Afterpay : Update on Scheme and Scheme Meeting

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Afterpay Limited ASX: APT

ASX Announcement

7 December 2021

Update on Scheme of Arrangement and Scheme Meeting to be held on 14 December 2021

Afterpay Limited (Afterpay) refers to the proposed acquisition by Lanai (AU) 2 Pty Ltd, a wholly owned indirect subsidiary of Square, Inc. (NYSE: SQ) (Square), of Afterpay by way of scheme of arrangement (Scheme) and advises that the Supreme Court of New South Wales (Court) has today made orders in connection with the conversion of the Bank of Spain condition precedent to a condition subsequent to be satisfied prior to implementation, the adjourned Scheme Meeting and Second Court Date and approving further materials for dispatch to Afterpay shareholders outlining details of the adjourned Scheme Meeting. The adjourned Scheme Meeting will be held at 9.00am (AEDT) on Tuesday, 14 December 20211.

Given all other regulatory conditions set out in detail in section 3.11(a)(1) of the Scheme Booklet have been satisfied, this will allow Afterpay to proceed with the Scheme Meeting and the Second Court Date and have the Scheme become effective before the end of CY21, notwithstanding the fact that the Bank of Spain condition will not likely be satisfied before the Scheme Meeting. Implementation of the Scheme will not occur until the Bank of Spain condition has been satisfied.

Afterpay will continue to work with Square to progress the remaining steps required to implement the Scheme, with implementation still anticipated to occur in Q1 CY22.

A letter setting out further information for Afterpay shareholders is attached to this announcement. Also attached as Annexure A to the letter is a supplementary letter received from the Independent Expert, Lonergan Edwards & Associates Limited (Lonergan Edwards), setting out Lonergan Edwards' continued view that the Scheme is fair and reasonable and in the best interests of Afterpay shareholders, in the absence of a Superior Proposal. The Independent Expert's conclusion should be read in context with the full Independent Expert's Report and the Scheme Booklet.

1 The previously advised date of the Scheme Meeting was 6 December 2021.

Afterpay Limited | ACN 618 280 649 | ASX:APT
Level 5, 406 Collins Street, Melbourne VIC 3000, Australia	1

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The Afterpay Directors continue to unanimously recommend that Afterpay shareholders vote in favour of the Scheme, in the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of Afterpay shareholders. Each Afterpay Director intends to vote all of the Afterpay Shares held or controlled by them in favour of the Scheme subject to the same qualifications.2

Afterpay shareholders who have questions in relation to the Scheme should contact the Afterpay Shareholder Information Line on 1300 229 418 (within Australia), or [phone] (outside Australia) between Monday to Friday (excluding public holidays in Australia) between 9.00am and 5.00pm (AEDT).

Authorised by

Anthony Eisen

Co-CEO & Managing Director

Ends

For further information please contact

	Investors			Media			Company
	Investors			ANZ			Amanda Street
	Rhianna Fursdon			Amanda Shannahan Moore			Company Secretary
	Senior Director Investor Relations			Global Director, Comms & PR			[e-mail]
	[e-mail]			[e-mail]
			[phone]
	[phone]
				North America
				Amanda Pires
				VP, Communications
				[e-mail]
				[phone]

2 In relation to the recommendation of Co-CEOs Anthony Eisen and Nick Molnar, Afterpay shareholders should have regard to the fact that, if the Scheme is implemented, each of Anthony Eisen and Nick Molnar will receive those entitlements as described in section 10.1 of the Scheme Booklet.

Afterpay Limited | ACN 618 280 649 | ASX:APT
Level 5, 406 Collins Street, Melbourne VIC 3000, Australia	2

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Tuesday, 7 December 2021

Dear Afterpay shareholder

Update on proposed acquisition of Afterpay by Square, Inc.: update on Scheme Meeting, update on conditions precedent and revised timetable

You will have previously received the Scheme Booklet relating to the proposed acquisition by Lanai (AU) 2 Pty Ltd, a wholly owned indirect subsidiary of Square, Inc. (NYSE: SQ) (Square) of Afterpay Limited (Afterpay) by way of scheme of arrangement (Scheme). A copy of the scheme booklet dated 5 November 2021 (Scheme Booklet) is also available on Afterpay's website at https://corporate.afterpay.com/investors/egm-2021.Unless otherwise indicated capitalised terms used in this letter have the meaning given to them in the Scheme Booklet.

The meeting of Afterpay shareholders to vote on the Scheme (Scheme Meeting) was scheduled for Monday, 6 December 2021.

The Scheme Meeting has been adjourned and the revised details for the online Scheme Meeting are:

Location:	Virtual meeting at http://web.lumiagm.com/354553219
Date:	Tuesday, 14 December 2021
Time:	9.00am (AEDT)

As previously announced, having regard to the uncertainty and potential health risks associated with large gatherings during the COVID-19 pandemic, the Scheme Meeting will be conducted as a virtual meeting and Afterpay shareholders will not be able to attend the Scheme Meeting in person. Afterpay shareholders and their authorised proxies, attorneys and corporate representatives may participate in the Scheme Meeting through an online platform available at http://web.lumiagm.com/354553219 (meeting ID 354553219). Afterpay shareholders who participate in the Scheme Meeting via the online platform will be able to listen to the Scheme Meeting, cast a vote online and ask questions.

The Scheme Meeting was opened at 10:00am on Monday, 6 December 2021 and was immediately adjourned to 9.00am (AEDT) on Tuesday, 14 December 2021.

