completion of the Mergers and result in additional costs to Matterport. Matterport believes that the Rose Action, the Hanna Action, the
Hamilton Action, the Scott Action, and the demand letters are without merit and intends to vigorously defend against them. Litigation could be time consuming
and expensive, could divert the attention of CoStar Groups and Matterports management away from their regular businesses, and, if adversely resolved against either CoStar Group or Matterport or their respective directors, could have a
material adverse effect on CoStar Groups and Matterports respective financial condition.
The following bolded and
underlined language is added to page 47 of the proxy statement in the section with the heading Background of the Mergers.
On
April 1, 2024, representatives of Foley and Latham held a call to discuss (i) the 13% symmetrical collar, (ii) Matterports proposed language that CoStar Group refrain from undertaking any other acquisitions that would imperil
regulatory review of the current transaction with Matterport and (iii) the definition of Good Reason in Matterports pre-existing executive severance plan applicable to senior
Matterport executives. CoStar Groups representatives requested assurances that the affected executives would not claim a termination for Good Reason by virtue of becoming a division of CoStar Group in order to trigger a severance
payment under the plan and leave the combined company in the period after the Closing. On the evening of April 3, 2024, Latham sent to Foley a revised Merger Agreement, with revisions that addressed CoStar Groups issues raised in
the April 1 call between Foley and Latham. In Lathams revised draft of the Merger Agreement, CoStar Group countered Matterports proposal of a 13% symmetrical collar with a narrower 10% symmetrical collar.
The following bolded and underlined language is added to page 48 of the proxy statement in the section with the heading Background of
the Mergers.
1On April 17, 2024, the management teams of Matterport and CoStar Group,
together with its respective financial advisors, met to discuss the companies preliminary quarterly financial results. In addition, members of Matterports management team who had been aware of the transaction agreed to sign the Good
Reason waiver on the condition that it be amended to extend the coverage of the Matterport executive severance plan for two years following consummation of the transaction. In addition, Messrs. Pittman and Dave Gausebeck, Chief Scientific Officer of
Matterport, agreed to enter into a five-year restrictive covenant agreement. Apart from Costar Groups request to modify the definition of Good Reason in those severance plans, CoStar Group did not include in its proposals,
and Matterport did not request in them, any provisions regarding the retention of Matterport management in the surviving company or their purchase of, or participation in, the equity of the combined company following the completion of the proposed
transaction.
The following bolded and underlined language is added to page 92 of the proxy statement in the section with the
heading Litigation Relating to the Mergers.
On June 3, 2024, a purported Matterport stockholder filed a complaint in
the U.S. District Court for the Northern District of California, captioned Andrew Rose v. Matterport, Inc., et al., Case No. 5:24-cv-3313, naming Matterport and
each member of the Matterport Board as defendants (the Rose Complaint). The complaint alleges that CoStar Groups Form S-4 Registration Statement filed with the SEC
on May 21, 2024 is materially misleading and omits certain purportedly material information relating to the sales process, financial projections of Matterport and CoStar Group, the valuation analyses performed by Qatalyst Partners, and
negotiations over the terms of post-transaction employment of certain Matterport employees. The complaint asserts violations of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated
thereunder against all defendants, and violations of Section 20(a) of the Exchange Act against the Companys Board. The complaint seeks, among other things, an injunction enjoining consummation of the Merger, an order
directing the individual defendants to issue a new Registration Statement, and an award of plaintiffs costs of the action, including plaintiffs reasonable attorneys and experts fees. Additionally, on
July 9, and July 11, 2024, purported Matterport stockholders filed complaints in the New York Supreme Court, captioned Hamilton v. Matterport, Inc., et
al., Case No. 240709-34 (the Hamilton Action) and Scott v. Matterport, Inc., et al., Case
No. 240711-901 (the Scott Action), respectively. These complaints name Matterport and each member of the Matterport Board as defendants and allege,
inter alia, that the proxy statement misrepresents or omits certain purportedly material information relating to financial projections for Matterport, the valuation analyses performed by Qatalyst Partners, and
potential conflicts of interest faced by Matterport insiders. The complaints assert claims for common law negligent misrepresentation and common law negligence. The complaint seeks, among other things, an injunction enjoining consummation of the
Mergers, damages, and an award of plaintiffs costs of the action, including plaintiffs reasonable attorneys and experts fees. Additionally, the plaintiffs in an already-pending action in the Delaware Court of Chancery,
captioned Hanna, et al. v. Pittman, et al., Case No. C.A. No. 2024-0088-LWW (the Hanna Action) have filed an amended complaint, which alleges,
inter alia, that the members of the Matterport Board breached their fiduciary duties by issuing a proxy statement which failed to disclose certain information concerning Matterports prior issuance of certain earn-out shares previously issued and the subsequent impact on the amount of the Merger Consideration that would have been
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