|
Delaware
(State or other jurisdiction of
incorporation or organization) |
| |
6324
(Primary Standard Industrial
Classification Code Number) |
| |
47-4991296
(I.R.S. Employer
Identification Number) |
|
|
William B. Brentani
Simpson Thacher & Bartlett LLP 2475 Hanover Street Palo Alto, California 94304 Tel: (650) 251-5000 Fax: (650) 251-5002 |
| |
Xiaohui (Hui) Lin
Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, New York 10017 Tel: (212) 455-2000 Fax: (212) 455-2502 |
| |
Bradley C. Weber
Gregg L. Katz Kim S. de Glossop Goodwin Procter LLP 601 Marshall Street Redwood City, California 94063 Tel: (650) 752 3100 Fax: (650) 853 1038 |
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Large accelerated filer
☐
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Accelerated filer
☐
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Non-accelerated filer
☒
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Smaller reporting company
☐
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| | | |
Emerging growth company
☐
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| | | ||||||||
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Title of Each Class
of Securities to be Registered |
| | |
Proposed Maximum
Aggregate Offering Price(1)(2) |
| | |
Amount of
Registration Fee |
|
|
Common stock, $0.0001 par value per share
|
| | |
$100,000,000
|
| | |
$10,910
|
|
| | |
Per
Share |
| |
Total
|
| ||||||
Public offering price
|
| | | $ | | | | | $ | | | ||
Underwriting discounts and commissions(1)
|
| | | $ | | | | | $ | | | ||
Proceeds, before expenses, to us
|
| | | $ | | | | | $ | | | |
|
J.P. Morgan
|
| |
Goldman Sachs & Co. LLC
|
| |
Morgan Stanley
|
| | Barclays | |
|
BofA Securities
|
| |
Citigroup
|
| |
Piper Sandler
|
|
|
Nomura
|
| |
RBC Capital Markets
|
|
| | |
Page
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| | | | 182 | | | |
| | | | 190 | | | |
| | | | 190 | | | |
| | | | 190 | | | |
| | | | F-1 | | |
| | |
Year Ended December 31,
|
| |
Three Months
Ended March 31, |
| ||||||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |
2020
|
| |
2021
|
| |
2020
|
| ||||||||||||||||||
| | |
Actual
|
| |
Pro Forma(1)
(Unaudited) |
| |
Actual
|
| |||||||||||||||||||||||||||
| | |
(in thousands)
|
| |||||||||||||||||||||||||||||||||
Statement of income (loss) and comprehensive income (loss) data:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Premium revenue
|
| | | | $ 1,180,338 | | | | | | $ 272,323 | | | | | | $ 127,122 | | | | | | $ 1,376,476 | | | | | | $ 860,631 | | | | | | $ 190,737 | | |
Service revenue
|
| | | | 18,514 | | | | | | — | | | | | | — | | | | | | 18,514 | | | | | | 8,438 | | | | | | 4,820 | | |
Investment income
|
| | | | 8,468 | | | | | | 8,350 | | | | | | 3,510 | | | | | | 8,493 | | | | | | 5,489 | | | | | | 3,009 | | |
Total revenue
|
| | | | 1,207,320 | | | | | | 280,673 | | | | | | 130,632 | | | | | | 1,403,483 | | | | | | 874,558 | | | | | | 198,566 | | |
Operating costs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Medical costs
|
| | | | 1,047,300 | | | | | | 224,387 | | | | | | 96,407 | | | | | | 1,233,725 | | | | | | 684,570 | | | | | | 130,615 | | |
Operating costs
|
| | | | 409,334 | | | | | | 180,489 | | | | | | 95,836 | | | | | | 432,718 | | | | | | 205,198 | | | | | | 74,444 | | |
Depreciation and amortization
|
| | | | 8,289 | | | | | | 1,134 | | | | | | 1,030 | | | | | | 10,651 | | | | | | 4,581 | | | | | | 787 | | |
Total operating costs
|
| | | | 1,464,923 | | | | | | 406,010 | | | | | | 193,273 | | | | | | 1,677,094 | | | | | | 894,349 | | | | | | 205,846 | | |
Operating loss
|
| | | | (248,442) | | | | | | (125,337) | | | | | | (62,641) | | | | | | (273,611) | | | | | | (19,791) | | | | | | (7,280) | | |
Interest expense
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 546 | | | | | | — | | |
Loss before income taxes
|
| | | | (257,603) | | | | | | (125,337) | | | | | | (62,641) | | | | | | (273,611) | | | | | | (20,337) | | | | | | (7,280) | | |
Income tax (benefit) expense