Afterpay notes that all regulatory conditions set out in detail in section 3.11(a)(1) of the Scheme Booklet including FIRB, OIO, Spanish FDI, US HSR and ATO have been satisfied, with the exception of the Bank of Spain condition. Afterpay and Square are confident that the Bank of Spain condition will ultimately be satisfied. Whilst the statutory deadline for

Afterpay Limited | ACN 618 280 649 | ASX:APT
Level 5, 406 Collins Street, Melbourne VIC 3000, Australia	3

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Square's application for Bank of Spain approval is currently 21 February 2022, at present Square expects that the Bank of Spain condition will be satisfied in mid-January 2022.

In light of this, Afterpay decided to adjourn the Scheme Meeting that was scheduled for 10.00am (AEDT) on Monday, 6 December 2021 to 9.00am (AEDT) on Tuesday, 14 December 2021.

Notwithstanding the fact that the Bank of Spain condition will not likely be satisfied prior to that time, Afterpay has obtained orders from the Court on Tuesday, 7 December 2021 in connection with convening a meeting for the purpose of considering, and if thought fit, agreeing (with or without modification) to an amended Scheme such that the condition relating to the Bank of Spain approval would become a condition to be satisfied by 14 April 2022 (i.e. a condition subsequent as opposed to a condition precedent) (Condition Subsequent) (Amended Scheme). Afterpay, Square and Lanai entered into a corresponding amendment to the Scheme Implementation Deed (Amending Deed) on 7 December 2021 to implement this change. Attached at Annexure B to this letter is the Amending Deed and Amended Scheme. The Scheme may become Effective (as defined in the Scheme Implementation Deed) prior to the satisfaction of the Condition Subsequent, but the closing of the transaction will not occur until the Condition Subsequent is satisfied. If the Condition Subsequent is not satisfied, the parties must consult in good faith for 20 business days to determine whether to pursue an alternative transaction. If the parties are unable to reach agreement during such period, then either party may terminate the Scheme Implementation Deed. The outcome of varying the Scheme in this way and approving the Scheme as varied is that:

• the terms of the Scheme would be final at the time of approval of the Scheme on the Second Court Date;
• the Scheme would remain subject to the Bank of Spain condition being satisfied by 14 April 2022;
• if the Bank of Spain condition is satisfied by 14 April 2022, the Scheme will take effect without the need for further shareholder or Court approval; and
• if the Bank of Spain condition is not satisfied by 14 April 2022 the Scheme will not proceed.

If the resolutions to approve the Scheme are passed by the requisite majorities of shareholders at the Scheme Meeting, and all other conditions have been satisfied or waived on or before the Second Court Date (other than the conditions relating to the Bank of Spain and Court approval), the Second Court Date to approve the Scheme will be held on Friday, 17 December 2021.

Afterpay Limited | ACN 618 280 649 | ASX:APT
Level 5, 406 Collins Street, Melbourne VIC 3000, Australia	4

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The resolution to be passed at the Scheme Meeting is set out below:

To consider and, if thought fit pass (with or without amendment) the following resolution:

"That, pursuant to and in accordance with section 411 of the Corporations Act 2001 (Cth), the scheme of arrangement proposed between Afterpay Limited ("Afterpay") and the holders of its fully paid ordinary shares, the terms of which are contained in and more particularly described in the Scheme Booklet (of which the notice convening the Scheme Meeting forms part) as amended by the amended Scheme Implementation Deed dated 7 December 2021, is approved (with or without alteration, or conditions as approved by the Supreme Court of New South Wales and agreed to by Afterpay and Square) and, subject to approval of the Scheme by the Court, the Afterpay Board is authorised to implement the Scheme with any such alterations or conditions."

What is the status of the other conditions to the Scheme?

The status of the other conditions precedent (Conditions) to the Scheme is as follows:

• Regulatory approvals: The Conditions relating to FIRB (Australian Foreign Investment Review Board), NZ OIO (New Zealand Overseas Investment Office), Spain FDI Authority (Spanish foreign investment approval) and the expiration of the applicable waiting period under the US HSR Act have now been satisfied. As set out in the Scheme Booklet, the ACCC (Australian Competition and Consumer Commission) has confirmed that it does not intend to conduct a public review of the transaction.
• Square Shareholder Approval: As previously announced, Square Shareholder Approval was obtained on Wednesday, 3 November 2021 (US time).
• NYSE quotation: The Condition relating to the approval for quotation of New Square Shares on NYSE has been satisfied.
• Australian tax ruling: The Condition relating to the receipt of confirmation from the Australian Tax Office that it is prepared to issue a class ruling has been satisfied. The class ruling will confirm that qualifying Australian resident Afterpay shareholders who hold their Afterpay Shares on capital account will be eligible to choose roll-over relief under the Income Tax Assessment Act 1997 (Cth) to the extent to which they receive New Square Securities.

What is the impact on the SGX Notes?

As set out in section 4.13(d) of the Scheme Booklet, on a change of control of Afterpay, the holders of the SGX Notes are entitled to, among other things, elect within 60 days to have the SGX Notes held by them redeemed for their face value. If all SGX noteholders exercise this redemption election right, the aggregate cost to redeem the SGX Notes would be A$1.5 billion. A change of control under the terms of the SGX Notes and the related redemption election right will be triggered by the receipt of Afterpay shareholder approval at the

Afterpay Limited | ACN 618 280 649 | ASX:APT
Level 5, 406 Collins Street, Melbourne VIC 3000, Australia	5