Shares of Class A Common Stock
56,966,667 Shares of Class A Common Stock Underlying Warrants
This prospectus supplement updates and supplements the prospectus dated August 2, 2021, which forms a part of our registration statement on Form S-1 (No. 333-257718). This prospectus supplement is being filed to update and supplement the information in the prospectus dated August 2, 2021, the related prospectus supplement dated August 4, 2021, the prospectus supplement dated September 15, 2021, the prospectus supplement dated December 15, 2021, the prospectus supplement dated December 22, 2021, and the prospectus supplement dated February 14, 2022 (together, the “Prospectus”) with information contained in our definitive proxy statement filed with the Securities and Exchange Commission on February 25, 2022 (the “Definitive Proxy”). Accordingly, we have attached the Definitive Proxy to this prospectus supplement.
The Prospectus and this prospectus supplement relate to the issuance by us of up to 23,000,000 shares of our Class A common stock, par value $0.0001 per share that are issuable upon the exercise of the Public Warrants (as defined below).
In addition, the Prospectus and this prospectus supplement also relate to the offer and sale from time to time by the selling securityholders named in the Prospectus (the “Selling Securityholders”), or their permitted transferees, of (a) up to 104,216,667 shares of our Class A common stock (which includes up to 33,966,667 shares of Class A common stock issuable upon the exercise of outstanding warrants) and (b) up to 33,966,667 warrants. We will not receive any proceeds from the sale of shares of our Class A common stock or warrants by the Selling Securityholders pursuant to the Prospectus, except with respect to amounts received by us upon exercise of the warrants to the extent such warrants are exercised for cash. However, we will pay the expenses, other than underwriting discounts and commissions and expenses incurred by the Selling Securityholders for brokerage, accounting, tax or legal services or any other expenses incurred by the Selling Securityholders in disposing of the securities, associated with the sale of securities pursuant to the Prospectus.
Our registration of the securities covered by the Prospectus does not mean that either we or the Selling Securityholders will issue, offer or sell, as applicable, any of the securities. The Selling Securityholders may offer and sell the securities covered by the Prospectus in a number of different ways and at varying prices. We provide more information in the section entitled “Plan of Distribution.” In addition, certain of the securities being registered hereby are subject to vesting and/or transfer restrictions that may prevent the Selling Securityholders from offering or selling of such securities upon the effectiveness of the registration statement of which the Prospectus is a part. See “Description of Securities” for more information.
You should read the Prospectus and any prospectus supplement or amendment carefully before you invest in our securities. Our Class A common stock and warrants are traded on the New York Stock Exchange under the symbol “SKIL” and “SKIL.WS”, respectively. On February 24, 2022, the last reported sale price of our Class A common stock on the New York Stock Exchange was $6.23 per share, and the closing price of our warrants was $1.07 per warrant.
This prospectus supplement updates and supplements the information in the Prospectus, and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any subsequent amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus, and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement. The information in this prospectus supplement modifies and supersedes, in part, the information in the Prospectus. Any information in the Prospectus that is modified or superseded shall not be deemed to constitute a part of the Prospectus except as modified or superseded by this prospectus supplement. You should not assume that the information provided in this prospectus supplement or the Prospectus is accurate as of any date other than their respective dates. Neither the delivery of this prospectus supplement or the Prospectus, nor any sale made hereunder, shall under any circumstances create any implication that there has been no change in our affairs since the date of this prospectus supplement, or that the information contained in this prospectus supplement or the Prospectus is correct as of any time after the date of that information.
Investing in our securities involves a high degree of risk. See the section entitled “Risk Factors” beginning on page 8 of the Prospectus and under similar headings in any further amendments or supplements to the Prospectus to read about factors you should consider before buying our securities.
Neither the Securities and Exchange Commission nor any other state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this Prospectus Supplement No. 6. Any representation to the contrary is a criminal offense.
The date of this Prospectus Supplement is February 25, 2022.

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300 Innovative Way, Suite 201
Nashua, NH 03062
Dear Fellow Stockholders:
You are invited to join us at a special meeting of stockholders (the “Special Meeting”) of Skillsoft Corp. (“Skillsoft”), which will be held on March 31, 2022 at 11:30 a.m. Eastern Time, in virtual format. If you own shares of Class A common stock, par value $0.0001 per share, of Skillsoft (“Common Stock”), at the close of business on March 7, 2022, the record date, you will be entitled to vote at the Special Meeting.
On December 22, 2021, Skillsoft, Skillsoft Finance II, Inc., a Delaware corporation and indirect wholly-owned subsidiary of Skillsoft (“Borrower”), Skillsoft Newco I, Inc., a Delaware corporation and direct wholly-owned subsidiary of Borrower (“Merger Sub I”), Skillsoft Newco II, LLC, a Delaware limited liability company and direct wholly-owned subsidiary of Borrower (“Merger Sub II”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Ryzac, Inc., a Delaware corporation (“Codecademy”), and Fortis Advisors LLC, a Delaware limited liability company, solely in its capacity as the representative of the Codecademy equity holders, pursuant to which Merger Sub I will merge with and into Codecademy (the “First Merger”), with Codecademy being the surviving corporation of the First Merger (the “Surviving Corporation”), and immediately following the First Merger and as part of the same overall transaction, the Surviving Corporation will merge with and into Merger Sub II (the “Second Merger” and, together with the First Merger, the “Mergers”), with Merger Sub II being the surviving company of the Second Merger and an indirect wholly-owned subsidiary of Skillsoft.
Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the First Merger (the “Effective Time”), all shares of common stock and preferred stock of Codecademy, options to acquire shares of common stock of Codecademy and restricted stock units of Codecademy issued and outstanding immediately prior to the Effective Time will be converted automatically into the right to receive a portion of the aggregate consideration (such aggregate consideration, the “Merger Consideration”), consisting of $204,943,210 in cash and a number of shares of Common Stock (including shares of Common Stock underlying restricted stock units of Skillsoft (“Skillsoft RSUs”)) determined by dividing the aggregate share consideration value of $320,056,790 by the 15-trading day volume-weighted average price of the Common Stock at two (2) trading days prior to the date of closing of the Mergers (the “Closing Average Price”); provided, that if the Closing Average Price is (a) more than $11.43879 (the “Maximum Price”), then the number of shares shall be determined by dividing $320,056,790 by the Maximum Price and (b) less than $9.35901 (the “Minimum Price”), then the number of shares shall be determined by dividing $320,056,790 by the Minimum Price (such shares, the “Stock Consideration”). The Merger Consideration will be allocated among the holders of Codecademy common stock, preferred stock, options and restricted stock units as follows: (i) “non-accredited investors” will receive their pro rata portion of the Merger Consideration in cash; (ii) “share-only holders” will receive their pro rata portion of the Merger Consideration in Common Stock; and (iii) “pro rata holders” will receive their pro rata portion of the Merger Consideration in a mix of cash and Common Stock, in each case, the amount and composition of the Merger Consideration allocable to equity holders are subject to adjustment and holdbacks as set forth in the Merger Agreement.
The Merger Agreement provides that, at the Effective Time, each: (i) vested option to purchase common stock of Codecademy (other than vested options held by “non-accredited investors”) that is outstanding immediately prior to the Effective Time will be converted into the right to receive, with respect to each share of common stock of Codecademy covered by such vested option immediately prior to the Effective Time, cash and Common Stock on a pro rata basis (net of withholding taxes and the applicable per share exercise price), less holdback amounts as set forth in the Merger Agreement; (ii) unvested option to purchase common stock of Codecademy (other than unvested options held by “non-accredited investors” that are not continuing employees of Codecademy) will be assumed by Skillsoft and converted into a Skillsoft RSU to be granted as of the closing, representing the right to receive a number of shares of Common Stock determined with reference to the number of shares of common stock of Codecademy subject to such unvested option and the per share consideration exchange ratio (net of the exercise price), with each such Skillsoft RSU to be eligible to continue to vest on each date that the applicable unvested option would have otherwise vested in accordance with its terms, but only if such conditions to vesting are satisfied prior to each such vesting date; (iii) unvested restricted stock unit of Codecademy that is held by a “continuing employee” will be converted into the right to receive a Skillsoft RSU, representing the right to receive that number of shares of Common Stock equal to (x) the number of shares of common stock of Codecademy subject to such unvested restricted stock unit multiplied by (y) the per share consideration exchange ratio, provided that each such Skillsoft RSU will be subject to vesting on substantially similar terms and conditions as were applicable to each such unvested restricted stock unit prior to closing; (iv) vested option to purchase common stock of Codecademy that is held by “non-accredited investor” will be converted, into an amount in cash (net of withholding taxes), equal to (x) the excess of the Merger Consideration such “non-accredited investor” would have been entitled to receive in respect of a share of common stock of Codecademy over the per share exercise price of such option multiplied by (y) the number of shares of common stock of Codecademy covered by such option, less holdback amounts as described in the

Merger Agreement; and (v) unvested option that is held by a “non-accredited investor” that is not a continuing employee will be converted into an amount in cash (net of withholding taxes) equal to (x) the excess of the Merger Consideration such “non-accredited investor” would have been entitled to receive in respect of a share of common stock of Codecademy over the per share exercise price of such option multiplied by (y) the number of shares of common stock of Codecademy covered by such option, provided that the right to receive cash in respect of such options shall be subject to vesting on the same terms and conditions as were applicable to such options prior to closing.
The Common Stock that will be issued pursuant to the Merger Agreement will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), and will be issued in reliance on the exemption from registration requirements thereof provided by Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering. Skillsoft will be required to file with the U.S. Securities and Exchange Commission (the “SEC”) a registration statement on Form S-1 to provide for the public resale of the Common Stock issued pursuant to the Merger Agreement, in accordance with the terms of that certain Registration Rights Agreement to be entered into at the closing of the Mergers by and between Skillsoft and certain Codecademy equity holders that will receive a portion of the Stock Consideration in connection with the Mergers.
The Common Stock is listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “SKIL.” As a result, Skillsoft is subject to Section 312.03 of the NYSE Listed Company Manual (“NYSE Listing Rule 312.03”), pursuant to which stockholder approval is required in certain transactions (such as the Mergers) prior to the issuance of securities representing (a) 5% or more of the number of shares outstanding, or the voting power of, Skillsoft’s outstanding stock before such issuance if such securities are issued as consideration and a director, officer or substantial security holder of the issuer has a 5% or greater interest in the company or assets to be acquired or in the consideration to be paid in the transaction or series of related transactions or (b) 20% or more of the number of shares outstanding, or the voting power, of Skillsoft’s outstanding stock before such issuance. As of February 24, 2022, MIH Learning B.V. (“Prosus”) holds approximately 37.5% of Skillsoft’s outstanding Common Stock, and an affiliate of Prosus, MIH Edtech Investments B.V. (“Edtech”), or an affiliate thereof, holds approximately 23.8% of the outstanding equity of Codecademy. The shares of the Common Stock to be issued pursuant to the Merger Agreement represented approximately 25.7% of the number of shares and voting power of Skillsoft’s outstanding common stock, based on the closing price of $6.23 per share of Common Stock on February 24, 2022, the most recent practicable date. Based on the same assumption, 34,197,718 shares of Common Stock would be issued to the Codecademy equity holders in the Mergers, of which approximately 11 million shares would be issued to Edtech, or an affiliate thereof, the “share-only holder.”
Accordingly, at the Special Meeting, Skillsoft’s stockholders will be asked to consider and vote upon:
(1)
a proposal to approve the issuance of shares of Common Stock pursuant to the Merger Agreement (the “Stock Issuance Proposal”), in accordance with the requirements of Sections 312.03 and 312.07 of the NYSE Listed Company Manual; and
(2)
a proposal to approve one or more adjournments of the Special Meeting (the “Adjournment Proposal”) only: (i) to ensure that any supplement or amendment to the accompanying proxy statement that the Board (as defined below) has reasonably determined in good faith after consultation with Skillsoft’s outside legal counsel is required by applicable law is disclosed to Skillsoft’s stockholders and for such supplement or amendment to be promptly disseminated to Skillsoft’s stockholders prior to the Special Meeting; (ii) if, as of the time for which the Special Meeting is originally scheduled, there are insufficient shares of Common Stock represented (either virtually or by proxy) to constitute a quorum necessary to conduct the business to be conducted at the Special Meeting; or (iii) in order to solicit additional proxies from stockholders if there are insufficient votes to approve the Stock Issuance Proposal.
The Stock Issuance Proposal and the Adjournment Proposal are more fully described in the accompanying proxy statement, which each stockholder is encouraged to read carefully.
Skillsoft is providing the accompanying proxy statement and accompanying proxy card to its stockholders in connection with the solicitation of proxies to be voted at the Special Meeting (including any adjournments or postponements of the Special Meeting). Information about the Special Meeting, the Mergers the Stock Issuance Proposal and the Adjournment Proposal is included in the accompanying proxy statement.
After careful consideration, Skillsoft’s Board of Directors (the “Board”) has approved the Merger Agreement and the transactions contemplated thereby, including the issuance of shares of Skillsoft’s Common Stock comprising a portion of the transaction consideration, and recommends that stockholders vote “FOR” the approval of the Stock Issuance Proposal and “FOR” the approval of the Adjournment Proposal.
We cannot complete the Mergers unless the requisite holders of Skillsoft’s Common Stock approve the Stock Issuance Proposal. Your vote on these matters is very important regardless of the number of shares you own. Whether or not you plan to attend the Special Meeting, please promptly mark, sign and date the accompanying proxy card and return it in the enclosed postage-paid envelope or authorize the individuals named on your proxy card to vote your shares by calling the toll-free telephone number or by using the Internet as described in the instructions included with your proxy card.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” each of the proposals presented at the Special Meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other holder of record how to vote, and do not vote by phone or on the Internet or by attending and voting at the Special Meeting, among other things, your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting. If you are a stockholder of record and you attend the Special Meeting and wish to vote at the Special Meeting, you may withdraw your proxy and vote at the Special Meeting. Please vote by whichever method is most convenient for you to ensure that your shares are represented at the Special Meeting.
On behalf of the Board, I would like to thank you for your support of Skillsoft and look forward to the successful completion of the Mergers.
On behalf of the Board of Directors,
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Jeffrey R. Tarr
Chief Executive Officer
February 25, 2022
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT, PASSED UPON THE MERITS OR FAIRNESS OF THE MERGERS OR RELATED TRANSACTIONS CONTEMPLATED THEREBY OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THE ACCOMPANYING PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.
The accompanying proxy statement is dated February 25, 2022 and is expected to be first mailed to Skillsoft’s stockholders on or about February 28, 2022.

 
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
OF
SKILLSOFT CORP.
TO BE HELD ON MARCH 31, 2022
You are cordially invited to attend a special meeting of stockholders (the “Special Meeting”) of Skillsoft Corp. (“Skillsoft”).
Time and Date:
March 31, 2022 at 11:30 a.m. Eastern Time
Place:
Virtual meeting
Record Date:
If you own shares of Common Stock (as defined below) at the close of business on March 7, 2022, the record date, you will be entitled to vote at the Special Meeting
At the Special Meeting, Skillsoft plans to ask you to:
1.
Consider and vote upon a proposal to approve, for purposes of complying with applicable sections of the New York Stock Exchange Listed Company Manual, the issuance of shares of Class A common stock, par value $0.0001 per share, of Skillsoft (“Common Stock”) (the “Stock Issuance Proposal”) pursuant to the Merger Agreement, dated as of December 22, 2021 (as it may be amended from time to time, the “Merger Agreement”), by and among Skillsoft, Skillsoft Finance II, Inc., an indirect wholly-owned subsidiary of Skillsoft (“Borrower”), Skillsoft Newco I, Inc., a direct wholly-owned subsidiary of Borrower, Skillsoft Newco II, LLC, a direct wholly-owned subsidiary of Borrower, Ryzac, Inc., and Fortis Advisors LLC; and
2.
Consider and vote upon a proposal to approve one or more adjournments of the Special Meeting (the “Adjournment Proposal”) only: (i) to ensure that any supplement or amendment to the accompanying proxy statement that the Board (as defined below) has reasonably determined in good faith after consultation with Skillsoft’s outside legal counsel is required by applicable law is disclosed to Skillsoft’s stockholders and for such supplement or amendment to be promptly disseminated to Skillsoft’s stockholders prior to the Special Meeting; (ii) if, as of the time for which the Special Meeting is originally scheduled, there are insufficient shares of Common Stock represented (either virtually at the Special Meeting or by proxy) to constitute a quorum necessary to conduct the business to be conducted at the Special Meeting; or (iii) in order to solicit additional proxies from stockholders if there are insufficient votes to approve the Stock Issuance Proposal.
Skillsoft’s Board of Directors (the “Board”) recommends that you vote “FOR” the Stock Issuance Proposal and “FOR” the Adjournment Proposal.
The above proposals are more fully described in the accompanying proxy statement, which also includes, attached thereto as Annex I, a copy of the Merger Agreement. We urge you to read carefully the accompanying proxy statement in its entirety, including the Annexes.
Please see the instructions in the “Questions and Answers About the Proposals for the Special Meeting” section in the accompanying proxy statement, which provides additional information on how to participate in the Special Meeting.
We urge each stockholder to promptly sign and return the enclosed proxy card or to vote by phone or Internet.
On behalf of the Board of Directors,
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Jeffrey R. Tarr
Chief Executive Officer
February 25, 2022
PROXY STATEMENT
DATED FEBRUARY 25, 2022
 

 
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SUMMARY TERM SHEET
This summary term sheet, together with the section entitled “Summary of the Proxy Statement,” summarizes certain information contained in this proxy statement, but may not contain all of the information that is important to you. You should read carefully this entire proxy statement, including the attached Annexes, for a more complete understanding of the matters to be considered at the Special Meeting.
For definitions used commonly throughout this proxy statement, including this summary term sheet, please see the section entitled “Frequently Used Terms.”

As of February 24, 2022, the most recent practicable date, there were 133,164,526 shares of Common Stock issued and outstanding, and there were no shares of preferred stock of Skillsoft issued and outstanding.

On December 22, 2021, the Skillsoft Parties entered into the Merger Agreement with the Codecademy Parties, pursuant to which Skillsoft will acquire all of the outstanding equity interests of Codecademy in exchange for the consideration described below. For more information about the Merger Agreement, please see the section entitled “Proposal No. 1 — Approval of the Issuance of Common Stock in Connection with the Mergers — Agreement and Plan of Merger.”

For information about Codecademy, please see the sections entitled “Information About Codecademy” and “Codecademy’s Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Under the terms and conditions of the Merger Agreement, the aggregate consideration (such aggregate consideration, the “Merger Consideration”) to be paid in exchange for all shares of common stock and preferred stock of Codecademy, options to acquire shares of common stock of Codecademy and restricted stock units of Codecademy issued and outstanding immediately prior to the Effective Time will consist of $204,943,210 in cash and a number of shares of Common Stock determined by dividing the aggregate share consideration value of $320,056,790 by the 15-trading day volume-weighted average price of the Common Stock at two (2) trading days prior to the date of closing of the Mergers (the “Closing Average Price”); provided, that if the Closing Average Price is (a) more than $11.43879 (the “Maximum Price”), then the number of shares shall be determined by dividing $320,056,790 by the Maximum Price and (b) less than $9.35901 (the “Minimum Price”), then the number of shares shall be determined by dividing $320,056,790 by the Minimum Price. The Merger Consideration will be allocated among the holders of Codecademy common stock, preferred stock, options and restricted stock units as follows: (i) “non-accredited investors” will receive their pro rata portion of the Merger Consideration in cash; (ii) “share-only holders” will receive their pro rata portion of the Merger Consideration in Common Stock; and (iii) “pro rata holders” will receive their pro rata portion of the Merger Consideration in a mix of cash and Common Stock, in each case, the amount and composition of which are subject to adjustment and holdbacks as set forth in the Merger Agreement. The Common Stock that will be issued pursuant to the Merger Agreement will not be registered under the Securities Act and will be issued in reliance on the exemption from registration requirements thereof provided by Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering. Skillsoft will be required to file with the SEC a registration statement on Form S-1 to provide for the public resale of the Common Stock issued pursuant to the Merger Agreement, in accordance with the terms of the Registration Rights Agreement. For more information about the Merger Consideration and the treatment of options and restricted stock units of Codecademy, please see the section entitled “Proposal No. 1 — Approval of the Issuance of Common Stock in Connection with the Mergers — Agreement and Plan of Merger — Merger Consideration.”

It is currently anticipated that, upon completion of the Mergers, assuming no adjustments are made to the Stock Consideration pursuant to the Merger Agreement, Skillsoft’s current stockholders will own approximately 79.6% of Skillsoft and the former Codecademy equity holders will own, in the aggregate, approximately 20.4% of Skillsoft. Based on the closing price of $6.23 per share of Common Stock on February 24, 2022, the most recent practicable date, 34,197,718 shares of Common Stock will be issued to the Codecademy equity holders in the Mergers, of which approximately 11 million shares will be issued to MIH Edtech Investments B.V. (“Edtech”), the “share-only holder.”
 
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The Board and Skillsoft’s management considered various factors in determining whether to approve the Merger Agreement and the transactions contemplated thereby, including the Mergers. For more information about the Board’s reasons for approving the Mergers, see the section entitled “Proposal No. 1 — Approval of the Issuance of Common Stock in Connection with the Mergers —  Background and Reasons for the Mergers — The Board’s Reasons for the Approval of the Mergers and the Stock Issuance.”

At the Special Meeting, Skillsoft’s stockholders will be asked to consider and vote upon the Stock Issuance Proposal. In addition to voting on the Stock Issuance Proposal at the Special Meeting, Skillsoft’s stockholders will be asked to vote on the Adjournment Proposal. Please see the sections entitled “Proposal No. 1 — Approval of the Issuance of Common Stock in Connection with the Mergers” and “Proposal No. 2 — The Adjournment Proposal.”

Unless waived by the Skillsoft Parties and/or the Codecademy Parties, as applicable, and subject to applicable law, the closing of the Mergers is subject to a number of conditions set forth in the Merger Agreement, including (i) the approval of the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement by written consent of holders of a majority of the voting power of each of the outstanding preferred stock, series C preferred stock and series D preferred stock of Codecademy entitled to vote thereon, which written consent has been obtained and delivered by Codecademy to Skillsoft; (ii) the approval by Skillsoft’s stockholders of the issuance of Common Stock as part of the Merger Consideration pursuant to the requirements of NYSE Listing Rule 312.03; (iii) the receipt of HSR clearance; (iv) clearance by the Committee on Foreign Investment in the United States (“CFIUS”); (v) the absence of any law or order prohibiting the consummation of the transactions contemplated by the Merger Agreement; (vi) the absence of a “material adverse effect” on Codecademy; (vii) the approval for listing on the NYSE of the Common Stock to be issued as part of the Merger Consideration; (viii) the representations and warranties of the Skillsoft Parties and Codecademy being true and correct, subject to the materiality standards contained in the Merger Agreement; and (ix) the Skillsoft Parties and Codecademy having complied in all material respects with their respective obligations under the Merger Agreement. For more information about the closing conditions to the Mergers pursuant to the Merger Agreement, please see the section entitled “Proposal No. 1 — Approval of the Issuance of Common Stock in Connection with the Mergers — Agreement and Plan of Merger — Conditions to Closing of the Mergers.”

The Merger Agreement also provides for termination rights for both Codecademy and Skillsoft under certain circumstances, including if the Mergers are not consummated on or before June 22, 2022 (the “Outside Date”), subject to an automatic extension until July 22, 2022 if on the Outside Date all conditions are satisfied other than conditions relating to the receipt of regulatory approvals. Skillsoft will be required to pay Codecademy a termination fee of $6,000,000 in the event of a termination of the Merger Agreement : (i) by either Codecademy or Skillsoft if the Mergers have not been consummated by the Outside Date (only if Skillsoft does not otherwise have a termination right due to Codecademy’s uncured breach of any of its covenants or representations in the Merger Agreement that would result in the failure of a closing condition), (ii) by either Codecademy or Skillsoft if there is any final, non-appealable injunction prohibiting the Mergers, (iii) by Codecademy if there is an uncured breach by a Skillsoft Party of any of its respective covenants or representations in the Merger Agreement that would result in the failure of a closing condition (only if Codecademy is not then in material breach of the Merger Agreement), (iv) by Codecademy if Skillsoft’s stockholders do not approve the issuance of Common Stock as Merger Consideration pursuant to the requirements of NYSE Listing Rule 312.03 or (v) by Codecademy if there has been a “material adverse effect” on a Skillsoft Party. For more information about the termination rights under the Merger Agreement, please see the section entitled “Proposal No. 1 — Approval of the Issuance of Common Stock in Connection with the Mergers — Agreement and Plan of Merger — Termination.”

The proposed Mergers involve numerous risks. For more information about these risks, please see the section entitled “Risk Factors.”
 
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FREQUENTLY USED TERMS
Throughout this proxy statement, references to “Skillsoft” or “SKIL” refer to Skillsoft Corp., a Delaware corporation, and not its subsidiaries, and references to “we,” “us,” “our” and the “Company” refer collectively to Skillsoft and its consolidated subsidiaries, except as otherwise indicated.
In addition, throughout this proxy statement, except as otherwise indicated:
Board” or “Board of Directors” means the board of directors of Skillsoft.
Borrower” means Skillsoft Finance II, Inc., a Delaware corporation and indirect wholly-owned subsidiary of Skillsoft.
Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized or required by applicable law to be closed in New York, New York.
Cash Consideration” means $204,943,210.
Code” means the Internal Revenue Code of 1986, as amended.
Codecademy” means Ryzac, Inc., a Delaware corporation.
Codecademy Parties” means Codecademy and the Securityholder Representative.
Common Stock” means the shares of Skillsoft’s Class A common stock, par value $0.0001 per share.
Company,” “we,” “us” or “our” means Skillsoft and its consolidated subsidiaries, except as otherwise indicated.
Continental” means Continental Stock Transfer & Trust Company, Skillsoft’s transfer agent.
COVID-19” means SARS-CoV-2 or COVID-19 and any evolutions thereof.
DGCL” means the General Corporation Law of the State of Delaware, as amended.
Effective Time” means the effective time of the First Merger.
Exchange Act” means the Securities Exchange Act of 1934, as amended.
First Merger” means the merger of Merger Sub I with and into Codecademy, with Codecademy being the surviving corporation of the merger.
GAAP” means accounting principles generally accepted in the United States as in effect from time to time.
Georgeson” means Georgeson LLC, Skillsoft’s proxy solicitor.
HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
Merger Agreement” means that certain Agreement and Plan of Merger, dated as of December 22, 2021, as it may be amended from time to time, by and among the Skillsoft Parties and the Codecademy Parties, a copy of which is included as Annex I attached hereto.
Merger Consideration” means the aggregate consideration, consisting of Cash Consideration and Stock Consideration.
Merger Sub I” means Skillsoft Newco I, Inc., a Delaware corporation and direct wholly-owned subsidiary of Borrower.
Merger Sub II” means Skillsoft Newco II, LLC, a Delaware limited liability company and direct wholly-owned subsidiary of Borrower.
Mergers” means the First Merger and the Second Merger.
 
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NYSE” means the New York Stock Exchange.
NYSE Listed Company Manual” means the NYSE Listed Company Manual, as amended from time to time, and any successor rule or regulation.
NYSE Listing Rule 312.03” means Section 312.03 of the NYSE Listed Company Manual.
Registration Rights Agreement” means that certain Registration Rights Agreement to be entered into at the closing of the Mergers by and between Skillsoft and the RRA Holders.
RRA Holders” means certain Codecademy equity holders that will receive a portion of the Stock Consideration in connection with the Mergers.
SEC” means the Securities and Exchange Commission.
Second Merger” means the merger of the Surviving Corporation with and into Merger Sub II, with Merger Sub II being the surviving company of the merger and an indirect wholly-owned subsidiary of Skillsoft.
Securities Act” means the Securities Act of 1933, as amended.
Securityholder Representative” means Fortis Advisors LLC, a Delaware limited liability company, solely in its capacity as the representative of the Codecademy equity holders under the Merger Agreement.
Shelf Registration Statement” means a registration statement filed with the SEC registering for public resale the shares of Common Stock received by the RRA Holders as part of the Mergers on either (a) Form S-3 or Form F-3 (or any successor form or other appropriate form under the Securities Act) or (b) if Skillsoft is not permitted to file a registration statement on Form S-3 or Form F-3, an evergreen registration statement on Form S-1 or Form F-1 (or any successor form or other appropriate form under the Securities Act), in each case, for an offering to be made on a continuous basis pursuant to Rule 415 under the Securities Act (or any similar rule that may be adopted by the SEC), as applicable.
Skillsoft” means Skillsoft Corp., a Delaware corporation, and, for the period prior to and including June 10, 2021, Churchill Capital Corp II, a Delaware corporation, which changed its name to Skillsoft Corp. on June 11, 2021 in connection with its merger with Software Luxembourg.
Skillsoft Parties” means Skillsoft, Borrower, Merger Sub I and Merger Sub II.
Software Luxembourg” means Software Luxembourg Holding S.A., a public limited liability company (société anonyme), incorporated and organized under the laws of the Grand Duchy of Luxembourg, having its registered office at Bijou, 17 Boulevard Raiffeisen, L-2411 Luxembourg, Grand Duchy of Luxembourg, and registered with the Luxembourg Register of Commerce and Companies (Registre de Commerce et des Sociétés, Luxembourg) under number B246188.
Special Meeting” means the special meeting of Skillsoft’s stockholders that is the subject of this proxy statement.
Stock Consideration” means a number of shares of Common Stock determined by dividing the aggregate share consideration value of $320,056,790 by the 15-trading day volume-weighted average price of the Common Stock at two (2) trading days prior to the date of closing of the Mergers (the “Closing Average Price”); provided, that if the Closing Average Price is (a) more than $11.43879 (the “Maximum Price”), then the number of shares shall be determined by dividing $320,056,790 by the Maximum Price and (b) less than $9.35901 (the “Minimum Price”), then the number of shares shall be determined by dividing $320,056,790 by the Minimum Price.
Surviving Company” means the surviving company of the Second Merger.
Surviving Corporation” means the surviving corporation of the First Merger.
VIF” means a voting instruction form.
 
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DEFINITIVE PROXY STATEMENT DATED
FEBRUARY 25, 2022
On behalf of the Board, Skillsoft is soliciting proxies to be voted at the Special Meeting to be held on March 31, 2022 at 11:30 a.m. Eastern Time, for the purposes set forth herein. Giving Skillsoft your proxy means you authorize Skillsoft to vote your shares at the Special Meeting in the manner you direct or if you provide no direction, as described herein.
This proxy statement and the form of proxy were first mailed on or about February 28, 2022. This proxy statement contains important information about the items you will vote on at the Special Meeting and about the voting process.
 
