Equibles

10-Q

SIGNET JEWELERS LTD (SIG)

10-Q 2022-09-01 For: 2022-07-30
View Original
Added on April 12, 2026

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended July 30, 2022 or

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from to

Commission file number 1-32349

SIGNET JEWELERS LIMITED

| (Exact name of Registrant as specified in its charter) | | --- || Bermuda | Not Applicable | | --- | --- | | (State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) |

Clarendon House

2 Church Street

Hamilton HM11

Bermuda

(441) 296 5872

(Address and telephone number including area code of principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class Trading Symbol(s) Name of Each Exchange on which Registered
Common Shares of $0.18 each SIG The New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No   o

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).    Yes   x     No   o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   ☐     No   x

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.

Common Shares, $0.18 par value, 46,245,349 shares as of August 26, 2022

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SIGNET JEWELERS LIMITED

TABLE OF CONTENTS

PAGE
PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
Condensed Consolidated Statements of Operations 3
Condensed Consolidated Statements of Comprehensive Income 4
Condensed Consolidated Balance Sheets 5
Condensed Consolidated Statements of Cash Flows 6
Condensed Consolidated Statements of Shareholders’ Equity 7
Notes to the Condensed Consolidated Financial Statements 8
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 30
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 44
ITEM 4. Controls and Procedures 44
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings 45
ITEM 1A. Risk Factors 45
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 47
ITEM 6. Exhibits 47

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SIGNET JEWELERS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

13 weeks ended 26 weeks ended
(in millions, except per share amounts) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021 Notes
Sales $ 1,754.9 $ 1,788.1 $ 3,593.2 $ 3,476.9 3
Cost of sales (1,090.2) (1,070.5) (2,204.8) (2,080.9)
Gross margin 664.7 717.6 1,388.4 1,396.0
Selling, general and administrative expenses (477.3) (502.6) (1,010.4) (1,014.6)
Other operating income (expense) (0.6) 10.4 (191.0) 12.7 20
Operating income 186.8 225.4 187.0 394.1 5
Interest expense, net (3.4) (4.4) (7.8) (8.3)
Other non-operating income (expense) (2.4) 0.1 (136.9) 0.2 20
Income before income taxes 181.0 221.1 42.3 386.0
Income taxes (35.6) 3.5 19.6 (23.0) 10
Net income $ 145.4 $ 224.6 $ 61.9 $ 363.0
Dividends on redeemable convertible preferred shares (8.6) (8.6) (17.2) (17.2) 7
Net income attributable to common shareholders $ 136.8 $ 216.0 $ 44.7 $ 345.8
Earnings per common share:
Basic $ 2.95 $ 4.10 $ 0.94 $ 6.60 8
Diluted $ 2.58 $ 3.60 $ 0.90 $ 5.84 8
Weighted average common shares outstanding:
Basic 46.4 52.7 47.6 52.4 8
Diluted 56.3 62.4 49.7 62.2 8

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SIGNET JEWELERS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

13 weeks ended
July 30, 2022 July 31, 2021
(in millions) Pre-tax <br>amount Tax <br>(expense) <br>benefit After-tax <br>amount Pre-tax <br>amount Tax <br>(expense) <br>benefit After-tax <br>amount
Net income $ 145.4 $ 224.6
Other comprehensive income (loss):
Foreign currency translation adjustments (7.1) — (7.1) 0.7 — 0.7
Cash flow hedges:
Unrealized gain (loss) 0.6 — 0.6 (0.1) — (0.1)
Reclassification adjustment for losses (gains) to earnings (0.3) — (0.3) 0.3 (0.1) 0.2
Pension plan:
Reclassification adjustment for amortization of actuarial losses to earnings 1.1 — 1.1 0.2 (0.1) 0.1
Reclassification adjustment for amortization of net prior service costs to earnings 0.1 — 0.1 0.1 — 0.1
Reclassification adjustment for pension settlement loss to earnings 0.9 (0.2) 0.7 — — —
Total other comprehensive income (loss) $ (4.7) $ (0.2) $ (4.9) $ 1.2 $ (0.2) $ 1.0
Total comprehensive income $ 140.5 $ 225.6
26 weeks ended
July 30, 2022 July 31, 2021
(in millions) Pre-tax <br>amount Tax <br>(expense) <br>benefit After-tax <br>amount Pre-tax <br>amount Tax <br>(expense) <br>benefit After-tax <br>amount
Net income $ 61.9 $ 363.0
Other comprehensive income (loss):
Foreign currency translation adjustments (23.9) — (23.9) 7.4 — 7.4
Available-for-sale securities:
Unrealized loss (0.3) — (0.3) (0.1) — (0.1)
Cash flow hedges:
Unrealized gain (loss) 1.8 (0.2) 1.6 (0.2) — (0.2)
Reclassification adjustment for losses (gains) to earnings (0.3) — (0.3) 0.5 (0.1) 0.4
Pension plan:
Actuarial gain (loss) (0.5) 0.1 (0.4) — — —
Reclassification adjustment for amortization of actuarial losses to earnings 2.0 (0.2) 1.8 0.4 (0.1) 0.3
Reclassification adjustment for amortization of net prior service costs to earnings 0.2 — 0.2 0.1 — 0.1
Reclassification adjustment for pension settlement loss to earnings 132.8 (25.2) 107.6 — — —
Total other comprehensive income $ 111.8 $ (25.5) $ 86.3 $ 8.1 $ (0.2) $ 7.9
Total comprehensive income $ 148.2 $ 370.9

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SIGNET JEWELERS LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in millions, except par value per share amount) July 30, 2022 January 29, 2022 July 31, 2021 Notes
Assets
Current assets:
Cash and cash equivalents $ 851.7 $ 1,418.3 $ 1,573.8
Accounts receivable 35.6 19.9 13.9 12
Other current assets 199.4 208.6 175.0
Income taxes 118.5 23.2 54.9
Inventories 2,190.8 2,060.4 2,004.7 13
Total current assets 3,396.0 3,730.4 3,822.3
Non-current assets:
Property, plant and equipment, net of accumulated depreciation and amortization of $1,284.9 (January 29, 2022 and July 31, 2021: $1,248.9 and $1,241.3, respectively) 566.5 575.9 533.2
Operating lease right-of-use assets 1,113.1 1,206.6 1,256.2 14
Goodwill 486.4 484.6 245.1 15
Intangible assets, net 312.8 314.2 189.7 15
Other assets 254.7 226.1 244.1
Deferred tax assets 34.9 37.3 21.3
Total assets $ 6,164.4 $ 6,575.1 $ 6,311.9
Liabilities, Redeemable convertible preferred shares, and Shareholders’ equity
Current liabilities:
Loans and overdrafts $ — $ — $ 0.4 18
Accounts payable 689.5 899.8 730.6
Accrued expenses and other current liabilities 598.5 501.6 463.9
Deferred revenue 326.9 341.3 297.9 3
Operating lease liabilities 281.3 300.0 322.1 14
Income taxes 23.9 28.0 25.6
Total current liabilities 1,920.1 2,070.7 1,840.5
Non-current liabilities:
Long-term debt 147.2 147.1 146.9 18
Operating lease liabilities 925.8 1,005.1 1,052.2 14
Other liabilities 101.3 117.6 123.2
Deferred revenue 873.9 857.6 809.4 3
Deferred tax liabilities 175.2 160.9 132.9
Total liabilities 4,143.5 4,359.0 4,105.1
Commitments and contingencies 21
Series A redeemable convertible preferred shares of $.01 par value: authorized 500 shares, 0.625 shares outstanding (January 29, 2022 and July 31, 2021: 0.625 shares outstanding, respectively) 653.0 652.1 651.3 6
Shareholders’ equity:
Common shares of $.18 par value: authorized 500 shares, 46.2 shares outstanding (January 29, 2022 and July 31, 2021: 49.9 and 53.0 outstanding, respectively) 12.6 12.6 12.6
Additional paid-in capital 245.6 231.2 266.8
Other reserves 0.4 0.4 0.4
Treasury shares at cost: 23.8 shares (January 29, 2022 and July 31, 2021: 20.1 and 17.0 shares, respectively) (1,494.4) (1,206.7) (951.0)
Retained earnings 2,868.3 2,877.4 2,509.3
Accumulated other comprehensive loss (264.6) (350.9) (282.6) 9
Total shareholders’ equity 1,367.9 1,564.0 1,555.5
Total liabilities, redeemable convertible preferred shares and shareholders’ equity $ 6,164.4 $ 6,575.1 $ 6,311.9

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SIGNET JEWELERS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

26 weeks ended
(in millions) July 30, 2022 July 31, 2021
Cash flows from operating activities
Net income $ 61.9 $ 363.0
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization 79.8 83.7
Amortization of unfavorable contracts (0.9) (2.4)
Share-based compensation 22.9 25.5
Deferred taxation (11.0) (33.2)
Pension settlement loss 132.8 —
Other non-cash movements 3.1 0.4
Changes in operating assets and liabilities, net of acquisitions:
(Increase) decrease in accounts receivable (15.7) 18.5
Proceeds from sale of in-house finance receivables — 81.3
(Increase) decrease in other assets and other receivables (4.9) 29.7
(Increase) decrease in inventories (146.6) 33.9
Decrease in accounts payable (221.2) (95.6)
Increase (decrease) in accrued expenses and other liabilities 95.3 (29.6)
Change in operating lease assets and liabilities (3.6) (44.7)
Increase in deferred revenue 2.3 34.2
Change in income tax receivable and payable (99.9) (3.8)
Pension plan contributions (9.2) (2.4)
Net cash (used in) provided by operating activities (114.9) 458.5
Investing activities
Purchase of property, plant and equipment (58.2) (32.2)
Acquisitions, net of cash acquired (1.9) (14.4)
Other investing activities, net (14.9) 1.9
Net cash used in investing activities (75.0) (44.7)
Financing activities
Dividends paid on common shares (18.3) —
Dividends paid on redeemable convertible preferred shares (16.4) (8.2)
Repurchase of common shares (291.0) —
Payment of debt issuance costs — (3.6)
Increase of bank overdrafts — 0.4
Other financing activities (41.4) (4.5)
Net cash used in financing activities (367.1) (15.9)
Cash and cash equivalents at beginning of period 1,418.3 1,172.5
(Decrease) increase in cash and cash equivalents (557.0) 397.9
Effect of exchange rate changes on cash and cash equivalents (9.6) 3.4
Cash and cash equivalents at end of period $ 851.7 $ 1,573.8

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SIGNET JEWELERS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

(in millions) Common <br>shares at <br>par value Additional <br>paid-in <br>capital Other <br>reserves Treasury <br>shares Retained <br>earnings Accumulated <br>other <br>comprehensive <br>loss Total <br>shareholders’ <br>equity
Balance at January 29, 2022 $ 12.6 $ 231.2 $ 0.4 $ (1,206.7) $ 2,877.4 $ (350.9) $ 1,564.0
Net loss — — — — (83.5) — (83.5)
Other comprehensive income — — — — — 91.2 91.2
Dividends declared:
Common shares, $0.20/share — — — — (9.3) — (9.3)
Preferred shares, $13.14/share — — — — (8.6) — (8.6)
Repurchase of common shares — 50.0 — (318.2) — — (268.2)
Net settlement of equity-based awards — (54.9) — 50.7 (35.1) — (39.3)
Share-based compensation expense — 10.5 — — — — 10.5
Balance at April 30, 2022 $ 12.6 $ 236.8 $ 0.4 $ (1,474.2) $ 2,740.9 $ (259.7) $ 1,256.8
Net income — — — — 145.4 — 145.4
Other comprehensive loss — — — — — (4.9) (4.9)
Dividends declared:
Common shares, $0.20/share — — — — (9.2) — (9.2)
Preferred shares, $13.14/share — — — — (8.6) — (8.6)
Repurchase of common shares — — — (22.8) — — (22.8)
Net settlement of equity based awards — (3.6) — 2.6 (0.2) — (1.2)
Share-based compensation expense — 12.4 — — — — 12.4
Balance at July 30, 2022 $ 12.6 $ 245.6 $ 0.4 $ (1,494.4) $ 2,868.3 $ (264.6) $ 1,367.9 (in millions) Common <br>shares at <br>par value Additional <br>paid-in <br>capital Other <br>reserves Treasury <br>shares Retained <br>earnings Accumulated <br>other <br>comprehensive <br>loss Total <br>shareholders’ <br>equity
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Balance at January 30, 2021 $ 12.6 $ 258.8 $ 0.4 $ (980.2) $ 2,189.2 $ (290.5) $ 1,190.3
Net income — — — — 138.4 — 138.4
Other comprehensive income — — — — — 6.9 6.9
Dividends declared:
Preferred shares, $13.14/share — — — — (8.6) — (8.6)
Net settlement of equity-based awards — (14.6) — 15.0 (14.8) — (14.4)
Share-based compensation expense — 8.0 — — — — 8.0
Balance at May 1, 2021 $ 12.6 $ 252.2 $ 0.4 $ (965.2) $ 2,304.2 $ (283.6) $ 1,320.6
Net income — — — — 224.6 — 224.6
Other comprehensive income — — — — — 1.0 1.0
Dividends declared:
Common shares, $0.18/share — — — — (9.5) — (9.5)
Preferred shares, $13.14/share — — — — (8.6) — (8.6)
Net settlement of equity based awards — (2.9) — 14.2 (1.4) — 9.9
Share-based compensation expense — 17.5 — — — — 17.5
Balance at July 31, 2021 $ 12.6 $ 266.8 $ 0.4 $ (951.0) $ 2,509.3 $ (282.6) $ 1,555.5

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SIGNET JEWELERS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

  1. Organization and principal accounting policies

Signet Jewelers Limited (“Signet” or the “Company”), a holding company incorporated in Bermuda, is the world’s largest retailer of diamond jewelry. The Company operates through its 100% owned subsidiaries with sales primarily in the United States (“US”), United Kingdom (“UK”) and Canada. Signet manages its business as three reportable segments: North America, International, and Other. The “Other” reportable segment primarily consists of subsidiaries involved in the purchasing and conversion of rough diamonds to polished stones. See Note 5 for additional discussion of the Company’s reportable segments.

Signet’s business is seasonal, with the fourth quarter historically accounting for approximately 35-40% of annual sales as well as accounts for a substantial portion of the annual operating profit.

Risks and Uncertainties - COVID-19

In December 2019, a novel coronavirus (“COVID-19”) was identified in Wuhan, China. During Fiscal 2021, the Company experienced significant disruption to its business, specifically in its retail store operations through temporary closures during the first half of the year. By the end of the third quarter of Fiscal 2021, the Company had re-opened substantially all of its stores. However, during the fourth quarter of Fiscal 2021, both the UK and certain Canadian provinces re-established mandated temporary closure of non-essential businesses. The UK stores began to reopen in April 2021, while the Canadian stores began reopening in the second quarter of Fiscal 2022.

The full extent and duration of the impact of COVID-19 on the Company’s operations and financial performance remains unknown and depends on future developments that are uncertain and unpredictable, including the duration and possible resurgence of COVID-19 (including through variants), the success of the vaccine rollout globally, its impact on the Company’s global supply chain, and the uncertainty of customer behavior and potential shifts in discretionary spending. The Company will continue to evaluate the impact of COVID-19 on its business, results of operations and cash flows throughout Fiscal 2023, including the potential impacts on various estimates and assumptions inherent in the preparation of the condensed consolidated financial statements.

Basis of preparation

The condensed consolidated financial statements of Signet are prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with US generally accepted accounting principles (“US GAAP”) have been condensed or omitted from this report, as is permitted by such rules and regulations. Intercompany transactions and balances have been eliminated in consolidation. Signet has reclassified certain prior year amounts to conform to the current year presentation. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes included in Signet’s Annual Report on Form 10-K for the fiscal year ended January 29, 2022 filed with the SEC on March 17, 2022.

Use of estimates

The preparation of these condensed consolidated financial statements, in conformity with US GAAP and SEC regulations for interim reporting, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Estimates and assumptions are primarily made in relation to the valuation of inventories, deferred revenue, derivatives, employee benefits, income taxes, contingencies, leases, asset impairments for goodwill, indefinite-lived intangible and long-lived assets and the depreciation and amortization of long-lived assets.

Fiscal year

The Company’s fiscal year ends on the Saturday nearest to January 31st. Fiscal 2023 and Fiscal 2022 refer to the 52 week periods ending January 28, 2023 and ended January 29, 2022, respectively. Within these condensed consolidated financial statements, the second quarter and year to date period of the relevant fiscal years 2023 and 2022 refer to the 13 and 26 weeks ended July 30, 2022 and July 31, 2021, respectively.

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Foreign currency translation

The financial position and operating results of certain foreign operations, including certain subsidiaries operating in the UK as part of the International segment and Canada as part of the North America segment, are consolidated using the local currency as the functional currency. Assets and liabilities are translated at the rates of exchange on the balance sheet date, and revenues and expenses are translated at the monthly average rates of exchange during the period. Resulting translation gains or losses are included in the accompanying condensed consolidated statements of shareholders’ equity as a component of accumulated other comprehensive income (loss) (“AOCI”). Gains or losses resulting from foreign currency transactions are included in other operating income, net within the condensed consolidated statements of operations.

See Note 9 for additional information regarding the Company’s foreign currency translation.

Investment in Sasmat

During the 13 weeks ended July 30, 2022, the Company acquired a 25% interest in Sasmat Retail, S.L (“Sasmat”) for $17.1 million in cash. Sasmat is a Spanish jewelry retailer specializing in online selling, with two brick and mortar locations. Under the terms of the agreement, the Company has the option to acquire the remaining 75% of Sasmat exercisable at the earlier of three years or upon Sasmat reaching certain revenue targets as defined in the agreement. The Company is applying the equity method of accounting to the Sasmat investment. The Sasmat investment was recorded within other noncurrent assets in the condensed consolidated balance sheet as of July 30, 2022. The Sasmat investment did not have a material impact to Signet’s condensed consolidated statement of operations for the second quarter of Fiscal 2023.

  1. New accounting pronouncements

The following section provides a description of new accounting pronouncements ("Accounting Standard Update" or "ASU") issued by the Financial Accounting Standards Board ("FASB") that are applicable to the Company.

New accounting pronouncements recently adopted

There were no new accounting pronouncements adopted during Fiscal 2023 that have a material impact on the Company’s financial position or results of operations.

New accounting pronouncements issued but not yet adopted

There are no new accounting pronouncements issued that are expected to have a material impact to the Company in future periods.

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  1. Revenue recognition

The following table provides the Company’s total sales, disaggregated by banner, for the 13 and 26 weeks ended July 30, 2022 and July 31, 2021:

13 weeks ended July 30, 2022 13 weeks ended July 31, 2021
(in millions) North America International Other Consolidated North America International Other Consolidated
Sales by banner:
Kay $ 617.5 $ — $ — $ 617.5 $ 673.7 $ — $ — $ 673.7
Zales 318.1 — — 318.1 367.3 — — 367.3
Jared 303.5 — — 303.5 311.9 — — 311.9
Diamonds Direct 113.0 — — 113.0 — —
Banter by Piercing Pagoda 100.2 — — 100.2 138.7 — — 138.7
James Allen 88.6 — — 88.6 108.8 — — 108.8
Peoples 47.8 — — 47.8 41.4 — — 41.4
International segment banners — 111.6 — 111.6 — 130.7 — 130.7
Other (1) 27.7 — 26.9 54.6 3.9 — 11.7 15.6
Total sales $ 1,616.4 $ 111.6 $ 26.9 $ 1,754.9 $ 1,645.7 $ 130.7 $ 11.7 $ 1,788.1
26 weeks ended July 30, 2022 26 weeks ended July 31, 2021
(in millions) North America International Other Consolidated North America International Other Consolidated
Sales by banner:
Kay $ 1,284.8 $ — $ — $ 1,284.8 $ 1,350.4 $ — $ — $ 1,350.4
Zales 665.8 — — 665.8 738.1 — — 738.1
Jared 617.6 — — 617.6 596.0 — — 596.0
Diamonds Direct 219.3 219.3 — —
Banter by Piercing Pagoda 219.2 — — 219.2 287.6 — — 287.6
James Allen 181.9 — — 181.9 210.3 — — 210.3
Peoples 93.2 — — 93.2 76.0 — — 76.0
International segment banners — 221.6 — 221.6 — 188.1 — 188.1
Other (1) 39.6 — 50.2 89.8 5.3 — 25.1 30.4
Total sales $ 3,321.4 $ 221.6 $ 50.2 $ 3,593.2 $ 3,263.7 $ 188.1 $ 25.1 $ 3,476.9

(1) Other primarily includes sales from Signet’s diamond sourcing initiative, loose diamonds and Rocksbox.

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The following table provides the Company’s total sales, disaggregated by major product, for the 13 and 26 weeks ended July 30, 2022 and July 31, 2021:

13 weeks ended July 30, 2022 13 weeks ended July 31, 2021
(in millions) North America International Other Consolidated North America International Other Consolidated
Sales by product:
Bridal $ 730.6 $ 49.2 $ — $ 779.8 $ 696.9 $ 60.7 $ — $ 757.6
Fashion 609.6 17.9 — 627.5 680.7 20.7 — 701.4
Watches 53.5 37.9 — 91.4 58.6 41.0 — 99.6
Services (1) 163.5 6.6 — 170.1 151.1 8.3 — 159.4
Other (2) 59.2 — 26.9 86.1 58.4 — 11.7 70.1
Total sales $ 1,616.4 $ 111.6 $ 26.9 $ 1,754.9 $ 1,645.7 $ 130.7 $ 11.7 $ 1,788.1
26 weeks ended July 30, 2022 26 weeks ended July 31, 2021
(in millions) North America International Other Consolidated North America International Other Consolidated
Sales by product:
Bridal $ 1,517.9 $ 99.3 $ — $ 1,617.2 $ 1,423.6 $ 89.5 $ — $ 1,513.1
Fashion 1,267.8 35.6 — 1,303.4 1,342.1 30.4 — 1,372.5
Watches 105.0 73.1 — 178.1 105.5 58.2 — 163.7
Services (1) 329.5 13.6 — 343.1 297.0 10.0 — 307.0
Other (2) 101.2 — 50.2 151.4 95.5 — 25.1 120.6
Total sales $ 3,321.4 $ 221.6 $ 50.2 $ 3,593.2 $ 3,263.7 $ 188.1 $ 25.1 $ 3,476.9

(1)     Services primarily includes sales from service plans, repairs and subscriptions.

(2)     Other primarily includes sales from Signet’s diamond sourcing initiative and other miscellaneous non-jewelry sales.

The following table provides the Company’s total sales, disaggregated by channel, for the 13 and 26 weeks ended July 30, 2022 and July 31, 2021:

13 weeks ended July 30, 2022 13 weeks ended July 31, 2021
(in millions) North America International Other Consolidated North America International Other Consolidated
Sales by channel:
Store $ 1,314.6 $ 91.9 $ — $ 1,406.5 $ 1,333.3 $ 106.9 $ — $ 1,440.2
E-commerce 278.1 19.7 — 297.8 312.4 23.8 — 336.2
Other (1) 23.7 — 26.9 50.6 — — 11.7 11.7
Total sales $ 1,616.4 $ 111.6 $ 26.9 $ 1,754.9 $ 1,645.7 $ 130.7 $ 11.7 $ 1,788.1
26 weeks ended July 30, 2022 26 weeks ended July 31, 2021
(in millions) North America International Other Consolidated North America International Other Consolidated
Sales by channel:
Store $ 2,711.1 $ 181.8 $ — $ 2,892.9 $ 2,632.9 $ 136.4 $ — $ 2,769.3
E-commerce 578.5 39.8 — 618.3 630.8 51.7 — 682.5
Other (1) 31.8 — 50.2 82.0 — — 25.1 25.1
Total sales $ 3,321.4 $ 221.6 $ 50.2 $ 3,593.2 $ 3,263.7 $ 188.1 $ 25.1 $ 3,476.9

(1) Other primarily includes sales from Signet’s diamond sourcing initiative and loose diamonds.

Extended service plans (“ESP”)

The Company recognizes revenue related to ESP sales in proportion to when the expected costs will be incurred. The deferral periods for ESP sales are determined from patterns of claims costs, including estimates of future claims costs expected to be incurred. Management reviews the trends in claims to assess whether changes are required to the revenue and cost recognition rates utilized. A significant change in estimates related to the time period or pattern in which warranty-related costs are expected to be incurred could materially impact revenues. All direct costs associated with the sale of these plans are deferred and amortized in proportion to the

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revenue recognized and disclosed as either other current assets or other assets in the condensed consolidated balance sheets. These direct costs primarily include sales commissions and credit card fees.

Deferred selling costs

Unamortized deferred selling costs as of July 30, 2022, January 29, 2022 and July 31, 2021 were as follows:

(in millions) July 30, 2022 January 29, 2022 July 31, 2021
Other current assets $ 27.4 $ 28.4 $ 25.4
Other assets 86.8 87.8 87.1
Total deferred selling costs $ 114.2 $ 116.2 $ 112.5

Amortization of deferred ESP selling costs is included within selling, general and administrative expenses in the condensed consolidated statements of operations. Amortization of deferred ESP selling costs was $10.3 million and $21.1 million during the 13 and 26 weeks ended July 30, 2022, respectively, and $7.1 million and $17.0 million during the 13 and 26 weeks ended July 31, 2021.

Deferred revenue

Deferred revenue as of July 30, 2022, January 29, 2022 and July 31, 2021 was as follows:

(in millions) July 30, 2022 January 29, 2022 July 31, 2021
ESP deferred revenue $ 1,131.5 $ 1,116.5 $ 1,063.8
Other deferred revenue (1) 69.3 82.4 43.5
Total deferred revenue $ 1,200.8 $ 1,198.9 $ 1,107.3
Disclosed as:
Current liabilities $ 326.9 $ 341.3 $ 297.9
Non-current liabilities 873.9 857.6 809.4
Total deferred revenue $ 1,200.8 $ 1,198.9 $ 1,107.3

(1) Other deferred revenue primarily includes revenue collected from customers for custom orders and eCommerce orders, for which control has not yet transferred to the customer.

13 weeks ended 26 weeks ended
(in millions) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021
ESP deferred revenue, beginning of period $ 1,125.9 $ 1,049.4 $ 1,116.5 $ 1,028.9
Plans sold (1) 120.3 118.6 244.1 242.7
Revenue recognized (2) (114.7) (104.2) (229.1) (207.8)
ESP deferred revenue, end of period $ 1,131.5 $ 1,063.8 $ 1,131.5 $ 1,063.8

(1)    Includes impact of foreign exchange translation.

(2)    The Company recognized sales of $68.6 million and $147.8 million during the 13 and 26 weeks ended July 30, 2022, respectively, and $63.9 million and $136.5 million during the 13 and 26 weeks ended July 31, 2021, respectively, related to deferred revenue that existed at the beginning of the period in respect to ESP.

  1. Acquisitions

Rocksbox

On March 29, 2021, the Company acquired all of the outstanding shares of Rocksbox Inc. (“Rocksbox”), a jewelry rental subscription business, for cash consideration of $14.6 million, net of cash acquired. The acquisition was driven by Signet's Inspiring Brilliance strategy and its initiatives to accelerate growth in its services offerings. Net assets acquired primarily consist of goodwill and intangible assets (see Note 15 for details).

The results of Rocksbox subsequent to the acquisition date are reported as a component of the North America segment. Pro forma results of operations have not been presented, as the impact on the Company’s consolidated financial results was not material.

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Diamonds Direct

On November 17, 2021, the Company acquired all of the outstanding shares of Diamonds Direct USA Inc. (“Diamonds Direct”) for cash consideration of $503.1 million, net of cash acquired of $14.2 million and including the final additional payment of $1.9 million made in the first quarter of Fiscal 2023. Diamonds Direct is an off-mall, destination jeweler in the US, with a highly productive, efficient operating model with demonstrated growth and profitability which is expected to immediately contribute to Signet’s Inspiring Brilliance strategy to accelerate growth and expand the Company’s market in accessible luxury and bridal. Diamonds Direct’s strong value proposition, extensive bridal offering and customer-centric, high-touch shopping experience is a destination for younger, luxury-oriented bridal shoppers.

The information included herein has been prepared based on the allocation of the purchase price using estimates of the fair value and useful lives of assets acquired and liabilities assumed which were determined by management using a combination of income and cost approaches, including the relief from royalty method and comparable market prices. The purchase price allocation is subject to further adjustment until all pertinent information regarding the assets and liabilities acquired are fully evaluated by the Company.

The following table presents the estimated fair value of the assets acquired and liabilities assumed from Diamonds Direct at the date of acquisition:

(in millions)
Inventories $ 229.1
Property, plant and equipment 32.3
Right-of-use assets 56.9
Intangible assets 126.0
Other assets 6.7
Identifiable assets acquired 451.0
Accounts payable 46.8
Deferred revenue 26.1
Operating lease liabilities 57.6
Deferred taxes 33.6
Other liabilities 27.6
Liabilities assumed 191.7
Identifiable net assets acquired 259.3
Goodwill 243.8
Net assets acquired $ 503.1

The Company recorded acquired intangible assets of $126.0 million, consisting entirely of an indefinite-lived trade name.

Goodwill is calculated as the excess of the purchase price over the estimated fair values of the assets acquired and the liabilities assumed in the acquisition and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The amount allocated to goodwill associated with the Diamonds Direct acquisition is primarily the result of expected synergies resulting from combining the activities such as marketing and digital effectiveness, expansion of connected commence capabilities, and sourcing savings. The Company allocated goodwill to its North America reportable segment. None of the goodwill associated with this transaction is deductible for income tax purposes.

The results of Diamonds Direct subsequent to the acquisition date are reported as a component of the North America reportable segment. Pro forma results of operations have not been presented, as the impact on the Company’s consolidated financial results was not material.

Blue Nile

On August 19, 2022, the Company acquired 100% of the outstanding common stock of Blue Nile, Inc. (“Blue Nile”), subject to the terms of a stock purchase agreement (“Agreement”) entered into on August 5, 2022. The total cash consideration is $398.2 million, net of cash acquired, including purchase price adjustments for working capital, and is subject to customary post-closing adjustments per

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the Agreement. In connection with the acquisition, the Company incurred $2.6 million of acquisition-related costs during the 13 weeks ended July 30, 2022, which were recorded as selling, general and administrative expenses in the condensed consolidated statements of operations.

Blue Nile is a leading online retailer of engagement rings and fine jewelry with 23 physical showrooms throughout the US. The strategic acquisition of Blue Nile accelerates Signet's initiatives to expand its bridal offerings and grow its accessible luxury portfolio while enhancing its connected commerce capabilities as well as extending its digital leadership across the jewelry category – all to further achieve meaningful operating synergies to enhance shopping experiences for consumers and create value for shareholders.

Neither the Company’s condensed consolidated balance sheets nor the operating results or cash flows, as of and for the periods ended July 30, 2022, reflect the impact of Blue Nile as the acquisition was completed after the balance sheet date. Signet plans to report Blue Nile results within the Company’s North America reportable segment.

  1. Segment information

Financial information for each of Signet’s reportable segments is presented in the tables below. Signet’s chief operating decision maker utilizes segment sales and operating income, after the elimination of any inter-segment transactions, to determine resource allocations and performance assessment measures. Signet aggregates operating segments with similar economic and operating characteristics. Signet manages its business as three reportable segments: North America, International, and Other. Signet’s sales are derived from the retailing of jewelry, watches, other products and services as generated through the management of its reportable segments. The Company allocates certain support center costs between operating segments, and the remainder of the unallocated costs are included with the corporate and unallocated expenses presented.

The North America reportable segment operates across the US and Canada. Its US stores operate nationally in malls and off-mall locations, as well as online, principally as Kay (Kay Jewelers and Kay Outlet), Zales (Zales Jewelers and Zales Outlet), Jared (Jared The Galleria Of Jewelry and Jared Vault), Diamonds Direct, James Allen, Banter by Piercing Pagoda, which primarily operates through mall-based kiosks, and Rocksbox. Its Canadian stores operate as Peoples Jewellers.

The International reportable segment operates stores in the UK, Republic of Ireland and Channel Islands. Its stores operate in shopping malls and off-mall locations (i.e. high street) principally under the H. Samuel and Ernest Jones banners.

The Other reportable segment primarily consists of subsidiaries involved in the purchasing and conversion of rough diamonds to polished stones.

13 weeks ended 26 weeks ended
(in millions) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021
Sales:
North America segment $ 1,616.4 $ 1,645.7 $ 3,321.4 $ 3,263.7
International segment 111.6 130.7 221.6 188.1
Other segment 26.9 11.7 50.2 25.1
Total sales $ 1,754.9 $ 1,788.1 $ 3,593.2 $ 3,476.9
Operating income (loss):
North America segment (1) $ 210.1 $ 237.3 $ 234.9 $ 449.3
International segment (2.0) 15.5 (8.4) (4.2)
Other segment 1.8 (0.1) 4.8 (1.0)
Corporate and unallocated expenses (2) (23.1) (27.3) (44.3) (50.0)
Total operating income 186.8 225.4 187.0 394.1
Interest expense, net (3.4) (4.4) (7.8) (8.3)
Other non-operating income (expense) (2.4) 0.1 (136.9) 0.2
Income before income taxes $ 181.0 $ 221.1 $ 42.3 $ 386.0

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(1)    Operating income during the 13 and 26 weeks ended July 30, 2022 includes $5.8 million and $10.2 million, respectively, of cost of sales associated with the fair value step-up of inventory acquired in the Diamonds Direct acquisition; and $2.6 million of acquisition-related expenses in connection with the Blue Nile acquisition. Operating income during the 26 weeks ended July 30, 2022 includes $190.0 million related to pre-tax litigation charges. See Note 4 and Note 21 for additional information.

Operating income during the 13 and 26 weeks ended July 31, 2021 includes $0.0 million and $1.1 million, respectively, of acquisition-related expenses in connection with the Rocksbox acquisition; $1.4 million of gains associated with the sale of customer in-house finance receivables; credits of $0.3 million and $1.0 million, respectively, to restructuring expense, primarily related to adjustments to previously recognized restructuring liabilities; and $(0.2) million and $1.3 million, respectively, of net asset impairments.

(2)    Operating income during the 13 and 26 weeks ended July 31, 2021 includes $0.6 million credit to restructuring expense, primarily related to adjustments to previously recognized restructuring liabilities.

  1. Redeemable preferred shares

On October 5, 2016, the Company issued 625,000 shares of Series A Redeemable Convertible Preference Shares (“Preferred Shares”) to certain affiliates of Leonard Green & Partners, L.P., for an aggregate purchase price of $625.0 million, or $1,000 per share (the “Stated Value”) pursuant to the investment agreement dated August 24, 2016. Preferred shareholders are entitled to a cumulative dividend at the rate of 5% per annum, payable quarterly in arrears either in cash or by increasing the stated value of the Preferred Shares. The Company has declared all Preferred Share dividends in Fiscal 2022 and Fiscal 2023 payable in cash. Refer to Note 7 for additional discussion of the Company’s dividends on Preferred Shares.

(in millions, except conversion rate and conversion price) July 30, 2022 January 29, 2022 July 31, 2021
Conversion rate 12.3939 12.2297 12.2297
Conversion price $ 80.6849 $ 81.7682 $ 81.7682
Potential impact of preferred shares if-converted to common shares 8.1 8.0 8.0
Liquidation preference (1) $ 665.1 $ 665.1 $ 673.2

(1) Includes the Stated Value of the Preferred Shares plus any declared but unpaid dividends

In connection with the issuance of the Preferred Shares, the Company incurred direct and incremental expenses of $13.7 million. These direct and incremental expenses originally reduced the Preferred Shares carrying value and will be accreted through retained earnings as a deemed dividend from the date of issuance through the first possible known redemption date in November 2024. Accumulated accretion recorded in the condensed consolidated balance sheets was $9.8 million as of July 30, 2022 (January 29, 2022 and July 31, 2021: $9.0 million and $8.1 million, respectively).

Accretion of $0.4 million and $0.8 million was recorded to Preferred Shares in the condensed consolidated balance sheets during the 13 and 26 weeks ended July 30, 2022 ($0.4 million and $0.8 million for the 13 and 26 weeks ended July 31, 2021).

  1. Shareholders’ equity

Dividends on Common Shares

As a result of COVID-19, Signet’s Board of Directors (the “Board”) elected to temporarily suspend the dividend program on common shares, effective in the first quarter of Fiscal 2021. The Board elected to reinstate the dividend program on common shares beginning in second quarter of Fiscal 2022. Dividends declared on the common shares during the 26 weeks ended July 30, 2022 and July 31, 2021 were as follows:

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Fiscal 2023 Fiscal 2022
(in millions, except per share amounts) Dividends <br>per share Total dividends Dividends <br>per share Total dividends
First quarter $ 0.20 $ 9.3 $ — $ —
Second quarter (1) 0.20 9.2 0.18 9.5
Total $ 0.40 $ 18.5 $ 0.18 $ 9.5

(1) Signet’s dividend policy results in the common share dividend payment date being a quarter in arrears from the declaration date. As a result, as of July 30, 2022 and July 31, 2021, $9.2 million and $9.5 million, respectively, has been recorded in accrued expenses and other current liabilities in the condensed consolidated balance sheets reflecting the cash dividends on common shares declared for the second quarter of Fiscal 2023 and Fiscal 2022, respectively.

Dividends on Preferred Shares

Dividends declared on the Preferred Shares during the 26 weeks ended July 30, 2022 and July 31, 2021 were as follows:

Fiscal 2023 Fiscal 2022
(in millions, except per share amounts) Dividends <br>per share Total dividends Dividends <br>per share Total dividends
First quarter $ 13.14 $ 8.2 $ 13.14 $ 8.2
Second quarter (1) 13.14 8.2 13.14 8.2
Total $ 26.28 $ 16.4 $ 26.28 $ 16.4

(1)    Signet’s dividend policy results in the preferred share dividend payment date being a quarter in arrears from the declaration date. As a result, as of July 30, 2022 and July 31, 2021, $8.2 million and $8.2 million, respectively, has been recorded in accrued expenses and other current liabilities in the condensed consolidated balance sheets reflecting the dividends on the Preferred Shares declared for the second quarter of Fiscal 2023 and Fiscal 2022, respectively.

There were no cumulative undeclared dividends on the Preferred Shares that reduced net income attributable to common shareholders during the 13 and 26 weeks ended July 30, 2022 or July 31, 2021. See Note 6 for additional discussion of the Company’s Preferred Shares.

Share repurchases

On August 23, 2021, the Board authorized a reinstatement of repurchases under the 2017 Share Repurchase Program (the “2017 Program”). During Fiscal 2022, the Board also authorized an increase in the remaining amount of shares authorized for repurchase under the 2017 Program by $559.4 million, bringing the total authorization to $1.2 billion as of January 29, 2022. In June 2022, the Board authorized an additional increase of the 2017 Program by $500 million, bringing the total authorization to $1.7 billion. Since inception of the 2017 Program, the Company has repurchased $1.1 billion of shares, with an additional $622.4 million of shares authorized for repurchase remaining as of July 30, 2022.

On January 21, 2022, the Company entered into an accelerated share repurchase agreement (“ASR”) with a large financial institution to repurchase the Company’s common shares for an aggregate amount of $250 million. On January 24, 2022, the Company made a prepayment of $250 million and took delivery of 2.5 million shares based on a price of $80 per share, which is 80% of the total prepayment amount. On March 14, 2022, the Company received an additional 0.8 million shares, representing the remaining 20% of the total prepayment and final settlement of the ASR. The number of shares received at final settlement was based on the average of the daily volume-weighted average prices of the Company’s common stock during the term of the ASR. The ASR was accounted for as a purchase of common shares and a forward purchase contract.

The share repurchase activity during the 26 weeks ended July 30, 2022 and July 31, 2021 was as follows:

26 weeks ended July 30, 2022 26 weeks ended July 31, 2021
(in millions, except per share amounts Shares repurchased Amount repurchased (1)(2) Average repurchase price per share (2) Shares repurchased Amount repurchased Average repurchase price per share
2017 Program 4.7 $ 341.0 $ 72.14 — $ — N/A

(1)    The amount repurchased in Fiscal 2023 includes $50 million related to the forward purchase contract in the ASR.

(2)    Includes amounts paid for commissions.

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  1. Earnings per common share (“EPS”)

Basic EPS is computed by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding for the period. The computation of basic EPS is outlined in the table below:

13 weeks ended 26 weeks ended
(in millions, except per share amounts) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021
Numerator:
Net income attributable to common shareholders $ 136.8 $ 216.0 $ 44.7 $ 345.8
Denominator:
Weighted average common shares outstanding 46.4 52.7 47.6 52.4
EPS – basic $ 2.95 $ 4.10 $ 0.94 $ 6.60

The dilutive effect of share awards represents the potential impact of outstanding awards issued under the Company’s share-based compensation plans, including restricted shares, restricted stock units, performance-based restricted stock units and stock options issued under the Omnibus Plan and stock options issued under the Share Saving Plans. The dilutive effect of performance-based restricted stock units represents the number of contingently issuable shares that would be issuable if the end of the period was the end of the contingency period and is based on the actual achievement of performance metrics through the end of the current interim periods. The dilutive effect of preferred shares represents the potential impact for common shares that would be issued upon conversion. Potential common share dilution related to share awards and preferred shares is determined using the treasury stock and if-converted methods, respectively. Under the if-converted method, the preferred shares are assumed to be converted at the beginning of the period, and the resulting common shares are included in the denominator of the diluted EPS calculation for the entire period being presented, only in the periods in which such effect is dilutive. Additionally, in periods in which preferred shares are dilutive, cumulative dividends and accretion for issuance costs associated with the preferred shares are added back to net income attributable to common shareholders. See Note 6 for additional discussion of the Company’s Preferred Shares.

The computation of diluted EPS is outlined in the table below:

13 weeks ended 26 weeks ended
(in millions, except per share amounts) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021
Numerator:
Net income attributable to common shareholders $ 136.8 $ 216.0 $ 44.7 $ 345.8
Add: Dividends on Preferred Shares 8.6 8.6 — 17.2
Numerator for diluted EPS $ 145.4 $ 224.6 $ 44.7 $ 363.0
Denominator:
Basic weighted average common shares outstanding 46.4 52.7 47.6 52.4
Plus: Dilutive effect of share awards 1.9 1.7 2.1 1.8
Plus: Dilutive effect of preferred shares 8.0 8.0 — 8.0
Diluted weighted average common shares outstanding 56.3 62.4 49.7 62.2
EPS – diluted $ 2.58 $ 3.60 $ 0.90 $ 5.84

The calculation of diluted EPS excludes the following items for each respective period on the basis that their effect would be anti-dilutive:

13 weeks ended 26 weeks ended
(in millions) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021
Share awards — — 0.1 —
Potential impact of preferred shares — — 8.0 —
Total anti-dilutive shares — — 8.1 —

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  1. Accumulated other comprehensive income (loss)

The following tables present the changes in AOCI by component and the reclassifications out of AOCI, net of tax:

Pension plan
(in millions) Foreign <br>currency <br>translation Gains (losses) on available-for-sale securities, net Gains (losses) <br>on cash flow <br>hedges Actuarial <br>(losses) gains Prior <br>service <br>costs Accumulated <br>other <br>comprehensive income (loss)
Balance at January 29, 2022 $ (244.3) $ 0.2 $ 0.4 $ (103.3) $ (3.9) $ (350.9)
Other comprehensive income (loss) (“OCI”) before reclassifications (23.9) (0.3) 1.6 (0.4) — (23.0)
Amounts reclassified from AOCI to earnings — — (0.3) 105.8 3.8 109.3
Net current period OCI (23.9) (0.3) 1.3 105.4 3.8 86.3
Balance at July 30, 2022 $ (268.2) $ (0.1) $ 1.7 $ 2.1 $ (0.1) $ (264.6)

The amounts reclassified from AOCI to earnings were as follows:

Amounts reclassified from AOCI
13 weeks ended 26 weeks ended
(in millions) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021 Statement of operations caption
(Gains) losses on cash flow hedges:
Foreign currency contracts $ (0.3) $ 0.2 $ (0.3) $ 0.3 Cost of sales (see Note 16)
Commodity contracts — 0.1 — 0.2 Cost of sales (see Note 16)
Total before income tax (0.3) 0.3 (0.3) 0.5
Income taxes — (0.1) — (0.1)
Net of tax (0.3) 0.2 (0.3) 0.4
Defined benefit pension plan items:
Amortization of unrecognized actuarial losses 1.1 0.2 2.0 0.4 Other non-operating income (expense) (see Note 22)
Amortization of unrecognized net prior service costs 0.1 0.1 0.2 0.1 Other non-operating income (expense) (see Note 22)
Pension settlement loss 0.9 — 132.8 — Other non-operating income (expense) (see Note 22)
Total before income tax 2.1 0.3 135.0 0.5
Income taxes (0.2) (0.1) (25.4) (0.1)
Net of tax 1.9 0.2 109.6 0.4
Total reclassifications, net of tax $ 1.6 $ 0.4 $ 109.3 $ 0.8
  1. Income taxes
26 weeks ended
July 30, 2022 July 31, 2021
Estimated annual effective tax rate before discrete items 20.1 % 21.4 %
Discrete items recognized (66.4) % (15.5) %
Effective tax rate recognized in statements of operations (46.3) % 5.9 %

During the 26 weeks ended July 30, 2022, the Company’s effective tax rate was lower than the US federal income tax rate, primarily as a result of the discrete tax benefits related to litigation charges of $47.7 million, the reclassification of the pension settlement loss out of AOCI of $25.2 million and the excess tax benefit for share-based compensation which vested during the year of $13.0 million.

The Company’s effective tax rate for the same period during the prior year was lower than the US federal income tax rate primarily due to the reversal of the valuation allowance recorded against certain state deferred tax assets.

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As of July 30, 2022, there has been no material change in the amounts of unrecognized tax benefits, or the related accrued interest and penalties (where appropriate), in respect of uncertain tax positions identified and recorded as of January 29, 2022.

  1. Credit transactions

Credit card outsourcing programs

The Company has entered into various agreements with Comenity Bank (“Comenity”) and Genesis Financial Solutions (“Genesis”) through its subsidiaries Sterling Jewelers Inc. (“Sterling”) and Zale Delaware, Inc. (“Zale”), to outsource its private label credit card programs. Under the original agreements, Comenity provided credit services to all prime credit customers for the Sterling banners and to all credit card customers for the Zale banners. In May 2021, both the Sterling and Zale agreements with Comenity and Genesis were amended and restated to provide credit services to prime and non-prime customers.

The non-prime portion of the Sterling credit card portfolio was previously outsourced to CarVal Investors (“CarVal”), Castlelake, L.P. (“Castlelake”) and Genesis (collectively with CarVal and Castlelake, the “Investors”). Under agreements with the Investors, Signet remained the issuer of non-prime credit with investment funds managed by the Investors purchasing forward receivables at a discount rate determined in accordance with their respective agreements. Prior to March 2022 as described below, Signet held the newly issued non-prime credit receivables on its balance sheet for two business days prior to selling the receivables to the respective counterparty in accordance with the agreements. In March 2021, the Company provided notice to the Investors of its intent not to extend the respective agreements with such Investors beyond the expiration date of June 30, 2021.

On June 30, 2021, the Company entered into amended and restated receivable purchase agreements with CarVal and Castlelake regarding the purchase of add-on receivables on such Investors’ existing accounts, as well as the purchase of the Company-owned credit card receivables portfolio for accounts that had been originated through Fiscal 2021 (see Note 12). During the second quarter of Fiscal 2022, Signet received cash proceeds of $57.8 million for the sale of these customer in-house finance receivables to the Investors. These receivables had a net book value of $56.4 million as of the sale date, and thus the Company recognized a gain on sale of $1.4 million in the North America segment within other operating income in the condensed consolidated statements of operations during the second quarter of Fiscal 2022. Additionally, during the second quarter of Fiscal 2022, the Company received $23.5 million from the Investors for the payment obligation of the remaining 5% of the receivables previously purchased in June 2018. Beginning July 1, 2021, all new prime and non-prime account origination have occurred in accordance with the Comenity and Genesis agreements described above.

Fiscal 2023 amended and restated agreements

In March 2022, the Company entered into amended and restated receivable purchase agreements with the Investors regarding the purchase of add-on receivables on such Investors’ existing accounts. Under the amended and restated agreements, The Bank of Missouri will be the issuer for the add-on receivables on these existing accounts and the Investors will purchase the receivables from The Bank of Missouri.

In conjunction with the above agreements in March 2022, the Company entered into agreements with the Investors to transfer all existing cardholder accounts previously originated by Signet to The Bank of Missouri. Therefore, the Company will no longer originate any credit receivables with customers.

  1. Accounts receivable

The following table presents the components of Signet’s accounts receivable:

(in millions) July 30, 2022 January 29, 2022 July 31, 2021
Accounts receivable, trade $ 35.6 $ 18.3 $ 10.7
Accounts receivable, held for sale — 1.6 3.2
Accounts receivable $ 35.6 $ 19.9 $ 13.9

During Fiscal 2021, the various agreements with the Investors discussed in Note 11 pertaining to the purchase of non-prime forward flow receivables were terminated and new agreements were executed which were effective until June 30, 2021. Those new agreements provided that the Investors continued to purchase add-on non-prime receivables created on existing customer accounts but Signet retained all forward flow non-prime receivables created for new customers beginning in the second quarter of Fiscal 2021. Upon expiration of the amended agreements in June 2021, Signet sold all existing customer in-house finance receivables to CarVal and Castlelake during the second quarter of Fiscal 2022. As a result of the amended and restated agreements entered into with Comenity, Genesis, and the Investors during the second quarter of Fiscal 2022, Signet no longer retains any customer in-house finance receivables.

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As described in Note 11, Signet is no longer the issuer of non-prime credit for add-on purchases on existing accounts. Therefore, the Company no longer holds these non-prime credit receivables. Prior to the March 2022 amendments, receivables originated by the Company but pending transfer to the Investors as of period end were classified as “held for sale” and included in accounts receivable in the condensed consolidated balance sheets. As of January 29, 2022 and July 31, 2021, the accounts receivable held for sale were recorded at fair value.

Accounts receivable, trade primarily includes amounts receivable relating to accounts receivable from the Company’s diamond sales in the North America reportable segment and from the Company’s diamond sourcing initiative in the Other reportable segment.

Customer in-house finance receivables

As discussed above, the Company began retaining certain customer in-house finance receivables beginning in the second quarter of Fiscal 2021 through the date of the portfolio sale in June 2021. The allowance for credit losses related to these receivables was an estimate of expected credit losses, measured over the estimated life of its credit card receivables that considered forecasts of future economic conditions in addition to information about past events and current conditions.

To estimate its allowance for credit losses, the Company segregated its credit card receivables into credit quality categories using the customers’ FICO scores. The following three industry standard FICO score categories were used:

•620 to 659 (Near Prime)

•580 to 619 (Subprime)

•Less than 580 (Deep Subprime)

The following table is a rollforward of the Company’s allowance for credit losses on customer in-house finance receivables:

13 weeks ended 26 weeks ended
(in millions) July 31, 2021 July 31, 2021
Beginning balance $ 21.4 $ 25.5
Provision for credit losses 0.8 (0.4)
Write-offs (2.6) (5.5)
Reversal of allowance on receivables sold (19.6) (19.6)
Ending balance $ — $ —

Additions to the allowance for credit losses were made by recording charges to bad debt expense (credit losses) within selling, general and administrative expenses within the condensed consolidated statements of operations.

Interest income related to the Company’s customer in-house finance receivables was included within other operating income (expense) in the condensed consolidated statements of operations. Accrued interest was included within the same line item as the respective principal amount of the customer in-house finance receivables in the condensed consolidated balance sheets. The accrual of interest was discontinued at the time the receivable is determined to be uncollectible and written-off. The Company recognized $2.5 million and $6.5 million of interest income on its customer in-house finance receivables during the 13 and 26 weeks ended July 31, 2021. Interest income recognition ceased at the date of the sale of the portfolio as noted above.

  1. Inventories

The following table summarizes the details of the Company’s inventory:

(in millions) July 30, 2022 January 29, 2022 July 31, 2021
Raw materials $ 129.0 $ 75.8 $ 106.4
Merchandise inventories 2,061.8 1,984.6 1,898.3
Total inventories $ 2,190.8 $ 2,060.4 $ 2,004.7

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  1. Leases

The Company deferred substantially all of its rent payments due in the months of April 2020 and May 2020. As of July 30, 2022, the Company had approximately $7 million of deferred rent payments remaining primarily in the UK. This remaining deferred rent is expected to be substantially repaid by the end of Fiscal 2023. The Company has not recorded any provision for interest or penalties which may arise as a result of these deferrals, as management does not believe payment for any such interest or penalties to be probable. In April 2020, the FASB granted guidance (hereinafter, the practical expedient) permitting an entity to choose to forgo the evaluation of the enforceable rights and obligations of the original lease contract, specifically in situations where rent concessions have been agreed to with landlords as a result of COVID-19. Instead, the entity may account for COVID-19 related rent concessions, whatever their form (e.g. rent deferral, abatement or other) either: a) as if they were part of the enforceable rights and obligations of the parties under the existing lease contract; or b) as lease modifications. In accordance with this practical expedient, the Company elected not to account for any concessions granted by landlords as a result of COVID-19 as lease modifications. Rent abatements under the practical expedient would be recorded as a negative variable lease cost. The Company negotiated with substantially all of its landlords and has received certain concessions in the form of rent deferrals and other lease or rent modifications. In addition, the Company recorded lease expense during the deferral periods in accordance with its existing policies.