|
| | | | (9,161) | | | | | | — | | | | | | — | | | | | | (9,161) | | | | | | 1,166 | | | | | | — | | |
Net loss
|
| | | | (248,442) | | | | | | (125,337) | | | | | | (62,641) | | | | | | (264,450) | | | | | | (21,503) | | | | | | (7,280) | | |
Other comprehensive income (loss): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Unrealized investment holding
gains (losses) arising during the year |
| | | | 1,556 | | | | | | 1,211 | | | | | | 72 | | | | | | 1,556 | | | | | | (980) | | | | | | 890 | | |
Less reclassification adjustments for investment gains (losses) included in net loss
|
| | | | 112 | | | | | | 38 | | | | | | (17) | | | | | | 112 | | | | | | 62 | | | | | | (61) | | |
Total other comprehensive income (loss)
|
| | | | 1,444 | | | | | | 1,173 | | | | | | 89 | | | | | | 1,444 | | | | | | (1,042) | | | | | | 951 | | |
Comprehensive loss
|
| | | | (246,998) | | | | | | (124,164) | | | | | | (62,552) | | | | | | (263,006) | | | | | | (22,545) | | | | | | (6,329) | | |
Comprehensive loss attributable
to noncontrolling interests |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (617) | | | | | | — | | |
Comprehensive loss attributable
to Bright Health Group, Inc. common shareholders |
| | | | $ (246,998) | | | | | | $ (124,164) | | | | | | $ (62,552) | | | | | | $ (263,006) | | | | | | $ (23,162) | | | | | | $ (6,329) | | |
Non-GAAP Metric: | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||
Adjusted EBITDA(2)
|
| | | | $ (238,912) | | | | | | $ (121,091) | | | | | | $ (61,354) | | | | | | $ (252,558) | | | | | | $ (9,584) | | | | | | $ (3,855) | | |
| | |
Year Ended December 31,
|
| |
Three Months Ended
March 31, |
| | ||||||||||||||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |
2020
|
| |
2021
|
| |
2020
|
| |
2021
|
| | |||||||||||||||||||||||
| | |
Actual
|
| |
Pro Forma
(Unaudited)(3)(4) |
| |
Actual
|
| |
Pro Forma
(Unaudited)(3)(4) |
| | ||||||||||||||||||||||||||||||||
| | |
(in thousands, except per share amounts)
|
| | | | |||||||||||||||||||||||||||||||||||||||
Per share data: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Net loss per share attributable to common stockholders, basic and diluted
|
| | | | $ (5.47) | | | | | | $ (2.80) | | | | | | $ (1.42) | | | | | | $ (1.66) | | | | | | $ (0.47) | | | | | | $ (0.16) | | | | | | $ | | | | ||
Weighted average common shares
outstanding used to compute net loss per share attributable to common stockholders, basic and diluted |
| | | | 45,398 | | | | | | 44,829 | | | | | | 43,992 | | | | | | 158,940 | | | | | | 46,725 | | | | | | 45,708 | | | | | | | | | |
| | |
Year Ended December 31,
|
| |
Three Months Ended
March 31, |
| ||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |
2021
|
| |
2020
|
| |||||||||||||||
| | |
(in thousands)
|
| |||||||||||||||||||||||||||
Cash flow data: | | | | | | | | | | | | | | | | | | | | | | ||||||||||
Net cash provided by (used in): | | | | | | | | | | | | | | | | | | | | | | ||||||||||
Operating activities
|
| | | $ | (57,238) | | | | | $ | (8,208) | | | | | $ | (27,034) | | | | | $ | 343,603 | | | | | $ | 82,286 | | |
Investing activities
|
| | | | (689,742) | | | | | | (94,643) | | | | | | (6,940) | | | | | | (56,275) | | | | | | (338,359) | | |
Financing activities
|
| | | | 712,441 | | | | | | 424,060 | | | | | | 203,057 | | | | | | 200,234 | | | | | | 13 | | |
| | |
As of March 31, 2021
|
| |||||||||||||||
| | |
Actual
|
| |
Pro Forma(4)
(Unaudited) |
| |
Pro Forma As
Adjusted(5) (Unaudited) |
| |||||||||
| | |
(in thousands)
|
| |||||||||||||||
Balance sheet data: | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 975,933 | | | | | $ | | | | | $ | | | ||
Total assets
|
| | | | 2,465,963 | | | | | | | | | | | | | | |
Total debt
|
| | | | 200,000 | | | | | | | | | | | | | | |
Total liabilities
|
| | | | 1,231,556 | | | | | | | | | | | | | | |
Total stockholders’ equity (deficit)
|
| | | | (519,807) | | | | | | | | | | | | | | |
| | |
Year Ended December 31,
|
| |
Three Months Ended March 31,
|