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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS FOR THE SPECIAL MEETING
Q.
Why am I receiving this proxy statement?
A.
Skillsoft’s stockholders are being asked to consider and vote upon proposals to:

approve the issuance of shares of Common Stock pursuant to the Merger Agreement (the “Stock Issuance Proposal” or “Proposal No. 1”), in accordance with Sections 312.03 and 312.07 of the NYSE Listed Company Manual; and

approve one or more adjournments of the Special Meeting, if necessary or appropriate, to permit solicitation of additional votes if there are insufficient votes to approve the Stock Issuance Proposal (the “Adjournment Proposal” or “Proposal No. 2”).
Skillsoft has entered into the Merger Agreement providing for the acquisition of all of the equity interests of Codecademy for the Merger Consideration. The Merger Consideration will be allocated among the holders of Codecademy common stock, preferred stock, options and restricted stock units as follows: (i) “non-accredited investors” will receive their pro rata portion of the Merger Consideration in cash; (ii) “share-only holders” will receive their pro rata portion of the Merger Consideration in Common Stock; and (iii) “pro rata holders” will receive their pro rata portion of the Merger Consideration in a mix of cash and Common Stock, in each case, the amount and composition of the portion of Merger Consideration are subject to adjustment and holdbacks as set forth in the Merger Agreement. For more information about the Merger Consideration and the treatment of options and restricted stock units of Codecademy, please see the section entitled “Proposal No. 1 — Approval of the Issuance of Common Stock in Connection with the Mergers — Agreement and Plan of Merger — Merger Consideration”. A copy of the Merger Agreement is attached to this proxy statement as Annex I.
Skillsoft is subject to NYSE Listing Rule 312.03, pursuant to which stockholder approval is required in certain transactions (such as the Mergers) prior to the issuance of securities representing (a) 5% or more of the number of shares outstanding, or the voting power of, Skillsoft’s outstanding stock before such issuance if such securities are issued as consideration and a director, officer or substantial security holder of the issuer has a 5% or greater interest in the company or assets to be acquired or in the consideration to be paid in the transaction or series of related transactions or (b) 20% or more of the number of shares outstanding, or the voting power of, Skillsoft’s outstanding stock before such issuance. As of February 24, 2022, MIH Learning B.V. (“Prosus”) holds approximately 37.5% of Skillsoft’s outstanding Common Stock, and an affiliate of Prosus, Edtech, or an affiliate thereof, holds approximately 23.8% of the outstanding equity of Codecademy. The shares of the Common Stock to be issued pursuant to the Merger Agreement represented approximately 25.7% of the number of shares and voting power of Skillsoft’s outstanding common stock, based on the closing price of $6.23 per share of Common Stock on February 24, 2022, the most recent practicable date. Based on the same assumption, 34,197,718 shares of Common Stock would be issued to the Codecademy equity holders in the Mergers, of which approximately 11 million shares would be issued to Edtech, or an affiliate thereof, the “share-only holder.”
This proxy statement and its Annexes contain important information about the proposed Mergers and the other matters to be acted upon at the Special Meeting. You should read this proxy statement and its Annexes carefully and in their entirety.
Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement and its Annexes.
Q.
What are the Board’s voting recommendations on each proposal?
A.
The Board recommends that you vote “FOR” the Stock Issuance Proposal and “FOR” the Adjournment Proposal.
Q.
What will happen in the Mergers?
A.
Pursuant to the Merger Agreement and upon the terms and subject to the conditions set forth therein, Merger Sub I will merge with and into Codecademy, with Codecademy being the surviving corporation
 
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of the First Merger, and immediately following the First Merger and as part of the same overall transaction, the Surviving Corporation will merge with and into Merger Sub II, with Merger Sub II being the surviving company of the Second Merger and an indirect wholly-owned subsidiary of Skillsoft.
Q.
How will the Mergers impact the shares of Common Stock outstanding after the Mergers?
A.
As a result of the Mergers, assuming no adjustments are made to the Merger Consideration pursuant to the Merger Agreement, the number of shares of Common Stock outstanding will increase by approximately 25.7% to approximately 167,362,244 shares of Common Stock, based on the closing price of $6.23 per share of Common Stock on February 24, 2022, the most recent practicable date.
Q.
Will the management of Skillsoft or the Board change upon consummation of the Mergers?
A.
Upon consummation of the Mergers, Zachary Sims, the Chief Executive Officer and President of Codecademy, is expected to join Skillsoft as an executive officer.
Q.
What conditions must be satisfied to complete the Mergers?
A.
There are a number of closing conditions set forth in the Merger Agreement, including the expiration of the applicable waiting period under the HSR Act, CFIUS clearance and the required approval by the holders of Common Stock of the Stock Issuance Proposal. On February 9, 2022, the waiting period applicable to the consummation of the transactions contemplated by the Merger Agreement under the HSR Act expired. For a summary of the conditions that must be satisfied or waived prior to completion of the Mergers, please see the section entitled “Proposal No. 1 — Approval of the Issuance of Common Stock in Connection with the Mergers — Agreement and Plan of Merger — Conditions to Closing of the Mergers.”
Q.
What is a proxy?
A.
A proxy is a person you appoint to vote on your behalf. When you vote by completing and returning the enclosed proxy card, you will be designating Sarah K. Hilty, Chief Legal Officer, and Gary W. Ferrera, Chief Financial Officer, as your proxy, with power of substitution. Skillsoft solicits proxies so that as many shares as possible of Common Stock may be voted at the Special Meeting. You must complete and return the enclosed proxy card or vote by phone or Internet to have your shares voted by proxy as contemplated by this proxy statement.
Q.
How will my proxy vote my shares?
A.
Your proxies will be voted in accordance with your instructions. If you complete and return your proxy card but do not provide instructions on how to vote, your proxies will vote “FOR” the Stock Issuance Proposal and “FOR” the Adjournment Proposal. Also, your proxy card or your vote via phone or internet will give your proxies authority to vote, using their best judgment, on any other business that properly comes before the meeting.
Q.
What is a proxy statement?
A.
It is a document that Skillsoft gives you when Skillsoft is soliciting your vote pursuant to SEC regulations.
Q.
When and where will the Special Meeting be held?
A.
The Special Meeting will be held on March 31, 2022 at 11:30 a.m. Eastern Time, in virtual format.
Q.
When were the enclosed solicitation materials first given to the holders of shares of Common Stock?
A.
This proxy statement and the accompanying proxy card are first being mailed, given or made available to holders of shares of Common Stock, on or about February 28, 2022.
Q.
Who is entitled to vote, and how many votes do I have?
A.
You may vote if you hold shares of Common Stock at the close of business on March 7, 2022, which is referred to as the record date for the Special Meeting. For each item presented for voting, you have one vote for each share you own at the close of business on March 7, 2022.
 
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Q.
What constitutes a quorum, and what vote is required to approve each proposal at the Special Meeting?
A.
A quorum is the presence at the Special Meeting virtually or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast as of March 7, 2022, the record date for the Special Meeting. As of February 24, 2022, the most recent practicable date, there were 133,164,526 shares of Common Stock outstanding. Based on the assumption that there will be 133,164,526 shares of Common Stock outstanding as of the record date, the quorum for the Special Meeting would require the presence at the Special Meeting virtually or by proxy of holders of Common Stock entitled to vote at least 66,582,264 shares.
Assuming a quorum is present, approval of the Stock Issuance Proposal requires the affirmative vote of the holders of a majority of the shares of Common Stock present virtually or represented by proxy at the Special Meeting and entitled to vote thereat. Accordingly, with respect to a holder of shares of Common Stock who is present virtually or represented by proxy at the Special Meeting, such stockholder’s abstention from voting or the failure of a holder of shares of Common Stock to vote will have the same effect as a vote “AGAINST” the Stock Issuance Proposal. Additionally, if a holder of shares of Common Stock instructs its bank, broker or other nominee regarding the Adjournment Proposal but not the Stock Issuance Proposal, such broker non-vote will have the same effect as voting “AGAINST” the Stock Issuance Proposal.
Approval of the Adjournment Proposal requires the affirmative vote of the holders of a majority of the shares of Common Stock present virtually or represented by proxy at the Special Meeting and entitled to vote thereat. Accordingly, with respect to a holder of shares of Common Stock who is present virtually or represented by proxy at the Special Meeting, such stockholder’s abstention from voting or the failure of a holder of shares of Common Stock to vote will have the same effect as a vote “AGAINST” the Adjournment Proposal. Additionally, if a holder of shares of Common Stock instructs its bank, broker or other nominee regarding the Stock Issuance Proposal but not the Adjournment Proposal, such broker non-vote will have the same effect as voting “AGAINST” the Adjournment Proposal. Unless there is a quorum, the presiding officer of the Special Meeting may also adjourn the Special Meeting.
Q.
What is the difference between a stockholder of record and a stockholder who holds stock in street name?
A.
Stockholders of Record.   If your shares are registered in your name with Continental, you are a stockholder of record with respect to those shares and the proxy materials were sent directly to you.
Street Name Holders.   If you hold your shares in an account at a bank or broker, then you are the beneficial owner of shares held in “street name.” The proxy materials were forwarded to you by your bank or broker, who is considered the stockholder of record for purposes of voting at the Special Meeting. As a beneficial owner, you have the right to direct your bank or broker on how to vote the shares held in your account.
Q.
How can I vote my shares and participate at the Special Meeting?
A.
This proxy statement and the accompanying proxy card are first being mailed, given or made available to holders of shares of Common Stock, on or about February 28, 2022. If you are the record holder of your shares, you may vote your shares using your proxy card (see the next question).
Q.
How do I vote by mail using my proxy card?
A.
Step 1:   To vote for a proposal, check the box marked “FOR.” If you are opposed to a proposal, check the box, “AGAINST.” If you do not wish to vote, mark the box “ABSTAIN.”
Step 2:   Sign and date your proxy card. IF YOU DO NOT SIGN AND DATE YOUR PROXY CARD, YOUR VOTES WILL NOT BE COUNTED. EACH PROPERLY EXECUTED PROXY WILL BE VOTED IN THE MANNER DIRECTED. IF NO DIRECTION IS MADE, EACH SUCH PROXY WILL BE VOTED IN ACCORDANCE WITH THE BOARD’S RECOMMENDATIONS AS SET FORTH IN THIS PROXY STATEMENT.
Step 3:   Mail your proxy card in the pre-addressed, postage-paid envelope.
 
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Q:
May I change my vote after I have mailed my proxy card or after I have submitted my proxy by telephone or through the internet?
A:
Yes. You may revoke your proxy or change your vote at any time before the proxy is exercised at the Special Meeting. You may revoke your proxy by delivering a signed written notice of revocation stating that the proxy is revoked and bearing a date later than the date of the proxy to Skillsoft’s Chief Legal Officer at Skillsoft Corp., 300 Innovative Way, Suite 201, Nashua, New Hampshire 03062. You may also revoke your proxy or change your vote by submitting another proxy by telephone or through the internet. You may also submit a later-dated proxy card relating to the same shares of Common Stock. If you voted by completing, signing, dating and returning the enclosed proxy card, you should retain a copy of the voter control number found on the proxy card in the event that you later decide to revoke your proxy or change your vote by telephone or through the internet. Alternatively, your proxy may be revoked or changed by attending the Special Meeting via the virtual meeting website and voting at the meeting by following the internet voting instructions on your proxy card. However, simply attending the Special Meeting without voting will not revoke or change your proxy. “Street name” holders of shares of Common Stock should contact their bank, broker, trust or other nominee to obtain instructions as to how to revoke or change their proxies.
If you have instructed a bank, broker, trust or other nominee to vote your shares of Common Stock, you must follow the instructions received from your bank, broker, trust or other nominee to change your vote.
All properly submitted proxies received by us before the Special Meeting that are not revoked or changed prior to being exercised at the Special Meeting will be voted at the Special Meeting in accordance with the instructions indicated on the proxies or, if no instructions were provided, “FOR” each of the proposals.
Q.
How do I vote if I am a beneficial holder of shares held in “street name”?
A.
If your shares are held by a bank, broker or other holder of record in “street name,” you should receive a VIF along with a copy of this proxy statement.
Your bank, broker or other holder of record (or designee thereof) will vote your shares in accordance with the instructions on your returned VIF. You may instruct the holder of record to vote your shares by completing the VIF as outlined in the instructions on the form and signing, dating and returning the VIF in the prepaid envelope provided. You may also submit your vote by phone or on the Internet if those options are made available to you by your bank, broker or other holder of record. Although most banks, brokers and other nominees offer these voting alternatives, availability and specific procedures vary. Please instruct your bank, broker or other holder of record how to vote your shares so that your vote can be counted. Please review your VIF for the date by which your instructions must be received in order for your shares to be voted.
Q.
If my shares of Common Stock are held in “street name” by my bank, broker or other nominee, will my bank, broker or other nominee automatically vote those shares for me?
A.
Under the rules of the NYSE, your bank, broker or other nominee will only be permitted to vote your shares of Common Stock with respect to “routine” matters without instruction from you. However, your bank, broker or other nominee may vote your shares of Common Stock with respect to “non-routine” matters only if you instruct your bank, broker or other nominee how to vote. The Stock Issuance Proposal and the Adjournment Proposal are “non-routine” matters. As a result, if you fail to provide voting instructions to your bank, broker or other nominee, your shares will not be counted as present at the Special Meeting for purposes of determining a quorum and will not be voted on any of the proposals. If you provide voting instructions to your bank, broker or other nominee on one of the proposals but not on the other proposal, then your shares will be counted as present for purposes of determining a quorum but will not be voted on the proposal for which you fail to provide instructions.
 
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To make sure that your shares are voted with respect to each of the proposals, you should instruct your bank, broker or other nominee how you wish to vote your shares in accordance with the procedures provided by your bank, broker or other nominee regarding the voting of your shares.
If you instruct your bank, broker or other nominee on how you wish to vote your shares on the Stock Issuance Proposal, but not on the Adjournment Proposal, such failure to so instruct will have the same effect as voting “AGAINST” the Adjournment Proposal.
If you instruct your bank, broker or other nominee on how you wish to vote your shares on the Adjournment Proposal, but not on the Stock Issuance Proposal, such failure to so instruct will have the same effect as voting “AGAINST” the Stock Issuance Proposal.
Q.
If I hold my shares in “street name,” can I change my voting instructions after I have submitted voting instructions to my bank, broker or other nominee?
A.
If your shares are held in the name of a bank, broker or other nominee and you previously provided voting instructions to your bank, broker or other nominee, you should follow the instructions provided by your bank, broker or other nominee to revoke or change your voting instructions.
Q.
What if I receive more than one proxy card, direction card or VIF?
A.
This means that you have multiple accounts holding shares of Common Stock. These may include accounts with Continental, accounts with a bank, broker or other holder of record shares. In order to vote all of the shares of Common Stock held by you in multiple accounts, you will need to vote separately the shares of Common Stock held in each account. Please follow the voting instructions provided on each proxy card, direction card or VIF to ensure that all of your shares are voted.
You are encouraged to have all accounts registered in the same name and address whenever possible. You can do this by contacting Continental at its toll-free number (800) 450-7155 or on its website at https://continentalstock.com. If you receive more than one VIF, please contact the bank, broker or other holder of record holding your shares to determine whether you can consolidate your accounts.
Q.
What is “householding”?
A:
The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements, prospectuses, and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement or annual report, as applicable, addressed to those stockholders. This process, which is commonly referred to as “householding”, potentially provides extra convenience for stockholders and cost savings for companies. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement/prospectus, or if you are receiving multiple copies of this proxy statement/prospectus and wish to receive only one, please contact Skillsoft Corp., Attention: Chief Legal Officer, 300 Innovative Way, Suite 201, Nashua, New Hampshire 03062. If you are a stockholder whose shares are held by a bank, broker, or other nominee, you can request information about householding from your bank, broker, or other nominee.
Q.
Is my vote important and how are the votes counted?
A.
Your vote is very important. Each share of Common Stock that you own at the close of business on March 7, 2022, the record date for the Special Meeting, represents one vote. If you do not vote your shares, you will not have a say on the important issues to be voted on at the Special Meeting. If many of Skillsoft’s stockholders do not vote, the stockholders who do vote may influence the outcome of the proposals in greater proportion than their percentage ownership of Skillsoft.
Q.
What will happen to my shares of Common Stock?
A.
Nothing. You will continue to own the same shares of Common Stock that you own prior to the Effective Time. As a result of the Stock Issuance Proposal, however, the overall ownership percentage of the current holders of shares of Common Stock will be diluted.
 
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Q.
What happens if the Special Meeting is postponed or adjourned?
A.
If the Special Meeting is postponed or adjourned, your proxy will still be valid and may be voted at the postponed or adjourned meeting. You will still be able to change or revoke your proxy until it is voted. See “May I change my vote after I have mailed my proxy card or after I have submitted my proxy by telephone or through the internet?” above.
Q.
Who pays for the solicitation of proxies by Skillsoft?
A.
Skillsoft pays for the solicitation of proxies. Skillsoft is soliciting proxies primarily by use of mail. However, Skillsoft may also solicit proxies in person, by phone, by facsimile, by courier or by electronic means. To the extent that Skillsoft’s directors, officers or other employees participate in this solicitation, such persons will not receive any compensation for their participation, other than their normal compensation. Georgeson is assisting Skillsoft with the solicitation for a fee of approximately $20,000, plus reasonable out-of-pocket expenses. Skillsoft will also reimburse brokerage firms and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for sending proxy materials to stockholders and obtaining their proxies.
Q.
How may I revoke my proxy after I have delivered it?
A.
A proxy may be revoked at any time before it is voted by sending written notice of revocation to the Chief Legal Officer of Skillsoft, by delivering a later dated proxy (by one of the methods described above) or by voting virtually at the Special Meeting. The Chief Legal Officer may be contacted at the following address: Skillsoft Corp., Attention: Chief Legal Officer, 300 Innovative Way, Suite 201, Nashua, New Hampshire 03062.
Q.
What happens if I transfer my shares of Common Stock after the record date for the Special Meeting but before the Special Meeting?
A.
The record date for the Special Meeting is earlier than the date of the Special Meeting. If you transfer your shares of Common Stock after the record date for the Special Meeting but before the Special Meeting, you will, unless special arrangements are made, retain your right to vote at the Special Meeting.
Q.
As a holder of Common Stock, are there any risks that I should consider in deciding whether to vote for the approval of the Stock Issuance Proposal?
A.
Yes. You should read and carefully consider the risk factors set forth in “Risk Factors.” You should also read and carefully consider the risk factors of Skillsoft contained in Skillsoft’s filings with the SEC, which are incorporated by reference into this proxy statement.
Q.
Where can I find the voting results of the Special Meeting?
A.
Skillsoft will announce preliminary voting results at the Special Meeting. Voting results will also be disclosed on a current report on Form 8-K filed with the SEC within four Business Days after the Special Meeting. Once filed, such Form 8-K will be available on Skillsoft’s and the SEC’s websites.
Q.
What should I do now?
A.
You should read this proxy statement carefully and in its entirety, including the Annexes attached hereto, and return your completed, signed and dated proxy card by mail in the enclosed postage-paid envelope, or you may submit your voting instructions by phone or over the Internet as soon as possible so that your shares will be voted in accordance with your instructions.
 
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Q.
Who can help answer my questions?
A.
If you have questions about the proposals or if you need additional copies of this proxy statement or the enclosed proxy card you should contact:
Skillsoft Corp.
Attention: Chief Legal Officer
300 Innovative Way, Suite 201
Nashua, New Hampshire 03062
(603) 324-3000
You may also contact Skillsoft’s proxy solicitor at:
Georgeson LLC
1290 Avenue of the Americas, 9th Floor
New York, NY 10104
Stockholders, banks and brokers, please call toll-free: (866) 482-4943
To obtain timely delivery, Skillsoft stockholders must request the materials no later than five Business Days prior to the Special Meeting.
You may also obtain additional information about Skillsoft from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.”
The SEC has an informational website that provides stockholders with general information about how to cast their vote and why voting should be an important consideration for stockholders. You may access that information at www.sec.gov/spotlight/proxymatters.shtml or at www.investor.gov.
 
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SUMMARY OF THE PROXY STATEMENT
This summary highlights selected information contained in this proxy statement and does not contain all of the information that may be important to you. You should read carefully this entire proxy statement, including the Annexes attached hereto and accompanying financial statements of Codecademy, to fully understand the proposed Mergers before voting on the proposals to be considered at the Special Meeting. Please see the section entitled “Where You Can Find More Information”.
The Parties to the Mergers
Skillsoft
Skillsoft is a global leader in corporate digital learning, focused on transforming today’s workforce for tomorrow’s economy. Skillsoft provides enterprise learning solutions designed to prepare organizations for the future of work, overcome critical skill gaps, drive demonstrable behavior-change, and unlock the potential in their people. Skillsoft offers a comprehensive suite of premium, original, and authorized partner content, including one of the broadest and deepest libraries of leadership & business skills, technology & developer, and compliance curricula. With access to a broad spectrum of learning options (including video, audio, books, bootcamps, live events, and practice labs), organizations can meaningfully increase learner engagement and retention. Skillsoft’s offerings are delivered through Percipio, its award-winning, AI-driven, immersive learning platform purpose built to make learning easier, more accessible, and more effective.
Skillsoft is a Delaware corporation. Our principal executive offices are located at 300 Innovative Way, Suite 201, Nashua, New Hampshire 03062 and our telephone number at that address is 603-324-3000. Our website is located at https://www.skillsoft.com. Our website and the information contained on, or accessed through, our website are not part of this proxy statement, and you should not rely on such information when making an investment decision.
Our Business Strategy
Skillsoft is a global leader in corporate digital learning, serving approximately 75% of the Fortune 1000, customers in over 160 countries, and more than 45 million learners globally. Skillsoft provides enterprise learning solutions designed to prepare organizations for the future of work, enable them to overcome critical skill gaps, drive demonstrable behavior-change, and unlock the potential in one of their most important assets: their people. Skillsoft offers a comprehensive suite of premium, original, and authorized partner content, including one of the broadest and deepest libraries of leadership & business, technology & developer, and compliance curricula. With access to a broad spectrum of learning options (including video, audio, books, bootcamps, live events, and practice labs), organizations can meaningfully increase learner engagement and retention. Skillsoft’s offerings are delivered through Percipio, the Company’s award-winning, artificial intelligence-driven, immersive learning platform purpose built to make learning easier, more accessible, and more effective. Skillsoft’s primary learning solutions include: (i) Skillsoft Percipio, an intelligent and immersive digital learning platform; (ii) Skillport, a legacy learning content delivery platform; (iii) Global Knowledge, a global provider of authorized information technology & development training and professional skills; and (iv) SumTotal, a SaaS-based Human Capital Management solution with a leading Talent Development platform.
Codecademy
Codecademy is an innovative and popular learning platform providing high-demand technical skills to approximately 40 million registered learners in nearly every country worldwide. The platform offers interactive, self-paced courses and hands-on learning in 14 programming languages across multiple domains such as application development, data science, cloud and cybersecurity. In addition, the Codecademy platform can rapidly expand to deliver new skills at scale, making it highly adaptable to the evolving technical needs of learners and their employers. Codecademy, which was founded in 2011 and is headquartered in New York, is led by an experienced entrepreneurial team that has built one of the most admired technical skills learning platforms in the industry.
 
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For more information about Codecademy, please see the sections entitled “Information About Codecademy” and “Codecademy’s Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The Merger Agreement and Related Agreements
On December 22, 2021, the Skillsoft Parties entered into the Merger Agreement with the Codecademy Parties, pursuant to which, subject to the terms and conditions set forth therein, Merger Sub I will merge with and into Codecademy, with Codecademy being the surviving corporation of the First Merger, and immediately following the First Merger and as part of the same overall transaction, the Surviving Corporation will merge with and into Merger Sub II, with Merger Sub II being the surviving company of the Second Merger and an indirect wholly-owned subsidiary of Skillsoft.
Subject to the terms and conditions set forth in the Merger Agreement, at the Effective Time, all shares of common stock and preferred stock of Codecademy, options to acquire shares of common stock of Codecademy and restricted stock units of Codecademy issued and outstanding immediately prior to the Effective Time will be converted automatically into the right to receive a portion of the Merger Consideration. The Merger Consideration will be allocated among the holders of Codecademy common stock, preferred stock, options and restricted stock units as follows: (i) “non-accredited investors” will receive their pro rata portion of the Merger Consideration in cash; (ii) “share-only holders” will receive their pro rata portion of the Merger Consideration in Common Stock; and (iii) “pro rata holders” will receive their pro rata portion of the Merger Consideration in a mix of cash and Common Stock, in each case, the amount and composition of the portion of the Merger Consideration are subject to adjustment and holdbacks as set forth in the Merger Agreement.
The Merger Agreement provides that, at the Effective Time, each: (i) vested option to purchase common stock of Codecademy (other than vested options held by “non-accredited investors”) that is outstanding immediately prior to the Effective Time will be converted into the right to receive, with respect to each share of common stock of Codecademy covered by such vested option immediately prior to the Effective Time, cash and Common Stock on a pro rata basis (net of withholding taxes and the applicable per share exercise price), less holdback amounts as set forth in the Merger Agreement; (ii) unvested option to purchase common stock of Codecademy (other than unvested options held by “non-accredited investors” that are not continuing employees of Codecademy) will be assumed by Skillsoft and converted into a Skillsoft RSU to be granted as of the closing, representing the right to receive a number of shares of Common Stock determined with reference to the number of shares of common stock of Codecademy subject to such unvested option and the per share consideration exchange ratio (net of the exercise price), with each such Skillsoft RSU to be eligible to continue to vest on each date that the applicable unvested option would have otherwise vested in accordance with its terms, but only if such conditions to vesting are satisfied prior to each such vesting date; (iii) unvested restricted stock unit of Codecademy that is held by a “continuing employee” will be converted into the right to receive a Skillsoft RSU, representing the right to receive that number of shares of Common Stock equal to (x) the number of shares of common stock of Codecademy subject to such unvested restricted stock unit multiplied by (y) the per share consideration exchange ratio, provided that each such Skillsoft RSU will be subject to vesting on substantially similar terms and conditions as were applicable to each such unvested restricted stock unit prior to closing; (iv) vested option to purchase common stock of Codecademy that is held by a “non-accredited investor” will be converted, into an amount in cash (net of withholding taxes), equal to (x) the excess of the Merger Consideration such “non-accredited investor” would have been entitled to receive in respect of a share of common stock of Codecademy over the per share exercise price of such option multiplied by (y) the number of shares of common stock of Codecademy covered by such option, less holdback amounts as described in the Merger Agreement; and (v) unvested option that is held by a “non-accredited investor” that is not a continuing employee will be converted into an amount in cash (net of withholding taxes) equal to (x) the excess of the Merger Consideration such “non-accredited investor” would have been entitled to receive in respect of a share of common stock of Codecademy over the per share exercise price of such option multiplied by (y) the number of shares of common stock of Codecademy covered by such option, provided that the right to receive cash in respect of such options shall be subject to vesting on the same terms and conditions as were applicable to such options prior to closing.
 
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In connection with the entry into the Merger Agreement, Borrower entered into a debt financing commitment letter (the “Debt Commitment Letter”) with Barclays Bank PLC and Citigroup Global Markets Inc. (collectively, the “Commitment Parties”) on December 22, 2021, pursuant to which the Commitment Parties have committed to arrange and provide Borrower with a senior secured incremental term loan in an aggregate amount of up to $160.0 million on the terms and subject to the conditions set forth in the Debt Commitment Letter (the “Incremental Credit Facility”). The proceeds of the Incremental Credit Facility shall be used (i) to pay the Cash Consideration, (ii) to pay fees and expenses related to the Mergers and (iii) for general corporate purposes.
In connection with the entry into the Merger Agreement, Skillsoft entered into an offer letter with Zachary Sims, the Chief Executive Officer of Codecademy, on December 22, 2021, regarding his potential future employment with Skillsoft, which employment is contingent upon the closing of the transactions contemplated by the Merger Agreement.
In connection with the closing of the Mergers, Skillsoft will enter into the Registration Rights Agreement with the RRA Holders. Pursuant to the Registration Rights Agreement, among other things, Skillsoft (a) is required to file with the SEC the Shelf Registration Statement and (b) will grant certain RRA Holders certain demand and piggyback registration rights.
The foregoing descriptions of the Merger Agreement and the Registration Rights Agreement do not purport to be complete and are subject to, and qualified in their entirety by, the full text thereof. The Merger Agreement is included as Annex I to this proxy statement and the form of Registration Rights Agreement is included as Annex II to this proxy statement. Stockholders and other interested parties are urged to read these agreements in their entirety prior to voting on the proposals presented at the Special Meeting.
Proposal No. 1: The Stock Issuance Proposal
Pursuant to the Merger Agreement, Skillsoft’s stockholders will be asked to approve, for purposes of complying with NYSE Listing Rule 312.03, the issuance of shares of Common Stock pursuant to the Merger Agreement. For more information about the issuance of shares of Common Stock contemplated by the Merger Agreement, please see the section entitled “Proposal No. 1 — Approval of the Issuance of Common Stock in Connection with the Mergers.” The Mergers are conditioned upon, among other things, the approval of the Stock Issuance Proposal at the Special Meeting.
Proposal No. 2: The Adjournment Proposal
Skillsoft’s stockholders will be asked to vote on a proposal to approve one or more adjournments of the Special Meeting, if necessary or appropriate, to permit solicitation of additional votes if there are insufficient votes to approve the Stock Issuance Proposal. Please see the section entitled “Proposal No. 2 — The Adjournment Proposal” for more information.
Date, Time and Place of Special Meeting
The Special Meeting will be held on March 31, 2022 at 11:30 a.m. Eastern Time, via live webcast at the following address: https://www.cstproxy.com/skillsoft/2022, or at such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the proposals.
Voting Power; Record Date
Only holders of shares of Common Stock of record at the close of business on March 7, 2022, the record date for the Special Meeting, will be entitled to vote at the Special Meeting. You are entitled to one vote for each share of Common Stock that you own at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your bank, broker or other holder of record to ensure that votes related to the shares you beneficially own are properly counted.
Accounting Treatment
The Mergers are expected to be accounted for using the acquisition method of accounting for business combinations with Skillsoft as the accounting acquirer. In arriving at the conclusion that Skillsoft is the
 
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accounting acquirer, Skillsoft considered the structure of the Mergers, relative outstanding share ownership of Skillsoft and Codecademy, the composition of the Board following consummation of the Mergers, the relative size of Skillsoft and Codecademy, and the designation of certain senior management positions of Skillsoft following consummation of the Mergers. The acquisition method of accounting will require goodwill and other intangible assets to be recorded, in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations. Accordingly, for accounting purposes, the net assets of Skillsoft are stated at historical cost, with the acquired assets and assumed liabilities of Codecademy stated at fair value, except for deferred revenue which, pursuant to Skillsoft’s adoption of Accounting Standards Update (“ASU”) 2021-08 — Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers effective June 11, 2021, will be recognized using the revenue recognition guidance in ASC Topic 606 rather than fair value.
Appraisal Rights
No dissenters’ or appraisal rights will be available to the holders of Common Stock with respect to the Mergers or the other transactions contemplated by the Merger Agreement.
Proxy Solicitation
Skillsoft is soliciting proxies on behalf of the Board. This proxy solicitation is being made by mail, but also may be made by phone or in person. Skillsoft has also engaged Georgeson to assist in the solicitation of proxies. Skillsoft and its directors, officers and employees may also solicit proxies in person. Skillsoft will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions.
Skillsoft will bear the entire cost of the proxy solicitation, including the preparation, assembly, printing, mailing and distribution of the proxy materials. Skillsoft estimates it will pay Georgeson a fee of approximately $20,000, plus reimburse Georgeson for its reasonable out-of-pocket expenses. Skillsoft will reimburse brokerage firms and other custodians for their reasonable out-of-pocket expenses for forwarding the proxy materials to Skillsoft’s stockholders. Directors, officers and employees of Skillsoft who solicit proxies will not be paid any additional compensation for soliciting proxies.
If a stockholder grants a proxy, it may still vote its shares virtually at the Special Meeting if it revokes its proxy before the Special Meeting. A stockholder may also change its vote by submitting a later-dated proxy, as described in the section entitled “Questions and Answers About the Proposals for Stockholders Special Meeting — May I change my vote after I have mailed my proxy card or after I have submitted my proxy by telephone or through the internet?
The Board’s Reasons for the Approval of the Mergers and the Stock Issuance
The Board considered the following positive factors, although not weighted or in any order of significance, in approving the Mergers and the issuance of the Stock Consideration in connection with the Mergers:

Creation of a Leading Technology & Developer Offering.    Adding Codecademy’s expertise in 14 programming languages as well as technical skills across multiple domains (e.g., data science, application development, web development and cybersecurity, among others) to Skillsoft’s existing technical skills offering is expected to enhance Skillsoft’s ability to become a leader in the high-demand, high-growth Technology & Developer sector of education technology. In addition, the capability of the Codecademy platform to rapidly add new programming languages and technical skills at scale is expected to further enhance Skillsoft’s ability to meet the evolving demands of learners worldwide as it helps organizations address the critical technical skills gap.