Total lease costs consist of the following:

13 weeks ended 26 weeks ended
(in millions) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021
Operating lease cost $ 99.2 $ 109.4 $ 196.6 $ 215.0
Short-term lease cost 11.3 5.6 24.0 6.4
Variable lease cost 29.0 30.9 58.4 61.5
Sublease income (0.4) (0.5) (1.0) (1.2)
Total lease cost $ 139.1 $ 145.4 $ 278.0 $ 281.7
  1. Goodwill and intangibles

Goodwill and other indefinite-lived intangible assets, such as indefinite-lived trade names, are evaluated for impairment annually. Additionally, if events or conditions indicate the carrying value of a reporting unit or an indefinite-lived intangible asset may be greater than its fair value, the Company would evaluate the asset for impairment at that time. Impairment testing compares the carrying amount of the reporting unit or other intangible assets with its fair value. When the carrying amount of the reporting unit or other intangible assets exceeds its fair value, an impairment charge is recorded.

Fiscal 2022

During the 13 weeks ended May 1, 2021, the Company did not identify any events or conditions that would indicate that it was more likely than not that the carrying values of the reporting units and indefinite-lived trade names exceed their fair values.

In connection with the acquisition of Rocksbox on March 29, 2021, the Company recognized $11.6 million of definite-lived intangible assets and $4.6 million of goodwill, which are reported in the North America reportable segment. The weighted-average amortization period of the definite-lived intangibles assets acquired is eight years.

During the 13 weeks ended July 31, 2021, the Company completed its annual evaluation of its indefinite-lived intangible assets, including goodwill and trade names, and through the qualitative assessment the Company did not identify any events or conditions that would indicate that it was more likely than not that the carrying values of the reporting units and indefinite-lived trade names exceeded their fair values. Additionally, the Company completed its quarterly triggering event assessment and determined that no triggering events had occurred in the second quarter of Fiscal 2022 requiring interim impairment assessments for all reporting units with goodwill and indefinite-lived intangible assets.

In connection with the acquisition of Diamonds Direct on November 17, 2021, the Company recognized $126.0 million of indefinite-lived intangible assets related to the Diamonds Direct trade name and $243.8 million of goodwill, which are reported in the North America reportable segment. Refer to Note 4 for additional information.

Fiscal 2023

During the 13 weeks ended April 30, 2022, the Company did not identify any events or conditions that would indicate that it was more likely than not that the carrying values of the reporting units and indefinite-lived trade names exceed their fair values.

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During the 13 weeks ended July 30, 2022, the Company completed its annual evaluation of its indefinite-lived intangible assets, including goodwill and trade names, and through the qualitative assessment the Company did not identify any events or conditions that would indicate that it was more likely than not that the carrying values of the reporting units and indefinite-lived trade names exceeded their fair values. Additionally, the Company completed its quarterly triggering event assessment and determined that no triggering events had occurred in the second quarter of Fiscal 2023 requiring interim impairment assessments for all reporting units with goodwill and indefinite-lived intangible assets.

Goodwill

The following table summarizes the Company’s goodwill by reportable segment:

(in millions) North America
Balance at January 29, 2022 (1) $ 484.6
Acquisitions (2) 1.8
Balance at July 30, 2022 (1) $ 486.4

(1)    The carrying amount of goodwill is presented net of accumulated impairment losses of $576.0 million as of July 30, 2022 and January 29, 2022.

(2)    The change in goodwill during the period primarily represents an increase related to the finalization of the purchase price consideration of Diamonds Direct. Refer to Note 4 for additional information.

Intangibles

Definite-lived intangible assets include trade names, technology and customer relationship assets. Indefinite-lived intangible assets consist of trade names. Both definite and indefinite-lived assets are recorded within intangible assets, net, on the condensed consolidated balance sheets. Intangible liabilities, net, consists of unfavorable contracts and is recorded within accrued expenses and other current liabilities and other liabilities on the condensed consolidated balance sheets.

The following table provides additional detail regarding the composition of intangible assets and liabilities:

July 30, 2022 January 29, 2022 July 31, 2021
(in millions) Gross <br>carrying <br>amount Accumulated <br>amortization Net <br>carrying <br>amount Gross <br>carrying <br>amount Accumulated <br>amortization Net <br>carrying <br>amount Gross <br>carrying <br>amount Accumulated <br>amortization Net <br>carrying <br>amount
Intangible assets, net:
Definite-lived intangible assets $ 15.8 $ (6.6) $ 9.2 $ 15.8 $ (5.3) $ 10.5 $ 17.2 $ (5.4) $ 11.8
Indefinite-lived intangible assets (1) 303.6 — 303.6 303.7 — 303.7 177.9 — 177.9
Total intangible assets, net $ 319.4 $ (6.6) $ 312.8 $ 319.5 $ (5.3) $ 314.2 $ 195.1 $ (5.4) $ 189.7
Intangible liabilities, net $ (38.0) $ 31.7 $ (6.3) $ (38.0) $ 30.8 $ (7.2) $ (38.0) $ 30.0 $ (8.0)

(1) The change in the indefinite-lived intangible asset balances during the periods presented was due to the addition of Diamonds Direct trade name of $126.0 million and the impact of foreign currency translation.

  1. Derivatives

Derivative transactions are used by Signet for risk management purposes to address risks inherent in Signet’s business operations and sources of financing. The main risks arising from Signet’s operations are market risk including foreign currency risk, commodity risk, liquidity risk and interest rate risk. Signet uses derivative financial instruments to manage and mitigate certain of these risks under policies reviewed and approved by the Board. Signet does not enter into derivative transactions for speculative purposes.

Market risk

Signet generates revenues and incurs expenses in US dollars, Canadian dollars and British pounds. As a portion of the International segment purchases and purchases made by the Canadian operations of the North America segment are denominated in US dollars, Signet enters into forward foreign currency exchange contracts and foreign currency swaps to manage this exposure to the US dollar.

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Signet holds a fluctuating amount of British pounds and Canadian dollars reflecting the cash generative characteristics of operations. Signet’s objective is to minimize net foreign exchange exposure to the condensed consolidated statements of operations on non-US dollar denominated items through managing cash levels, non-US dollar denominated intra-entity balances and foreign currency swaps. In order to manage the foreign exchange exposure and minimize the level of funds denominated in British pounds and Canadian dollars, dividends are paid regularly by subsidiaries to their immediate holding companies and excess British pounds and Canadian dollars are sold in exchange for US dollars.

Signet’s policy is to reduce the impact of precious metal commodity price volatility on operating results through the use of outright forward purchases of, or by entering into options to purchase, precious metals within treasury guidelines approved by the Board. In particular, when price and volume warrants such actions, Signet undertakes hedging of its requirements for gold through the use of forward purchase contracts, options and net zero premium collar arrangements (a combination of forwards and option contracts).

Liquidity risk

Signet’s objective is to ensure that it has access to, or the ability to generate, sufficient cash from either internal or external sources in a timely and cost-effective manner to meet its commitments as they become due and payable. Signet manages liquidity risks as part of its overall risk management policy. Management produces forecasting and budgeting information that is reviewed and monitored by the Board. Cash generated from operations and external financing are the main sources of funding, which supplement Signet’s resources in meeting liquidity requirements.

The primary external sources of funding are an asset-based credit facility and senior unsecured notes as described in Note 18.

Interest rate risk

Signet has exposure to movements in interest rates associated with cash and borrowings. Signet may enter into various interest rate protection agreements in order to limit the impact of movements in interest rates.

Credit risk and concentrations of credit risk

Credit risk represents the loss that would be recognized at the reporting date if counterparties failed to perform as contracted. Signet does not anticipate non-performance by counterparties of its financial instruments. Signet does not require collateral or other security to support cash investments or financial instruments with credit risk; however, it is Signet’s policy to only hold cash and cash equivalent investments and to transact financial instruments with financial institutions with a certain minimum credit rating. As of July 30, 2022, management does not believe Signet is exposed to any significant concentrations of credit risk that arise from cash and cash equivalent investments, derivatives or accounts receivable.

Commodity and foreign currency risks

The following types of derivative financial instruments are utilized by Signet to mitigate certain risk exposures related to changes in commodity prices and foreign exchange rates:

Forward foreign currency exchange contracts (designated) — These contracts, which are principally in US dollars, are entered into to limit the impact of movements in foreign exchange rates on forecasted foreign currency purchases. The total notional amount of these foreign currency contracts outstanding as of July 30, 2022 was $20.9 million (January 29, 2022 and July 31, 2021: $11.2 million and $21.6 million, respectively). These contracts have been designated as cash flow hedges and will be settled over the next 12 months (January 29, 2022 and July 31, 2021: 10 months and 12 months, respectively).

Forward foreign currency exchange contracts (undesignated) — Foreign currency contracts not designated as cash flow hedges are used to limit the impact of movements in foreign exchange rates on recognized foreign currency payables and to hedge currency flows through Signet’s bank accounts to mitigate Signet’s exposure to foreign currency exchange risk in its cash and borrowings. The total notional amount of these foreign currency contracts outstanding as of July 30, 2022 was $93.7 million (January 29, 2022 and July 31, 2021: $93.8 million and $97.2 million, respectively).

Commodity forward purchase contracts and net zero premium collar arrangements (designated) — These contracts are entered into to reduce Signet’s exposure to significant movements in the price of the underlying precious metal raw materials. Trading for these contracts was suspended during Fiscal 2022 due to the commodity price environment and there were no commodity derivative contracts outstanding as of July 30, 2022, January 29, 2022, and July 31, 2021.

The bank counterparties to the derivative instruments expose Signet to credit-related losses in the event of their non-performance. However, to mitigate that risk, Signet only contracts with counterparties that meet certain minimum requirements under its counterparty risk assessment process. As of July 30, 2022, Signet believes that this credit risk did not materially change the fair value of the foreign currency or commodity contracts.

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The following table summarizes the fair value and presentation of derivative instruments in the condensed consolidated balance sheets:

Fair value of derivative assets
(in millions) Balance sheet location July 30, 2022 January 29, 2022 July 31, 2021
Derivatives designated as hedging instruments:
Foreign currency contracts Other current assets $ 1.0 $ 0.3 $ —
Derivatives not designated as hedging instruments:
Foreign currency contracts Other current assets 0.9 — 0.9
Total derivative assets $ 1.9 $ 0.3 $ 0.9 Fair value of derivative liabilities
--- --- --- --- --- --- --- ---
(in millions) Balance sheet location July 30, 2022 January 29, 2022 July 31, 2021
Derivatives designated as hedging instruments:
Foreign currency contracts Other current liabilities $ — $ — $ (0.2)
Derivatives not designated as hedging instruments:
Foreign currency contracts Other current liabilities — (1.3) —
Total derivative liabilities $ — $ (1.3) $ (0.2)

Derivatives designated as cash flow hedges

The following table summarizes the pre-tax gains (losses) recorded in AOCI for derivatives designated in cash flow hedging relationships:

(in millions) July 30, 2022 January 29, 2022 July 31, 2021
Foreign currency contracts $ 2.0 $ 0.5 $ (0.6)
Commodity contracts — — (0.2)
Gains (losses) recorded in AOCI $ 2.0 $ 0.5 $ (0.8)

The following tables summarize the effect of derivative instruments designated as cash flow hedges on OCI and the condensed consolidated statements of operations:

Foreign currency contracts

13 weeks ended 26 weeks ended
(in millions) Statement of operations caption July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021
Gains (losses) recorded in AOCI, beginning of period $ 1.7 $ (0.6) $ 0.5 $ (0.7)
Current period gains (losses) recognized in OCI 0.6 (0.2) 1.8 (0.2)
Losses (gains) reclassified from AOCI to earnings Cost of sales (1) (0.3) 0.2 (0.3) 0.3
Gains (losses) recorded in AOCI, end of period $ 2.0 $ (0.6) $ 2.0 $ (0.6)

Commodity contracts

13 weeks ended 26 weeks ended
(in millions) Statement of operations caption July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021
Gains (losses) recorded in AOCI, beginning of period $ — $ (0.4) $ — $ (0.4)
Current period gains (losses) recognized in OCI — 0.1 — —
Losses (gains) reclassified from AOCI to earnings Cost of sales (1) — 0.1 — 0.2
Gains (losses) recorded in AOCI, end of period $ — $ (0.2) $ — $ (0.2)

(1)    Refer to the condensed consolidated statements of operations for total amounts of each financial statement caption impacted by cash flow hedges.

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There were no discontinued cash flow hedges during the 26 weeks ended July 30, 2022 and July 31, 2021 as all forecasted transactions are expected to occur as originally planned. As of July 30, 2022, based on current valuations, the Company expects approximately $1.8 million of net pre-tax derivative gains to be reclassified out of AOCI into earnings within the next 12 months.

Derivatives not designated as hedging instruments

The following table presents the effects of the Company’s derivatives instruments not designated as cash flow hedges in the condensed consolidated statements of operations:

13 weeks ended 26 weeks ended
(in millions) Statement of operations caption July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021
Foreign currency contracts Other operating income (expense) $ (2.4) $ — $ (7.2) $ 0.9
  1. Fair value measurement

The estimated fair value of Signet’s financial instruments held or issued to finance Signet’s operations is summarized below. Certain estimates and judgments were required to develop the fair value amounts. The fair value amounts shown below are not necessarily indicative of the amounts that Signet would realize upon disposition nor do they indicate Signet’s intent or ability to dispose of the financial instrument. Assets and liabilities that are carried at fair value are required to be classified and disclosed in one of the following three categories:

Level 1—quoted market prices in active markets for identical assets and liabilities

Level 2—observable market based inputs or unobservable inputs that are corroborated by market data

Level 3—unobservable inputs that are not corroborated by market data

Signet determines fair value based upon quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. The methods Signet uses to determine fair value on an instrument-specific basis are detailed below:

July 30, 2022 January 29, 2022 July 31, 2021
(in millions) Carrying Value Level 1 Level 2 Carrying Value Level 1 Level 2 Carrying Value Level 1 Level 2
Assets:
US Treasury securities $ 3.4 $ 3.4 $ — $ 4.5 $ 4.5 $ — $ 5.1 $ 5.1 $ —
Foreign currency contracts 1.9 — 1.9 0.3 — 0.3 0.9 — 0.9
US government agency securities 2.0 — 2.0 2.0 — 2.0 2.0 — 2.0
Corporate bonds and notes 4.5 — 4.5 5.8 — 5.8 6.2 — 6.2
Total assets $ 11.8 $ 3.4 $ 8.4 $ 12.6 $ 4.5 $ 8.1 $ 14.2 $ 5.1 $ 9.1
Liabilities:
Foreign currency contracts $ — $ — $ — $ (1.3) $ — $ (1.3) $ (0.2) $ — $ (0.2)
Total liabilities $ — $ — $ — $ (1.3) $ — $ (1.3) $ (0.2) $ — $ (0.2)

Investments in US Treasury securities are based on quoted market prices for identical instruments in active markets, and therefore were classified as Level 1 measurements in the fair value hierarchy. Investments in US government agency securities and corporate bonds and notes are based on quoted prices for similar instruments in active markets, and therefore were classified as Level 2 measurements in the fair value hierarchy. The fair value of derivative financial instruments has been determined based on market value equivalents at the balance sheet date, taking into account the current interest rate environment, foreign currency forward rates or commodity forward rates, and therefore were classified as Level 2 measurements in the fair value hierarchy. See Note 16 for additional information related to the Company’s derivatives.

The carrying amounts of cash and cash equivalents, accounts receivable, other current assets, accounts payable, accrued expenses and other current liabilities, and income taxes approximate fair value because of the short-term maturity of these amounts.

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The fair values of long-term debt instruments, excluding revolving credit facilities, were determined using quoted market prices in inactive markets based upon current observable market interest rates and therefore were classified as Level 2 measurements in the fair value hierarchy. The carrying value of the ABL Revolving Facility (as defined in Note 18) approximates fair value based on the nature of the instrument and its variable interest rate, which is primarily Level 2 inputs. The following table provides a summary of the carrying amount and fair value of outstanding debt:

July 30, 2022 January 29, 2022 July 31, 2021
(in millions) Carrying <br>Value Fair Value Carrying <br>Value Fair Value Carrying <br>Value Fair Value
Long-term debt:
Senior notes (Level 2) $ 147.2 $ 146.2 $ 147.1 $ 150.0 $ 146.9 $ 152.7
  1. Loans, overdrafts and long-term debt
(in millions) July 30, 2022 January 29, 2022 July 31, 2021
Debt:
Senior unsecured notes due 2024, net of unamortized discount $ 147.7 $ 147.7 $ 147.6
Other loans and bank overdrafts — — 0.4
Gross debt $ 147.7 $ 147.7 $ 148.0
Less: Current portion of loans and overdrafts — — (0.4)
Less: Unamortized debt issuance costs (0.5) (0.6) (0.7)
Total long-term debt $ 147.2 $ 147.1 $ 146.9

Senior unsecured notes due 2024

On May 19, 2014, Signet UK Finance plc (“Signet UK Finance”), a wholly owned subsidiary of the Company, issued $400 million aggregate principal amount of its 4.70% senior unsecured notes due in 2024 (the “Senior Notes”). The Senior Notes were issued under an effective registration statement previously filed with the SEC. The Senior Notes are jointly and severally guaranteed, on a full and unconditional basis, by the Company and by certain of the Company’s wholly owned subsidiaries.

On September 5, 2019, Signet UK Finance announced the commencement of a tender offer to purchase any and all of its outstanding Senior Notes (the “Tender Offer”). Signet UK Finance tendered $239.6 million of the Senior Notes, representing a purchase price of $950.00 per $1,000.00 in principal, leaving $147.8 million of the Senior Notes outstanding after the Tender Offer.

Asset-based credit facility

On September 27, 2019, the Company entered into a senior secured asset-based credit facility consisting of (i) a revolving credit facility in an aggregate committed amount of $1.5 billion (as amended to the date hereto, the “ABL Revolving Facility”) and (ii) a first-in last-out term loan facility in an aggregate principal amount of $100.0 million (the “FILO Term Loan Facility” and, together with the ABL Revolving Facility, the “ABL Facility”). During Fiscal 2021, the Company fully repaid the FILO Term Loan Facility.

On July 28, 2021, the Company entered into the Second Amendment to the Credit Agreement (the “Second Amendment”) to amend the ABL Facility. The Second Amendment extended the maturity of the ABL Facility from September 27, 2024 to July 28, 2026 and allows the Company to increase the size of the ABL Facility by up to $600 million.

The Company had available borrowing capacity of $1.3 billion on the ABL Revolving Facility as of July 30, 2022.

  1. Warranty reserve

The North America segment provides a product lifetime diamond guarantee as long as six-month inspections are performed and certified by an authorized store representative. Provided the customer has complied with the six-month inspection policy, the Company will replace, at no cost to the customer, any stone that chips, breaks or is lost from its original setting during normal wear. Management estimates the warranty accrual based on the lag of actual claims experience and the costs of such claims, inclusive of labor and material. A similar product lifetime guarantee is also provided on color gemstones. The warranty reserve for diamond and gemstone guarantees, included in accrued expenses and other current liabilities and other non-current liabilities, is as follows:

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13 weeks ended 26 weeks ended
(in millions) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021
Warranty reserve, beginning of period $ 37.7 $ 35.5 $ 36.0 $ 37.3
Warranty expense 3.4 1.5 8.1 2.2
Utilized (1) (2.6) (2.3) (5.6) (4.8)
Warranty reserve, end of period $ 38.5 $ 34.7 $ 38.5 $ 34.7

(1)     Includes impact of foreign exchange translation.

(in millions) July 30, 2022 January 29, 2022 July 31, 2021
Disclosed as:
Other current liabilities $ 10.8 $ 10.2 $ 9.9
Other liabilities - non-current 27.7 25.8 24.8
Total warranty reserve $ 38.5 $ 36.0 $ 34.7
  1. Other operating and non-operating income (expense)

The following table provides the components of other operating income (expense) for the 13 and 26 weeks ended July 30, 2022 and July 31, 2021:

13 weeks ended 26 weeks ended
(in millions) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021
Litigation charges (1) $ — $ — $ (190.0) $ —
Interest income from customer in-house finance receivables (2) — 2.5 — 6.5
UK government grants — 6.5 — 6.5
Other (0.6) 1.4 (1.0) (0.3)
Other operating income (expense) $ (0.6) $ 10.4 $ (191.0) $ 12.7

(1)    See Note 21 for additional information.

(2)    See Note 12 for additional information.

The following table provides the components of other non-operating income (expense) for the 13 and 26 weeks ended July 30, 2022 and July 31, 2021:

13 weeks ended 26 weeks ended
(in millions) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021
Pension settlement (1) $ (0.9) $ — $ (132.8) $ —
Other (1.5) 0.1 (4.1) 0.2
Other non-operating income (expense) $ (2.4) $ 0.1 $ (136.9) $ 0.2

(1)    See Note 22 for additional information.

  1. Commitments and contingencies

Legal proceedings

Employment practices

In March 2008, a group of private plaintiffs (the “Claimants”) filed a class and collective action lawsuit for an unspecified amount against Sterling Jewelers, Inc. (“SJI”), a subsidiary of Signet, in the US District Court for the Southern District of New York (“SDNY”), alleging that US store-level employment practices as to compensation and promotions discriminate on the basis of gender in purported violation of Title VII of the Civil Rights Act of 1964 (“Title VII”) and the Equal Pay Act (“EPA”). In June 2008, the SDNY referred the matter to private arbitration with the American Arbitration Association (“AAA”) where the Claimants sought to proceed on a class-wide basis. On February 2, 2015, the arbitrator issued a Class Determination Award in which she certified a class (estimated to include approximately 70,000 class members at the time) for the Claimants’ disparate impact claims for declaratory and injunctive relief under Title VII. On February 29, 2016, the arbitrator granted Claimants’ Motion for Conditional Certification of Claimants’ EPA Claims and Authorization of Notice, and notice to EPA collective action members was issued on May 3, 2016. The opt-in period for the EPA collective action closed on August 1, 2016, and the number of valid opt-in EPA Claimants is believed to be approximately 9,124. SJL challenged the arbitrator’s Class Determination Award with the SDNY. Although the SDNY vacated the

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Class Determination Award on January 15, 2018, on appeal the US Court of Appeals for the Second Circuit (“Second Circuit”) held that the SDNY erred and remanded the case to the SDNY to decide whether the Arbitrator erred in certifying an opt-out, as opposed to a mandatory, class for declaratory and injunctive relief. On January 27, 2021 the SDNY ordered the case remanded to the AAA for further proceedings in arbitration on a class-wide basis. Subsequently, the arbitrator retired, and the parties selected a new arbitrator to oversee the proceedings moving forward. On October 8, 2021, the newly selected arbitrator issued an amended case management plan and scheduled the arbitration hearing to begin on September 5, 2022. SJI denies the allegations of the Claimants and has been defending the case vigorously.

On June 8, 2022, SJI and the Claimants reached a settlement agreement, which is subject to preliminary and final approval after notice to the class. The proposed settlement provides for the dismissal of the arbitration with prejudice and includes payments totaling approximately $175 million. As a result of the proposed settlement, the Company recorded a pre-tax charge of $190 million within other operating expense in the condensed consolidated statement of operations during the first quarter ended April 30, 2022. The settlement charge includes the payments to the Claimants, estimated employer payroll taxes, class administration fees and Claimants’ counsel attorney fees and costs. The arbitrator issued a preliminary approval of the settlement agreement on June 23, 2022 and scheduled a hearing for final approval of the settlement for November 15, 2022. If the agreement is approved by the arbitrator and confirmed by the SDNY shortly after the final approval hearing, the Company expects to fund the settlement in the fourth quarter of Fiscal 2023.

On May 4, 2017, without any findings of liability or wrongdoing, SJI entered into a Consent Decree with the Equal Employment Opportunity Commission (“EEOC”) settling a previously disclosed lawsuit that alleged that SJI engaged in intentional and disparate impact gender discrimination with respect to pay and promotions of female retail store employees since January 1, 2003. On May 4, 2017 the US District Court for the Western District of New York (“WDNY”) approved and entered the Consent Decree jointly proposed by the EEOC and SJI. The Consent Decree resolves all of the EEOC’s claims against SJI in this litigation, and imposes certain obligations on SJI including the appointment of an employment practices expert to review specific policies and practices, as well as obligations relative to training, notices, reporting and record-keeping. The Consent Decree does not require an outside third-party to monitor or require any monetary payment. The duration of the Consent Decree initially was three years and three months, set to expire on August 4, 2020, but on March 11, 2020, the WDNY approved a limited extension until November 4, 2021 of a few aspects of the Consent Decree terms regarding SJI’s compensation practices, and incorporating its implementation of a new retail team member compensation program into the overall Consent Decree framework. On October 11, 2021, SJI and the EEOC agreed to a tolling stipulation, which was submitted on October 22, 2021 and entered by the WDNY on November 4, 2021, and which extended certain deadlines of the Consent Decree until December 4, 2021. SJI and the EEOC have agreed to additional extensions of the tolling stipulation while the parties negotiated the terms of an amended Consent Decree for the limited purpose of completing certain statistical analyses on SJI’s initial pay and merit increase practices for its retail store employees that the employment practices expert was required to conduct during the term of the Consent Decree. The parties filed the Second Amended Consent Decree on April 15, 2022 and it was entered by the WDNY on April 22, 2022. The Second Amended Consent Decree is currently scheduled to expire on November 19, 2022.

Previously settled matters

Shareholder actions

As previously reported, on March 16, 2020, the Company entered into an agreement to settle a consolidated class action filed against the Company and certain former executives filed by various shareholders of the Company (the “Consolidated Action”). As a result of the settlement, the Company recorded a charge of $33.2 million during the fourth quarter of Fiscal 2020 in other operating income, net, which includes administration costs of $0.6 million and was recorded net of expected recoveries from the Company’s insurance carriers of $207.4 million. The settlement was fully funded in the second quarter of Fiscal 2021, and the Company contributed approximately $35 million of the $240 million settlement payment, net of insurance proceeds and including the impact of foreign currency. The Court granted final approval of the settlement on July 21, 2020.

Four additional actions were filed against the Company and certain former executives largely based on the same allegations as the Consolidated Action. Soon thereafter these four actions were filed, the Court entered orders staying these actions until entry of final judgment in the Consolidated Action. On June 27, 2020, the Company and plaintiffs in the four stayed actions (the “Opt-Out Plaintiffs”) reached a settlement in principle, which was finalized on July 10, 2020 requiring the Opt-Out Plaintiffs to rejoin the Consolidated Action. The Company recorded pre-tax charges related to the settlement of $7.5 million (net of expected insurance recovery) and $1.7 million during Fiscal 2021 and Fiscal 2022, respectively. The final amount owed to the Opt-Out Plaintiffs was paid during the first quarter of Fiscal 2023.

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  1. Retirement plans

Signet operates a defined benefit pension plan in the UK (the “Pension Scheme”) which ceased to admit new employees effective April 2004. The Pension Scheme provides benefits to participating eligible employees. Beginning in Fiscal 2014, a change to the benefit structure was implemented and members’ benefits that accumulate after that date were based upon career average salaries, whereas previously, all benefits were based on salaries at retirement. In September 2017, the Company approved an amendment to freeze benefit accruals under the Pension Scheme in an effort to reduce anticipated future pension expense. As a result of this amendment, the Company froze the pension plan for all participants with an effective date of October 2019 as elected by the plan participants. All future benefit accruals under the plan have thus ceased as of that date.

On July 29, 2021, Signet Group Limited (“SGL”), a wholly-owned subsidiary of the Company, entered into an agreement (the “Agreement”) with Signet Pension Trustee Limited (the “Trustee”), as trustee of the Pension Scheme, to facilitate the Trustee entering into a bulk purchase annuity policy ("BPA") securing accrued liabilities under the Pension Scheme with Rothesay Life Plc ("Rothesay") and subsequently, to wind up the Pension Scheme. The BPA is held by the Trustee as an asset of the Pension Scheme (the "buy-in") in anticipation of Rothesay subsequently (and in accordance with the terms of the BPA) issuing individual annuity contracts to each of the 1,909 Pension Scheme members (or their eligible beneficiaries) ("Transferred Participants") covering their accrued benefits (a full “buy-out”), following which the BPA will terminate and the Trustee will wind up the Pension Scheme (collectively, the “Transactions”).

Under the terms of the Agreement, SGL has contributed £14.0 million to date (approximately $18.9 million) to the Pension Scheme to enable the Trustee to pay for any and all costs incurred by the Trustee as part of the Transactions. The initial contribution of £7.0 million (approximately $9.7 million) was paid on August 4, 2021, and the Trustee transferred substantially all Plan assets into the BPA on August 9, 2021. SGL contributed an additional £7.0 million (approximately $9.2 million) to the Pension Scheme on March 23, 2022 to facilitate the Trustee funding the balancing premium to Rothesay. SGL is expected to contribute up to an additional £2.0 million (approximately $2.4 million) to the Pension Scheme to enable the Trustee to pay the remaining costs of the Transactions and wind up the Pension Scheme.

On April 22, 2022, the Trustee entered into a Deed Poll agreement with Rothesay and a Deed of Assignment with SGL to facilitate the assignment of individual policies for a significant portion of the Transferred Participants (“Assigned Participants”). The Deed Poll and Deed of Assignment, collectively, irrevocably relieve SGL and the Trustee of its obligations under the policies to the Assigned Participants. In addition, during the first quarter of Fiscal 2023, certain Transferred Participants elected to take a voluntary wind-up lump sum distribution and thus no further liability exists for this group.

In the first quarter of Fiscal 2023, as a result of the Deed Poll and Deed of Assignment, as well as the voluntary lump sum distributions, the Company has determined that a transfer of all remaining risks has occurred with respect to these groups of participants. Thus, management concluded that the Company triggered settlement accounting and performed a remeasurement of the Pension Scheme, which resulted in a non-cash, pre-tax settlement charge of $131.9 million recorded within other non-operating income (expense) within the condensed consolidated statement of operations during the first quarter of Fiscal 2023.

In the second quarter of Fiscal 2023, as a result of additional voluntary lump sum distributions made from the Pension Scheme, the Company has determined that a transfer of all remaining risks has occurred with respect to this group of participants. Thus, management concluded that the Company triggered settlement accounting which resulted in a non-cash, pre-tax settlement charge of $0.9 million recorded within other non-operating income (expense) within the condensed consolidated statement of operations during the second quarter of Fiscal 2023.

The settlement charges recorded in the first half of Fiscal 2023 relate to the pro-rata recognition of previously unrecognized actuarial losses and prior service costs out of AOCI and into earnings associated with the Assigned Participants, as well as the voluntary lump sum distributions noted above. The Company expects to settle the remaining obligations and wind up the Pension Scheme by the end of Fiscal 2023.

The components of net periodic pension benefit cost for the Pension Scheme are as follows:

13 weeks ended 26 weeks ended
(in millions) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021
Components of net periodic benefit (cost) income:
Interest cost $ — $ (1.0) (0.9) (2.0)
Expected return on plan assets (0.3) 1.3 0.3 2.6
Amortization of unrecognized actuarial losses (1.1) (0.2) (2.0) (0.4)
Amortization of unrecognized net prior service costs (0.1) (0.1) (0.2) (0.1)
Pension settlement loss (0.9) — (132.8) —
Total net periodic benefit (cost) income $ (2.4) $ — $ (135.6) $ 0.1

All components of net periodic benefit cost are charged to other non-operating income (expense), in the condensed consolidated statements of operations.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The discussion and analysis in this Item 2 is intended to provide the reader with information that will assist in understanding the significant factors affecting the Company’s consolidated operating results, financial condition, liquidity and capital resources. This discussion should be read in conjunction with our condensed consolidated financial statements and notes to the condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q, as well as the financial and other information included in Signet’s Fiscal 2022 Annual Report on Form 10-K filed with the SEC on March 17, 2022. This discussion contains certain forward-looking statements. The Company's actual results could materially differ from those discussed in these forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those discussed in the “Forward-Looking Statements” below and elsewhere in this report, as well as in the “Risk Factors” section herein and within Signet’s Fiscal 2022 Annual Report on Form 10-K.

This management's discussion and analysis provides comparisons of material changes in the condensed consolidated financial statements for the 13 and 26 weeks ended July 30, 2022 and July 31, 2021.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements which are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements based upon management's beliefs and expectations as well as on assumptions made by and data currently available to management, appear in a number of places throughout this document and include statements regarding, among other things, results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which Signet operates. The use of the words "expects," "intends," "anticipates," "estimates," "predicts," "believes," "should," "potential," "may," "preliminary," "forecast," "objective," "plan," or "target," and other similar expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to a number of risks and uncertainties which could cause the actual results to not be realized, including, but not limited to: difficulty or delay in executing or integrating an acquisition, including Blue Nile, or executing other major business or strategic initiatives, the negative impacts that the COVID-19 pandemic has had, and could have in the future, on Signet's business, financial condition, profitability and cash flows; the effect of steps we take in response to the pandemic; the severity, duration and potential resurgence of the pandemic (including through variants), including whether it is necessary to temporarily reclose our stores, distribution centers and corporate facilities or for our suppliers and vendors to temporarily reclose their facilities; the pace of recovery when the pandemic subsides and the heightened impact COVID-19 has on many of the risks described herein, including without limitation risks relating to disruptions in our supply chain, our ability to attract and retain labor especially if COVID-19 vaccine mandates are implemented, decelerating levels of consumer confidence and consumer behaviors such as willingness to patronize shopping centers and shifts in spending away from the jewelry category toward more experiential purchases such as travel, the impacts of the expiration of government stimulus on overall consumer spending, our level of indebtedness and covenant compliance, availability of adequate capital, our ability to execute our business plans, our lease obligations and relationships with our landlords, and asset impairments; general economic or market conditions, including impacts of , the cessation of government stimulus programs, or other pricing environment factors on the Company's commodity costs (including diamonds) or other operating costs; a prolonged slowdown in the growth of the jewelry market or a recession in the overall economy; financial market risks; a decline in consumer discretionary spending or deterioration in consumer financial position, including due to the impacts of inflation and rising prices on necessities such as gas and groceries; our ability to optimize Signet's transformation strategies; changes to regulations relating to customer credit; disruption in the availability of credit for customers and customer inability to meet credit payment obligations; our ability to achieve the benefits related to the outsourcing of the credit portfolio, including due to technology disruptions, future financial results and operating results and/or disruptions arising from changes to or termination of the relevant outsourcing agreements; deterioration in the performance of individual businesses or of the Company's market value relative to its book value, resulting in impairments of long-lived assets or intangible assets or other adverse financial consequences; the volatility of our stock price; the impact of financial covenants, credit ratings or interest volatility on our ability to borrow; our ability to maintain adequate levels of liquidity for our cash needs, including debt obligations, payment of dividends, planned share repurchases (including execution of accelerated share repurchases) and capital expenditures as well as the ability of our customers, suppliers and lenders to access sources of liquidity to provide for their own cash needs; changes in our credit rating; potential regulatory changes; future legislative and regulatory requirements in the US and globally relating to climate change, including any new climate related disclosure or compliance requirements, such as those recently proposed by the SEC; global economic conditions or other developments related to the United Kingdom's exit from the European Union; exchange rate fluctuations; the cost, availability of and demand for diamonds, gold and other precious metals, including any impact on the global market supply of diamonds due to the ongoing Russia-Ukraine conflict or related sanctions; stakeholder reactions to disclosure regarding the source and use of certain minerals; seasonality of Signet's business; the merchandising, pricing and inventory policies followed by Signet and its ability to manage inventory levels; Signet's relationships with suppliers including the ability to continue to utilize extended payment terms and the ability to obtain merchandise that customers wish to purchase; the failure to adequately address the impact of existing tariffs and/or the imposition of additional duties, tariffs, taxes and other charges or other barriers to trade or impacts from trade relations; the level of competition and promotional activity in the jewelry sector; our ability to optimize Signet's multi-year strategy to gain market share, expand and improve existing services,

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innovate and achieve sustainable, long-term growth; the maintenance and continued innovation of Signet's OmniChannel retailing and ability to increase digital sales, as well as management of its digital marketing costs; changes in consumer attitudes regarding jewelry and failure to anticipate and keep pace with changing fashion trends; changes in the supply and consumer acceptance of and demand for gem quality lab created diamonds and adequate identification of the use of substitute products in our jewelry; ability to execute successful marketing programs and manage social media; the ability to optimize Signet's real estate footprint; the ability to satisfy the accounting requirements for "hedge accounting," or the default or insolvency of a counterparty to a hedging contract; the performance of and ability to recruit, train, motivate and retain qualified team members - particularly in regions experiencing low unemployment rates; management of social, ethical and environmental risks; the reputation of Signet and its banners; inadequacy in and disruptions to internal controls and systems, including related to the migration to new information technology systems which impact financial reporting; security breaches and other disruptions to Signet's information technology infrastructure and databases; an adverse development in legal or regulatory proceedings or tax matters, including any new claims or litigation brought by employees, suppliers, consumers or shareholders, regulatory initiatives or investigations, and ongoing compliance with regulations and any consent orders or other legal or regulatory decisions; failure to comply with labor regulations; collective bargaining activity; changes in corporate taxation rates, laws, rules or practices in the US and jurisdictions in which Signet's subsidiaries are incorporated, including developments related to the tax treatment of companies engaged in Internet commerce or deductions associated with payments to foreign related parties that are subject to a low effective tax rate; risks related to international laws and Signet being a Bermuda corporation; risks relating to the outcome of pending litigation; our ability to protect our intellectual property or physical assets; changes in assumptions used in making accounting estimates relating to items such as extended service plans and pensions; or the impact of weather-related incidents, natural disasters, organized crime or theft, strikes, protests, riots or terrorism, acts of war (including the ongoing Russia-Ukraine conflict), or another public health crisis or disease outbreak, epidemic or pandemic on Signet's business.

For a discussion of these and other risks and uncertainties which could cause actual results to differ materially from those expressed in any forward looking statement, see the “Risk Factors” and “Forward-Looking Statements” sections of Signet’s Fiscal 2022 Annual Report on Form 10-K filed with the SEC on March 17, 2022 and quarterly reports on Form 10-Q and the “Safe Harbor Statements” in current reports on Form 8-K filed with the SEC. Signet undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances, except as required by law.

OVERVIEW

Signet Jewelers Limited (“Signet” or the “Company”) is the world’s largest retailer of diamond jewelry. Signet is incorporated in Bermuda. The Company, with 2,833 retail locations as of July 30, 2022, manages its business by geography, a description of which follows:

•The North America segment operates eight banners, with the majority operating through both online and brick and mortar retail operations. The segment had 2,400 locations in the US and 93 locations in Canada as of July 30, 2022.

◦In the US, the segment operates under the following banners: Kay (Kay Jewelers and Kay Outlet); Zales (Zales Jewelers and Zales Outlet); Jared (Jared The Galleria Of Jewelry and Jared Vault); Banter by Piercing Pagoda; Diamonds Direct; James Allen; and Rocksbox.

◦In Canada, the segment primarily operates under the Peoples banner (Peoples Jewellers).

•The International segment had 340 retail stores in the UK, Republic of Ireland and Channel Islands as of July 30, 2022, as well as maintains an online retail presence, for its principal banners, H. Samuel and Ernest Jones.

Certain Company activities are managed in the “Other” segment for financial reporting purposes, including the Company’s diamond sourcing function and its diamond polishing factory in Botswana. See Note 5 of Item 1 for additional information regarding the Company’s reportable segments, and see Item 1 of Signet’s Fiscal 2022 Annual Report on Form 10-K for further background and description of the Company’s business.

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Diamonds Direct acquisition

On November 17, 2021, the Company acquired all of the outstanding shares of Diamonds Direct USA Inc. (“Diamonds Direct”) for cash consideration of $503.1 million, net of cash acquired. Diamonds Direct is an off-mall, destination jeweler in the US operating with a highly productive, efficient operating model with demonstrated growth and profitability. Diamonds Direct has been immediately accretive to Signet following the acquisition date. Diamonds Direct's strong value proposition, extensive bridal offering and customer-centric, high-touch shopping experience is a destination for younger, luxury-oriented bridal shoppers. Diamonds Direct strategically expands Signet’s market in accessible luxury and bridal, provides access to a new customer base and furthers Signet’s opportunity to build lifetime customer relationships. Signet plans to grow Diamonds Direct while driving operating margin expansion over time through operating synergies in purchasing, targeted marketing and connected commerce.

Blue Nile acquisition

On August 19, 2022, the Company completed its acquisition of Blue Nile, Inc. (“Blue Nile”), subject to the terms of a stock purchase agreement (“Agreement”) entered into on August 5, 2022. The total cash consideration is $398.2 million, net of cash acquired, including purchase price adjustments for working capital, and is subject to customary post-closing adjustments per the Agreement. Blue Nile is a leading online retailer of engagement rings and fine jewelry with 23 physical showrooms throughout the US. The addition of Blue Nile will further bring Signet a younger, more affluent, and highly diverse customer to Signet’s banner portfolio that will expand Signet’s accessible luxury tier. The strategic acquisition of Blue Nile accelerates Signet's efforts to enhance its connected commerce capabilities and extend its digital leadership across the jewelry category – all to further achieve meaningful operating synergies for the consumers and create value for shareholders.

Overall performance

Signet’s total sales declined by 1.9% during the second quarter of Fiscal 2023 compared to the same period in Fiscal 2022, which is primarily driven by the impact of the heightened inflationary pressure on consumers’ discretionary spending, shifts in consumer spending to experiences and travel, the impacts of lapping benefits from last year’s government stimulus in the North America segment and the weakening of the British Pound in the International segment. The decline in organic sales when compared to prior year quarter was partially offset by the addition of Diamonds Direct to Signet’s portfolio in the fourth quarter of Fiscal 2022. The Company’s overall operating results continue to reflect sustainable enhancements to Signet’s connected commerce capabilities, accelerated services, digital marketing effectiveness and flexibility, the strength of Signet’s banner differentiation and inventory management. The Company’s focus on its connected commerce shopping experience, both online and in-store, helped improve average transaction values during the second quarter of Fiscal 2023, despite the decline in traffic and number of transactions. During the remainder of Fiscal 2023, the Company will continue to execute the initiatives under its Inspiring Brilliance strategy, which is focused on the achievement of sustainable, industry-leading growth. As described in the Purpose and Strategy section within Item 1 of Signet’s Fiscal 2022 Annual Report on Form 10-K filed with the SEC on March 17, 2022, through its Inspiring Brilliance strategy, the Company will focus on leveraging its core strengths that it developed over the past four years with the goal of creating a broader mid-market and increasing Signet’s share of that larger market as the industry leader.

Refer to the “Results of Operations” section below for further information on performance during the second quarter of Fiscal 2023.

Outlook

Following a year of heightened growth, jewelry industry revenues are expected to be flat to down slightly for the remainder of Fiscal 2023, as the pressure on consumer discretionary spending is expected to continue in the back half of Fiscal 2023. In addition, the Company anticipates that discretionary spending in jewelry will continue to be adversely impacted by rising prices on necessities such as gas and groceries, as well as less disposable income by consumers as a result of the expiration of government stimulus programs, particularly on the Company’s product assortments at lower price points. However, the magnitude and timing of both inflationary factors and the shift in spending are difficult to predict, as is whether these pressures will ultimately impact other product categories, including softening demand for products at higher price points. The Company believes that its banner value propositions and differentiation, including the addition of Diamonds Direct and Blue Nile to Signet’s portfolio, the strength of the Company’s product assortment and its investments in digital and flexible fulfillment capabilities are expected to continue fueling a positive response from customers across most merchandise categories and banners in Fiscal 2023. Furthermore, the Company will continue its diligent and effective efforts to drive structural cost savings and mitigate supply chain disruption.

The Company continues to monitor the additional potential impacts of the novel coronavirus (“COVID-19”) and other macroeconomic factors on its business, such as inflation and the conflict in Ukraine. Uncertainties exist that could continue to impact the Company’s results of operations or cash flows in the future, such as potential resurgence of COVID-19 in key trade areas, further pricing and inflationary environment changes impacting the Company (including, but not limited to, materials, labor, fulfillment and advertising costs) or the consumers’ ability to spend described above, the Company’s ability to recruit and retain qualified team members, organized retail crime, or extended duration of heightened unemployment in certain trade areas. See “Forward-Looking Statements” above as well as the “Risk Factors” section herein and in Signet’s Fiscal 2022 Annual Report on Form 10-K.

RESULTS OF OPERATIONS

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The following should be read in conjunction with the condensed consolidated financial statements and related notes in Item 1 of this Quarterly Report on Form 10-Q, as well as the financial and other information included in Signet’s Fiscal 2022 Annual Report on Form 10-K.

Comparison of Second Quarter Fiscal 2023 to Second Quarter Fiscal 2022

•Same store sales: Down 8.2%.

•Total sales: $1.75 billion, down 1.9%.

•Operating income: $186.8 million compared to $225.4 million in the prior year.

•Diluted earnings per share: $2.58 compared to $3.60 in the prior year.

Comparison of Year to Date Fiscal 2023 Year to Prior Year

•Same store sales: Down 3.0%.

•Total sales: $3.59 billion, up 3.3%.

•Operating income: $187.0 million compared to $394.1 million in the prior year.

•Diluted earnings per share: $0.90 compared to $5.84 in the prior year.

Second Quarter Year to Date
Fiscal 2023 Fiscal 2022 Fiscal 2023 Fiscal 2022
(in millions) % of sales % of sales % of sales % of sales
Sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales (1,090.2) (62.1) (1,070.5) (59.9) (2,204.8) (61.4) (2,080.9) (59.8)
Gross margin 664.7 37.9 717.6 40.1 1,388.4 38.6 1,396.0 40.2
Selling, general and administrative expenses (477.3) (27.2) (502.6) (28.1) (1,010.4) (28.1) (1,014.6) (29.2)
Other operating income (expense) (0.6) — 10.4 0.6 (191.0) (5.3) 12.7 0.4
Operating income 186.8 10.6 225.4 12.6 187.0 5.2 394.1 11.3
Interest expense, net (3.4) (0.2) (4.4) (0.2) (7.8) (0.2) (8.3) (0.2)
Other non-operating income (expense) (2.4) (0.1) 0.1 — (136.9) (3.8) 0.2 —
Income before income taxes 181.0 10.3 221.1 12.4 42.3 1.2 386.0 11.1
Income taxes (35.6) (2.0) 3.5 0.2 19.6 0.5 (23.0) (0.7)
Net income 8.3 % 12.6 % 1.7 % 10.4 %
Dividends on redeemable convertible preferred shares (8.6) nm (8.6) nm (17.2) nm (17.2) nm
Net income attributable to common shareholders 7.8 % 12.1 % 1.2 % 9.9 %

All values are in US Dollars.

nm    Not meaningful.

Second quarter sales

Signet's total sales decreased 1.9% year over year to $1.75 billion in the 13 weeks ended July 30, 2022, while total sales at constant exchange rates decreased 0.5%. Total sales were impacted by a decrease in the Company’s core business year over year, partially offset by the impacts of the Diamonds Direct acquisition in the fourth quarter of Fiscal 2022. The decline in core business primarily reflects the impacts of lapping benefits from last year’s US government stimulus on consumers’ discretionary spending as well as other factors noted in the overall performance section above. This trend was reflected in Signet’s same store sales which decreased 8.2%, compared to an increase of 97.4% in the prior year quarter.

eCommerce sales in the second quarter of Fiscal 2023 were $297.8 million, down $38.4 million or 11.4%, compared to $336.2 million in the prior year second quarter. eCommerce sales accounted for 17.0% of second quarter sales, down from 18.8% of total sales in the prior year second quarter. Brick and mortar same store sales decreased 7.4% from the prior year second quarter.

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The breakdown of the second quarter sales performance by segment is set out in the table below:

Change from previous year
Second Quarter of Fiscal 2023 Same <br>store <br>sales Non-same<br><br>store sales,<br><br>net (2) Total sales <br>at constant exchange rate Exchange <br>translation <br>impact Total <br>sales <br>as reported Total <br>sales <br>(in millions)
North America segment (8.7) % 7.1 % (1.6) % (0.2) % (1.8) % $ 1,616.4
International segment (1.5) % 2.3 % 0.8 % (15.4) % (14.6) % $ 111.6
Other segment (1) nm nm nm nm nm $ 26.9
Signet (8.2) % 7.7 % (0.5) % (1.4) % (1.9) % $ 1,754.9

(1)     Includes sales from Signet’s diamond sourcing initiative.

(2)    Includes sales from acquired businesses which were not included in the results for the full comparable periods presented.

nm Not meaningful.

Average merchandise transaction value (“ATV”) is defined as net merchandise sales on a same store basis divided by the total number of customer transactions. As such, changes from the prior year do not recompute within the table below.

Average Merchandise Transaction Value(1)(2) Merchandise Transactions
Average Value Change from previous year Change from previous year
Second Quarter Fiscal 2023 Fiscal 2022 Fiscal 2023 Fiscal 2022 Fiscal 2023 Fiscal 2022
North America segment $ 493 $ 449 10.8 % 10.0 % (19.2) % 70.1 %
International segment (3) £ 178 £ 168 6.0 % (4.5) % (6.9) % 89.5 %

(1)     Net merchandise sales within the North America segment include all merchandise product sales, net of discounts and returns. In addition, excluded from net merchandise sales are sales tax in the US, repairs, extended service plans, insurance, employee and other miscellaneous sales. As a result, the sum of the changes will not agree to change in same store sales.

(2)    Net merchandise sales within the International segment include all merchandise product sales, including value added tax (“VAT”), net of discounts and returns. In addition, excluded from net merchandise sales are repairs, warranty, insurance, employee and other miscellaneous sales. As a result, the sum of the changes will not agree to change in same store sales.

(3)    Amounts for the International segment are denominated in British pounds.

North America sales

The North America segment’s total sales were $1.62 billion compared to $1.65 billion in the prior year, or a decrease of 1.8%. This decline reflects the impacts of lapping benefits from last year’s government stimulus on consumers’ discretionary spending as well as other factors noted in the overall performance section above, partially offset by an increased ATV of 10.8% compared to prior year, and by the impacts of the Diamonds Direct acquisition in the fourth quarter of Fiscal 2022.

Same store sales decreased 8.7% compared to an increase of 97.6% in the prior year, which is reflective of the factors discussed above and resulted in the number of transactions decreasing by 19.2% year over year.

International sales

The International segment’s total sales decreased 14.6% to $111.6 million compared to $130.7 million in the prior year, primarily as a result of the weakening of the British Pound. Same store sales decreased 1.5% compared to an increase of 95.1% in the prior year. In the International segment, the ATV increased 6.0% year over year, while the number of transactions decreased 6.9%.

Year to date sales

Signet’s total sales increased 3.3% to $3.59 billion compared to $3.48 billion in the prior year, while total sales at constant exchange rates increased 4.1%. Signet’s same store sales decreased 3.0%, compared to an increase of 101.7% in the prior year. While Signet’s total sales increased primarily due to the addition of Diamonds Direct to Signet’s portfolio in the fourth quarter of Fiscal 2022, Signet’s core business declined due to a combination of factors discussed above, such as the impacts of lapping benefits from last year’s government stimulus on consumers’ discretionary spending.

eCommerce sales year to date were $618.3 million, down $64.2 million or 9.4%, compared to $682.5 million in the prior year. eCommerce sales accounted for 17.2% of year to date sales, down from 19.6% of total sales in the prior year. Brick and mortar same store sales decreased 1.2% from the prior period.

The decrease in eCommerce sales as of percentage of sales reflected increased traffic in the stores year over year, particularly in the UK due to the lifting of government imposed COVID restrictions in the prior year. The Company’s focus on its connected commerce shopping experience, both online and in-store, helped maintain conversion rates and improve the ATV throughout Fiscal 2023 year to date.

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The breakdown of the year-to-date sales performance is set out in the table below:

Change from previous year
Second Quarter of Fiscal 2023 Same <br>store <br>sales Non-same<br><br>store sales,<br><br>net (2) Total sales <br>at constant exchange rate Exchange <br>translation <br>impact Total <br>sales <br>as reported Total <br>sales <br>(in millions)
North America segment (4.8) % 6.7 % 1.9 % (0.1) % 1.8 % $ 3,321.4
International segment 32.2 % (0.4) % 31.8 % (14.0) % 17.8 % $ 221.6
Other segment (1) nm nm nm nm nm $ 50.2
Signet (3.0) % 7.1 % 4.1 % (0.8) % 3.3 % $ 3,593.2

(1)     Includes sales from Signet’s diamond sourcing initiative.

(2)    Includes sales from acquired businesses which were not included in the results for the full comparable periods presented.

nm Not meaningful.

As described above, changes from the prior year do not recompute within the table below.

Average Merchandise Transaction Value(1)(2) Merchandise Transactions
Average Value Change from previous year Change from previous year
Second Quarter Fiscal 2023 Fiscal 2022 Fiscal 2023 Fiscal 2022 Fiscal 2023 Fiscal 2022
North America segment $ 495 $ 434 15.1 % 12.4 % (18.9) % 79.7 %
International segment (3) £ 174 £ 167 4.8 % 0.6 % 25.9 % 36.4 %

(1)     Net merchandise sales within the North America segment include all merchandise product sales, net of discounts and returns. In addition, excluded from net merchandise sales are sales tax in the US, repair, extended service plan, insurance, employee and other miscellaneous sales. As a result, the sum of the changes will not agree to change in same store sales.

(2)    Net merchandise sales within the International segment include all merchandise product sales, including VAT, net of discounts and returns. In addition, excluded from net merchandise sales are repairs, warranty, insurance, employee and other miscellaneous sales. As a result, the sum of the changes will not agree to change in same store sales.

(3)    Amounts for the International segment are denominated in British pounds.

North America sales

The North America segment’s total sales were $3.32 billion compared to $3.26 billion in the prior year, up 1.8%. Same store sales decreased 4.8% compared to an increase of 106.9% in the prior year. North America’s ATV increased 15.1%, while the number of transactions decreased 18.9%. While North America’s total sales increased, primarily as a result of the addition of Diamonds Direct, same store sales declined due to a combination of factors such as the impacts of lapping benefits from last year’s government stimulus on consumers’ discretionary spending.

eCommerce sales decreased 9.4%, while brick and mortar same store sales decreased 3.7%.

International sales

The International segment’s total sales increased 17.8% to $221.6 million compared to $188.1 million in the prior year and increased 31.8% at constant exchange rates. Same store sales increased 32.2% compared to an increase of 42.1% in the prior year. The ATV increased 4.8% over prior year, while the number of transactions increased 25.9%. The increases in sales and the number of transactions reflect the reopening of all UK stores in April 2021 following the lifting of COVID restrictions, offset by the weakening of the British Pound. In the prior year, all UK stores temporarily closed on March 24, 2020 and began reopening in the second quarter of Fiscal 2022.

Gross margin

In the second quarter of Fiscal 2023, gross margin was $664.7 million or 37.9% of sales compared to $717.6 million or 40.1% of sales in the prior year comparable period. In the first half of Fiscal 2023, gross margin was $1.4 billion or 38.6% of sales compared to $1.4 billion or 40.2% of sales in the prior year comparable period. The decrease in gross margin rate for both the 13 and 26 weeks ended July 30, 2022, compared to the same periods in Fiscal 2022, reflects deleveraging of store occupancy costs as a result of the lower same store sales noted above and the strength of Diamonds Direct’s bridal business, which carries a lower relative margin. Merchandise margins within the Company’s organic banners were similar to prior year. In addition, the gross margin also reflects technology investments and the lapping of benefits received in the UK in Fiscal 2022 from COVID-related tax abatements. These decreases were partially offset by the continued benefits of cost savings across the Company.

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Selling, general and administrative expenses (“SG&A”)

In the second quarter of Fiscal 2023, SG&A was $477.3 million or 27.2% of sales compared to $502.6 million or 28.1% of sales in the prior year quarter. In the first half of Fiscal 2023, SG&A was $1.01 billion or 28.1% of sales compared to $1.01 billion or 29.2% of sales in the prior year comparable period. SG&A remained consistent for the 13 and 26 weeks ended July 30, 2022, compared to the prior year quarter. Increased spend for advertising and investments in digital/IT was offset by lower payroll-related costs and the benefits of structural cost savings, including from the Company’s restructured outsourced credit agreements finalized in the second quarter of Fiscal 2022. The improved SG&A as a percentage of sales was primarily driven by the cost savings programs, as well as the impact of the efficiency of Diamonds Direct’s operating model.

Other operating income (expense)

For the 13 and 26 weeks ended July 30, 2022, other operating expense was $0.6 million and $191.0 million, respectively, primarily driven by the pre-tax litigation charges of $190 million recorded in the first quarter. For the 13 and 26 weeks ended July 31, 2021, other operating income, net was $10.4 million and $12.7 million, respectively, primarily driven by interest income on the Company’s non-prime credit card portfolio and UK government subsidies granted for restrictions imposed on non-essential businesses.

Operating income

In the second quarter of Fiscal 2023, operating income was $186.8 million or 10.6% of sales, compared to $225.4 million or 12.6% of sales in the prior year second quarter. In the first half of Fiscal 2023, operating income was $187.0 million or 5.2% of sales compared to $394.1 million or 11.3% of sales in the prior year comparable period. The decrease in operating income for the 13 weeks ended July 30, 2022, compared to prior year reflects the heightened pressure on consumers’ discretionary spending, rapid inflation and other increased macroeconomic headwinds, offset by the impact of the addition of Diamonds Direct to Signet's portfolio and the benefits of cost savings discussed above. The decrease in operating income for the 26 weeks ended July 30, 2022, compared to prior year was primarily driven by the pre-tax litigation charges of $190 million offset by the impact of the addition of Diamonds Direct to Signet's portfolio and the benefits of cost savings discussed above.

Signet’s operating income by segment for the second quarter is as follows:

Fiscal 2023 Fiscal 2022
(in millions) % of segment sales % of segment sales
North America segment (1) 13.0 % 14.4 %
International segment (2.0) (1.8) % 15.5 11.9 %
Other segment 1.8 nm (0.1) nm
Corporate and unallocated expenses (2) (23.1) nm (27.3) nm
Operating income 10.6 % 12.6 %
Signet’s operating income by segment for the year to date period is as follows:
Fiscal 2023 Fiscal 2022
(in millions) % of segment sales % of segment sales
North America segment (1) 7.1 % 13.8 %
International segment (8.4) (3.8) % (4.2) (2.2) %
Other segment 4.8 nm (1.0) nm
Corporate and unallocated expenses (2) (44.3) nm (50.0) nm
Operating income 5.2 % 11.3 %

All values are in US Dollars.

(1)    Operating income during the 13 and 26 weeks ended July 30, 2022 includes $5.8 million and $10.2 million, respectively, of cost of sales associated with the fair value step-up of inventory acquired in the Diamonds Direct acquisition; and $2.6 million of acquisition-related expenses in connection with the Blue Nile acquisition. Operating income during the 26 weeks ended July 30, 2022 includes $190.0 million related to pre-tax litigation charges. See Note 4 and Note 21 for additional information.

Operating income during the 13 and 26 weeks ended July 31, 2021 includes $0.0 million and $1.1 million, respectively, of acquisition-related expenses in connection with the Rocksbox acquisition; $1.4 million of gains associated with the sale of customer in-house finance receivables; credits of $0.3 million and $1.0 million, respectively, to restructuring expense, primarily related to adjustments to previously recognized restructuring liabilities; and $(0.2) million and $1.3 million, respectively, of net asset impairments.

(2)    Operating income during the 13 and 26 weeks ended July 31, 2021 includes $0.6 million credit to restructuring expense, primarily related to adjustments to previously recognized restructuring liabilities.

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Interest expense, net

For the 13 and 26 weeks ended July 30, 2022, net interest expense was $3.4 million and $7.8 million, respectively, compared to $4.4 million and $8.3 million in the 13 and 26 weeks ended July 31, 2021, respectively.

Other non-operating income (expense)

In the second quarter of Fiscal 2023, other non-operating expense was $2.4 million compared to other non-operating income of $0.1 million in the prior year comparable period. In the first half of Fiscal 2023, other non-operating expense was $136.9 million compared to other non-operating income of $0.2 million in the prior year comparable period. The other non-operating expenses primarily consisted of non-cash, pre-tax settlement charges of $132.8 million related to the partial buy-out of the Pension Scheme. Refer to Note 22 for additional information.

Income taxes

In the second quarter of Fiscal 2023, income tax expense was $35.6 million, an effective tax rate (“ETR”) of 19.7%, compared to income tax benefit of $3.5 million, an ETR of (1.6)%, in the prior year comparable period. The ETR for the 13 weeks ended July 30, 2022 was lower than the US federal income tax rate, primarily due to the favorable impact of foreign rate differences and benefits from its global reinsurance arrangements. The ETR for the 13 weeks ended July 31, 2021 was lower than the US federal income tax rate primarily due to the favorable impact of the reversal of the valuation allowance recorded against certain state deferred tax assets.

In the year to date period of Fiscal 2023, income tax benefit was $19.6 million, an ETR of (46.3)%, compared to an income tax expense of $23.0 million, an ETR of 5.9% in the prior year comparable period. The ETR for the 26 weeks ended July 30, 2022 was lower than the US federal income tax rate primarily due to the discrete tax benefits related to litigation charges of $47.7 million, the reclassification of the pension settlement loss out of AOCI of $25.2 million and the excess tax benefit for share based compensation which vested during the year of $13.0 million. The year to date ETR in the prior year comparable period was lower than the US federal income tax rate primarily due to the favorable impact of the reversal of the valuation allowance recorded against certain state deferred tax assets. Refer to Note 10 for additional information.

NON-GAAP MEASURES

Signet provides certain non-GAAP information in reporting its financial results to give investors additional data to evaluate its operations. The Company believes that non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, can provide more information to assist investors in evaluating historical trends and current period performance. For these reasons, internal management reporting also includes non-GAAP measures. Items may be excluded from GAAP financial measures when the Company believes this provides greater clarity to management and investors.

These non-GAAP financial measures should be considered in addition to, and not superior to or as a substitute for the GAAP financial measures presented in the Company’s condensed consolidated financial statements and other publicly filed reports. In addition, our non-GAAP financial measures may not be the same as or comparable to similar non-GAAP measures presented by other companies.

  1. Net cash

Net cash is a non-GAAP measure defined as the total of cash and cash equivalents less loans, overdrafts and long-term debt. Management considers this metric to be helpful in understanding the total indebtedness of the Company after consideration of liquidity available from cash balances on-hand.

(in millions) July 30, 2022 January 29, 2022 July 31, 2021
Cash and cash equivalents $ 851.7 $ 1,418.3 $ 1,573.8
Less: Loans and overdrafts — — (0.4)
Less: Long-term debt (147.2) (147.1) (146.9)
Net cash $ 704.5 $ 1,271.2 $ 1,426.5

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  1. Free cash flow and adjusted free cash flow

Free cash flow is a non-GAAP measure defined as the net cash provided by operating activities less purchases of property, plant and equipment. Management considers this metric to be helpful in understanding how the business is generating cash from its operating and investing activities that can be used to meet the financing needs of the business. Adjusted free cash flow, a non-GAAP measure, excludes the proceeds from the sale of in-house finance receivables. Free cash flow and adjusted free cash flow are indicators frequently used by management in evaluating its overall liquidity needs and determining appropriate capital allocation strategies. Free cash flow and adjusted free cash flow do not represent the residual cash flow available for discretionary purposes.

13 weeks ended 26 weeks ended
(in millions) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021
Net cash (used in) provided by operating activities $ 20.6 $ 297.4 $ (114.9) $ 458.5
Purchase of property, plant and equipment (37.4) (20.9) (58.2) (32.2)
Free cash flow (16.8) 276.5 $ (173.1) $ 426.3
Proceeds from sale of in-house finance receivables — (81.3) — (81.3)
Adjusted free cash flow $ (16.8) $ 195.2 $ (173.1) $ 345.0
  1. Earnings before interest, income taxes, depreciation and amortization (“EBITDA”) and adjusted EBITDA

EBITDA is a non-GAAP measure defined as earnings before interest, income taxes, depreciation and amortization. EBITDA is an important indicator of operating performance as it excludes the effects of financing and investing activities by eliminating the effects of interest, depreciation and amortization costs. Adjusted EBITDA is a non-GAAP measure, defined as earnings before interest, income taxes, depreciation and amortization, share-based compensation expense, non-operating income (expense) and certain non-GAAP accounting adjustments. Reviewed in conjunction with net income and operating income (loss), management believes that EBITDA and adjusted EBITDA help in enhancing investors’ ability to evaluate and analyze trends regarding Signet’s business and performance based on its current operations.

13 weeks ended 26 weeks ended
(in millions) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021
Net income $ 145.4 $ 224.6 $ 61.9 $ 363.0
Income tax expense (benefit) 35.6 (3.5) (19.6) 23.0
Interest expense, net 3.4 4.4 7.8 8.3
Depreciation and amortization 39.8 41.6 79.8 83.7
Amortization of unfavorable contracts (0.4) (1.0) (0.9) (2.4)
EBITDA $ 223.8 $ 266.1 $ 129.0 $ 475.6
Other non-operating expense (income) (3) 2.4 (0.1) 136.9 (0.2)
Share-based compensation 12.4 17.5 22.9 25.5
Other accounting adjustments
Credits related to transformation plan — (0.9) — (1.6)
Asset impairments, net (1) — (0.1) — (0.3)
Acquisition-related costs (2) 6.4 — 10.8 1.1
Gain on sale of in-house finance receivables — (1.4) — (1.4)
Litigation charges (4) — — 190.0 —
Adjusted EBITDA $ 245.0 $ 281.1 $ 489.6 $ 498.7

(1) Includes right-of-use (“ROU”) asset impairment gains, net recorded due to various impacts of COVID-19 to the Company’s business and related gains on terminations or modifications of leases, resulting from previously recorded impairments of the ROU assets in Fiscal 2021.

(2) Acquisition-related costs include the impact of the fair value step-up for inventory from Diamonds Direct, as well as professional fees for direct transaction-related costs incurred for the acquisitions of Blue Nile and Rocksbox in the second quarter of Fiscal 2023 and first quarter of Fiscal 2022, respectively.

(3) The 13 and 26 weeks ended July 30, 2022 includes the pension settlement charges. Refer to Note 22 for further information.

(4) Refer to Note 21 for additional information.

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  1. Non-GAAP operating income

Non-GAAP operating income is a non-GAAP measure defined as operating income excluding the impact of significant and unusual items which management believes are not necessarily reflective of operational performance during a period. Management finds the information useful when analyzing financial results in order to appropriately evaluate the performance of the business without the impact of significant and unusual items. In particular, management believes the consideration of measures that exclude such expenses can assist in the comparison of operational performance in different periods which may or may not include such expenses.

13 weeks ended 26 weeks ended
(in millions) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021
Operating income $ 186.8 $ 225.4 $ 187.0 $ 394.1
Gain on sale of in-house finance receivables — (1.4) — (1.4)
Credits related to transformation plan — (0.9) — (1.6)
Asset impairments, net (1) — (0.1) — (0.3)
Acquisition-related costs (2) 6.4 — 10.8 1.1
Litigation charges (3) — — 190.0 —
Non-GAAP operating income $ 193.2 $ 223.0 $ 387.8 $ 391.9

(1) Includes ROU asset impairment gains, net recorded due to various impacts of COVID-19 to the Company’s business and related gains on terminations or modifications of leases, resulting from previously recorded impairments of the ROU assets in Fiscal 2021.

(2) Acquisition-related costs include the impact of the fair value step-up for inventory from Diamonds Direct, as well as professional fees for direct transaction-related costs incurred for the acquisitions of Blue Nile and Rocksbox in the second quarter of Fiscal 2023 and first quarter of Fiscal 2022, respectively.

(3) Refer to Note 21 for additional information.

LIQUIDITY AND CAPITAL RESOURCES

Overview

The Company’s primary sources of liquidity are cash on hand, cash provided by operations and availability under its senior unsecured asset-based revolving credit facility (the “ABL Revolving Facility”). As of July 30, 2022, the Company had $851.7 million of cash and cash equivalents and $147.7 million of outstanding debt, with $1.3 billion of availability under its ABL Revolving Facility.

The tenets of Signet’s capital strategy are: 1) investing in its business to drive growth in line with the Company’s overall business strategy; 2) ensuring adequate liquidity through a strong cash position and financial flexibility under its debt arrangements; and 3) returning excess cash to shareholders. Over time, Signet’s strategy is to sustain an adjusted leverage ratio (a non-GAAP measure as defined in Item 7 of the Signet’s Fiscal 2022 Annual Report on Form 10-K) below 2.75x.

Investing in growth

Since the Company’s transformation strategies began in Fiscal 2019, the Company delivered substantially against its strategic priorities to establish the Company as the OmniChannel jewelry category leader and position its business for sustainable long-term growth. The investments and new capabilities built during the past three years laid the foundation for stronger than expected results during Fiscal 2022, including prioritizing digital investments in both technology and talent, enhancing its new and modernized eCommerce platform and optimizing a connected commerce shopping journey for its customers. The Company’s cash discipline has led to more efficient working capital, through both the extension of payment days with the Company’s vendor base, as well as through improvement in productivity and overall health of the Company’s inventory, utilizing a disciplined approach to drive continued reductions in selldown and clearance inventory. In addition, structural cost reductions since the Company’s transformation strategy began in Fiscal 2019 have generated annual structural costs savings of over $400 million.

As the Company continues to implement and execute on the next phase of its strategy, Inspiring Brilliance, it will continue to focus on working capital efficiency, optimizing its real estate footprint, and prioritizing transformational productivity to drive future cost savings opportunities, all of which are expected to be used to fuel strategic investments, grow the business, and enhance liquidity. In addition, the Company invested over $190 million for capital investments in Fiscal 2022, which included approximately $130 million for capital expenditures and approximately $60 million related to investments in digital and cloud IT. Additional capital investments of up to $250 million are planned for Fiscal 2023.

In addition, during Fiscal 2022, the Company made two acquisitions in line with its Inspiring Brilliance strategy. On March 29, 2021, the Company acquired all of the outstanding shares of Rocksbox Inc. (“Rocksbox”), a jewelry rental subscription business, for cash

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consideration of $14.6 million, net of cash acquired. The acquisition was driven by Signet's initiatives to accelerate growth in its services offerings. On November 17, 2021, the Company acquired Diamonds Direct for cash consideration of $503.1 million, net of cash acquired. The acquisition of Diamonds Direct accelerates the Company’s growth in accessible luxury and bridal.

During the third quarter of Fiscal 2023, the Company completed its acquisition of Blue Nile Inc. (“Blue Nile”), subject to the terms of a stock purchase agreement (“Agreement”) entered into on August 5, 2022. The total cash consideration is $398.2 million, net of cash acquired, including purchase price adjustments for working capital, and is subject to customary post-closing adjustments per the Agreement. Blue Nile is a leading online retailer of engagement rings and fine jewelry with 23 physical showrooms throughout the US. The strategic acquisition of Blue Nile accelerates Signet's efforts to enhance its connected commerce capabilities and broaden its digital leadership across the jewelry category – all to further achieve meaningful operating synergies for the consumers and create value for shareholders. See Note 4 for further details.

Liquidity and financial flexibility

During Fiscal 2022, the Company made significant progress in line with its Inspiring Brilliance growth strategy through two key financial milestones. First, the Company renegotiated its $1.5 billion ABL Facility, as further described in Note 18, to extend the maturity until 2026 and allow overall greater financial flexibility to grow the business and provide an additional option to address the 2024 maturities for its 4.70% senior unsecured notes (“Senior Notes”) and Preferred Shares, if necessary.

Second, as described in Note 11, the Company entered into amended and restated receivable purchase agreements with CarVal and Castlelake regarding the purchase of add-on receivables on such Investors’ existing accounts, as well as the purchase of the Company-owned credit card receivables portfolio for accounts that had been originated through Fiscal 2021. These agreements provide Signet with improved terms for the next two years, as well as remove consumer credit risk from the balance sheet. In March 2022, the Company entered into amended and restated receivable purchase agreements with the Investors regarding the purchase of add-on receivables on such Investors’ existing accounts. Under the amended and restated agreements, The Bank of Missouri will be the issuer for the add-on receivables on these existing accounts and the Investors will purchase the receivables from The Bank of Missouri. In conjunction with the above agreements in March 2022, the Company entered into agreements with the Investors to transfer all existing cardholder accounts previously originated by Signet to The Bank of Missouri. Therefore, the Company no longer originates any credit receivables with customers.

Returning excess cash to shareholders

The Company remains committed to its goal to return excess cash to shareholders. During Fiscal 2022 and Fiscal 2023 to date, the Company has declared all preferred share dividends payable in cash, and beginning in the second quarter of Fiscal 2022, elected to reinstate the dividend program on its common shares. The Company also increased its common dividends from $0.18 per share in Fiscal 2022 to $0.20 per share beginning in Fiscal 2023. In addition, during the third quarter of Fiscal 2022, the Board of Directors authorized a reinstatement of share repurchases under the 2017 Program, increased authorization under the 2017 Program by approximately $560 million during Fiscal 2022 and authorized an additional $500 million in June 2022. Since the reinstatement of share repurchases, the Company has repurchased approximately 7.9 million shares for $602.7 million under the 2017 Program, including $291.0 million to date in Fiscal 2023. See Note 7 for further information related to the share repurchases.

The Company believes that cash on hand, cash flows from operations and available borrowings under the ABL Revolving Facility will be sufficient to meet its ongoing business requirements for at least the 12 months following the date of this report, including funding working capital needs, projected investments in the business (including capital expenditures), debt service, and returns to shareholders through either dividends or the share repurchases.

Primary sources and uses of operating cash flows

Operating activities provide the primary source of cash for the Company and are influenced by a number of factors, the most significant of which are operating income and changes in working capital items, such as:

•changes in the level of inventory as a result of sales and other strategic initiatives;

•changes and timing of accounts payable and accrued expenses, including variable compensation; and

•changes in deferred revenue, reflective of the revenue from performance of extended service plans.

Signet derives most of its operating cash flows through the sale of merchandise and extended service plans. As a retail business, Signet receives cash when it makes a sale to a customer or when the payment has been processed by Signet or the relevant bank if the payment is made by third-party credit or debit card. As further discussed in Note 11, the Company has outsourced its entire credit card portfolio, and it receives cash from its outsourced financing partners (net of applicable fees) generally within two days of the customer

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sale. Offsetting these receipts, the Company’s largest operating expenses are the purchase of inventory, store occupancy costs (including rent), and payroll and payroll-related benefits.

Summary cash flow

The following table provides a summary of Signet’s cash flow activity for Fiscal 2023 and Fiscal 2022:

26 weeks ended
(in millions) July 30, 2022 July 31, 2021
Net cash (used in) provided by operating activities $ (114.9) $ 458.5
Net cash used in investing activities (75.0) (44.7)
Net cash used in financing activities (367.1) (15.9)
(Decrease) increase in cash and cash equivalents $ (557.0) $ 397.9
Cash and cash equivalents at beginning of period $ 1,418.3 $ 1,172.5
(Decrease) increase in cash and cash equivalents (557.0) 397.9
Effect of exchange rate changes on cash and cash equivalents (9.6) 3.4
Cash and cash equivalents at end of period $ 851.7 $ 1,573.8

Operating activities

Net cash used in operating activities was $114.9 million compared to net cash provided by operating activities of $458.5 million in the prior year comparable period. This overall decrease is primarily due to higher cash outflows for working capital compared to the prior period. The significant movements in operating cash flows are further described below:

•Net income was $61.9 million compared to net income of $363.0 million in the prior year period, a decrease of $301.1 million. This decrease was primarily related to non-cash, pre-tax pension settlement charges of $132.8 million and pre-tax accrued litigation charges of $190.0 million during Fiscal 2023. See Note 20 for details.

•Changes in current income taxes was a use of $99.9 million in the current period compared to a use of $3.8 million in the prior year. The year over year change was primarily the result of income tax payments of $90.6 million in the current year and lower overall pre-tax income. Refer to Note 10 for more information.

•During the prior period, the Company sold its existing customer in-house finance receivables, as well as collected the payment obligation of the remaining 5% of the receivables previously sold in June 2018. This resulted in cash proceeds of $81.3 million. See Note 11 for further information.

•Cash used by inventory was $146.6 million compared to a source of $33.9 million in the prior year period driven by the pull forward of merchandise receipts during the first half of Fiscal 2023 to mitigate potential supply chain disruptions and replenish inventories to healthier in-stock levels. Overall inventory, excluding Diamonds Direct, has decreased compared to the same period in the prior year.

•Cash used by accounts payable was $221.2 million compared to a use of $95.6 million in the prior year period. Accounts payable decreased in the current year as a result of merchandise receipts pulled forward during the first half of the year to replenish stocks. In addition, the Company continued to utilize extended terms with its vendors and has maintained these extended terms throughout the current year.

Investing activities

Net cash used in investing activities for the 26 weeks ended July 30, 2022 was $75.0 million compared to net cash used in investing activities of $44.7 million in the prior period. Cash used in Fiscal 2023 was primarily related to capital expenditures of $58.2 million. Capital expenditures are associated with new stores, remodels of existing stores, and strategic capital investments in digital and IT. Signet has planned Fiscal 2023 capital investments of up to $250 million, of which approximately $200 million relates to capital expenditures for technology and banner differentiation, and approximately $50 million relates to digital and cloud innovation. In Fiscal 2022, net cash used in investing activities included $14.4 million for the acquisition of Rocksbox.

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Stores opened and closed in the 26 weeks ended July 30, 2022:

Store count by segment January 29, 2022 Openings Closures July 30, 2022
North America segment (1) 2,506 23 (36) 2,493
International segment (1) 348 1 (9) 340
Signet 2,854 24 (45) 2,833

(1)    The net change in selling square footage for Fiscal 2023 year to date for the North America and International segments was 0.4% and (2.0%), respectively.

Financing activities

Net cash used in financing activities for the 26 weeks ended July 30, 2022 was $367.1 million, consisting of the repurchase of common shares of $291.0 million, payments for withholding taxes related to the settlement of the Company’s share-based compensation awards of $41.4 million, and preferred and common dividends paid of $34.7 million.

Net cash used in financing activities for the 26 weeks ended July 31, 2021 was $15.9 million, primarily due to dividends paid of $8.2 million and payment of debt issuance costs of $3.6 million related to the modification to the ABL Facility.

Movement in cash and indebtedness

Cash and cash equivalents at July 30, 2022 were $851.7 million compared to $1.6 billion as of July 31, 2021. Signet has cash and cash equivalents invested in various ‘AAA’ rated government money market funds and at a number of large, highly-rated financial institutions. The amount invested in each liquidity fund or at each financial institution takes into account the credit rating and size of the liquidity fund or financial institution and is invested for short-term durations.

As further described in Note 18, on July 28, 2021, the Company entered into an agreement to amend the ABL Revolving Facility. The amendment extends the maturity of the ABL Revolving Facility to July 28, 2026 and allows the Company to increase the size of the ABL Revolving Facility by up to $600 million.

At July 30, 2022 and July 31, 2021, Signet had $147.7 million and $148.0 million, respectively, of outstanding debt, consisting primarily of the Senior Notes.

Available borrowings under the ABL Revolving Facility were $1.3 billion as of July 30, 2022.

Net cash was $704.5 million as of July 30, 2022 compared to net cash of $1.4 billion as of July 31, 2021. Refer to the non-GAAP measures discussed above for the definition of net cash (debt) and reconciliation to its most comparable financial measure presented in accordance with GAAP.

As of July 30, 2022, January 29, 2022 and July 31, 2021, the Company was in compliance with all debt covenants.

SEASONALITY

Signet’s business is seasonal, with the fourth quarter historically accounting for approximately 35-40% of annual sales as well as accounts for a substantial portion of the annual operating profit. The “Holiday Season” consists of results for the months of November and December, with December being the highest volume month of the year.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its accounting policies, estimates and judgments, including those related to the valuation of inventories, deferred revenue, derivatives, employee benefits, income taxes, contingencies, asset impairments, leases, indefinite-lived intangible assets, depreciation and amortization of long-lived assets and accounting for business combinations. Management bases the estimates and judgments on historical experience and various other factors believed to be reasonable under the circumstances. Actual results may differ from these estimates. There have been no material changes to the critical accounting policies and estimates disclosed in Signet’s Annual Report on Form 10-K for the fiscal year ended January 29, 2022 filed with the SEC on March 17, 2022.

SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

The Company and certain of its subsidiaries, which are listed on Exhibit 22.1 to this Quarterly Report on Form 10-Q, have guaranteed obligations under the Senior Notes.

The Senior Notes were issued by Signet UK Finance plc (the “Issuer”). The Senior Notes rank senior to the Preferred Shares (as defined in Note 6) and Common Shares. The Senior Notes are effectively subordinated to our existing and future secured indebtedness

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to the extent of the assets securing that indebtedness. The Senior Notes are fully and unconditionally guaranteed on a joint and several basis by the Company, as the parent entity ( the “Parent”) of the Issuer, and certain of its subsidiary guarantors (each, a “Guarantor” and collectively, the “Guarantors”).

The Senior Notes are structurally subordinated to all existing and future debt and other liabilities, including trade payables, of our subsidiaries that do not guarantee the Senior Notes (the “Non-Guarantors”). The Non-Guarantors will have no obligation, contingent or otherwise, to pay amounts due under the Senior Notes or to make funds available to pay those amounts. Certain Non-Guarantors may be limited in their ability to remit funds to us by means of dividends, advances or loans due to required foreign government and/or currency exchange board approvals or limitations in credit agreements or other debt instruments of those subsidiaries.

The Guarantors jointly and severally irrevocably and unconditionally guarantee on a senior unsecured basis the performance and full and punctual payment when due of all obligations of Issuer, as defined in the Indenture, in accordance with the Senior Notes and the related Indentures, as supplemented, whether for payment of principal of or interest on the Senior Notes when due and any and all costs and expenses incurred by the trustee or any holder of the Senior Notes in enforcing any rights under the guarantees (collectively, the “Guarantees”). The Guarantees and Guarantors are subject to release in limited circumstances only upon the occurrence of certain customary conditions.

Although the Guarantees provide the holders of Senior Notes with a direct unsecured claim against the assets of the Guarantors, under US federal bankruptcy law and comparable provisions of US state fraudulent transfer laws, in certain circumstances a court could cancel a Guarantee and order the return of any payments made thereunder to the Guarantors or to a fund for the benefit of its creditors.

A court might take these actions if it found, among other things, that when the Guarantors incurred the debt evidenced by their Guarantee (i) they received less than reasonably equivalent value or fair consideration for the incurrence of the debt and (ii) any one of the following conditions was satisfied:

•the Guarantor entity was insolvent or rendered insolvent by reason of the incurrence;

•the Guarantor entity was engaged in a business or transaction for which its remaining assets constituted unreasonably small capital; or

•the Guarantor entity intended to incur or believed (or reasonably should have believed) that it would incur, debts beyond its ability to pay as those debts matured.

In applying the above factors, a court would likely find that a Guarantor did not receive fair consideration or reasonably equivalent value for its Guarantee, except to the extent that it benefited directly or indirectly from the issuance of the Senior Notes. The determination of whether a Guarantor was or was not rendered insolvent when it entered into its Guarantee will vary depending on the law of the jurisdiction being applied. Generally, an entity would be considered insolvent if the sum of its debts (including contingent or unliquidated debts) is greater than all of its assets at a fair valuation or if the present fair salable value of its assets is less than the amount that will be required to pay its probable liability on its existing debts, including contingent or unliquidated debts, as they mature.

If a court canceled a Guarantee, the holders of the Senior Notes would no longer have a claim against that Guarantor or its assets.

Each Guarantee is limited, by its terms, to an amount not to exceed the maximum amount that can be guaranteed by the applicable Guarantor without rendering the Guarantee, as it relates to that Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.

Each Guarantor is a consolidated subsidiary of Parent at the date of each balance sheet presented. The following tables present summarized financial information for Parent, Issuer, and the Guarantors on a combined basis after elimination of (i) intercompany transactions and balances among Parent, Issuer, and the Guarantors and (ii) equity in earnings from and investments in any Non-Guarantor.

Summarized Balance Sheets
(in millions) July 30, 2022 January 29, 2022
Total current assets $ 3,150.6 $ 3,507.0
Total non-current assets 2,147.7 2,245.3
Total current liabilities 2,245.5 2,309.3
Total non-current liabilities 3,314.3 3,407.0
Redeemable preferred stock 653.0 652.1
Total due from Non-Guarantors (1) 416.9 311.4
Total due to Non-Guarantors (1) 1,741.7 1,666.9

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(1)    Amounts included in asset and liability subtotals above.

Summarized Statements of Operations
26 weeks ended Year Ended
(in millions) July 30, 2022 January 29, 2022
Sales $ 3,133.9 $ 7,188.9
Gross margin 1,284.4 3,014.9
Income before income taxes (2) 17.7 939.7
Net income (2) 52.5 827.9

(2)    Includes net income from intercompany transactions with Non-Guarantors of $15.1 million for the 26 weeks ended July 30, 2022 and net income of $49.8 million for the year ended January 29, 2022. Intercompany transactions primarily include intercompany dividends and interest.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Signet is exposed to market risk from fluctuations in foreign currency exchange rates, interest rates and precious metal prices, which could affect its consolidated financial position, earnings and cash flows. Signet manages its exposure to market risk through its regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. Signet uses derivative financial instruments as risk management tools and not for trading purposes.

As certain of the International segment’s purchases are denominated in US dollars and its net cash flows are in British pounds, Signet’s policy is to enter into forward foreign currency exchange contracts and foreign currency swaps to manage the exposure to the US dollar. Signet also hedges a significant portion of forecasted merchandise purchases using commodity forward contracts. Additionally, the North America segment occasionally enters into forward foreign currency exchange contracts to manage the currency fluctuations associated with purchases for its Canadian operations. These contracts are entered into with large, reputable financial institutions, thereby minimizing the credit exposure from our counterparties.

Signet has significant amounts of cash and cash equivalents invested in various ‘AAA’ rated government money market funds and at a number of large, highly-rated financial institutions. The amount invested in each liquidity fund or at each financial institution takes into account the credit rating and size of the liquidity fund or financial institution and is invested for short-term durations.

Signet’s market risk profile as of July 30, 2022 has not materially changed since January 29, 2022. The market risk profile as of January 29, 2022 is disclosed in Signet’s Annual Report on Form 10-K, filed with the SEC on March 17, 2022.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e)) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management, including the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as amended. Based on this review, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of July 30, 2022.

Changes in Internal Control over Financial Reporting

During the second quarter of Fiscal 2023, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Additionally, as disclosed in the Annual Report on Form 10-K filed with the SEC on March 17, 2022, the Company acquired Diamonds Direct during the fourth quarter of Fiscal 2022. The Company is currently in the process of integrating Diamonds Direct into its framework and assessment of the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information regarding legal proceedings is incorporated by reference from Note 21 of the Condensed Consolidated Financial Statements set forth in Part I of this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS

The Company is supplementing the risk factors previously disclosed in Part I, Item 1A, of the Company’s Annual Report on Form 10-K for the year ended January 29, 2022 with the following modified risk factor, which should be read in conjunction with the other risk factors presented in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2022 that was filed with the SEC on March 17, 2022.

A decline in consumer spending may unfavorably impact Signet’s future sales and earnings, particularly if such decline occurs during the Holiday shopping season.

Our financial performance is highly dependent on US consumer confidence and the health of the US economy. At the end of the first quarter of Fiscal 2023 and continuing through the date of this quarterly report, we began to experience a decline in sales in lower price point products, which we believe is largely driven by the effects of inflation, reduced government stimulus, shifts in spending toward travel and experiences, and general US consumer confidence. If there is further deterioration of the economic conditions in the US, Canada, the UK and Europe, or if the effects of inflation, interest rates, a recession, and reduced government stimulus programs begin to further impact mid-tier consumer spending for bridal sales or sales of other higher price point products, our future sales and earnings could be further adversely impacted. Conditions in the Eurozone have a significant impact on the UK economy even though the UK is not a member of the Eurozone, which together with uncertainty regarding the final terms of the withdrawal of the UK from the European Union, could adversely impact trading in the International segment, as well as adversely impact the US economy.

The success of our operations depends to a significant extent upon a number of factors relating to discretionary consumer spending. These include economic conditions, and perceptions of such conditions by consumers, consumer confidence, level of customer traffic in shopping malls and other retail centers, employment, the level of consumers’ disposable income, business conditions, interest rates, consumer debt and asset values, availability of credit and levels of taxation for the economy as a whole and in international, regional and local markets where we operate. As our sales are highly seasonal, a change in any one of these economic conditions during the Holiday shopping season could have an increased adverse impact on our sales.

Consumer spending may be significantly affected by many factors outside of our control, including general economic conditions; consumer disposable income; consumer confidence; wage and unemployment levels; unexpected trends in merchandise demand; significant competitive and promotional activity by other retailers; the availability, cost and level of consumer debt; inflationary pressures; the increase in general price levels; domestic and global supply chain issues; the costs of basic necessities and other goods; effects of weather and natural disasters, whether caused by climate change or otherwise; epidemics, contagious disease outbreaks, pandemics and other public health concerns, including those related to COVID-19 (including variants such as the Omicron variant); or lockdowns of our stores, support centers or distribution centers due to governmental mandates, the Russia-Ukraine war or social unrest. Any prior increase in consumer discretionary spending during times of crisis may be temporary, such as those related to government stimulus programs or remote-work environments, and consumer spending may decrease again now that the government has terminated such stimulus programs and businesses terminate the ability to work remotely. Such decreases in consumer discretionary spending could result in a decrease in consumer traffic, same store sales, and average transaction values and could cause us to increase promotional activities, which would have a negative impact on our operating margins, all of which could negatively affect our business, results of operations, cash flows or stock price, particularly if consumer spending levels are depressed for a prolonged period of time. Furthermore, we believe government economic stimulus measures have a positive impact on our sales and when removed it is uncertain if or how long associated benefits may last.

Jewelry purchases are discretionary and are dependent on the above factors relating to discretionary consumer spending, particularly as jewelry is often perceived to be a luxury purchase. Consumer purchases of discretionary luxury items, such as our products, tend to decline during recessionary periods, periods of sustained high unemployment, or other times when disposable income is lower. Adverse changes in the economy and periods when discretionary spending by consumers may be under pressure could unfavorably impact sales and earnings. We may respond by increasing discounts or initiating marketing promotions to reduce excess inventory, which could also have a material adverse effect on our margins and operating results.

Our business has historically been highly seasonal, with a significant proportion of our sales and operating profit generated during our fourth quarter, which includes the Holiday shopping season. We expect to continue experiencing a seasonal fluctuation in sales and earnings. Therefore, there is limited ability for us to compensate for shortfalls in fourth quarter sales or earnings by changes in our operations and strategies in other quarters, or to recover from any extensive disruption during the fourth quarter due to any of the factors noted elsewhere in this risk factor, particularly if lockdowns or weather events have an impact on a significant number of stores in the last few days immediately before Christmas Day or disruptions to warehousing, store replenishment systems or our ability to fulfill orders during the Holiday shopping season.

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In addition, other retail categories and other forms of expenditure, such as electronics, entertainment and travel, also compete for consumers’ discretionary spending, particularly during the Holiday shopping season. Therefore, the price of jewelry relative to other products influences the proportion of consumers’ expenditures that are spent on jewelry. If the relative price of jewelry increases, if our competitive position deteriorates, or if pent up demand due to COVID-19 restrictions causes consumers to shift spending to more experience oriented categories such as travel, concerts, and restaurants, our sales and operating profits would be adversely impacted.

An increase in general price levels (due to inflationary pressure, domestic and global supply chain issues or other macroeconomic factors) could also result in a shift in consumer demand away from jewelry and related services, which would adversely affect our sales and, at the same time, increase our operating costs including but not limited to materials, labor, fulfillment and advertising. We may not be able to adequately increase our prices over time at price points that consumers are willing to pay to offset such increased costs. An inability to increase retail prices to reflect higher commodity, labor, advertising and other operating costs, would result in lower profitability.

Particularly sharp increases in commodity costs may result in a time lag before increased commodity costs are fully reflected in retail prices or have an impact to our results of operations. As we use an average cost inventory methodology, volatility in our commodity costs may also result in a time lag before cost increases are reflected in retail prices. Further, even if price increases are implemented, there is no certainty that such increases will be sustainable or acceptable to consumers. These factors may cause decreases in gross and operating margins and earnings. In addition, any sustained increases in the cost of commodities could result in the need to fund a higher level of inventory or changes in the merchandise available to the customer, which could increase costs, disrupt our sales levels and negatively impact liquidity.

Any difficulty or delay in executing or integrating an acquisition or a major business or strategic initiative may result in expected returns and other projected benefits from such an exercise not being realized.

We have recently made acquisitions of Diamonds Direct and Blue Nile, and we may continue to make acquisitions in the future based on available opportunities in the market. All acquisitions, including these, involve numerous inherent challenges, such as our ability to properly evaluate acquisition opportunities and risks during diligence and our ability to balance resource constraints as we begin to integrate the acquired company into our existing business. Other risks and uncertainties related to our acquisitions include: failing to meet sales and profitability expectations; delayed or unrealized costs savings or synergy opportunities; unknown and underestimated liabilities; and difficulties integrating operations, personnel, financial systems and technology systems. Similarly, the acquisition of companies with operating margins lower than ours may cause a lower operating margin for Signet as a whole. Further, our ability to retain key employees of an acquired company, maintain pre-acquisition cultural dynamics and team morale, and foster the entrepreneurial spirit of an acquired company, particularly while implementing policies, procedures and compliance measures we require, may impact our ability to successfully integrate an acquisition. A significant transaction could also disrupt the operation of our current activities and divert significant management time and resources. If we are unable to execute or integrate an acquisition, major business or strategic initiative or a transformation plan, this could have a significant adverse effect on our results of operations. Our current borrowing agreements place certain limited constraints on our ability to make an acquisition, and future borrowing agreements could place tighter constraints on such actions.

Likewise, there is always the potential for difficulty or delay in execution of a strategic initiative including our direct diamond sourcing capabilities, or a strategic plan, such as our Inspiring Brilliance plan, that may prevent us from realizing expected returns and other projected benefits from such exercises during the anticipated timeframe or at all. The long-term growth of our business depends on the successful execution of our evolving business and strategic initiatives. Any number of factors could impact the success of these initiatives, many of which are out of our control, and there can be no assurance that they will be successful or deliver their anticipated benefits. Some initiatives may require us to devote significant management, financial and other resources and may expose us to new and unforeseen risks and challenges. We may also incur significant asset impairment and other charges in connection with any such initiative or an acquisition.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Repurchases of equity securities

The following table contains the Company’s repurchases of equity securities in the second quarter of Fiscal 2023:

Period Total number of shares <br>purchased (1) Average price paid per share (2) Total number of shares purchased as part of publicly announced plans or programs (3) Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs
May 1, 2022 to May 28, 2022 — $ — — $ 145,105,596
May 29, 2022 to June 25, 2022 392,664 $ 57.95 392,158 $ 622,381,014
June 26, 2022 to July 30, 2022 1,560 $ 55.25 — $ 622,381,014
Total 394,224 $ 57.94 392,158 $ 622,381,014

(1)    Includes 2,066 shares delivered to Signet by employees to satisfy tax withholding obligations due upon the vesting of restricted share awards under share-based compensation programs. These shares are not repurchased in connection with any publicly announced share repurchase programs.

(2)    The average price paid per share excludes commissions paid of $7,843 in connection with the repurchases made under the 2017 Share Repurchase Program (the “2017 Program”).

(3)    In June 2017, the Board of Directors authorized the repurchase of up to $600.0 million of Signet’s common shares. The 2017 Program may be suspended or discontinued at any time without notice. In August 2021, the Board of Directors authorized the increase in the remaining share repurchase under the 2017 Program of up to $225.0 million, with additional authorizations of $500.0 million in both January and June 2022.

ITEM 6. EXHIBITS

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

Number Description of Exhibits
2.1*# Stock Purchase Agreement by and among Sterling Jewelers Inc., BC Cyan Investment Holdings, Inc., and BC Cyan Holdings L.P, and Sterling Jewelers Inc., dated August 5, 2022.
10.1*† Amended and Restated Termination Protection Agreement dated March 15, 2022 between Sterling Jewelers Inc. and Virginia Drosos (refiled to correct a typographical error).
22.1* List of Subsidiary Guarantors
31.1* Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1* Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.
32.2* Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS* Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH* Inline XBRL Taxonomy Extension Schema Document.
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). * Filed herewith.
--- ---
† Management contract or compensatory plan or arrangement.
# Certain portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Signet Jewelers Limited
Date: September 1, 2022 By: /s/ Joan Hilson
Name: Joan Hilson
Title: Chief Financial and Strategy Officer (Principal Financial Officer)

48

Document

Exhibit 2.1

REDACTED VERSION<br><br><br><br>CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS EXHIBIT, MARKED BY [****], HAS BEEN OMITTED BECAUSE SIGNET JEWELERS LIMITED HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO SIGNET JEWELERS LIMITED IF PUBLICLY DISCLOSED.
Stock Purchase Agreement
by and among
BC Cyan Investment Holdings Inc.,
a Delaware corporation,
BC Cyan Holdings LP,
a Delaware limited partnership,
and
Sterling Jewelers Inc.,
a Delaware corporation
August 5, 2022

TABLE OF CONTENTS

Page

Article I Purchase and Sale Transaction; THE CLOSING; TRANSACTION PRICE ADJUSTMENT 6
Section 1.01    Purchase and Sale of the Company Stock 6
Section 1.02    Closing Cash Proceeds 7
Section 1.03    The Closing 8
Section 1.04    The Closing Transactions 8
Section 1.05    Transaction Price Adjustments 9
Section 1.06    Withholding Rights 12
Article II REPRESENTATIONS AND WARRANTIES OF THE COMPANY 12
Section 2.01    Organization and Corporate Power 13
Section 2.02    Subsidiaries 13
Section 2.03    Authorization; No Conflicts 14
Section 2.04    Capitalization 14
Section 2.05    Financial Statements 16
Section 2.06    No Material Adverse Effect; Absence of Certain Developments 17
Section 2.07    Title to Properties 17
Section 2.08    Tax Matters 19
Section 2.09    Contracts and Commitments 21
Section 2.10    Intellectual Property; IT and Privacy Matters 24
Section 2.11    Litigation 28
Section 2.12    Undisclosed Liabilities 28
Section 2.13    Governmental Consents 28
Section 2.14    Employee Benefit Plans 28
Section 2.15    Insurance 31
Section 2.16    Environmental Matters 31
Section 2.17    Affiliated Transactions 32
Section 2.18    Broker Fees 32
Section 2.19    Permits; Compliance with Laws; Vendor Compliance 33
Section 2.20    International Trade Compliance; Sanctions 34
Section 2.21    Employees 34
Section 2.22    Anti-Corruption 36

i

Section 2.23    Suppliers 37
Section 2.24    [Reserved.] 37
Section 2.25    Warranties; Product 37
Section 2.26    Inventory 37
Section 2.27    SPAC Termination Agreement 38
Section 2.28    No Additional Representations or Warranties 38
Article III REPRESENTATIONS AND WARRANTIES OF SELLER 39
Section 3.01    Organization and Power 39
Section 3.02    Authorization 39
Section 3.03    No Violation 39
Section 3.04    Governmental Bodies; Consents 39
Section 3.05    Title to the Company Stock 39
Section 3.06    Litigation 40
Section 3.07    Brokers or Finders 40
Section 3.08    SPAC 40
Section 3.09    No Additional Representations or Warranties 40
Article IV REPRESENTATIONS AND WARRANTIES OF PURCHASER 40
Section 4.01    Organization and Power 41
Section 4.02    Authorization 41
Section 4.03    No Violation 41
Section 4.04    Governmental Bodies; Consents 41
Section 4.05    Litigation 41
Section 4.06    Broker Fees 42
Section 4.07    Investment Representation 42
Section 4.08    Financial Capability 42
Section 4.09    Solvency 42
Section 4.10    No Additional Representations or Warranties 42
Section 4.11    No Outside Reliance 42
Article V COVENANTS OF THE COMPANY AND SELLER 43
Section 5.01    Conduct of the Business 43

ii

Section 5.02    Access to Books and Records 47
Section 5.03    Regulatory Filings 47
Section 5.04    Exclusivity 48
Section 5.05    280G Cooperation 48
Section 5.06    Reasonable Best Efforts 48
Section 5.07    FIRPTA Certificate 49
Section 5.08    Payoff Letters; Liens 49
Section 5.09    Non-Solicitation 49
Section 5.10    SPAC Termination 50
Section 5.11    Notification 51
Article VI COVENANTS OF PURCHASER 51
Section 6.01    Access to Books and Records 51
Section 6.02    Regulatory Filings 52
Section 6.03    Notification 52
Section 6.04    Director and Officer Liability and Indemnification 52
Section 6.05    Contact with Business Relations 54
Section 6.06    Employee Layoffs 54
Section 6.07    Reasonable Best Efforts 54
Article VII CONDITIONS TO CLOSING 54
Section 7.01    Conditions to All Parties' Obligations 54
Section 7.02    Conditions to Purchaser's Obligations 55
Section 7.03    Conditions to the Company's and Seller's Obligations 56
Section 7.04    Waiver of Conditions 56
Article VIII TERMINATION 57
Section 8.01    Termination 57
Section 8.02    Effect of Termination 58
Section 8.03    Certain Other Effects of Termination 58
Article IX ADDITIONAL AGREEMENTS AND COVENANTS 58
Section 9.01    Survival; Certain Waivers 58
Section 9.02    Acknowledgment by Purchaser 60

iii

Section 9.03    Further Assurances 61
Section 9.04    Employees and Employee Benefits 61
Section 9.05    Antitrust Notification 62
Section 9.06    Release 62
Section 9.07    Provision Respecting Representation of Company 63
Section 9.08    Tax Matters 64
Article X MISCELLANEOUS 66
Section 10.01    Press Releases and Communications 66
Section 10.02    Expenses 66
Section 10.03    Notices 67
Section 10.04    Assignment 68
Section 10.05    Amendment and Waiver 69
Section 10.06    Third Party Beneficiaries 69
Section 10.07    Non-Recourse 69
Section 10.08    Severability; Specific Provisions 69
Section 10.09    Construction; Headings 70
Section 10.10    Disclosure Schedules 70
Section 10.11    Complete Agreement 70
Section 10.12    No Partnership or Other Relationship Created 70
Section 10.13    Specific Performance 71
Section 10.14    Exclusive Jurisdiction and Venue 71
Section 10.15    Governing Law; Waiver of Jury Trial 72
Section 10.16    No Right of Set-Off 73
Section 10.17    Counterparts and PDF 73
Article XI DEFINITIONS 73
Section 11.01    Definitions 73
Section 11.02    Index of Defined Terms 85
Section 11.03    Other Definitional Provisions 87

iv

EXHIBITS

Exhibit 1.02    Accounting Principles and Net Working Capital

Exhibit 7.02(d)    Form of Company Closing Certificate

Exhibit 7.02(e)    Form of Seller Closing Certificate

Exhibit 7.03(c)    Form of Purchaser Closing Certificate

Exhibit A    Adjustment Escrow Agreement

v

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of August 5, 2022, is made by and among (i) BC Cyan Investment Holdings Inc., a Delaware corporation (the "Company"), (ii) BC Cyan Holdings LP, a Delaware limited partnership ("Seller"), and (iii) Sterling Jewelers Inc., a Delaware corporation ("Purchaser"). Capitalized terms used and not otherwise defined herein have the meanings set forth in Article XI below.

WHEREAS, Seller owns all of the issued and outstanding shares of capital stock of the Company, other than the Series C Preferred Stock (the "Company Stock");

WHEREAS, the Series C Holders own all of the issued and outstanding shares of Series C Preferred Stock;

WHEREAS, concurrently with the Closing, the Company will redeem all of the shares of Series C Preferred Stock and, as a result, Seller will be the sole holder of capital stock of the Company;

WHEREAS, concurrently with the Closing, all outstanding Options in the Company will be cancelled in accordance with their terms;

WHEREAS, on the terms and subject to the conditions set forth in this Agreement, Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, the Company Stock, which will represent all of the issued and outstanding shares of capital stock of the Company immediately after the consummation of the Transaction.

NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties and covenants set forth herein, and intending to be legally bound, the parties hereto agree as follows.

ARTICLE I PURCHASE AND SALE TRANSACTION; THE CLOSING; TRANSACTION PRICE ADJUSTMENT

Section 1.01    Purchase and Sale of the Company Stock. Upon the terms and subject to the conditions of this Agreement, Purchaser shall purchase from Seller and accept the transfer from Seller at the Closing, and Seller shall sell, assign, transfer, and deliver to Purchaser at the Closing, all of the Company Stock, free and clear of all Liens (other than restrictions on transfer under applicable federal and state securities Laws), in exchange for the consideration specified in, and delivered in accordance with, this Article I (the "Transaction"). All other equity interests in the Company not held by Seller, including the Series C Preferred Stock and any outstanding Options of the Company will be redeemed or otherwise cancelled, respectively, concurrently with the Closing, such that Purchaser will own 100% of the issued and outstanding shares of capital stock of the Company immediately after the consummation of the Transaction.

Section 1.02    Closing Cash Proceeds.