Expansion of Immersive Platform with New Ways of Learning.    Supplementing Skillsoft’s expansive set of learning options, including micro videos, virtual instructor-led training, coaching, audio, books, bootcamps, live events, assessments and badges with Codecademy’s interactive, self-paced courses and hands-on learning will enable Skillsoft to deliver even more immersive experiences through its AI-driven platform, Percipio.
 
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Addition of Codecademy’s Talent.   Talented members of Codecademy’s management and employees are expected to join Skillsoft’s proven management team and employees.

Creation of Substantial Cross-Selling and Upselling Opportunities by Adding a Strong Brand and Powerful Digital Sales and Marketing Engine to Global Enterprise Sales Force.    The Mergers will bring together Codecademy’s sophisticated direct-to-learner digital sales and marketing engine and Skillsoft’s enterprise sales organization, creating new opportunities to upsell and cross-sell across each company’s customer base, which is expected to drive customer growth and revenue synergies.

Expectation of Significant Accretion to Bookings and Revenue Growth Immediately Upon Closing. Codecademy is expected to deliver approximately $47 million in bookings and approximately $42 million in revenue for the calendar year ended December 31, 2021, up 23% and 27%, respectively, over the prior year. Codecademy is entirely a SaaS business and is expected to deliver gross margins of more than 85% in 2021 and be accretive to Skillsoft’s gross margin immediately upon closing. Skillsoft expects it will accelerate Codecademy’s growth in its first year of ownership primarily by cross-selling Codecademy’s products to Skillsoft’s large enterprise customer base and that the acquisition will be accretive to EBITDA over the long term.

Reasonableness of Merger Consideration.   Following a review of the financial data provided to Skillsoft, including Codecademy’s historical financial statements and certain unaudited prospective financial information, as well as Skillsoft’s due diligence review of Codecademy’s business and views of Skillsoft’s consultants and financial and other advisors, the Board considered the Merger Consideration to be paid in connection with the Mergers and determined that the Merger Consideration was reasonable in light of such data and financial information.

Favorable Industry Trends.   The digital learning market, particularly with respect to information technology and technology-based skills, is large, growing, and fragmented. The market is experiencing a number of favorable trends, including an increased need for companies to provide additional training to employees in light of an ongoing digital transformation in the market and technical skills gaps as well as an increased need for technologists as employees prepare for the jobs of tomorrow.

Business and Financial Condition and Prospects.   After conducting due diligence, along with their familiarity with Codecademy’s business, the Board and Skillsoft’s management had knowledge of, and were familiar with, Codecademy’s business, financial condition, results of operations and future growth prospects. The Board considered the results of the due diligence review of Codecademy’s business, including its intellectual property assets and customer networks.

Fairness Opinion of Barclays and Related Analyses.   The financial analyses of Barclays Capital Inc. (“Barclays”), as reviewed and discussed with the Board, as well as the opinion of Barclays delivered to the Board, to the effect that, as of December 21, 2021, and based upon and subject to the qualifications, limitations and assumptions set forth in the Barclays written opinion, the aggregate consideration to be paid by Skillsoft pursuant to the Merger Agreement and the transactions contemplated thereby, including the Mergers, was fair, from a financial point of view, to Skillsoft, as further discussed below in the section entitled “— Opinion of Skillsoft’s Financial Advisor.” The full text of the written opinion of Barclays, dated as of December 21, 2021, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex III to this proxy statement.

Terms of the Merger Agreement.   The Board considered the terms and conditions of the Merger Agreement and the transactions contemplated thereby, including the Mergers, each party’s representations, warranties and covenants, including the commitment by each of Codecademy and Skillsoft to take certain actions in order to consummate the Mergers, the conditions to each party’s obligations and the termination provisions.
For more information about Skillsoft’s decision-making process, please see the section entitled “Proposal No. 1 — Approval of the Issuance of Common Stock in Connection with the Mergers — Background and Reasons for the Mergers — The Board’s Reasons for the Approval of the Mergers and the Stock Issuance.
 
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Conditions to Closing of the Mergers
Conditions to Obligation of Codecademy
The obligation of Codecademy to consummate the transactions contemplated by the Merger Agreement is subject to the satisfaction or waiver, at or prior to the closing date, of each of the following conditions:

the representations and warranties of the Skillsoft Parties being true and correct as of the date of the Merger Agreement and as of the closing date, subject to the materiality standards contained in the Merger Agreement;

each of the Skillsoft Parties having performed and complied with in all material respects each of the covenants and agreements required to be performed by it on or before the closing;

Skillsoft having delivered or caused to be delivered all documents, instruments and certificates required to be delivered at or prior to the closing by Skillsoft pursuant to the Merger Agreement;

the waiting period (including any extension thereof) applicable to the consummation of the transactions contemplated by the Merger Agreement under the HSR Act having expired or having been terminated;

there being no order or law of a court of competent jurisdiction or other governmental authority issued, promulgated or entered after the date of the Merger Agreement and remaining in effect that prohibits, enjoins or makes illegal the consummation of the transactions contemplated by the Merger Agreement;

the Stock Issuance Proposal having been approved by Skillsoft’s stockholders; and

the Common Stock to be issued in connection with the Mergers having been approved for listing on the NYSE, subject to official notice of issuance thereof.
Conditions to Obligation of Skillsoft Parties
The obligation of the Skillsoft Parties to consummate the transactions contemplated by the Merger Agreement is subject to the satisfaction or waiver, at or prior to the closing date, of each of the following conditions:

the representations and warranties of Codecademy being true and correct as of the date of the Merger Agreement and as of the closing date, subject to the materiality standards contained in the Merger Agreement;

Codecademy having performed and complied with in all material respects each of the covenants and agreements required to be performed by it on or before the closing;

Codecademy having delivered or caused to be delivered all documents, instruments and certificates required to be delivered at or prior to the closing by Skillsoft pursuant to the Merger Agreement;

the waiting period (including any extension thereof) applicable to the consummation of the transactions contemplated by the Merger Agreement under the HSR Act having expired or having been terminated;

there being no order or law of a court of competent jurisdiction or other governmental authority issued, promulgated or entered after the date of the Merger Agreement and remaining in effect that prohibits, enjoins or makes illegal the consummation of the transactions contemplated by the Merger Agreement;

the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement having been approved by the written consent of holders of a majority of the voting power of each of the outstanding preferred stock, series C preferred stock and series D preferred stock of Codecademy entitled to vote thereon (the “Codecademy stockholder written consent”), which Codecademy stockholder written consent has been obtained and delivered by Codecademy to Skillsoft;

the Stock Issuance Proposal having been approved by Skillsoft’s stockholders;
 
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the Common Stock to be issued in connection with the Mergers having been approved for listing on the NYSE, subject to official notice of issuance thereof;

no material adverse effect on Codecademy having occurred; and

clearance by CFIUS having been obtained.
Quorum and Required Vote for Proposals for the Special Meeting
A quorum of Skillsoft’s stockholders is necessary to hold a valid meeting. A quorum will be present at the Special Meeting if the holders of a majority of the outstanding shares entitled to vote as of the close of business on the record date are present virtually or are represented by proxy at the Special Meeting. Abstentions will count as present for the purposes of establishing a quorum. Broker non-votes will be counted for the purposes of determining the existence of a quorum at the Special Meeting if a stockholder instructs its bank, broker or other nominee to vote its shares on any proposal.
Assuming a quorum is present, approval of the Stock Issuance Proposal requires the affirmative vote of the holders of a majority of the shares of Common Stock present virtually or represented by proxy at the Special Meeting and entitled to vote thereat. Accordingly, with respect to a holder of shares of Common Stock who is present virtually or represented by proxy at the Special Meeting, such stockholder’s abstention from voting or the failure of a holder of shares of Common Stock to vote will have the same effect as a vote “AGAINST” the Stock Issuance Proposal. Additionally, if a holder of shares of Common Stock instructs its bank, broker or other nominee regarding the Adjournment Proposal but not the Stock Issuance Proposal, such broker non-vote will have the same effect as voting “AGAINST” the Stock Issuance Proposal.
Approval of the Adjournment Proposal requires the affirmative vote of the holders of a majority of the shares of Common Stock present virtually or represented by proxy at the Special Meeting and entitled to vote thereat. Accordingly, with respect to a holder of shares of Common Stock who is present virtually or represented by proxy at the Special Meeting, such stockholder’s abstention from voting or the failure of a holder of shares of Common Stock to vote will have the same effect as a vote “AGAINST” the Adjournment Proposal. Additionally, if a holder of shares of Common Stock instructs its bank, broker or other nominee regarding the Stock Issuance Proposal, but not the Adjournment Proposal, such broker non-vote will have the same effect as voting “AGAINST” the Adjournment Proposal. Unless there is a quorum, the presiding officer of the Special Meeting may also adjourn the Special Meeting.
The Mergers are conditioned on, among other things, the approval of the Stock Issuance Proposal at the Special Meeting. The Adjournment Proposal is not conditioned on the approval of the Stock Issuance Proposal.
It is important for you to note that, in the event that the Stock Issuance Proposal does not receive the requisite vote for approval, Skillsoft cannot consummate the Mergers and will be required to pay a termination fee to Codecademy in connection with the termination of the Merger Agreement as a result of failure to receive the requisite vote for approval of the Stock Issuance Proposal.
Opinion of Skillsoft’s Financial Advisor
On December 21, 2021, Barclays rendered its oral opinion (which was subsequently confirmed in writing) to the Board that, as of such date and based upon and subject to the qualifications, limitations and assumptions stated in its opinion, the total consideration to be paid by Skillsoft in the Mergers is fair, from a financial point of view, to Skillsoft.
The full text of Barclays’ written opinion, dated as of December 21, 2021, is attached as Annex III to this proxy statement. Barclays’ written opinion sets forth, among other things, the assumptions made, procedures followed, factors considered and limitations upon the review undertaken by Barclays in rendering its opinion. You are encouraged to read the opinion carefully in its entirety.
For more information, please see “Proposal No. 1 — Approval of the Issuance of Common Stock in Connection with the Mergers — Background and Reasons for the Mergers — Opinion of Skillsoft’s Financial Advisor” and Annex III to this proxy statement.
 
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Recommendation to Skillsoft’s Stockholders
The Board believes that each of the Stock Issuance Proposal and the Adjournment Proposal is in the best interests of Skillsoft and its stockholders and recommends that the stockholders vote “FOR” the Stock Issuance Proposal and “FOR” the Adjournment Proposal.
When you consider the recommendation of the Board in favor of approval of each of these proposals, you should keep in mind that, aside from their interests as stockholders, certain of our directors may have interests in the Mergers that are different from, or in addition to, your interests as a stockholder. Please see the section entitled “Proposal No. 1 — Approval of the Issuance of Common Stock in Connection with the Mergers — Interests of Certain Persons in the Mergers.
Risk Factors
In evaluating the Mergers and the proposals to be considered and voted on at the Special Meeting, you should carefully read this proxy statement, including the annexes, and especially review and consider the risk factors set forth under the section entitled “Risk Factors”. The occurrence of one or more of the events or circumstances described in the section entitled “Risk Factors,” alone or in combination with other events or circumstances, may have a material adverse effect on (i) the ability of Skillsoft and Codecademy to complete the Mergers and (ii) the business, cash flows, financial condition and results of operations of Skillsoft or Codecademy prior to or after the consummation of the Mergers.
 
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The unaudited pro forma condensed combined financial information (“Unaudited Pro Forma Financial Information”) included herein presents the unaudited pro forma condensed combined balance sheet (“Pro Forma Balance Sheet”) based upon the historical financial statements of Skillsoft and Codecademy, after giving effect to the Mergers and the Incremental Credit Facility (collectively, the “Codecademy Transaction”), and the adjustments described in the accompanying notes.
The Pro Forma Balance Sheet as of October 31, 2021 gives effect to the Codecademy Transaction as if each of them had occurred on October 31, 2021. The Pro Forma Statements of Operations give effect to the Mergers and the Incremental Credit Facility as if each of them had occurred on February 1, 2020.
The Unaudited Pro Forma Financial Information set out below has been prepared in accordance with Article 11 of Regulation S-X, as amended by the SEC Final Rule Release No. 33 10786, Amendments to Financial Disclosures About Acquired and Disposed Businesses (“Regulation S-X”), using accounting policies in accordance with GAAP.
The Unaudited Pro Forma Financial Information reflects Codecademy Transaction accounting adjustments that Skillsoft management believes are necessary to present fairly the Pro Forma Balance Sheet.
The Unaudited Pro Forma Financial Information has been prepared for illustrative purposes only. The hypothetical financial position included in the Unaudited Pro Forma Financial Information may differ from Skillsoft’s actual financial position following the Mergers. The Unaudited Pro Forma Financial Information has been prepared on the basis set out in the notes below and has been prepared in a manner consistent with the accounting policies applied by Skillsoft in its historical financial statements for the nine months ended October 31, 2021 and the year ended January 31, 2021. In preparing the Unaudited Pro Forma Financial Information, no adjustments have been made to reflect the potential operating synergies, dis-synergies, and administrative cost savings or the costs of integration activities that could result from the combination of Skillsoft and Codecademy.
Mergers
On December 22, 2021, the Skillsoft Parties entered into the Merger Agreement with the Codecademy Parties, pursuant to which Skillsoft will acquire all of the outstanding equity interests of Codecademy in exchange for $204,943,210 in cash and a number of shares of Common Stock determined by dividing the aggregate share consideration value of $320,056,790 by the Closing Average Price; provided, that if the Closing Average Price is (a) more than the Maximum Price, then the number of shares shall be determined by dividing $320,056,790 by the Maximum Price and (b) less than the Minimum Price, then the number of shares shall be determined by dividing $320,056,790 by the Minimum Price. Skillsoft will fund the Cash Consideration with a combination of available cash on hand and committed debt financing. The Mergers are expected to be accounted for using the acquisition method of accounting for business combinations with Skillsoft as the accounting acquirer in accordance with ASC 805. In arriving at the conclusion that Skillsoft is the accounting acquirer, Skillsoft considered the structure of the Mergers, relative outstanding share ownership of Skillsoft and Codecademy, the composition of the Board following consummation of the Mergers, the relative size of Skillsoft and Codecademy, and the designation of certain senior management positions of Skillsoft following consummation of the Mergers.
Incremental Credit Facility
As part of the financing of the Mergers, Skillsoft entered into the Debt Commitment Letter, which provides for the Incremental Credit Facility.
Skillsoft intends to use the proceeds of the Incremental Credit Facility and cash on hand (i) to pay the Cash Consideration, (ii) to pay fees and expenses related to the Mergers and (iii) for general corporate purposes.
 
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Unaudited Condensed Proforma Combined Balance Sheet
As of October 31, 2021
(in thousands)
Historical As of
October 31, 2021
Codecademy
Financing
Transaction
(Note 3)
Codecademy
Transaction
Accounting
Adjustments
(Note 4)
As of
October 31, 2021
Skillsoft Corp.
Codecademy
(Note 2)
Pro Forma
Condensed
Combined
ASSETS
Current Assets
Cash and cash equivalents$80,671$50,591$150,8003A$(47,591)4A$81,247
63,9203B(204,944)4B
(12,200)4F
Restricted cash2,6802,680
Accounts receivable, net136,890272137,162
Prepaid expenses and other current assets42,0662,17044,236
Total Current Assets262,30753,033214,720(264,735)265,325
Property and equipment, net17,25346117,714
Goodwill872,291285,7834E1,158,074
Intangible assets, net904,7971,894203,6064E1,110,297
Right of use assets21,9281,23823,166
Deferred tax assets
Other assets10,08376610,849
TOTAL ASSETS$2,088,659$57,392$214,720$224,654$2,585,425
Current liabilities
Current maturities of long-term debt$4,800$$1,6003A$$6,400
Borrowings under accounts receivable facility11,08063,9203B75,000
Accounts payable31,47231,472
Accrued compensation38,68138,681
Accrued expenses and other current liabilities55,7723,31059,082
Lease liability7,6871,2388,925
Deferred revenue246,18814,737260,925
Total Current Liabilities395,68019,28565,520480,485
Long-term Debt462,996149,2003A612,196
Warrant liabilities65,36365,363
Deferred tax liabilities91,49742,7574G134,254
Long-term lease liabilities15,20915,209
Deferred revenue – non-current1,8831,883
Other long-term liabilities9,6999,699
Total Liabilities1,042,32719,285214,72042,7571,319,089
Stockholders’ Equity
Class A common stock1134C14
Common stock, preferred stock and paid-in capital90,680(90,680)4D
Additional paid-in capital1,301,319232,2014C1,533,520
Accumulated deficit(255,132)(52,573)52,5734D(267,332)
(12,200)4F
Accum. other comprehensive income (loss)134134
Total Stockholders’ Equity1,046,33238,107181,8971,266,336
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$2,088,659$57,392$214,720$224,654$2,585,425
 
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Unaudited Proforma Condensed Combined Statement of Operations
For the Year Ended January 31, 2021
(in thousands, except per share amounts)
For the year ended
January 31, 2021
For the year ended
December 31, 2020
Codecademy
Financing
Transaction
(Note 3)
Codecademy
Transaction
Accounting
Adjustments
(Note 4)
For the year ended
January 31, 2021
Skillsoft
(Note 5)
Codecademy
(Note 2)
Pro Forma
Condensed
Combined
Revenues:
Total revenues$660,467$32,841$$$693,308
Operating expenses
Cost of revenues196,8263,574200,400
Content and software development71,49817,18088,678
Selling and marketing152,8068,724161,530
General and administrative91,2929,121100,413
Amortization of intangible assets152,23552,0834H204,318
Impairment of intangible assets399,808399,808
Recapitalization and transaction-related costs115,87112,2004F128,071
Restructuring12,79512,795
Operating and formation costs2,9072,907
Total operating expenses1,196,03738,59964,2831,298,920
Operating income (loss):$(535,570)$(5,758)$$(64,283)$(605,612)
Other income (expense), net2,728(255)2,473
Gain on derivative liabilities(73,161)(73,161)
Reorganization items, net3,329,2453,329,245
Interest income12972201
Interest expense(30,402)(12,490)3C(42,892)
Income (loss) before provision (benefit) for income
taxes
2,692,969(5,941)(12,490)(64,283)2,610,254
Provision (benefit) for income taxes93,82264(2,623)(13,500)4G77,764
Net income (loss)$2,599,146$(6,005)$(9,867)$(50,784)$2,532,490
Earnings per Share
Weighted average Class A shares outstanding133,11234,198167,310
Earnings per share (basic and diluted) attributable
to Class A common stockholders
$19.53$15.14
 
23

 
Unaudited Proforma Condensed Combined Statement of Operations
For the Nine Months Ended October 31, 2021
(in thousands, except per share amounts)
For the Nine
Months ended
October 31, 2021
For the Nine
Months ended
September 30, 2021
Codecademy
Financing
Transaction
(Note 3)
Codecademy
Transaction
Accounting
Adjustments
(Note 4)
For the Nine
Months ended
October 31, 2021
Skillsoft
(Note 5)
Codecademy
(Note 2)
Pro Forma
Condensed
Combined
Revenues:
Total revenues$496,388$30,676$$$527,064
Operating expenses
Cost of revenues147,3293,947151,276
Content and software development50,89218,88469,776
Selling and marketing120,60812,914���133,522
General and administrative82,1768,39290,568
Amortization of intangible assets123,26739,0634H162,330
Recapitalization and transaction-related
costs
11,89711,897
Restructuring3,1543,154
Operating and formation costs2,9522,952
Total operating expenses542,27544,13739,063625,475
Operating income (loss):$(45,887)$(13,461)$$(39,063)$(98,411)
Other income (expense), net(1,177)(226)(1,403)
Gain on derivative liabilities(41,324)(41,324)
Interest income94296
Interest expense(22,723)(9,368)3C(32,091)
Income (loss) before provision (benefit) for income taxes(111,018)(13,685)(9,368)(39,063)(173,133)
Provision for (benefit from) income taxes1,11948(1,967)(8,203)4G(9,003)
Net loss$(112,137)$(13,733)$(7,401)$(30,859)$(164,130)
Earnings per Share
Weighted average Class A shares outstanding133,11234,198167,310
Net loss per share (basic and diluted) attributable
to Class A common
stockholders
$(0.84)$(0.98)
 
24

 
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
($ in thousands)
1. Basis of Presentation
The Unaudited Pro Forma Financial Information has been prepared based on GAAP and pursuant to Regulation S-X and presents the Pro Forma Balance Sheet of Skillsoft based upon the historical financial information of Skillsoft and Codecademy, after giving effect to the Mergers.
The Unaudited Pro Forma Financial Information is not necessarily indicative of what Skillsoft’s consolidated balance sheet would have been had the Codecademy Transaction been completed as of the date indicated or will be for any future periods. The Unaudited Pro Forma Financial Information does not purport to project the future financial position of Skillsoft following the Codecademy Transaction. The Unaudited Pro Forma Financial Information reflects accounting adjustments related to the Codecademy Transaction management believes are necessary to present fairly the Skillsoft Pro Forma Balance Sheet assuming the Codecademy Transaction had been consummated as of October 31, 2021. The accounting related Codecademy Transaction adjustments are based on currently available information and assumptions management believes are, under the circumstances and given the information available at this time, reasonable, and reflective of adjustments necessary to report Skillsoft financial condition as a result of the closing of the Codecademy Transaction.
The acquisition of Codecademy will be treated as a business combination and accounted for using the acquisition method of accounting, with goodwill and other intangible assets recorded, in accordance with ASC 805, Business Combinations. Accordingly, for accounting purposes, the net assets of Skillsoft are stated at historical cost, with the acquired assets and assumed liabilities of Codecademy stated at fair value in accordance with the acquisition method of accounting. As of the date of this filing, the calculations necessary to estimate the fair values of the assets acquired and liabilities assumed have been performed based on a hypothetical valuation allocation using comparable market transactions. Skillsoft will continue to refine its identification and valuation of assets acquired and the liabilities assumed as further information becomes available, including refinement of inputs and estimates inherent in (i) the valuation of intangible assets, (ii) deferred income taxes, (iii) realization of tangible assets and (iv) the accuracy and completeness of liabilities.
The unaudited pro forma condensed combined financial information and related notes have been prepared utilizing period ends that differ by fewer than one fiscal quarter, as permitted by Regulation S-X. The unaudited pro forma condensed combined balance sheet as of October 31, 2021 combines the historical balance sheet of Skillsoft as of October 31, 2021 and the historical balance sheet of Codecademy as of September 30, 2021, on a pro forma basis as if the Codecademy Transaction had been consummated on October 31, 2021.
The historical Codecademy condensed balance sheet as of September 30, 2021 has been prepared using the same basis of presentation as the historical financial statements and accompanying notes as of and for the year ended December 31, 2020 and the unaudited condensed historical financial statements and accompanying notes as of and for the nine months ended September 30, 2021, attached as Annex IV to this proxy statement.
The Unaudited Pro Forma Financial Information has been compiled in a manner consistent with the accounting policies adopted by Skillsoft and reflects certain adjustments to the historical financial information of Codecademy to conform to the accounting policies of Skillsoft based on a preliminary review of the accounting policies of Codecademy.
The Unaudited Pro Forma Financial Information should be read in conjunction with the audited Consolidated Financial Statements of Skillsoft as of and for the year ended January 31, 2021 appearing in Skillsoft’s Current Report on Form 8-K filed with the SEC on June 17, 2021 and the Unaudited Condensed Consolidated Financial Statements of Skillsoft as of and for the nine months ended October 31, 2021 appearing in Skillsoft’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2021 filed with the SEC on December 14, 2021 as well as the audited financial statements of Codecademy as of and for the
 
25

 
year ended December 31, 2020 and the unaudited condensed financial statements of Codecademy as of and for the nine months ended September 30, 2021 attached as Annex IV to this proxy statement.
The pro forma financial information does not reflect adjustments for any other consummated or probable acquisition by Skillsoft that is significant in accordance with Regulation S-X Rule 3-05, as amended by Release No. 33-10786, Amendments to Financial Disclosures About Acquired and Disposed Businesses, as adopted by the SEC on May 20, 2020 because no significant transactions were identified.
2. Codecademy Accounting Policies and Reclassifications
In the preparation of these unaudited pro forma condensed combined financial statements, certain reclassifications were made to align the financial statement presentations of Skillsoft following consummation of the Mergers. Skillsoft management will perform a comprehensive review of Codecademy’s accounting policies upon the completion of the Mergers. As a result of the review, Skillsoft management may identify differences between the accounting policies of these entities which, when conformed, could have a material impact on the financial statements of Skillsoft following consummation of the Mergers. Based on its initial analysis, Skillsoft has identified differences between Skillsoft and Codecademy that would have an impact on the unaudited pro forma condensed combined financial information.
A summary of the necessary pro forma adjustment in the unaudited pro forma condensed combined balance sheet as of October 31, 2021 is as follows:
As of
September 30, 2021
As of
October 31, 2021
Codecademy
Historical
Condensed
Accounting Policies
and Reclassifications
Codecademy
As Adjusted
ASSETS
Current Assets
Cash and cash equivalents$50,591$$50,591
Restricted cash
Accounts receivable, net272272
Prepaid expenses and other current assets2,1702,170
Total Current Assets53,03353,033
Property and equipment, net461461
Goodwill
Intangible assets, net3,814(1,920)2A1,894
Right of use assets1,2382B1,238
Other assets766766
TOTAL ASSETS$58,074$(682)$57,392
Current liabilities
Accrued expenses and other current liabilities$3,310$$3,310
Lease liability1,2382B1,238
Deferred revenue14,73714,737
Total Current Liabilities18,0471,23819,285
Deferred tax liabilities
Long-term lease liabilities
Total Liabilities18,0471,23819,285
Stockholders’ Equity
Common stock, preferred stock and paid-in capital90,68090,680
Accumulated deficit(50,653)(1,920)2A(52,573)
Total Stockholders’ Equity40,027(1,920)38,107
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$58,074$(682)$57,392
 
26

 
A summary of the necessary pro forma adjustment in the unaudited pro forma condensed combined statement of operations for the year ended January 31, 2021 and for the nine months ended October 31, 2021 is as follows:
For the Year ended
December 31, 2020
Accounting
Policies,
Reclassifications,
and Eliminations
For the Year ended
January 31, 2021
For the Nine
Months ended
September 30, 2021
Accounting
Policies,
Reclassifications,
and Eliminations
For the Nine
Months ended
October 31, 2021
Codecademy
Historical
Condensed
Pro Forma
Condensed
Combined
Codecademy
Historical
Condensed
Pro Forma
Condensed
Combined
Revenues:
Total revenues$32,841$$32,841$30,676$$30,676
Operating expenses
Cost of revenues3,5743,5743,9473,947
Content and software development15,9331,2472A17,18017,7771,1072A18,884
Selling and marketing8,7248,72412,91412,914
General and administrative9,1219,1218,3928,392
Amortization of intangible assets
Recapitalization and transaction-related costs
Restructuring
Operating and formation costs
Total operating expenses37,3521,24738,59943,0301,10744,137
Operating income (loss):$(4,511)$(1,247)$(5,758)$(12,354)$(1,107)$(13,461)
Other income (expense),
net
(255)(255)(226)(226)
Gain on derivative liabilities
Interest income727222
Interest expense
Loss before provision for income taxes(4,694)(1,247)(5,941)(12,578)(1,107)(13,685)
Provision for income taxes6464(48)(48)
Net loss$(4,758)$(1,247)$(6,005)$(12,626)$(1,107)$(13,733)
2A.
Skillsoft’s accounting policy with respect to content development costs is to expense such costs as incurred whereas Codecademy capitalized certain content development costs. This adjustment conforms Codecademy’s financial statements to Skillsoft’s policy.
2B.
Skillsoft adopted ASC 842, Leases (“ASC 842”) as of February 1, 2020 and it is reflected in its historical financial statements for all periods subsequent to date of adoption. Codecademy did not adopt ASC 842 and was not required to adopt the standard in Codecademy’s September 30, 2021 interim financial statements. To conform Codecademy, a pro forma adjustment was made to reflect the adoption impact of ASC 842 on its financial statements as if it had adopted this standard at the beginning of its fiscal year ended December 31, 2020.
 