(a)    At least five (5) Business Days prior to the Closing Date, the Company will prepare and deliver to Purchaser a statement (the "Estimated Closing Statement")

setting forth (i) its good faith estimates of: (A) Closing Net Working Capital (the "Estimated Net Working Capital"), (B) Closing Indebtedness (including and specifically identifying the portion thereof, if any, comprising Funded Indebtedness) (the "Estimated Indebtedness"), (C) Closing Cash (the "Estimated Cash") and (D) Transaction Expenses (the "Estimated Transaction Expenses") and (ii) the resulting calculation of the Closing Cash Proceeds, together with reasonable supporting detail and documentation, based on the Company's books and records and other information available at the Closing and calculated on a basis consistent with this Agreement and the definitions set forth herein. The Estimated Closing Statement will be accompanied by a certificate of an officer of the Company (solely in such officer's capacity as a duly authorized officer of the Company, and not individually) stating that the Estimated Closing Statement has been prepared in accordance with this Agreement and the definitions set forth herein, including as set forth on Exhibit 1.02(a) and Exhibit 1.02(b). Following delivery of the Estimated Closing Statement, Purchaser will be entitled to review the calculation of such estimates, and the Company will permit Purchaser and its representatives to have reasonable access to the books and records related to the preparation of the Estimated Closing Statement and to the Company's and its Affiliates' appropriate personnel involved in the preparation of the Estimated Closing Statement. The Company shall consider in good faith any reasonable comments Purchaser has to the Estimated Closing Statement and, to the extent the Company agrees with any such comments (as determined in good faith by the Company or as such comments relate to material errors (as opposed to good faith differences of opinion between Purchaser and the Company regarding the calculation of any item contained in the Estimated Closing Statement, which matters are to be resolved after the Closing pursuant to the process set forth in Section 1.05)), revise the Estimated Closing Statement to reflect such comments. Any such revised Estimated Closing Statement shall constitute the Estimated Closing Statement for all purposes of this Agreement and will be used to determine the Closing Cash Proceeds.

(b)    As used herein, "Closing Cash Proceeds" means, an amount equal to, without duplication: (i) $360,000,000 (the "Transaction Price"), minus (ii) the amount of Estimated Indebtedness, minus (iii) the Adjustment Escrow Amount, minus (iv) the Series C Redemption Price, minus (v) the amount of Estimated Transaction Expenses, plus (vi) the amount of Estimated Cash, plus (vii) the amount, if any, by which Estimated Net Working Capital exceeds Target Net Working Capital, and minus (viii) the amount, if any, by which Target Net Working Capital exceeds Estimated Net Working Capital.

(c)    The inventory included in the Estimated Net Working Capital and the Estimated Closing Statement will consider in good faith the physical count of the inventory conducted by the Company at the Company’s Seattle Fulfilment Center on July 30, 2022, rolled forward in good faith as needed without further physical count procedures not in the Ordinary Course of Business to appropriately reflect any changes in the interim period between July 30, 2022 and the Closing. Such physical count of inventory will be conducted using the accounting principles set forth on Exhibit 1.02(b), and each of Seller and Purchaser (at each party’s sole cost and expense) and their respective Advisors will have the right to observe such physical count of inventory. For the avoidance of doubt, the physical count of inventory will include both inventory owned by the Company or its Subsidiaries and all inventory held by the Company or its Subsidiaries on consignment. For purposes of considering the results of the physical count of inventory in the Estimated Net Working Capital and the Estimated Closing Statement, the physical count will only be considered for the existence of inventory.

Inventory value, including any related reserves, will be calculated consistent with the accounting principles set forth in Exhibit 1.02(b).

Section 1.03    The Closing. The closing of the Transaction (the "Closing") will take place by electronic exchange of documents at 10:00 a.m. Eastern Time on (a) the third (3rd) Business Day following satisfaction or waiver (by the party entitled to the benefit of such condition) of the closing conditions set forth in Article VII (other than conditions that by their terms or nature are to be satisfied at the Closing, but subject to such conditions being satisfied or waived (by the party having the benefit thereof) at the Closing), or (b) such other date as Seller and Purchaser may mutually agree in writing. The date the Closing actually occurs is referred to herein as the "Closing Date."

Section 1.04    The Closing Transactions. Subject to the terms and conditions set forth in this Agreement, the parties hereto will consummate the following transactions at the Closing in accordance with the payment instructions in a funds flow prepared by Seller and delivered to Purchaser at least two (2) Business Days prior to the Closing Date and agreed in good faith and executed by each of the parties hereto prior to the Closing (the "Funds Flow").

(a)    Purchaser will repay, or cause to be repaid, on behalf of the Company or Seller, all amounts of Funded Indebtedness as set forth in the Estimated Closing Statement and applicable Payoff Letters, such amounts to be paid by wire transfer of immediately available funds in accordance with the Funds Flow.

(b)    Purchaser will deposit, or cause to be deposited, the Adjustment Escrow Amount in the Adjustment Escrow Account by wire transfer of immediately available funds in accordance with the Funds Flow.

(c)    Purchaser will pay, or cause to be paid, on behalf of the Company, the Series C Redemption Price to the Series C Holders as set forth in the Estimated Closing Statement, such amount(s) to be paid by wire transfer of immediately available funds in accordance with the Funds Flow.

(d)    Purchaser will pay, or cause to be paid, to Seller the Closing Cash Proceeds as set forth in the Estimated Closing Statement, such amount(s) to be paid by wire transfer of immediately available funds in accordance with the Funds Flow.

(e)    Purchaser will pay, or cause to be paid, on behalf of the Company or Seller, all Estimated Transaction Expenses to each Person who is owed a portion thereof as set forth in the Estimated Closing Statement, including, for the avoidance of doubt, the termination fees payable to the SPAC or any other parties pursuant to the Termination Agreement and Business Combination Agreement, such amount(s) to be paid by wire transfer of immediately available funds in accordance with the Funds Flow.

(f)    Purchaser, the Company and Seller will make such other deliveries as are required by Article VII.

Section 1.05    Transaction Price Adjustments.

(a)    Promptly after the Closing Date, but in no event later than ninety (90) days after the Closing Date, Purchaser will prepare and deliver to Seller a statement (the

"Closing Statement") setting forth Purchaser's calculation of Closing Net Working Capital, Closing Indebtedness, Closing Cash, Transaction Expenses and the resulting calculation of Final Cash Proceeds and, with respect to each of the foregoing, the changes in such amounts from the corresponding amounts set forth in the Estimated Closing Statement. The Closing Net Working Capital, Closing Indebtedness, Closing Cash, Transaction Expenses and Final Cash Proceeds will be determined in accordance with this Agreement and the definitions set forth herein. The Closing Statement (i) will not include any changes in assets or liabilities as a result of purchase or other accounting adjustments or other changes arising from or resulting as a consequence of the Transaction, and (ii) will be based on facts and circumstances as they exist as of the Effective Time and will exclude the effects of any act, decision, change in circumstances or event arising or occurring on or after the Effective Time. The parties agree that the purpose of preparing the Closing Statement and the resulting calculating of the Final Cash Proceeds is solely to accurately measure changes (if any) in the amounts of Net Working Capital, Indebtedness, Cash and Transaction Expenses from the respective amounts set forth in the Estimated Closing Statement in order to determine the Purchaser Adjustment Amount or the Seller Adjustment Amount, as the case may be, in accordance with this Agreement, including Exhibit 1.02(a) and Exhibit 1.02(b). If the Closing Statement is not delivered to Seller within ninety (90) days after the Closing Date, then in addition to any other rights Seller may have under this Agreement, Seller will have the right to prepare the Closing Statement within an additional sixty (60) days thereafter (and in the case of such election by Seller, (x) in connection with the preparation of the Closing Statement, Seller and its Advisors shall have the same access afforded to them as set forth in Section 1.05(c) and (y) in connection with the review of the Closing Statement, the rights and obligations with respect to each of Seller and Purchaser (and their respective Advisors) as set forth in Section 1.05(c) and Section 1.05(d) shall be deemed to be reversed).

(b)    As used herein, "Final Cash Proceeds" means an amount equal to, without duplication: (i) the Transaction Price minus (ii) the amount of Closing Indebtedness, minus (iii) the Adjustment Escrow Amount, minus (iv) the Series C Redemption Price, minus (v) the amount of Transaction Expenses, plus (vi) the amount of Closing Cash, plus (vii) the amount, if any, by which Closing Net Working Capital exceeds Target Net Working Capital, and minus (viii) the amount, if any, by which Target Net Working Capital exceeds Closing Net Working Capital, in each case as finally determined pursuant to Section 1.05(a), Section 1.05(d) or Section 1.05(e), as applicable.

(c)    During the period (the "Seller Review Period") of sixty (60) days immediately following the earlier of (i) Seller's receipt of the Closing Statement and (ii) the expiration of the additional sixty (60)-day period contemplated by Section 1.05(a), and during any period of dispute thereafter with respect to the Closing Statement, the Company and Purchaser will reasonably cooperate with Seller and its Advisors in the review of the Closing Statement (including by furnishing on a timely basis all reasonably requested information necessary or useful in connection with such review) and provide Seller and its Advisors reasonable access, upon reasonable advance notice and during regular business hours, to the books, records (including work papers, schedules, memoranda, Tax Returns, Tax schedules, Tax rulings and other documents), supporting data, facilities and appropriate personnel of the Company and its Subsidiaries involved in the preparation of the Closing Statement (including, if applicable, Company personnel responsible for accounting and finance, senior management and the Company's accountants and other Advisors) for purposes of their review of the Closing Statement,

provided that such access does not unreasonably interfere with the normal operations of the Company or any of its Subsidiaries.

(d)    If Seller disagrees with any part of Purchaser's calculation of Closing Net Working Capital, Closing Indebtedness, Closing Cash or Transaction Expenses, Seller will, within the Seller Review Period, notify Purchaser in writing of such disagreement by setting forth, in reasonable detail with reasonable supporting documentation, Seller's calculation of Closing Net Working Capital, Closing Indebtedness, Closing Cash or Transaction Expenses (an "Objection Notice"). Any items not specified in any Objection Notice shall be deemed agreed. If an Objection Notice is not delivered to Purchaser within the Seller Review Period, the Closing Statement will be final, conclusive and binding upon, and non-appealable by, the parties hereto, and Seller shall be deemed to have agreed with all items and amounts contained in the Closing Statement. If Seller does deliver a timely Objection Notice, then during the thirty (30) days immediately following the delivery of an Objection Notice, or such longer period as Seller and Purchaser may agree in writing, Seller and Purchaser will seek in good faith to promptly resolve in writing any differences that they may have with respect to any matter specified in the Objection Notice, and all such discussions related thereto will be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement) and any applicable similar state rule, unless otherwise agreed in writing by Seller and Purchaser. In the event that Purchaser and Seller resolve in writing all such disagreements, the amounts for Closing Net Working Capital, Closing Indebtedness, Closing Cash, Transaction Expenses and Final Cash Proceeds so agreed in writing by Purchaser and Seller will be final, conclusive and binding upon, and non-appealable by, the parties hereto. In the event that Purchaser and Seller are unable to resolve all such disagreements within such period, Purchaser and Seller will submit such remaining disagreements to BDO USA, LLP, or, in the event BDO USA, LLP declines to accept engagement hereunder, such other United States nationally recognized certified public accounting firm as is acceptable to Purchaser and Seller (the "Accounting Firm") for determination. The Accounting Firm will have exclusive jurisdiction over, and resort to the Accounting Firm as provided in this Section 1.05 will be the only recourse and remedy of the parties against one another with respect to, any disputes arising out of or relating to the adjustments pursuant to this Section 1.05.

(e)    Purchaser and Seller will use their respective reasonable best efforts to cause the Accounting Firm to make a determination with respect to all remaining disagreements regarding the computation of Closing Net Working Capital, Closing Indebtedness, Closing Cash and Transaction Expenses identified in the Objection Notice as soon as practicable and in any event within thirty (30) days after its retention. Purchaser and Seller will execute a customary engagement letter and will cooperate with the Accounting Firm during the term of its engagement. Purchaser and Seller will also instruct the Accounting Firm to, and the Accounting Firm will, consider only those items and amounts in Purchaser and Seller's respective calculations of Closing Net Working Capital, Closing Indebtedness, Closing Cash and Transaction Expenses (as set forth on the Closing Statement or Objection Notice, as applicable) that are identified as being items and amounts to which Purchaser's and Seller have been unable to agree and, in resolving any disputed item, the Accounting Firm may not assign a value to any item greater than the greatest value for such item claimed by either party or less than the smallest value for such item claimed by either party (as set forth on the Closing Statement or Objection Notice, as applicable). Purchaser and Seller will also instruct the Accounting Firm to, and the Accounting Firm will (acting as an expert and not an

arbitrator), make a final determination of the disputed items based solely on written materials submitted by Purchaser and Seller and in accordance with this Agreement (i.e., not on the basis of an independent review). The determination of the disputed items by the Accounting Firm will be final, conclusive and binding upon the parties hereto and will not be subject to appeal or further review, in each case, absent fraud or manifest error. The Accounting Firm's determination shall be set forth in a written report that shall specify in reasonable detail, how the determination was made.

(f)    The fees, costs and expenses of the Accounting Firm in determining the disputed items will be borne by Purchaser, on the one hand, and Seller, on the other hand, based upon the percentage that the portion of the aggregate contested amount not awarded to each party bears to the aggregate amount actually contested by such party. For example, if Purchaser claims Closing Net Working Capital is $1,000 less than the amount determined by Seller, and Seller contests only $500 of the amount claimed by Purchaser, and if the Accounting Firm ultimately resolves the dispute by awarding Purchaser $300 of the $500 contested, then the costs and expenses of the Accounting Firm will be allocated 60% (i.e., 300 ÷ 500) to Seller and 40% (i.e., 200 ÷ 500) to Purchaser. In connection with its determination of the disputed items, the Accounting Firm will, pursuant to the terms of this Section 1.05(f), also determine the allocation of its fees and expenses between Purchaser and Seller, which such determination will be final, conclusive and binding upon the parties hereto.

(g)    After Closing Net Working Capital, Closing Indebtedness, Closing Cash and Transaction Expenses are finally determined pursuant to this Section 1.05 (the date of such final determination, the "Settlement Date"):

(i)    if the Final Cash Proceeds as finally determined pursuant to Section 1.05(a), Section 1.05(d) or Section 1.05(e), as applicable, is less than the Closing Cash Proceeds (such shortfall, the "Purchaser Adjustment Amount"), then (A) Purchaser and Seller will deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay to Purchaser (or its designee), within five (5) Business Days after the Settlement Date, the Purchaser Adjustment Amount from the Adjustment Escrow Amount and (B) in the event that at such time the Purchaser Adjustment Amount is less than the Adjustment Escrow Amount, Purchaser and Seller will simultaneously with delivery of the instructions in the immediately foregoing clause (A) deliver joint written instructions to the Escrow Agent to pay to Seller, within five (5) Business Days after the Settlement Date, all of the funds then remaining in the Adjustment Escrow Account;

(ii)    if the Final Cash Proceeds as finally determined pursuant to Section 1.05(a), Section 1.05(d) or Section 1.05(e), as applicable, is greater than the Closing Cash Proceeds, then (A) Purchaser will, or will cause the Company to, within five (5) Business Days after the Settlement Date, pay to Seller an amount equal to such excess (but which shall not exceed an amount equal to the Adjustment Escrow Amount) (the "Seller Adjustment Amount") and (B) Purchaser and Seller will deliver joint written instructions to the Escrow Agent to pay to Seller, within five (5) Business Days after the Settlement Date, all of the funds then remaining in the Adjustment Escrow Amount from the Adjustment Escrow Account;

(iii)    if the Final Cash Proceeds as finally determined pursuant to Section 1.05(a), Section 1.05(d) or Section 1.05(e), as applicable, is equal to the Closing Cash Proceeds, then Purchaser and Seller will deliver joint written instructions to the Escrow Agent to pay to Seller, within five (5) Business Days after the Settlement Date, all of the funds then remaining in the Adjustment Escrow Amount from the Adjustment Escrow Account; and

(iv)    any payment to be made pursuant to this Section 1.05(g) will (A) be treated by all parties for applicable Tax purposes as adjustments to the Transaction Price (unless otherwise required by applicable Law) and (B) be made by wire transfer of immediately available funds to, as applicable, the account(s) designated in writing by Purchaser prior to such payment or the account(s) designated in writing by Seller prior to such payment, as applicable.

(h)    Purchaser and Seller agree that (i) the payment of the Purchaser Adjustment Amount (if any) from the Adjustment Escrow Amount in the Adjustment Escrow Account in accordance with the Adjustment Escrow Agreement will be the sole and exclusive remedy for payment of the Purchaser Adjustment Amount, if any, and the Adjustment Escrow Amount in the Adjustment Escrow Account will be the sole and exclusive source of recovery for any amounts owing to Purchaser pursuant to this Section 1.05, even if the Purchaser Adjustment Amount exceeds the Adjustment Escrow Amount, and (ii) the adjustments to Estimated Net Working Capital, Estimated Indebtedness, Estimated Cash and Estimated Transaction Expenses provided for in this Section 1.05, and the dispute resolution provisions provided for in this Section 1.05, will be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Purchaser or any of its Affiliates or representatives for the payment of the Purchaser Adjustment Amount will be asserted against the Seller Parties.

Section 1.06    Withholding Rights. Any consideration payable or otherwise deliverable by Purchaser shall be paid without withholding or deduction; provided that Purchaser shall be entitled to deduct and withhold (or cause to be deducted and withheld) from any consideration payable or otherwise deliverable pursuant to this Agreement to Seller or any other recipient of payment under this Agreement such amounts as may be required therefrom under any tax law; provided, further, that if Purchaser determines that it is entitled to withhold under this Section 1.06, Purchaser shall timely provide Seller with its written intention to withhold prior to any such withholding and Purchaser and Seller shall cooperate to minimize any such Taxes. To the extent that amount are so withheld and paid to the appropriate taxing authority of any Governmental Body, such withheld amounts shall be treated as having been delivered and paid to Seller or any other recipient of payment in respect of which such deduction and withholding was made.

ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company, on behalf of itself and each of its Subsidiaries, represents and warrants to Purchaser as set forth in this Article II, subject to Section 10.10, and except as set forth in the disclosure schedules attached to this Agreement (each, a "Schedule" and, collectively, the "Disclosure Schedules").

Section 2.01    Organization and Corporate Power. The Company has been duly incorporated, and is validly existing and in good standing, under the Laws of the State of Delaware and has all requisite corporate power and authority to own and operate its properties and to carry on its businesses as now conducted and to own or lease and operate its properties and assets. The copies of the Organizational Documents of the Company certified by the Secretary of the State of Delaware, as in effect on the date hereof, previously made available by the Company to Purchaser (a) are true, correct and complete, (b) are in full force and effect and (c) have not been amended in any respect. The Company is qualified to do business and is in good standing as a foreign entity in every jurisdiction in which its ownership of property or the conduct of business as now conducted requires it to qualify, except where the failure to be so qualified would not, individually or in the aggregate, reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole. The Company is not in violation of any of the provisions of its Organizational Documents.

Section 2.02    Subsidiaries.

(a)    Schedule 2.02(a) sets forth a correct and complete capitalization table that accurately sets forth each direct and indirect Subsidiary of the Company, its jurisdiction of organization, and the Persons holding its equity interests. Except as set forth on Schedule 2.02(a), the Company owns, directly or indirectly, of record and beneficially, all issued and outstanding shares, capital stock and other equity interests in each of its Subsidiaries, free and clear of all Liens (other than Liens arising under applicable securities Laws and Liens arising in connection with the Credit Facility), and all such shares, capital stock and other equity interests are validly issued, fully paid and non-assessable (to the extent such concept is applicable to such shares, capital stock and other equity interests). With respect to each Subsidiary, there are no (i) outstanding securities convertible or exchangeable into equity of such Subsidiary, (ii) options, warrants, equity participation, "phantom" equity, stock appreciation rights, calls, subscriptions, puts, rights of first offer, rights of first refusal or other rights, agreements or commitments obligating such Subsidiary to issue, transfer, repurchase, redeem or sell any equity or any securities or rights that are derivative or provide any earn-out benefit based, directly or indirectly, on the value of or price of any securities of the Company, or (iii) voting trusts or other agreements or understandings with respect to the voting, transfer or other disposition of its equity.

(b)    Each of the Subsidiaries of the Company is duly incorporated, formed or organized, validly existing and in good standing (or its equivalent, if applicable) under the applicable Laws of its jurisdiction of incorporation, formation or organization, and each of the Subsidiaries of the Company has all requisite corporate (or comparable) power and authority to own and operate its properties and to carry on its businesses as now conducted. Each of the Subsidiaries of the Company is qualified to do business and is in good standing (or its equivalent, if applicable) as a foreign entity in every jurisdiction in which its ownership of property or the conduct of business as now conducted requires it to qualify, except where the failure to be so qualified would not individually or in the aggregate, reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole. A list of each Person, other than the Subsidiaries of the Company in which any of the Company and its Subsidiaries hold any equity interests, including the percentage of the equity interests of such Persons held by the Company and its Subsidiaries, and the respective jurisdiction of incorporation or organization of each such Person, is set forth on Schedule 2.02(b), and, except as set forth

on Schedule 2.02(b), all such equity interests are owned by the Company and the applicable Subsidiaries free and clear of all Liens (other than restrictions on transfer under applicable federal and state securities Laws and Liens arising in connection with the Credit Facility). Except as set forth on Schedule 2.02(b), other than the Subsidiaries set forth on Schedule 2.02(a), the Company and each Subsidiary does not own or hold any direct or indirect interest or any right (contingent or otherwise) to acquire any shares, stock, partnership interest, joint venture interest or other equity interest in any other Person (or any interest convertible into or exercisable or exchangeable for, any equity interests in any other Person).

Section 2.03    Authorization; No Conflicts.

(a)    The Company has full corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transaction. The execution, delivery and performance of this Agreement by the Company and the consummation of the Transaction have been duly and validly authorized by all requisite action, and no other corporate proceedings on its part are necessary to authorize the execution, delivery or performance of this Agreement. This Agreement has been duly and validly authorized, executed and delivered by the Company, and assuming that this Agreement is a valid and binding obligation of Seller and Purchaser, this Agreement constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and similar Laws relating to or affecting creditors' rights or to general principles of equity and (ii) the availability of specific performance and other equitable remedies or any applicable equitable principles (whether considered in a proceeding at law or equity).

(b)    Except as set forth on Schedule 2.03(b), the execution, delivery and performance by the Company of this Agreement and the consummation of the Transaction does not and will not (i) contravene, conflict with or violate any provision of, or result in the breach of the Organizational Documents of the Company or its Subsidiaries, (ii) contravene, conflict with or result in any violation of any provision of any applicable Law, or rule or regulation of any Governmental Body or Order applicable to the Company and any of its Subsidiaries or any of their respective properties or assets, (iii) require notice to or the consent of any Person under, violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the termination or acceleration or maturity of, or a right of termination, cancellation, modification, acceleration or amendment under, accelerate the performance required by, or result in the acceleration or trigger of any payment, posting of collateral (or right to require the posting of collateral), time of payment, vesting or increase in the amount of any compensation or benefit payable pursuant to, any of the terms, conditions or provisions of any Material Contract, or (iv) result in the creation of any Lien (other than a Permitted Lien) upon or with respect to any of the properties or assets of the Company or any of its Subsidiaries.

Section 2.04    Capitalization.

(a)    Schedule 2.04(a) provides a correct and complete capitalization table that accurately sets forth all of the authorized, issued, and outstanding equity interests of the Company and the name of each owner thereof and the number and class or series of all

equity interests of the Company held thereby as of the date of this Agreement, including a true, complete and correct listing of all outstanding Options, together with the name of each Optionholder and number of Options held by such Optionholder and the exercise price with respect to each such Option. Other than Seller and the Persons set forth on Schedule 2.04(a), no other Person has any rights or interests in any of the Company Stock or any other equity interests of the Company. All of the outstanding shares of capital stock or other equity interests of the Company and each of its Subsidiaries (i) have been duly authorized and are validly issued, fully paid and non-assessable, (ii) were issued in compliance with Law and the Organizational Documents of the Company and its Subsidiaries, (iii) were not issued in breach or violation of any Contract or right of first refusal, rights of first offer, preemptive rights or similar rights of any Person and (iv), except as set forth on Schedule 2.04(a), are owned by Seller free and clear of all Liens (other than restrictions on transfer under applicable federal and state securities Laws). Except as set forth on Schedule 2.04(a), there are no outstanding options, warrants, redemption rights, rights to subscribe to, purchase rights, calls, preemptive rights, equity appreciation rights, "phantom" equity rights, puts, equity-based performance units, subscriptions, Contracts, agreements, arrangements or rights of any character whatsoever relating to, or securities or rights convertible into, any shares or securities containing any equity features of the Company or any of its Subsidiaries, or Contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound or relating to the sale or issuance of the Company Stock or shares or other equity interests or options, warrants, scrip, rights to subscribe to, purchase rights, puts, calls commitments or rights of any character whatsoever relating to, or securities or rights convertible into, any shares or other equity interests, or which restrict the transfer of any equity interests of the Company (including the Company Stock) or any of its Subsidiaries.

(b)    All of the outstanding shares of capital stock or other equity interests of each of the Company and its Subsidiaries have been duly authorized and are validly issued and are fully paid and nonassessable. Except as set forth on Schedule 2.04(b), there are no securities or rights of any of the Company or its Subsidiaries, or Contracts, commitments, understandings or arrangements (contingent or otherwise) by which any of the Company and its Subsidiaries are bound obligating any of the Company and its Subsidiaries to redeem, repurchase or otherwise acquire any shares, shares of capital stock or other equity interests of the Company and its Subsidiaries. Except as set forth on Schedule 2.04(b), none of the Company and its Subsidiaries have outstanding bonds, debentures, notes or other similar obligations, the holders of which have the right to vote (or which are convertible into, exchangeable or exercisable for shares or securities having the right to vote) with the share or equity holders of any of the Company and its Subsidiaries on any matter. Except as set forth on Schedule 2.04(b), there are no voting trusts or other agreements or understandings to which any of the Company or its Subsidiaries are subject with respect to the voting of the shares, shares of capital stock or other equity interests of the Company or its Subsidiaries. Except as set forth on Schedule 2.04(b), no outstanding Options are subject to any severance or other ongoing benefits to the Optionholder. All outstanding Options are subject to automatic termination in connection with the Transaction pursuant to the Company's Option Plan.

Section 2.05    Financial Statements.

(a)    Attached as Schedule 2.05(a) are true, correct and complete copies of (i) the audited consolidated financial statements of (x) the Company and its Subsidiaries,

consisting of a balance sheet of the Company as of January 2, 2022 and January 3, 2021, and the related audited consolidated statements of operations, comprehensive loss, redeemable convertible preferred stock and stockholders' equity, and cash flows for the fiscal years then ended, and (y) Blue Nile and its Subsidiaries, consisting of a balance sheet of Blue Nile as of December 29, 2019, and the related audited consolidated statements of operations, comprehensive loss, changes in stockholder's equity, and cash flows for the fiscal year then ended and, in each case of (x) and (y), together with the auditor's reports thereon (the "Audited Financial Statements"), and (ii) the unaudited consolidated financial statements of Blue Nile and its Subsidiaries consisting of a balance sheet as of May 29, 2022 (the "Balance Sheet") and the related consolidated statements of income, stockholders' equity and cash flows for the five (5)-month period then ended (the "Interim Financial Statements" and, together with the Audited Financial Statements, including, solely with respect to the Audited Financial Statements, any notes and schedules thereto, the "Financial Statements"). The Financial Statements comply as to form in all material respects, and were prepared in accordance, with GAAP applied consistent with the Company's and its Subsidiaries' past practices throughout the periods involved and fairly present in all material respects the financial condition of the Company and its Subsidiaries on a consolidated basis as of the respective dates thereof and the results of their respective operations, changes in equity and cash flows for the periods indicated in the Financial Statements and were derived from and accurately reflect in all material respects, the books and records of the Company and its Subsidiaries.

(b)    The Company has established and maintains a system of internal accounting controls. Such internal accounting controls are sufficient to provide reasonable assurance (i) regarding the reliability of financial reporting, (ii) that transactions are executed with management's general or specific authorization, (iii) that all transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP, consistently applied, and to maintain proper accountability for items, (iv) recorded accountability for items is compared with actual levels at reasonable intervals and appropriate action is taken with respect to any differences, and (v) regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets. Except as set forth on Schedule 2.05(b), neither the Company (including any employee of the Company or its Subsidiaries who has a role in the preparation of financial statements or the internal accounting controls utilized by the Company) nor the Company's independent audits has identified or been made aware of (x) any significant deficiency or material weakness in any system of internal accounting controls utilized by the Company or its Subsidiaries, (y) any fraud or other wrongdoing, whether or not material, that involves any management or other employees of the Company or its Subsidiaries who have a role in the preparation of financial statements, financial reporting or the internal accounting controls utilized by the Company or its Subsidiaries or (z) any claim or allegation regarding any of the foregoing.

(c)    All accounts receivable and payable of the Company or its Subsidiaries arose in bona fide arm's length transactions in the Ordinary Course of Business, and, to the knowledge of the Company, no account receivable or payable is delinquent more than thirty (30) days in its payment. All accounts receivable are, except to the extent there are reserves therefor (if any) set forth in the Financial Statements, collectible in the Ordinary Course of Business. There are no facts or circumstances generally or specifically (other than general economic conditions) which would result in the uncollectability of any receivables in excess of the reserves therefor (if any) set forth on the Financial Statements. There has not been any adverse change in the collectability of any such

receivables since the date of the Interim Financial Statements. Schedule 2.05(c) sets forth, as of July 3, 2022, a true and correct aging schedule of accounts payable of the Company and its Subsidiaries.

(d)    Schedule 2.05(d) sets forth a complete and accurate list of all items of Indebtedness (other than any items of Indebtedness set forth in clause (i) of the definition thereof) of the Company and its Subsidiaries as of the date of this Agreement.

(e)    Subject to the reserves set forth in the Financial Statements, all inventory reflected on the Financial Statements is valued in accordance with GAAP at the lower of cost (on a specific identification method for diamonds and the weighted average cost method for fine jewelry) or net realizable value. The cost of inventory is determined using the specific identification method for diamonds and the weighted average cost method for fine jewelry in accordance with GAAP. The inventory reserves set forth in the Financial Statements were established in accordance with GAAP. The Financial Statements reflect adequate reserves for inventory write downs in accordance with GAAP, consistently applied.

Section 2.06    No Material Adverse Effect; Absence of Certain Developments.

(a)    Since January 2, 2022 through the date of this Agreement, there has not been any Material Adverse Effect.

(b)    Except as set forth on Schedule 2.06(b), except in connection with the Transaction, since January 2, 2022 through the date of this Agreement, none of the Company or its Subsidiaries have engaged in any material transaction other than in the Ordinary Course of Business or, to the knowledge of the Company, experienced, as a result of, arising out of, or related to, COVID-19 or COVID-19 Measures, any material business interruptions or Liabilities, including any (i) material disruptions to any of their supply chains, (ii) material failure of any of their suppliers to timely manufacture, ship or deliver raw materials and goods, (iii) material failure of any of their agents and service providers to timely perform services, (iv) material labor shortages, (v) material reductions in customer demand, (vi) any claim of force majeure by a counterparty to any contract, (vii) material non-fulfillment of customer orders, (viii) material restrictions on any of its operations, (ix) material reduced hours of operations or reduced aggregate labor hours or (x) material restrictions on uses of the Leased Real Property. Except as set forth on Schedule 2.06(b), since January 2, 2022 through the date of this Agreement, none of the Company or its Subsidiaries have taken any action that would have been prohibited by, or required the consent of Purchaser under, Section 5.01 if it had been taken after the date hereof and prior to the Closing Date.

Section 2.07    Title to Properties.

(a)    Each of the Company and its Subsidiaries have possession of and good and valid title to, or hold a valid leasehold interest in or has the right to use, free and clear of Liens (except Permitted Liens), all of the assets and rights, including personal property, necessary for, or used in the conduct of, the business of the Company and its Subsidiaries as presently conducted and as reflected in the Financial Statements, other than assets sold or otherwise disposed of in the Ordinary Course of Business since the date of the Balance Sheet. The assets and rights reflected in the Financial Statements or acquired after the date of the Balance Sheet are sufficient for the continued conduct of the

business of the Company and its Subsidiaries in substantially the same manner as presently conducted and constitute all of the rights, property and assets necessary to conduct the business of the Company and its Subsidiaries in substantially the same manner as currently conducted. The personal property, including machinery, equipment and other tangible assets, of the Company and its Subsidiaries is free from material defects (patent and latent), has been maintained in all material respects in accordance with normal industry practice, is in good operating condition and repair, subject to normal wear and tear, and is suitable in all material respects for the purposes for which it presently is used and presently proposed to be used.

(b)    The Company and its Subsidiaries do not have any Owned Real Property.

(c)    Schedule 2.07(c) contains a list of all real property leased or subleased by each of the Company and its Subsidiaries as of the date hereof (the "Leased Real Property"). The Company and its Subsidiaries have delivered to Purchaser a true, correct and complete copy of the underlying lease with respect to each parcel of Leased Real Property, including all amendments, extensions, renewals, guaranties and other Contracts with respect thereto (each, a "Lease"). Except as set forth on Schedule 2.07(c), with respect to each of the Leases: (i) it is in full force and effect, enforceable in accordance with its terms and either the Company or one of its Subsidiaries has a valid, binding and enforceable leasehold interest in each parcel or tract of real property leased by the Company or its Subsidiaries and such Company or Subsidiary enjoys peaceful and undisturbed possession of the Leased Real Property; (ii) none of the Company or its Subsidiaries have received notice of any existing or potential material defaults thereunder by the Company or such Subsidiary (as applicable) nor, to the knowledge of the Company, are there any existing material defaults by the lessor thereof; and (iii) no event has occurred which (with notice, lapse of time or both) would constitute a material breach or default thereunder by the Company or any of its Subsidiaries (as applicable) or, to the knowledge of the Company, any other party thereto and the Company or any of its Subsidiaries (as applicable) has paid all rent and other expenses due and payable under each such Lease. The present use and operation of the Leased Real Property is authorized by, and is in compliance with, in all material respects, all applicable zoning, land use, building, and fire Laws and other legal requirements. There are no subleases, licenses, occupancy agreements or other contractual obligations that grant the right of use, occupancy, possession, lease or enjoyment of any of the Leased Real Property to any Person other than the Company and its Subsidiaries, and there is no Person in possession of any of the Leased Real Property other than the Company and its Subsidiaries. The Company or its Subsidiaries have not collaterally assigned, pledged, mortgaged, deeded in trust, or otherwise granted a Lien on any Lease or any interest therein, including its leasehold interest in any of the Leased Real Property.

(d)    To the knowledge of the Company, there are no outstanding options or other contractual rights to purchase, sell or lease, or rights of first refusal to purchase, sell or lease the Leased Real Property or any portion thereof or interests therein or contracts relating to the right to receive any portion of the income or profits from the sale thereof. None of the Company or its Subsidiaries have any contractual obligation, nor has entered into any contract to purchase or sell any real property.

(e)    The Company or any of its Subsidiaries has not received any written, or, to the knowledge of the Company, oral, notice of existing, pending or threatened (i) Legal Proceedings, including any condemnation or eminent domain proceedings threatened

against or affecting the Leased Real Property or any portion thereof or interest therein, or (ii) zoning, building code or other moratorium proceedings, or similar matters, which would reasonably be expected to materially and adversely affect the ability to operate the Leased Real Property as currently operated. Neither the whole nor any material portion of any Leased Real Property has been damaged or destroyed by fire or other casualty.

(f)    The Leased Real Property is sufficient for the continued conduct of the business of the Company and its Subsidiaries after the Closing in substantially the same manner as conducted prior to the Closing and constitutes all of the real property necessary to conduct the business of the Company and its Subsidiaries as currently conducted. The Company or its Subsidiaries have obtained all Permits that are required by Law for the current uses of the Leased Real Property for the conduct of the business as currently conducted and as planned to be conducted as of the date of this Agreement. The use and operation of the Leased Real Property in the conduct of the business of the Company and its Subsidiaries does not violate in any material respect any Law, covenant, condition, restriction, easement, license, Permit or Contract.

(g)    No material improvements constituting a part of the Leased Real Property encroach on real property owned or leased by a Person other than the Company or any of its Subsidiaries. The improvements located on the Leased Real Property or constituting part thereof, are in good operating condition and repair, and are suitable, adequate and sufficient in all material respects for the purposes for which such Leased Real Property is currently used. There are no material defects in the roof, footings, foundation, sprinkler mains, structural, mechanical and HVAC systems and masonry walls in any of the improvements upon the Leased Real Property. The Leased Real Property is supplied with utilities and other services necessary for the operation thereof as the same is currently operated.

Section 2.08    Tax Matters.

(a)    All income and other material Tax Returns required by Law to be filed by any of the Company and its Subsidiaries have been timely filed (taking into account any applicable extensions), and all such Tax Returns are true, correct and complete in all material respects. To the knowledge of the Company, all other Tax Returns required by Law to be filed by any of the Company and its Subsidiaries have been timely filed (taking into account any applicable extensions), and to the knowledge of the Company, all such Tax Returns are true, correct and complete in all material respects.

(b)    All material Taxes due and payable by any of the Company and its Subsidiaries, whether or not shown on any Tax Return, have been paid. To the knowledge of the Company, all other Taxes due and payable by the Company and its Subsidiaries, whether or not shown on any Tax Return, have been paid.

(c)    The Company and each of its Subsidiaries have (i) withheld and deducted all material amounts of Taxes required to have been withheld or deducted by it in connection with amounts paid or owed to any employee, independent contractor, creditor, shareholder or any other third party, (ii) remitted, or will remit on a timely basis, such amounts to the appropriate taxing authority of any Governmental Body and (iii) complied in all material respects with applicable Law with respect to Tax withholding, including all reporting and record keeping requirements.

(d)    None of the Company or its Subsidiaries are currently engaged in any material audit, administrative proceeding or judicial proceeding with respect to Taxes. None of the Company or its Subsidiaries have received any written notice from a taxing authority of any Governmental Body of a dispute or claim with respect to any material amount of Taxes, other than disputes or claims that have since been resolved, and to the knowledge of the Company, no such claims have been threatened. No claim has been made by any taxing authority of any Governmental Body in writing in a jurisdiction where any of the Company or its Subsidiaries do not file a Tax Return that such entity is or may be subject to Taxes by that jurisdiction. There are no outstanding agreements extending or waiving the statutory period of limitations applicable to any claim for, or the period for the collection or assessment or reassessment of, a material amount of Taxes of the Company or any of its Subsidiaries.

(e)    Within the past five (5) years, none of the Company or its Subsidiaries have (A) constituted either a "distributing corporation" or a "controlled corporation" in a distribution of stock that was purported or intended to be governed in whole or in part by Section 355 of the Code, or (B) had distributed stock of another Person or has had its stock distributed by another Person in a transaction that was purported to be governed in whole or in part by Section 361 of the Code.

(f)    None of the Company or its Subsidiaries have been a party to any "listed transaction" within the meaning of Treasury Regulation Section 1.6011-4(b)(2).

(g)    There are no Liens with respect to Taxes on any of the assets of the Company or any of its Subsidiaries, other than Permitted Liens.

(h)    None of the Company or its Subsidiaries has any material Liability for the Taxes of any Person (other than the Company or another Subsidiary, as applicable) (i) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Law), (ii) as a transferee or successor or (iii) by contract (except, in the case of (ii) and (iii), for liabilities pursuant to contracts entered into in the Ordinary Course of Business not primarily relating to Taxes).

(i)    None of the Company or its Subsidiaries has made a request for an advance tax ruling, request for technical advice, a request for a change of any method of accounting or any similar request that is in progress or pending with any taxing authority of any Governmental Body with respect to income Taxes or a material amount of non-income Taxes.

(j)    None of the Company or its Subsidiaries will be required to include any material amount in taxable income, or exclude any material item of deduction or loss from taxable income, for any taxable period (or portion thereof) beginning after the Closing Date as a result of any (i) installment sale or open transaction disposition made prior to the Closing, (ii) prepaid amount received or deferred revenue recognized prior to the Closing (other than amounts received or recognized in the Ordinary Course of Business), (iii) change in method of accounting or use of an improper method of accounting for a taxable period ending on or prior to the Closing Date, (iv) "closing agreement" described in Section 7121 of the Code (or any similar provision of state, local or foreign Law) executed prior to the Closing or (v) by reason of Section 965(a) of the Code or election pursuant to Section 965(h) of the Code (or any similar provision of state, local or foreign Law).

(k)    Each of the Company and its Subsidiaries has collected all material sales and use Taxes required to be collected, and has remitted, or will remit on a timely basis, such amounts to the appropriate Governmental Body, or has been furnished properly completed exemption certificates.

(l)    None of the Company or its Subsidiaries are a party to, or bound by, any Tax allocation, Tax sharing or Tax indemnification agreement (except, in each case, for any such agreements that are entered into in the Ordinary Course of Business and are not primarily relating to Taxes).

(m)    None of the Company or its Subsidiaries has a permanent establishment (within the meaning of an applicable Tax treaty) or otherwise has a taxable presence in a country other than the country in which it is organized.

(n)    The U.S. federal income tax classification of the Company and each of its Subsidiaries is set forth on Schedule 2.08(n).

(o)    All related party transactions to which the Company and its Subsidiaries are parties are in compliance with section 482 of the Code (or any corresponding or similar provision of state, local, or foreign Law).

(p)    Except as set forth on Schedule 2.08(p), none of the Company or its Subsidiaries have deferred any "applicable employment taxes" under Section 2302 of the Coronavirus Aid, Relief and Economic Security Act (Public Law 116-136) and any administrative or other guidance published with respect thereto by any Governmental Body, the American Rescue Plan Act of 2021 (Public Law 117-2), and any administrative or other guidance published with respect thereto by any Governmental Body, or any other Law intended to address the consequences of COVID-19 ("CARES Act") (or any corresponding or similar provision of state, local, or foreign Law) and have complied with and duly accounted for all credits received under Section 2301 of the CARES Act (or any corresponding or similar provision of state, local or foreign Law).

Section 2.09    Contracts and Commitments.

(a)    Except as set forth on Schedule 2.09(a), which contains a complete and accurate list as of the date hereof of all Contracts of the type noted in this Section 2.09(a), none of the Company or its Subsidiaries are, as of the date of this Agreement, a party to any:

(i)    labor-related Contract with any union or labor organization, including any collective bargaining agreement, card check agreement, recognition agreement, neutrality agreement, memorandum of agreement, memorandum of understanding or other Contracts;

(ii)    pension, profit sharing or retirement plan, other than any Multiemployer Plan or any Company Plan, whether or not set forth in Section 2.14 or the Schedules relating thereto;

(iii)    Contract for the employment of any Company Employee (except, as it relates to any former employee, only to the extent of ongoing Liability), or any Contract for the service or engagement of any officer, director, or

independent contractor, in either case, providing for a base salary, or in the case of any officer, director, or independent contractor, total compensation, in excess of $200,000 per annum, except for any (A) such Contracts that are terminable upon notice of sixty (60) days or less by the Company or a Subsidiary without liability or financial obligation or (B) any Company Plan, or except as set forth in Section 2.14 or the Schedules relating thereto;

(iv)    Contract, agreement, indenture or other evidence of Indebtedness of the Company and its Subsidiaries or to mortgaging, pledging or otherwise placing a Lien (other than a Permitted Lien (except for a Permitted Lien set forth in clauses (d), (e), (k) or (n) of the definition thereof)) on any portion of the assets or equity of the Company or its Subsidiaries;

(v)    guaranty of any obligation of a third party for borrowed money or other guaranty;

(vi)    Contract under which it is lessee of, or holds or operates any personal property owned by any Person, for which the aggregate rental payments exceed (or are expected to exceed) $100,000 in a twelve (12)-month period;

(vii)    Contract under which it is lessor of or permits any Person to hold or operate any property, real or personal;

(viii)    Contracts pursuant to which the Company or any of its Subsidiaries (A) grants to a third-party any right, license, consent or covenant not to sue with respect to any Intellectual Property (other than Contracts in under $150,000 and non-exclusive licenses granted by or to customers or vendors in the Ordinary Course of Business), or (B) is granted by any third party, any right, license, consent or covenant not to sue with respect to any Intellectual Property (excluding licenses of commercially available, off-the-shelf software available on standard terms with an annual aggregate fee of less than $500,000 or licenses which have an annual aggregate fee of less than $250,000);

(ix)    Contracts that provide for (A) the creation, discovery, development or reduction to practice by the Company or any of its Subsidiaries for any other Person, or for the Company or any of its Subsidiaries by any other Person, of material Intellectual Property (including any joint development) or (B) the assignment or other transfer of any material Intellectual Property to or from the Company or any of its Subsidiaries, in each case (A) and (B), other than the Personnel IP Contracts;

(x)    Contracts prohibiting, limiting, curtailing or restricting the ability of the Company or its Subsidiaries to engage in any business, to operate in any geographical area or to compete with any Person in any geographic area or line of business or restrict the Persons to whom the Company or its Subsidiaries may sell products or deliver services;

(xi)    Contracts relating to the acquisition or disposition (whether by merger, purchase, sale of equity, sale of assets or otherwise) of any Person or equity or material assets or business or line of business or any real property entered into in during the past five (5) years or the future acquisition or

disposition (whether by merger, sale of stock, sale of assets or otherwise) of any Person or assets or equity or business or line of business, in each case for consideration in excess of $250,000;

(xii)    joint venture Contract, partnership agreement, limited liability company agreement, strategic alliance agreement or other similar Contract with a third party;

(xiii)    Contracts providing for the grant of an option or a first-refusal, first-offer or similar preferential right to purchase, lease or acquire any material asset of the Company and its Subsidiaries;

(xiv)    Contracts granting exclusivity, "most-favored nation", "take or pay", or similar rights;

(xv)    Contract with any Person (A) that is a sole source supplier to the Company and its Subsidiaries, (B) from which the Company and its Subsidiaries source all or substantially all of their supply of any material product or service or (C) that requires the Company or any of its Subsidiaries to use any supplier or third party for all or a specified percentage of any of the Company's or its Subsidiaries' requirements or needs;

(xvi)    Contracts to which any present or former director, officer, employee, stockholder or holder of derivative securities of the Company and its Subsidiaries, or any member of any such Person's immediate family, or any entity owned or controlled by any such Person, is a party, excluding any Company Plan;

(xvii)    Contracts in respect of any settlement, coexistence agreement or similar agreement with any Governmental Body or other Person containing obligations yet to be performed or completed by either or both parties;

(xviii)    Contracts with any Material Supplier;

(xix)    Contracts with any Governmental Body;

(xx)    Contracts under which the Company or its Subsidiaries has advanced or loaned any amount to any of its directors, managers, officers, Affiliates or employees;

(xxi)    Contracts with vendors that are material to the operation of the Company's and its Subsidiaries' e-commerce business, including the webhosting platform;

(xxii)    any Contract with a marketing or advertising agency involving aggregate consideration in excess of $1,000,000 on an annual basis;

(xxiii)    Contracts with the SPAC or its Affiliates or other parties to the Termination Agreement or Business Combination Agreement; or

(xxiv)    any written offer or proposal which, if accepted, would constitute any of the foregoing.

(b)    Each of the Contracts listed or required to be listed on Schedule 2.09(a) (each, a "Material Contract") is in full force and effect, and is the legal, valid and binding obligation of either the Company or a Subsidiary which is party thereto, and, to the knowledge of the Company, of the other parties thereto enforceable against each of them in accordance with its terms. Except as set forth on Schedule 2.09(b), none of the Company or its Subsidiaries is in material breach or material default under any Material Contract, and, to the knowledge of the Company, none of the other party(ies) to any Material Contract is in material breach or material default thereunder nor has any notice of material breach or material default been threatened in writing or, to the knowledge of the Company, threatened orally (including, in each case, as a result of COVID-19 or COVID-19 Measures). Except as set forth on Schedule 2.09(b), no event has occurred that with the lapse of time or the giving of notice or both would constitute a material breach or material default on the part of the Company, or any Subsidiary or, to the knowledge of the Company, any other party(ies) under any Material Contract. (i) No party to any Material Contract has exercised in writing (or, to the knowledge of the Company, orally) any termination rights with respect thereto and (ii) no party to any Material Contract has given written notice of any dispute with respect to any Material Contract. The Company has made available to Purchaser true and correct copies of each Material Contract, together with all amendments, modifications or supplements thereto and all waivers of any of the terms thereof, and, in the case of any oral Contracts, an accurate summary of the key and material terms thereof.

Section 2.10    Intellectual Property; IT and Privacy Matters.

(a)    Schedule 2.10(a) sets forth a true, correct and complete list of (i) all registered, applied for or issued items of Intellectual Property included in the Owned Intellectual Property (the "Scheduled Intellectual Property") and (ii) all material unregistered trademarks included in the Owned Intellectual Property, including, for each item of Scheduled Intellectual Property, the record owner, jurisdiction, registration, issuance or application number registration, issuance or application date, as applicable, and status and registrar, as applicable, of each such item. All necessary filing, registration, maintenance and renewal fees currently due and owing in connection with the Scheduled Intellectual Property have been paid to, and all necessary documents, recordations and certifications have been filed with, the appropriate Governmental Body and authorized registrars for the purposes of maintaining, perfecting and recording ownership of all Scheduled Intellectual Property by the Company or its applicable Subsidiary. No issuance or registration obtained or acquired by the Company or its Subsidiaries (as applicable), and no application filed or acquired by the Company or its Subsidiaries (as applicable), for any Scheduled Intellectual Property has been cancelled, abandoned, allowed to lapse or not renewed, except where the Company or its applicable Subsidiary has, in its reasonable business judgement, decided to cancel, abandon, allow to lapse or not renew such issuance, registration or application. All Scheduled Intellectual Property is subsisting, valid and enforceable.

(b)    Neither the conduct and operation of the businesses of the Company and its Subsidiaries nor the products and services of the Company and its Subsidiaries ("Company Products"), including the manufacture, use, practice, offering, licensing, provision, sale, distribution or other commercial exploitation of any Company Products, has infringed, misappropriated, diluted or otherwise violated, or infringes, misappropriates, dilutes or otherwise violates any Intellectual Property of any Person in any material respect. No member of the Company and its Subsidiaries is the subject of

any pending or threatened (either in writing or, to the knowledge of the Company, orally threatened) Legal Proceedings either (i) involving a claim against the Company or its Subsidiaries of infringement, misappropriation, dilution or other violation of any Intellectual Property of any Person, or (ii) challenging the use, ownership, validity or enforceability of any Company Intellectual Property. None of the Company or its Subsidiaries have received any written notice alleging any of the foregoing.

(c)    To the knowledge of the Company, no Person has infringed, misappropriated, diluted or otherwise violated, or is infringing, misappropriating, diluting or otherwise violating any Owned Intellectual Property, any Licensed Intellectual Property that is exclusively licensed to any member of the Company and its Subsidiaries or any Company Product, in each case in any material respect, and no such claims have been made against any Person by the Company and its Subsidiaries. None of the Company and its Subsidiaries have received written notice of any such claim.

(d)    The Company and its Subsidiaries are the sole and exclusive owners of all right, title and interest in and to all Owned Intellectual Property, free and clear of all Liens other than Permitted Liens. The Company and its Subsidiaries have valid, enforceable and continuing rights to use, sell, license, and otherwise commercially exploit, as the case may be, pursuant to a valid written Contract, all Licensed Intellectual Property as the same is used, sold, licensed or otherwise commercially exploited by the Company and its Subsidiaries or as the same is otherwise necessary for the conduct of the business of each of the Company and its Subsidiaries as currently conducted. The Owned Intellectual Property, along with the Licensed Intellectual Property (when used within the scope of the applicable license) (collectively, the "Company Intellectual Property"), constitutes all the Intellectual Property necessary and sufficient for the conduct and operation of the businesses of the Company and its Subsidiaries as currently conducted. None of the Company Intellectual Property, or the Company and its Subsidiaries' rights to own, use, practice, or otherwise commercially exploit the same, will be materially and adversely affected by reasons of the execution and delivery of this Agreement, the performance by any member of the Company and its Subsidiaries obligations hereunder, or the consummation of the Transaction.

(e)    The Company and its Subsidiaries take, and have taken, all commercially reasonable measures necessary to protect and maintain the secrecy, confidentiality and value of (i) all trade secrets included in the Owned Intellectual Property, (ii) all trade secrets of any Person in the possession or control of any of the Company or its Subsidiaries, and (iii) all invention disclosures not covered by any patents owned or patent applications filed by the Company, or to which any of the Company or its Subsidiaries has access or has had access, with respect to which any of the Company or any of its Subsidiaries is subject to confidentiality obligations (collectively, the "Company Trade Secrets"). No Company Trade Secrets have been authorized to be disclosed or have been actually disclosed by any of the Company or its Subsidiaries to any Person other than pursuant to a valid and enforceable written non-disclosure agreement restricting the disclosure and use thereof.

(f)    Except for those Persons identified on Schedule 2.10(f), the Company and its Subsidiaries have each entered into valid and enforceable written Contracts with each Person (including all past and current employees, independent contractors and consultants) involved in the creation, discovery, development or reduction to practice of any material Intellectual Property for or on behalf of the Company or its Subsidiaries

(including all Owned Intellectual Property) pursuant to which such Person has: (i) presently assigned and/or transferred to the Company or its Subsidiaries all such Person's right, title and interest in and to all Intellectual Property or Company Products created, discovered, developed or reduced to practice by such Person in the course of such Person's employment or engagement thereby; and (ii) agreed to hold all Company Trade Secrets and Company proprietary information in confidence both during and after his, her or its employment or engagement, as applicable (the "Personnel IP Contracts"). All Personnel IP Contracts are in full force and effect, and have not suffered a material default or breach. There are no pending or threatening claims from any current or former employees, independent contractors, or consultants of the Company that intend to assert any rights over the Intellectual Property.