27

 
3. Incremental Credit Facility
The adjustments included in the unaudited pro forma condensed combined balance sheet as of October 31, 2021 are as follows:
3A.
Reflects debt issuance necessary to fund a portion of the Cash Consideration, the components of which are as follows:
Debt issuance$160,000
Less: Original issue discount and issuance costs(9,200)
Net Proceeds$150,800
The Incremental Credit Facility is assumed to bear interest at a rate of 5.5% per year, payable quarterly in arrears and has an effective interest rate of 6.4% when including the impact of debt issuance costs and original issue discount. The Incremental Credit Facility is assumed to amortize at 1% per year and mature in July 2028.
3B.
Reflects $63.9 million of incremental borrowing on Skillsoft’s accounts receivable facility that will be used, in part, to fund the Cash Consideration.
3C.
Reflects additional interest expense for the incremental term loan and additional account receivable facility borrowings necessary to fund the cash portion of consideration.
4. Codecademy Transaction Accounting Adjustments
The estimated consideration for the Mergers is as follows:
Cash consideration$204,944
Equity consideration(1)
232,204
Total estimated consideration$437,148
(1)
The Merger Agreement requires the number of shares of Common Stock issued be calculated based upon equity consideration of $320.1 million, divided by the volume-weighted average price of the Common Stock during the fifteen trading days ending two trading days prior to the Closing Date. The calculation of shares of Common Stock issued is subject to a collar provision, whereby the share price used in the calculation can be no lower than $9.36 per share and no greater than $11.44 per share. Based on a price of $6.79 per share, consistent with recent trading prices over the 30 days preceding the date of this proxy statement, issuance of 34,198,000 shares of Common Stock representing equity consideration of $232,204 is assumed based on the minimum collared share price of $9.36 per share. Because of the collared price, a hypothetical 10% increase or decrease in the price of Common Stock from current trading levels would not impact the number of shares issued under the Codecademy Transaction.
Under the acquisition method of accounting, the identifiable assets acquired and liabilities assumed of Codecademy are recorded at the acquisition date fair values. The pro forma adjustments are preliminary and based on estimates of the fair value and useful lives of the assets acquired and liabilities assumed and have been prepared to illustrate the estimated effects of the Mergers.
For assets acquired and liabilities assumed, other than right of use assets and lease liabilities, identified intangible assets, goodwill, and deferred revenue, the carrying values were assumed to equal fair value. The final determination of the fair value of certain assets and liabilities will be completed within the one-year measurement period subsequent to the closing of the Codecademy Transaction as required by ASC 805. The acquisition of Codecademy may necessitate the use of this measurement period to adequately analyze and assess a number of the factors used in establishing the asset and liability fair values as of the acquisition date, including the significant contractual and operational factors underlying the developed technology and customer relationship intangible assets and the assumptions underpinning the related tax impacts of any changes made. Any potential adjustments made could be material in relation to the preliminary values
 
28

 
presented. Accordingly, the pro forma purchase price allocation is subject to further adjustment as additional information becomes available and as additional analyses and final valuations are completed. There can be no assurances that these additional analyses and final valuations will not result in significant changes to the estimates of fair value set forth below.
The following table sets forth a preliminary allocation of the estimated consideration for the Codecademy Transaction to the identifiable tangible and intangible assets acquired and liabilities assumed based on Codecademy’s September 30, 2021 balance sheet, with the excess recorded as goodwill:
Codecademy Estimated Goodwill
Cash and cash equivalents$3,000
Accounts receivable, net272
Prepaid expenses and other current assets2,170
Property and equipment, net461
Intangible assets205,500
Right of use assets1,238
Other assets766
Total assets acquired$213,407
Accrued expenses and other current liabilities3,310
Lease liability – short-term portion1,238
Deferred revenues14,737
Deferred tax liabilities42,757
Total liabilities acquired$62,042
Net assets acquired (a)$151,365
Estimated purchase consideration (b)$437,148
Estimated goodwill (b)  – (a)$285,783
In accordance with ASC Topic 350, Goodwill and Other Intangible Assets, goodwill will not be amortized, but instead will be tested for impairment at least annually or more frequently if certain impairment indicators are present. In the event Skillsoft management determines that the value of goodwill has become impaired, an accounting charge for the amount of impairment during the quarter in which the determination is made may be recognized. Goodwill is primarily attributable to the assembled workforce of Codecademy and opportunity for Skillsoft to penetrate the enterprise market with Codecademy products. Goodwill recognized is not expected to be deductible for tax purposes. The table below indicates the estimated fair value of each of the identifiable intangible assets associated with the Mergers:
Preliminary
Estimated Asset
Fair Value
(in thousands)
Preliminary
Weighted Average
Useful Life
(Years)
Trade name$33,50010 years
Developed Technology50,0003 years
Content57,5003 years
Customer Relationships64,5005 years
Total$205,500
Less: net intangible assets reported on Codecademy’s historical financial statements as of September 30, 20211,894
Pro forma adjustment$203,606
The preliminary fair values reflected above were determined in accordance with ASC 820, Fair Value Measurement. The Codecademy customer relationship fair value was determined using an income approach
 
29

 
under a multi-period excess earnings approach whereby the cash flows in excess of those needed to operate contributory assets over a period of time are otherwise attributed to the fair value of the asset. The Codecademy trade name fair value was determined using an income approach with an estimate developed from the relief-from-royalty method and the projected cash savings over an estimated period of time that would otherwise be required to license this asset. Excess purchase price was allocated to goodwill.
The estimated useful lives were determined based on a review of the time period over which economic benefit is estimated to be generated as well as additional factors. Factors considered include contractual life, the period over which a majority of cash flow is expected to be generated or management’s view based on historical experience with similar assets.
The pro forma adjustments included in the unaudited pro forma condensed combined financial statements for the purchase price allocation and other transaction adjustments are as follows:
4A.
Represents estimated cash that will be retained by the seller in accordance with the terms of the Merger Agreement whereby any cash in excess of $3 million at the closing date will not be transferred to the buyer.
4B.
Reflects payment of approximately $205 million (assuming no adjustment at Closing), representing the cash consideration component of the purchase price
4C.
Reflects issuance of 34,198,000 shares of Common Stock representing equity consideration of $232,204 based on the minimum collared share price of $9.36 per share and a price of $6.79 per share of Common Stock, consistent with recent trading prices over the 30 days preceding the date of this proxy statement.
4D.
Reflects the elimination of previously issued and outstanding shares of common stock of Codecademy at the date of the Codecademy Transaction and accumulated deficit balance.
4E.
Reflects the increase in intangible assets and goodwill due to the step up in fair value adjustments recognized as part of the Codecademy Transaction based on the preliminary purchase price allocation.
4F.
Reflects the settlement and payment of expected transaction costs of $12.2 million related to the Mergers, including, among others, fees paid for financial advisors, legal services, and professional accounting services. These transaction costs are not reflected in the historical consolidated balance sheet of Skillsoft or in the historical balance sheet of Codecademy.
4G.
Reflects adjustments for the tax impact on the pro forma adjustments at the U.S. federal statutory tax rate of 21% as of September 30, 2021 resulting from the acquisition. The effective tax rate of Skillsoft following the Mergers could be significantly different than what is presented within the unaudited pro forma financial information based on several factors including geographic mix of our taxable income or legal entity structure, among others.
4H.
Reflects additional amortization expense if the Merger had occurred as of February 1, 2020. Amortization expense is based on the fair value of the amortizable assets and the estimated economic useful life of the identified intangible assets.
5. Predecessor Pro Forma Statement of Operations
On October 12, 2020, Software Luxembourg and Churchill Capital Corp II, a Delaware corporation (“Churchill”), entered into an Agreement and Plan of Merger (the “Skillsoft Merger Agreement”) by and between Churchill and Software Luxembourg. Pursuant to the terms of the Skillsoft Merger Agreement, a business combination between Churchill and Software Luxembourg was effected through the merger of Software Luxembourg with and into Churchill (the “Churchill Transaction”), with Churchill being the surviving company. On June 11, 2021, Churchill completed its acquisition of Software Luxembourg, and changed its corporate name from Churchill to Skillsoft Corp. In addition, Skillsoft changed its fiscal year end from December 31 to January 31. On June 11, 2021, Skillsoft completed the acquisition of Albert DE Holdings Inc. (“Global Knowledge” and such acquisition, the “Global Knowledge Merger”). The unaudited condensed consolidated statement of operations included herein have been calculated on a pro forma basis as if each of these transactions occurred on February 1, 2020.
 
30

 
A summary of the pro forma statement of operations for predecessor entities for the year ended January 31, 2021 is as follows:
Predecessor Companies
For the year ended
December 31, 2020
For the year ended
January 31, 2021
For the twelve
months ended
January 1, 2021
For the Twelve
Months ended
January 31, 2021
Churchill Capital
Corp II
(Note 6)
Software
Luxembourg
(Note 7)
Global Knowledge
(Note 9)
Skillsoft Corp.
Pro Forma
Condensed
Combined
Revenues:
Total revenues$$471,515$188,952$660,467
Operating expenses
Cost of revenues93,058103,768196,826
Content and software development69,0142,48471,498
Selling and marketing111,29541,511152,806
General and administrative(2,000)59,09134,20191,292
Amortization of intangible assets106,23146,004152,235
Impairment of intangible assets332,27667,432399,808
Recapitalization and transaction-related costs59,12156,750115,871
Restructuring5,5207,27512,795
Operating and formation costs2,9072,907
Total operating expenses60,028833,335302,6751,196,037
Operating income (loss):$(60,028)$(361,820)$(113,723)$(535,570)
Other income (expense), net4,725(1,997)2,728
(Loss) gain on derivative liabilities(73,156)(5)(73,161)
Reorganization items, net3,329,2453,329,245
Interest income129129
Interest expense(30,402)(30,402)
Income (loss) before provision (benefit) for income taxes(133,184)2,941,872(115,720)2,692,969
Provision (benefit) for income taxes48793,784(449)93,822
Net income (loss)$(133,671)$2,848,089$(115,271)$2,599,146
 
31

 
A summary of the pro forma statement of operations for predecessor entities for the nine months ended October 31, 2021 is as follows:
Predecessor Companies
for the period from
February 1, 2021 to June 11, 2021
Sucessor
Company for the
Period from
June 12, 2021 to
October 31, 2021
For the Nine
Months ended
October 31, 2021
Churchill
Capital
Corp II
(Note 6)
Software
Luxembourgh
(Note 7)
Global
Knowledge
(Note 9)
Skillsoft Corp.
(Note 10)
Skillsoft
Pro Forma
Condensed
Combined
Revenues:
Total revenues$$163,031$71,785$261,572$496,388
Operating expenses
Cost of revenues35,88134,55176,897147,329
Content and software development24,08449226,31650,892
Selling and marketing36,19816,40468,007120,608
General and administrative17,21719,76545,19482,176
Amortization of intangible assets47,11912,03164,117123,267
Recapitalization and transaction-related costs6,9384,95911,897
Restructuring(703)2,7641,0933,154
Operating and formation costs2,9522,952
Total operating expenses2,952166,73386,007286,583542,275
Operating income (loss):$(2,952)$(3,702)$(14,222)$(25,011)$(45,887)
Other income (expense), net(493)624(1,308)(1,177)
Gain on derivative liabilities(22,501)900(19,723)(41,324)
Interest income643094
Interest expense(10,904)(11,820)(22,723)
Income (loss) before provision (benefit) for income taxes(25,453)(14,135)(13,598)(57,831)(111,018)
Provision (benefit) for income taxes24,448902(4,232)1,119
Net income (loss)$(25,455)$(18,583)$(14,500)$(53,599)$(112,137)
 
32

 
6. Churchill Pro Forma Adjustments
A summary of the pro forma adjustments to the Churchill historical financial statements for the year ended January 31, 2021 is as follows:
For the year ended
December 31, 2020
For the year ended
January 31, 2021
Churchill Capital
Corp II
Proforma
Adjustments
Pro Forma
Revenues:
Total revenues$$$
Operating expenses
Cost of revenues
Content and software development
Selling and marketing
General and administrative(2,000)(2,000)
Amortization of intangible assets
Impairment of goodwill
Recapitalization and transaction-related costs59,1216A59,121
Restructuring
Operating and formation costs2,9072,907
Total operating expenses90759,12160,028
Operating income (loss):$(907)$(59,121)$(60,028)
Other income (expense), net2,518(2,518)6B
(Loss) gain on derivative liabilities(73,583)4276C(73,156)
Reorganization items, net
Interest income
Interest expense
(Loss) income before provision (benefit) for income
taxes
(71,972)(61,212)(133,184)
Provision (benefit) for income taxes487487
Net (loss) income$
(72,459)
$
(61,212)
$
(133,671)
 
33

 
A summary of the pro forma adjustments to the Churchill Capital Corp II historical financial statements for the period from February 1, 2021 to June 11, 2021 is as follows:
For the period from February 1, 2021 to June 11, 2021
Churchill Capital
Corp II
Proforma
Adjustments
Pro Forma
Revenues:
Total revenues$$$
Operating expenses
Cost of revenues
Content and software development
Selling and marketing
General and administrative
Amortization of intangible assets
Impairment of goodwill
Recapitalization and transaction-related costs59,121(59,121)6A
Restructuring
Operating and formation costs2,9522,952
Total operating expenses62,073(59,121)2,952
Operating income (loss):$(62,073)$59,121$(2,952)
Other income (expense), net60(60)6B
(Loss) gain on derivative liabilities(51,282)28,7816C(22,501)
Reorganization items, net
Interest income
Interest expense
(Loss) income before provision (benefit) for income taxes(113,295)87,842(25,453)
Provision (benefit) for income taxes22
Net (loss) income$(113,297)$87,842$(25,455)
The pro forma adjustments above consist of the following:
6A
Reflects transaction costs incurred by Churchill related to the acquisition of Software Luxembourg and Global Knowledge, including, among others, fees paid for financial advisors, legal services and professional accounting services. These transaction costs were incurred on June 11, 2021 but have been reclassified to the earliest period presented as if the acquisitions had occurred on February 1, 2020.
6B
Reflects the removal of interest income earned on Churchill’s marketable securities.
6C
Reflects (i) the recognition of a $0.2 million and $27.7 million loss related to a subscription agreement with a PIPE investor for the year ended January 31, 2021 and for the period from February 1, 2021 to June 11, 2021, respectively, and (ii) a $0.6 million gain and $1.0 million loss on a conversion feature of a note receivable used to fund working capital for the year ended January 31, 2021 and for the period from February 1, 2021 to June 11, 2021, respectively.
 
34

 
7. Software Luxembourg Pro Forma Adjustments
A summary of the pro forma adjustments to the Software Luxembourg historical financial statements for the year ended January 31, 2021 is as follows:
For the year ended
January 31, 2021
For the year ended
January 31, 2021
Pro Forma
Software
Luxembourg
As Adjusted
(Note 8)
Pro Forma
Adjustments
Pro Forma
Condensed
Combined
Revenues:
Total revenues$382,619$88,8967A$471,515
Operating expenses
Cost of revenues93,05893,058
Content and software development69,01469,014
Selling and marketing130,313(19,018)7B111,295
General and administrative59,09159,091
Amortization of intangible assets74,20232,0297C106,231
Impairment of goodwill332,376332,376
Recapitalization and transaction-related costs48,0278,7237D56,750
Restructuring5,5205,520
Operating and formation costs
Total operating expenses811,60121,734833,335
Operating income (loss):$(428,982)$67,162$(361,820)
Other income (expense), net4,7254,725
(Loss) gain on derivative liabilities(5)(5)
Reorganization items, net3,329,2453,329,245
Interest income129129
Interest expense(188,301)157,8997E(30,402)
(Loss) income before provision (benefit) for income taxes2,716,811225,0612,941,872
Provision (benefit) for income taxes46,52147,2637F93,784
Net (loss) income$2,670,290$177,799$2,848,089
 
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A summary of the pro forma adjustments to the Software Luxembourg historical financial statements for the period from February 1, 2021 to June 11, 2021 is as follows:
For the period from February 1, 2021
through June 11, 2021
(amounts in thousands)
Software
Luxembourg
Basis
Pro Forma
Adjustments
Pro Forma
Software
Luxembourg
Revenues:
Total revenues$139,636$23,3957A$163,031
Operating expenses
Cost of revenues35,88135,881
Content and software development24,08424,084
Selling and marketing41,940(5,742)7B36,198
General and administrative17,21717,217
Amortization of intangible assets50,902(3,783)7C47,119
Impairment of goodwill
Recapitalization and transaction-related costs6,9386,938
Restructuring(703)(703)
Total operating expenses176,259(9,526)166,733
Operating loss:$(36,623)$32,921$(3,702)
Other expense, net(493)(493)
Reorganization items, net
Loss on derivative instruments900900
Interest income6464
Interest expense, net(16,820)5,9167E(10,904)
Income (loss) before provision for income taxes(52,972)38,837(14,135)
Provision for income taxes(3,708)8,1567F4,448
Net income (loss)$(49,264)$30,681���$(18,583)
7A.
Reflects the elimination of deferred revenue “fresh start reporting” and fair value adjustments recorded in Skillsoft’s historical periods based on the assumed adoption of ASU 2021-08 — Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”) as of February 1, 2020, which requires deferred revenue to be recognized using the revenue recognition guidance in Accounting Standards Codification Topic 606 rather than fair value.
7B.
Reflects the reduction of commissions expense due to the assumed elimination of Skillsoft’s deferred contract acquisition costs as of February 1, 2020 which were replaced by the establishment of customer relationship assets and corresponding increases to amortization expense.
7C.
Reflects adjustments to amortization expense calculated as if the Churchill Transaction had occurred as of February 1, 2020. Amortization expense is based on the fair value of the amortizable assets and the estimated economic useful life of the identified intangible assets.
7D.
Reflects transaction costs incurred by Skillsoft related to the acquisition by Churchill including, among others, fees paid for financial advisors, legal services and professional accounting services. These transaction costs were incurred during the period from June 11, 2021 to October 31, 2021 but have been reclassified to the earliest period presented as if the acquisitions had occurred on February 1, 2020.
7E.
Reflects adjustment to interest expense based on the current capital structure in place after completion of the Churchill Transaction and Global Knowledge Merger.
7F.
Reflects adjustments for the tax impact on the pro forma adjustments at the U.S. federal statutory tax
 
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rate of 21%. The prospective effective tax rate of the combined company could be significantly different than what is presented within the unaudited pro forma financial information based on several factors including geographic mix of our taxable income or legal entity structure and tax planning strategies, among other things.
8. Software Luxembourg Reorganization Combined Income Statement
The following table shows the computation of combined results of Software Luxembourg for the fiscal year ended January 31, 2021 derived from the actual historical predecessor period from February 1, 2020 to August 27, 2020 and the successor period from August 28, 2020 to January 31, 2021:
PredecessorSuccessor
(amounts in thousands)
February 1, 2020
through
August 27, 2020
For the period
August 28, 2020
through
January 31, 2021
Combined
Software
Luxembourgh
Revenues:
Total revenues$273,851$108,768$382,619
Operating expenses
Cost of revenues52,16040,89893,058
Content and software development38,98630,02869,014
Selling and marketing75,02855,285130,313
General and administrative37,45521,63659,091
Amortization of intangible assets34,37839,82474,202
Impairment of goodwill332,376332,376
Recapitalization and transaction-related costs32,09915,92848,027
Restructuring1,1794,3415,520
Total operating expenses603,661207,940811,601
Operating loss:$(329,810)$(99,172)$(428,982)
Other expense, net1,2733,4524,725
Reorganization items, net3,329,2453,329,245
Loss on derivative instruments(5)(5)
Interest income10524129
Interest expense, net(168,341)(19,960)(188,301)
Income (loss) before provision for income taxes2,832,467(115,656)2,716,811
Provision for income taxes68,455(21,934)46,521
Net income (loss)$2,764,012$(93,722)$2,670,290
 
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9. Global Knowledge Pro Forma Adjustments
A summary of pro forma adjustments to the Global Knowledge historical financial statements for the year ended January 31, 2021 is as follows:
For the twelve 
months ended
January 1, 2021
Pro Forma
Adjustments
For the year ended
January 31, 2021
Global
Knowledge
Global Knowledge
Pro Forma
Condensed
Combined
Revenues:
Total revenues$189,649$(697)9A$188,952
Operating expenses
Cost of revenues104,465(697)9A103,768
Content and software development2,4842,484
Selling and marketing41,51141,511
General and administrative34,20134,201
Amortization of intangible assets7,27938,7259B46,004
Impairment of intangible assets7,8797,879
Impairment of goodwill59,55359,553
Recapitalization and transaction-related costs
Restructuring7,2757,275
Operating and formation costs
Total operating expenses264,64738,028302,675
Operating income (loss):$(74,998)$(38,725)$(113,723)
Other income (expense), net(1,997)(1,997)
(Loss) gain on derivative liabilities
Reorganization items, net
Loss on derivative instruments
Interest income
Interest expense(31,750)31,7509C
(Loss) income before provision (benefit) for income taxes(108,745)(6,975)(115,720)
Provision (benefit) for income taxes1,016(1,465)9D(449)
Net (loss) income$(109,761)$(5,510)$(115,271)
 
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A summary of the pro forma adjustments to the Global Knowledge historical financial statements for the nine months ended October 31, 2021 is as follows:
For the period from February 1, 2021
through June 11, 2021
(amounts in thousands)
Global Knowledge
Predecessor
Basis
Pro Forma
Adjustments
Pro Forma
Global Knowledge
Revenues:
Total revenues$71,932$
(147)
9A$71,785
Operating expenses
Cost of revenues34,698(147)9A34,551
Content and software development492492
Selling and marketing16,40416,404
General and administrative19,76519,765
Amortization of intangible assets2,6469,3859B12,031
Impairment of goodwill
Recapitalization and transaction-related costs
Restructuring2,7642,764
Total operating expenses76,7699,23886,007
Operating loss:$(4,837)$(9,385)$(14,222)
Other expense, net624624
Reorganization items, net
Loss on derivative instruments
Interest income
Interest expense, net(11,970)11,9709C
Income (loss) before provision for income taxes(16,183)2,585(13,598)
Provision for income taxes3595439D902
Net income (loss)$(16,542)$2,042$(14,500)
9A.
Reflects the elimination of historical intercompany revenues and cost of revenues between Skillsoft and Global Knowledge.
9B.
Reflects adjustments to amortization expense calculated as if the Global Knowledge Merger had occurred as of February 1, 2020. Amortization expense is based on the fair value of the amortizable assets and the estimated economic useful life of the identified intangible assets.
9C.
Reflects the elimination of interest expense for historical periods. See Note 5 for pro forma interest of the combined company.
9D.
Reflects adjustments for the tax impact on the pro forma adjustments at the U.S. federal statutory tax rate of 21%. The prospective effective tax rate of the combined company could be significantly different than what is presented within the unaudited pro forma financial information based on several factors including geographic mix of our taxable income or legal entity structure and tax planning strategies, among other things.
 
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10. Skillsoft Pro Forma Adjustments
A summary of the pro forma adjustments to the Skillsoft historical financial statements for the period from June 12, 2021 through October 31, 2021 is as follows:
For the period from June 12, 2021
through October 31, 2021
(amounts in thousands)
Skillsoft
Successor
Basis
Pro Forma
Adjustments
Pro Forma
Skillsoft
Revenues:
Total revenues$261,572$$261,572
Operating expenses
Cost of revenues76,89776,897
Content and software development26,31626,316
Selling and marketing62,1715,83610A68,007
General and administrative45,19445,194
Amortization of intangible assets57,0877,03010B64,117
Impairment of goodwill
Recapitalization and transaction-related costs13,682(8,723)10C4,959
Restructuring1,0931,093
Total operating expenses282,4404,143286,583
Operating loss:$(20,868)$(4,143)$(25,011)
Other expense, net(1,308)(1,308)
Reorganization items, net
Loss on derivative instruments(19,723)(19,723)
Interest income3030
Interest expense, net(17,366)5,54610D(11,820)
Income (loss) before provision for income taxes(59,235)1,404(57,831)
Provision for (benefit from) income taxes(4,527)29510E(4,232)
Net income (loss)$(54,708)$1,109$(53,599)
10A.
Reflects an increase to commissions expense due to the assumed elimination of Skillsoft’s deferred contract acquisition costs as of February 1, 2020 rather than June 11, 2021, resulting in more amortization of the deferred commission asset in this period relating to contract acquisition costs that were deferred upon payment subsequent February 1, 2020.
10B.
Reflects adjustments to amortization expense calculated as if the Skillsoft Merger had occurred as of February 1, 2020. Amortization expense is based on the fair value of the amortizable assets and the estimated economic useful life of the identified intangible assets.
10C.
Reflects transaction costs incurred by Skillsoft related to the acquisition by Churchill Capital Corp II. including, among others, fees paid for financial advisors, legal services and professional accounting services. These transaction costs were incurred during the period from June 11, 2021 to October 31, 2021 but have been reclassified to the earliest period presented as if the acquisitions had occurred on February 1, 2020.
10D.
Reflects adjustment to interest expense based on the current capital structure in place after completion of the Skillsoft Merger and Global Knowledge Merger.
10E.
Reflects adjustments for the tax impact on the pro forma adjustments at the US federal statutory tax rate of 21%. The prospective effective tax rate of the combined company could be significantly different than what is presented within the unaudited pro forma financial information based on several factors including geographic mix of our taxable income or legal entity structure and tax planning strategies, among other things.
 
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement includes statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created by those laws. These forward-looking statements include information about possible or assumed future results of our operations, the timing and occurrence of the closing of the transaction, and the anticipated transaction benefits. All statements, other than statements of historical facts, that address activities, events or developments that we expect or anticipate may occur in the future, including such things as our outlook, our product development and planning, our pipeline, future capital expenditures, financial results, the impact of regulatory changes, existing and evolving business strategies and acquisitions and dispositions, demand for our services and competitive strengths, goals, the benefits of new initiatives, growth of our business and operations, our ability to successfully implement our plans, strategies, objectives, expectations and intentions are forward-looking statements. Also, when we use words such as “may,” “will,” “would,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “projects,” “forecasts,” “seeks,” “outlook,” “target,” goals,” “probably,” or similar expressions, we are making forward-looking statements. Such statements are based upon the current beliefs and expectations of Skillsoft’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Except as otherwise required by applicable law, we will not update any forward-looking statements to reflect events or circumstances after the date of this proxy statement. All forward-looking disclosure is speculative by its nature and any forward-looking events discussed in this proxy statement may not occur. You are cautioned not to rely on such forward-looking statements.
There are important risks, uncertainties, events and factors that could cause our actual results or performance to differ materially from those in the forward-looking statements contained in this proxy statement, including:

the impact of changes in consumer and prosumer spending patterns, consumer and prosumer preferences, local, regional and national economic conditions, crime, weather, demographic trends and employee availability;

the impact of the ongoing COVID-19 pandemic (including any variant) on our business, operating results and financial condition;

fluctuations in our future operating results;

our ability to successfully identify, consummate and achieve strategic objectives in connection with our acquisition opportunities and realize the benefits expected from the acquisition;

the demand for, and acceptance of, our products and for cloud-based technology learning solutions in general;

our ability to compete successfully in competitive markets and changes in the competitive environment in our industry and the markets in which we operate;

our ability to market existing products and develop new products;

a failure of our information technology infrastructure or any significant breach of security, including in relation to the migration of our key platforms from our systems to cloud storage;

future regulatory, judicial and legislative changes in our industry;

our ability to comply with laws and regulations applicable to our business;

the impact of natural disasters, public health crises, political crises, or other catastrophic events;

our ability to attract and retain key employees and qualified technical and sales personnel;

fluctuations in foreign currency exchange rates;

our ability to protect or obtain intellectual property rights;

our ability to raise additional capital;

the impact of our indebtedness on our financial position and operating flexibility;
 
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our ability to meet future liquidity requirements and comply with restrictive covenants related to long-term indebtedness;

our ability to successfully defend ourselves in legal proceedings; and

our ability to continue to meet applicable listing standards.
Additional factors that may cause actual results or performance to differ materially from any forward-looking statements regarding the transaction between Skillsoft and Codecademy include, but are not limited to:

our ability to timely satisfy the conditions to the closing of the transaction contemplated in the Merger Agreement;

occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;

the possibility that the consummation of the acquisition is delayed or does not occur, including the failure to obtain stockholder approval of the transaction;

Skillsoft’s identification of a material weakness in its internal control over financial reporting which, if not corrected, could affect the reliability of Skillsoft’s consolidated financial statements;

the possibility that COVID-19 may hinder our ability to consummate the Mergers;

our ability to realize the benefits from the acquisition;

our ability to effectively and timely incorporate the acquired business into our business operations;

risks that the acquisition and other transactions contemplated by the Merger Agreement disrupt current plans and operations that may harm the parties’ current businesses;

the amount of any costs, fees, expenses, impairments and charges related to the acquisition; and

uncertainty as to the effects of the announcement or pendency of the acquisition on the market price of the Common Stock and/or on the parties’ respective financial performance.
The foregoing list of factors is not exhaustive and new factors may emerge from time to time that could also affect actual performance and results. For more information, please see the risk factors included in this proxy statement below and those included in Skillsoft’s Amendment No. 1 to its Registration Statement on Form S-1 declared effective by the SEC on July 29, 2021, and subsequent filings with the SEC.
Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and therefore also the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. Given the significant uncertainties inherent in the forward-looking statements included in this document, our inclusion of this information is not a representation or guarantee by us that our objectives and plans will be achieved. Annualized, pro forma, projected and estimated numbers are used for illustrative purposes only, are not forecasts and may not reflect actual results. Additionally, statements as to market share, industry data and our market position are based on the most currently available data available to us and our estimates regarding market position or other industry data included in this document or otherwise discussed by us involve risks and uncertainties and are subject to change based on various factors, including as set forth above.
 
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RISK FACTORS
You should carefully review and consider the following risk factors, and the other information included in this proxy statement, including the financial statements and notes to the financial statements included herein, in evaluating the Mergers and the proposals to be voted on at the Special Meeting. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the anticipated benefits of the Mergers, and may have an adverse effect on our business, cash flows, financial condition and results of operations. You should also carefully consider the following risk factors in addition to the other information included in this proxy statement, including matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements.” Skillsoft and Codecademy may face additional risks and uncertainties that are not presently known to Skillsoft and Codecademy or that Skillsoft and Codecademy currently deem immaterial, which may also impair Skillsoft’s and Codecademy’s business or financial condition. The following discussion should be read in conjunction with the financial statements and notes to the financial statements included herein.
Risks Related to the Mergers
There can be no assurances when or if the Mergers will be completed.
Although Skillsoft expects to complete the Mergers by the end of the second quarter of 2022, there can be no assurances as to the exact timing of completion of the Mergers or that the Mergers will be completed at all. The completion of the Mergers is subject to numerous conditions, including, among others:

the approval of the Stock Issuance Proposal;

the receipt of HSR clearance;

clearance by the Committee on Foreign Investment in the United States;

the absence of any law or order prohibiting the consummation of the transactions contemplated by the Merger Agreement;

the absence of a “material adverse effect” on Codecademy;

the approval for listing on the NYSE of the Common Stock to be issued as part of the Merger Consideration;

the representations and warranties of the Skillsoft Parties and Codecademy being true and correct, subject to the materiality standards contained in the Merger Agreement; and

the Skillsoft Parties and Codecademy having complied in all material respects with their respective obligations under the Merger Agreement.
There can be no assurance that the conditions required to complete the Mergers, some of which are beyond the control of Skillsoft and Codecademy, will be satisfied or waived on the anticipated schedule, or at all. Furthermore, the governmental authorities from which the regulatory approvals are required may impose conditions on the completion of the Mergers or require changes to the terms thereof. Such conditions or changes and the process of obtaining regulatory approvals could have the effect of delaying or impeding consummation of the transactions or of imposing additional costs or limitations on Skillsoft or Codecademy.
The Merger Agreement also provides for certain termination rights for both Codecademy and Skillsoft, including if the Mergers are not consummated on or before the Outside Date, subject to an automatic extension until July 22, 2022 if on the Outside Date all conditions are satisfied other than conditions relating to the receipt of regulatory approvals. Skillsoft will be required to pay Codecademy a termination fee of $6,000,000 in the event of a termination of the Merger Agreement other than (i) by mutual agreement, (ii) by either Codecademy or Skillsoft if the transaction has not been consummated by the Outside Date (if at the time of such termination Skillsoft had the right to terminate due to a material breach of the Merger Agreement by Codecademy), (iii) by Skillsoft in the event of a material uncured breach of the Merger Agreement by Codecademy, (iv) by Skillsoft if Codecademy does not deliver the requisite approval by its stockholders or (v) by Skillsoft if there has been a “material adverse effect” on Codecademy.
 