(g)    No Open Source Software is or has been included, incorporated or embedded in, linked to, combined or distributed with or used in the development, maintenance, operation, delivery or provision of any Company Products in a manner that requires the contribution, licensing or disclosure to any third party of any portion of any Owned Intellectual Property (including Software) or that would otherwise diminish or transfer the rights of ownership of any Owned Intellectual Property (including Software) to any third party. The Company and its Subsidiaries have complied and are in compliance with all terms and conditions of all relevant licenses for Open Source Software used in the operation of the businesses of the Company and its Subsidiaries.

(h)    Other than to contractors providing services to the Company and its Subsidiaries pursuant to a written confidentiality and non-disclosure agreement entered into in the ordinary course of business, no source code that constitutes Owned Intellectual Property has been disclosed, licensed, released, distributed, escrowed or made available to any Person, and no Person has been granted any rights thereto, and neither the Company nor its Subsidiaries has agreed to disclose, license, release, deliver, or otherwise grant any right thereto under any circumstance.

(i)    All advertising, marketing, and other promotional materials currently being disseminated, and that have been disseminated in the five (5) years preceding the date hereof, by or on behalf of the Company or any of its Subsidiaries (collectively, the "Company Marketing Materials") are in material compliance with all Laws applicable to such Company Marketing Materials and all applicable administrative interpretations of such laws, including the Federal Trade Commission's Guides for the Jewelry, Precious Metals, and Pewter Industries (16 C.F.R. Part 23) and Guides Concerning the Use of Endorsements and Testimonials in Advertising (16 C.F.R. Part 255). To the knowledge of the Company, to the extent that any Company Marketing Materials reproduce the image, likeness, or testimonial of any person, the Company and its Subsidiaries have secured all necessary releases in connection with such images, likenesses, and testimonials. To the knowledge of the Company, any testimonials included in the Company Marketing Materials reflect the honest opinions, findings, beliefs and/or experiences of the individuals providing such testimonials.

(j)    The Company and its Subsidiaries own, or have valid rights to access and use pursuant to a written Contract, all IT Systems. The IT Systems are reasonably adequate for, and operate and perform in all material respects as needed by the Company and its Subsidiaries to conduct their businesses as currently conducted. The IT Systems do not contain any viruses, worms, Trojan horses, bugs, faults or other devices, errors,

contaminants or effects that could (i) materially disrupt or adversely affect the functionality of any IT Systems, except as disclosed in their documentation, or (ii) enable or assist any Person to access without authorization any IT Systems. The Company and its Subsidiaries have taken commercially reasonable measures to maintain the performance and security of the Company IT Systems. Neither the Company nor its Subsidiaries has suffered a disruption, malfunction, failure or security breach of the Company IT Systems that has caused a material adverse impact to operation the Company's or its Subsidiaries' business. The Company and its Subsidiaries have commercially reasonable back-up and disaster recovery arrangements in the event of a failure.

(k)    The Company and its Subsidiaries are, and have at all times been, in compliance with all Privacy Requirements in all material respects. The Company and its Subsidiaries have implemented and maintained adequate policies, procedures and systems for receiving and responding to requests from individuals concerning their Personal Information. None of the Company and its Subsidiaries' privacy policies or notices contain any material omissions or are misleading or deceptive. The Company and its Subsidiaries have not received any written notice (including from third parties acting on its behalf) of any claims, charges, investigations, or regulatory inquiries related to or alleging the violation of any Privacy Requirements. To the knowledge of the Company, there are no facts or circumstances that could form the basis of any such claim, charge, investigation, or regulatory inquiry.

(l)    The Company and its Subsidiaries have (i) implemented commercially reasonable technical and organizational safeguards to protect all Personal Information and other confidential data in its possession or under its control against loss, theft, misuse or unauthorized access, use, modification, alteration, destruction or disclosure, and (ii) taken commercially reasonable steps to require, including by making contractual commitments to the extent required by applicable Privacy Laws, that all third-party service providers, outsourcers, processors or other third parties who process, store or otherwise handle any Personal Information for or on behalf of the Company and its Subsidiaries have agreed to comply with applicable Privacy Laws. To the knowledge of the Company, any third party who has provided any Personal Information to the Company and its Subsidiaries has done so in compliance with applicable Privacy Laws, including providing any notice and obtaining any consent required.

(m)    Except as set forth on Schedule 2.10(m), in the past five (5) years, there have been no actual, or, to the knowledge of the Company, suspected, material breaches, security incidents, cyber-attacks, misuse of or unauthorized access to or disclosure of any Personal Information in the possession or control of the Company and its Subsidiaries or collected, used or processed by or on behalf of the Company and its Subsidiaries, and the Company and its Subsidiaries have not provided or been required to provide any notices to any Person in connection with any security incident or data breach involving of any Personal Information. The Company and its Subsidiaries have conducted commercially reasonable data security testing or audits at reasonable and appropriate intervals and have resolved or remediated in all material respects any privacy or data security issues or vulnerabilities identified. Neither the Company and its Subsidiaries nor any third party acting at the direction or authorization of the Company and its Subsidiaries has received any ransomware demand or other threat or have paid (i) any perpetrator of any data breach incident or cyber-attack or (ii) any third party with actual or alleged information about any data breach incident or cyber-attack.

(n)    The execution, delivery and performance of this Agreement materially complies with all applicable Privacy Requirements.

Section 2.11    Litigation. Except as set forth on Schedule 2.11, (i) there are no, and during the five (5) years preceding the date hereof, there have not been any, Legal Proceedings or Orders pending or threatened (either in writing or, to the knowledge of the Company, orally) against or by any of the Company and its Subsidiaries, at law or in equity, or before or by any Governmental Body, and (ii) none of the Company or any of its Subsidiaries is, or is threatened (either in writing or, to the knowledge of the Company, orally threatened) to be made, subject to any outstanding Order, in each case of (i) and (ii), which would adversely affect the Company or any of its Subsidiaries or their business or which would or is reasonably likely to prevent or materially delay the ability of the Company to consummate the Transaction or adversely affect the Company's ability to perform any of its obligations under this Agreement. Except as set forth on Schedule 2.11, none of the Company or its Subsidiaries is subject to any outstanding judgment, Order or decree of any Governmental Body as of the date hereof. There is no unsatisfied judgment or any open injunction binding upon any of the Company or its Subsidiaries. With respect to any Legal Proceedings identified on Schedule 2.11, the Company has made available to Purchaser true, correct and complete copies of all material complaints and filings related to such Legal Proceedings or Orders that are within the possession or reasonable control of the Company or any of its Subsidiaries. Except as set forth on Schedule 2.11, to the knowledge of the Company, no basis exists for any Legal Proceeding or Order against or by the Company or any of its Subsidiaries, which would adversely affect their business or seek to enjoin, prevent or delay the Transaction.

Section 2.12    Undisclosed Liabilities. As of the date of this Agreement, neither the Company nor any of its Subsidiaries has any Liability, debt or obligation (including as a result of COVID-19 and COVID-19 Measures), whether accrued, contingent, absolute, determined, determinable or otherwise, except for liabilities, debts or obligations (a) reflected or reserved for in the Financial Statements or disclosed in any notes thereto, (b) that have arisen since January 2, 2022 in the Ordinary Course of Business of the Company and its Subsidiaries, (c) arising under this Agreement or the performance by the Company of its obligations hereunder, including Transaction Expenses, (d) otherwise disclosed in the Schedules or (e) that are not, individually or in the aggregate, material in amount.

Section 2.13    Governmental Consents. Except as set forth on Schedule 2.13, no authorization of any Governmental Body is required in connection with any of the execution, delivery or performance of this Agreement or the other agreements to be executed by the Company or the consummation by the Company of any other transaction contemplated hereby other than those that may be required by reason of Purchaser's (as opposed to any other party's) participation in the transactions contemplated hereby.

Section 2.14    Employee Benefit Plans.

(a)    Schedule 2.14(a) contains a complete and correct list of all material Company Plans. With respect to each material Company Plan (but, with respect to any non-U.S. Company Plan, only to the extent reasonably available), the Company has provided to Purchaser true, correct and complete copies of each of the following documents, to the extent applicable: (i) the current plan document and all amendments

thereto, or a written summary thereof where the plan is unwritten; (ii) the most recent summary plan description and summaries of material modifications, if any, required under ERISA with respect to any such Company Plan; (iii) the three (3) most recent annual reports on Form 5500, in each case, together with all attachments thereto, with respect to each Company Plan (if applicable); (iv) the most recent determination or opinion letter, if any, issued by the IRS with respect to each such Company Plan; (v) all material correspondence to or from any Governmental Body in the last three (3) years with respect to a Company Plan; (vi) IRS Forms 1094-C as filed with the IRS for the last three (3) years and Forms 1095-C as filed with the IRS and provided to employees for the last two (2) years; (vii) nondiscrimination testing for the three (3) most recently completed plan years; and (viii) the ERISA bond, ERISA fiduciary indemnification agreements, trust agreements, insurance contracts, and other funding agreements and arrangements with respect to each Company Plan currently in effect. Each Company Plan (and each related trust, insurance contract or fund) has been established, maintained, in form and operation, funded, invested and administered, as applicable, in all material respects in compliance with its terms and all applicable Laws, including ERISA and the Code. The Company has in all material respects complied, and currently is in compliance, with COBRA, the Patient Protection and Affordable Care Act, including the Health Care and Education Reconciliation Act of 2010, as amended and including the guidance issued thereunder (the "PPACA"); and the Company has not incurred (whether or not assessed, and including on account of an ERISA Affiliate), and does not reasonably expect to incur or be subject to, any Taxes or other penalties under PPACA (including with respect to the reporting requirements under Sections 6055 and 6056 of the Code, as applicable) or under Sections 4980B, 4980D or 4980H of the Code. With respect to each Company Plan, all material contributions, premiums, reimbursements, accruals and payments (including all employer contributions and employee salary reduction contributions) due on or before the date hereof have been made and all material obligations in respect of each Company Plan as of the date hereof have been accrued and reflected in the Company's financial statements to the extent required by GAAP. Each Company Plan that is intended to be qualified under Section 401(a) of the Code has received, or relied upon, a favorable determination letter, or opinion letter, from the IRS; and to the knowledge of the Company, no event or circumstance has occurred since the date of such determination or opinion letter that would adversely affect the qualified status of any such Company Plan. There are no Governmental Body or individual audits, requests for information, penalties, actions, suits or proceedings (other than routine claims for benefits) pending or to the knowledge of the Company expressly threatened in writing against any Company Plan, as of the date hereof. There have been no non-exempt "prohibited transactions" (as defined in Code Section 4975 or Section 406 of ERISA) with respect to any Company Plan. There have been no breaches of fiduciary duty (as determined under ERISA) with respect to any Company Plan that would result in material Liability to the Company or its Subsidiaries.

(b)    None of the Company and its Subsidiaries has any current or contingent Liability or obligation (including on account of any ERISA Affiliate) in respect of a single employer "pension plan" (as defined in Section 3(2) of ERISA) which is subject to Sections 412 or 430 of the Code or Section 302 or Title IV of ERISA; and neither the Company nor its Subsidiaries is subject to any Company Plan-related Lien under ERISA or the Code.

(c)    Except as listed on Schedule 2.14(c), none of the Company and its Subsidiaries have incurred any current or projected Liability in respect of post-

employment or post-retirement health, medical or life insurance benefits for current, former or retired employees of any of the Company and its Subsidiaries, except as required to avoid an excise Tax under COBRA and for which the recipient pays the full premium cost.

(d)    None of the Company and its Subsidiaries have any current or contingent Liability or obligation with respect to any Multiemployer Plan, "multiple employer welfare arrangement" (as defined in Section 3(40) of ERISA) or "multiple employer plan" to which Code Section 413(c) applies (including on account of any ERISA Affiliate).

(e)    Neither the execution of this Agreement nor the consummation of the Transaction (whether alone or in connection with any other event(s)) is reasonably expected to: (i) result in any material payment or benefits becoming due to any current or former employee, service provider, individual independent contractor or director of any of the Company or any of its Subsidiaries under any Company Plan; (ii) materially increase the amount of any payment due to any current or former employee, service provider, individual independent contractor or director of any of the Company or any of its Subsidiaries or under any Company Plan; (iii) result in the acceleration of the time of payment or the funding or vesting of any payment of compensation or provision of benefits to any Company Employee under any of the Company Plans; (iv) limit the right to merge, materially amend or terminate any Company Plan (except any limitations imposed by applicable Law, if any); or (v) result in the forfeiture of any compensation or benefits under any Company Plan or otherwise. No insurance policy or other agreement relating to a Company Plan requires or permits a retroactive increase in contributions, premiums or other payments due thereunder.

(f)    Each Company Plan which constitutes in any part a "nonqualified deferred compensation plan" (within the meaning of Section 409A of the Code) has been established, operated and maintained in compliance with Section 409A of the Code in all material respects. None of the Company and its Subsidiaries are party to any agreement providing for a gross-up, reimbursement or payment of Taxes to an individual who incurs Taxes under Sections 409A or 4999 of the Code.

(g)    No amount or benefit that could be, or has been, received (whether in cash or property or the vesting of property or the cancellation of indebtedness) by any current or former employee, officer or director of any of the Company or any of its Subsidiaries who is reasonably expected to be a "disqualified individual" within the meaning of Section 280G of the Code would reasonably be expected to be characterized as an "excess parachute payment" (as defined in Section 280G(b)(1) of the Code) as a result of the consummation of the Transaction.

(h)    With respect to each Company Plan established or maintained outside of the United States for the benefit of employees and service providers of the Company and its Subsidiaries residing outside of the United States (a "Foreign Benefit Plan"): (i) all employer and employee contributions required by applicable Law or by the terms of such Foreign Benefit Plan have been made, or, if applicable, accrued in accordance with normal accounting practices; (ii) the fair market value of the assets of each funded Foreign Benefit Plan, the Liability of each insurer for any Foreign Benefit Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligation with respect to all current or former participants in such Foreign Benefit Plan

according to the actuarial assumptions and valuations most recently used to determine employer contributions to such Foreign Benefit Plan and no transactions contemplated by this Agreement shall cause such assets or insurance obligations to be less than such benefit obligations; and (iii) each Foreign Benefit Plan required to be registered has been registered and has been maintained in good standing with the applicable Governmental Body.

Section 2.15    Insurance. Schedule 2.15 sets forth a list of all insurance policies maintained by the Company or any of its Subsidiaries currently in effect that cover any portion of the assets, properties, activities or businesses of the Company or its Subsidiaries or their respective directors, officers, agents or employees, identifying the insurer the types and amounts of coverage and expiration date, and true and correct copies of such policies have been made available to the Purchaser.  Each such insurance policy is in full force and effect in accordance with its terms, including any required notification of change of ownership, with all premiums due and payable thereon having been paid in full on a timely basis, and are maintained and expected to remain in full force and effect following the consummation of the Transaction.  None of the Company or any of its Subsidiaries is in material default or material breach or has otherwise failed to comply with, in any material respect, any provision contained in any such policy.  No written notice of cancellation, termination or revocation or other written notice that any such insurance policy is no longer in full force or effect in accordance with its terms or that the issuer of any such insurance policy is not willing or able to perform its obligations thereunder has been received by the Company or any of its Subsidiaries.  There are no material claims under such insurance policies that have not been timely and properly reported to an insurer, or as to which any insurer has questioned or denied liability or has communicated a reservation of rights as to coverage. None of the Company or any of its Subsidiaries has any self-insurance arrangements.

Section 2.16    Environmental Matters.

(a)    The Company and its Subsidiaries are and have been in compliance in all material respects for the past five (5) years with all Environmental Laws, which compliance includes obtaining, maintaining and complying in all material respects with all material Environmental Permits, in each case required for their operations and their occupancy of any real property, which such Environmental Permits are in full force and effect and have been appropriately maintained; the Company and its Subsidiaries have not received any written notice, nor, to the knowledge of the Company, is there any current proposal or requirement to amend, revoke or replace any such Environmental Permit;

(b)    None of the Company and its Subsidiaries have received any written notice, demand, letter, or request for information, complaint, Order, or other document from any Governmental Body or Person regarding any actual or alleged material violation of or material Liability under any Environmental Laws or material penalty with respect thereto and, at all times during the past five (5) years, there has not been, and there are not presently any Environmental Claims pending, threatened in writing, or, to the knowledge of the Company, otherwise threatened against the Company or any of its Subsidiaries;

(c)    None of the Company and its Subsidiaries are subject to any pending or, to the knowledge of the Company, threatened, Legal Proceedings asserting a remedial obligation or material Liability under Environmental Laws;

(d)    None of the Company and its Subsidiaries are subject to any outstanding material Liabilities pursuant to any applicable Environmental Law;

(e)    None of the Company and its Subsidiaries nor, to the knowledge of the Company, any predecessor of any of the Company and its Subsidiaries, has used, manufactured, treated or stored any Hazardous Material, other than in the Ordinary Course of Business and in material compliance with Environmental Laws, or Released any Hazardous Material on, under, from or at any real property currently or formerly owned, operated or leased by any of the Company and its Subsidiaries;

(f)    None of the Company and its Subsidiaries nor, to the knowledge of the Company, any entity previously owned by, or any predecessors of, the Company and its Subsidiaries, have transported or arranged for the transportation of any Hazardous Material to any off-site location, or arranged for the treatment, storage, handling, disposal, or other management of any Hazardous Material at any off-site location; and

(g)    The Company and its Subsidiaries have made available to Purchaser in the Dataroom true and correct copies of all environmental assessments or other material, environmental reports, audits, studies, investigations or tests relating to the Company and its Subsidiaries or any real property currently or formerly owned, operated or leased by any of the Company and its Subsidiaries, in each case that is, in its possession or reasonable control and that relates to the Company or its Subsidiaries or their current or former facilities or operations, including the Leased Real Property, or concerning their compliance with Environmental Laws.

(h)    To the knowledge of the Company, there are no conditions or circumstances that could reasonably be expected to prevent or interfere with the use of the Leased Real Property, or the operation of the business, in material compliance with Environmental Laws and any Environmental Permits. The Company and its Subsidiaries are, and have been, in compliance in all material respects with and have not been in violation of, in noncompliance with, or liable under any occupational safety Laws.

(i)    The Company and its Subsidiaries have not assumed, provided an indemnity with respect to or otherwise accepted or undertaken a material liability of any other Person with respect to Environmental Laws or any Hazardous Materials.

Section 2.17    Affiliated Transactions. Except for any assets, property, services or rights to be made available to the Company or its Subsidiaries pursuant to employment relationships, and the provision of compensation and benefits to employees in the Ordinary Course of Business, or as set forth on Schedule 2.17, no equity holder, officer, director, employee, member, manager or Affiliate of any of the Company or any of its Subsidiaries, including Seller and any of its Affiliates or, to the knowledge of the Company, any individual by blood, marriage or adoption to any such Person in which any such Person owns or has any interest in, has any ownership or right, title or other interest in any material tangible (real or personal) or intangible property or assets of or used by, or is a party to any agreement or Contract or transaction that is still in effect with, or performs any services for, or on behalf of, any of the Company or its Subsidiaries.

Section 2.18    Broker Fees. Except as set forth on Schedule 2.18, neither the Company or any of its Subsidiaries has entered into any Contract, arrangement or understanding with any Person or firm that may result in the obligation of the Company or any of its Subsidiaries to pay any finder's fees, brokerage or agent's commissions or other like payments or commissions in connection with the negotiations leading to this Agreement and the Transaction.

Section 2.19    Permits; Compliance with Laws; Vendor Compliance.

(a)    Except as set forth on Schedule 2.19(a), each of the Company and its Subsidiaries holds, and is and for the past five (5) years has been, in compliance in all material respects with, all material Permits necessary or required for the operation of the Company and its Subsidiaries in the manner and places conducted as of the date of this Agreement and required to own, lease, license or use all of its assets. All of such material Permits held by or issued to the Company or any of its Subsidiaries, as applicable, are in full force and effect and, to the knowledge of the Company, no condition exists that would constitute a default under such material Permits. No written notice has been issued to, and no Legal Proceeding is pending or, to the knowledge of the Company, has been threatened against the Company or any of its Subsidiaries that would reasonably be expected to lead to the revocation, amendment, failure to renew, suspension, withdrawal, termination or modification of any such material Permit.

(b)    Except as set forth on Schedule 2.19(b), (i) the Company and its Subsidiaries comply and for the past five (5) years have complied, in all material respects, with all Laws (including any Laws or Orders related to COVID-19) applicable to the Company and its Subsidiaries, their business, their properties or their assets, and (ii) none of the Company or any of its Subsidiaries have, during the past five (5) years, received any written notice of any Legal Proceeding against it alleging any material failure to comply with any applicable Law (including any Laws or Orders related to COVID-19), nor, to the knowledge of the Company, has any such written notice been issued, filed or commenced against the Company or any of its Subsidiaries alleging, in each case, that the Company or any of its Subsidiaries is not in material compliance with any applicable Law (including any Laws or Orders related to COVID-19).

(c)    The Company does not and has not purchased rough diamonds from its suppliers. Without limiting the foregoing, the Company and its Subsidiaries are, and at all times have been, in compliance in all material respects with all applicable Laws relating to diamonds, gemstones and jewelry administration (including the Supervision of Diamonds Law, Import and Export, 1979, the Kimberley Process, the Clean Diamond Trade Act, the Rough Diamonds Control Regulations and any other conflict minerals Laws) (collectively, "Jewelry Laws"). To the knowledge of the Company, all provided diamonds have been purchased by the Company or its Subsidiaries from sources who are registered dealers and Kimberley Process-certified and not involved in funding conflict and are in full compliance with the United Nations resolutions and all other similar applicable regulation governing such matters. Neither the Company nor any Subsidiary has received any notice of or been charged with the violation of any Jewelry Law. To the Company's knowledge, neither the Company nor any Subsidiary has been under investigation with respect to the violation of any Jewelry Laws.

(d)    The Company has made available to Purchaser true, correct and complete copies of the Company Vendor Policies and the Company's Vendor Standards Manual.

(i) Each of the Company and its Subsidiaries have conducted its transactions in compliance in all material respects with applicable Company Vendor Policies and (ii) to the knowledge of the Company, suppliers and other business partners of the Company and its Subsidiaries have (A) complied in all material respects with the Company Vendor Policies and (B) complied in all material respects with the other provisions of the Company's Vendor Standards Manual.

Section 2.20    International Trade Compliance; Sanctions. The Company and each of its Subsidiaries (a) are in material compliance and have in the past five (5) years complied in all material respects with all applicable Sanctions Laws and applicable import, export, and other international trade Laws, including the U.S. Export Administration Regulations, 15 CFR Parts 730-774, administered by the Department of Commerce, and applicable Customs and Border Protection regulations under 19 CFR Parts 1-199, administered by the Department of Homeland Security, the Clean Diamond Trade Act, and any other applicable Laws related to the sourcing, export, or import of items, materials, technology, data, or services; and (b) have obtained all required licenses, consents, notices, waivers, approvals, orders, registrations, declarations, or other authorizations from, and have made any required filings with, any applicable Governmental Body for the import, export, re-export, deemed export, deemed re-export, or transfer required under the international trade Laws and Sanctions Laws (the "Trade Approvals"). There are no material pending or, to the knowledge of the Company, threatened claims, complaints, charges, investigations, voluntary disclosures by or legal proceedings against or involving any of the Company or its Subsidiaries related to any international trade Laws or Sanctions Laws or any Trade Approvals. None of the Company or its Subsidiaries or any of their respective directors, officers, employees, or, to the knowledge of the Company, agents is (a) a Person that is, or is acting under the direction of, on behalf of or for the benefit of a Person that is, or is owned or controlled by a Person that (i) is the target of Sanctions Laws or restrictive export controls, (ii) is located, organized or resident in a country or territory that is the target of comprehensive trade sanctions under Sanctions Laws (i.e., as of the date hereof, Cuba, Iran, North Korea, Syria, and the Luhansk, Donetsk, and Crimea regions of Ukraine), or (iii) is otherwise a Person with which transactions are prohibited under Sanctions Laws, or (b) has transacted business with any of the foregoing Persons or in any of the foregoing jurisdictions, as applicable.

Section 2.21    Employees.

(a)    The Company has made available a true, correct, and complete in all material respects list of all current employees of the Company and its Subsidiaries (taken as a whole) as of the date of such list, showing date of hire, hourly rate or salary or other basis of non-discretionary cash compensation, including annual bonus payments (if applicable), full-time or part-time status, exempt or non-exempt status, and job title or position.

(b)    None of the Company and its Subsidiaries are party to or bound by any collective bargaining agreement or any other type of labor-related, Contract with any union or labor organization, and there are no collective bargaining agreements or other labor-related Contracts covering any employee or group of employees of the Company and its Subsidiaries. No union, labor organization, or group of employees of the Company and its Subsidiaries has made a pending demand for recognition, and there are no representation proceedings or petitions seeking a representation proceeding presently

pending or, to the knowledge of the Company and its Subsidiaries, threatened to be brought or filed, with the National Labor Relations Board or other labor relations tribunal. Except as set forth on Schedule 2.21(b): (i) to the knowledge of the Company, there are and within the past five (5) years have been no union organizing activities involving employees of the Company and its Subsidiaries; (ii) there are no pending or, to the knowledge of the Company, threatened strikes, work stoppages, walkouts, slowdowns, lockouts, unfair labor practice charges, material grievances or other similar labor disputes pending or, to the knowledge of the Company, threatened against the Company and its Subsidiaries or any employee of the Company and its Subsidiaries, and no such disputes have occurred within the past five (5) years; and (iii) within the past five (5) years, none of the Company and its Subsidiaries have committed a unfair labor practice, and there are no pending or, to the knowledge of the Company, threatened, unfair labor practice charges or complaints against any of the Company and its Subsidiaries.

(c)    The Company and its Subsidiaries are, and for the past five (5) years, have been, in material compliance with all Laws relating to the employment of labor, including all such Laws relating to wages (including minimum wage and overtime), hours of work, child labor, equal employment opportunity, discrimination, harassment, retaliation, whistleblowing, disability accommodation, leaves of absence, paid and unpaid time off, vacation, benefits, hiring, promotion, and termination of employees, civil rights, payroll withholdings and deductions (including payment of social security, payroll, and other mandatory employment-related Taxes), classification and payment of employees, independent contractors and consultants, temporary employees, interns, joint employment, employment equity, WARN and any similar state or local "mass layoff" or "plant closing" Law, collective bargaining, occupational health and safety, workers' compensation, unemployment compensation insurance, and immigration and authorization to lawfully work in the United States. None of the Company and its Subsidiaries have taken any action which would constitute a "plant closing" or "mass layoff" within the meaning of WARN or issued any notification of a plant closing or mass layoff required by WARN with the six (6) months prior to the Closing.

(d)    There are no complaints, charges or claims against the Company and its Subsidiaries pending or, to knowledge of the Company, threatened that could be brought or filed with any Governmental Body, or based on, arising out of, in connection with or otherwise relating to the employment or termination of employment or failure to employ by the Company and its Subsidiaries, of any individual.

(e)    The Company and its Subsidiaries have incurred no material outstanding Liability arising from the: (i) failure to pay wages (including overtime wages), (ii) misclassification of employees as independent contractors or, (iii) misclassification of employees as exempt from the requirements of the Fair Labor Standards Act or similar state Laws, in each case of (i) through (iii) within the past five (5) years. For the past five (5) years, all wages and benefits due to the Company and its Subsidiaries' employees, and all compensation due to the Company and its Subsidiaries' individual consultants and independent contractors, have been paid in accordance with applicable Law in all material respects. There are no complaints, charges, or claims against the Company and its Subsidiaries pending, or, to the knowledge of Company, threatened, relating to any actual or alleged failure to pay wages (including overtime wages) or misclassification of employees as either independent contractors or as exempt employees.

(f)    To the knowledge of the Company, the current employees of the Company and its Subsidiaries who work in the United States are authorized and have appropriate documentation to work in the United States. None of the Company and its Subsidiaries have, in the past five (5) years, been notified of any pending or threatened investigation by any branch or department of U.S. Immigration and Customs Enforcement ("ICE"), or other federal agency charged with administration and enforcement of federal immigration laws concerning the Company and its Subsidiaries. To the knowledge of the Company, the Company and its Subsidiaries have never received any "no match" notices from ICE, the Social Security Administration, or the IRS with respect to current employees.

(g)    The Company and its Subsidiaries have reasonably investigated all employment discrimination (including hostile work environment), harassment (including sexual harassment), and retaliation allegations of, or against, the Company and its Subsidiaries and any employee of the Company and its Subsidiaries brought to or otherwise reasonably within the Company's knowledge.

(h)    To the Company's knowledge, no officer or employee of the Company or any of its Subsidiaries earning annual base cash compensation in excess of $200,000 intends to terminate his or her employment relationship with the Company or any of its Subsidiaries within twelve (12) months following Closing.

(i)    The employment of the employees of the Company and its Subsidiaries located in the United States is "at will" and the Company and its Subsidiaries do not have any limitation on their respective right to terminate the employment of any employee of the Company or the Subsidiaries located in the United States, nor any obligation to provide any particular form or period of notice prior to terminating the employment of any such employees, nor to provide any severance or other cash or other consideration to such employees upon termination of employment, except as disclosed on Schedule 2.21(i).

(j)    To the Company's knowledge, no officer, director, current employee, consultant, or independent contractor to the Company and its Subsidiaries is bound by any Contract, including any employment agreement, non-competition, or non-solicitation agreement, or other restrictive covenant, that is in conflict with the ability of such Person to engage in his or her duties and responsibilities to the Company and its Subsidiaries.

(k)    Company and its Subsidiaries are not party to, or otherwise bound by, any consent decree with, or citation by, any Governmental Body relating to Company and its Subsidiaries' employees or employment practices.

Section 2.22    Anti-Corruption. None of the Company or any of its Subsidiaries, or any of their respective officers, directors, managers, employees or, to the Company's knowledge, any agents or other Person acting or purporting to act on behalf of any of the Company or any of its Subsidiaries has (a) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to political activity; (b) made any unlawful payment or unlawfully offered, promised, or authorized the giving of anything of value to any Person, private or public, regardless of form; (c) except as set forth on Schedule 2.22(c), materially violated any applicable anti-money laundering, anti-terrorism Law or regulation, the United States Foreign Corrupt Practices Act of 1977, as amended ("FCPA"), or any other applicable anti-money laundering, anti-corruption or anti-bribery Law; (d) has directly or indirectly offered, given, promised to give, or

authorized the giving of any money or anything of value to any Person (i) to obtain favorable treatment in securing or retaining business, (ii) to pay for favorable treatment for business secured or retained, (iii) to obtain special concessions or for special concessions already obtained, for or in respect of the Company, its Subsidiaries, or any Affiliate of the Company or its Subsidiaries, or (iv) in material violation of any Law; or (e) established or maintained any material fund or asset for the benefit of the Company or any of its Subsidiaries that has not been recorded in the books and records of the Company. There are and have been no internal investigations, third party investigations (including by any Governmental Body), internal or external audits, or internal or external reports that address or allege material violations by any of the Company and its Subsidiaries of any applicable anti-corruption, anti-bribery, or anti-money laundering Law, including the FCPA.

Section 2.23    Suppliers. Schedule 2.23 sets forth a list of the top ten (10) suppliers of the Company and its Subsidiaries, on a consolidated basis (by volume of purchases from such suppliers) (collectively, the "Material Suppliers"), for the fiscal years ended December 31, 2021 and December 31, 2020, and 2022 year to date. Neither the Company nor any of its Subsidiaries has received any written or, to the knowledge of the Company, oral notice from any Material Supplier to the effect that any such Material Supplier will stop, materially decrease the rate of or materially change the terms (whether related to payment, price or otherwise) with respect to, supplying materials, products or services to the Company or any of its Subsidiaries (whether as a result of the consummation of the Transaction or otherwise). Except as set forth on Schedule 2.23, there are no claims for indemnification, contribution, reimbursement, or subrogation by or against the Company or any of its Subsidiaries with respect to any Material Supplier.

Section 2.24    [Reserved.]

Section 2.25    Warranties; Product. Schedule 2.25(a) sets forth the Company's and any of its Subsidiaries' standard warranty terms. Each of the products and services developed, sold, delivered, or distributed by the Company or its Subsidiaries (the "Products") meets, and since for the past five (5) years has met, in all material respects, all applicable standards for quality and workmanship prescribed by applicable Law or otherwise set forth in the contractual agreements or the product literature of the Company or its Subsidiaries and has been labeled in all material respects in accordance with all applicable Laws. Except as described on Schedule 2.25(b), for the past five (5) years (a) neither the Company nor its Subsidiaries has materially breached any Product guarantee, and (b) other than jewelry repair claims in the Ordinary Course of Business, no material customer claims have been made under the product or service warranties or guarantees of the Company or its Subsidiaries. Except as set forth on Schedule 2.25(c), neither the Company nor its Subsidiaries has any material Liability arising out of any injury to any Person or property as a result of the ownership, possession, or use of any Products sold, leased, distributed, or delivered, or any services rendered, by the Company or its Subsidiaries.

Section 2.26    Inventory. Except as set forth on Schedule 2.26(a), all inventory, whether or not reflected in the Financial Statements, (i) is normal and merchantable and consists of a quality and quantity presently usable and salable in the Ordinary Course of Business, except for obsolete items and items of below standard quality, all of which have been written off or written down (including by way of creating a reserve or allowance) to net realizable value in the Financial Statements or on the accounting

records of the Company and its Subsidiaries and except for such de minimis defective inventory that arises in the Ordinary Course of Business and is not required by GAAP to be recorded on Financial Statements; (ii) is of such quality as to meet the quality control standards of the Company and its Subsidiaries and any applicable governmental quality control standard; (iii) consists primarily of products purchased for resale and in the Ordinary Course of Business; and (iv) is in the physical possession and control of the Company or its Subsidiaries or their grading laboratories or vendors that are processing or holding such inventory on behalf of the Company or its Subsidiaries, or in transit to or from a customer or supplier of the Company or its Subsidiaries and subject to their control. All such inventory is owned by the Company and its Subsidiaries free and clear of all Liens, other than the Permitted Liens, and no inventory is held on a consignment basis, except as set forth on Schedule 2.26(b), which contains a true and correct summary of the consigned inventory held by the Company and its Subsidiaries, based on the value and number of units of such consigned inventory on hand as of June 30, 2022. The Company and its Subsidiaries have no commitments to buy any of the consigned inventory. All inventory complies with all applicable Laws and with the requirements of the Contracts to which such inventory relates, in each case in all material respects.  The Company and its Subsidiaries will have on hand as of the Closing such quantities of inventory as are reasonably required to continue the business of the Company and its Subsidiaries immediately after the Closing consistent with past practice and such quantities of inventory are not excessive.

Section 2.27    SPAC Termination Agreement. The Company has delivered to Purchaser a true, correct and complete copy of the Termination Agreement. The Termination Agreement is in full force and effect and has not been withdrawn or terminated, or otherwise amended or modified, in any respect, and no withdrawal, termination, amendment or modification is contemplated by the Company or, to the knowledge of the Company, the other parties thereto.  The Termination Agreement is a legal, valid and binding obligation of the Company and, to the knowledge of the Company, each other party thereto and neither the execution or delivery by any party thereto, nor the performance of any party’s obligations under, the Termination Agreement violates any provision of, or results in the breach of or default under, or requires any filing, registration or qualification under, any applicable Law. No event has occurred that, with or without notice, lapse of time or both, would constitute a default or breach on the part of the Company, or, to the knowledge of the Company, any other party thereto, under any term or condition of the Termination Agreement. To the Company’s knowledge, there are no disputes or claims related to or in connection with the termination of the Business Combination Agreement or the transactions contemplated thereby.

Section 2.28    No Additional Representations or Warranties. Notwithstanding anything contained in this Article II or any other provision of this Agreement to the contrary, except for the representations and warranties contained in this Article II (as qualified by the Disclosure Schedules) or in any document or certificate delivered hereunder (which are the sole and exclusive representations and warranties made by the Company or any other Person on behalf of the Company to the Purchaser Group in connection with the Transaction and all other representations and warranties made by the Company or any other Person on behalf of the Company whether expressed or implied are specifically disclaimed by the Purchaser Group) and in accordance with the express terms and conditions (including limitations and exclusions) of this Agreement), Purchaser acknowledges and agrees, on its own behalf and on behalf of the Purchaser Group, that

neither the Company nor any other Person on behalf of the Company makes, and neither Purchaser nor any member of the Purchaser Group is relying on, any other express or implied representation or warranty with respect to the Company or any of its Subsidiaries or with respect to any other information provided to Purchaser or any of its Affiliates or Advisors.

ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Purchaser as set forth in this Article III, subject to Section 10.10, and except as set forth in the Disclosure Schedules.

Section 3.01    Organization and Power. Seller is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Delaware. Seller has the requisite limited partnership power and authority to execute and deliver this Agreement and to perform its obligations hereunder.

Section 3.02    Authorization. The execution, delivery and performance of this Agreement by Seller, and the consummation of the Transaction by Seller, have been duly and validly authorized by all requisite organizational action of Seller, and no other organizational proceedings on the part of Seller are necessary to authorize the execution, delivery or performance of this Agreement by Seller. This Agreement has been duly and validly executed and delivered by Seller, and, assuming that this Agreement is a valid and binding obligation of the Company and Purchaser, this Agreement constitutes a valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as may be limited by the application of bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, or other Laws affecting the enforcement of creditors' rights or general principles of equity.

Section 3.03    No Violation. Seller is not subject to or obligated under its Organizational Documents, any material applicable Law, or material rule or regulation of any Governmental Body, or any material agreement or instrument, or any material license, franchise or permit, or subject to any Order, that would be contravened in any material respect, conflicted with in any material respect or result in a material violation or breach thereof by Seller's execution, delivery or performance of this Agreement or the consummation of the Transaction and the performance by Seller or its obligations hereunder.

Section 3.04    Governmental Bodies; Consents. Seller is not required to file, seek or obtain any notice, authorization, approval, Order, permit or consent of or with any Governmental Body in connection with the execution and delivery of this Agreement, the performance of its obligations hereunder or the consummation of the Transaction, except (a) any filings required to be made, and any consents or approvals and the expiration or termination of any applicable waiting periods under the HSR Act or any other applicable Competition Laws, and (b) such filings as may be required by any applicable federal or state securities or "blue sky" Laws. Except as contemplated by the foregoing sentence, the execution and delivery by Seller of this Agreement, and the consummation of the Transaction, and performance by Seller of its obligations hereunder, will not require the consent of any Person or result in the imposition or creation of any Liens upon or with respect to any of the Company Stock or, to the knowledge of Seller, any other equity interests of the Company.

Section 3.05    Title to the Company Stock. Seller has, and as of the Closing will have, good and valid title to, and is the record and beneficial owner of, all of the Company Stock, free and clear of all Liens other than restrictions on transfer under applicable federal and state securities Laws. There are no outstanding options, warrants, call or other rights or agreements to which Seller is a party requiring Seller to sell or transfer the Company Stock to any Person other than as provided in this Agreement. Except as set forth on Schedule 3.05, Seller is not party to any voting trust or other agreement with respect to the voting, redemption, sale, pledge, transfer or other disposition of its Company Stock.

Section 3.06    Litigation. There are no Legal Proceedings or Orders pending or threatened (either in writing or, to the knowledge of Seller, orally threatened), against or by or otherwise affecting Seller, at law or in equity, before or by any Governmental Body that would, individually or in the aggregate, reasonably be expected to adversely affect Seller's performance under this Agreement or the consummation of the Transaction. Seller is not and is not threatened (either in writing or, to the knowledge of Seller, orally threatened) to be made subject to any outstanding Order that challenges the validity or enforceability of this Agreement or seeks to enjoin or prohibit consummation of, or any other material equitable relief with respect to, the Transaction, or that would, individually or in the aggregate, reasonably be expected to adversely affect Seller's ability to consummate the Transaction or adversely affect Seller's ability to perform any of its material obligations under this Agreement.

Section 3.07    Brokers or Finders. Seller has not entered into any Contract with any Person that may result in the obligation of Seller to pay any finder's fees, brokerage or agent's commissions or other like payments or commissions in connection with this Agreement and the Transaction, other than as set forth on Schedule 3.07.

Section 3.08    SPAC. To the Seller’s knowledge, there are no disputes or claims related to or in connection with the termination of the Business Combination Agreement or the transactions contemplated thereby.

Section 3.09    No Additional Representations or Warranties. Notwithstanding anything contained in this Article III or any other provision of this Agreement to the contrary, except for the representations and warranties contained in this Article III (as qualified by the Disclosure Schedules) or in any document or certificate delivered hereunder (which are the sole and exclusive representations and warranties made by Seller or any other Person on behalf of Seller to the Purchaser Group in connection with the Transaction and all other representations and warranties made by Seller or any other Person on behalf of Seller whether expressed or implied are specifically disclaimed by the Purchaser Group) and in accordance with the express terms and conditions (including limitations and exclusions) of this Agreement), Purchaser acknowledges and agrees, on its own behalf and on behalf of the Purchaser Group, that neither Seller nor any other Person on behalf of Seller makes, and neither Purchaser nor any member of the Purchaser Group is relying on, any other express or implied representation or warranty with respect to Seller or any of its Subsidiaries or with respect to any other information provided to Purchaser or any of its Affiliates or Advisors.

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser represents and warrants to each of Seller and the Company as set forth in this Article IV.

Section 4.01    Organization and Power. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, with full power and authority to enter into this Agreement and perform all of its obligations hereunder.

Section 4.02    Authorization. The execution, delivery and performance of this Agreement by Purchaser and the consummation of the Transaction by Purchaser have been duly and validly authorized by all requisite corporate action by Purchaser, and no other corporate proceedings on the part of Purchaser are necessary to authorize the execution, delivery or performance of this Agreement by Purchaser. This Agreement has been duly and validly executed and delivered by Purchaser, and, assuming that this Agreement is a valid and binding obligation of the Company and Seller, this Agreement constitutes a valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as may be limited by the application of bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, or other Laws affecting the enforcement of creditors' rights or general principles of equity.

Section 4.03    No Violation. Purchaser is not subject to or obligated under its certificate of incorporation or bylaws (or equivalent Organizational Documents), any material applicable Law, or material rule or regulation of any Governmental Body, or any material agreement or instrument, or any material license, franchise or permit, or subject to any Order, that would be contravened in any material respect, conflicted with in any material respect or result in a material violation or breach thereof by Purchaser's execution, delivery or performance of this Agreement or the consummation of the Transaction and the performance by Purchaser or its obligations hereunder.

Section 4.04    Governmental Bodies; Consents. Purchaser is not required to file, seek or obtain any notice, authorization, approval, Order, permit or consent of or with any Governmental Body in connection with the consummation of the Transaction, except (a) any filings required to be made under the HSR Act or any other applicable Competition Laws, and (b) such filings as may be required by any applicable federal or state securities or "blue sky" Laws. Except as contemplated by the foregoing sentence, the execution and delivery by Purchaser of this Agreement, and the consummation of the Transaction, and performance by Purchaser of its obligations hereunder, will not require the consent of any Person.

Section 4.05    Litigation. There are no Legal Proceedings or Orders pending or, to Purchaser's knowledge, threatened (either in writing or, to the knowledge of Purchaser, orally threatened) against or affecting Purchaser at law or in equity, or before or by any Governmental Body, that would, individually or in the aggregate, reasonably be expected to adversely affect Purchaser's performance under this Agreement or the consummation of the Transaction. Purchaser is not and, to the knowledge of Purchaser, is not threatened in writing to be made subject to any outstanding Order that challenges the validity or enforceability of this Agreement or seeks to enjoin or prohibit consummation of, or any other material equitable relief with respect to, the Transaction, or that would, individually

or in the aggregate, reasonably be expected to adversely affect Purchaser's ability to consummate the Transaction or adversely affect Purchaser's ability to perform any of its material obligations under this Agreement.

Section 4.06    Broker Fees. There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Purchaser that might be entitled to any fee or commission in connection with the Transaction.

Section 4.07    Investment Representation. Purchaser is acquiring the Company Stock for its own account with the present intention of holding such securities for investment purposes and not with a view to, or for sale in connection with, any distribution of such securities in violation of any federal or state securities Laws. Purchaser is an "accredited investor" within the meaning of Regulation D promulgated pursuant to the Securities Act of 1933 (the "Securities Act"). Purchaser is knowledgeable about the industries in which the Company and its Subsidiaries operate and is capable of evaluating the merits and risks of the acquiring and holding the Company Stock and is able to bear the substantial economic risk of such investment for an indefinite period of time. Purchaser acknowledges that it has been afforded the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of Seller and the Company concerning the risks of investing in the Company.

Section 4.08    Financial Capability. Purchaser has, and will have at the Closing, sufficient immediately available funds to pay the full Transaction Price and to make all other payments required to be made by Purchaser under this Agreement, including (i) the amounts payable pursuant to Section 1.04, including amounts owing pursuant to the outstanding amount of Funded Indebtedness, the Series C Redemption Price and the Transaction Expenses, and (ii) all of the fees, costs and expenses of Purchaser arising from or related to this Agreement or the consummation of the Transaction, and to otherwise consummate the Transaction in accordance with the terms hereof.

Section 4.09    Solvency. No transfer of property is being made and no obligation is being incurred in connection with the Transaction with the intent to hinder, delay or defraud either present or future creditors.

Section 4.10    No Additional Representations or Warranties. Notwithstanding anything contained in this Article IV or any other provision of this Agreement to the contrary, except for the representations and warranties contained in this Article IV (as qualified by the Disclosure Schedules or in any document or certificate delivered hereunder (which are the sole and exclusive representations and warranties made by Purchaser or any other Person on behalf of Purchaser to the Seller Parties in connection with the Transaction, and all other representations and warranties made by Purchaser or any other Person on behalf of Purchaser whether expressed or implied are specifically disclaimed by the Seller Parties) and in accordance with the express terms and conditions (including limitations and exclusions) of this Agreement), each of Seller and the Company, on behalf of themselves and the Seller Parties, acknowledges and agrees, that neither Purchaser nor any other Person on behalf of Purchaser makes, and none of the Seller Parties is relying on, any other express or implied representation or warranty with respect to Purchaser or with respect to any other information provided to the Seller Parties by Purchaser.

Section 4.11    No Outside Reliance. Notwithstanding anything contained in this Article IV or any other provision of this Agreement to the contrary, Purchaser acknowledges and agrees, on its own behalf and on behalf of the Purchaser Group, that the Express Representations constitute the sole and exclusive representations, warranties and statements of any kind to Purchaser in connection with the Transaction and that all other representations, warranties and statements of any kind or nature expressed or implied are specifically disclaimed by the Company and Seller. Purchaser acknowledges, on its own behalf and on behalf of the Purchaser Group, that it has conducted to their sole satisfaction an independent investigation and verification of the financial condition, results of operations, assets, liabilities, properties, contracts and prospects of the Company and its Subsidiaries, and, in making its determination to proceed with the Transaction, Purchaser has relied solely on the results of the Purchaser Group's own independent investigation and verification, and has not relied on, is not relying on, and will not rely on, Seller, the Company, any Subsidiary of the Company, any information, statements, disclosures, documents, projections, forecasts or other material made available to Purchaser or any of its Affiliates or Advisors in the "Project Aqua" datasite administered by Donnelley Financial Solutions (the "Dataroom"), the Projections or any information, statements, disclosures or materials, in each case, whether written or oral, provided by, or as part of, any of the foregoing or any other Seller Party, or any failure of any of the foregoing to disclose or contain any information, except for the Express Representations. Notwithstanding the foregoing, nothing in this Section 4.11 will preclude bringing any claims with respect to Fraud.

ARTICLE V COVENANTS OF THE COMPANY AND SELLER

Section 5.01    Conduct of the Business.

(a)    From the date of this Agreement until the Closing (or the earlier termination of this Agreement pursuant to Article VIII), except as (x) set forth on Schedule 5.01, (y) required by Law or (z) required to comply with COVID-19 Measures or otherwise taken (or not taken) by the Company or its Subsidiaries reasonably and in good faith to respond to COVID-19 or COVID-19 Measures in a manner and form substantially consistent with any actions taken (or not taken) by the Company or its Subsidiaries prior to the date of this Agreement in response to or in connection with COVID-19 or COVID-19 Measures, the Company will, and will cause its Subsidiaries to, use commercially reasonable efforts to conduct its and its Subsidiaries' business in the Ordinary Course of Business and preserve intact the Company and its Subsidiaries' business organization and current business relationships with third parties in the Ordinary Course of Business (including lessors, licensors, suppliers, distributors, customers, employees, lenders, regulators and others having business relationships with the Company or any of its Subsidiaries) in all material respects; provided that (i) no action by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.01(b) will be deemed a breach of this Section 5.01(a), unless such action would constitute a breach of one or more of such provisions, (ii) the Company and its Subsidiaries' failure to take any action prohibited by Section 5.01(b) will not be a breach of this Section 5.01(a); and (iii) in the event that the Company or its Subsidiaries reasonably and in good faith determines that it is necessary to take action in response to or in connection with COVID-19 or COVID-19 Measures, then, to the extent reasonably practicable, the Company will provide notice to Purchaser and the parties will reasonably consult and cooperate before taking such action.