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Obtaining required approvals and satisfying closing conditions may prevent or delay completion of the Mergers.
The Mergers are subject to a number of conditions to closing as specified in the Merger Agreement. These closing conditions include, among others, obtaining stockholder approval of the Stock Issuance Proposal, approval for listing on the NYSE of the shares of Common Stock to be issued as part of the Merger Consideration, and the absence of any law or order prohibiting the consummation of the transactions contemplated by the Merger Agreement. The obligation of each of Skillsoft and Codecademy to consummate the Merger is also conditioned on, among other things, (i) the representations and warranties of the Skillsoft Parties and Codecademy being true and correct, subject to the materiality standards contained in the Merger Agreement, (ii) the other party having complied in all material respects with its obligations under the Merger Agreement and (iii) the delivery by the other party of a certificate of its chief executive officer certifying that the required conditions have been satisfied. The required approvals may not be obtained and the required conditions to closing may not be satisfied, and, if all required consents and approvals are obtained and the conditions are satisfied, no assurance can be given as to the terms, conditions and timing of such consents and approvals. Any delay in completing the Mergers could cause Skillsoft and Codecademy not to realize, or to be delayed in realizing, some or all of the benefits that Skillsoft and Codecademy expect to achieve if the Mergers are successfully completed within its expected time frame. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the Mergers, please see “Proposal No. 1 — Approval of the Issuance of Common Stock in Connection with the Mergers — Agreement and Plan of Merger.”
The market price for shares of Common Stock following the completion of the Mergers may be affected by factors different from, or in addition to, those that historically have affected or currently affect the market prices of shares of Common Stock.
Skillsoft’s businesses differ in some regards from those of Codecademy and, accordingly, the results of operations of Skillsoft following completion of the Mergers will be affected by some factors that are different from those currently or historically affecting the results of operations of Skillsoft. The results of operations of Skillsoft following completion of the Mergers may also be affected by factors different from those that currently affect or have historically affected Skillsoft. In addition, following completion of the Mergers, Skillsoft may seek to raise additional equity financing through one or more underwritten offerings, private placements and/or rights offerings, or issue stock in connection with acquisitions, which may result in downward pressure on the share price of the Common Stock. For a discussion of the businesses of each of Skillsoft and Codecademy and some important factors to consider in connection with those businesses, please see “The Parties to the Mergers” and the documents and information included elsewhere in, or incorporated by reference into, this proxy statement.
Skillsoft may waive one or more of the closing conditions without re-soliciting stockholder approval.
Skillsoft may determine to waive, in whole or part, one or more of the conditions to closing the Mergers prior to Skillsoft being obligated to consummate the Mergers. Skillsoft currently expects to evaluate the materiality of any waiver and its effect on Skillsoft stockholders in light of the facts and circumstances at the time, to determine whether any amendment of this proxy statement or any re-solicitation of proxies is required in light of such waiver. Any determination whether to waive any condition to the Mergers or to re-solicit stockholder approval or amending or supplementing this proxy statement as a result of a waiver will be made by Skillsoft at the time of such waiver based on the facts and circumstances as they exist at that time.
Skillsoft and Codecademy will be subject to business uncertainties while the Mergers are pending, which could adversely affect Skillsoft’s business.
In connection with the pendency of the Mergers, it is possible that certain persons with whom Skillsoft or Codecademy have a business relationship may delay or defer certain business decisions or might decide to seek to terminate, change or renegotiate their relationships with Skillsoft or Codecademy, as the case may be, as a result of the Mergers, which could negatively affect Skillsoft’s or Codecademy’s revenues, earnings and cash flows as well as the market price of the Common Stock, regardless of whether the Mergers are completed. Also, Skillsoft’s and Codecademy’s ability to attract, retain and motivate employees may be
 
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impaired until the Mergers are completed, and Skillsoft’s ability to do so may be impaired for a period of time thereafter, as current and prospective employees may experience uncertainty about their roles within Skillsoft following the Mergers.
Under the terms of the Merger Agreement, Skillsoft and Codecademy are subject to certain restrictions on the conduct of business prior to the consummation of the Mergers, which may adversely affect Skillsoft’s and Codecademy’s ability to execute certain of Skillsoft’s and Codecademy’s business strategies, including the ability in certain cases to modify or enter into certain contracts, acquire or dispose of certain assets, incur or prepay certain indebtedness, incur encumbrances, make capital expenditures or settle claims. Such limitations could negatively affect Skillsoft’s and Codecademy’s businesses and operations prior to the completion of the Mergers.
Skillsoft will incur significant transaction costs in connection with the Mergers.
Skillsoft has incurred and is expected to continue to incur a number of non-recurring costs associated with the Mergers, combining the operations of Codecademy with Skillsoft’s and achieving desired synergies. These costs have been, and will continue to be, substantial and, in many cases, will be borne by Skillsoft whether or not the Mergers are completed. A substantial majority of non-recurring expenses will consist of transaction costs and include, among others, fees paid to financial, legal, accounting and other advisors and employee retention, severance, and benefit costs. Skillsoft will also incur costs related to formulating and implementing integration plans. Although Skillsoft expects that the elimination of duplicative costs, as well as the realization of synergies and efficiencies related to the integration of the assets and operations of Codecademy, should allow Skillsoft to offset these transaction costs over time, this net benefit may not be achieved in the near term or at all.
Moreover, if the Mergers are not completed, Skillsoft will have incurred substantial expenses for which no ultimate benefit will have been received. Skillsoft has incurred out-of-pocket expenses in connection with the Mergers for investment banking, legal and accounting fees and financial printing and other costs and expenses, much of which will be incurred even if the Mergers are not completed.
Termination of the Merger Agreement or failure to otherwise complete the Mergers could negatively impact Skillsoft’s business and financial results.

Skillsoft’s business may have been adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the Mergers, without realizing any of the anticipated benefits of completing the Mergers;

in certain instances, payment by Skillsoft of a termination fee or reimbursement of certain expenses to Codecademy; and

negative reactions from the financial markets and customers may occur if the anticipated benefits of the Mergers are not able to be realized.
If the Mergers are not consummated, Skillsoft cannot assure you that the risks described above will not negatively impact the business, financial results, and ability to repay its outstanding indebtedness.
Until the completion of the Mergers or the termination of the Merger Agreement in accordance with its terms, Skillsoft and Codecademy are each prohibited from entering into certain transactions and taking certain actions that might otherwise be beneficial to Skillsoft or Codecademy and their respective stockholders.
From and after the date of the Merger Agreement and prior to completion of the Mergers, the Merger Agreement restricts Skillsoft and Codecademy from taking specified actions without the consent of the other party and generally requires that the business of each company and its respective subsidiaries be conducted in all material respects in the ordinary course of business consistent with past practice. These restrictions may prevent Skillsoft or Codecademy from making appropriate changes to their respective businesses or organizational structures or from pursuing attractive business opportunities that may arise prior to the completion of the Mergers, and could have the effect of delaying or preventing other strategic transactions. Adverse effects arising from the pendency of the Mergers could be exacerbated by any delays in consummation of the Mergers or termination of the Merger Agreement.
 
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The announcement and pendency of the Mergers could have an adverse effect on Skillsoft’s and/or Codecademy’s business, financial condition, results of operations or business prospects.
The announcement and pendency of the Mergers could disrupt Skillsoft’s and/or Codecademy’s businesses in the following ways, among others:

Skillsoft’s and/or Codecademy’s employees may experience uncertainty regarding their future roles in Skillsoft, which might adversely affect Skillsoft’s and/or Codecademy’s ability to retain, recruit and motivate key personnel;

the attention of Skillsoft’s and/or Codecademy’s management may be directed toward the completion of the Mergers and other transaction-related considerations and may be diverted from the day-to-day business operations of Skillsoft and/or Codecademy, as applicable, and matters related to the Mergers may require commitments of time and resources that could otherwise have been devoted to other opportunities that might have been beneficial to Skillsoft and/or Codecademy, as applicable; and

customers, suppliers and other third parties with business relationships with Skillsoft and/or Codecademy may decide not to renew or may decide to seek to terminate, change and/or renegotiate their relationships with Skillsoft and/or Codecademy as a result of the Mergers, whether pursuant to the terms of their existing agreements with Skillsoft and/or Codecademy or otherwise.
Any of these matters could adversely affect the businesses of, or harm the financial condition, results of operations or business prospects of, Skillsoft and/or Codecademy.
Securities class action and derivative lawsuits may be brought against Skillsoft in connection with the Mergers, which could result in substantial costs and may delay or prevent the Mergers from being completed.
Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into acquisition, merger or other business combination agreements that could prevent or delay the completion of the Mergers and result in significant costs to Skillsoft, including any costs associated with the indemnification of directors and officers. Even if such a lawsuit is without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on Skillsoft’s liquidity and financial condition.
Lawsuits that may be brought against Skillsoft, Codecademy or Skillsoft’s or Codecademy’s directors could also seek, among other things, injunctive relief or other equitable relief, including a request to enjoin Skillsoft from consummating the Mergers. One of the conditions to the closing of the Mergers is that no order, judgment, ruling, injunction, stipulation, monetary assessment, award, decree, decision, determination subpoena, verdict or writ in any suit, legal proceeding, enforcement proceeding, arbitration proceeding, hearing, litigation, investigation or other proceeding or law of a court of competent jurisdiction or other governmental authority has been issued, promulgated or entered after the date of the Merger Agreement and remains in effect that prohibits, enjoins or makes illegal the consummation of the transactions contemplated by the Merger Agreement. Consequently, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Mergers, that injunction may delay or prevent the Merger from being completed within the expected timeframe or at all, which may adversely affect Skillsoft’s business, financial position and results of operation.
Completion of the Mergers may trigger change in control or other provisions in certain agreements to which Codecademy is a party, which may have an adverse impact on Skillsoft’s business and results of operations.
The completion of the Mergers may trigger change in control and other provisions in certain agreements to which Codecademy is a party. For those agreements for which Skillsoft and Codecademy are unable to negotiate waivers of those provisions, the counterparties may exercise their rights and remedies under the agreements, potentially terminating the agreements or seeking monetary damages. The foregoing or similar developments may have an adverse impact on Skillsoft’s business and results of operations.
 
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Skillsoft may record goodwill and other intangible assets that could become impaired and result in material non-cash charges to the results of operations of Skillsoft in the future.
Skillsoft will account for the Mergers as an acquisition of a business in accordance with GAAP. Under the acquisition method of accounting, the assets and liabilities of Codecademy will be recorded, as of completion, at their respective fair values (except for deferred revenue which, pursuant to Skillsoft’s adoption of ASU 2021-08 — Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers effective June 11, 2021, will be recognized using the revenue recognition guidance in Accounting Standards Codification Topic 606 rather than fair value) and added to Skillsoft’s. Skillsoft’s reported financial condition and results of operations for periods after completion of the Mergers will reflect Codecademy’s balances and results after completion of the Mergers but will not be restated retroactively to reflect the historical financial position or results of operations of Codecademy for periods prior to the Mergers.
Under the acquisition method of accounting, the total purchase price will be allocated to Codecademy’s tangible assets and liabilities and identifiable intangible assets based on their fair values as of the date of completion of the Mergers. The excess of the purchase price over those fair values, if any, will be recorded as goodwill. To the extent the value of goodwill or intangibles, if any, becomes impaired in the future, Skillsoft may be required to incur material non-cash charges relating to such impairment. Skillsoft’s operating results may be significantly impacted from both the impairment and the underlying trends in the business that triggered the impairment.
The unaudited pro forma condensed combined financial information and the pro forma reserves information in this proxy statement is presented for illustrative purposes only and may not be reflective of Skillsoft’s operating results, financial condition or reserves following completion of the Mergers.
The unaudited pro forma condensed combined financial information in this proxy statement is presented for illustrative purposes only and is not necessarily indicative of what Skillsoft’s actual financial position or results of operations would have been had the Mergers been completed on the dates indicated. Similarly, the pro forma reserves information in this proxy statement is presented for illustrative purposes only and is not necessarily indicative of what Skillsoft’s reserves would have been had the Mergers been completed on the dates indicated. Further, Skillsoft’s actual results and financial position after the Mergers may differ materially and adversely from the pro forma information that is included in this proxy statement.
The unaudited pro forma condensed combined financial information has been prepared with the assumption that Skillsoft will be identified as the acquirer under GAAP and reflects adjustments based upon preliminary estimates of the fair value of assets to be acquired and liabilities to be assumed.
Risks Related to Skillsoft Following the Mergers
If the Mergers are consummated, Skillsoft may be unable to successfully integrate Codecademy’s business into its business or achieve the anticipated benefits of the Mergers.
The success of the Mergers will depend, in part, Skillsoft’s ability to realize the anticipated benefits and cost savings from combining Skillsoft’s and Codecademy’s businesses, and there can be no assurance that Skillsoft will be able to successfully integrate or otherwise realize the anticipated benefits of the Mergers. Difficulties in integrating Codecademy into Skillsoft may result in Skillsoft performing differently than expected, in operational challenges, or in the failure to realize anticipated expense-related efficiencies. Potential difficulties that may be encountered in the integration process include, among others:

the inability to successfully integrate Codecademy in a manner that permits the achievement of full revenue, expected cash flows and cost savings anticipated from the Mergers;

not realizing anticipated operating synergies;

integrating personnel from Codecademy and the loss of key leadership and employees;

potential unknown liabilities and unforeseen expenses or delays associated with and following the completion of the Mergers;

integrating relationships with customers, vendors and business partners;
 
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performance shortfalls as a result of the diversion of management’s attention caused by completing the Mergers and integrating Codecademy’s operations;

the impact of Skillsoft’s recent acquisition of Global Knowledge and Pluma, Inc.; and

the disruption of, or the loss of momentum in, Skillsoft’s ongoing business or inconsistencies in standards, controls, procedures and policies.
Skillsoft’s results may suffer if it does not effectively manage its expanded operations following the Mergers.
Following completion of the Mergers, the size of Skillsoft’s business will increase significantly beyond its current size. Skillsoft’s future success will depend, in part, on Skillsoft’s ability to manage this expanded business, which poses numerous risks and uncertainties, including the need to integrate the operations and business of Codecademy into Skillsoft’s existing business in an efficient and timely manner, to combine systems and management controls and to integrate relationships with customers, vendors and business partners.
Skillsoft’s current stockholders will have a reduced ownership and voting interest after the Mergers compared to their current ownership and will exercise less influence over management.
Based on the number of outstanding shares of Common Stock as of February 24, 2022, immediately after the Mergers are completed, it is expected that, on a fully diluted basis, Skillsoft’s current stockholders will collectively own approximately 79.6% and the former Codecademy stockholders will own, in the aggregate, approximately 20.4% of the outstanding shares of Common Stock. As a result of the Mergers, Skillsoft’s current stockholders will own a smaller percentage of Skillsoft than they currently own, and as a result will have less influence on Skillsoft’s management and policies.
Sales of substantial amounts of the Common Stock in the open market by the Codecademy equity holders could depress the price of the Common Stock.
Shares of Common Stock that are issued to the Codecademy equity holders in the Mergers will become freely tradable once registered pursuant to the Registration Rights Agreement or sold in compliance with Rule 144 promulgated under the Securities Act. Pursuant to the Registration Rights Agreement, all of the shares of Common Stock issued as Stock Consideration to any Codecademy equity holder who is a party to the Registration Rights Agreement will be registered for resale. Once registered, the Common Stock held by such Codecademy equity holders will be unrestricted and will not require further registration under the Securities Act, although such shares may be subject to the lockup restrictions set forth in the Registration Rights Agreement.
The Codecademy equity holders may wish to dispose of some or all of their interests in Skillsoft, and as a result may seek to sell their shares of Common Stock. These sales (or the perception that these sales may occur), coupled with the increase in the outstanding number of shares of Common Stock, may affect the market for, and the market price of, the Common Stock in an adverse manner.
If the Mergers are completed and Skillsoft’s stockholders, including the Codecademy equity holders, sell substantial amounts of Common Stock in the public market following the closing of the Mergers, the market price of the Common Stock may decrease. These sales might also make it more difficult for Skillsoft to raise capital by selling equity or equity-related securities at a time and price that it otherwise would deem appropriate.
The trading price and volume of the Common Stock may be volatile following the Mergers.
The trading price and volume of the Common Stock may be volatile following completion of the Mergers. The stock markets in general and in our industry have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of the Common Stock. As a result, you may suffer a loss on your investment.
The market for the Common Stock will depend on a number of conditions, most of which Skillsoft cannot control, including:

general economic conditions within the U.S. and internationally, including changes in interest rates;
 
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general market conditions;

domestic and international economic, legal and regulatory factors unrelated to Skillsoft’s performance;

volatility in the financial markets or other global economic factors, including the impact of COVID-19;

actual or anticipated fluctuations in Skillsoft’s quarterly and annual results and those of its competitors;

quarterly variations in the rate of growth of Skillsoft’s financial indicators, such as revenue, EBITDA, bookings, net income and net income per share;

the businesses, operations, results and prospects of Skillsoft;

the operating and financial performance of Skillsoft;

future mergers and strategic alliances;

changes in government regulation, taxes, legal proceedings or other developments;

shortfalls in Skillsoft’s operating results from levels forecasted by securities analysts;

changes in revenue or earnings estimates, or changes in recommendations by equity research analysts;

failure of Skillsoft to achieve the perceived benefits of the Mergers, including financial results and anticipated synergies, as rapidly as or to the extent anticipated by financial or industry analysts;

speculation in the press or investment community;

the failure of research analysts to cover Skillsoft’s common stock;

sales of the Common Stock by Skillsoft, large stockholders or management, or the perception that such sales may occur;

changes in accounting principles, policies, guidance, interpretations or standards;

announcements concerning Skillsoft or its competitors;

public reaction to Skillsoft’s press releases, other public announcements and filings with the SEC;

strategic actions taken by competitors;

actions taken by Skillsoft’s stockholders;

additions or departures of key management personnel;

maintenance of acceptable credit ratings or credit quality;

the general state of the securities markets; and

the risk factors described in this proxy statement and the documents incorporated by reference into this proxy statement.
These and other factors may impair the market for the Common Stock and the ability of investors to sell shares at an attractive price. These factors also could cause the market price and demand for the Common Stock to fluctuate substantially, which may negatively affect the price and liquidity of the Common Stock. Many of these factors and conditions are beyond the control of Skillsoft or Skillsoft’s stockholders.
Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. Such litigation, if instituted against Skillsoft, could result in very substantial costs, divert management’s attention and resources and harm Skillsoft’s business, operating results and financial condition.
Failure or perceived failure to comply with regulations relating to some career training services could result in the imposition of penalties or the interruption of our ability to provide services in certain jurisdictions.
In many jurisdictions in which we operate, some career training services are subject to licensing requirements. We do not believe that the services we provide are subject to such licensing requirements.
 
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Regulators could disagree with our assessment regarding the applicability of licensure requirements and take enforcement action against us, including by imposing penalties or prohibiting us from offering career-related training services in a relevant jurisdiction until we are able to obtain the requisite license. Regulatory action has in the past been taken against Global Knowledge in respect of licensing requirements applicable to providers of career training services in certain jurisdictions and regulatory inquiries have occasionally been made about Global Knowledge’s licensure.
Codecademy provides learning products and services directly to individuals. If those products and services were deemed to be non-exempt services, subject to regulation by a particular U.S. state or other jurisdiction, and we were found to be in non-compliance with any of the laws, regulations, standards, or policies related to state or other jurisdictional authorization after the consummation of the Mergers, we could lose our ability to offer some products or services in those jurisdictions, be subject to increased compliance costs, and be subject to related legal proceedings, and our revenue, results of operations and financial condition could be adversely impacted.
Risks Related to Ownership of our Common Stock
If the benefits of the Mergers do not meet the expectations of financial analysts, the market price of the Common Stock may decline.
The market price of the Common Stock may decline as a result of the Mergers if Skillsoft does not achieve the perceived benefits of the Mergers as rapidly, or to the extent anticipated by, financial analysts or the effect of the Mergers on the financial results of Skillsoft is not consistent with the expectations of financial analysts. Accordingly, holders of Common Stock may experience a loss as a result of a decline in the market price of Common Stock. In addition, a decline in the market price of the Common Stock could adversely affect the ability of Skillsoft to issue additional securities and to obtain additional financing in the future.
The unaudited pro forma condensed combined financial information included in this proxy statement is preliminary and based on a number of assumptions and the actual financial condition and results of operations after the Mergers may differ materially.
The unaudited pro forma financial information included in this proxy statement is presented for illustrative purposes only and is not necessarily indicative of what the actual financial position or results of operations of Skillsoft subsequent to the consummation of the Mergers would have been on the date(s) indicated. The preparation of the pro forma financial information is based upon available information and certain assumptions and estimates that Skillsoft and Codecademy currently believe are reasonable. The unaudited pro forma financial information reflects adjustments, which are based upon preliminary estimates that are subject to change of the pro forma acquisition accounting necessary to recognize the acquired assets and assumed liabilities of Codecademy. The pro forma acquisition accounting reflected in this proxy statement is preliminary, and the final acquisition accounting will be based upon the actual purchase price and the fair value of the assets and liabilities of Codecademy as of the date of the completion of the Mergers. In addition, following the completion of the Mergers, there may be further refinements of the acquisition as additional information becomes available. Accordingly, the acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this proxy statement. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”
Our Derivative Instruments are accounted for as liabilities and the changes in value of our Derivative Instruments could have a material effect on our financial results.
On April 12, 2021, the Staff at the SEC issued a statement (the “SEC Statement”) discussing the accounting implications of certain terms that are common in warrants issued by special purpose acquisition companies. In light of the SEC Statement and guidance in ASC 815-40, “Derivatives and Hedging —  Contracts in Entity’s Own Equity,” Skillsoft’s management evaluated the terms of the warrant agreement entered into in connection with Skillsoft’s initial public offering and concluded that the warrant agreement governing public warrants and the private placement warrants (together, the “warrants”) include provisions that, based on the SEC Statement, preclude the warrants from being classified as components of equity. As a result, Skillsoft classified the warrants, the 2020 note and that certain Subscription Agreement, dated
 
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as of October 12, 2020, by and among Skillsoft, Churchill Sponsor II, LLC, and Prosus (the “Prosus Subscription Agreement”) (together, the “Derivative Instruments”) as liabilities. Under this accounting treatment, Skillsoft was required to measure the fair value of the Derivative Instruments at the end of each reporting period and recognize changes in the fair value from the prior period in their operating results for the current period. As a result of the recurring fair value measurement, our financial statements and results of operations may fluctuate quarterly based on factors which are outside our control. We expect that we will recognize non-cash gains or losses due to the quarterly fair valuation of the Derivative Instruments and that such gains or losses could be material.
In connection with the restatement of Skillsoft’s financial statements, Skillsoft’s management has concluded that its disclosure controls and procedures and internal control over financial reporting were not effective as of December 31, 2020 due to a material weakness in internal control over financial reporting solely related to its accounting for Derivative Instruments.
Following the issuance of the SEC Statement and after consultation with Skillsoft’s independent registered public accounting firm and its management team, Skillsoft concluded that, in light of the SEC Statement, it was appropriate to restate its previously issued audited financial statements as of and for the year ended December 31, 2020 and the period from April 11, 2019 (inception) through December 31, 2019. Skillsoft also restated the financial statements as of July 1, 2019, as of and for the period ended September 30, 2019, as of December 31, 2019, and as of and for the periods ended March 31, 2020, June 30, 2020 and September 30, 2020. As part of such process, Skillsoft identified a material weakness in its internal controls over financial reporting, solely related to its accounting for Derivative Instruments as further discussed herein.
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 our annual or interim financial statements will not be prevented, or detected and corrected, on a timely basis. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We have taken steps and will continue to take steps to remediate the material weakness moving forward, but there is no assurance that any remediation efforts will ultimately have the intended effects.
If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and the price of the Common Stock may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
The price of the Common Stock may change significantly and you could lose all or part of your investment as a result.
The trading price of shares of our Common Stock is likely to continue to be volatile. The stock market, including in our industry, recently has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies. You may not be able to resell your shares at an attractive price due to a number of factors such as those listed in the risk factors above and below and the following:

results of operations that vary from the expectations of securities analysts and investors;

results of operations that vary from those of Skillsoft’s competitors;

changes in expectations as to Skillsoft’s future financial performance, including financial estimates and investment recommendations by securities analysts and investors;

declines in the market prices of stocks generally;

strategic actions by Skillsoft or its competitors;
 
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announcements by Skillsoft or its competitors of significant contracts, acquisitions, joint ventures, other strategic relationships or capital commitments;

any significant change in Skillsoft’s management;

changes in general economic or market conditions or trends in Skillsoft’s industry or markets;

changes in business or regulatory conditions, including new laws or regulations or new interpretations of existing laws or regulations applicable to Skillsoft’s business;

future sales of Common Stock or other securities of Skillsoft;

investor perceptions or the investment opportunity associated with the Common Stock relative to other investment alternatives;

the public’s response to press releases or other public announcements by Skillsoft or third parties, including the filings of Skillsoft with the SEC;

litigation involving Skillsoft, Skillsoft’s industry, or investigations by regulators into Skillsoft’s operations or those of their competitors;

guidance, if any, that Skillsoft provides to the public, any changes in this guidance or Skillsoft’s failure to meet this guidance;

the development and sustainability of an active trading market for the Common Stock;

actions by institutional or activist stockholders;

changes in accounting standards, policies, guidelines, interpretations or principles; and

other events or factors, including those resulting from natural disasters, pandemics, war, acts of terrorism or responses to these events.
These broad market and industry fluctuations may adversely affect the market price of the Common Stock, regardless of Skillsoft’s actual operating performance. In addition, price volatility may be greater if the public float and trading volume of the Common Stock is low.
In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If Skillsoft was involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from Skillsoft’s business regardless of the outcome of such litigation.
Because there are no current plans to pay cash dividends on our Common Stock for the foreseeable future, you may not receive any return on investment unless you sell your Common Stock for a price greater than that which you paid for it.
Skillsoft intends to retain future earnings, if any, for future operations, expansion and debt repayment and there are no current plans to pay any cash dividends for the foreseeable future. The declaration, amount and payment of any future dividends on shares of Common Stock will be at the sole discretion of Skillsoft’s Board. Skillsoft’s Board may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax, and regulatory restrictions, implications on the payment of dividends by us to our stockholders or by our subsidiaries to us and such other factors as our Board may deem relevant. In addition, our ability to pay dividends is limited by covenants of Skillsoft’s existing and outstanding indebtedness and may be limited by covenants of any future indebtedness Skillsoft incurs. As a result, stockholders must rely on their sales of Common Stock after appreciation, which may never occur, as the only way to realize any future gains on their investments.
If securities analysts do not publish research or reports about Skillsoft’s business or if they downgrade the Common Stock or Skillsoft’s sector, the price of the Common Stock and trading volume could decline.
The trading market for our Common Stock is influenced in part by the research and reports that industry or financial analysts publish about Skillsoft or its business. Skillsoft does not control these analysts. In
 
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addition, some financial analysts may have limited expertise with Skillsoft’s model and operations. Furthermore, if one or more of the analysts who do cover Skillsoft downgrade the Common Stock or industry, or the stock of any of its competitors, or publish inaccurate or unfavorable research about its business, the price of the Common Stock could decline. If one or more of these analysts ceases coverage of Skillsoft or fails to publish reports on it regularly, Skillsoft could lose visibility in the market, which in turn could cause the price of the Common Stock or trading volume to decline.
Future sales, or the perception of future sales, by Skillsoft or its stockholders in the public market could cause the market price for our Common Stock to decline.
The sale of shares of Common Stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of Common Stock. These sales, or the possibility that these sales may occur, also might make it more difficult for Skillsoft to sell equity securities in the future at a time and at a price that it deems appropriate.
As of February 24, 2022, Skillsoft had a total of 133,164,526 shares of Common Stock outstanding and warrants to purchase an aggregate of 61,966,667 shares of Common Stock outstanding. Based on the closing price of $6.23 per share of Common Stock on February 24, 2022, the most recent practicable date, 34,197,718 shares of Common Stock would be issued to the Codecademy equity holders in the Mergers.
As restrictions on resale end or if Skillsoft’s stockholders exercise their registration rights, the market price of shares of Common Stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for Skillsoft to raise additional funds through future offerings of shares of Common Stock or other securities.
In addition, the shares of Common Stock reserved for future issuance under Skillsoft’s equity incentive plans will become eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements, lock-up agreements and, in some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144, as applicable. The compensation committee of our Board may determine the exact number of shares to be reserved for future issuance under its equity incentive plans at its discretion. On August 17, 2021, Skillsoft filed a registration statement on Form S-8 under the Securities Act to register shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock issued pursuant to Skillsoft’s equity incentive plans. Skillsoft will file an additional registration statement on Form S-8 under the Securities Act to register shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock issued pursuant to Skillsoft’s equity incentive plans in connection with the issuance of Skillsoft RSUs in connection with the Mergers. Form S-8 registration statements automatically become effective upon filing.
Future issuances of debt securities and equity securities may adversely affect us, including the market price of shares of Common Stock, and may be dilutive to existing stockholders.
In the future, we may incur debt or issue equity ranking senior to the shares of Common Stock. Those securities will generally have priority upon liquidation. Such securities also may be governed by an indenture or other instrument containing covenants restricting its operating flexibility. Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of the shares of Common Stock. Because our decision to issue debt or equity in the future will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, nature or success of our future capital raising efforts. As a result, future capital raising efforts may reduce the market price of the shares of Common Stock and be dilutive to existing stockholders.
We may also issue securities in connection with investments or acquisitions. The amount of shares of Common Stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of Common Stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to our stockholders.
Anti-takeover provisions in our organizational documents could delay or prevent a change of control.
Certain provisions of our Charter and bylaws may have an anti-takeover effect and may delay, defer or prevent a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a
 
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stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders.
These provisions provide for, among other things:

a staggered board, which means that our board of directors is classified into three classes of directors with staggered three-year terms and directors are only able to be removed from office for cause;

the ability of our board of directors to issue one or more series of preferred stock;

advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings;

certain limitations on convening special stockholder meetings;

limiting the ability of stockholders to act by written consent; and

providing that our board of directors is expressly authorized to make, alter or repeal our bylaws.
These anti-takeover provisions could make it more difficult for a third party to acquire Skillsoft, even if the third-party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause Skillsoft to take other corporate actions you desire.
The Charter 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 Skillsoft or its directors, officers, employees or stockholders.
The Charter provides that, subject to limited exceptions, any (1) derivative action or proceeding brought on behalf of Skillsoft, (2) action asserting a claim of breach of a fiduciary duty owed by any director, officer, stockholder or employee to Skillsoft or its stockholders, (3) action asserting a claim arising pursuant to any provision of the DGCL or the Charter or our bylaws or (4) action asserting a claim governed by the internal affairs doctrine shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, another state or federal court located within the State of Delaware. Any person or entity purchasing or otherwise acquiring any interest in shares of Skillsoft’s capital stock shall be deemed to have notice of and to have consented to the provisions of the Charter described above. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with Skillsoft or its directors, officers or other employees, which may discourage such lawsuits against Skillsoft and its directors, officers and employees. Alternatively, if a court were to find these provisions of the Charter inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, the Skillsoft may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect Skillsoft’s business and financial condition. Notwithstanding the foregoing, the Charter will not apply to suits brought to enforce any liability or duty created by the Exchange Act, or any other claim for which the federal district courts of the United States of America shall be the sole and exclusive forum. While Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
Any person or entity 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 the forum provisions in the Charter. If any action the subject matter of which is within the scope of the forum provisions is filed in a court other than a court located within the State of Delaware (a “foreign action”) in the name of any stockholder, such stockholder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce
 
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the forum provisions (an “enforcement action”); and (y) having service of process made upon such stockholder in any such enforcement action by service upon such stockholder’s counsel in the foreign action as agent for such stockholder.
This choice-of-forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with Skillsoft or its directors, officers, stockholders, agents or other employees, which may discourage such lawsuits. We note that there is uncertainty as to whether a court would enforce this provision, and the enforceability of similar choice of forum provisions in other companies’ charter documents has been challenged in legal proceedings. Further, investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. It is possible that a court could find these types of provisions to be inapplicable or unenforceable, and if a court were to find this provision of the Charter inapplicable or unenforceable with respect to 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 materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
The NYSE may not continue to list our securities, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
Our Common Stock and Public Warrants are currently listed on the NYSE. There can be no assurance that we will be able to comply with the continued listing standards of NYSE. If the NYSE delists our Common Stock from trading on its exchange for failure to meet the listing standards, our stockholders could face significant material adverse consequences including:

a limited availability of market quotations for our securities;

reduced liquidity for our securities;

a determination that the Common Stock is a “penny stock” which will require brokers trading in such securities to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

a limited amount of news and analyst coverage; and

a decreased ability to issue additional securities or obtain additional financing in the future.
A market for our securities may not continue, which would adversely affect the liquidity and price of our securities.
The price of our securities may fluctuate significantly due to the market’s reaction to the Mergers and general market and economic conditions. An active trading market for our securities may not be sustained. In addition, the price of our securities can vary due to general economic conditions and forecasts, our general business condition and the release of our financial reports. Additionally, if our securities become delisted from the NYSE for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on the NYSE or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.
Prosus and its affiliates may have interests that differ from those of other stockholders.
As of February 24, 2022, Prosus holds approximately 37.5% of Skillsoft’s outstanding Common Stock, and an affiliate of Prosus, Edtech, or an affiliate thereof, holds approximately 23.8% of the outstanding equity of Codecademy. The shares of the Common Stock to be issued pursuant to the Merger Agreement represented approximately 25.7% of the number of shares and voting power of Skillsoft’s outstanding common stock, based on the closing price of $6.23 per share of Common Stock on February 24, 2022, the most recent practicable date. Based on the same assumption, 34,197,718 shares of Common Stock would be issued to the Codecademy equity holders in the Mergers, of which approximately 11 million shares would be issued to Edtech, or an affiliate thereof, the “share-only holder.”
Pursuant to the terms of the Prosus Subscription Agreement, and subject to any required approval of Skillsoft’s stockholders pursuant to the applicable rules and listing standards of the NYSE (which Skillsoft
 
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will use reasonable best efforts to obtain), if Skillsoft intends to issue New Securities (as defined in the Prosus Subscription Agreement) to any person, then, at least fifteen (15) business days prior to the issuance of the New Securities, Skillsoft shall deliver Prosus an offer (the “Offer”) to issue New Securities to Prosus for cash in an aggregate amount, on a pro forma basis after giving effect to the issuance of the New Securities, that would result in Subscriber maintaining beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of at least the percentage of the issued and outstanding shares of Common Stock that it beneficially owns immediately prior to the issuance of such New Securities on a fully-diluted and as-converted basis but, solely prior to the expiration of the earlier of (i) June 11, 2024 and (ii) the occurrence of a Significant Event (as defined in the Prosus Subscription Agreement), not to the extent such issuance would result in Prosus having beneficial ownership of more than thirty-five percent (35%) of the issued and outstanding shares of Common Stock on a fully-diluted and as converted basis (excluding any warrants issued to Prosus pursuant to the Prosus Subscription Agreement). The Offer shall state that Skillsoft proposes to issue the New Securities and shall specify their number and terms (including the cash purchase price or the fair market value of any non-cash consideration as reasonably determined by the Board). The Offer shall remain open and irrevocable for a period of 15 business days from the date of its delivery.
Following the Mergers, so long as Prosus and its affiliates continue to directly or indirectly own a significant amount of Skillsoft’s outstanding Common Stock, Prosus may be able to exert substantial influence on Skillsoft and may be able to exercise its influence in a manner that is not in the interests of Skillsoft’s other stakeholders. Additionally, Prosus and its affiliates are in the business of making investments in companies and owning real estate, and may from time to time acquire and hold interests in businesses that compete directly or indirectly with Skillsoft or that supply Skillsoft with goods and services. Prosus or its affiliates may also pursue acquisition opportunities that may be complementary to (or competitive with) Skillsoft’s business, and as a result those acquisition opportunities may not be available to Skillsoft. Stockholders should consider that the interests of Prosus may differ from their interests in material respects.
Skillsoft’s consultant, the Klein Group, has an interest in the Mergers.
Michael Klein, a member of our Board, is the Chief Executive Officer of The Klein Group, LLC (the “Klein Group”). Skillsoft engaged the Klein Group to act as a consultant in respect of a potential transaction with Codecademy, particularly to assist management in its evaluation of the business opportunity and structuring and negotiation of a potential transaction. Pursuant to this engagement, Skillsoft will pay the Klein Group a transaction fee equal to the greater of (i) $2.0 million and (ii) 0.35% of the aggregate Merger Consideration, promptly at the closing of the Mergers. Therefore, the Klein Group has a financial interest in the closing of the Mergers.
 
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COMPARATIVE SHARE INFORMATION
The following tables set forth:

historical per share information of Skillsoft for the period of February 1, 2020 to October 31, 2021; and

unaudited pro forma per share information of Skillsoft following the consummation of the Churchill Transaction for the fiscal year ended January 31, 2021 and the nine months ended October 31, 2021.
This information is only a summary and is based on, and should be read together with, the selected historical consolidated financial information, the unaudited pro forma condensed combined financial information and the historical consolidated financial information of Skillsoft and the unaudited pro forma condensed financial information and the historical financial information of Codecademy, and the accompanying notes to such financial statements, that has been presented in Skillsoft’s filings with the SEC that are included or incorporated herein by reference in this proxy statement or that are otherwise included in this proxy statement. The unaudited pro forma condensed combined per share data are presented for illustrative purposes only and are not necessarily indicative of actual or future financial position or results of operations that would have been realized if the Mergers had been completed as of the dates indicated or will be realized upon the completion of the Mergers. Uncertainties that could impact Skillsoft’s financial condition include risks that affect Codecademy’s operations and outlook such as economic recessions, inflation, fluctuations in commodity prices or interest or currency exchange rates, and changes in the fiscal or monetary policies of the United States government. For more information on the risks, please see the section entitled “Risk Factors.” You are also urged to read the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.
Historical(1)
Skillsoft
Period from
February 1, 2020
to August 27,
2020
Skillsoft
Period from
August 28, 2020
to January 31,
2021
Skillsoft
Period from
February 1, 2021
to June 11,
2021
Skillsoft
Period from
June 12, 2021
to October 31,
2021
Basic and diluted earnings (loss) per common
share – class A
n/a$(24.97)$(12.32)$(0.41)
Basic and diluted earnings (loss) per common
share – class B
n/a$13.44$(12.32)$(0.41)
Basic and diluted earnings (loss) per common
share – ordinary shares
$27,612.51n/an/an/a
(1)
Codecademy share information not applicable because it is a privately held company.
Unaudited Pro Forma
Year Ended
January 31, 2021
Nine Months Ended
October 31, 2021
Basic and diluted income (loss) per common share$15.14$(0.98)
 
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SPECIAL MEETING OF SKILLSOFT’S STOCKHOLDERS
This proxy statement is being provided to Skillsoft’s stockholders as part of a solicitation of proxies by the Board for use at the Special Meeting to be held on March 31, 2022, and at any adjournment or postponement thereof. This proxy statement contains important information regarding the Special Meeting, the proposals on which you are being asked to vote and information you may find useful in determining how to vote and voting procedures.
This proxy statement is being first mailed on or about February 28, 2022. Stockholders of record who own Common Stock at the close of business March 7, 2022, the record date for the Special Meeting, are entitled to receive notice of, attend and vote at the Special Meeting.
All stockholders as of the record date, or their duly appointed proxies, may attend the Special Meeting, which will be a completely virtual meeting. There will be no physical meeting location and the Special Meeting will only be conducted via live webcast. Stockholders may attend the Special Meeting online, including to vote and submit questions, at the following address: https://www.cstproxy.com/skillsoft/2022.
We are utilizing a virtual stockholder meeting format for the Special Meeting. Our virtual stockholder meeting format uses technology designed to increase stockholder access, save Skillsoft and our stockholders time and money and provide our stockholders rights and opportunities to participate in the virtual Special Meeting similar to those they would have at an in-person special meeting, at no cost. In addition to online attendance, we provide stockholders with an opportunity to hear all portions of the official Special Meeting as conducted by the Board, submit written questions and comments during the Special Meeting and vote online during the open poll portion of the Special Meeting.
Stockholders who wish to submit a question to Skillsoft for the Special Meeting may do so during the Special Meeting at https://www.cstproxy.com/skillsoft/2022. Questions pertinent to Special Meeting matters may be recognized and answered during the Special Meeting in our discretion, subject to time constraints. We reserve the right to edit or reject questions that are inappropriate for Special Meeting matters. In addition, we will offer live technical support for all stockholders attending the Special Meeting.
To attend online and participate in the Special Meeting, stockholders of record will need to https://www.cstproxy.com/skillsoft/2022.
Date, Time and Place of Special Meeting
The Special Meeting will be held on March 31, 2022 at 11:30 a.m. Eastern Time, via live webcast at the following address: https://www.cstproxy.com/skillsoft/2022, or at such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the proposals.
Voting Power; Record Date
Only holders of shares of Common Stock of record at the close of business on March 7, 2022, the record date for the Special Meeting, will be entitled to vote at the Special Meeting. You are entitled to one vote for each share of Common Stock that you own at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your bank, broker or other holder of record to ensure that votes related to the shares you beneficially own are properly counted.
Proposals at the Special Meeting
At the Special Meeting, Skillsoft’s stockholders will vote on the following proposals:

to approve the Stock Issuance Proposal, in accordance with Sections 312.03 and 312.07 of the NYSE Listed Company Manual; and

to approve one or more adjournments of the Special Meeting, if necessary or appropriate, to permit solicitation of additional votes if there are insufficient votes to approve the Stock Issuance Proposal.
Quorum and Required Vote for Proposals for the Special Meeting
A quorum of Skillsoft’s stockholders is necessary to hold a valid meeting. A quorum will be present at the Special Meeting if the holders of a majority of the outstanding shares of Common Stock entitled to
 
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vote as of the close of business on the record date are present virtually or are represented by proxy at the Special Meeting. Abstentions will count as present for the purposes of establishing a quorum. Broker non-votes will be counted for the purposes of determining the existence of a quorum at the Special Meeting if a stockholder instructs its bank, broker or other nominee to vote its shares on any proposal.
Assuming a quorum is present, approval of the Stock Issuance Proposal requires the affirmative vote of the holders of a majority of the shares of Common Stock present virtually or represented by proxy at the Special Meeting and entitled to vote thereat. Accordingly, with respect to a holder of shares of Common Stock who is present virtually or represented by proxy at the Special Meeting, such stockholder’s abstention from voting or the failure of a holder of shares of Common Stock to vote will have the same effect as a vote “AGAINST” the Stock Issuance Proposal. Additionally, if a holder of shares of Common Stock instructs its bank, broker or other nominee regarding the Adjournment Proposal but not the Stock Issuance Proposal, such broker non-vote will have the same effect as voting “AGAINST” the Stock Issuance Proposal.
Approval of the Adjournment Proposal requires the affirmative vote of the holders of a majority of the shares of Common Stock present virtually or represented by proxy at the Special Meeting and entitled to vote thereat. Accordingly, with respect to a holder of shares of Common Stock who is present virtually or represented by proxy at the Special Meeting, such stockholder’s abstention from voting or the failure of a holder of shares of Common Stock to vote will have the same effect as a vote “AGAINST” the Adjournment Proposal. Additionally, if a holder of shares of Common Stock instructs its bank, broker or other nominee regarding the Stock Issuance Proposal, but not the Adjournment Proposal, such broker non-vote will have the same effect as voting “AGAINST” the Adjournment Proposal. Unless there is a quorum, the presiding officer of the Special Meeting may also adjourn the Special Meeting.
The Mergers are conditioned on, among other things, the approval of the Stock Issuance Proposal at the Special Meeting. The Adjournment Proposal is not conditioned on the approval of the Stock Issuance Proposal.
It is important for you to note that, in the event that the Stock Issuance Proposal does not receive the requisite vote for approval, Skillsoft cannot consummate the Mergers and will be required to pay a termination fee to Codecademy in connection with the termination of the Merger Agreement as a result of failure to receive the requisite vote for approval of the Stock Issuance Proposal.
Recommendation to Skillsoft’s Stockholders
The Board believes that each of the Stock Issuance Proposal and the Adjournment Proposal to be presented at the Special Meeting is in the best interests of Skillsoft and Skillsoft’s stockholders and recommends that its stockholders vote “FOR” the Stock Issuance Proposal and “FOR” the Adjournment Proposal.
For a more complete description of our reasons for the approval of the Mergers and the recommendation of the Board, see the section entitled “Proposal No. 1 — Approval of the Issuance of Common Stock in Connection with the Mergers — Background and Reasons for the Mergers — The Board’s Reasons for the Approval of the Mergers and the Stock Issuance.
Voting Your Shares — Stockholders of Record
If you are a holder of shares of Common Stock of record, you may vote by mail, virtually at the Special Meeting, by phone using the toll-free phone number on your proxy card or through the Internet using the instructions described on the proxy card. Each share of Common Stock that you own in your name entitles you to one vote on each of the proposals for the Special Meeting. Your one or more proxy cards
 
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show the number of shares of Common Stock that you own. There are several ways to vote your shares of Common Stock:

Voting by Mail.   You can vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. By signing the proxy card and returning it in the enclosed prepaid and addressed envelope, you are authorizing the individuals named on the proxy card to vote your shares at the Special Meeting in the manner you indicate. We encourage you to sign and return the proxy card even if you plan to attend the Special Meeting so that your shares will be voted if you are unable to attend the Special Meeting. If you receive more than one proxy card, it is an indication that your shares are held in multiple accounts. Please sign and return all proxy cards to ensure that all of your shares are voted. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares of Common Stock will be voted as recommended by the Board. The Board recommends voting “FOR” the Stock Issuance Proposal and “FOR” the Adjournment Proposal. Votes submitted by mail must be received by the deadline specified on the enclosed proxy card.
If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the Special Meeting.

Voting By Phone or Internet.   All stockholders of record can vote by phone from the United States and Canada, using the toll-free phone number on the proxy card, or through the Internet using the procedures and instructions described on the proxy card. Street name holders may vote by Internet or telephone if their bank or broker makes those methods available, in which case the bank or broker will enclose the instructions with the proxy materials. The Internet and phone voting procedures are designed to authenticate stockholders’ identities, allow stockholders to vote their shares and to confirm that their instructions have been properly recorded.

Voting at the Special Meeting.   You can attend the Special Meeting virtually and vote online even if you have previously voted by submitting a proxy pursuant to any of the methods noted above. However, if your shares of Common Stock are held in the name of your broker, bank or other nominee, you must get a proxy from the broker, bank or other nominee. That is the only way we can be sure that the broker, bank or nominee has not already voted your shares of Common Stock.
Revocation of Proxies
You can change or revoke your proxy at any time before the final vote at the Special Meeting. If you are the stockholder of record of your shares, you may revoke your proxy by:

submitting another proxy over the Internet or by phone prior to 11:59 p.m., Eastern Time, on March 30, 2022;

timely delivering a written notice that you are revoking your proxy to Skillsoft’s Chief Legal Officer;

timely delivering a valid, later-dated proxy;

attending the Special Meeting virtually, revoking your proxy and voting online, as indicated above. Your attendance at the Special Meeting will not revoke your proxy unless you give written notice of revocation to Skillsoft’s Chief Legal Officer before your proxy is exercised or unless you vote your shares virtually at the Special Meeting; or

if you are the beneficial owner of shares held in “street name,” you should contact your bank, broker or other nominee with questions about how to change or revoke your voting instructions.
No Additional Matters
The Special Meeting has been called to consider only the approval of the Stock Issuance Proposal and the Adjournment Proposal. Under the Amended and Restated Bylaws of Skillsoft (the “Bylaws”), other than procedural matters incident to the conduct of the Special Meeting, no other matters may be considered at the Special Meeting if they are not included in this proxy statement, which serves as the notice of the Special Meeting.
 
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Who Can Answer Your Questions About Voting?
If you have any questions about how to vote or direct a vote in respect of your shares of Common Stock, you may call Georgeson, Skillsoft’s proxy solicitor, at (866) 482-4943 (toll free).
Appraisal Rights
No dissenters’ or appraisal rights will be available to the holders of Common Stock with respect to the Mergers or the other transactions contemplated by the Merger Agreement.
Proxy Solicitation Costs
Skillsoft is soliciting proxies on behalf of its Board. This proxy solicitation is being made by mail, but also may be made by phone or in person. Skillsoft has also engaged Georgeson to assist in the solicitation of proxies for the Special Meeting. Skillsoft and its directors, officers and employees may also solicit proxies in person. Skillsoft will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions.
Skillsoft will bear the entire cost of the proxy solicitation, including the preparation, assembly, printing, mailing and distribution of the proxy materials. Skillsoft will pay Georgeson a fee of approximately $20,000, plus reimburse Georgeson for its reasonable out-of-pocket expenses. Skillsoft will reimburse brokerage firms and other custodians for their reasonable out-of-pocket expenses for forwarding the proxy materials to Skillsoft’s stockholders. Directors, officers and employees of Skillsoft who solicit proxies will not be paid any additional compensation for soliciting proxies.
 
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PROPOSAL NO. 1 — APPROVAL OF THE ISSUANCE OF
COMMON STOCK IN CONNECTION WITH THE MERGERS
Overview
A portion of the consideration to be paid to the Codecademy equity holders in connection with the Mergers will be the Stock Consideration, which consists of a number of shares of Common Stock determined by dividing the aggregate share consideration value of $320,056,790 by the Closing Average Price; provided, that if the Closing Average Price is (a) more than the Maximum Price, then the number of shares shall be determined by dividing $320,056,790 by the Maximum Price and (b) less than the Minimum Price, then the number of shares shall be determined by dividing $320,056,790 by the Minimum Price.
The Common Stock that will be issued pursuant to the Merger Agreement will not be registered under the Securities Act and will be issued in reliance on the exemption from registration requirements thereof provided by Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering. Skillsoft will be required to file with the SEC a registration statement on Form S-1 to provide for the public resale of the Common Stock issued pursuant to the Merger Agreement, in accordance with the terms of the Registration Rights Agreement.
We are asking Skillsoft’s stockholders to approve the issuance of the Stock Consideration pursuant to the terms of the Merger Agreement in connection with the Mergers. Skillsoft’s stockholders should read carefully this proxy statement in its entirety for more detailed information concerning the Merger Agreement, which is attached as Annex I to this proxy statement. Please see the subsection entitled “— Agreement and Plan of Merger” below for additional information and a summary of certain terms of the Merger Agreement. You are urged to read carefully the Merger Agreement in its entirety before voting on this proposal.
We may only consummate the Mergers if the Stock Issuance Proposal is, assuming a quorum is present, approved by the affirmative vote of the holders of a majority of the shares of Common Stock present virtually or represented by proxy at the Special Meeting and entitled to vote thereat.
Agreement and Plan of Merger
This section describes certain material terms of the Merger Agreement. The description of the Merger Agreement in this section and elsewhere in this proxy statement is qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex I to this proxy statement. In the event of any discrepancy between the summary of the Merger Agreement contained in this proxy statement and the terms of the Merger Agreement, the terms of the Merger Agreement will control. 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. You are encouraged to read the Merger Agreement carefully and in its entirety. This section is not intended to provide you with any factual information about Skillsoft or Codecademy. Such information can be found elsewhere in this proxy statement.
Effects of the Mergers
Pursuant to the Merger Agreement and upon the terms and subject to the conditions set forth therein, Merger Sub I will merge with and into Codecademy, with Codecademy being the surviving corporation of the First Merger, and immediately following the First Merger and as part of the same overall transaction, the Surviving Corporation will merge with and into Merger Sub II, with Merger Sub II being the surviving company of the Second Merger and an indirect wholly-owned subsidiary of Skillsoft.
Merger Consideration
Subject to the terms and conditions set forth in the Merger Agreement, at the Effective Time, all shares of common stock and preferred stock of Codecademy, options to acquire shares of common stock of Codecademy and restricted stock units of Codecademy issued and outstanding immediately prior to the Effective Time will be converted automatically into the right to receive a portion of the Merger Consideration. The Merger Consideration will be allocated among the holders of Codecademy common stock, preferred stock, options and restricted stock units as follows: (i) “non-accredited investors” will receive their pro rata
 
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portion of the Merger Consideration in cash; (ii) “share-only holders” will receive their pro rata portion of the Merger Consideration in Common Stock; and (iii) “pro rata holders” will receive their pro rata portion of the Merger Consideration in a mix of cash and Common Stock, in each case, the amount and composition of the portion of the Merger Consideration are subject to adjustment and holdbacks as set forth in the Merger Agreement.
The Merger Agreement provides that, at the Effective Time, each: (i) vested option to purchase common stock of Codecademy (other than vested options held by “non-accredited investors”) that is outstanding immediately prior to the Effective Time will be converted into the right to receive, with respect to each share of common stock of Codecademy covered by such vested option immediately prior to the Effective Time, cash and Common Stock on a pro rata basis (net of withholding taxes and the applicable per share exercise price), less holdback amounts as set forth in the Merger Agreement; (ii) unvested option to purchase common stock of Codecademy (other than unvested options held by “non-accredited investors” that are not continuing employees of Codecademy) will be assumed by Skillsoft and converted into a Skillsoft RSU to be granted as of the closing, representing the right to receive a number of shares of Common Stock determined with reference to the number of shares of common stock of Codecademy subject to such unvested option and the per share consideration exchange ratio (net of the exercise price), with each such Skillsoft RSU to be eligible to continue to vest on each date that the applicable unvested option would have otherwise vested in accordance with its terms, but only if such conditions to vesting are satisfied prior to each such vesting date; (iii) unvested restricted stock unit of Codecademy that is held by a “continuing employee” will be converted into the right to receive a Skillsoft RSU, representing the right to receive that number of shares of Common Stock equal to (x) the number of shares of common stock of Codecademy subject to such unvested restricted stock unit multiplied by (y) the per share consideration exchange ratio, provided that each such Skillsoft RSU will be subject to vesting on substantially similar terms and conditions as were applicable to each such unvested restricted stock unit prior to closing; (iv) vested option to purchase common stock of Codecademy that is held by a “non-accredited investor” will be converted, into an amount in cash (net of withholding taxes), equal to (x) the excess of the Merger Consideration such “non-accredited investor” would have been entitled to receive in respect of a share of common stock of Codecademy over the per share exercise price of such option multiplied by (y) the number of shares of common stock of Codecademy covered by such option, less holdback amounts as described in the Merger Agreement; and (v) unvested option that is held by a “non-accredited investor” that is not a continuing employee will be converted into an amount in cash (net of withholding taxes) equal to (x) the excess of the Merger Consideration such “non-accredited investor” would have been entitled to receive in respect of a share of common stock of Codecademy over the per share exercise price of such option multiplied by (y) the number of shares of common stock of Codecademy covered by such option, provided that the right to receive cash in respect of such options shall be subject to vesting on the same terms and conditions as were applicable to such options prior to closing.
Closing and Effective Time of the Mergers
Unless the parties otherwise mutually agree, the closing of the Mergers will take place on the date which is three Business Days (as defined in the Merger Agreement) after the date on which all of the closing conditions have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the closing) (such date, the “closing date”). See “— Conditions to Closing of the Mergers” below for a more complete description of the conditions that must be satisfied prior to the closing.
On the closing date, (i) Codecademy and Merger Sub I will file a certificate of merger with the Secretary of State of the State of Delaware in connection with the First Merger and (ii) the Surviving Corporation and Merger Sub II will file a certificate of merger with the Secretary of State of the State of Delaware in connection with the Second Merger. The time at which the First Merger becomes effective is referred to in this proxy statement as the “Effective Time”.
Covenants and Agreements
Conduct of Codecademy Prior to the Closing of the Mergers. Codecademy has agreed that, from the date of the Merger Agreement until the closing of the Mergers or the earlier termination of the Merger Agreement, it will, subject to certain exceptions or as required or contemplated by the Merger Agreement
 
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or as required by applicable law, unless Skillsoft has previously consented (which consent will not be unreasonably withheld, conditioned or delayed) (i) conduct its business and operations in all material respects in the ordinary course of business consistent with past practice (including, for the avoidance of doubt, recent past practice in light of COVID-19; provided, that any commercially reasonable action taken, or omitted to be taken, in each case, in good faith, that relates to, or arises out of, COVID-19 will be deemed to be in the ordinary course of business), (ii) maintain and preserve substantially intact its business organization, and assets and properties in their current condition (ordinary wear and tear excepted) and use commercially reasonable efforts to keep available the services of its employees and to preserve the goodwill and present relationships (contractual or otherwise) with all customers, suppliers, resellers, retailers, distributors, employees, licensors, governmental authorities and others having significant business dealings with Codecademy, and (iii) comply in all material respects with applicable law.
In addition to the general covenants above, Codecademy has agreed that, between the date of the Merger Agreement and prior to the earlier of the Effective Time and the termination of the Merger Agreement, except as required by applicable law, as specified or as expressly required or contemplated by the Merger Agreement, it will not, without the prior written consent of Skillsoft (which may not be unreasonably withheld, conditioned or delayed):

incur, amend, assume or guarantee any Indebtedness (as defined in the Merger Agreement);

acquire or agree to acquire any person or any interest therein or any business or division or material assets thereof (by merger, consolidation, purchase or sale of shares or assets or otherwise);

subject to any lien, other than Permitted Liens (as defined in the Merger Agreement), any property or assets;

expressly cancel any debts owed to or claims held by Codecademy, except debts or claims cancelled in the ordinary course of business consistent with past practice or that would not reasonably be expected to be, individually or in the aggregate, material to Codecademy;

sell, divest, assign, transfer or otherwise dispose of any tangible assets, except for sales of products of Codecademy, other than (i) in the ordinary course of business consistent with past practice or (ii) fixed assets that are surplus or obsolete;

sell, transfer, license, sublicense, lease, pledge or otherwise encumber or subject to any lien (other than Permitted Liens), abandon, cancel, let lapse or convey or dispose of any material assets, properties or businesses of any of Codecademy (including Owned Intellectual Property, Licensed Intellectual Property or Owned Company Software (each as defined in the Merger Agreement)), except for dispositions of obsolete or worthless assets or other than in the ordinary course of business consistent with past practice;

receive, collect, compile, use, store, process, share, safeguard, secure (technically, physically or administratively), dispose of, destroy, disclose, or transfer (including cross-border) any Personal Information (as defined in the Merger Agreement) (or fail to do any of the foregoing, as applicable) in violation of any Privacy Requirements (as defined in the Merger Agreement);

fail to take all actions (or avoid to take actions, as appropriate) reasonably necessary to protect the privacy and confidentiality of, and to protect and secure, any Personal Information in the possession or control of, or processed by or on behalf of, Codecademy, including by undergoing regular, comprehensive data security testing and auditing and expeditiously and fully resolving or remediating all material risks or vulnerabilities identified in any such testing or auditing or of which Codecademy is otherwise aware;

(A) make any loans, advances to, guarantees for the benefit of or any capital contributions to, or investments in, any other person, make any change in existing borrowing or lending arrangements for or on behalf of such persons, or enter into any “keep well” or similar agreement to maintain the financial condition of another entity, except for expense and travel advances in the ordinary course of business consistent with past practice to employees and other service providers of Codecademy or (B) forgive any loans to any of Codecademy’s affiliates or any of its or their directors, officers, employees of Codecademy or any of their respective affiliates;
 
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enter into, terminate, materially amend or modify, release, renew (other than automatic renewals in accordance with the terms of any Material Contract (as defined in the Merger Agreement) as in effect on the date of the Merger Agreement), assign or waive any material rights or claims under, any Material Contract or any contract that, if entered into prior to the date of the Merger Agreement, would have constituted a Material Contract, in each case, other than (i) in the ordinary course of business consistent with past practice or (ii) contracts entered into in connection with actions expressly permitted and not otherwise prohibited by the Merger Agreement;

enter into, amend or modify, renew or waive any rights under any Affiliate Agreements (as defined in the Merger Agreement), or enter into any other transaction with any officer, director, stockholder, equity holder or affiliate of Codecademy, except to the extent required by law;

except (i) to the extent required by law or any Employee Plan (as defined in the Merger Agreement) as in effect on the date of the Merger Agreement and specified or as expressly contemplated by the Merger Agreement, or (ii) as would not result in any material liability for Skillsoft or any of its subsidiaries (including any retention bonus, equity awards and similar compensation that is included in Transaction Expenses (as defined in the Merger Agreement)) or impact Skillsoft’s obligations under the Merger Agreement, (A) other than permitted plan modifications (as defined below), enter into, adopt, amend, establish, or terminate any Employee Plan, (B) increase the compensation, equity awards or benefits payable to any current or former officer, employee, consultant or director of Codecademy, other than (x) annual merit-based increases in base salary or wage rate in the ordinary course of business consistent with past practice that do not in the aggregate exceed more than two percent (2%) of the aggregate cost of annual base salaries and annualized wage rate in effect as of the date of the Merger Agreement, and (y) annual modifications to health and welfare plans and arrangements in the ordinary course of business consistent with past practice that do not result in the provision of any material benefit that is not provided as of the date of the Merger Agreement (“permitted plan modifications”); provided, that any such awards shall not provide for accelerated vesting upon termination of employment (except as set forth in the Merger Agreement), (C) other than as contemplated by the Merger Agreement, accelerate the vesting or time of payment of any compensation, equity awards or benefits of any current or former officer, employee, consultant or director of Codecademy, (D) take any action to fund any trust or similar funding vehicle with respect to compensation, equity awards or benefits under any Employee Plan, (E) hire, promote or terminate any employee, other than (x) hires, promotions and terminations of employees in the ordinary course of business to a position with an annual base salary or annualized base wage rate of less than $200,000, (y) hires or promotions to fill vacant positions and (z) terminations for cause (including for failure to satisfactorily perform duties and responsibilities), or (F) enter into, modify, amend or terminate any material collective bargaining or works council agreement;

make any change to its financial accounting methods, principles or practices, except as may be required by law or GAAP (or any interpretation or enforcement thereof);

make, change or revoke any material election in respect of taxes, change any tax accounting period or adopt or change any method of tax accounting, file any amended tax return, file any tax return in a manner inconsistent with past practice, settle or compromise any material tax claim, investigation, audit or proceeding, agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of material taxes, enter into any “closing agreement” described in Section 7121 of the Code (or any similar provision of state, local or foreign tax law) or apply for any tax ruling from any taxing authority, or knowingly surrender any right to claim a material refund of taxes;

make any amendment to its certificate of incorporation, certificate of formation, bylaws or operating agreement (or equivalent organizational documents) of Codecademy, except as required by the current organizational documents of Codecademy;

except as permitted under any Employee Plan (or award agreement thereunder) in each case, as may be adopted, entered into or modified after the date of the Merger Agreement, to the extent such adoption, entry into or modification is implemented in accordance with the Merger Agreement, or in connection with the termination of an employee, advisor, consultant or other service provider of
 
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Codecademy, repurchase or redeem any shares of capital stock or other securities or equity interests or options, warrants, calls, subscriptions or other rights to purchase any capital stock or other securities or equity interests of Codecademy or securities convertible or exchangeable into or exercisable for shares of capital stock or other securities or equity interests of Codecademy;

issue, sell, pledge, dispose of, transfer (other than to Codecademy) or subject to any lien any capital stock or other securities or equity interests or options, warrants, calls, subscriptions or other rights to purchase any capital stock or other securities or equity interests of Codecademy or securities convertible or exchangeable into or exercisable for shares of capital stock or other securities or equity interests of Codecademy, or adjust, split, combine, subdivide or reclassify the capital stock or other securities or equity interests of Codecademy, other than (i) the issuance of shares of common stock of Codecademy upon the exercise or vesting in accordance with the terms of such awards as in effect on the date of the Merger Agreement of options to acquire shares of common stock of Codecademy outstanding as of the date of the Merger Agreement or otherwise granted in accordance with the Merger Agreement and (ii) the grant of certain specified restricted stock units;

waive, release, assign, settle or compromise any action or any rights or claims with a total value in excess of $250,000;

take any action for the winding up, liquidation, dissolution or reorganization of Codecademy or for the appointment of a receiver, administrator or administrative receiver, trustee or similar officer of its assets or revenues;

commit or authorize any commitment to make any capital expenditures in excess of the aggregate capital expenditures set forth in Codecademy’s specified capital expenditure plan for 2021 and 2022 other than expenditures that Codecademy reasonably determines are necessary to avoid a material business interruption or maintain the safety and integrity of any asset or property; provided, that Codecademy will use its reasonable best efforts to consult with Skillsoft prior to making or agreeing to make any such capital expenditure;

declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock, property or a combination thereof) with respect to any capital stock of Codecademy, or other equity securities or ownership interests in Codecademy, or reclassify, combine, split, subdivide or make any similar change or amend the terms of, directly or indirectly, any capital stock of Codecademy (other than issuances of awards under the Employee Plans as in effect on the date of the Merger Agreement in the ordinary course of business);

enter into any new real property lease, or materially modify or amend, or terminate any real property lease (except for any renewal or extension right exercised in accordance with the existing terms of the real property lease);

waive the excess share provisions of, or otherwise grant or increase an exception to or waiver of any ownership limits set forth in, the organizational documents of Codecademy for any person;

amend or modify any engagement letter entered into with certain specified persons, in a manner adverse to Codecademy or Skillsoft, or engage other financial advisers in connection with the Mergers or the other transactions contemplated by the Merger Agreement;

take any action under the organizational documents of Codecademy or otherwise (including by resolution) that would give dissenters’ appraisal or similar rights to the holders of common stock of Codecademy with respect to the transactions contemplated by the Merger Agreement;

adopt any amendment to any contract providing for the indemnification by Codecademy of any person or the assumption of any tax, environmental or other liability of any person; or

agree, offer, authorize or commit (whether in writing or otherwise) to take any of the actions described in the foregoing.
Conduct of Skillsoft Prior to the Closing of the Mergers.   Skillsoft has agreed that, from the date of the Merger Agreement until the closing of the Mergers or the earlier termination of the Merger Agreement, it will, and will cause each of its subsidiaries to, subject to certain exceptions or required or contemplated by the Merger Agreement or as required by applicable law, unless Codecademy has previously consented
 