(b)    From the date of this Agreement until the Closing (or the earlier termination of this Agreement pursuant to Article VIII), except as (v) otherwise specifically contemplated or permitted by this Agreement, (w) set forth on Schedule 5.01, (x) consented to in writing by Purchaser (such consent not to be unreasonably withheld, delayed or conditioned), (y) required by Law or (z) required to comply with COVID-19 Measures or otherwise taken (or not taken) by the Company or its Subsidiaries reasonably and in good faith to respond to COVID-19 or COVID-19 Measures in a manner and form substantially consistent with any actions taken (or not taken) by the Company or its Subsidiaries prior to the date of this Agreement in response to or in connection with COVID-19 or COVID-19 Measures (subject to Section 5.01(a)(iii)), the Company will not, and will not permit its Subsidiaries to:

(i)    change, modify or amend the Organizational Documents of the Company or any of its Subsidiaries;

(ii)    make, declare, set aside, establish a record date for or pay any dividend or distribution, other than any dividends or distributions from any wholly-owned Subsidiary of the Company to the Company or any other wholly-owned Subsidiaries of the Company;

(iii)    enter into, assume, assign, partially or completely amend or modify or terminate (excluding any expiration in accordance with its terms) any labor or collective bargaining or similar agreement (including agreements with works councils and trade unions and side letters) to which the Company or its Subsidiaries is a party or by which it is bound;

(iv)    (A) issue, deliver, sell, transfer, pledge, dispose of or create, impose or place any Lien (other than a Lien arising in connection with the Credit Facility for which prompt written notice is provided to Purchaser) on any shares of capital stock or any other equity or voting securities of the Company or any of its Subsidiaries or (B) issue, sell, redeem, purchase, dispose of, grant or deliver any options, warrants or other rights to (including upon conversion, exchange or exercise) any shares of capital stock or any other equity or voting securities of the Company or any of its Subsidiaries;

(v)    sell, assign, transfer, convey, lease, license, abandon, allow to lapse or expire, subject to or grant any Lien (other than Permitted Liens) on, or otherwise dispose of, any material assets (including the Owned Real Property), rights or properties of the Company and its Subsidiaries, other than the sale or license of Software, goods and services to customers in the Ordinary Course of Business, or the sale or other disposition of inventory in the Ordinary Course of Business;

(vi)    sell, license, assign, transfer, waive, abandon, allow to lapse, fail to maintain or otherwise dispose of any Intellectual Property (other than (A) nonexclusive licenses granted in the Ordinary Course of Business and (B) with respect to Intellectual Property that the Company and its Subsidiaries have determined, in the exercise of their commercially reasonable business judgment, to be immaterial or obsolete) or disclose any Company Trade Secrets to any Person (other than in the Ordinary Course of Business to a Person bound by adequate, written confidentiality obligations);

(vii)    (A) pay, discharge, settle, satisfy, cancel or compromise any claim, Liabilities, or Indebtedness owed to the Company or any of its Subsidiaries in excess of $250,000 in the aggregate, (B) settle any pending or threatened Legal Proceeding (I) if such settlement would require (x) payment by the Company in an amount greater than $250,000 or (y) any of the Company or its Subsidiaries to perform or satisfy any continuing obligations, (II) to the extent such settlement includes an agreement to accept or concede injunctive relief or (III) to the extent such settlement involves a Governmental Body or alleged wrongdoing, or (C) agree to modify any confidentiality or similar Contract to which the Company or any of its Subsidiaries are a party;

(viii)    (A) increase in any material manner the compensation of any of its officers or employees, except in the Ordinary Course of Business or as required by any Law or pursuant to any agreement set forth on Schedule 2.14(a), (B) materially increase the benefits under any Company Plan, adopt any new Company Plan, amend, modify or terminate any existing Company Plan, except as required by applicable Law and except for any bonus or similar arrangement that is a Transaction Expense, (C) hire or terminate any officer of the Company or any of its Subsidiaries or (D) enter into, amend or terminate any material employment, retention, change in control agreement or other similar arrangement with any employee, except as otherwise permitted by clause (B) hereof;

(ix)    directly or indirectly acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by purchasing all of or a substantial equity interest in, or by any other manner, any business or any corporation, partnership, limited liability company, joint venture, association or other entity or Person or division thereof;

(x)    make any investment (by contribution to capital, property transfers, purchase of securities or otherwise) in, or make any loans or advance any money or other property to any Person, except for (A) travel and similar advances to employees in the Ordinary Course of Business, (B) prepayments and deposits paid to suppliers of the Company or any of its Subsidiaries in the Ordinary Course of Business or (C) trade credit extended to customers of the Company or any of its Subsidiaries in the Ordinary Course of Business;

(xi)    enter into, assume, assign, amend, modify, renew or terminate (excluding any expiration in accordance with its terms) any Material Contract, or any lease related to the Leased Real Property;

(xii)    redeem, purchase or otherwise acquire, any shares of capital stock (or other equity interests) of the Company or any of its Subsidiaries or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of capital stock (or other equity interests) of the Company or any of its Subsidiaries;

(xiii)    adjust, split, combine, subdivide, recapitalize, reclassify, distribute or like change in respect of any shares of capital stock or other equity interests or securities of the Company or any of its Subsidiaries;

(xiv)    make any material change in its accounting principles, practices or methods of accounting, other than as may be required by a change in applicable Law, GAAP or regulatory guidelines;

(xv)    adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or its Subsidiaries (other than the Transaction) or file a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar Law;

(xvi)    make, change, or rescind any income or other material Tax election; adopt or change any material financial or Tax accounting methods, principles, or practices; file any amended income or other material Tax Return; settle or compromise any income or other material Tax Liability; enter into any closing agreement with respect to Tax; consent to any extension or waiver of the limitations period applicable to any income or other material Tax claim or assessment; surrender or allow to expire any right to claim a refund; enter into any Tax sharing or Tax indemnification agreement or similar agreement (except, in each case, for such agreements that are in the Ordinary Course of Business and not primarily relating to Taxes); request a ruling or similar guidance from any Governmental Body with respect to any Tax matter; or file any Tax Return in a manner inconsistent with past practice;

(xvii)    directly or indirectly, incur, or modify the terms of any Indebtedness (other than (A) Indebtedness under the existing Credit Facility of the Company and its Subsidiaries or (B) other than any items referred to in any of subclauses (h), (i) or (j) of the definition of Indebtedness set forth in this Agreement, in each case with respect to subclauses (A) and (B), for which prompt written notice is provided to Purchaser; provided, that, with respect to items referred to in subclause (i) of the definition of Indebtedness set forth in this Agreement, (I) no such written notice is required if such Taxes are incurred or modified in the Ordinary Course of Business and not material in amount, and (II) any such actions remain subject to Section 5.01(b)(xvi)), or issue any debt securities or assume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person for Indebtedness;

(xviii)    voluntarily fail to maintain in full force and effect material insurance policies covering the Company and its Subsidiaries and their respective properties, assets and businesses;

(xix)    make any capital expenditures that (A) exceed, on a monthly basis, $1,000,000 with respect to new showroom openings, (B) exceed, on a monthly basis, $750,000 with respect to capitalized software development or (C) in the aggregate exceed $500,000 with respect to capital expenditures not otherwise described in the foregoing subclauses (A) and (B);

(xx)    marketing or advertising expenditures that exceed 110% of the monthly forecast amounts set forth on Schedule 5.01(xx); or

(xxi)    enter into any agreement, or otherwise become obligated, to take any action prohibited under this Section 5.01.

For the avoidance of doubt, nothing contained herein will (i) permit Purchaser to control the operation of the Company and its Subsidiaries prior to the Closing or (ii) prevent the Company or its Subsidiaries from reasonably and in good faith taking or failing to take any action, including the establishment of any policy, procedure or protocol, in response to COVID-19 or COVID-19 Measures, in accordance with this Section 5.01.

Section 5.02    Access to Books and Records.

(a)    From the date of this Agreement until the Closing (or the earlier termination of this Agreement pursuant to Article VIII), (i) the Company will provide Purchaser and its authorized Advisors and representatives with reasonable access and upon reasonable advance notice and during regular business hours to the books and records of the Company and its Subsidiaries, in order for Purchaser and its authorized Advisors to access such information regarding the Company and its Subsidiaries as Purchaser reasonably deems necessary in connection with the Transaction; provided that (A) such access does not interfere with the normal operations of the Company or any of its Subsidiaries, (B) such access will occur in such a manner as the Company reasonably determines to be appropriate to protect the confidentiality of the Transaction, and (C) nothing herein will require the Company to provide access to, or to disclose any information to, Purchaser if such access or disclosure would (1) cause significant competitive harm to the Company or any of its Subsidiaries if the Transaction is not consummated, (2) in the opinion of legal counsel of the Company, would result in the loss of attorney-client privilege or other privilege or (3) be in violation of applicable Laws or regulations of any Governmental Body or the provisions of any agreement to which the Company or any of its Subsidiaries is a party; provided that, in each case with respect to subclauses (C)(2) and (C)(3), Seller will use commercially reasonable efforts to provide summaries of the information to the extent such summary would not waive privilege or violate applicable Law.

(b)    The information provided pursuant to this Section 5.02 will be governed by all the terms and conditions of the Confidentiality Agreement. Purchaser will, and will cause its Advisors to, abide by the terms of the Confidentiality Agreement with respect to such access and any information furnished to Purchaser or any of its Advisors. Neither the Company nor Seller makes any representation or warranty as to the accuracy of any information, if any, provided pursuant to this Section 5.02, and Purchaser may not rely on the accuracy of any such information, in each case, other than the Express Representations, and the providing of any such information will not expand the remedies available to Purchaser or its Affiliates under or with respect to this Agreement in any manner.

Section 5.03    Regulatory Filings. Subject to Section 9.05, the Company will (a) make or cause to be made all filings and submissions to any Governmental Body required to be made by the Company or its Subsidiaries under any applicable Laws for the consummation of the Transaction set forth on Schedule 5.03, (b) coordinate and cooperate with Purchaser in exchanging such information and providing such assistance as Purchaser may reasonably request in connection with the foregoing and (c) (i) supply promptly any additional information and documentary material that may be reasonably

requested in connection with such filings and (ii) use reasonable best efforts to take all actions necessary to obtain all required clearances in connection with such filings. The parties agree that this Section 5.03 (and not Section 5.06) sets forth the Company's sole obligations with respect to regulatory filings, other than filings under the HSR Act and any other applicable Competition Laws, which is governed solely by Section 9.05.

Section 5.04    Exclusivity. From immediately after the execution and delivery of this Agreement and through the Closing (or the earlier termination of this Agreement pursuant to Article VIII), neither the Company nor Seller will, nor will they authorize or permit any of their Affiliates, directors, partners, officers, managers, employees, agents or Advisors to, take any action or otherwise solicit, encourage, initiate, entertain, consider, or accept proposals, offers or inquiries from, or engage in discussions or negotiations with, or provide any information or documentation to, any Person (other than Purchaser and its Affiliates and Advisors) with respect to any merger or recapitalization involving the Company or any of its Subsidiaries, sale, transfer, issuance or conveyance of the Company Stock or other equity interests of the Company or any of its Subsidiaries, any sale, transfer or conveyance of a material portion of the assets of the Company or any of its Subsidiaries or similar transaction involving the Company or its Subsidiaries (other than inventory sold in the Ordinary Course of Business) (each of the foregoing transactions, an "Acquisition Proposal"). Following the execution and delivery of this Agreement, the Company and Seller will, and will each cause their respective Affiliates and representatives to, immediately cease and cause to be terminated any and all existing activities, negotiations or discussions with any Person (other than Purchaser and its Affiliates and Advisors) with respect to, or that could lead to, directly or indirectly, any Acquisition Proposal. The Company and Seller each agree that the rights and remedies for noncompliance with this Section 5.04 shall include having such provisions specifically enforced by any court having jurisdiction, it being acknowledged and agreed that any such breach shall cause irreparable injury to Purchaser and that money damages would not provide an adequate remedy to Purchaser. In addition to the other obligations under this Section 5.04, the Company and Seller shall, and shall cause each of their Affiliates and each of their representatives to, reasonably promptly advise Purchaser in writing of any third-party proposal with respect to any Acquisition Proposal, any request for information with respect to such proposal, or any inquiry with respect to or which could reasonably be expected to result in such third-party proposal.

Section 5.05    280G Cooperation. The Company will, prior to the Closing Date, use commercially reasonable efforts to seek to obtain equity holder approval, in a manner intended to comply with the requirements of Section 280G(b)(5)(B) of the Code and the regulations promulgated pursuant thereto, such that payments by the Company to any employees of the Company or any of its Subsidiaries arising in whole or in part as a result of the Transaction based on arrangements in place at the Closing (other than arrangements entered into at the direction of Purchaser or its Affiliates on the Closing Date) should not be characterized as "excess parachute payments" under Section 280G of the Code; provided that in no event will this Section 5.05 be construed to require the Company to compel any Person to waive any existing rights under any contract or agreement that such Person has with the Company or any Subsidiary thereof and in no event will the Company be deemed in breach of this Section 5.05 if any such Person refuses to waive any such rights.

Section 5.06    Reasonable Best Efforts. Subject to the terms of this Agreement (including the limitations set forth in Section 5.03 and this Section 5.06) and applicable

Law, Seller and the Company will, and will cause its Subsidiaries and Advisors to, use their reasonable best efforts to take, or cause to be taken, all actions necessary to cause its conditions to Closing to be satisfied and for the Closing to occur as promptly as practicable, and no such Person will take any action designed to prevent, impede or materially delay the Closing. Prior to the Closing, the Company and its Subsidiaries (taken together) will use their reasonable best efforts to (i) obtain the consents set forth on Schedule 5.06 and (ii) obtain and deliver to Purchaser a certificate of good standing (or its equivalent) of each of the non-U.S.-based Subsidiaries of the Company from the jurisdiction in which such Subsidiary is organized; provided, that, for the avoidance of doubt, in each case of (i) and (ii), the failure to obtain any or all of such consents or such certificates of good standing (as applicable) shall not constitute (or be deemed to constitute) a breach or failure to comply with this Section 5.06 for any purpose under this Agreement. The Company will not be obligated by any sentence contained in this Section 5.06 to make any payments or otherwise pay any consideration to any third party to obtain any consent, waiver or approval in connection with the consummation of the Transaction.

Section 5.07    FIRPTA Certificate. At or prior to the Closing, the Company shall deliver to Purchaser (a) a certificate conforming to the requirements of Section 1.897-2(h)(1)(i) and 1.1445-2(c)(3)(i) of the Treasury Regulations and (b) a copy of the signed notice contemplated by Section 1.897-2(h)(2) of the Treasury Regulations, which Purchaser shall be entitled to file with the IRS in accordance with such Treasury Regulation ((a) and (b) together, the "FIRPTA Certificate").

Section 5.08    Payoff Letters; Liens(a)    . The Company shall deliver to Purchaser, no later than two (2) Business Days prior to the Closing Date, draft payoff letters for any Funded Indebtedness of the Company or any of its Subsidiaries, which letters shall be in customary form and shall provide that upon payment of the amounts specified therein all Liens securing such Funded Indebtedness shall be released and the Funded Indebtedness shall be repaid in full with no further Liabilities or obligations to the Company and its Subsidiaries with respect thereto (other than the provisions that expressly survive termination in accordance with the terms thereof) (each, a "Payoff Letter"). Seller will deliver evidence of the release of any Liens related to or arising in connection with any Funded Indebtedness promptly after the Closing.

Section 5.09    Non-Solicitation.

(a)    During the two (2)-year period following the Closing Date, Seller will not, and will not permit its representatives to, directly or indirectly, solicit, induce, cause or facilitate any senior-level employee (vice president-level and above) (the "Specified Employees") to terminate his or her relationship with the Company or any of its Subsidiaries; provided, that this Section 5.09(a) shall not prohibit Seller or its representatives from making general employment solicitations (such as through advertisements in publicly available media) so long as such general employment solicitations are not specifically targeted at any Specified Employees.

(b)    Seller acknowledges that the restrictions set forth in this Section 5.09 are reasonable and narrowly tailored to protect the legitimate interests of Purchaser. Any provision of the foregoing covenants that is prohibited or unenforceable, including as to time, geographic area, or scope of activity, shall be void to the extent of that prohibition or unenforceability only and the remaining provisions, including the remainder of any

provision found only partially invalid or unenforceable, shall continue to be in full force and effect and shall not be affected by such invalidity or unenforceability. Seller acknowledges that the foregoing covenants in this Section 5.09 are a material inducement to Purchaser to enter into this Agreement and consummate the Transaction. Seller further acknowledges that it has benefited from the Agreement and will benefit from the Transaction and that such benefits are adequate consideration to support the foregoing covenants. Seller acknowledges that a breach of this Section 5.09 would give rise to irreparable harm to Purchaser, for which monetary damages would not be an adequate remedy, and hereby agrees that, in the event of a breach of or a threatened breach by Seller of this Section 5.09, Purchaser shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining Order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction (without any requirement to post bond).

Section 5.10    SPAC Termination. Prior to the Closing, Seller and the Company will take all actions necessary to terminate that certain Agreement and Plan of Merger, dated as of June 10, 2022 (the "Business Combination Agreement"), by and between Mudrick Capital Acquisition Corporation II (the "SPAC"), the Company, and the other parties thereto, and any related agreements, effective no later than as of immediately prior to the Closing, without any further force or effect or survival of any provision thereunder (other than the provisions that expressly survive termination in accordance with the terms thereof) and without any cost, expense, Liability or obligation thereunder to the Company, any of its Subsidiaries, or any of their post-Closing Affiliates (other than, for the avoidance of doubt, any termination fee or other similar payments required to be made by the Company thereunder in connection with the Closing, the amounts of which the parties hereto agree shall constitute Transaction Expenses and shall be paid by or on behalf of the Company in connection with the Closing) (the "SPAC Termination"). Prior to the Closing, Seller and the Company will take all actions necessary to redeem all of the Series C Preferred Stock concurrently with the Closing, in accordance with the Company's Organizational Documents, such that the only remaining issued and outstanding shares of capital stock of the Company following such redemption will be the Company Stock, and the SPAC and the Series C Holders will have no other equity or other interests in the Company or any of its Subsidiaries, as of immediately after the consummation of the Transaction (the "Series C Redemption"). The Termination Agreement entered into by and among the SPAC, the Company, and the other parties thereto, dated and effective as of the date hereof (the "Termination Agreement") (but for which the effectiveness of certain provisions expressly contained therein are conditioned upon the consummation of the Closing), has been duly authorized and delivered hereunder to Purchaser concurrently with the signing of this Agreement. Unless otherwise approved in writing by Purchaser, the Company shall not permit any amendment or modification to be made to, any waiver (in whole or in part) or provide consent to (including consent to termination), of any provision or remedy under, the Termination Agreement or the Business Combination Agreement. The Company shall take, or cause to be taken, all actions and do, or cause to be done, all things necessary, proper or advisable to satisfy in all material respects on a timely basis all conditions and covenants applicable to the Company in the Termination Agreement and otherwise comply with its obligations thereunder and to enforce its rights thereunder. Without limiting the generality of the foregoing, Seller and the Company shall give Purchaser prompt written notice (a) of any breach or default (or any event or circumstance that, with or without notice, lapse of time or both, would give rise to any breach or default) by any

Section 5.11    Notification. Prior to the Closing Date, Seller will promptly notify Purchaser of: (a) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the Transaction; (b) any notice or other communication from any Governmental Body related to or in connection with the Transaction; (c) any actions, suits, claims, investigations or proceedings commenced or, to its knowledge threatened in writing against, whether civil, criminal, administrative or investigative, relating to or involving or otherwise affecting Seller, the Company or any of its Subsidiaries or their Affiliates that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 2.11 or Section 3.05 or that relate to the Transaction; and (d) any breach or inaccuracy of any representation or warranty contained in this Agreement at any time during the term hereof that could reasonably be expected to cause the condition set forth in Section 7.02(a) not to be satisfied; provided that the delivery of any notice pursuant to this Section 5.11 will not limit any of the representations and warranties of Seller or the Company set forth in this Agreement or the remedies available to Purchaser under this Agreement. The parties hereto agree and acknowledge that Seller's or the Company's failure to comply with this Section 5.11 shall not be taken into account for purposes of determining whether the condition set forth in Section 7.02(b) shall have been satisfied.

ARTICLE VI COVENANTS OF PURCHASER

Section 6.01    Access to Books and Records. In order to facilitate the resolution of any claims made against or incurred by the Company or any of its Subsidiaries prior to the Closing or for purposes of complying with any applicable Tax, financial reporting or regulatory requirements of Seller or any of its Affiliates, from and after the Closing for a period of six (6) years following the Closing Date, Purchaser will, and will cause the Company to, provide Seller and its Advisors with reasonable access, during normal business hours at a mutually convenient time, and upon reasonable advance notice, to the books and records, including work papers, schedules, memoranda, Tax Returns, Tax schedules, Tax rulings, and other documents (for the purpose of examining and copying at Seller's expense) of the Company and its Subsidiaries with respect to periods or

occurrences prior to the Closing Date (unless otherwise disposed of pursuant to the Company's retention and destruction policy); provided, that none of Purchaser, the Company or any of its Subsidiaries shall be obligated to disclose any information the disclosure of which is prohibited by Contract or applicable Law or Order or would, based on the advice of counsel, compromise any applicable privilege (including the attorney-client privilege); provided, further, that in each case of the foregoing proviso, Purchaser will, and will cause the Company to, use commercially reasonable efforts to provide a summary of the information to the extent such summary would not be so prohibited or cause such a compromise. Unless otherwise consented to in writing by Seller or disposed of pursuant to the Company's retention and destruction policy, neither Purchaser nor the Company will, nor will they permit the Company's Subsidiaries to, for a period of six (6) years following the Closing Date, destroy, alter or otherwise dispose of any of the books and records of the Company and its Subsidiaries for any period prior to the Closing Date.

Section 6.02    Regulatory Filings. Subject to Section 9.05, Purchaser will, and will cause its Affiliates and Advisors to, (a) make or cause to be made all filings and submissions to any Governmental Body required to be made by any member of the Purchaser Group under any applicable Laws for the consummation of the Transaction set forth on Schedule 6.02, (b) coordinate and cooperate with the Company in exchanging such information and providing such assistance as the Company may reasonably request in connection with all of the foregoing, and (c) (i) supply promptly any additional information and documentary material that may be reasonably requested in connection with such filings and (ii) use reasonable best efforts to take all actions necessary to obtain all required clearances in connection with such filings. The parties agree that this Section 6.02 (and not Section 6.06) sets forth the Company's sole obligations with respect to regulatory filings, other than filings under the HSR Act and any other applicable Competition Laws, which is governed solely by Section 9.05.

Section 6.03    Notification. Prior to the Closing Date, Purchaser will promptly notify the Company and Seller of: (a) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the Transaction; (b) any notice or other communication from any Governmental Body related to or in connection with the Transaction; (c) any actions, suits, claims, investigations or proceedings commenced or, to its knowledge threatened in writing, against, whether civil, criminal, administrative or investigative, relating to or involving or otherwise affecting Purchaser or its Affiliates that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 4.05 or that relate to the Transaction; and (d) any breach or inaccuracy of any representation or warranty contained in this Agreement at any time during the term hereof that could reasonably be expected to cause the condition set forth in Section 7.03(a) not to be satisfied; provided that the delivery of any notice pursuant to this Section 6.03 will not limit any of the representations and warranties of Purchaser set forth in this Agreement or the remedies available to Seller or the Company under this Agreement.

Section 6.04    Director and Officer Liability and Indemnification.

(a)    Without limiting any additional rights that any Person may have under any other agreement, and except to the extent prohibited by, or as a result or any change in, applicable law, from the Closing Date through the sixth (6th) anniversary of the Closing Date, Purchaser, the Company and its Subsidiaries will indemnify and hold harmless each present (as of immediately prior to the Closing) and former officer, director, supervisory

director, employee, manager, managing member, member, partner (general or limited), fiduciary or agent of the Company or any of its Subsidiaries (each, an "Indemnified Person"), against all claims, losses, liabilities, damages, judgments, inquiries, fines and reasonable fees, costs and expenses, including attorneys' fees and disbursements, incurred in connection with any Legal Proceeding, arising out of or pertaining to (i) the fact that the Indemnified Person is or was an officer, director, supervisory director, employee, manager, managing member, fiduciary or agent of the Company or any of its Subsidiaries or (ii) matters existing or occurring at or prior to the Closing (including this Agreement, the Transaction and related actions), whether asserted or claimed prior to, at or after the Closing, to the fullest extent permitted under applicable Law, as provided in the Organizational Documents or any other Contract of the Company or any of its Subsidiaries, in each case, as in effect on the date of such activities or otherwise in effect on the date hereof substantially in accordance with their respective terms. In the event of any such Legal Proceeding, each Indemnified Person will be entitled to advancement of expenses incurred in the defense of any Legal Proceeding to the extent provided in the Organizational Documents or any other Contract of the Company or any of its Subsidiaries, in each case, as in effect on the date of such activities or otherwise in effect on the date hereof.

(b)    For at least six (6) years following the Closing Date, Purchaser will not, and will not permit the Company or any of its Subsidiaries to, amend, repeal or modify in any manner adverse to any Indemnified Person any provision in such Person's certificates or articles of incorporation, articles of organization, certificate of limited partnership, operating agreement, bylaws, limited partnership agreement or similar governing documents, as applicable, or in any agreement, relating to the exculpation or indemnification of, or advancement of expenses to, any Indemnified Person as in effect immediately prior to the Closing, and Purchaser will cause all such provisions to be observed by the Company and its Subsidiaries, it being the intent of the parties that any Indemnified Person will continue to be entitled to such exculpation, indemnification and advancement of expenses to the fullest extent permitted under applicable Law.

(c)    At the Closing, the Company will (at Purchaser's expense) obtain, maintain and fully pay for irrevocable "tail" insurance policies naming the Indemnified Persons as direct beneficiaries with a claims period of at least six (6) years from the Closing Date from an insurance carrier with the same or better credit rating as the Company's current insurance carrier with respect to directors' liability insurance in an amount and scope at least as favorable as the Company's existing policies with respect to matters existing or occurring at or prior to the Closing Date (the "D&O Tail Policy"); provided that in the event that any claim is brought under the D&O Tail Policy prior to the sixth (6th) anniversary of the Closing Date, the D&O Tail Policy will be maintained until final disposition thereof. Purchaser will not, or will cause the Company to not, cancel or change such insurance policies in any respect.

(d)    In the event that Purchaser, the Company or any of its Subsidiaries or any of the respective successors or assigns of the foregoing (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation of such consolidation or merger, or (ii) transfers all or substantially all of its properties or assets to any Person, then, in each case, proper provisions shall be made so that such successor or purchaser, as the case may be, shall assume the obligations set forth in this Section 6.04.

(e)    This Section 6.04 is intended to be for the benefit of each of the Indemnified Persons and may be enforced by any such Indemnified Person as if such Indemnified Person were a party to this Agreement.

(f)    Purchaser acknowledges and agrees, on their own behalf and on behalf of Purchaser Group, the agreements contained in this Section 6.04 and the indemnification contemplated by this Section 6.04 require performance after the Closing to the maximum extent permitted by applicable Law and will survive in accordance with Section 9.01(a).

Section 6.05    Contact with Business Relations. Without limiting the provisions of Section 5.02, Purchaser hereby acknowledges and agrees that it is not authorized to and will not, and will not permit any member of the Purchaser Group to, contact any officer, manager, director, employee, customer, supplier, distributor, lessee, lessor, lender, noteholder or other material business relation of the Company or its Subsidiaries prior to the Closing with respect to the Company, its Subsidiaries, their business or the Transaction without the prior consent of the Company for each such contact (which consent shall not be unreasonably withheld, conditioned or delayed).

Section 6.06    Employee Layoffs. For a period of ninety (90) days after the Closing Date, neither Purchaser nor the Company will, and neither will permit any of the Company's Subsidiaries to, terminate employees of the Company or any of its Subsidiaries, except in full compliance with all requirements of the WARN Act or equivalent or similar requirements for multiple employee layoffs pursuant to any applicable local law.

Section 6.07    Reasonable Best Efforts. Subject to the terms of this Agreement (including the limitations set forth in Section 6.02 and Section 9.05) and applicable Law, Purchaser will, and will cause its Affiliates and Advisors to, use their reasonable best efforts to take, or cause to be taken, all actions necessary to cause its conditions to Closing to be satisfied and for the Closing to occur as promptly as practicable, and no such Person will take any action intended to, or that would reasonably be expected to, prevent, impede or materially delay the Closing. Purchaser will not be obligated by the foregoing sentence to make any payments or otherwise pay any consideration to any third party to obtain any consent, waiver or approval in connection with the consummation of the Transaction.

ARTICLE VII CONDITIONS TO CLOSING

Section 7.01    Conditions to All Parties' Obligations. The respective obligations of each of the Company, Seller and Purchaser to consummate the Transaction are subject to the satisfaction (or waiver by Purchaser or Seller or the Company, as appropriate, in writing), at or before the Closing, of each of the following conditions:

(a)    no court or other Governmental Body has issued, enacted, entered, promulgated or enforced any Law or Order (that is final and non-appealable and that has not been vacated, withdrawn or overturned) restraining, enjoining or otherwise prohibiting the consummation of the Transaction or has the effect of making such consummation thereof illegal;

(b)    no action before a court of competent jurisdiction shall be pending or threatened in writing, which, if sustained, would enjoin or prevent the consummation of the Transaction;

(c)    no Material Adverse Effect shall have occurred since the date of this Agreement; and

(d)    this Agreement has not been terminated in accordance with Section 8.01.

Section 7.02    Conditions to Purchaser's Obligations. The obligation of Purchaser to consummate the Transaction is subject to the satisfaction (or waiver by Purchaser in writing), at or before the Closing, of each of the following conditions:

(a)    The representations and warranties set forth in Article II and Article III will be true and correct in all respects on and as of the Closing Date (disregarding all qualifications or limitations as to "materiality" or "Material Adverse Effect" and words of similar import set forth therein), as though such representations and warranties had been made on and as of the Closing Date (except that representations and warranties that are made as of a specified date need be true and correct only as of such date), except to the extent of changes or developments specifically contemplated by the terms of this Agreement and except where the failure of such representations and warranties to be true and correct has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; provided that the representations and warranties set forth in Section 2.01 (Organization and Corporate Power), Section 2.02 (Subsidiaries), Section 2.03(a) (Authorization), Section 2.03(b)(i) (No Conflicts with respect to Organizational Documents), Section 2.04 (Capitalization), Section 2.06(a) (No Material Adverse Effect), Section 2.18 (Broker Fees), Section 3.01 (Organization and Power), Section 3.02 (Authorization), Section 3.05 (Title to Company Stock) and Section 3.07 (Brokers or Finders) will be true and correct in all respects (except for any failure of any such representation or warranty to be true and correct in any de minimis respect; provided that Section 2.04 (Capitalization) and Section 3.05 (Title to Company Stock) will be true and correct in all respects) on and as of the Closing Date, as though such representations and warranties had been made on and as of the Closing Date (except that representations and warranties that are made as of a specified date need be true and correct only as of such date);

(b)    the Company and Seller will have performed in all material respects all of the covenants and agreements required to be performed by each of them under this Agreement and the Termination Agreement at or prior to the Closing;

(c)    the Company will have delivered to Purchaser a certificate duly executed by the Company, in the form of Exhibit 7.02(d) and dated as of the Closing Date, stating that the conditions specified in Section 7.02(a) and Section 7.02(b) solely as they relate to the Company or any of its Subsidiaries, have been satisfied;

(d)    Seller will have delivered to Purchaser a certificate duly executed by Seller, in the form of Exhibit 7.02(d) and dated as of the Closing Date, stating that the conditions specified in Section 7.02(a) and Section 7.02(b), solely as they relate to Seller, have been satisfied;

(e)    Seller will have delivered to Purchaser the Adjustment Escrow Agreement, duly executed by Seller and the Escrow Agent;

(f)    Seller will have either (i) delivered to Purchaser resignation letters of, or (ii) otherwise caused or effectuated the resignations of, all Persons set forth on Schedule 7.02(f) in their capacities as managers, directors and/or officers (or equivalent) of the Company and each of its Subsidiaries, in each case with such resignations to be effective as of the Closing;

(g)    Seller will have delivered to Purchaser a certificate of good standing (or its equivalent) of the Company and each of its U.S.-based Subsidiaries from the jurisdictions in which they are organized dated after the date hereof;

(h)    Seller will have delivered evidence, reasonably satisfactory to Purchaser, that all of the agreements and arrangements specified on Schedule 7.02(i)have been terminated, effective no later than as of immediately prior to the Closing;

(i)    The Company will have delivered a duly executed FIRPTA Certificate pursuant to Section 5.07, provided that Purchaser's sole recourse in the event that the Company fails to deliver the FIRPTA Certificate at or before the Closing in accordance with this Section 7.02(k) shall be to withhold from consideration payable under this Agreement any amounts required to be withheld under applicable Tax law in accordance with Section 1.06;

(j)    Seller will have delivered the duly executed Payoff Letters; and

(k)    Seller will have delivered evidence, reasonably satisfactory to Purchaser, of the termination of the 401(k) Plan.

Section 7.03    Conditions to the Company's and Seller's Obligations. The obligation of each of the Company and Seller to consummate the Transaction is subject to the satisfaction (or waiver by Seller or the Company in writing), at or before the Closing, of each of the following conditions:

(a)    The representations and warranties set forth in Article IV will be true and correct as of the Closing Date, as though such representations and warranties had been made on and as of the Closing Date (except that representations and warranties that are made as of a specified date need be true and correct only as of such date), except to the extent any failure to be so true and correct would not have a material adverse effect on the financial condition or operating results of Purchaser or on the ability of Purchaser to consummate the Transaction;

(b)    Purchaser will have performed in all material respects each of the covenants and agreements required to be performed by it under this Agreement at or prior to the Closing;

(c)    Purchaser will have delivered to the Company and Seller a certificate of Purchaser, in the form of Exhibit 7.03(c) and dated as of the Closing Date, stating that the conditions specified in Section 7.03(a) and Section 7.03(b) have been satisfied; and

(d)    Purchaser will have delivered to Seller the Adjustment Escrow Agreement, duly executed by Purchaser.

Section 7.04    Waiver of Conditions. Upon the occurrence of the Closing, any condition set forth in this Article VII which was not satisfied as of the Closing will be deemed to have been waived for all purposes by the party having the benefit of such condition as of and after the Closing; provided, however, that Purchaser's election to proceed with the Closing shall not be deemed a waiver of any breach of any representation, warranty or covenant not known to Purchaser as of the Closing Date, and such action shall not prejudice Purchaser's right to recover losses for any such breach (solely to the extent such right to recover is expressly contemplated by (and is subject to the restrictions contained in) this Agreement). None of Purchaser, Seller or the Company may rely on the failure of any condition set forth in this Article VII, as applicable, to be satisfied if such failure was caused by such party's failure to act in good faith (only in any instance where any such party is expressly required to do so in accordance with the terms of this Agreement) or use, to the extent required by this Agreement, its reasonable best efforts to consummate the Transaction.

ARTICLE VIII TERMINATION

Section 8.01    Termination. This Agreement may be terminated at any time prior to the Closing as set forth in this Article VIII and in no other manner:

(a)    by mutual written consent of Purchaser, on the one hand, and Seller, on the other hand;

(b)    by either Purchaser, on the one hand, or by Seller, on the other hand, by giving written notice of such termination to the other party, upon the issuance by any Governmental Body of an Order restraining, enjoining or otherwise prohibiting the consummation of the Transaction or declaring unlawful the Transaction, and such Order having become final, binding and non-appealable;

(c)    by either Purchaser, on the one hand, or by Seller, on the other hand, by giving written notice of such termination to the other party, if the Closing will not have occurred on or before November 3, 2022 (the "Outside Date"); provided that the party seeking to terminate has used reasonable best efforts to cause the Closing to occur as promptly as practicable; provided, further, that no termination may be made under this Section 8.01(c) if the failure to consummate the Closing by the Outside Date is caused by or the result of a breach by the party seeking to terminate this Agreement pursuant to this Section 8.01(c) of any covenant, representation or warranty hereunder;

(d)    by Purchaser, upon a breach of any covenant or agreement on the part of the Company or Seller set forth in this Agreement, or if any representation or warranty of the Company or Seller will have become untrue, in each case, such that the conditions set forth in Section 7.02(a) or Section 7.02(b) would not be satisfied, including a breach of Seller's or the Company's obligation to consummate the Closing; provided that (i) if such breach is curable by the Company or Seller, then Purchaser may not terminate this Agreement under this Section 8.01(d) unless such breach has not been cured by the date which is the earlier of (A) two (2) Business Days prior to the Outside Date and (B) fifteen (15) days after Purchaser notifies the Company or Seller of such breach and (ii)

the right to terminate this Agreement pursuant to this Section 8.01(d) will not be available to Purchaser at any time that Purchaser is in material breach of any covenant, representation or warranty hereunder; and

(e)    by Seller, upon a breach of any covenant or agreement on the part of Purchaser set forth in this Agreement, or if any representation or warranty of Purchaser will have become untrue, in each case, such that the conditions set forth in Section 7.03(a) or Section 7.03(b) would not be satisfied, including a breach of Purchaser's obligation to consummate the Closing; provided that (i) if such breach is curable by Purchaser, then Seller may not terminate this Agreement under this Section 8.01(e) unless such breach has not been cured by the date which is the earlier of (A) two (2) Business Days prior to the Outside Date and (B) fifteen (15) days after Seller notifies Purchaser of such breach and (ii) the right to terminate this Agreement pursuant to this Section 8.01(e) will not be available to Seller at any time that the Company or Seller is in material breach of any covenant, representation or warranty hereunder.

Section 8.02    Effect of Termination. If this Agreement is terminated pursuant to Section 8.01, this Agreement will become void and have no further legal effect, and no party shall have any Liability or obligation to any other party hereto or their respective Affiliates, directors, officers or employees, (i) other than liabilities and obligations under the Confidentiality Agreement, (ii) except that the provisions of this Section 8.02, Section 8.03, Section 9.02, Section 9.06, Section 9.07, and Article X will survive any termination of this Agreement and (iii) except that no such termination will relieve any party hereto from any liabilities, losses, damages, obligations, costs or expenses (x) in respect of Fraud or (y) relating to such party's willful breach of this Agreement (which, for the avoidance of doubt, will be deemed to include any failure by Purchaser, Seller, or the Company to consummate the Closing if it is obliged to do so hereunder).

Section 8.03    Certain Other Effects of Termination. In the event of the termination of this Agreement by either Seller or Purchaser as provided in Section 8.01: (a) each party, if so requested by any other party, will return or destroy promptly every document furnished to it by such other party (or any Affiliate or Advisor of such other party) in connection with the Transaction, whether so obtained before or after the execution of this Agreement, and any copies thereof (except for copies of documents publicly available) that may have been made, and will use reasonable best efforts to cause its Advisors and any Advisors of financial institutions, financing sources and others to whom such documents were furnished promptly to return or destroy such documents and any copies thereof any of them may have made; and (b) the Confidentiality Agreement will remain in full force and effect and survive the termination of this Agreement in accordance with its terms.

ARTICLE IX ADDITIONAL AGREEMENTS AND COVENANTS

Section 9.01    Survival; Certain Waivers.

(a)    Each of the representations and warranties and the covenants and agreements (to the extent such covenant or agreement contemplates or requires performance by such party prior to the Closing) of the parties set forth in this Agreement or any other document contemplated hereby, or in any certificate delivered hereunder or thereunder, will terminate effective immediately as of the Closing such that no claim for

breach of any such representation, warranty, covenant or agreement, detrimental reliance or other right or remedy (whether in contract, in tort or at law or in equity) may be brought with respect thereto after the Closing, except in respect of Fraud. Each covenant and agreement requiring performance at or after the Closing, will, in each case, expressly survive Closing in accordance with its terms, and if no term is specified, then until the longest statute of limitations permitted by applicable Law in respect of such covenant or agreement, and nothing in this Section 9.01(a) will be deemed to limit any rights or remedies of any Person for breach of any such covenant or agreement (with it being understood that Purchaser will also be liable for breach of any covenant or agreement requiring performance by the Company or any of its Subsidiaries after the Closing, and that nothing herein will limit or affect Purchaser's or any of its Affiliates' liability for the failure to pay the Closing Cash Proceeds (in whole or in part) or any party's failure to pay any amounts payable by them (in whole or in part) as and when required by this Agreement).

(b)    Each of the Company and Purchaser (on its own behalf and on behalf of the Purchaser Group) irrevocably from and after the Closing, to the fullest extent permitted under applicable Law, waives any and all rights, claims and causes of action it may have against any Seller Party relating to the operation of the Company or its Subsidiaries or their respective businesses or relating to the subject matter of this Agreement or any other document contemplated hereby, and the Transaction (other than, (i) solely with respect to and solely to the extent of its covenants that survive the Closing pursuant to Section 9.01(a), against Seller, and (ii) in respect of Fraud), whether or not arising under, or based upon, any Law (including any right, whether arising at law or in equity, to seek indemnification, contribution, cost recovery, damages, or any other recourse or remedy). Furthermore, without limiting the generality of this Section 9.01, no action, suit, claim, investigation or proceeding will be brought, encouraged, supported or maintained by, or on behalf of, any member of the Purchaser Group (including, after the Closing, the Company and its Subsidiaries) against any of the Seller Parties, or the Seller Parties against any of the Purchaser Group, and no recourse will be sought or granted against any of them, by virtue of, or based upon, any alleged misrepresentation or inaccuracy in, or breach of, any of the representations, warranties, covenants or agreements of the Company or any other Person set forth or contained in this Agreement or any other document contemplated hereby or any certificate delivered hereunder or thereunder (other than, (i) solely with respect to and solely to the extent of its covenants that survive the Closing pursuant to Section 9.01(a), against Seller or Purchaser as applicable, or (ii) in respect of Fraud), the subject matter of this Agreement or any other document contemplated hereby, the Transaction, the business, the ownership, operation, management, use or control of the business of the Company or any of its Subsidiaries, any of their assets, or any actions or omissions at, or prior to, the Closing Date. Furthermore, without limiting the generality of this Section 9.01, Purchaser and Seller will not be entitled to rescind this Agreement, or subject to Section 8.01, treat this Agreement as terminated by reason of any breach of this Agreement, and Purchaser and Seller hereby knowingly, willingly and irrevocably waive any and all rights of rescission it may have in respect of any such matter.

(c)    Purchaser acknowledges and agrees, on its own behalf and on behalf of the Purchaser Group, that the agreements contained in this Section 9.01 (i) require performance after the Closing to the maximum extent permitted by applicable Law and will survive in accordance with Section 9.01(a); and (ii) are an integral part of the

Transactions and that, without the agreements set forth in this Section 9.01, the Company would not enter into this Agreement.

(d)    Notwithstanding anything in this Agreement to the contrary and for the avoidance of doubt, nothing in this Agreement shall limit, restrict, or preclude the ability of Purchaser to bring any action or claims in respect of Fraud.

Section 9.02    Acknowledgment by Purchaser.

(a)    Purchaser acknowledges and agrees, on its own behalf and on behalf of the Purchaser Group, that they have conducted to their full satisfaction an independent investigation and verification of the business, financial condition, results of operations, assets, liabilities, properties, contracts and prospects of the Company and its Subsidiaries, and, in making its determination to proceed with the Transaction, Purchaser has relied solely on the results of the Purchaser Group's own independent investigation and verification and have not relied on, are not relying on, and will not rely on, Seller, the Company, any Subsidiary, the information presentation, any information, statements, disclosures, documents, projections, forecasts or other material made available to Purchaser or any of its Affiliates or Advisors in the Dataroom, the Projections or any information, statements, disclosures or materials, in each case, whether written or oral, provided by, or as part of, any of the foregoing or any other Seller Party, or any failure of any of the foregoing to disclose or contain any information, except for the Express Representations. Purchaser acknowledges and agrees, on its own behalf and on behalf of the Purchaser Group, that (i) the Express Representations are the sole and exclusive representations, warranties and statements of any kind made to Purchaser and on which Purchaser may rely in connection with the Transaction; and (ii) all other representations, warranties and statements of any kind or nature expressed or implied, whether in written, electronic or oral form, (including (1) the completeness or accuracy of, or any omission to state or to disclose, any information (other than solely to the extent expressly set forth in the Express Representations) including in the Information Presentation, the Dataroom, the Projections, meetings, calls or correspondence with management of the Company and its Subsidiaries or any of the Seller Parties and (2) any other statement relating to the historical, current or future business, financial condition, results of operations, assets, liabilities, properties, contracts, and prospects of the Company or any of its Subsidiaries, or the quality, quantity or condition of the Company's or its Subsidiaries' assets), are, in each case, specifically disclaimed by the Company, on its behalf and on behalf of the Seller Parties. Purchaser, on its own behalf and on behalf of the Purchaser Group, (x) disclaims reliance on the items in clause (ii) in the immediately preceding sentence and (y) acknowledges and agrees that it has relied on, is relying on and will rely on only the items in clause (i) in the immediately preceding sentence. Without limiting the generality of the foregoing, Purchaser acknowledges and agrees, on its own behalf and on behalf of the Purchaser Group, that neither the Company, nor any other Person (including the Seller Parties), has made, is making or is authorized to make, and Purchaser, on its own behalf and on behalf of the Purchaser Group, hereby knowingly, willingly and irrevocably waives, any warranty or representation (whether in written, electronic or oral form), express or implied, as to the quality, merchantability, fitness for a particular purpose, or condition of the Company's or its Subsidiaries' business, operations, assets, liabilities, prospects or any portion thereof, except solely to the extent expressly set forth in the Express Representations. Notwithstanding the foregoing, nothing in this Section 9.02 will preclude bringing any claims in respect of Fraud.

(b)    Without limiting the generality of the foregoing, in connection with the investigation by Purchaser of the Company and its Subsidiaries, Purchaser and its Affiliates, and the Advisors of each of the foregoing, have received or may receive, from or on behalf of the Company, certain projections, forward-looking statements and other forecasts (whether in written, electronic or oral form, and including in the Information Presentation, Dataroom, management meetings, etc.) (collectively, "Projections"). Purchaser acknowledges and agrees, on its own behalf and on behalf of the Purchaser Group, that (i) such Projections are being provided solely for the convenience of Purchaser to facilitate its own independent investigation of the Company and its Subsidiaries, (ii) there are uncertainties inherent in attempting to make such Projections, (iii) Purchaser is familiar with such uncertainties, and (iv) Purchaser is taking full responsibility for making its own evaluation of the adequacy and accuracy of all Projections (including the reasonableness of the assumptions underlying such Projections).

(c)    Purchaser acknowledges and agrees, on its own behalf and on behalf of the Purchaser Group, that the agreements contained in this Section 9.02 (i) require performance after the Closing to the maximum extent permitted by applicable Law and will survive in accordance with Section 9.01(a); and (ii) are an integral part of the Transaction and that, without these agreements set forth in this Section 9.02, Seller would not enter into this Agreement.

Section 9.03    Further Assurances. From time to time, as and when requested by any party hereto and at such party's expense, any other party will execute and deliver, or cause to be executed and delivered, all such documents and instruments and will take, or cause to be taken, without further consideration, all such further or other actions as such requesting party may reasonably deem necessary or desirable to evidence and effectuate the Transaction.

Section 9.04    Employees and Employee Benefits.

(a)    Termination of Company 401(k) Plan. The Company shall adopt resolutions to terminate the Blue Nile 401(k) Retirement Savings Plan & Trust (the "Company 401(k) Plan") effective as of the date immediately preceding the Closing Date, but contingent on the occurrence of the Closing. The form and substance of such resolutions and shall be subject to the prior review and written approval of Purchaser, which approval shall not be unreasonably withheld, conditioned or delayed.

(b)    Option Cancellations. Prior to the Closing Date and contingent on the consummation of the Closing, the Company shall take such actions, including, but not limited to, those required by the terms of the Option Plan, the Non-Qualified Stock Option Award Agreements and any other agreements, including any agreements with Adama Partners, LLC, its Affiliates, or other Persons pursuant to which Options were granted (the "Award Agreements"), to (i) terminate the Option Plan, (ii) cancel the Options, and (iii) terminate the Award Agreements set forth on Schedule 9.04(b), which termination shall require the execution and delivery concurrently with the execution of this Agreement (but conditioned upon the consummation of the Closing) of option cancellation agreements in the form mutually agreed between Purchaser and Seller with respect to the Award Agreements set forth on Schedule 9.04(b) (the "Option Cancellation Agreements"). Each of the Option Cancellation Agreements, dated as of the date hereof and effective as of, and conditioned upon the consummation of, the Closing, have been

duly authorized and delivered hereunder to Purchaser concurrently with the signing of this Agreement.

(c)    No Third Party Beneficiaries. Nothing set forth in this Section 9.04 will (i) confer any rights or remedies upon any employee or former employee of the Company, any Retained Employee or upon any other Person other than the parties hereto and their respective successors and assigns, (ii) be construed to establish, amend, or modify any benefit plan, program, agreement or arrangement or Company Plan or (iii) alter or limit Purchaser's or the Company's or any of its Subsidiaries' ability to amend, modify or terminate any specific benefit plan, program, agreement or arrangement at any time.

Section 9.05    Antitrust Notification.

(a)    Seller, the Company and Purchaser shall use their respective commercially reasonable efforts to promptly respond to any inquiry by any Governmental Body regarding any Competition Law in connection with the Transaction.

(b)    The parties hereto shall, and shall cause their respective Affiliates to, cooperate with each other in connection with any investigation or inquiry by any Governmental Body under any applicable Competition Laws with respect to the Transaction and use their respective commercially reasonable efforts (i) to keep each other promptly informed of any substantive oral communications with, and provide copies of any substantive written communications with, any Governmental Body regarding the Transaction, and (ii) to confer with each other regarding appropriate contacts with and response to personnel of such Governmental Bodies and the content of any such contacts or presentations. None of Seller, the Company or Purchaser shall participate in any meeting or material discussion with any Governmental Body with respect of any filings, applications, investigation, or other inquiry relating to the transactions contemplated hereby without giving the other parties prior notice of the meeting or discussion and, to the extent permitted by the relevant Governmental Body, the opportunity to attend and participate in such meeting or discussion (which, at the request of Purchaser or the Company, shall be limited to outside antitrust counsel only). Subject to applicable Law, Seller, the Company and Purchaser shall each consult and cooperate with one another and consider in good faith the views of the other party, in connection with any analyses, appearances, material communications, presentations, white papers memoranda, briefs, arguments, opinions and proposals or other written materials to be made or submitted to any Governmental Body in advance of any such submission. Any materials provided pursuant to this Section 9.05(b) may be redacted to (A) comply with contractual arrangements or applicable Laws, and (B) address reasonable attorney-client privilege or confidentiality concerns; provided, that, portions of materials that are competitively sensitive may be designated as “outside antitrust counsel only,” in which case such portions of such copies shall be given only to the outside legal counsel and advisors of the parties hereto.

Section 9.06    Release.

(a)    Effective upon the Closing, (i) each of Purchaser, the Company and its Subsidiaries, in each case on behalf of itself and the Purchaser Group (collectively, the "Purchaser Releasers"), hereby knowingly, willingly, irrevocably and expressly waives, acquits, remises, discharges and forever releases Seller and each of its equityholders,

officers, directors, members, managers, employees, agents, representatives and Affiliates (collectively, the "Seller Released Parties"), from any and all liabilities and obligations to such Purchaser Releasers of any kind or nature whatsoever, in each case whether absolute or contingent, liquidated or unliquidated, known or unknown, matured or unmatured or determined or determinable, and whether arising under any Law, contract, agreement, arrangement, commitment, undertaking or understanding, whether written or oral or otherwise at law or in equity, and which occurred, existed or was taken or permitted at or prior to the Closing, in each case solely with respect to the equity ownership of the Company and the ownership, operation and management of the Company and its Subsidiaries (other than rights or obligations under this Agreement and any of the other agreements executed and delivered in connection herewith, but, in each case, only to the extent set forth herein or therein), and (ii) each of the Purchaser Releasers hereby agrees that it will not seek to recover any amounts in connection therewith or thereunder from any of the Seller Released Parties (except as provided for in this Agreement or any of the other agreements executed and delivered in connection herewith, but, in each case, only to the extent set forth herein or therein).

(b)    Effective upon the Closing, (i) each of Seller, on behalf of itself and the Seller Parties (collectively, the "Seller Releasers"), hereby knowingly, willingly, irrevocably and expressly waives, acquits, remises, discharges and forever releases Purchaser and each of its equityholders, officers, directors, members, managers, employees, agents, representatives and Affiliates (including, from and after the Closing, the Company and its Subsidiaries) (collectively, the "Purchaser Released Parties"), from any and all Liabilities and obligations to such Seller Releasers of any kind or nature whatsoever, in each case whether absolute or contingent, liquidated or unliquidated, known or unknown, matured or unmatured or determined or determinable, and whether arising under any Law, contract, agreement, arrangement, commitment, undertaking or understanding, whether written or oral, at law or in equity, and which occurred, existed or was taken or permitted at or prior to the Closing, in each case solely with respect to Seller's equity ownership of the Company and the ownership, operation and management of the Company and its Subsidiaries (other than rights or obligations under this Agreement and any of the other agreements executed and delivered in connection herewith, but, in each case, only to the extent set forth herein or therein), and (ii) each of the Seller Releasers hereby agrees that it will not seek to recover any amounts in connection therewith or thereunder from any of the Purchaser Released Parties (except as provided for in this Agreement or any of the other agreements executed and delivered in connection herewith, but, in each case, only to the extent set forth herein or therein).

Section 9.07    Provision Respecting Representation of Company.

(a)    Each of the parties to this Agreement hereby agrees, on its own behalf and on behalf of its directors, supervisory directors, members, partners, managers, members, officers, employees and Affiliates, that (a) Kirkland & Ellis LLP has been retained by, and may serve as counsel to, each and any of Seller and its equityholders and their respective Affiliates (other than the Company and its Subsidiaries) (individually and collectively, the "Seller Group"), on the one hand, and the Company and its Subsidiaries, on the other hand, in connection with the negotiation, preparation, execution, delivery and performance of this Agreement, and the consummation of the Transaction, (b) Kirkland & Ellis LLP has not acted as counsel for any other party hereto in connection with the Transaction and that none of the other parties hereto has the status of a client of Kirkland & Ellis LLP for conflict of interest or any other purposes as a result thereof and

(c) following consummation of the Transaction, Kirkland & Ellis LLP (or any successor) may serve as counsel to the Seller Group or any director, member, partner, manager, officer, employee or Affiliate of any member of the Seller Group, in connection with any litigation, claim, action, suit, proceeding, proceeding or obligation arising out of or relating to this Agreement or the Transaction. Notwithstanding such representation or any continued representation of the Company or any of its Subsidiaries, each of the parties hereto (on their own behalf and on behalf of their Affiliates) hereby consents thereto and irrevocably waives any conflict of interest arising therefrom, and each of such parties will cause any Affiliate thereof to consent to knowingly, willingly and irrevocably waive any conflict of interest arising from such representation. Purchaser, the Company and the Seller Group hereby agree that, in the event that a dispute arises after the Closing between Purchaser, the Company, or its Subsidiaries on the one hand, and the Seller Group or their respective Affiliates, on the other hand, Kirkland & Ellis LLP may represent the Seller Group, or such Affiliates in such dispute even though the interests of the Seller Group or such Affiliates may be directly adverse to Purchaser, the Company or its Subsidiaries, and even though Kirkland & Ellis LLP may have represented the Company or its Subsidiaries in a matter substantially related to such dispute, or may be handling ongoing matters for Purchaser, the Company or any of their Subsidiaries.

(b)    In addition, Purchaser agrees that (i) all communications among any member of the Seller Group, the Company and its Subsidiaries, any of their respective Affiliates, directors, officers, employees or Advisors, on the one hand, and Kirkland & Ellis LLP, on the other hand, that relate in any way to the negotiation, preparation, execution, delivery and closing under, or any dispute arising in connection with, this Agreement, or otherwise relating to any potential sale of the Company or the Transaction (the "Protected Seller Communications"), will be deemed to be privileged and confidential communications, (ii) all rights to such Protected Seller Communications, the expectation of client confidentiality, and the control of the confidentiality and privilege applicable thereto, belong to and will be retained by the Seller Group and (iii) to the extent Purchaser or any of its Affiliates (including the Company and its Subsidiaries after the Closing) should discover in its possession after the Closing any Protected Seller Communications, it will take reasonable steps to preserve the confidentiality thereof and promptly deliver the same to Seller, keeping no copies, and will not by reason thereof assert any loss of confidentiality or privilege protection. As to any such Protected Seller Communications prior to the Closing Date, Purchaser, the Company, and each of its Subsidiaries together with any of their respective affiliates, Subsidiaries, successors or assigns, further agree that none of the foregoing may use or rely on any of the Protected Seller Communications in any action against or involving any of the Seller Group or Kirkland & Ellis LLP after the Closing. The Protected Seller Communications may be used by the Seller Group or any of their respective Affiliates in connection with any dispute that relates in any way to this Agreement or the Transaction. Purchaser acknowledges and agrees, on its own behalf and on behalf of the Purchaser Group, that the agreements contained in this Section 9.07 (A) require performance after the Closing to the maximum extent permitted by applicable Law and will survive in accordance with Section 9.01(a); and (B) are an integral part of the Transaction and that, without the agreements set forth in this Section 9.07, Seller would not enter into this Agreement.