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(which consent will not be unreasonably withheld, conditioned or delayed) (i) conduct its operations in all material respects in the ordinary course of business, (ii) maintain and preserve substantially intact its business organization, and (iii) comply in all material respects with applicable law.
In addition to the general covenants above, Skillsoft has agreed that, between the date of the Merger Agreement and the earlier of the Effective Time and the termination of the Merger Agreement, except as required by applicable law or as expressly required by the Merger Agreement, it will not, and will not permit any of its subsidiaries to, without the prior written consent of Codecademy:

declare, set aside, make or pay any non-cash dividend or other distribution with respect to any capital stock (or warrant) of Skillsoft, or reclassify, combine, split, subdivide or make any similar change or amend the terms of, directly or indirectly, any capital stock (or warrant) of Skillsoft (other than issuances of awards under the Parent Equity Plans (as defined in the Merger Agreement) as in effect on the date of the Merger Agreement in the ordinary course of business consistent with past practice);

acquire or agree to acquire (including by merger, consolidation, acquisition of stock or assets, recapitalization, joint venture or otherwise) any business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire any assets or securities of any person the acquisition of which would reasonably be expected to have a material impact or a delay on consummation of the transactions contemplated by the Merger Agreement;

authorize, issue, split, combine, subdivide or reclassify any capital stock, or securities exercisable for, exchangeable for or convertible into capital stock, or other equity or voting interests other than (A) the authorization and issuance in accordance with the Merger Agreement, (B) the issuance of capital stock, or securities exercisable for, exchangeable for or convertible into capital stock in the ordinary course of business consistent with past practice, and (C) issuances of awards or shares under the Parent Equity Plans as in effect on the date of the Merger Agreement in the ordinary course of business;

amend, modify, waive, rescind or otherwise change either of the Merger Subs’ certificate of incorporation or bylaws (or equivalent organizational documents), other than as contemplated by the Merger Agreement;

take any action for the winding up, liquidation, dissolution or reorganization of Skillsoft or for the appointment of a receiver, administrator or administrative receiver, trustee or similar officer of its assets or revenues; or

agree, offer, authorize or commit (whether in writing or otherwise) to take any of the actions described in the foregoing.
HSR Act and Regulatory Approvals.   Each of Skillsoft and Codecademy have agreed to make its respective filings required under the HSR Act with respect to the Mergers within fifteen (15) Business Days (as defined in the Merger Agreement) after the date of the Merger Agreement, and further agreed to (i) use its respective reasonable best efforts to comply as promptly as practicable with the requests of any governmental authority for additional information and documents, including information or documents requested under the HSR Act, (ii) not (A) extend any waiting period under the applicable competition laws or (B) enter into any agreement with any governmental authority not to consummate the transactions contemplated by the Merger Agreement, except, in each case, with the prior consent of the other parties, and (iii) cooperate fully with the other and use reasonable best efforts, as proper or advisable, to contest and resist any action, including legislative, administrative or judicial action, and to have vacated, lifted, reversed or overturned any order (whether temporary, preliminary or permanent) that restricts, prevents or prohibits the consummation of the transactions contemplated by the Merger Agreement.
If any objections are asserted with respect to the transactions contemplated by the Merger Agreement under applicable competition laws, or if any action is instituted by any governmental authority or any private party challenging any of the transactions contemplated by the Merger Agreement as violative of applicable competition laws, each of Codecademy and Skillsoft have agreed to use its respective reasonable best efforts, as proper or advisable, to oppose or defend against any action to prevent or enjoin consummation
 
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of the Merger Agreement (and the transactions contemplated therein), including by defending any action brought by any governmental authority in order to avoid entry of, or to have vacated, overturned or terminated, including by appeal if necessary, in each case, in order to resolve any such objections or challenge as such governmental authority or private party may have to such transactions under the HSR Act or any other applicable law so as to permit consummation of the transactions contemplated by the Merger Agreement. On February 9, 2022, the waiting period applicable to the consummation of the transactions contemplated by the Merger Agreement under the HSR Act expired.
Notwithstanding anything to the contrary in the Merger Agreement, nothing shall require Skillsoft or any of its affiliates to offer, accept or agree to (i) dispose, sell or hold separate any part of its or Codecademy’s business, operations, assets or product lines (or any combination of the foregoing), (ii) restrict the manner in which, or whether, it (including after giving effect to the transactions contemplated by the Merger Agreement) or Codecademy may carry on business in any part of the world, (iii) pay any consideration (other than ordinary course filing, application or similar fees and charges) to obtain any consent in connection with the consummation of the transactions contemplated by the Merger Agreement, (iv) terminate existing relationships, contractual rights or obligations of it or Codecademy, (v) terminate any venture or other arrangement of it or Codecademy or (vi) otherwise take or commit to take actions that after the closing date would limit its or Codecademy’s freedom of action with respect to, or ability to retain, one or more of the businesses, operations, assets or product lines. Further, Codecademy shall not propose, negotiate, commit to or effect any sale, divestiture or disposition, termination of existing relationships, contractual rights or obligations, or termination of any venture or other arrangement, or otherwise take or commit to take any action in connection with obtaining any consents without the prior written consent of Skillsoft.
Notwithstanding anything to the contrary in the Merger Agreement and subject to the paragraph above, Codecademy and Skillsoft further agreed that Skillsoft will have the right (subject to good faith consultations with Codecademy) to devise the strategy (including the timing thereof) for all registrations, filings, forms, notices, petitions, statements, submissions of information, applications and other documents, communications and correspondence contemplated by, made in connection with or subject to any of the foregoing.
Proxy Solicitation.   Skillsoft has agreed, as promptly as practicable following the date of the Merger Agreement, to prepare and file this proxy statement with the SEC in order in order to facilitate the solicitation by Skillsoft of proxies from Skillsoft’s stockholders to approve at the Special Meeting, by the requisite vote of Skillsoft’s stockholders under the DGCL, Skillsoft’s organizational documents, and the rules and regulations of the NYSE and applicable laws (the “requisite Skillsoft stockholder vote”): (i) the issuance of Common Stock as consideration in the Mergers pursuant to the requirements of NYSE Listing Rule 312.03, and (2) any other proposals the parties to the Merger Agreement deem necessary or desirable to consummate the transactions contemplated by the Merger Agreement (collectively, the “parent stockholder matters”). Without the prior written consent of Codecademy (such consent not to be unreasonably withheld, conditioned or delayed), the parent stockholder matters will be the only matters (other than procedural matters) which Skillsoft shall propose to be acted on by Skillsoft’s stockholders at the Special Meeting. Skillsoft has agreed to use its reasonable best efforts to file a preliminary proxy statement within thirty (30) days following the date of the Merger Agreement.
Skillsoft has further agreed to use its reasonable best efforts to (i) cause this proxy statement, when filed with the SEC, to comply with all legal requirements applicable thereto, including the applicable requirements of the Exchange Act and the rules and regulations thereunder, (ii) promptly provide responses to the SEC with respect to all comments received on this proxy statement from the SEC, and (iii) cause this proxy statement to be cleared by the SEC as promptly as practicable after such filing. Skillsoft shall cause the definitive proxy statement to be mailed to its stockholders as of the applicable record date as promptly as practicable (and in any event within three (3) Business Days (as defined in the Merger Agreement)) following the earlier of (x) in the event the preliminary proxy statement is not reviewed by the SEC, the expiration of the waiting period in Rule 14a-6(a) under the Exchange Act or (y) in the event the preliminary proxy statement is reviewed by the SEC, receipt of oral or written notification of the completion of the review by the SEC (such earlier date, the “proxy clearance date”). Each of the Skillsoft Parties and the Codecademy Parties has agreed to furnish all information concerning it and its affiliates to the other parties as necessary to be included in this proxy statement and to provide such other assistance as may be reasonably requested by the
 
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other party in connection with this proxy statement and shall otherwise reasonably assist and cooperate with the other party in the preparation of this proxy statement and the resolution of any comments received from the SEC. In furtherance of the foregoing, Codecademy (i) agreed to provide Skillsoft with all information concerning the business, management, operations and financial condition of Codecademy, in each case, as necessary for inclusion in this proxy statement and as reasonably requested by Skillsoft for inclusion in this proxy statement and (ii) shall cause the officers and employees of Codecademy to be reasonably available to Skillsoft and its counsel in connection with the drafting of this proxy statement and responding in a timely manner to comments on this proxy statement from the SEC.
Special Meeting. As promptly as practicable after the proxy clearance date, Skillsoft has agreed to convene and hold the Special Meeting for the purpose of obtaining the requisite Skillsoft stockholder vote, and to use its reasonable best efforts to obtain the requisite Skillsoft stockholder vote at the Special Meeting, including by soliciting proxies as promptly as practicable in accordance with applicable law.
Other Covenants and Agreements.   The Merger Agreement contains other covenants and agreements, including covenants and agreements related to:

Codecademy affording Skillsoft and the Merger Subs and their representatives reasonable access, upon reasonable advance notice to Codecademy, during normal business hours of Codecademy, to the assets, properties, facilities, offices, books, records, contracts and representatives of Codecademy as Skillsoft or the Merger Subs may reasonably request in connection with the Mergers, subject to certain conditions and exceptions;

publicity relating to the subject matter of the Merger Agreement and the transactions contemplated thereby;

indemnification of current or former directors, officers, employees or agents of Codecademy (the “D&O indemnified individuals”) following the closing and, prior to the closing, Codecademy’s obligation to obtain a directors’ and officers’ liability insurance policy for a period of six (6) years from the Effective Time (the “D&O tail policy”);

cooperation between Skillsoft and Codecademy in obtaining any necessary third-party consents and approvals required to consummate the transactions contemplated by the Merger Agreement;

Codecademy’s exclusivity obligations between the date of the Merger Agreement and the earlier to occur of the closing of the Mergers and the termination of the Merger Agreement;

Skillsoft agreeing to provide certain compensation and benefits for continuing employees;

Codecademy’s delivery of the Codecademy stockholder written consent, which has been delivered by Codecademy to Skillsoft;

Codecademy’s obligation to use reasonable best efforts to cause Codecademy India Private Limited to legally dissolve or otherwise cease conducting business under the “Codecademy” name;

termination of all Affiliate Agreements prior to the closing;

Skillsoft’s financing of the transactions contemplated by the Merger Agreement, its obligations to arrange and obtain such financing, and Codecademy’s obligations to use reasonable best efforts to provide reasonable cooperation to Skillsoft in connection therewith;

Skillsoft’s agreement to make an application to the NYSE for the listing of the shares of Common Stock to be issued pursuant to the Merger Agreement and to use reasonable best efforts to cause such shares of Common Stock to be approved for listing on the NYSE, subject to official notice of issuance;

the delivery by Codecademy to Skillsoft of audited financials for the fiscal year ended December 31, 2021 as promptly as practicable but in no event later than April 1, 2022;

Skillsoft and Codecademy’s agreement to use best efforts to obtain CFIUS clearance;

Codecademy renewing or obtaining an extension of its current technology errors and omissions liability insurance policy and obtaining a tail policy in connection therewith for a period of three (3) years from the Effective Time;
 
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Codecademy’s agreement to use reasonable best efforts to fully satisfy including with respect to rights of timely notification) or obtain enforceable waivers in respect of any preemptive rights, rights of first refusal, co-sale rights or similar rights directly or indirectly affecting any of its securities with respect to the transactions contemplated by the Merger Agreement; and

Skillsoft’s agreements (effective for as long as amounts remain in the adjustment escrow account) regarding the preparation, filing, and amendment of income tax returns of Codecademy for taxable periods ending on or before the closing date and the making of income tax elections of Codecademy with retroactive effect on such periods.
Representations and Warranties
The Merger Agreement contains representations and warranties made by Codecademy to Skillsoft and by the Skillsoft Parties to Codecademy. Certain of the representations and warranties in the Merger Agreement are subject to materiality or Material Adverse Effect (as defined in the Merger Agreement) qualifications, which, in certain instances, means that a representation or warranty subject to such qualifications will not be deemed to be inaccurate or incorrect unless their failure to be true or correct is material or would, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect on the party making such representation or warranty. In addition, certain of the representations and warranties in the Merger Agreement are subject to knowledge qualifications, which means that those representations and warranties would not be deemed untrue, inaccurate or incorrect as a result of matters of which certain knowledge parties of the party making the representation or warranty did not have knowledge after reasonable inquiry. Furthermore, the representations and warranties of Codecademy are subject to the qualifications set forth on the disclosure letter delivered to Skillsoft by Codecademy in connection with the Merger Agreement, and the representations and warranties of the Skillsoft Parties are subject to the qualifications set forth on the disclosure letter delivered to Codecademy by Skillsoft in connection with the Merger Agreement and certain reports of Skillsoft filed with the SEC after December 31, 2020 and prior to the date of the Merger Agreement (to the extent the qualifying nature of such disclosure is readily apparent from the content of such reports and excluding any disclosures set forth under the heading “Risk Factors”, “Cautionary Statement Regarding Forward-Looking Statements” or any similar heading to the extent that such information is predictive or cautionary in nature), subject to certain exceptions.
Codecademy’s Representations and Warranties
In the Merger Agreement, Codecademy has made representations and warranties to Skillsoft regarding: organization and standing; authority; capitalization; subsidiaries; no conflict; required filings and consents; financial statements; taxes; title to properties; sufficiency of assets; real property; compliance with laws; permits; employee plans; material contracts; legal proceedings; intellectual property and information technology; privacy and data security; insurance; personnel; environmental, health and safety matters; absence of certain changes; material customers and material suppliers; no brokers; directors and officers; affiliate transactions; state takeover statutes; the allocation schedule; and independent investigation and no reliance.
Skillsoft Parties’ Representations and Warranties
In the Merger Agreement, the Skillsoft Parties have made representations and warranties to Codecademy regarding: organization and standing; capitalization; authority, validity and effect; no conflict; required filings and consents; independent investigation; no reliance; financing; legal proceedings; no brokers; SEC filings; financial statements; compliance with laws; absence of certain changes; ownership of the Merger Subs and no prior activities; Skillsoft listing; and information supplied.
Conditions to Closing of the Mergers
Conditions to Obligation of Skillsoft Parties
The obligation of the Skillsoft Parties to consummate the transactions contemplated by the Merger Agreement is subject to the satisfaction or waiver, at or prior to the closing date, of each of the following conditions:
 
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the representations and warranties of Codecademy being true and correct as of the date of the Merger Agreement and as of the closing date, subject to the materiality standards contained in the Merger Agreement;

Codecademy having performed and complied with in all material respects each of the covenants and agreements required to be performed by it on or before the closing;

Codecademy having delivered or caused to be delivered all documents, instruments and certificates required to be delivered at or prior to the closing by Skillsoft pursuant to the Merger Agreement;

the waiting period (including any extension thereof) applicable to the consummation of the transactions contemplated by the Merger Agreement under the HSR Act having expired or having been terminated;

there being no order or law of a court of competent jurisdiction or other governmental authority issued, promulgated or entered after the date of the Merger Agreement and remaining in effect that prohibits, enjoins or makes illegal the consummation of the transactions contemplated by the Merger Agreement;

the Codecademy stockholder written consent being obtained and delivered, which written consent has been obtained and delivered by Codecademy to Skillsoft;

the Stock Issuance Proposal having been approved by Skillsoft’s stockholders;

the Common Stock to be issued in connection with the Mergers having been approved for listing on the NYSE, subject to official notice of issuance thereof;

no material adverse effect on Codecademy having occurred; and

clearance by CFIUS having been obtained.
Conditions to Obligation of Codecademy
The obligation of Codecademy to consummate the transactions contemplated by the Merger Agreement is subject to the satisfaction or waiver, at or prior to the closing date, of each of the following conditions:

the representations and warranties of the Skillsoft Parties being true and correct as of the date of the Merger Agreement and as of the closing date, subject to the materiality standards contained in the Merger Agreement;

each of the Skillsoft Parties having performed and complied with in all material respects each of the covenants and agreements required to be performed by it on or before the closing;

Skillsoft having delivered or caused to be delivered all documents, instruments and certificates required to be delivered at or prior to the closing by Skillsoft pursuant to the Merger Agreement;

the waiting period (including any extension thereof) applicable to the consummation of the transactions contemplated by the Merger Agreement under the HSR Act having expired or having been terminated;

there being no order or law of a court of competent jurisdiction or other governmental authority issued, promulgated or entered after the date of the Merger Agreement and remaining in effect that prohibits, enjoins or makes illegal the consummation of the transactions contemplated by the Merger Agreement;

the Stock Issuance Proposal having been approved by Skillsoft’s stockholders; and

the Common Stock to be issued in connection with the Mergers having been approved for listing on the NYSE, subject to official notice of issuance thereof.
Representation and Warranty Insurance Policy
Skillsoft obtained a representation and warranty insurance policy (the “R&W insurance policy”) as of the date of the Merger Agreement for coverage for losses that may result from a breach of certain
 
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representations and warranties made by Codecademy in the Merger Agreement, subject to certain exclusions, policy limits and other terms and conditions.
Survival
Skillsoft and Codecademy agreed that the representations and warranties of Codecademy contained in the Merger Agreement, as qualified by Codecademy’s disclosure letter, and in the certificate of Codecademy to be delivered to Skillsoft at the closing, shall survive the Effective Time and remain in full force and effect until 11:59 p.m. Eastern Time on the date that is eighteen (18) months after the Effective Time, subject to the following:

the Fundamental Representations (as defined in the Merger Agreement) will remain operative and in full force and effect until the expiration of the statute of limitations applicable to the subject matter of such representation (or, if there is no statute of limitations applicable to the subject matter of such representation, until the third (3rd) anniversary of the closing date);

no right to indemnification, compensation or reimbursement pursuant to the Merger Agreement in respect of any claim based upon any failure of a representation or warranty to be true and correct that is set forth in a notice of claim that is timely and properly delivered in accordance with the Merger Agreement prior to the applicable expiration date of such representation or warranty shall be affected by the expiration of such representation or warranty; and

such expiration will not affect the rights of any Indemnified Party (as defined in the Merger Agreement) under the Merger Agreement to seek recovery of damages arising out of any Fraud (as defined in the Merger Agreement) until the expiration of the statute of limitations applicable to such Fraud.
Skillsoft and Codecademy further agreed that, except with respect to the representation and warranty regarding ownership and no prior activity of the Merger Subs, the representations and warranties of the Skillsoft Parties contained in the Merger Agreement and the certificates to be delivered to Codecademy at the closing will not survive the Effective Time.
All covenants of the Skillsoft Parties and Codecademy Parties will remain operative and in full force and effect in accordance with their terms until fully performed.
Certain Limitations to Recourse
In the case of a claim with respect to any of the Company Representation Indemnities (as defined in the Merger Agreement) or the Special Indemnities (as defined in the Merger Agreement), the Indemnifying Parties (as defined in the Merger Agreement) will be severally (for such Indemnifying Party’s pro rata portion based on his, her or its applicable percentage) and not jointly liable for any damages resulting therefrom up to an aggregate amount, (i) in the case of Company Representation Indemnities, equal to $2,625,000, and, (ii) in the case of certain specified Special Indemnities, equal to $5,250,000. Recovery from the indemnification escrow account and recourse to the R&W insurance policy will be the sole and exclusive remedies under the Merger Agreement for claims in respect of such matters for indemnification, compensation or reimbursement against the Indemnifying Parties.
In the case of (i) any failure of the Fundamental Representations to be true and correct as of the date of the Merger Agreement or as of the closing date, subject to certain exceptions, and (ii) any failure of any claim for indemnification, compensation or reimbursement made relating to (A) any breach of, or default in connection with, any of the covenants of or agreements made by Codecademy in the Merger Agreement, in each case that is to be performed by Codecademy prior to or at closing, (B) any claim asserted by any D&O indemnified individuals that are not otherwise fully covered by the D&O tail policy, (C) the exercise by any Codecademy equity holder of appraisal rights under Section 262 of the DGCL, including any payment made with respect to any such equity holder’s dissenting shares to the extent that such payment exceeds the value of the amount that otherwise would have been payable pursuant to the Merger Agreement in respect of such dissenting shares if such equity holder had not exercised appraisal rights in respect thereof, (D) any Fraud on the part of Codecademy in connection with the representations, warranties and covenants contained in the Merger Agreement, or (E) certain other specified matters, each Indemnifying Party will be severally and not jointly liable for such Indemnifying Party’s pro rata portion of any damages resulting therefrom up to
 
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an amount equal to (I) the aggregate amount of cash paid to such Indemnifying Party pursuant to the Merger Agreement, inclusive of contributions to the indemnification escrow account, plus (II) the aggregate number of shares of Common Stock (if any) received by such Indemnifying Party pursuant to the Merger Agreement, inclusive of contributions to the indemnification escrow account.
Tax Treatment of the Mergers
Skillsoft and Codecademy agreed that, provided the aggregate Fair Market Value (as defined below) of the Common Stock payable to the holders of common stock and preferred stock of Codecademy pursuant to the Merger Agreement is at least forty percent (40%) of the sum of the aggregate Fair Market Value of the Common Stock and cash payable to such holders, then (A) the Skillsoft Parties and Codecademy Parties will adopt the Merger Agreement as a plan of reorganization within the meaning of Section 1.368-2(g) of the Treasury Regulations and Section 354(a)(1) of the Code and (B) Skillsoft, Borrower, Codecademy, and the Surviving Company will report the Mergers, taken together, for income tax purposes, as a “reorganization” within the meaning of Section 368(a) of the Code, including the filing of the statement required by Treasury Regulations Section 1.368-3, unless otherwise required by law or a tax authority pursuant to a “determination” within the meaning of Section 1313(a) of the Code.
For purposes of the immediately preceding sentence, “Fair Market Value” is defined in the Merger Agreement to mean the average of the high and low trading prices of Common Stock on the closing date.
Skillsoft and Codecademy further agreed that neither Skillsoft nor Codecademy will take any action prior to the closing, and Skillsoft will not take any action or fail to take any reasonable action (and shall prevent the Surviving Company from taking any action or failing to take any reasonable action) following the closing, that would reasonably be expected to cause the Mergers, taken together, to fail to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. For the avoidance of doubt, any and all changes in the trading price of Common Stock will be disregarded in determining whether any party has complied with its obligations pursuant to the foregoing.
Termination
The Merger Agreement may be terminated under certain circumstances, including (i) by mutual agreement; (ii) by Codecademy or Skillsoft if the transaction is not consummated on or before the Outside Date, subject to an automatic extension until July 22, 2022 if on the Outside Date all conditions are satisfied other than conditions relating to the receipt of regulatory approvals; (iii) by Codecademy or Skillsoft if there is any final, non-appealable injunction prohibiting the Mergers; (iv) by either Codecademy or Skillsoft if there is an uncured breach by the other party of any of its covenants or representations in the Merger Agreement that would result in the failure of a closing condition (only if the terminating party is not then in material breach of the Merger Agreement); (v) by Skillsoft if Codecademy does not deliver the Codecademy stockholder written consent within 48 hours following the execution of the Merger Agreement; (vi) by Codecademy if Skillsoft’s stockholders do not approve the issuance of Common Stock as Merger Consideration pursuant to the requirements of NYSE Listing Rule 312.03; and (vii) by either Codecademy or Skillsoft if there has been a “material adverse effect” on the other party.
Reverse Termination Fee
Skillsoft will be required to pay Codecademy a termination fee of $6,000,000 in the event of a termination of the Merger Agreement: (i) by either Codecademy or Skillsoft if the Mergers have not been consummated by the Outside Date (only if Skillsoft does not otherwise have a termination right due to Codecademy’s uncured breach of any of its covenants or representations in the Merger Agreement that would result in the failure of a closing condition), (ii) by either Codecademy or Skillsoft if there is any final, non-appealable injunction prohibiting the Mergers, (iii) by Codecademy if there is an uncured breach by a Skillsoft Party of any of its respective covenants or representations in the Merger Agreement that would result in the failure of a closing condition (only if Codecademy is not then in material breach of the Merger Agreement), (iv) by Codecademy if Skillsoft’s stockholders do not approve the issuance of Common Stock as Merger Consideration pursuant to the requirements of NYSE Listing Rule 312.03 or (v) by Codecademy if there has been a “material adverse effect” on a Skillsoft Party.
 
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Amendments
The Merger Agreement may be amended or modified only if agreed to in writing by each Skillsoft Party and Codecademy Party, subject to certain exceptions.
Fees and Expenses
Except with respect to all filing and other fees in connection with any filing under the HSR Act, which will be borne by Skillsoft, and certain other specified fees and expenses, all costs and expenses incurred in connection with the Merger Agreement and the transactions contemplated thereby will be borne by the party incurring such cost or expense, regardless of whether the transactions contemplated by the Merger Agreement are consummated.
Specific Performance
The parties to the Merger Agreement agreed that each party to the Merger Agreement will be entitled to an injunction or any other appropriate form of specific performance or equitable relief to prevent breaches of the Merger Agreement and to enforce specifically the terms and provisions thereof, such equitable relief being in addition to any other remedy to which such party may be entitled under the terms of the Merger Agreement at law or in equity. If any party to the Merger Agreement brings an action to enforce specifically the performance of the terms and provisions of the Merger Agreement by the parties, the termination date will automatically be extended for so long as the party bringing the action is actively seeking a court order for such equitable relief.
Financing
In connection with the entry into the Merger Agreement, Borrower entered into the Debt Commitment Letter with the Commitment Parties on December 22, 2021, pursuant to which the Commitment Parties have committed to arrange and provide Borrower with the Incremental Credit Facility. The proceeds of the Incremental Credit Facility shall be used (i) to pay the Cash Consideration, (ii) to pay fees and expenses related to the Mergers and (iii) for general corporate purposes.
Obtaining the Incremental Credit Facility is not a condition to the Skillsoft Parties’ obligations to consummate the Mergers.
Offer Letter
In connection with the entry into the Merger Agreement, Skillsoft entered into an offer letter with Zachary Sims, the Chief Executive Officer of Codecademy, regarding his potential future employment with Skillsoft, which employment is contingent upon the closing of the transactions contemplated by the Merger Agreement.
Registration Rights Agreement
This section describes certain material terms of the form of Registration Rights Agreement. The description of the form of Registration Rights Agreement in this section and elsewhere in this proxy statement is qualified in its entirety by reference to the complete text of the form of Registration Rights Agreement, a copy of which is attached as Annex II to this proxy statement. In the event of any discrepancy between the summary of the form of Registration Rights Agreement contained in this proxy statement and the terms of the form of Registration Rights Agreement, the terms of the form of Registration Rights Agreement will control. This summary does not purport to be complete and may not contain all of the information about the form of Registration Rights Agreement that is important to you. Interested parties are encouraged to read the form of Registration Rights Agreement carefully and in its entirety.
In connection with the closing of the Mergers, Skillsoft will enter into the Registration Rights Agreement with the RRA Holders. Pursuant to the Registration Rights Agreement, among other things, Skillsoft (a) is required to file with the SEC the Shelf Registration Statement and (b) will grant certain RRA Holders certain demand and piggyback registration rights.
 
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The RRA Holders (other than the Founder Holder (as defined in the Registration Rights Agreement)) may not sell any Registrable Securities (as defined in the Registration Rights Agreement) for the period beginning on the closing date and ending on the date that is 180 days following the closing date, except as otherwise permitted by the Registration Rights Agreement. The Founder Holder may not sell any Registrable Securities for the period beginning on the closing date and ending on the earlier of (i) the second anniversary of the closing date and (ii) a change of control, as defined in Skillsoft’s 2020 Omnibus Incentive Plan (such period, the “Founder Lock-up Period”), except as otherwise permitted by the Registration Rights Agreement; provided, however, that, pursuant to the terms of the Registration Rights Agreement, the Founder Lock-Up Period may be deemed to have ended with respect to up to fifty percent (50%) of all Registrable Securities held by the Founder Holder subject to certain conditions provided thereunder.
Background and Reasons for the Mergers
Background of the Mergers
The following chronology (i) summarizes the key meetings and events that led to the signing of the Merger Agreement and (ii) does not purport to catalogue every conversation among representatives of Skillsoft, Codecademy and other relevant parties.
The Board, together with Skillsoft’s management, regularly reviews and assesses Skillsoft’s strategic direction, financial performance and business plans with a view towards strengthening Skillsoft’s business and identifying opportunities to increase stockholder value, taking into account financial, industry, competitive and other considerations. As part of this process, from time to time, the Board and Skillsoft’s management have reviewed potential strategic transactions available to Skillsoft, including strategic acquisitions, in order to enhance the value of Skillsoft’s business and operations. In addition, Skillsoft’s management regularly engages with key stockholders to obtain their input on Skillsoft’s strategic direction, financial performance and business plans.
On June 11, 2021, Software Luxembourg and Churchill Capital Corp II (“Churchill”) consummated a business combination transaction (the “Churchill Transaction”) pursuant to which Software Luxembourg merged with and into Churchill, with Churchill surviving the Churchill Transaction, and Churchill changed its name to Skillsoft Corp. In connection with the Churchill Transaction, Edtech and certain of its affiliates (collectively, “Prosus Group”) became a significant stockholder of Skillsoft and nominated two members to the Board, Patrick Kolek and Lawrence C. Illg. Prosus Group remains a significant stockholder of Skillsoft, and Messrs. Kolek and Illg are currently members of the Board, with Mr. Kolek serving as Chairperson of the Board.
Edtech is a significant stockholder of Codecademy, and Mr. Illg also serves as a member of Codecademy’s board of directors.
Zachary Sims, the Chief Executive Officer and President of Codecademy, and Ronald Hovsepian, a current member of the Board, then the Executive Chairman of Software Luxembourg, had an introductory phone call on February 5, 2021, during which they discussed methods of building an enterprise sales force. On February 24, 2021, Messrs. Hovsepian and Sims held a second phone call to continue their prior discussion.
On June 8, 2021, Mr. Illg sent an email to Mr. Sims introducing him to Jeffrey Tarr, Chief Executive Officer of Skillsoft, to explore potential commercial opportunities between the companies. Messrs. Tarr and Sims held an introductory phone call on June 9, 2021.
From July through September 2021, members of Skillsoft and Codecademy management conducted discussions regarding a potential commercial agreement to expand Skillsoft’s technology and developer offerings through the addition of Codecademy’s off-the-shelf products. In addition, Skillsoft and Codecademy explored the usage of Codecademy’s lab platform as a method for developing new learning content for Skillsoft’s offerings.
As discussions regarding a potential commercial agreement continued, on August 23, 2021, Messrs. Tarr and Sims met in person in Denver, Colorado to further discuss potential relationships between Skillsoft and Codecademy. During that meeting, Mr. Sims indicated that he believed Codecademy’s board of directors would not consider a business combination proposal for less than $500 million, noting, among
 
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other things, Codecademy’s recently consummated financing round, other acquisition proposals and certain possible strategic alternatives for Codecademy, including continuing to operate Codecademy independently, engaging a financial advisor and launching a potential auction process. Mr. Tarr suggested to Mr. Sims that Skillsoft and Codecademy enter into a non-disclosure agreement in order for Codecademy to share financial and business information to enable Skillsoft to assess whether it might be interested in pursuing a potential acquisition of Codecademy (the “potential transaction”).
On August 25, 2021, Mr. Tarr and Rich Walker, Chief Corporate Strategy and Development Officer of Skillsoft, had a phone call with representatives of Barclays Capital Inc. (“Barclays”) to discuss the potential transaction. On August 27, 2021, Barclays and Skillsoft entered into a non-disclosure agreement in respect of the potential transaction.
On August 27, 2021, Adam Goldman, Chief Financial Officer of Codecademy, sent a draft non-disclosure agreement to Mr. Tarr in furtherance of the discussion on August 23, 2021 between Messrs. Tarr and Sims. On September 1, 2021, Skillsoft and Codecademy entered into a mutual non-disclosure agreement for purposes of further discussions between the two parties regarding the potential transaction.
During September 2021, representatives of Skillsoft and Codecademy met in person and virtually to discuss the potential transaction. On September 7, 2021, Messrs. Tarr and Sims held a teleconference during which Mr. Tarr indicated that, while additional diligence was required, Skillsoft was potentially interested in pursuing the potential transaction at a valuation of Codecademy at over $500 million. On September 15, 2021, Messrs. Tarr, Sims, Goldman and Walker met in person in Boston, Massachusetts to further discuss the potential transaction, including the valuation range of Codecademy. On September 21, 2021, Messrs. Goldman and Walker and Gary Ferrera, Chief Financial Officer of Skillsoft, held a videoconference to discuss the potential transaction.
During September and October 2021, representatives of Skillsoft, Barclays, Weil, Gotshal & Manges LLP (“Weil”), legal counsel to Skillsoft, and the Klein Group held several telephonic conversations to discuss potential financing arrangements in respect of the potential transaction.
During October 2021, Mr. Tarr spoke with various members of the Board on a one-on-one basis and provided them with updates on the status of Skillsoft’s discussions with Codecademy regarding the potential transaction. Throughout October 2021, Messrs. Tarr and Sims continued to discuss the potential transaction, including the potential valuation range of Codecademy, the possibility of an exclusivity period, whether balance sheet cash would be included in the purchase price, the form of consideration, possible treatment of employee equity awards and post-closing lock-up periods for certain Codecademy stockholders receiving shares of Common Stock as part of their consideration.
On October 1, 2021, Codecademy made certain legal and financial due diligence information available to Skillsoft and its advisors.
On October 4, 2021, representatives of Skillsoft, Weil, Codecademy and Orrick, Herrington & Sutcliffe LLP (“Orrick”), as legal counsel to Codecademy, held a call to discuss legal due diligence.
On October 7, 2021, representatives of Codecademy and Skillsoft, including Mr. Ferrera, met in person in Mountain View, California to discuss financial due diligence and the outlook for the Codecademy business.
Throughout October 2021, Messrs. Goldman, Ferrera and Walker held numerous video and telephonic conferences to discuss the potential transaction.
On October 20, 2021, Mr. Sims and members of senior management of Skillsoft met in Denver, Colorado to discuss the businesses of Skillsoft and Codecademy.
On October 23, 2021, the Board met via videoconference, with members of Skillsoft’s senior management and representatives of Weil in attendance. At the meeting, prior to discussion of the potential transaction, Mr. Kolek, Chairperson of the Board, disclosed to the other Board members in attendance Prosus Group’s approximately twenty percent ownership interest in Codecademy, and noted that Mr. Illg, a director of Skillsoft, who was not in attendance at the meeting, also serves on the board of directors of Codecademy. Mr. Kolek noted to the other Board members that, as he had previously discussed on October 22, 2021 with Mr. Tarr, Sarah Hilty, Skillsoft’s Chief Legal Officer, and a representative of Weil, both he and Mr. Illg
 
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intended to recuse themselves from attendance and participation in deliberations or decision-making activities of the Board in respect of the potential transaction. In addition, the Board discussed the potential engagement of the Klein Group as a consultant in respect of the potential transaction, particularly for the purpose of assisting Skillsoft’s management in its evaluation of the business opportunity and structuring and negotiation of the potential transaction. Mr. Klein, a member of the Board and Chief Executive Officer of the Klein Group, noted that, if the Board decided to engage the Klein Group in respect of the potential transaction, he would recuse himself from decision-making in respect of the potential transaction, to avoid any potential conflict. Mr. Klein also noted that the Klein Group would agree to a substantial discount to a market fee in respect of any such role. Mr. Kolek then left the meeting prior to the Board’s discussion of the terms of the potential transaction. Messrs. Tarr and Walker then described the discussions with Codecademy and the business due diligence regarding Codecademy that had been completed to date. Mr. Walker subsequently guided the Board through a presentation addressing the potential benefits and risks to Skillsoft of the potential transaction, and the members of the Board and Skillsoft’s management in attendance engaged in a discussion regarding the same. The members of the Board remaining at the meeting all expressed support for continuing discussions with Codecademy. Mr. Klein then recused himself from the meeting and the Board discussed a potential engagement of the Klein Group as well as additional advisors.
On October 26, 2021, Mr. Tarr sent a proposed non-binding letter of intent (the “October 26 LOI”) to Mr. Sims regarding the potential transaction. The October 26 LOI contemplated an acquisition of Codecademy by Skillsoft for aggregate consideration in the range of $550 million to $600 million, consisting of up to 50% in shares of Common Stock and the balance in cash, with the Common Stock component to be issued based on a fixed exchange ratio. The October 26 LOI further provided, among other things, that the Common Stock consideration would be subject to customary lock-up provisions to be determined and that Codecademy’s equity holders’ indemnity obligations would be supported by a 10% holdback of the aggregate consideration. In addition, the October 26 LOI proposed a 60-day exclusivity period for the parties to have exclusive discussions regarding any transaction or business combination involving Codecademy, its business or its capital stock, including any material investment in Codecademy. On October 28 and October 29, 2021, Messrs. Tarr and Sims and Messrs. Walker and Goldman, respectively, had telephonic conversations regarding the proposed valuation for the potential transaction and the proposed exclusivity period. On October 29, 2021, Mr. Walker sent a revised letter of intent to Mr. Goldman, reflecting, among other things, aggregate consideration of $575 million.
On November 1, 2021, Messrs. Tarr and Sims held a call to discuss certain feedback from the Board and Codecademy’s board of directors, respectively, regarding the potential transaction.
Also on November 1, 2021, Mr. Goldman sent Skillsoft a revised draft of the letter of intent (the “November 1 LOI”), providing that the number of shares of Common Stock to be issued as a portion of the aggregate consideration be determined with reference to the average closing price of Common Stock during the 10 trading days ending one trading day prior to the consummation of the potential transaction. The November 1 LOI also provided, among other things, that the parties would discuss and agree on the most efficient transaction structure for allocation and delivery of the Common Stock consideration component to each category of Codecademy’s equity holders and to facilitate the potential transaction qualifying as a tax-free reorganization, that Codecademy’s equity holders’ indemnity obligations would be supported by a third-party escrow of 5% of the aggregate consideration, in the same mix of Common Stock and cash as comprising the aggregate consideration, and that such escrow (less any amount subject to pending claims for indemnification) would be released to Codecademy’s equity holders 12 months from the closing of the potential transaction. The November 1 LOI further noted that the parties would discuss obtaining a representation and warranty insurance policy (a “R&W Policy”), and that, if such R&W Policy were to be obtained, the escrow requirement would be reduced to the customary 50% of the 1.0% retention amount under such R&W Policy. The November 1 LOI also reduced the exclusivity period to 14 days.
Later on November 1, 2021, Mr. Walker e-mailed Mr. Goldman a revised draft of the letter of intent providing, among other things, for a 45-day exclusivity period, a collar on the share price of Common Stock used to determine the number of shares to be issued as part of the aggregate transaction consideration, based on a maximum fluctuation from the closing price as of the day prior to execution of the definitive agreements relating to the potential transaction, and the equal sharing of the cost of obtaining and binding a R&W Policy.
 
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On November 2, 2021, Messrs. Tarr, Klein, and Sims and a member of Codecademy’s board of directors, Amit Patel, held a call to discuss Skillsoft’s rationale for the potential transaction. Mr. Klein presented the background on the rationale for the Churchill Transaction, and Mr. Tarr discussed his rationale for joining Skillsoft as Chief Executive Officer and his views on the future of Skillsoft’s business.
Later on November 2, 2021, Mr. Goldman e-mailed Mr. Walker a revised draft of the letter of intent, which, among other things, accepted the 45-day exclusivity period, set the parameters of the collar at a 15% change in the share price of Common Stock measured within the applicable period, set the lock-up period for shares of Common Stock delivered as consideration in the potential transaction at up to 180 days, and provided for Skillsoft to bear 75% of the cost of any R&W Policy. Later on November 2, 2021, Skillsoft proposed a revised version of the letter of intent, which, among other things, limited the collar to a 10% change in the share price of Common Stock measured within the applicable period and provided that the parties would mutually agree upon the allocation of responsibility for the cost of obtaining and binding a R&W Policy.
On November 3, 2021, Skillsoft and Codecademy entered into a non-binding letter of intent (the “Non-Binding Proposal”) with respect to the potential transaction, pursuant to which Skillsoft would deliver to Codecademy’s existing equity holders aggregate consideration of $575 million (subject to adjustment) consisting of (i) $287,500,000 in Common Stock based on a collared share price of Common Stock (the “collared share price”), with the collar set at a 10% change in the share price of Common Stock measured within the applicable period, and (ii) $287,500,000 in cash, pursuant to the terms of definitive transaction agreements. In addition, the Non-Binding Proposal provided that the parties would share equally in the cost of obtaining and binding a R&W Policy. The Non-Binding Proposal also provided for, among other things, an exclusivity period expiring on the earlier of (a) the date that is 45 days after the Non-Binding Proposal, (b) the date on which Skillsoft and Codecademy enter into definitive agreements with respect to the potential transaction and (c) the date on which Skillsoft advises Codecademy in writing that Skillsoft has determined not to proceed with further discussions with respect to the potential transaction.
On November 8, 2021, at the instruction of Skillsoft, representatives of Weil engaged with Orrick in order to schedule a call to discuss the process and timeline for legal due diligence and to agree on drafting responsibilities for definitive documentation.
On November 10, 2021, representatives of Weil, Orrick and Skillsoft held a telephonic conference to discuss the structure of the potential transaction, the legal due diligence process and other procedural matters concerning the potential transaction.
Later on November 10, 2021, Weil and Skillsoft were granted access to Codecademy’s virtual data room to facilitate Skillsoft’s and its advisors’ due diligence review of Codecademy. Throughout the month of November 2021, Skillsoft and its advisors continued their due diligence review of Codecademy’s business, including holding numerous diligence calls among Skillsoft’s management, Codecademy’s management and their respective advisors. The parties and their representatives also held numerous calls regarding the structure of the potential transaction.
On November 17, 2021, Messrs. Sims and Goldman met with Skillsoft’s senior management in New York to discuss their views on the outlook for the Codecademy business.
On November 29, 2021, the Board met via videoconference, with certain members of Skillsoft senior management and representatives of Barclays, the Klein Group and Weil in attendance. Skillsoft’s management updated the Board on the due diligence conducted to date, as well as the status of negotiations with Codecademy. Mr. Illg did not attend the meeting, and Mr. Kolek departed the meeting after the status of the potential transaction was summarized. Management of Skillsoft then presented to the Board key priorities for the potential transaction and various financing alternatives, and also noted for the Board that, in order to support the financing of the potential transaction and reduce the cash financing burden on Skillsoft, Prosus Group was considering electing to receive 100% Common Stock as consideration for its shares of capital stock of Codecademy, as opposed to receiving a mix of cash and Common Stock. Management of Skillsoft and representatives of Barclays and Weil then answered questions from various members of the Board, and the Board discussed Skillsoft’s financing options. The Board also reviewed and discussed the engagement of Barclays as Skillsoft’s financial advisor in connection with providing financial advisory services to Skillsoft with respect to the potential transaction.
 
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In addition, on November 29, 2021, Skillsoft management sent Skillsoft’s preliminary forecasted financial information related to Codecademy to representatives of Barclays.
On November 30, 2021, Weil delivered to Orrick an initial draft of the Merger Agreement. Over the course of the next three weeks, Skillsoft and its advisors completed their due diligence review of Codecademy, and Weil and Orrick, as well as representatives of Skillsoft and Codecademy, negotiated the terms of the Merger Agreement and various other transaction documents, including the form of Registration Rights Agreement and, with the involvement of Withers LLP, as legal counsel to Mr. Sims in his personal capacity, the employment offer letter and restrictive covenant agreement to be entered into between Skillsoft and Mr. Sims, exchanging multiple revised drafts of the various agreements. Significant areas of discussion and negotiation included: (i) the mechanics for the payment of the merger consideration to Codecademy’s equity holders, including the collared share price; (ii) the treatment of Codecademy’s equity awards; (iii) the parties’ respective obligations in connection with the proposed tax-free treatment of the Mergers; (iv) indemnification of Skillsoft by Codecademy’s equity holders following the closing, including special indemnities for certain matters excluded from Skillsoft’s R&W Policy; (v) Skillsoft’s obligations with respect to filings under the HSR Act; and (vi) the scope of the representations and warranties and covenants of the parties, including the efforts to be taken by the parties to satisfy the closing conditions and consummate the Mergers.
On December 2, 2021, Skillsoft and Barclays entered into the engagement letter regarding Barclays serving as a financial advisor to Skillsoft in respect of the potential transaction. In a presentation dated December 2, 2021 provided by Barclays to Skillsoft, Barclays described its material relationships with Skillsoft and Codecademy.
On December 3, 2021, representatives of Skillsoft, Mr. Goldman of Codecademy, representatives of Ernst & Young LLP, Skillsoft’s tax advisor, and representatives of WithumSmith+Brown, PC, Codecademy’s tax advisor, met via videoconference to discuss certain tax considerations in connection with the potential transaction.
On December 8, 2021, Skillsoft and the Klein Group entered into an engagement letter with the Klein Group with respect to their role as a consultant to Skillsoft in respect of a potential transaction. The engagement of the Klein Group and the payment of the fees pursuant to the Klein Group engagement letter were approved by Skillsoft’s audit committee in accordance with Skillsoft’s related party transaction policy on December 8, 2021.
On December 13, 2021, Skillsoft and Codecademy entered into an amendment to the Non-Binding Proposal to extend the exclusivity period to December 25, 2021.
On December 15, 2021, Messrs. Tarr and Walker and Eric Stine, Skillsoft’s Chief Revenue Officer, attended a virtual meeting of Codecademy’s board of directors at which Messrs. Tarr, Walker and Stine discussed Skillsoft and its interest in the potential transaction and Codecademy’s business.
Between December 15 and December 19, 2021, representatives of Skillsoft and Codecademy discussed Codecademy’s performance during the fourth quarter of 2021 and the updated outlook for the rest of the year.
On December 17, 2021, Skillsoft management sent to representatives of Barclays Skillsoft’s updated forecasted financial information related to Codecademy.
On the morning of December 19, 2021, Messrs. Sims and Goldman gave a presentation via videoconference regarding Codecademy, its business and the opportunity presented by the potential transaction, which presentation was attended by certain members of Skillsoft management and the Board.
Later on December 19, 2021, the Board met via videoconference. With certain members of Skillsoft’s senior management and representatives of Barclays and Weil in attendance, Skillsoft’s management updated the Board on the due diligence conducted to date, as well as the status of negotiations with Codecademy. Skillsoft’s management and the representatives of Barclays and Weil answered questions from the Board about various potential legal, financial and operational issues related to the potential transaction. Skillsoft’s management also provided an update regarding Codecademy’s recent financial results and recent public
 
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company valuations among certain companies comparable to Skillsoft and Codecademy. The Board determined that Skillsoft’s management should proceed to negotiate a downward revision to the aggregate consideration set forth in the Non-Binding Proposal. Neither Mr. Illg nor Mr. Kolek attended the meeting.
Subsequently, on December 19, 2021, representatives of Skillsoft and Codecademy negotiated a revised purchase price of $525 million (subject to adjustment) consisting of (i) $320,056,790 in Common Stock based on a collared share price and (ii) $204,943,210 in cash, pursuant to the terms of the Merger Agreement.
On December 20, 2021, representatives of Skillsoft, Codecademy, Weil and Orrick met via videoconference to discuss the transaction documents. Later that same day, Weil sent Orrick a revised draft of the Merger Agreement reflecting, among other revisions, the revised purchase price.
On December 21, 2021, the Board met via videoconference to consider the Merger Agreement and the Mergers. Certain members of Skillsoft’s senior management and representatives of Weil and Barclays participated in the videoconference. Skillsoft’s management updated the Board on the negotiations and discussions with Codecademy. Further, Skillsoft management reviewed the strategic rationale and benefits of the potential transaction, including the immediate expected accretion to bookings and revenue growth, and also noted the expectation of continuing Codecademy’s investment in future growth, which would likely result in the generation of negative EBITDA at Codecademy in the short term. Representatives of Weil reviewed for the Board the terms of the Merger Agreement and certain ancillary agreements and the Board’s fiduciary duties in respect of their consideration of the potential transaction. Representatives of Barclays reviewed with the Board Barclays’ financial analysis of the potential transaction and rendered its oral opinion, subsequently confirmed by delivery of a written opinion dated December 21, 2021, to the effect that, as of such date and based upon and subject to the qualifications, limitations and assumptions set forth in the Barclays written opinion, the aggregate consideration to be paid by Skillsoft for all of the Codecademy equity pursuant to the Merger Agreement was fair from a financial point of view to Skillsoft. See section entitled “— Opinion of Skillsoft’s Financial Advisor” for more information. Following the Board’s discussions, the Board approved the Merger Agreement, the Mergers, and the other transactions contemplated by the Merger Agreement and resolved to recommend to Skillsoft’s stockholders approval of the Stock Issuance Proposal and the Adjournment Proposal. Mr. Klein recused himself from the vote of the Board on these actions, and neither Mr. Illg nor Mr. Kolek attended the meeting. The Compensation Committee of the Board also met via videoconference to discuss the terms and conditions of the employment offer letter and restrictive covenant agreement to be entered into with Mr. Sims, contingent on the consummation of the potential transaction, which the Compensation Committee resolved to approve. Also on December 21, 2021, the Audit Committee of the Board met via videoconference to consider the Merger Agreement and the transactions contemplated thereby and resolved that, solely for purposes of approvals required by Skillsoft’s Related Person Transaction Policy resulting from Prosus Group’s ownership of Common Stock and Mr. Kolek’s and Mr. Illg’s respective affiliations with Prosus Group, the transactions contemplated by the Merger Agreement are in the best interests of Skillsoft and approved the Merger Agreement and the transactions contemplated thereby, subject to the further approval and authorization by the Board.
Following the Board meeting on December 21, 2021, the parties finalized the Merger Agreement and certain other transaction documents, including the form of Registration Rights Agreement attached to the Merger Agreement as an exhibit and the employment offer letter and restrictive covenant agreement to be entered into between Skillsoft and Mr. Sims. The Skillsoft Parties and Codecademy Parties executed the Merger Agreement on the morning of December 22, 2021, and Mr. Sims and Skillsoft entered into the employment offer letter and restrictive covenant agreement that morning as well.
Later in the morning of December 22, 2021, prior to the open of trading on the New York Stock Exchange, Skillsoft and Codecademy issued a joint press release announcing the transactions contemplated by the Merger Agreement, and Skillsoft hosted a teleconference to explain additional details and the strategic rationale of the potential transaction.
The Board’s Reasons for the Approval of the Mergers and the Stock Issuance
The Board, in evaluating the Merger Agreement and the transactions contemplated thereby, consulted with Skillsoft’s management and its consultants and legal, financial and other advisors. In (i) determining that it is in the best interests of Skillsoft and its stockholders, and declaring it advisable, to enter into the
 
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Merger Agreement, (ii) approving the Merger Agreement and the transactions contemplated thereby, including the Mergers, on the terms and subject to the conditions of the Merger Agreement and (iii) adopting a resolution recommending the Stock Issuance Proposal and any other proposals the parties to the Merger Agreement deem necessary or desirable to consummate the transactions contemplated thereby to Skillsoft’s stockholders, the Board considered and evaluated a number of factors, including the factors discussed below. The Board did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors it considered in reaching its determination. The Board viewed its decision as being based on all of the information available and the factors presented to and considered by it. In addition, individual directors may have given different weight to different factors.
This explanation of the Board’s reasons for the Mergers and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the section entitled “Cautionary Statement Regarding Forward-Looking Statements.” For purposes of this section, references to “the Board” shall not include Messrs. Illg or Kolek, who did not attend the meeting at which the Board approved the Merger Agreement, the Mergers, and the other transactions contemplated by the Merger Agreement and resolved to recommend to Skillsoft’s stockholders approval of the Stock Issuance Proposal and the Adjournment Proposal, or Mr. Klein, who did not participate in the vote of the Board with respect to the foregoing.
The Board considered a number of factors pertaining to the Mergers as generally supporting its decision to enter into the Merger Agreement and the related agreements and the transactions contemplated thereby, including, but not limited to, the following factors:

Creation of a Leading Technology & Developer Offering.   Adding Codecademy’s expertise in 14 programming languages as well as technical skills across multiple domains (e.g., data science, application development, web development and cybersecurity, among others) to Skillsoft’s existing technical skills offering is expected to enhance Skillsoft’s ability to become a leader in the high-demand, high-growth Technology & Developer sector of education technology. In addition, the capability of the Codecademy platform to rapidly add new programming languages and technical skills at scale is expected to further enhance Skillsoft’s ability to meet the evolving demands of learners worldwide as it helps organizations address the critical technical skills gap.

Expansion of Immersive Platform with New Ways of Learning.   Supplementing Skillsoft’s expansive set of learning options, including micro videos, virtual instructor-led training, coaching, audio, books, bootcamps, live events, assessments and badges with Codecademy’s interactive, self-paced courses and hands-on learning will enable Skillsoft to deliver even more immersive experiences through its AI-driven platform, Percipio.

Addition of Codecademy’s Talent.   Talented members of Codecademy’s management and employees are expected to join Skillsoft’s proven management team and employees.

Creation of Substantial Cross-Selling and Upselling Opportunities by Adding a Strong Brand and Powerful Digital Sales and Marketing Engine to Global Enterprise Sales Force.   The Mergers will bring together Codecademy’s sophisticated direct-to-learner digital sales and marketing engine and Skillsoft’s enterprise sales organization, creating new opportunities to upsell and cross-sell across each company’s customer base, which is expected to drive customer growth and revenue synergies.

Expectation of Significant Accretion to Bookings and Revenue Growth Immediately Upon Closing. Codecademy is expected to deliver approximately $47 million in bookings and approximately $42 million in revenue for the calendar year ended December 31, 2021, up 23% and 27%, respectively, over the prior year. Codecademy is entirely a SaaS business and is expected to deliver gross margins of more than 85% in 2021 and be accretive to Skillsoft’s gross margin immediately upon closing. Skillsoft expects it will accelerate Codecademy’s growth in its first year of ownership primarily by cross-selling Codecademy’s products to Skillsoft’s large enterprise customer base and that the acquisition will be accretive to EBITDA over the long term.

Reasonableness of Merger Consideration.   Following a review of the financial data provided to Skillsoft, including Codecademy’s historical financial statements and certain unaudited prospective financial information, as well as Skillsoft’s due diligence review of Codecademy’s business and views of Skillsoft’s consultants and financial and other advisors, the Board considered the Merger Consideration
 
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to be paid in connection with the Mergers and determined that the Merger Consideration was reasonable in light of such data and financial information.

Favorable Industry Trends.   The digital learning market, particularly with respect to information technology and technology-based skills, is large, growing, and fragmented. The market is experiencing a number of favorable trends, including an increased need for companies to provide additional training to employees in light of an ongoing digital transformation in the market and technical skills gaps as well as an increased need for technologists as employees prepare for the jobs of tomorrow.

Business and Financial Condition and Prospects.   After conducting due diligence, along with their familiarity with Codecademy’s business, the Board and Skillsoft’s management had knowledge of, and were familiar with, Codecademy’s business, financial condition, results of operations and future growth prospects. The Board considered the results of the due diligence review of Codecademy’s business, including its intellectual property assets and customer networks.

Fairness Opinion of Barclays and Related Analyses.   The financial analyses of Barclays, as reviewed and discussed with the Board, as well as the opinion of Barclays delivered to the Board, to the effect that, as of December 21, 2021, and based upon and subject to the qualifications, limitations and assumptions set forth in the Barclays written opinion, the aggregate consideration to be paid by Skillsoft pursuant to the Merger Agreement and the transactions contemplated thereby, including the Mergers, was fair, from a financial point of view, to Skillsoft, as further discussed below in the section entitled “— Opinion of Skillsoft’s Financial Advisor.” The full text of the written opinion of Barclays, dated as of December 21, 2021, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex III to this proxy statement.

Terms of the Merger Agreement.   The Board considered the terms and conditions of the Merger Agreement and the transactions contemplated thereby, including the Mergers, each party’s representations, warranties and covenants, including the commitment by each of Codecademy and Skillsoft to take certain actions in order to consummate the Mergers, the conditions to each party’s obligations and the termination provisions.
The Board also considered a variety of uncertainties and risks and other potentially negative factors concerning the Mergers, including, but not limited to, the following:

Interests of Certain Persons.   Certain directors of Skillsoft may have interests in the Mergers that are in addition to, and that may be different from, the interests of Skillsoft’s stockholders (see section entitled “— Interests of Certain Persons in the Mergers”).

Benefits May Not Be Achieved.   The potential benefits of the Mergers may not be fully achieved or may not be achieved within the expected timeframe and therefore Skillsoft may not realize the financial performance set forth in the financial projections considered by the Board.

Investments Required to Fuel Growth.   Codecademy’s plan involves investment to accelerate growth, and accordingly, is expected to generate negative adjusted EBITDA for Codecademy of approximately $20 million in 2021.

Growth Initiatives May Not be Achieved.   The growth initiatives and synergies between Skillsoft and Codecademy may not be fully achieved or may not be achieved within the expected timeframe.

Skillsoft’s Stockholder Vote.   Skillsoft’s stockholders may object to and challenge the Mergers and take action that may prevent or delay the consummation of the Mergers, including by voting against the Stock Issuance Proposal at the Special Meeting.

Closing Conditions.   The consummation of the Mergers is conditioned on the satisfaction of certain closing conditions, some of which are not within Skillsoft’s control.

Litigation.   There may be potential litigation challenging the Mergers.

Fees and Expenses.   There will be fees and expenses associated with completing the Mergers, some of which must be borne by Skillsoft pursuant to the terms of the Merger Agreement.
 
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Macroeconomic Risks.   Skillsoft, Codecademy and the Mergers are subject to macroeconomic uncertainty, including the potential impact of the COVID-19 pandemic, and the effects they could have on the revenues of Skillsoft following the Mergers.
The Board concluded that the potential benefits that it expected Skillsoft and its stockholders to achieve as a result of the Mergers outweighed the potentially negative factors associated with the Mergers. Accordingly, the Board determined that the Merger Agreement and the transactions contemplated thereby, including the Mergers, were advisable and in the best interests of Skillsoft and its stockholders.
Certain Unaudited Forecasted Financial Information
Prior to approval by the Board of the Mergers and the execution of the Merger Agreement and related agreements (a) Codecademy provided Skillsoft with certain unaudited projected financial information for calendar years 2021 through 2026 (the “Codecademy Projections”) and (b) Skillsoft management provided to the Board and Barclays certain unaudited projected financial information, on a standalone basis, regarding Codecademy’s operations for calendar years 2021 through 2026 for purposes of evaluating the Mergers, which were prepared based on the Codecademy Projections, as adjusted by Skillsoft management (the “Skillsoft Adjusted Codecademy Projections”).
The Codecademy Projections and the Skillsoft Adjusted Codecademy Projections were not prepared with a view toward public disclosure, compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information or GAAP with respect to forward looking financial information, but (i) in the view of Codecademy’s management, the Codecademy Projections were prepared on a reasonable basis, reflect the best available estimates and judgments at the time of preparation, and present, to the best of Codecademy’s management’s knowledge and belief, the expected future financial performance of Codecademy, and (ii) in the view of Skillsoft’s management, the Skillsoft Adjusted Codecademy Projections were prepared on a reasonable basis, reflect the best available estimates and judgments at the time of preparation, and present, to the best of Skillsoft’s management’s knowledge and belief, the expected future financial performance of Codecademy. The forecasts include Adjusted EBITDA which is a non-GAAP financial measure. Due to the forward-looking nature of the Codecademy Projections and the Skillsoft Adjusted Codecademy Projections, specific quantifications of the amounts that would be required to reconcile such projections to GAAP measures are not available and Skillsoft’s and Codecademy’s management believe that it is not feasible to provide accurate forecasted non-GAAP reconciliations. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Skillsoft’s and Codecademy’s management may not be comparable to similarly titled amounts used by other companies.
As a private company, Codecademy does not, as a matter of course, make public projections as to future performance, revenues, earnings or other results of operations. The Codecademy Projections were prepared solely for internal use, capital budgeting and other management purposes. The Codecademy Projections are subjective in many respects and therefore susceptible to varying interpretations and the need for periodic revision based on actual experience and business developments, and were not intended for third-party use, including by investors or equity or debt holders.
In preparing the models, Codecademy management relied on a number of factors, including the executive team’s experience in education technology and the historical performance of Codecademy. The forecasts reflect the consistent application of the accounting policies of Codecademy and should be read in conjunction with the accounting policies included in Note 1 — “Summary of Significant Accounting Policies” accompanying the historical audited financial statements of Codecademy and included as Annex IV to this proxy statement.
Skillsoft management prepared the Skillsoft Adjusted Codecademy Projections to take into consideration the consummation of the Mergers, as well as certain adjustments that were appropriate in their judgment and experience, including, but not limited to, taking into consideration the following: (i) a conservative view of new product adoption and paused expansion in India; (ii) expansion in business-to-business revenue by selling Codecademy’s products to Skillsoft’s customer base and increased investment in sales and marketing; (iii) higher sales and marketing expense from investment to promote brand awareness,
 
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lead generation and additional sales representations; (iv) research and development and general and administrative cost savings through consolidating platforms and administrative and corporate functions; and (v) certain adjustments to EBITDA for one-time expenses in connection with the Mergers.
The Codecademy Projections and the Skillsoft Adjusted Codecademy Projections included in this proxy statement have been prepared by, and are the responsibility of, Codecademy’s and Skillsoft’s management, respectively. Ernst & Young LLP and WithumSmith+Brown, PC have not audited, reviewed, examined, compiled or applied agreed-upon procedures with respect to the accompanying selected forecasted financial information and, accordingly, Ernst & Young LLP and WithumSmith+Brown, PC do not express an opinion or any other form of assurance with respect thereto. The WithumSmith+Brown, PC report included in this proxy statement relates to Codecademy’s previously issued financial statements. It does not extend to the forecasted financial information and should not be read to do so.
Codecademy Projections
The following table presents a summary of the Codecademy Projections. The Codecademy Projections were provided to the Board and to Barclays as described above.
Fiscal Year Ending December 31,
21E – 26E
CAGR / Diff.
($ in millions)2021E2022E2023E2024E2025E2026E
B2C&P Bookings$47$72$96$114$131$146
25%
% Growth27%52%34%19%15%11%
B2B Bookings$3$8$15$22$31$44
74%
% Growth111%200%79%49%42%39%
Total Bookings$50$80$111$136$163$189
31%
% Growth30%60%39%23%20%16%
B2C&P Revenue$43$65$86$102$118$13125%
% Growth34%51%34%18%15%11%
B2B Revenue$2$5$10$15$21$29
74%
% Growth104%200%79%49%42%39%
Total Revenue$45$70$96$117$139$160
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