Section 9.08    Tax Matters. The following shall govern the allocation of responsibility as between Purchaser and Seller for certain Tax matters following the Closing Date:

(a)    At the Closing or, if due thereafter, promptly when due, all transfer, sales, use, documentary, stamp, and any other similar Taxes and all applicable conveyance fees, recording charges and other similar fees and charges applicable to, arising out of or imposed upon the Transaction, whether imposed on the Company, its Subsidiaries, Purchaser, or the Seller resulting from the Transaction (collectively, "Transfer Taxes") will be paid fifty percent (50%) by Seller and fifty percent (50%) by Purchaser. Purchaser will prepare any Tax Returns with respect to the foregoing Taxes and fees, and Seller will cooperate with Purchaser in the preparation and filing of such Tax Returns.

(b)    Solely for purposes of calculating the Income Tax Amount and Net Working Capital, in the case of any Straddle Period, the amount of any Taxes based on or measured by income, receipts, or payroll of the Company or a Subsidiary allocable to the Pre-Closing Tax Period shall be determined based on an interim closing of the books as of the close of business on the Closing Date (and for such purpose, the taxable period of any partnership or other pass-through entity in which the Company or any Subsidiary holds a beneficial interest shall be deemed to terminate at such time) and the amount of other Taxes allocable to the Pre-Closing Tax Period, other than Taxes based on or measured by income, receipts, or payroll, shall be deemed to be the amount of such Tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the taxable period ending on the Closing Date and the denominator of which is the number of days in such Straddle Period; provided, that all Transaction Tax Deductions shall be allocated to a Pre-Closing Tax Period to the extent permitted by Law, as determined by a "more likely than not" standard.

(c)    Purchaser, the Company and its Subsidiaries, and Seller, at the requesting party's reasonable, out-of-pocket cost, shall cooperate fully as and to the extent reasonably requested by the other party, in connection with the filing of Tax Returns pursuant to this Section 9.08 and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party's request) the provision of records and information that are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Purchaser and Seller both agree to retain all books and records with respect to Tax matters pertinent to the Company and its Subsidiaries relating to any taxable period beginning before the Closing Date until one-hundred and eighty (180) days after the expiration of the statute of limitations (and, to the extent notified by Purchaser or Sellers, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority.

(d)    Purchaser shall control all audits, examinations, litigation, and other administrative or judicial proceedings of the Company and each Subsidiary (each a "Tax Controversy") after the Closing Date. Purchaser shall keep Seller informed as to the status of any Tax Controversy relating to Pre-Closing Tax Periods and Purchaser shall not settle or voluntarily compromise any Tax Controversy that could affect the amounts to be received by Seller under this Agreement without first obtaining the Seller's approval, which approval shall not be unreasonably withheld, conditioned or delayed.

(e)    None of Purchaser, the Company or any of their Affiliates will make any election under Sections 338 or 336(e) of the Code (or any similar provision under state, local or foreign Law) with respect to the Transaction.

ARTICLE X MISCELLANEOUS

Section 10.01    Press Releases and Communications. No press release or public announcement related to this Agreement or the Transaction will be issued or made without the joint approval of Purchaser and Seller (which approval will not to be unreasonably withheld, conditioned, or delayed), unless required by Law or applicable stock exchange rules and regulations, in which case Purchaser and Seller, as applicable, will have the right to review and consult with the other party on any such press release or public announcement prior to publication to the extent reasonably practicable; provided, that, from and after the Closing Date, such consent or review and consultation, as the case may be, will only be necessary to the extent reasonably practicable and no such consent or review and consultation will be necessary to the extent that any such press release or public announcement does not contain any previously-redacted information not already contained in any previous press release or public announcement that was otherwise made in compliance with this Section 10.01; provided, further that (a) each of Seller and Purchaser and their respective Affiliates will be entitled to communicate with its and its Affiliates' respective directors, managers, officers, employees, current or prospective limited partners and investors in connection with their fundraising and reporting activities or otherwise in the ordinary course of their respective businesses; and (b) Seller will not, and will cause each of the Company and its Subsidiaries to not, prior to the Closing, make any broad-based announcements or disclosures regarding the Transaction to any employees, customers, suppliers, or other business partners of the Company or its Subsidiaries without the prior written consent of Purchaser. Notwithstanding the foregoing, from the date of this Agreement until the Closing (or the earlier termination of this Agreement pursuant to Article VIII), the Company will not, and will use its reasonable best efforts to cause the SPAC and the other parties to the Business Combination Agreement (the "SPAC Parties") not to, issue any press release or public announcement related to the SPAC Termination without Purchaser's prior written consent (such consent not to be unreasonably withheld, conditioned or delayed), and the timing of the initial press release shall be discussed and mutually agreed between Purchaser and the Company and enforced against the SPAC Parties by the Company. If, from the date of this Agreement until the Closing (or the earlier termination of this Agreement pursuant to Article VIII), any SPAC Parties coordinate with the Company regarding any press release or public announcement related to the SPAC Termination, the Company will use its reasonable best efforts to share the terms and provisions of such press release or public announcement with Purchaser and consult with Purchaser as to the content and timing of such release; provided, that the Company shall not be obligated to disclose any information (or take any action that could result in the disclosure of such information) the disclosure of which would breach (or would reasonably be expected to breach) its confidentiality obligations to the SPAC, based on the reasonable advice of counsel, under the Business Combination Agreement. Neither Seller nor the Company will, and the Company will use its reasonable best efforts to cause the SPAC Parties not to, issue an initial press release or public announcement related to the SPAC Termination, this Agreement or the Transaction prior to Purchaser's initial press release or public announcement.

Section 10.02    Expenses. Whether or not the Closing takes place, except as otherwise provided herein (including, for the avoidance of doubt, Section 8.02), all fees, costs and expenses incurred in connection with the negotiation of this Agreement and the other agreements contemplated hereby, the performance of this Agreement and the other agreements contemplated hereby and the consummation of the Transaction (a) by the Company, prior to the Closing, and Seller will be paid by Seller or, at or prior to the Closing, by the Company and (b) by Purchaser and, from and after the Closing, the Company will be paid by Purchaser or, following the Closing, the Company; it being acknowledged and agreed that Purchaser, on the one hand, and Seller, on the other hand, shall each pay and be fully responsible for fifty percent (50%) of (i) all fees and expenses of the Escrow Agent, and (ii) all Transfer Taxes pursuant to Section 9.08(a); provided, that (x) the fees and expenses of the Accounting Firm will be allocated pursuant to Section 1.05(f) and (y) Purchaser will pay (or cause to be paid) all fees and expenses in connection with any filing or submission that is necessary under the HSR Act and any other applicable Competition Laws and all fees and expenses in connection with purchasing and obtaining the D&O Tail Policy.

Section 10.03    Notices. Except as otherwise expressly provided herein, all notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given (a) when personally delivered, (b) when transmitted by electronic mail, unless if transmitted after 5:00 P.M. local time or other than on a Business Day, then on the next Business Day, (c) the second (2nd) Business Day following the day on which the same has been delivered prepaid to a reputable national overnight air courier service or (d) the third (3rd) Business Day following the day on which the same is sent by certified or registered mail, postage prepaid, in each case, to the respective party at the number, electronic mail address or street address, as applicable, set forth below, or at such other number, electronic mail address or street address as such party may specify by written notice to the other party hereto.

Notices to Purchaser and, following the Closing, the Company:
Sterling Jewelers Inc.<br><br>375 Ghent Road<br>Akron, Ohio 44333<br>Attention:    Stash Ptak, General Counsel<br><br>Email:        stash.ptak@signetjewelers.com
with a copy to (which will not constitute notice):
Squire Patton Boggs (US) LLP<br>1201 W. Peachtree Street, NW, Suite 3150<br>Atlanta, Georgia 30309<br>Attention:    Ann-Marie Notaro<br><br>Email:        ann-marie.notaro@squirepb.com
Notices to Seller and, prior to the Closing, the Company:
BC Cyan Holdings LP<br><br>c/o Bain Capital Private Equity, LP<br><br>200 Clarendon Street<br><br>Boston, Massachusetts 02116<br>Attention:    David Humphrey<br>     Ryan Cotton<br><br>Bryan Curran<br><br>Email:        dhumphrey@baincapital.com<br><br>rcotton@baincapital.com<br><br>bcurran@baincapital.com
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with a copy to (which will not constitute notice):
Kirkland & Ellis LLP<br>300 North LaSalle Street<br>Chicago, Illinois 60654<br>Attention:    Jeffrey W. Richards, P.C.<br>        Matthew H. O'Brien, P.C.<br><br>Email:         jrichards@kirkland.com <br>        matthew.obrien@kirkland.com<br><br><br><br>and<br><br><br><br>Kirkland & Ellis LLP<br>601 Lexington Avenue<br><br>New York, New York 10022<br>Attention:    Laura J. Steinke<br><br>Email:         laura.steinke@kirkland.com
and<br><br><br><br>Kirkland & Ellis LLP<br>200 Clarendon Street<br>Boston, Massachusetts 02116<br>Attention:    Benjamin J. Dionne<br><br>Email:         benjamin.dionne@kirkland.com

Section 10.04    Assignment. This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided that neither this Agreement nor any of the rights or obligations hereunder may be assigned or delegated without the prior written consent of Purchaser and Seller; provided, further, that Purchaser may assign any of its rights and obligations hereunder and under any of the other agreements and instruments contemplated hereby, in whole or in part, without the consent of any other party (a) to any of its Affiliates, (b) from and after the Closing, in connection with any disposition or transfer of all or any portion of the Company or any of its Subsidiaries or their business in any form of transaction, or (c) from and after the Closing, to any of Purchaser's, the Company's or its Subsidiaries lenders as collateral security (provided no such assignment

contemplated by subclause (a), (b) or (c) shall relieve Purchaser of its obligations under this Agreement).

Section 10.05    Amendment and Waiver. Any provision of this Agreement or the Disclosure Schedules or exhibits hereto may be (a) amended only in a writing signed by Purchaser, the Company and Seller or (b) waived only in a writing executed by the Person against which enforcement of such waiver is sought. No waiver of any provision hereunder or any breach or default thereof will extend to or affect in any way any other provision or prior or subsequent breach or default. No course of dealing between or among any Persons having any interest in this Agreement will be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any person under or by reason of this Agreement.

Section 10.06    Third Party Beneficiaries. Except as otherwise expressly provided herein, including Section 6.04 and Section 10.07 (in respect of the non-party Persons stated therein) nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement (or their successors or permitted assigns) any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. The representations and warranties in this Agreement are the product of negotiations among the parties hereto and are for the sole benefit of the parties hereto. Consequently, Persons other than the parties hereto may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.

Section 10.07    Non-Recourse. This Agreement may only be enforced against, and any claim, action, suit, proceeding or investigation based upon, arising out of or related to this Agreement may only be brought against, the Persons that are expressly named as parties to this Agreement. Except to the extent named as a party to this Agreement, and then only to the extent of the specific obligations of such parties set forth in this Agreement, no past, present or future shareholder, member, partner, manager, director, officer, employee, Affiliate, agent or Advisor of any party to this Agreement or any Subsidiary of the Company will have any liability (whether in contract, tort, equity or otherwise) for any of the representations, warranties, covenants, agreements or other obligations or liabilities of any of the parties to this Agreement or for any claim, action, suit, proceeding or investigation based upon, arising out of or related to this Agreement. Without limiting the foregoing, no claim will be brought or maintained by: (a) Purchaser or any member of the Purchaser Group or any of their respective successors or permitted assigns against any Seller Party that is not otherwise expressly identified as a party to this Agreement, or (b) Seller or any Seller Party or any of their respective successors or permitted assigns against any member of the Purchaser Group that is not otherwise expressly identified as a party to this Agreement, and, in each case, no recourse will be brought or granted against any of them, by virtue of or based upon any alleged misrepresentation or inaccuracy in or breach or nonperformance of any of the representations, warranties, covenants or agreements of any party hereto set forth or contained in this Agreement or any exhibit or schedule hereto or any document or certificate delivered hereunder.

Section 10.08    Severability; Specific Provisions. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable Law, but if any provision of this Agreement is held to be

prohibited by or invalid under applicable Law in any jurisdiction, such provision will be ineffective only to the extent of such prohibition or invalidity and only in such jurisdiction, without invalidating the remainder of such provision or the remaining provisions of this Agreement or in any other jurisdiction.

Section 10.09    Construction; Headings. The language used in this Agreement will be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any Person. The headings of the sections and paragraphs of this Agreement have been inserted for convenience of reference only and will in no way restrict or otherwise modify any of the terms or provisions hereof.

Section 10.10    Disclosure Schedules. The disclosure of any matter in one section of the Disclosure Schedules will be deemed disclosed with respect to any other section of the Disclosure Schedules notwithstanding the omission of a cross reference thereto, to the extent the relevance of such matter to such section is readily apparent on the face of the information disclosed. Capitalized terms used in the Disclosure Schedules and not otherwise defined therein have the meanings given to them in this Agreement. The information contained in this Agreement, in the Disclosure Schedules and exhibits hereto is disclosed solely for purposes of this Agreement, and no information contained herein or therein will be deemed to be an admission by any party hereto to any third party of any matter whatsoever, including that such information is material or of any violation of Law or breach of contract.

Section 10.11    Complete Agreement. This Agreement (including the Disclosure Schedules and exhibits hereto), together with the Confidentiality Agreement, the Adjustment Escrow Agreement and any other agreements expressly referred to herein or therein, contains the entire agreement of the parties respecting the sale and purchase of the Company and the Transaction and supersedes all prior agreements among the parties respecting the sale and purchase of the Company. In the event an ambiguity or question of intent or interpretation arises with respect to this Agreement, the terms and provisions of the execution version of this Agreement will control and prior drafts of this Agreement and the documents referenced herein will not be considered or analyzed for any purpose (including in support of parol evidence proffered by any Person in connection with this Agreement), will be deemed not to provide any evidence as to the meaning of the provisions hereof or the intent of the parties with respect hereto and will be deemed joint work product of the parties. The sole and exclusive remedies for any breach of the terms and provisions of this Agreement, including any representations and warranties set forth herein or alleged to have been made in connection herewith or as an inducement to enter into this Agreement, or any claim or cause of action otherwise arising out of or related to the sale and purchase of the Company and the Transaction will be those remedies available at law or in equity for Fraud or breach of contract only as such contractual remedies have been further limited or excluded pursuant to the express terms of this Agreement; and the parties hereby agree that neither party hereto will have any remedies or cause of action (whether in contract or in tort, at law or equity) for any statements, communications, disclosures, failures to disclose, representations or warranties not set forth in this Agreement.

Section 10.12    No Partnership or Other Relationship Created. In no event will this Agreement be deemed to create a partnership between Seller, the Company or any Affiliate of the foregoing, on the one hand, and Purchaser or any of its Affiliates, on the

other hand, and in no event will any fiduciary or similar duty be deemed owed by Seller, the Company or any Affiliate of the foregoing to Purchaser or any of its Affiliates. The parties hereto have voluntarily agreed to define their rights, liabilities and obligations respecting the sale and purchase of the Company Stock exclusively in contract pursuant to the express terms and provisions of this Agreement; and the parties hereto expressly disclaim that they are owed any duties or are entitled to any remedies not expressly set forth in this Agreement. Furthermore, the parties each hereby acknowledge that this Agreement embodies the justifiable expectations of sophisticated parties derived from arm's-length negotiations; all parties to this Agreement specifically acknowledge that no party has any special relationship with another party that would justify any expectation beyond that of an ordinary buyer and an ordinary seller in an arm's-length transaction with neither being under compulsion to buy or sell.

Section 10.13    Specific Performance. The parties hereto agree that irreparable damage, for which monetary relief, even if available, would not be an adequate remedy, would occur in the event that any provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached, including if the parties hereto fail to take any action required of them hereunder to consummate the Transaction. It is accordingly agreed that (a) the parties hereto will be entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in the courts described in Section 10.14 without proof of damages or otherwise, this being in addition to any other remedy to which they are entitled under this Agreement and (b) the right of specific performance and other equitable relief is an integral part of the Transaction and without that right, neither the Company, Seller nor Purchaser would have entered into this Agreement. The parties hereto acknowledge and agree that any party pursuing an injunction or injunctions or other Order to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 10.13 will not be required to provide any bond or other security in connection with any such Order. The remedies available to Seller, Purchaser and the Company pursuant to this Section 10.13 will be in addition to any other remedy to which they were entitled at law or in equity, and the election to pursue an injunction or specific performance will not restrict, impair or otherwise limit Seller, Purchaser or the Company from seeking to collect or collecting damages. If, prior to the Outside Date, any party hereto brings any action, in each case in accordance with Section 10.14, to enforce specifically the performance of the terms and provisions hereof by any other party, the Outside Date will automatically be extended (y) for the period during which such action is pending, plus ten (10) Business Days or (z) by such other time period established by the court presiding over such action, as the case may be. In no event will this Section 10.13 be used, alone or together with any other provision of this Agreement, to require the Company to remedy any breach of any representation or warranty of the Company made herein.

Section 10.14    Exclusive Jurisdiction and Venue. Each of the parties irrevocably agrees that any claim, action, suit, investigation or proceeding of any kind whatsoever, including a counterclaim, cross-claim, or defense, regardless of the legal theory under which such liability or obligation may be sought to be imposed, whether sounding in contract or tort, or whether at law or in equity, or otherwise under any legal or equitable theory, that may be based upon, arising out of or related to this Agreement or the negotiation, execution or performance of this Agreement and the Transaction brought by any other party or its successors or permitted assigns will be brought and determined only

in the Delaware Chancery Court and any state court sitting in the State of Delaware to which an appeal from the Delaware Chancery Court may be validly taken (or, if the Delaware Chancery Court declines to accept jurisdiction over a particular matter, any state or federal court within the state of Delaware), and each of the parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such claim, action, suit, proceeding or investigation arising out of or relating to this Agreement and the Transaction. Each of the parties agrees not to commence any claim, action, suit, proceeding or investigation relating thereto except in the courts in Delaware described above, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any of the courts in Delaware as described above, and no party will file a motion to dismiss any action filed in a state or federal court in the State of Delaware, on any jurisdictional or venue-related grounds, including the doctrine of forum non-conveniens. The parties hereto irrevocably agree that venue would be proper in any of the courts in Delaware described above, and hereby irrevocably waive any objection that any such court is an improper or inconvenient forum for the resolution of such suit, action or proceeding. Each of the parties hereto further irrevocably and unconditionally consents to service of process in the manner provided for notices in Section 10.03. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by Law.

Section 10.15    Governing Law; Waiver of Jury Trial.

(a)    This Agreement, and any claim, action, suit, investigation or proceeding of any kind whatsoever, including a counterclaim, cross-claim, or defense, regardless of the legal theory under which such liability or obligation may be sought to be imposed, whether sounding in contract or tort, or whether at law or in equity, or otherwise under any legal or equitable theory, that may be based upon, arising out of or related to this Agreement (including any claim, action, suit, investigation or proceeding of any kind whatsoever, including a counterclaim, cross-claim, or defense, based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement) or the negotiation, execution or performance of this Agreement or the Transaction will be governed by and construed in accordance with the internal Laws of the State of Delaware (including its statutes of limitations) applicable to agreements executed and performed entirely within such State without regards to conflicts of law principles of the State of Delaware or any other jurisdiction that would cause the Laws of any jurisdiction other than the State of Delaware to apply.

EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT AND THE TRANSACTION IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND THEREFORE HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY CLAIM, ACTION, SUIT, INVESTIGATION OR PROCEEDING BASED ON, ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTION, IN EACH CASE, WHETHER NOW EXISTING OR HEREINAFTER ARISING AND WHETHER BASED ON CONTRACT, TORT OR ANY OTHER LEGAL OR EQUITABLE THEORY. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR PROCEEDING WILL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND

THAT THE PARTIES HERETO MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE IRREVOCABLE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. EACH PARTY HERETO (I) CERTIFIES THAT NO ADVISOR OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 10.16    No Right of Set-Off. Each party hereto, on behalf of itself and its Affiliates, hereby waives any rights of set-off, netting, offset, recoupment, or similar rights that such party or any of its or their respective successors and permitted assigns has or may have with respect to any amounts owed hereunder by such Persons to the other party hereto or any of such other party's Affiliates.

Section 10.17    Counterparts and PDF. This Agreement and any other agreements referred to herein, and any amendments hereto or thereto, may be executed in multiple counterparts, any one of which need not contain the signature of more than one party, but all such counterparts taken together will constitute one and the same instrument. Any counterpart, to the extent signed and delivered by means of a facsimile machine, .PDF or other electronic transmission, will be treated in all manner and respects as an original contract and will be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person. Minor variations in the form of the signature page to this Agreement or any agreement or instrument contemplated hereby, including footers from earlier versions of this Agreement or any such other document, will be disregarded in determining the effectiveness of such signature. At the request of any party hereto or to any such contract, each other party hereto or thereto will re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such contract will raise the use of a facsimile machine, .PDF or other electronic transmission to deliver a signature or the fact that any signature or contract was transmitted or communicated through the use of facsimile machine, .PDF or other electronic transmission as a defense to the formation of a contract and each such party forever waives any such defense.

ARTICLE XI DEFINITIONS

Section 11.01    Definitions. For purposes hereof, the following terms when used herein will have the respective meanings set forth below.

"Adjustment Escrow Account" means the account holding the Adjustment Escrow Amount pursuant to the Adjustment Escrow Agreement, which such account shall be designated in writing by the Escrow Agent no later than two (2) Business Days prior to the Closing.

"Adjustment Escrow Agreement" means an escrow agreement dated as of the Closing Date, by and among Seller, Purchaser and the Escrow Agent.

"Adjustment Escrow Amount" means $16,000,000.

"Advisors" means, with respect to any Person, the accountants, attorneys, consultants, advisors, investment bankers, or other representatives of such Person.

"Affiliate" of any particular Person means any other Person directly or indirectly controlling, controlled by or under common control with such particular Person, where "control" means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.

"Blue Nile" means Blue Nile, Inc., a Delaware corporation.

"Business Day" means any day other than a Saturday, Sunday or a day on which banking institutions located in any of New York, New York or Seattle, Washington are closed as a result of federal, state or local holiday.

"Cash" means, as of any given time of determination, all cash, cash equivalents and marketable securities of the Company or any of its Subsidiaries, at such time, plus any deposits in transit, minus any checks written (but not yet cashed) by the Company or any of its Subsidiaries, calculated consistent with the Audited Financial Statements, except to the extent that any such deposits or checks are instead taken into account in determining Closing Net Working Capital.

"Certificate of Designation" means the Certificate of Designation of Series C Convertible Preferred Stock of the Company, filed on June 14, 2022.

"Closing Cash" means Cash calculated as of the time of the Effective Time (without giving effect to the consummation of the Transaction).

"Closing Indebtedness" means Indebtedness of the Company and its Subsidiaries calculated as of the time of the Effective Time (without giving effect to the consummation of the Transaction but including any prepayment penalties, premiums, breakage costs or similar amounts payable with respect to the Closing).

"Closing Net Working Capital" means Net Working Capital calculated as of the time of the Effective Time (without giving effect to the consummation of the Transaction).

"COBRA" means Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code or similar state Laws.

"Code" means the Internal Revenue Code of 1986, as amended.

"Company Employee" means any current or former employee, officer, director or independent contractor of any of the Company and its Subsidiaries.

"Company Plans" means any "employee benefit plans" (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA), and each employee benefit, fringe benefit, perquisite, supplemental unemployment benefit, employment, individual consulting, severance, salary continuation, incentive or bonus, deferred compensation, transaction, change in control, retention, separation, commission, savings, profit sharing, retirement, savings, pension, welfare, health, Code Section 125, Code Section 501(c)(9),

tuition assistance, adoption assistance, paid time off, post-employment or post-termination welfare, vacation, fringe, unit purchase, unit option or other equity incentive or equity-based plan, program, policy, practice, contract, agreement or arrangement, and all other compensation or benefit plans, programs, policies, practices, contracts, agreements or arrangements of any kind relating to current or former employees, officers, service providers or directors of the Company or any Subsidiary that in each case are maintained, sponsored or contributed to or required to be contributed to by the Company or any Subsidiary, whether written or oral, funded or unfunded, insured or self-insured, registered or unregistered which the Company or any Subsidiary sponsors, maintains, contributes to, is required to contribute to, or with respect to which the Company or any Subsidiary has any Liability or potential Liability, other than any Multiemployer Plan or benefit plans maintained by any Governmental Body established pursuant to statutory Law.

"Competition Law" means the HSR Act, the Sherman Act of 1890, the Clayton Antitrust Act of 1914, the Federal Trade Commission Act, and any other federal, state, multinational or foreign statutes, rules, regulations, orders, decrees, administrative or judicial doctrines or other laws that are designed to prohibit, restrict or regulate actions for the purpose or effect of monopolization, restraining trade, abusing a dominant position, or affecting competition or market conditions through merger, acquisition or other transaction.

"Confidentiality Agreement" means that certain Confidentiality Agreement between Blue Nile and Sterling Jewelers Inc., dated as of March 13, 2022.

"Contracts" means any legally binding contracts, agreements, subcontracts, leases, notes, loans, purchase orders, letter of credit, indenture, security or pledge agreement, covenant not to compete, license, or other similar instrument, and all amendments, modifications and supplements thereto.

"COVID-19" means SARS-CoV-2 or COVID-19 (and all related strains and sequences), including any evolutions, future resurgences or mutations thereof or any related or associated epidemics, pandemic or disease outbreaks or public health emergencies.

"COVID-19 Measures" means any measures reasonably taken to comply with any quarantine, "shelter in place," "stay at home," workforce reduction, social distancing, shut down, closure, sequester or any other Law, judgment, decision, decree, injunction, writ, stipulation, determination, ruling, order, directive, guidelines or recommendations by any Governmental Body in connection with or in response to COVID-19, including the CARES Act.

"Credit Facility" means that certain (i) Term Loan Credit Agreement, dated as of February 17, 2017 (as amended by that certain Amendment No. 1 to Term Loan Credit Agreement, dated as of December 23, 2019, as further amended by that certain Amendment No. 2 to Term Loan Credit Agreement, dated as of January 18, 2022, as further amended by that certain Amendment No. 3 to Term Loan Credit Agreement, dated as of April 8, 2022, and as further amended and restated, supplemented or otherwise modified), by and among BC Cyan Parent Inc., Blue Nile, the lenders party thereto, Goldman Sachs Lending Partners LLC, as administrative agent, and Goldman Sachs Bank USA, as collateral agent and (ii) ABL Credit Agreement, dated as of

February 17, 2017 (as amended by that certain First Amendment to ABL Credit Agreement, dated as of December 30, 2021 and as further amended and restated, supplemented or otherwise modified), by and among BC Cyan Parent Inc., Blue Nile, the subsidiary borrowers party thereto, the lenders party thereto, Goldman Sachs Lending Partners LLC, as administrative agent, and Goldman Sachs Bank USA, as collateral agent.

"Effective Time" means (i) in the case of the definitions of Closing Cash and Closing Net Working Capital, 11:59 P.M., Eastern time on the day immediately preceding the Closing Date, and (ii) in the case of the definitions of Closing Indebtedness and Transaction Expenses, immediately prior to the Closing.

"Environmental Claim" means any claim, action, suit, demand, notice of noncompliance or violation, proceeding or litigation by any Person alleging Liability or potential Liability (including Liability or potential Liability for enforcement, investigatory costs, cleanup costs, removal, response or remedial costs, governmental response costs, property damage, personal injury, fines or penalties, damages, contribution costs, indemnification costs, cost recovery, compensation or injunctive relief) based on (i) the Release of any Hazardous Materials at the Leased Real Property or (ii) the violation of any Environmental Laws or Environmental Permits.

"Environmental Law" means all applicable foreign, federal, state or local laws (including common law), rules, ordinances, decisions or decrees, or regulations promulgated thereunder and orders, consent orders, judgments, or rulings issued, promulgated or entered pursuant thereto, regarding pollution, the protection of human health or safety (as it relates to exposure to Hazardous Material) or protection of the environment, including (i) laws regarding the Releases of Hazardous Materials into the environment and (ii) laws relating to the generation, manufacture, processing, distribution, use, treatment, storage, disposal, recovery, transport or other handling of Hazardous Materials. Environmental Laws shall include, but not be limited to CERCLA, the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., as amended, the Safe Drinking Water Act (21 U.S.C. § 349, 42 U.S.C. §§ 201, 300f), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Emergency Planning and Community Right-To-Know Act of 1986 (EPCRA), 42 U.S.C. §11001 et seq.; and the Hazardous Materials Transportation Act, 49 U.S.C. §4901 et seq.; as any of the above statutes are or may be amended at any time and all rules and regulations promulgated pursuant to any of the above statutes or any other similar foreign, federal, state or local law of similar effect.

"Environmental Permits" means all licenses, permits, authorizations, waivers, approvals, registrations, filings or consents from any Governmental Body required under Environmental Laws for the operation of the Company or any of its Subsidiaries as they are currently operated.

"ERISA" means the Employee Retirement Income Security Act of 1974.

"ERISA Affiliate" means any trade or business (whether or not incorporated) that, together with the Company or any of its Subsidiaries is treated as a single employer under Section 414(b) or (c) of the Code, or solely for purposes of Section 412 of the Code,

Section 414(m) or (o) of the Code, or is under common control within the meaning of Section 4001(b) of ERISA.

"Escrow Agent" means Acquiom Clearinghouse LLC.

"Express Representations" means the representations and warranties (i) of the Company expressly and specifically set forth in Article II regarding the Company and its Subsidiaries or any documents or certificates delivered hereunder, and (ii) of Seller expressly and specifically set forth in Article III or any documents or certificates delivered hereunder, in each case of (i) and (ii), as qualified by the Disclosure Schedules and in accordance with the express terms and conditions (including limitations and exclusions) of this Agreement.

"Fraud" means knowing and intentional common law fraud under Delaware law with respect to the making of a representation or warranty set forth in Article II, Article III or Article IV (as modified by the Disclosure Schedule), or any representation or warranty set forth in any documents or certificates delivered hereunder. For the avoidance of doubt, "Fraud" will not include any claim for equitable fraud, promissory fraud, unfair dealings fraud, or any torts (including a claim for fraud) based on negligence or recklessness.

"Funded Indebtedness" means the Indebtedness set forth on Schedule 1.04(a), including any related interest, early termination/breakage penalties, letters or credit and similar.

"GAAP" means United States generally accepted accounting principles.

"Governmental Body" means any national, foreign, federal, state, local, municipal, or other governmental authority of any nature (including any division, department, agency, commission, or other regulatory body thereof) and any court or arbitral tribunal.

"Hazardous Material" means any chemical, material, substance or waste that is listed, defined, designated, characterized, classified, or regulated as hazardous, toxic, radioactive, infectious, reactive, or as a pollutant, or a contaminant or words of similar meaning and regulatory effect under applicable Environmental Laws, including asbestos or asbestos-containing materials, lead, perfluorinated substances such as PFAS, Teflon, PFOA, or PFOS, polychlorinated biphenyls, radon, urea formaldehyde, per- and polyfluoroalkyl substances, petroleum, petroleum hydrocarbons or petroleum products or petroleum by-products.

"HSR Act" means the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

"Income Tax Amount" means an amount equal to (A) the unpaid Income Taxes of the Company and its Subsidiaries for any Pre-Closing Tax Period including the pre-Closing portion of any Straddle Period, reduced by (but not below zero, meaning the Income Tax Amount cannot be a negative liability), (B) any Tax refunds or credits for Taxes with respect to a Pre-Closing Tax Period for which the Company and its Subsidiaries will be entitled to (including any tax refunds or credits for Taxes available with respect to the carryback of any item of loss, deduction or credit from any Pre-

Closing Tax Period to reduce an actual cash Tax liability). The Income Tax Amount shall be determined (i) based on the Company's historical practices and procedures (including any elections, methods of accounting and other filing positions, but only to the extent use of such elections, methods, and positions is permitted by applicable Law); (ii) by taking all Transaction Tax Deductions into account in Pre-Closing Tax Periods to the extent permitted by applicable Law (at a more likely than not standard); (iii) excluding any reserves for contingent Tax or uncertain Tax positions; (iv) excluding any deferred Tax items; (v) taking into account all payments made (or credits received in lieu thereof prior to Closing that would reasonably be expected to result in a reduction in cash tax liability after Closing and within two (2) years of the receipt of such credit) by the Company or any of its Subsidiaries prior to Closing; and (vi) excluding any Income Taxes attributable to transactions occurring outside the Ordinary Course of Business on the Closing Date and after the time of the Closing to the extent executed at the direction of Purchaser.

"Income Taxes" means the United States federal income tax, and any state, local or foreign net income tax.

"Indebtedness" means, as of any given time of determination, without duplication, any Liability of the Company or any of its Subsidiaries in respect of (a) any indebtedness for borrowed money (including any unpaid principal, premium, accrued and unpaid interest, related expenses, prepayment penalties, commitment and other fees, reimbursements and all other amounts payable in connection therewith), (b) any indebtedness evidenced by bonds, debentures, notes or other similar instruments or contracts or debt securities, (c) any letter of credit, bankers' acceptance, note purchase facility, or similar credit transactions, in each case, solely to the extent drawn, (d) all liabilities of the Company and its Subsidiaries to the applicable counterparty to settle interest rate and currency swap, cap, hedging or derivative instruments, and any other arrangements designed to provide protection against fluctuations in interest or currency rates, in each case including any amounts payable to terminate such arrangements, (e) any obligations for the deferred purchase price of property, goods or services, (f) all obligations under leases that are required to be classified as a capital or finance lease in accordance with GAAP (applied as if ASC 842 had not taken effect), (g) indebtedness created or arising under any purchase money mortgage or other purchase money lien or conditional sale or other title retention agreement with respect to property acquired (even though the right and remedies of the Person or lender under such agreement in the event of default are limited to repossession or sale of such property), (h) any management or sponsor fees, including any fees owed to any Seller or Affiliate of Seller, (i) the Income Tax Amount, (j) the unpaid amount of any payroll Taxes deferred pursuant to the CARES Act, and (k) all Liabilities of the type described in clause (a) through (j) above of any Person the payment of which is guaranteed by the Company or any of its Subsidiaries, in each case together with accrued but unpaid interest, prepayment or termination premiums and penalties, fees, related expenses, commitment and other fees, reimbursement or other charges related thereto, whether or not current, short term or long term, secured or unsecured; provided that, without limiting other liabilities that are not to be included therewith, in no event will Indebtedness include (i) any amounts included in Closing Net Working Capital or Transaction Expenses, (ii) any liabilities related to inter-company debt between the Company and any of its Subsidiaries and any Subsidiary of the Company and another Subsidiary of the Company, or (iii) any fees and expenses to the extent incurred by or at the direction of Purchaser or otherwise relating to Purchaser's or any of its Affiliates' financing for the Transaction or any other liabilities or obligations

incurred or arranged by or on behalf of Purchaser or any of its Affiliates in connection with the Transaction or otherwise, including any fees payable to any financing institution or lender or the Company's accountants on behalf of Purchaser or its Affiliates (including the Company and its Subsidiaries following the Closing).

"Intellectual Property" means all of the following: (i) patents, patent applications and patent disclosures; (ii) trademarks, service marks, trade dress, corporate names and internet domain names, together with all goodwill associated with each of the foregoing; (iii) copyrights; (iv) registrations and applications for any of the foregoing; (v) trade secrets; (vi) computer software; (vii) drawings, schematics and other technical plans; and (viii) all other intellectual property.

"IRS" means the U.S. Internal Revenue Service.

"IT Systems" means all information technology, computer systems, networks, servers, hardware, technology, Software, databases, websites, and equipment used to process, store, maintain and operate data, information and functions used in connection with the businesses of the Company and its Subsidiaries to the extent owned, purported to be owned, or used by (but only to the extent used by or under the control of) the Company and its Subsidiaries.

"Kimberley Process" means the Kimberley Process Certification Scheme established by the United Nations General Assembly and all applicable Laws and requirements established in accordance therewith, in each case as amended from time to time.

"knowledge of the Company" or "Company's knowledge" means (1) the actual knowledge of Sean Kell, Dominique Bourgault, Derek Mullens and Camille Cleveland and (2) that knowledge which such Person should have acquired after making such due inquiry of such Person's direct reports as a prudent businessperson would have made or exercised in the management of his or her business affairs.

"Law" means any federal, state, provincial, local, municipal, foreign, international, multinational, or other law, rule, regulation, statute, code, ordinance, treaty or Order of any Governmental Body, in effect on or prior to the date of this Agreement, including common law.

"Legal Proceeding" means any action, arbitration, audit, hearing, investigation, claim, litigation, proceeding or suit (whether civil, criminal, investigative or administrative) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Body or arbitrator.

"Liability" means any direct or indirect liability, indebtedness, obligation, commitment, expense, claim, deficiency or guaranty of or by any Person of any type, whether known, unknown, accrued, fixed, absolute, contingent, asserted, unasserted, determined, determinable, matured or unmatured.

"Licensed Intellectual Property" means any Intellectual Property used, held for use or practiced by the Company or any of its Subsidiaries (other than Owned Intellectual Property).

"Liens" means all liens (statutory or otherwise), mortgages, deeds of trust, pledges, security interests, charges, claims, option, condition, equitable interest, community property interest, right of first refusal, right-of-way, easements, encroachment, or restriction or encumbrance of any kind.

"Material Adverse Effect" means any change, event, circumstance or effect that, individually or in the aggregate with any other change, event, circumstance or effect, (A) has had or would reasonably be expected to have a material adverse effect upon the business, assets, liabilities, financial condition or operating results of the Company and any of its Subsidiaries, taken as a whole; provided that none of the following, either alone or taken together with other changes or effects, will constitute, or be taken into account in determining whether there has been, a Material Adverse Effect: (a) changes in, or effects arising from or relating to, general business or economic conditions generally affecting the industry in which the Company and its Subsidiaries operate, (b) changes in, or effects arising from or relating to, national or international political or social conditions (including (i) the engagement by the United States in hostilities or the escalation thereof, whether or not pursuant to the declaration of a national emergency or war, (ii) the occurrence or the escalation of any military, cyber or terrorist attack upon the United States, (iii) any of its territories, possessions, or diplomatic or consular offices or upon any military installation, asset, equipment or personnel of the United States, (iv) any actual or potential break-up of any existing political or economic union of or within any country or countries or any actual or potential exit by any country or countries from, or suspension or termination of its or their membership in, any such political or economic union or (v) civil unrest, protests and public demonstrations and any governmental responses thereto), (c) changes in, or effects arising from or relating to, financial, banking, or securities markets in general (including (i) any disruption of any of the foregoing markets, (ii) any change in currency exchange rates, (iii) any decline or rise in the price of any security, commodity, contract or index and (iv) any increased cost, or decreased availability, of capital or pricing or terms related to any financing for the Transaction), (d) changes in, or effects arising from or relating to changes in, GAAP, (e) changes in, or effects arising from or relating to changes in, Laws (including any COVID-19 Measures) or other binding directives or determinations issued or made by or agreements with or consents of any Governmental Body (including, for the avoidance of doubt, any such items related to Section 9.05), (f) changes or effects arising from or relating to (i) the taking of any action permitted or contemplated by this Agreement (including Section 5.01) or at the request of Purchaser or its Affiliates, (ii) the failure to take any action if such action is prohibited by this Agreement or (iii) the announcement of this Agreement or the Transaction or the identity, nature or ownership of Purchaser, (g) any failure, in and of itself, to achieve any budgets, projections, forecasts, estimates, plans, predictions, performance metrics or operating statistics or the inputs into such items (whether or not shared with Purchaser or its Affiliates or Advisors) (provided that this clause (g) will not prevent a determination that any change or effect underlying such failure has resulted in a Material Adverse Effect to the extent such change or effect is not otherwise excluded from the definition of Material Adverse Effect), (h) the effect of any action taken by Purchaser or its Affiliates with respect to the Transactions or the financing thereof, (i) public health conditions, including any pandemic, epidemic, disease outbreak or other public health emergency (including, for the avoidance of doubt, COVID-19) or any material worsening of such conditions threatened or existing as of the date of this Agreement, or (j) any actual or potential sequester, stoppage, shutdown, default or similar event or occurrence by or involving any Governmental Body, except in the case of the foregoing clauses (a) through (e), (i) or (j), to the extent such changes or

effects have a materially disproportionate impact on the Company and its Subsidiaries, taken as a whole, as compared to other participants engaged in the industries and geographies in which they operate; or (B) prevents or would reasonably be expected to prevent Seller from consummating the Transaction under this Agreement.

"Multiemployer Plan" means any "multiemployer plan" subject to ERISA that is described in Section 3(37) of ERISA.

"Net Working Capital" means the consolidated current assets minus the current liabilities, which will be calculated in a manner consistent with the accounting principles set forth in Exhibit 1.02(b) and using the specific exclusions presented in the illustrative Net Working Capital as set forth on or reflected in Exhibit 1.02(a), it being understood that the historical numerical values included therein are included for illustrative purposes only as an example of a hypothetical calculation of Net Working Capital based on those values. For the avoidance of doubt, Net Working Capital shall exclude (w) ASC 842 lease accounting assets and liabilities, (x) deferred tax assets and liabilities, (y) Indebtedness, Cash and Transaction Expenses and (z) Income Tax assets and liabilities.

"Open Source Software" means any Software that contains, incorporates, links, or is derived from, any Software that is licensed, provided or distributed under, any license meeting the Open Source Definition (as promulgated by the Open Source Initiative as of the date of this Agreement) or the Free Software Definition (as promulgated by the Free Software Foundation as of the date of this Agreement) or any similar license for "free," "publicly available" or "open source" Software, including the GNU General Public License, the Lesser GNU General Public License, the Apache License, the BSD License, Mozilla Public License (MPL), the MIT License or any other license that includes similar terms.

"Option" means each option to purchase stock of the Company issued under the Option Plan or otherwise that is outstanding as of immediately prior to the Closing, in each case, whether vested or unvested as of immediately prior to the Closing.

"Optionholder" means the holder of Options as of immediately prior to the Closing.

"Option Plan" means the BC CYAN Investment Holdings Inc. 2017 Stock Option Plan, as the same may be amended, modified or otherwise supplemented from time to time.

"Order" means any judgment, order, injunction, decree, ruling, writ, assessment or arbitration award of any Governmental Body or any arbitrator.

"Ordinary Course of Business" means an action taken, or omitted to be taken, by any Person in the ordinary course of such Person's business, consistent in all material respects with such Person's past custom and practice, and includes actions taken (or not taken) from time to time by the Company or its Subsidiaries reasonably and in good faith to respond to COVID-19 or COVID-19 Measures.

"Organizational Documents" means, with respect to any Person, such Person's articles of incorporation, certificate of incorporation, articles of organization, articles of association, memorandum of association, certificate of formation, bylaws, limited

liability company agreement, operating agreement, limited partnership agreement, articles of limited partnership, certificate of limited partnership, stockholders' agreement or other formation or organizational documents and governing documents (or similar organizational documents for a Person organized or existing in any non-U.S. jurisdiction), as applicable, and any amendment or supplement to any of the foregoing.

"Owned Intellectual Property" means any Intellectual Property that is owned or purported to be owned by the Company and its Subsidiaries, including all Scheduled Intellectual Property.

"Owned Real Property" means all real property owned by the Company or its Subsidiaries.

"Permits" means all material licenses, permits, franchises, approvals, authorizations, certificates, accreditations, easements, variances, exemptions, consents or orders of, or filings with, any Governmental Body.

"Permitted Liens" means (a) any restriction on transfer arising under applicable securities Laws, (b) Liens for Taxes not yet delinquent or for Taxes being contested in good faith, (c) purchase money Liens with third parties entered into in the Ordinary Course of Business which are not, individually or in the aggregate, material to the operation of the business of the Company and its Subsidiaries taken as a whole, (d) Liens of lessors, lessees, sublessors, sublessees, licensors or licensees arising under lease arrangements or license arrangements, (e) Liens under Indebtedness, (f) Liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money, which are not, individually or in the aggregate, material to the operation of the business of the Company and its Subsidiaries taken as a whole, (g) mechanics Liens and similar Liens for labor, materials, or supplies arising or incurred in the Ordinary Course of Business or amounts that are not delinquent and which are not, individually or in the aggregate, material to the operation of the business of the Company and its Subsidiaries taken as a whole, (h) zoning, building codes, and other land use laws regulating the use or occupancy of real property or the activities conducted thereon that are imposed by any Governmental Body having jurisdiction over such real property, (i) rebates, refunds and other discounts to customers, (j) easements, servitudes, covenants, conditions, restrictions, and other similar matters affecting title to any assets of the Company or any of its Subsidiaries and other title defects that do not or would not materially impair the use or occupancy of such assets in the operation of the business of the Company and its Subsidiaries taken as a whole, (k) Liens set forth on Schedule 11.01(a), (l) all matters set forth on title policies or surveys made available by the Company to Purchaser prior to the date of this Agreement, (m) other Liens that are not material to the Company and its Subsidiaries taken as a whole, (n) Liens that will be terminated at or prior to the Closing, and (o) Liens arising under consignment arrangements or conditional sales Contracts incurred in the Ordinary Course of Business and that are incurred only with respect to consigned inventory, which such Liens, as of the date hereof, are set forth on Schedule 11.01(b).

"Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, an estate, a joint venture, an unincorporated organization, a labor union or any other entity or a Governmental Body.

"Personal Information" means all information in any form or media that, alone or in combination with other reasonably available information, identifies, relates to, describes, is reasonably capable of being associated with or could reasonably be linked, directly or indirectly, with a particular person or household (including any current, prospective, or former customer, end user or employee), in addition to any definition for "personal information," or any similar term (e.g., "personal data," "personally identifiable information" or "PII") provided by applicable Law or by the Company or any of its Subsidiaries in any of their privacy policies, notices, contracts or other materials.

"Pre-Closing Tax Period" means any taxable period ending on or before the Closing Date and the portion of any Straddle Period ending on the Closing Date.

"Privacy Laws" means any and all applicable Laws, legal requirements and self-regulatory guidelines to which any of the Company and its Subsidiaries are bound (including of any applicable foreign jurisdiction), relating to the receipt, collection, compilation, use, storage processing, sharing, safeguarding, security (technical, physical or administrative), disposal, destruction, disclosure or transfer (including cross-border) of any Personal Information, including as applicable, the Federal Trade Commission Act, California Consumer Privacy Act (CCPA), Payment Card Industry Data Security Standard (PCI-DSS), EU General Data Protection Regulation (GDPR), Telephone Consumer Protection Act (TCPA), any and all applicable Laws relating to breach notification, the use of biometric identifiers, and the use of Personal Information for marketing purposes.

"Privacy Requirements" means all applicable Privacy Laws and all of the Company's and its Subsidiaries' policies, notices, and contractual obligations relating to the receipt, collection, compilation, use, storage, processing, sharing, safeguarding, security (technical, physical and administrative), disposal, destruction, disclosure, or transfer (including cross-border) of Personal Information.

"Purchaser Group" means Purchaser, any Affiliate of Purchaser (including, but solely after the Closing, the Company and its Subsidiaries) and each of their respective former, current or future Affiliates, officers, directors, employees, partners, members, equityholders, controlling or controlled persons, managers, agents, Advisors, successors or permitted assigns.

"Release" means any spilling, disposing, leaking, pumping, pouring, injecting, emitting, discharging, depositing, escaping, leaching, dispersing, dumping, or other releasing into the environment (including, without limitation, ambient air, soil, surface or subsurface strata, ground water, or surface water).

"Sanctions Laws" means (a) the economic sanctions Laws, rules, regulations and executive orders of the United States, including the International Emergency Economic Powers Act (50 U.S.C. §§1701 et seq.), the Trading with the Enemy Act (50 App. U.S.C. §§1 et seq.), and any economic sanctions administered by OFAC; the U.S. Department of State, the United Nations Security Council, the European Union, Her Majesty's Treasury of the United Kingdom and (b) any other applicable economic sanctions Laws, rules or regulations of a Governmental Body with applicable jurisdiction over the Company or any of its Subsidiaries.

"Seller Parties" means Seller, the Company and the Company's Subsidiaries and each of their respective former, current, or future Affiliates, officers, directors, employees, partners, members, equityholders, controlling or controlled persons, managers, agents, Advisors, successors or permitted assigns.

"Series C Holders" means, as of any date of determination, the holders of Series C Preferred Stock.

"Series C Preferred Stock" means the Series C Preferred Stock, par value $0.00001 per share, of the Company.

"Series C Redemption Price" means the aggregate amount payable to the Series C Holders pursuant to the Certificate of Designation in respect of a redemption of all Series C Preferred Stock on the Closing Date.

"Software" means any and all (a) computer programs, including any and all software implementation of algorithms, models and methodologies, whether in source code, object code, human readable form or other form, (b) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, (c) descriptions, flow charts and other work products used to design, plan, organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons and (d) all documentation including user manuals and other training documentation relating to any of the foregoing.

"Straddle Period" means a Tax period that begins on or before, and ends after, the Closing Date.

"Subsidiary" means, with respect to any Person, any corporation of which a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof or any partnership, association or other business entity of which a majority of the partnership or other similar ownership interest is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of such Person or a combination thereof. For purposes of this definition, a Person is deemed to have a majority ownership interest in a partnership, association or other business entity if such Person is allocated a majority of the gains or losses of such partnership, association or other business entity or is or controls the managing director or general partner of such partnership, association or other business entity.

"Target Net Working Capital" means [****].

"Tax" or "Taxes" means any U.S. or non-U.S. taxes, including without limitation, all federal, state, provincial, local, income, gross receipts, ad valorem, franchise, profits, sales or use, transfer, registration, excise, utility, environmental, communications, real or personal property, capital unit, license, payroll, wage or other withholding, employment, social security (or similar), severance, stamp, occupation, premium, windfall profits, customs duties, unemployment, disability, value added, healthcare, unclaimed property, escheatment, alternative or add on minimum, estimated and other taxes of any kind

whatsoever and further including any fee, custom, impost, assessment, obligation, levy, tariff, charge or duty in the nature of a tax (including deficiencies, penalties, interest, additions to tax, additional amounts and other charges or fees attributable thereto), whether disputed or not, and any obligations to indemnify or otherwise assume, pay, or succeed to the tax of any other Person.

"Tax Returns" means any return, claim for refund, report, statement or information return required or permitted to be filed with a Governmental Body relating to Taxes, including any schedule or attachment thereto, and including any amendments thereof.

"Transaction Expenses" means, to the extent incurred prior to the Effective Time and not paid in full by the Company or its Subsidiaries before the Effective Time, the amount incurred at or prior to the Effective Time of (a) all fees, costs, and expenses or other obligations of the Company's and its Subsidiaries' Advisors and their Affiliates and associated expenses incurred on or prior to the Closing by or on behalf of, or to be paid by, the Company or any Subsidiary (with respect to periods ending on the Closing) in connection with the drafting, negotiation, execution and delivery of this Agreement and the other documents contemplated hereby and the consummation of the Transaction or any alternative transaction hereto or related to the SPAC, the SPAC Termination, or the Series C Redemption; (b) all "single-trigger" transaction, retention, change of control, and sale bonuses, severance and similar payments payable to employees which become payable or due (prior to any reduction in respect of applicable federal, state and local tax withholdings) as a result of the Transaction and only if triggered without the requirement of any further action by the Company, its Subsidiaries or their Affiliates on or following the Closing (including any termination of employment) (other than any such payments that are a result of actions taken by or at the request of Purchaser), including all payroll, employment or other Taxes, if any, required to be paid by the Purchaser (solely to the extent payable on behalf of the Company or any of its Subsidiaries) or the Company or any of its Subsidiaries with respect to the foregoing; and (c) fifty percent (50%) of (i) any fees charged by the Escrow Agent; and (ii) Transfer Taxes, recording fees, and other similar Taxes that are imposed on any of the parties by a Governmental Body in connection with the Transaction; provided that in no event will Transaction Expenses include any fees, expenses or other liabilities to the extent incurred by or at the direction of Purchaser or otherwise relating to Purchaser's or its Affiliates' financing, including obtaining any consent or waiver relating thereto, for the Transaction or any other liabilities or obligations incurred or arranged by or on behalf of Purchaser or its Affiliates in connection with the Transaction, including any fees payable to any financing institution or lender or the Company's accountants on behalf of Purchaser or its Affiliates, or any fees or expenses specifically allocated to Purchaser pursuant to Section 10.02.

"Transaction Tax Deductions" means any Tax deduction attributable to the payment of the Transaction Expenses, any bonuses, change in control payments, other retention payments or other similar compensatory payments made in connection with the transactions contemplated by this Agreement, any costs, fees, expenses or other liabilities included in the calculation of New Working Capital or Indebtedness, any deduction for unamortized financing costs of the Company or any of its Subsidiaries and premium deductions arising from the repayment of indebtedness (including any previously capitalized expenses attributable thereto, interest, breakage fees or accelerated deferred financing fees and other fees associated with such prepayment) and any other costs or expenses, in each case incurred in connection with the transactions contemplated by this

Agreement; provided, that the parties shall make any available elections under Revenue Procedure 2011-29, 2011-18 IRB to treat seventy percent (70%) of any success-based fees that were paid as an amount that did not facilitate the transactions contemplated hereby, and therefore treat seventy percent (70%) of such costs as deductible in the taxable year that included the Closing Date for U.S. federal (and applicable state and local) Income Tax purposes.

"willful breach" means a knowing and intentional breach that is a direct consequence of an act knowingly undertaken by the breaching party with the intent of causing a breach of a specific provision or covenant of this Agreement.

Section 11.02    Index of Defined Terms.

Accounting Firm    10

Adjustment Escrow Account    73

Adjustment Escrow Agreement    73

Adjustment Escrow Amount    73

Advisors    73

Affiliate    74

Agreement    6

Audited Financial Statements    16

Award Agreements    61

Balance Sheet    16

Business Day    74

CARES Act    21

Cash    74

Certificate of Designation    74

Closing    8

Closing Cash    74

Closing Cash Proceeds    7

Closing Date    8

Closing Indebtedness    74

Closing Net Working Capital    74

Closing Statement    9

COBRA    74

Code    74

Company    6

Company 401(k) Plan    61

Company Employee    74

Company Intellectual Property    25

Company Marketing Materials    26

Company Plans    74

Company Products    24

Company Stock    6

Company Trade Secrets    25

Company's knowledge    79

Competition Law    75

Confidentiality Agreement    75

Contracts    75

COVID-19    75

COVID-19 Measures    75

D&O Tail Policy    53

Dataroom    43

Disclosure Schedules    13

Environmental Claim    76

Environmental Law    76

Environmental Permits    76

ERISA    76

ERISA Affiliate    76

Escrow Agent    76

Estimated Cash    7

Estimated Closing Statement    7

Estimated Indebtedness    7

Estimated Net Working Capital    7

Estimated Transaction Expenses    7

Express Representations    76

FCPA    36

Final Cash Proceeds    9

Financial Statements    16

FIRPTA Certificate    49

Foreign Benefit Plan    30

Fraud    77

Funded Indebtedness    77

Funds Flow    8

GAAP    77

Governmental Body    77

Hazardous Material    77

HSR Act    77

ICE    36

Income Tax Amount    77

Income Taxes    78

Indebtedness    78

Indemnified Person    53

Intellectual Property    78

Interim Financial Statements    16

IRS    79

IT Systems    79

Jewelry Laws    33

Kimberley Process    79

knowledge of the Company    79

Law    79

Lease    18

Leased Real Property    18

Legal Proceeding    79

Liability    79

Licensed Intellectual Property    79

Liens    79

Material Adverse Effect    79

Material Contract    24

Material Suppliers    37

Multiemployer Plan    80

Net Working Capital    80

Objection Notice    10

Open Source Software    81

Option    81

Option Cancellation Agreements    61

Option Plan    81

Optionholder    81

Order    81

Ordinary Course of Business    81

Organizational Documents    81

Outside Date    57

Owned Intellectual Property    81

Owned Real Property    81

Payoff Letter    49

Permits    81

Permitted Liens    82

Person    82

Personal Information    82

Personnel IP Contracts    26

PPACA    29

Pre-Closing Tax Period    82

Privacy Laws    82

Privacy Requirements    83

Products    37

Projections    60

Protected Seller Communications    64

Purchaser    6

Purchaser Adjustment Amount    11

Purchaser Group    83

Purchaser Releasers    62, 63

Release    83

Sanctions Laws    83

Schedule    13

Scheduled Intellectual Property    24

Securities Act    42

Seller    6

Seller Adjustment Amount    11

Seller Group    63

Seller Parties    83

Seller Released Parties    62, 63

Seller Review Period    9

Series C Holders    83

Series C Preferred Stock    83

Series C Redemption    50

Series C Redemption Price    83

Settlement Date    11

Software    83

SPAC    50

SPAC Termination    50

Specified Employees    49

Straddle Period    84

Subsidiary    84

Target Net Working Capital    84

Tax    84

Tax Controversy    65

Tax Returns    84

Taxes    84

Trade Approvals    34

Transaction    6

Transaction Expenses    84

Transaction Price    7

Transaction Tax Deductions    85

Transfer Taxes    64

willful breach    85

Section 11.03    Other Definitional Provisions. The following will apply to this Agreement, the Disclosure Schedules and any other certificate, instrument, agreement or other document delivered hereunder.

(a)    Accounting terms which are not otherwise defined in this Agreement have the meanings given to them under GAAP consistently applied. To the extent that the definition of an accounting term defined in this Agreement is inconsistent with the meaning of such term under GAAP, the definition set forth in this Agreement will control.

(b)    The terms "hereof," "herein" and "hereunder" and terms of similar import are references to this Agreement as a whole and not to any particular provision of this

Agreement. Section, clause, schedule and exhibit references contained in this Agreement are references to sections, clauses, schedules and exhibits in or to this Agreement, unless otherwise specified.

(c)    Whenever the words "include," "includes" or "including" are used in this Agreement, they will be deemed to be followed by the words "without limitation" or "but not limited to."

(d)    Where the context permits, the use of the term "or" will be equivalent to the use of the term "and/or."

(e)    When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period will be excluded. If the last day of such period is a day other than a Business Day, the period in question will end on the next succeeding Business Day.

(f)    Words denoting any gender will include all genders, including the neutral gender. Where a word is defined herein, references to the singular will include references to the plural and vice versa.

(g)    The word "will" will be construed to have the same meaning and effect as the word "shall". The words "shall," "will," or "agree(s)" are mandatory, and "may" is permissive.

(h)    The word "extent" in the phrase "to the extent" means the degree to which a subject or other thing extends, and such phrase will not mean simply "if".

(i)    All references to "$" and dollars will be deemed to refer to United States currency unless otherwise specifically provided.

(j)    All references to a day or days will be deemed to refer to a calendar day or calendar days, as applicable, unless otherwise specifically provided.

(k)    Any document or item will be deemed "delivered", "provided", "made available" within the meaning of this Agreement if such document or item is (i) included in the Dataroom and accessible to Purchaser no less than one (1) Business Day prior to the date of this Agreement and remains so posted and accessible continuously through the Closing (including through any "clean room", "clean team" or other similar arrangement), or (ii) actually delivered or provided to Purchaser or any of Purchaser's representatives no less than one (1) Business Day prior to the date of this Agreement.

(l)    Any reference to any particular Code section or any Law will be interpreted to include any amendment to, revision of or successor to that section or Law regardless of how it is numbered or classified; provided that, for the purposes of the representations and warranties set forth herein, with respect to any violation of or non-compliance with, or alleged violation of or non-compliance, with any Code section or Law, the reference to such Code section or Law means such Code section or Law as in effect at the time of such violation or non-compliance or alleged violation or non-compliance.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase Agreement on the day and year first above written.

The Company: BC CYAN INVESTMENT HOLDINGS INC.
By:    /s/ Sean Kell
Name:    Sean Kell<br><br>Its:    Chief Executive Officer and President
Seller: BC CYAN HOLDINGS LP
By:    /s/ David Humphrey
Name:    David Humphrey<br><br>Its:    Authorized Signatory
Purchaser: STERLING JEWELERS INC.
By:    /s/ Joan Hilson
Name:    Joan Hilson<br><br>Its:    Chief Financial and Strategy Officer

[Signature page to Stock Purchase Agreement]

Document

Exhibit 10.1

AMENDED AND RESTATED TERMINATION PROTECTION AGREEMENT

THIS AMENDED AND RESTATED TERMINATION PROTECTION AGREEMENT (as hereinafter amended from time to time, this “Agreement”) is made and entered into by and between Sterling Jewelers Inc., a Delaware corporation (the “Company”) and Virginia Drosos (the “Executive”), dated as of March 15, 2022.

W I T N E S S E T H

WHEREAS, the Company and its affiliates are engaged in the business of operating chains of retail jewelry stores in the United States, the United Kingdom and Canada;

WHEREAS, the Company employed the Executive as Chief Executive Officer of Signet Jewelers Limited, a Bermuda corporation (“Signet,” and, together with its subsidiaries, the “Signet Group,” which for purposes of this Agreement is an affiliate of the Company), effective as of August 1, 2017, subject to the terms and provisions of the Termination Protection Agreement entered into between the Company and the Executive on September 26, 2017 (the “Original Agreement”); and

WHEREAS, each of the Company and the Executive desire to amend and restate the Original Agreement in its entirety as set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is mutually acknowledged, the Company and the Executive (individually a “Party” and together the “Parties”), intending to be legally bound, agree as follows:

AGREEMENT

1.    Definitions.

(a)    “Board” means the Board of Directors of Signet.

(b)    “Business” shall mean the operation of a retail jewelry business that sells to the public jewelry, watches and associated services including through e-commerce.

(c)    “Cause” means (A) fraud, embezzlement, gross insubordination or any act of moral turpitude or misconduct, in each case, on the part of the Executive; (B) conviction of or the entry of a plea of nolo contendere by the Executive for any felony; or (C) (x) a material breach by the Executive of Executive’s duties, responsibilities or obligations under this Agreement or the attached Schedule 1, or (y) the willful failure or refusal by the Executive to perform and discharge a specific lawful directive issued to Executive by the Board within a reasonable period of time, not to be less than five (5) business days, following written notice thereof to the Executive by the Company or the Board.

(d)    “Change of Control” means the occurrence of any of the following events:

(i)    any consolidation, amalgamation, or merger of Signet with or into any other Person, or any other corporate reorganization, business combination, transaction or transfer of securities of Signet by its stockholders, or a series of transactions (including the acquisitions of capital stock of Signet), whether or not Signet is a party thereto, in which the stockholders of Signet immediately prior to such consolidation, merger, reorganization, business combination or transaction, collectively have beneficial ownership (as defined in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended), directly or indirectly, of capital stock representing directly, or indirectly through one or more entities, less than fifty (50%) of the equity (measured by economic value or voting power (by contract, share ownership or otherwise) of Signet or other surviving entity immediately after such consolidation, merger, reorganization, business combination or transaction;

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(ii)    the sale or disposition, in one transaction or a series of related transactions, of all or substantially all of the assets of Signet to any Person;

(iii)    during any period of twelve (12) consecutive months, individuals who as of the beginning of such period constituted the entire Board (together with any new directors whose election by such Board or nomination for election by Signet’s shareholders was approved by a vote of at least two-thirds of the directors of Signet, then still in office, who were directors at the beginning of the period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority thereof; or

(iv)    approval by the shareholders of Signet of a complete liquidation or dissolution of Signet.

(e)    “Compensation Committee” means the Human Capital Management and Compensation Committee or successor committee of the Board.

(f)    “Disability” means any physical or mental disability during the term of the Executive’s Employment that renders the Executive incapable of performing the services required of the Executive for any period or periods aggregating six (6) months during any twelve (12) month period. For purposes of the foregoing, the Executive’s physical or mental disability shall be determined in accordance with any disability plan of or applicable to the Company that is then in effect or may be determined by the Compensation Committee.

(g)    “Good Reason” means any of the following has occurred without the Executive’s prior written consent: (A) a material reduction in Executive’s target or maximum potential annual compensation opportunities as set forth on the attached Schedule 1; (B) a material diminution in Executive’s authority, duties or responsibilities as set forth on Schedule 1; (C) any requirement that the Executive relocate Executive’s principal place of employment by more than fifty (50) miles from such Executive’s then primary office location set forth on the attached Schedule 1 and from Executive’s principal residence in any such location, provided that such a relocation shall not include: (i) the Executive’s travel for business in the course of performing the Executive’s duties for the Company, (ii) the Executive working remotely or (iii) the Company requiring the Executive to report to the office within the Executive’s relocated principal place of employment (instead of working remotely) at the Company’s expense for three days or less each week; or (D) a material breach by the Company of its payment obligations to the Executive as set forth on Schedule 1, which breach remains uncured for thirty (30) days following written notice thereof provided by the Executive to the Company; provided that, no event described in clauses (A) – (D) shall constitute Good Reason unless (i) Executive has given the Company written notice of the termination, setting forth the conduct of the Company that is alleged to constitute Good Reason, within ninety (90) days following the first occurrence of such event, and (ii) Executive has provided the Company at least thirty (30) days following the date on which such notice is provided to cure such conduct and the Company has failed to do so.

(h)    “LTIP” means the Company’s Amended and Restated 2018 Omnibus Incentive Plan or other long-term incentive plan then in effect, as approved by the Compensation Committee or its designee.

(i)    “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.

(j)    “Retirement” shall mean termination of the Executive’s service with the Signet Group on or following the Executive’s sixtieth (60th) birthday with at least five (5) years of service, or such earlier date as provided in a written agreement between a member of the Signet Group and the Executive (excluding such a termination at a time when the Signet Group may terminate the Executive for Cause, as determined by the Compensation Committee).

(k)    “Short-Term Deferral Period” means the period ending on the later of the fifteenth (15th) day of the third (3rd) month following the end of the Executive’s first taxable year in which the right

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to the payment is no longer subject to a substantial risk of forfeiture or the fifteenth (15th) day of the third (3rd) month following the end of the Company’s first taxable year in which the right to the payment is no longer subject to a substantial risk of forfeiture.

(l)    “STIP Bonus” means an annual cash bonus award in accordance with the annual short-term incentive plan (“STIP”) then in effect for executive officers of the Signet Group, as approved by the Compensation Committee or its designee.

(m)    “STIP Payment Period” means the later of (a) between March 10th and May 31st following the end of the fiscal year to which such STIP Bonus relates and (b) the Payment Commencement Date (as defined below), but in no event later than the Short-Term Deferral Period.

2.    Term; Termination.

(a)    Term. This Agreement shall have an initial term ending on August 1, 2022 (the “Initial Term”) and thereafter shall automatically renew for one (1) year periods (each, a “Renewal Term”) unless either Party provides a notice to the other Party that such Party elects not to renew the Agreement, at least six (6) months prior to the end of the then current term. Subject to the prior sentence, the Executive’s employment with the Company is “at-will” and shall continue until terminated either by the Company at any time or the Executive with at least ninety (90) days’ notice by notifying the other Party in writing. The provisions of this Agreement exclusively shall govern the Executive’s rights upon termination of employment with the Company and its affiliates.

(b)    Notice of Termination. Any purported termination of employment by the Company or by the Executive (other than due to the Executive’s death) shall be communicated by written Notice of Termination to the other Party hereto in accordance with Section 11(f).

(c)    Board/Committee Resignation. Upon termination of the Executive’s employment for any reason, the Executive agrees to resign at the direction of the Board or shall be deemed to have resigned, as of the date of such termination (the “Termination Date”) and to the extent applicable, from the Board (and any committees thereof) and the Board of Directors (and any committees thereof) of any of the Company’s subsidiaries or affiliates.

3.    Payments Upon Certain Terminations of Employment or Non-Renewal of this Agreement by the Company.

(a)    Waiver and Release and Continued Compliance with Covenants; Timing of Payments.

(i)    Notwithstanding anything herein to the contrary, as a condition precedent to receiving any payments under this Section 3 (other than those amounts already accrued prior to the Termination Date, including the Accrued Rights (as defined below)), Executive (or the Executive’s estate, as applicable) shall have executed, within twenty-one (21) days, or if required for an effective release, forty-five (45) days, following the Termination Date, a waiver and release in similar form to that attached hereto as Exhibit A (the “Release”), which Release may be updated by the Company from time to time to reflect changes in law and related factors, and the seven (7) day revocation period of such Release shall have expired. In addition, all payments under this Section 3 are subject to Executive’s continued compliance with the provisions of Sections 4, 5 and 6 of this Agreement.

(ii)    Subject to Section 8(b) and the execution of the Release pursuant to this Section 3(a), all payments under this Section 3 that are conditioned on such Release shall be payable as described below on (or beginning on) the sixtieth (60th) day after the Termination Date (the “Payment Commencement Date”) and no later than the Short-Term Deferral Period, except payments that are made pursuant to the LTIP or STIP or an award agreement under the LTIP or STIP.

(b)    Termination By the Company For Cause; Resignation by the Executive. If the Executive’s employment with the Company is terminated by the Company for Cause or if the Executive resigns for any reason or no reason (other than for Good Reason within one year following a Change of

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Control), the Executive shall be entitled to receive solely the following (the amounts described in clauses (i), (ii), and (iii) being referred to as the “Accrued Rights”):

(i)     base salary and accrued and unused vacation through the Termination Date in accordance with the Company’s normal payroll practices;

(ii)     any STIP Bonus or LTIP payment that has been earned by and is payable to the Executive in accordance with the applicable plan as of the Termination Date that remains unpaid as of such date, which shall be paid in accordance with such plan; and

(iii)     any vested benefits to which the Executive is entitled under the employee benefit plans of the Company, which shall be paid pursuant to the terms and conditions of such benefit plans.

(c)    Termination by the Company Without Cause or Non-Renewal of this Agreement by the Company. If the Executive’s employment is terminated by the Company without Cause or if the Executive’s employment terminates at the expiration of the Initial Term or any Renewal Term as a result of the Company’s non-renewal of this Agreement, other than in circumstances where Section 3(d) applies, the Executive shall be entitled to receive solely the following in addition to the Accrued Rights:

(i)    one and one-half (1.5) times the sum of (1) the Executive’s base salary in effect on the Termination Date and (2) the Executive’s target STIP Bonus in effect on the Termination Date, payable in twelve (12) equal monthly installments commencing in the month after the Terminate Date and in accordance with the Company’s standard payroll practices for executive officers, except that the first payment will be on the first payroll date occurring on or after the Payment Commencement Date and include a catch up payment for the first installment;

(ii)    the STIP Bonus the Executive would otherwise have received for the full fiscal year in which the Termination Date occurred, based on actual performance, pro-rated for the number of calendar days during the fiscal year during which the Executive was employed, payable in a lump sum during the STIP Payment Period;

(iii)    for each outstanding award that remains subject to vesting under the LTIP as of the Termination Date:

(1)    any such performance-based award shall vest based on actual performance, as of the date of determination by the Compensation Committee after the end of the completed performance cycle for such award of the level of such performance achieved, and be pro-rated for the number of calendar days that the Executive was employed during the maximum vesting period applicable to the award, and shall be payable in accordance with the LTIP and applicable award agreement, and

(2)    any such time-based award shall vest on the Termination Date in an amount that is pro-rated for the number of calendar days that the Executive was employed during the vesting period, and shall be payable in accordance with the LTIP and applicable award agreement; and

(iv)    if the Executive timely elects coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), a cash payment equal to the employer contribution to the premium payment for actively employed senior executives with the same level of coverage, payable monthly in accordance with the Company’s standard payroll practices for twelve (12) months following the Termination Date or until such earlier termination of COBRA coverage, except that the first payment will be on the first payroll date occurring on or after the Payment Commencement Date and include a catch up payment for the first installment.

(d)    Certain Termination Events Within One Year Following a Change of Control. If the Executive’s employment hereunder is terminated within one (1) year following a Change of Control (A) by the Company without Cause, (B) due to the expiration of the Initial Term or any Renewal Term as a result of the Company’s non-renewal of the Agreement, or (C) because the Executive resigns for Good

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Reason, in each case, the Executive shall be entitled to receive solely the following, in addition to the Accrued Rights:

(i)    one and one-half (1.5) times the sum of (1) the Executive’s base salary in effect on the Termination Date (provided that a material reduction to base salary resulting in Good Reason, shall be disregarded for purposes of this calculation) and (2) the Executive’s target STIP Bonus in effect on the Termination Date (provided that a material reduction to target STIP Bonus resulting in Good Reason, shall be disregarded for purposes of this calculation), payable as a lump sum on the first payroll date following the Payment Commencement Date; provided, that, to the extent such payment constitutes “nonqualified deferred compensation,” and the Change of Control is not a “change in control event,” in each case as such terms are defined under Section 409A, then such amount shall be paid in equal monthly installments over the twelve (12) months beginning on the first payroll date immediately following the Payment Commencement Date;

(ii)    the STIP Bonus the Executive would otherwise have received for the full fiscal year in which the Termination Date occurred, based on actual performance, pro-rated for the number of calendar days during the fiscal year during which the Executive was employed, payable in a lump sum during the STIP Payment Period; and

(iii)    each outstanding award that remains subject to vesting under the LTIP as of the Termination Date shall be paid in accordance with the terms and on the timing applicable to such termination event in the LTIP and applicable award agreements and, if the applicable award agreement does not expressly provide for any payment upon a resignation by the Executive for Good Reason or termination of employment due to non-renewal of the Agreement within one (1) year following a Change of Control, such termination of employment, in each case, shall entitle the Executive to the same payment that the Executive would be entitled to receive upon a termination by the Company without Cause following a Change of Control under the LTIP and applicable award agreement;

(iv)    if Executive timely elects coverage under COBRA, a cash payment equal to the employer contribution to the premium payment for actively employed senior executives with the same level of coverage, payable monthly in accordance with the Company’s standard payroll practices for eighteen (18) months following the Termination Date or until such earlier termination of COBRA coverage, except that the first payment will be on the first payroll date occurring on or after the Payment Commencement Date and include a catch up payment for the first installment.

(e)    Termination Upon the Executive’s Death. In the event of the Executive’s death during the term of the Executive’s employment, the Executive’s employment and this Agreement shall automatically terminate and, in addition to the Accrued Rights, the Company shall pay to Executive’s estate:

(i)    Executive’s base salary in effect on the Termination Date for six (6) months following such Termination Date, in accordance with the Company’s standard payroll practices for executive officers;

(ii)    the STIP Bonus the Executive would otherwise have received for the full fiscal year in which the Termination Date occurred, based on actual performance, pro-rated for the number of calendar days during the fiscal year during which the Executive was employed, payable in a lump sum during the STIP Payment Period; and

(iii)    each outstanding award that remains subject to vesting under the LTIP as of the Termination Date shall be paid in accordance with the terms and on the timing applicable to such termination event in the LTIP and applicable award agreements and, if the applicable award agreement does not expressly provide for any payment upon death, if any such award has been held by Executive for at least six (6) months (1) any such performance-based award shall vest on the Termination Date, based on target performance, and be pro-rated for the number of calendar days that the Executive was employed during the applicable performance cycle, and (2) any such time-based award shall vest on the Termination Date in an amount that is pro-rated for the number of calendar days that the Executive was employed

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during the vesting period, and in each case shall be payable in accordance with the time and method of settlement provisions set forth in the LTIP and applicable award agreement.

(f)    Termination Due to Disability. In the event of the Executive’s Disability during the term of the Executive’s employment, the Company shall have the right, upon written notice to the Executive, to terminate the Executive’s employment hereunder, effective upon the giving of such notice (or such later date as shall be specified in such notice). Upon such termination, in addition to the Accrued Rights, the Company shall pay to the Executive:

(i)    the STIP Bonus the Executive would otherwise have received for the full fiscal year in which the Termination Date occurred, based on actual performance, pro-rated for the number of calendar days during the fiscal year during which the Executive was employed, payable in a lump sum during the STIP Payment Period; and

(ii)    each outstanding award that remains subject to vesting under the LTIP as of the Termination Date shall be paid in accordance with the terms applicable to termination for Disability in the LTIP and applicable award agreements.

(g)    Termination Due to Retirement. In the event of the Executive’s Retirement, in addition to the Accrued Rights, the Company shall pay to the Executive:

(i)    the STIP Bonus that is then payable in accordance with the STIP for the full fiscal year in which the Termination Date occurred, based on actual performance, pro-rated for the number of calendar days during the fiscal year during which the Executive was employed, payable in a lump sum during the STIP Payment Period; and

(ii)    each outstanding award that remains subject to vesting under the LTIP as of the Termination Date shall be paid in accordance with the LTIP and applicable award agreements.

(h)    Illustration. For illustration purposes only, the attached Schedule 2 sets forth a summary of the payments that would be owed to Executive upon the occurrence of certain termination events. To the extent of any conflict between Schedule 2 and this Agreement, the terms of this Agreement shall control and prevail.

4.    Confidentiality; Ownership of Developments.

(a)    During the term of the Executive’s employment with the Signet Group and for all time thereafter, the Executive shall keep secret and retain in strictest confidence and not divulge, disclose, discuss, copy or otherwise use or suffer to be used in any manner, except in connection with the Business of the Signet Group, any trade secrets, confidential or proprietary information and documents or materials owned, developed or possessed by or for the Signet Group pertaining to the Signet Group; provided that such information referred to in this Section 4(a) shall not include information that is or has become generally known to the public or the jewelry trade without violation of this Section 4.

(b)    The Executive acknowledges that all developments, including, without limitation, inventions (patentable or otherwise), discoveries, improvements, patents, trade secrets, designs, reports, computer software, flow charts and diagrams, data, documentation, writings and applications thereof (collectively, “Works”) relating to the Business or planned business of the Signet Group that, alone or jointly with others, the Executive may create, make, develop or acquire during the term of Executive’s employment with the Signet Group (collectively, the “Developments”) are works made for hire and shall remain the sole and exclusive property of the Signet Group and the Executive hereby assigns to the Company all of Executive’s right, title and interest in and to all such Developments and Executive shall take any action reasonably necessary to achieve the foregoing result. Notwithstanding any provision of this Agreement to the contrary, “Developments” shall not include any Works that do not relate to the Business or planned business of the Signet Group.

(c)    The Executive is hereby notified, in accordance with the Defend Trade Secrets Act of 2016, 18 U.S.C. § 1833(b), that: (i) an individual shall not be held criminally or civilly liable under any

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federal or state trade secret law for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law; (ii) an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (iii) an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal and does not disclose the trade secret except pursuant to court order. Notwithstanding anything herein to the contrary, nothing in this Agreement shall: (i) prohibit the Executive from making reports of possible violations of federal law or regulation to any governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or of any other whistleblower protection provisions of state or federal law or regulation; or (ii) require notification or prior approval by the Company of any reporting described in clause (i).

(d)    The Executive further understands that this Agreement does not limit the Executive’s ability to communicate with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”) or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. This Agreement also does not limit the Executive’s right to receive an award for information provided to any Government Agency.

5.    Covenants Not to Solicit and Not to Compete. The Executive agrees that Executive shall not, directly or indirectly, without the prior written consent of the Company:

(a)    during Executive’s employment with the Signet Group and for a period of two (2) years commencing upon the Termination Date, solicit, entice, persuade or induce any employee, consultant, agent or independent contractor of the Signet Group to terminate his or her employment or engagement with the Signet Group, to become employed by any person, firm or corporation other than the Signet Group or approach any such employee, consultant, agent or independent contractor for any of the foregoing purposes; or

(b)    during Executive’s employment with the Signet Group and for a period of one (1) year commencing upon the Termination Date, directly or indirectly own, manage, control, invest or participate in any way in, consult with or render services to or for any person or entity (other than for the Signet Group) which is materially engaged in the Business (“materially” meaning deriving more than 25% of its revenue from the sale of jewelry and watches per year as of the applicable date); provided that the Executive shall be entitled to own up to 1% of any class of outstanding securities of any company whose common stock is listed on a national securities exchange or included for trading on the NASDAQ Stock Market.

6.    Non-Defamation and Non-Disparagement. The Executive shall not at any time, publicly or privately, verbally or in writing, directly or indirectly, make or cause to be made any defaming and/or disparaging, derogatory, misleading or false statement about the Signet Group or its products, or any current or former directors, officers, employees, or agents of the Signet Group, or the business strategy, plans, policies, practices or operations of the Signet Group to any person or entity, including members of the investment community, press, customers, competitors, employees and advisors of the Signet Group. Truthful disclosure to any government agency regarding possible violations of federal law or regulation in accordance with any whistleblower protection provisions of state or federal law or regulation shall not be deemed to violate this paragraph. The Company shall instruct the Company’s successor Chief Executive Officer and the Board not to make any defaming and/or disparaging, derogatory, misleading or false statement about the Executive. Executive recognizes that the breach of this Section 6 will cause serious and irreparable injury to the Company.

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7.    Specific Performance. The Executive acknowledges that the services to be rendered by the Executive are of a special, unique and extraordinary character and, in connection with such services, the Executive will have access to confidential information vital to the Business of the Signet Group. By reason of this, the Executive consents and agrees that if the Executive violates any of the provisions of Sections 4, 5 or 6 hereof, the Signet Group would sustain irreparable injury and that monetary damages will not provide adequate remedy to the Signet Group and that the Signet Group shall be entitled to have Sections 4, 5 or 6 specifically enforced by any court having equity jurisdiction. Nothing contained herein shall be construed as prohibiting the Signet Group from pursuing any other remedies available to it for such breach or threatened breach, including, without limitation, the recovery of damages from the Executive or cessation of payments hereunder without requirement for posting a bond. In addition, to the extent allowed by law, the Executive shall be required to return to the Company any termination payments and benefits paid pursuant to Section 3 less two hundred fifty dollars ($250.00) if the Executive violates Sections 4, 5 or 6.

8.    Section 409A.

(a)    The intent of the Parties is that payments and benefit under this Agreement comply with or be exempt from Internal Revenue Code of 1986, as amended (the “Code”) Section 409A and the regulations and guidance promulgated thereunder (collectively, “Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith or exempt therefrom, as applicable. If any other payments of money or other benefits due to the Executive hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, the Company may (i) adopt such amendments to the Agreement, including amendments with retroactive effect, that the Company determines necessary or appropriate to preserve the intended tax treatment of the benefits provided by the Agreement and/or (ii) take such other actions as the Company determines necessary or appropriate to comply with the requirements of Section 409A.

(b)    A termination of employment shall not be deemed to have occurred for purposes of this Agreement providing for the payment of any amounts or benefits that are considered nonqualified deferred compensation under Section 409A upon or following a termination of employment, unless such termination is also a “separation from service” within the meaning of Section 409A and the payment thereof prior to a “separation from service” would violate Section 409A. For purposes of any such provision of this Agreement relating to any such payments or benefits, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” If the Executive is deemed on the date of termination to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B), then, notwithstanding any other provision herein, with regard to any payment or the provision of any benefit that is considered nonqualified deferred compensation under Section 409A payable on account of a “separation from service,” such payment or benefit shall not be made or provided prior to the date which is the earlier of (A) the expiration of the six (6) month period measured from the date of such “separation from service” of the Executive, and (B) the date of the Executive’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 8(b) (whether they would have otherwise been payable in a single lump sum or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum on the first business day following the Delay Period, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

(c)    (i) All expenses or other reimbursements as provided herein shall be payable in accordance with the Company’s policies in effect from time to time, but in any event any reimbursements that are non-qualified deferred compensation subject to Section 409A of the Code shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive; (ii) no such reimbursement or expenses eligible for reimbursement in any taxable year shall in any way affect the expenses eligible for reimbursement in any other taxable year; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchanged for another benefit.

(d)    For purposes of Section 409A, the Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.

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Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company.

(e)    Nothing contained in this Agreement shall constitute any representation or warranty by the Company regarding compliance with Section 409A. The Company has no obligation to take any action to prevent the assessment of any additional income tax, interest or penalties under Section 409A on any person and the Company, its subsidiaries and affiliates, and each of their employees and representatives shall not have any liability to the Executive with respect thereto.

9.    Compliance with Board Policies.

(a)    The Executive shall be required to build a holding of shares of Signet common stock (“Shares”) equal to a specified level as set by the Board from time to time (the “Share Ownership Requirement”) pursuant to the terms of any stock ownership policy or guidelines approved by the Board or a committee of the Board and provided to the Executive. The Share Ownership Requirement shall be required for so long as the Executive is a senior officer of the Signet Group.

(b)    The Executive shall be subject to the written policies of the Board applicable to senior officers, including without limitation any Board policy relating to claw back of compensation, as they exist from time to time during the Executive’s employment with the Company or any of its affiliates.

10.    Governing Law; Jurisdiction.

(a)    This Agreement shall be subject to, and governed by, the laws of the State of Ohio applicable to contracts made and to be performed therein, without regard to conflict of laws principles thereof.

(b)    Any action to enforce any of the provisions of this Agreement shall be brought in a court of the State of Ohio located in Summit County or in a Federal court located in Cleveland, Ohio. The Parties consent to the jurisdiction of such courts and to the service of process in any manner provided by Ohio law. Each Party irrevocably waives any objection which it may now or hereafter have to the laying of the venue of any such suit, action, or proceeding brought in such court and any claim that such suit, action, or proceeding brought in such court has been brought in an inconvenient forum and agrees that service of process in accordance with the foregoing sentences shall be deemed in every respect effective and valid personal service of process upon such Party.

EXECUTIVE ACKNOWLEDGES THAT, BY SIGNING THIS AGREEMENT, SHE IS WAIVING ANY RIGHT THAT SHE MAY HAVE TO A JURY TRIAL RELATED TO THIS AGREEMENT.

11.    Miscellaneous.

(a)    Entire Agreement/Amendments. This Agreement, including the employment terms, duties and entitlements set forth on Schedule 1, contains the entire understanding of the Parties with respect to the subject matter hereof and supersedes any and all prior agreements (whether written or oral) between the Parties with respect thereto, including, without limitation, any prior written term sheet and to the extent modified by the terms herein, any LTIP or STIP award granted after the date of this Agreement (unless such award agreement expressly overrides this Agreement). There are no restrictions, agreements, promises, warranties, covenants or undertakings between the Parties with respect to the subject matter herein other than those expressly set forth herein. This Agreement may not be altered, modified, or amended except by written instrument signed by the Parties hereto. For the avoidance of doubt, the employment terms, duties and entitlements set forth on Schedule 1 are an integral part of this Agreement.

(b)    No Waiver. The failure of a Party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such Party’s rights or deprive such Party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

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(c)    Severability. The provisions of this Agreement are severable and the invalidity, illegality or unenforceability of any one or more provisions shall not affect the validity, legality or enforceability of any other provision. In the event that a court of competent jurisdiction shall determine that any provision of this Agreement or the application thereof is unenforceable in whole or in part because of the duration or scope thereof, the Parties hereto agree that said court in making such determination shall have the power to reduce the duration and scope of such provision to the extent necessary to make it enforceable, and that the Agreement in its reduced form shall be valid and enforceable to the full extent permitted by law.

(d)    Assignment. This Agreement and all of the Executive’s rights and duties hereunder shall not be assignable or delegable by the Executive. Any purported assignment or delegation by the Executive in violation of the foregoing shall be null and void ab initio and of no force and effect. This Agreement may be assigned by the Company to, or assumed by, a person or entity which is an affiliate of the Company or a successor in interest to substantially all of the business operations of the Company. Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such affiliate or successor person or entity.

(e)    Successors; Binding Agreement. This Agreement shall inure to the benefit of and be binding upon personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. In the event of the Executive’s death, all amounts payable hereunder to the Executive that are then unpaid, shall be paid to the Executive’s beneficiary designated by Executive in writing to the Company or, in the absence of such designation, to Executive’s estate.

(f)    Notice. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand or overnight courier or three days after it has been mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below in this Agreement, or to such other address as either Party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

If to the Company:

Sterling Jewelers Inc.

375 Ghent Road

Akron, Ohio 44333

Attn: General Counsel and SVP Legal Compliance and Risk

with copies to:

Baker Hostetler LLP

127 Public Square, Suite 2000

Cleveland, Ohio 44114

Attn: Janet Spreen

If to the Executive:

To Executive’s last address set forth on the payroll records of the Company

with copies to:

[______________]

Attn: [____________]

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(g)    Cooperation. The Executive shall provide the Executive’s reasonable cooperation in connection with any action or proceeding (or any appeal from any action or proceeding) which relates to events occurring during the Executive’s employment hereunder.

(h)    Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

(i)    Survival. The provisions of Sections 4, 5, 6, 7, 8, 10 and 11 of this Agreement shall survive the expiration or termination of this Agreement and the Executive’s employment hereunder, irrespective of the reason for any termination.

(j)    Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

[Signatures on following page]

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IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement on the last date written below.

STERLING JEWELERS INC.

By: /s/ Stash Ptak

Name: Stash Ptak

Title: General Counsel

Date: July 8, 2022

EXECUTIVE

/s/ Virginia C. Drosos

Virginia Drosos

Date: July 6, 2022

Acknowledged and agreed to by:

SIGNET JEWELERS LIMITED

By: /s/ Stash Ptak

Name: Stash Ptak

Title: General Counsel

Date: July 8, 2022

[SIGNATURE PAGE TO TERMINATION PROTECTION AGREEMENT]

SCHEDULE 1

EMPLOYMENT TERMS, DUTIES AND ENTITLEMENTS

Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Amended and Restated Termination Protection Agreement, dated as of March 15, 2022, by and among Sterling Jewelers Inc. (the “Company”) and Virginia Drosos (the “Executive”) to which this Schedule 1 is attached (the “Agreement”).

Position Chief Executive Officer of the Signet Group
Reporting Line Executive shall report through the Chairman of the Board to the Board.
Duties Executive shall have such duties and authority, consistent with her position, as may be assigned from time to time by the Board.<br><br><br><br>For so long as the Executive serves as the Chief Executive Officer of the Signet Group during the term of the Executive’s employment with the Company or any of its subsidiaries or affiliates, the Executive shall, subject to the provisions of the Bylaws of Signet, also serve as a member of the Board and shall, if requested by the Company, also serve as a member of the board of directors of any of Signet’s or the Company’s subsidiaries without additional compensation.<br><br><br><br>Executive shall devote her full business time and best efforts to the performance of her duties and will not engage in any other business, profession or occupation for compensation or otherwise which would directly or indirectly conflict or interfere with the rendition of such services, without the prior written consent of the Board; provided Executive may (i) serve on any board of directors or trustees of any charitable or educational organization or engage in other charitable, civic and professional activities, (ii) continue to serve on the board of directors of Foot Locker, Inc., and (iii) subject to the prior approval of the Board, in its sole discretion, Executive may accept appointment to any board of directors of any business entity; provided in each case, and in the aggregate, that such activities do not conflict or interfere with the performance of the Executive’s duties or breach the terms of Section 3 or 4 of the Agreement.
Annual Base Salary Annual rate of $1,500,000, subject to annual review and adjustment by the Compensation Committee.<br><br><br><br>Base Salary shall not be reduced unless there is a comparable reduction in the base salaries of other named executive officers of Signet.
STIP Bonus Target STIP Bonus: 150% of Base Salary upon achievement of performance objectives at target for the applicable fiscal year of Signet.<br><br><br><br>STIP Bonus may be less than or greater than Target STIP Bonus, based upon achievement of performance objectives against target levels, up to 300% of Base Salary.
LTIP Annual consideration for long-term awards (as determined in the Compensation Committee’s sole discretion) made in accordance with the terms of the LTIP.

Executive’s Initials: VCD

Employee Benefits Eligible for all Company health, life and disability insurance and other welfare, and retirement, savings, deferred compensation and fringe employee benefit plans, as in effect from time to time, on the same basis as those benefits are generally made available to senior executives of the Company.<br><br>Eligible for reimbursement of reasonable business expenses incurred by the Executive during employment in the performance of the Executive’s duties, in accordance with Company policies and subject to timely submission of reimbursement requests.
Time Off Executive shall be entitled to time off as provided under the Signet US Time Off Program, as in effect from time to time.
Director and Officer Insurance The Company shall keep in force for the Executive coverage under a directors and officers liability insurance policy, such coverage to be at a level no less than that maintained for substantially all of the executive officers of the Company or Signet (during the period the Executive is an executive officer of Signet) and substantially all of the members of the Board of Directors of Signet (during any period the Executive is a member of the Board of Directors of Signet).
Legal Fee Reimbursement The Company shall pay the reasonable legal fees incurred by Executive in negotiating the terms of this Agreement up to $20,000.
Executive Representations Executive represents and warrants to the Company that the performance by Executive of the duties set forth on the Agreement and this Schedule 1 shall not constitute a breach of, or otherwise contravene, the terms of any employment agreement or other agreement or policy to which the Executive is a party or otherwise bound.

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SCHEDULE 2

TERMINATION PAYMENTS TABLE

For purposes of the table below:

“Full-Year Achievement” means, with respect to any STIP Bonus or LTIP award, the amount of that bonus the Executive would have received or the amount of that award that would have vested (as applicable) had the Executive remained employed with the Company through the end of the applicable vesting period in which employment terminated, based on actual performance during the applicable performance cycle.

“LTIP” means the Long-Term Incentive Plan.

“Pro-Rated Achievement” means an amount equal to the Full-Year Achievement pro-rated for the number of calendar days employed out of the number of days in the applicable performance cycle or vesting period.

“Pro-Rated Target” means, with respect to any Target, an amount equal to that Target pro-rated for the number of calendar days employed out of the number of calendar days in such performance cycle or vesting period.

“Target” means, with respect to any: (i) STIP Bonus, the targeted amount of that STIP Bonus; (ii) performance-based LTIP award, the amount of that award that would have vested upon achieving target performance during the applicable performance cycle; and (iii) time-based LTIP award, the amount of that award that would have vested if the Executive had remained employed during the full vesting period.

Capitalized terms used but not otherwise defined in this Schedule 2 shall have the meanings ascribed to them in the Agreement to which this Schedule 2 is attached.

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Compensation Type Involuntary Termination without Cause Death Disability Retirement Involuntary Termination without Cause or Resignation for Good Reason within one year following a Change of Control
Salary 1.5 x 12 months<br><br>(TPA, §3(c)(i)) 6 months<br><br>(TPA, §3(e)(i)) None, except under disability plans None 1.5 x 12 months<br><br>(TPA, §3(d)(i))
STIP Bonus (1.5 x Target) + <br>Pro-Rated Achievement<br><br>(TPA, §3(c)(i)-(ii)) Pro-Rated Achievement<br><br>(TPA, §3(e)(ii)) Pro-Rated Achievement<br><br>(TPA, §3(f)(ii)) Pro-Rated Achievement<br><br>(TPA, §3(g)(i)) (1.5 x Target) +<br>Pro-Rated Achievement<br><br>(TPA, §3(d)(i)-(ii))
PSU Awards under LTIP Pro-Rated Achievement<br><br>(TPA, §3(c)(iii)(1)) Pro-Rated Target, subject to a six-month holding period following the grant date<br><br>(TPA, §3(e)(iii); PSU Award, §2(b)(i)) Pro-Rated Target, subject to a six-month holding period following the grant date<br><br>(TPA, §3(f)(iii);<br><br>PSU Award, §2(b)(ii)) Continued Vesting, subject to a six-month holding period following the grant date<br><br>(TPA, §3(g)(ii); <br>PSU Award, §2(b)(ii)) Unless awards are vested for all on a pro-rata basis at time of Change of Control, receive Full-Year Achievement, but with performance measured against goals that are also pro-rated, see agreement for more details:<br><br><br><br>(TPA, §3(d)(iii);<br>PSU Award, §3(b)(ii) and “Replacement Award”)
RSU Awards under LTIP Pro-Rated Target<br><br>(TPA, §3(c)(iii)(2)) Pro-Rated Target, subject to a six-month holding period following the grant date<br><br>(TPA, §3(e)(iii);<br><br>RSU Award, §2(b)) Pro-Rated Target, subject to a six-month holding period following the grant date<br><br>(TPA, §3(f)(iii);<br>RSU Award, §2(b)) Continued Vesting, subject to a six-month holding period following the grant date<br><br>(TPA, §3(g)(ii); <br>RSU Award, §2(b)) Unless awards are vested for all on a pro-rata basis at time of Change of Control, receive full vesting at Target, see agreement for more details:<br><br>(TPA, §3(d)(iii);<br>RSU Award, §2(c)(ii) and “Replacement Award”)
Employer Contribution to COBRA 12 months or until such earlier termination of COBRA coverage<br><br>(TPA, §3(c)(iv)) None None None 18 months or until such earlier termination of COBRA coverage<br><br>(TPA, §3(d)(iv))

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EXHIBIT A

RELEASE

This RELEASE (“Release”) dated as of ___________, 20__ between Sterling Jewelers Inc., a Delaware corporation (the “Company”), and Virginia Drosos (the “Executive”).

WHEREAS, the Company and the Executive previously entered into that certain Amended and Restated Termination Protection Agreement dated [________], 2022 (the “Agreement”); and

WHEREAS, the Executive’s employment with the Company has terminated effective ______ __, 20__ (“Termination Date”).

NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein and in the Agreement, the Company and the Executive agree as follows:

  1. Capitalized terms not defined herein shall have the meaning as defined under the Agreement.

  2. In consideration of the Executive’s release under Paragraph 3 hereof, the Company shall pay to the Executive or provide benefits to the Executive as set forth in Section 3, as applicable, of the Agreement, which is attached hereto and made a part hereof.

  3. The Executive, on Executive’s own behalf and on behalf of Executive’s heirs, estate and beneficiaries, does hereby release the Company, and in such capacities, any of its subsidiaries or affiliates, and each past or present officer, director, agent, employee, shareholder, and insurer of any such entities, from any and all claims made, to be made, or which might have been made of whatever nature, whether known or unknown, from the beginning of time, including those that arose as a consequence of Executive’s employment with the Company, or arising out of the severance of such employment relationship, or arising out of any act committed or omitted during or after the existence of such employment relationship, all up through and including the date on which this Release is executed, including, without limitation, any tort and/or contract claims, common law or statutory claims, claims under any local, state or federal wage and hour law, wage collection law or labor relations law, claims under any common law or other statute, claims of age, race, sex, sexual orientation, religious, disability, national origin, ancestry, citizenship, retaliation or any other claim of employment discrimination, including under Title VII of the Civil Rights Acts of 1964 and 1991, as amended (42 U.S.C. §§ 2000e et seq.), Age Discrimination in Employment Act, as amended (29 U.S.C. §§ 621, et seq.); the Americans with Disabilities Act (42 U.S.C. §§ 12101 et seq.), the Rehabilitation Act of 1973 (29 U.S.C. 701 et seq.), the Family and Medical Leave Act (29 U.S.C. §§ 2601 et seq.), the Fair Labor Standards Act (29 U.S.C. §§ 201 et seq.), the Employee Retirement Income Security Act of 1974, as amended (29 U.S.C. §§ 1001 et seq.) and any other law (including any state or local law or ordinance) prohibiting employment discrimination or relating to employment, retaliation in employment, termination of employment, wages, benefits or otherwise. In connection with this release provision, the Executive does not waive the Executive’s right to file a charge with the EEOC or participate in an investigation conducted by the EEOC; however, the Executive expressly waives the Executive’s right to monetary or other relief should any administrative agency, including but not limited to the EEOC, pursue any claim on the Executive’s behalf, except that the Executive is not prohibited from receiving any monetary award from the Securities and Exchange Commission pursuant to Section 21F of the Securities Exchange Act of 1934. The Executive relinquishes any right to future employment with the Company and the Company shall have the right to refuse to re-employ the Executive, in each case without liability of the Executive or the Company. The Executive acknowledges and agrees that even though claims and facts in addition to those now known or believed by her to exist may subsequently be discovered, it is Executive’s intention to fully settle and release all claims she may have against the Company and the persons and entities described above, whether known, unknown or suspected.

  4. The Company and the Executive acknowledge and agree that the release contained in Paragraph 3 does not, and shall not be construed to, release or limit the scope of any existing obligation of the

17    Executive’s Initials: VCD

Company and/or any of its subsidiaries or affiliates (i) to indemnify the Executive for Executive’s acts as an officer or director of Company in accordance with the Certificate of Incorporation and all agreements thereunder, (ii) to pay any amounts or benefits pursuant to Paragraph 2 of this Release or any Accrued Rights (as defined in the Agreement) to which the Executive is entitled under the Agreement, or (iii) with respect to the Executive’s rights as a shareholder of the Company, Signet or any of their subsidiaries.

  1. Executive acknowledges that pursuant to the Release set forth in Paragraph 3 above, Executive is waiving and releasing any rights she may have under the Age Discrimination in Employment Act of 1967 (“ADEA”) and that Executive’s waiver and release of such rights is knowing and voluntary. Executive acknowledges that the consideration given for the ADEA waiver and release under this Release is in addition to anything of value to which Executive was already entitled.

(a)    Executive further acknowledges that she has been advised by this writing that:

(i) Executive should consult with an attorney prior to executing this Release and has had an opportunity to do so;

(ii)    Executive has up to twenty-one (21) days within which to consider this ADEA waiver and release;

(iii)    Executive has seven (7) days following Executive’s execution of this Release to revoke this ADEA waiver and release, but only by providing written notice of such revocation to the Company in accordance with the “Notice” provision in Section 11(f) of the Agreement;

(iv)    the ADEA waiver and release shall not be effective until the seven (7) day revocation period has expired; and

(v)    the twenty-one (21) day period set forth above shall run from the date Executive receives this Release. The parties agree that any modifications made to this Release prior to its execution shall not restart, or otherwise affect, this twenty-one day (21) period.

(b)    It is the intention of the parties in executing this Release that this Release shall be effective as a full and final accord and satisfaction and release of and from all liabilities, disputes, claims and matters covered under this Release, known or unknown, suspected or unsuspected.

  1. This Release shall become effective on the first \(1st\) day following the day that this Release becomes irrevocable under Paragraph 5. All payments due to the Executive shall be payable in accordance with the terms of the Agreement.

[Remainder of page intentionally blank]

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IN WITNESS WHEREOF, the parties have executed this Release on the date first above written.

STERLING JEWELERS INC.

By:______________________________

Name:

Title:

Date:

VIRGINIA DROSOS

__________________________________

Date:

Document

Exhibit 22.1

LIST OF SUBSIDIARY GUARANTORS

Signet UK Finance plc (the “Issuer”), a 100% owned subsidiary of Signet Jewelers Limited (the “Parent”), has $147.8 million principal amount outstanding of 4.700% Senior Notes due 2024 (the “Senior Notes”). As of July 30, 2022, Parent, along with the following 100% owned subsidiaries, are guarantors of the outstanding Senior Notes:

Name of Entity Place of Incorporation or Organization
SIGNET US FINANCE LIMITED England & Wales
SIGNET GROUP LIMITED England & Wales
SIGNET TRADING LIMITED England & Wales
SIGNET US HOLDINGS, INC. Delaware
SIGNET U.S. SERVICES INC. Delaware
SIGNET GROUP TREASURY SERVICES INC. Delaware
STERLING JEWELERS INC. Delaware
STERLING ECOMM LLC Delaware
SIGNET GROUP SERVICES US INC. Delaware
STERLING INC. Ohio
ZALE CORPORATION Delaware
ZALE DELAWARE, INC Delaware
ZALE INTERNATIONAL, INC. Delaware
ZAP, INC. Delaware
ZGCO, LLC Virginia
TXDC, L.P. Texas
ZALE CANADA CO. Canada
ZCSC, LLC Delaware
ZALE PUERTO RICO, INC. Puerto Rico
SIGNET SERVICE PLANS, INC. Ohio

Document

Exhibit 31.1

CERTIFICATION

I, Virginia C. Drosos, certify that:

  1. I have reviewed this Quarterly Report on Form 10-Q of Signet Jewelers Limited (the “Report”);

  2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

  3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this Report;

  4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

(d) Disclosed in this Report any change in the company’s internal control over financial reporting that occurred during the company’s most recent fiscal quarter (the company’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

  1. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: September 1, 2022

By: /s/ Virginia C. Drosos
Name: Virginia C. Drosos
Title: Chief Executive Officer <br>(Principal Executive Officer)

Document

Exhibit 31.2

CERTIFICATION

I, Joan Hilson, certify that:

  1. I have reviewed this Quarterly Report on Form 10-Q of Signet Jewelers Limited (the “Report”);

  2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

  3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this Report;

  4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

(d) Disclosed in this Report any change in the company’s internal control over financial reporting that occurred during the company’s most recent fiscal quarter (the company’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

  1. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: September 1, 2022

By: /s/ Joan Hilson
Name: Joan Hilson
Title: Chief Financial and Strategy Officer (Principal Financial Officer)

Document

Exhibit 32.1

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Virginia C. Drosos, as Chief Executive Officer of Signet Jewelers Limited (the “Company”), hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the accompanying Quarterly Report on Form 10-Q for the period ended July 30, 2022, as filed with the US Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: September 1, 2022

By: /s/ Virginia C. Drosos
Name: Virginia C. Drosos
Title: Chief Executive Officer<br>(Principal Executive Officer)

Document

Exhibit 32.2

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Joan Hilson, as Chief Financial and Strategy Officer of Signet Jewelers Limited (the “Company”), hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the accompanying Quarterly Report on Form 10-Q for the period ended July 30, 2022, as filed with the US Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: September 1, 2022

By: /s/ Joan Hilson
Name: Joan Hilson
Title: Chief Financial and Strategy Officer (Principal Financial Officer)

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