| ||||||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |
2020
|
| |
2021
|
| |
2020
|
| ||||||||||||||||||
| | |
Actual
|
| |
Pro Forma
(Unaudited) |
| |
Actual
|
| |||||||||||||||||||||||||||
| | |
(in thousands)
|
| |||||||||||||||||||||||||||||||||
Net loss
|
| | | $ | (248,442) | | | | | $ | (125,337) | | | | | $ | (62,641) | | | | | $ | (264,450) | | | | | $ | (21,503) | | | | | $ | (7,280) | | |
Interest expense
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 546 | | | | | | — | | |
Income tax (benefit) expense
|
| | | | (9,161) | | | | | | — | | | | | | — | | | | | | (9,161) | | | | | | 1,166 | | | | | | — | | |
Depreciation and amortization
|
| | | | 8,289 | | | | | | 1,134 | | | | | | 1,030 | | | | | | 10,651 | | | | | | 4,581 | | | | | | 787 | | |
Transaction costs(a)
|
| | | | 4,950 | | | | | | 1,248 | | | | | | — | | | | | | 4,950 | | | | | | 2,020 | | | | | | 1,695 | | |
Share-based compensation expense(b)
|
| | | | 5,452 | | | | | | 1,864 | | | | | | 257 | | | | | | 5,452 | | | | | | 2,134 | | | | | | 943 | | |
Change in fair value of contingent consideration(c)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,472 | | | | | | — | | |
Adjusted EBITDA
|
| | | $ | (238,912) | | | | | $ | (121,091) | | | | | $ | (61,354) | | | | | $ | (252,558) | | | | | $ | (9,584) | | | | | $ | (3,855) | | |
| | |
Year Ended
December 31, 2020 |
| |
Three Months
Ended March 31, 2021 |
| ||||||
| | |
(in thousands, except
per share amounts) |
| |||||||||
Numerator: | | | | | | | | | |||||
Net loss attributable to common stockholders
|
| | | $ | (264,450) | | | | | $ | | | |
Denominator: | | | | | | | | | |||||
Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted
|
| | | | 45,398 | | | | | | | | |
Pro forma adjustment to reflect the assumed conversion of preferred stock
|
| | | | 113,542 | | | | | | | | |
Pro forma weighted-average number of shares outstanding used to compute pro forma net loss per share, basic and diluted
|
| | | | 158,940 | | | | | | | | |
Pro forma net loss per share, basic and diluted
|
| | | $ | (1.66) | | | | | $ | | | |
| | |
As of March 31, 2021
|
| |||||||||||||||
| | |
Actual
|
| |
Pro Forma
|
| |
Pro Forma
As Adjusted |
| |||||||||
| | |
(in thousands, except share and par value)
|
| |||||||||||||||
Cash and cash equivalents
|
| | | $ | 975,933 | | | | | | $ | | | | | | $ | | |
Debt: | | | | | | | | | | | | | | | | | | | |
Total debt(1)
|
| | | | 200,000 | | | | | | | | | | | | | | |
Redeemable equity: | | | | | | | | | | | | | | | | | | | |
Redeemable noncontrolling interests
|
| | | | 40,217 | | | | | | | | | | | | | | |
Preferred stock, $0.0001 par value; 168,065,332 shares
authorized, actual, 165,664,947 shares issued and outstanding, actual, shares authorized, pro forma, no shares issued and outstanding, pro forma as adjusted |
| | | | 1,713,997 | | | | | | | | | | | | | | |
Stockholders’ equity (deficit): | | | | | | | | | | | | | | | | | | | |
Common stock, $0.0001 par value; shares authorized, actual, shares issued and outstanding, actual, shares authorized, pro forma, shares issued and outstanding, pro forma, shares issued and outstanding, pro forma as adjusted
|
| | | | 5 | | | | | | | | | | | | | | |
Additional paid-in capital
|
| | | | 16,913 | | | | | | | | | | | | | | |
Accumulated deficit
|
| | | | (538,109) | | | | | | | | | | | | | | |
Accumulated other comprehensive income (loss)
|
| | | | 1,384 | | | | | | | | | | | | | | |
Total stockholders’ equity (deficit)
|
| | | $ | (519,807) | | | | | | $ | | | | | | $ | | |
Total capitalization
|
| | | $ | 1,434,407 | | | | | | $ | | | | | | $ | | |
| | |
Bright
Health Historical |
| |
Brand New
Day As Adjusted (Note 3) |
| |
Transaction
Accounting Adjustments (Note 4) |
| |
Bright
Health Pro Forma Combined |
| ||||||||||||
Revenue
|
| | | | $ 1,207,320 | | | | | | $ 196,163 | | | | | | | | | | | | $1,403,483 | | |
Operating costs: | | | | | | | | | | | | | | | | | | | | | | | | | |
Medical costs
|
| | | | 1,047,300 | | | | | | 186,425 | | | | | | | | | | | | 1,233,725 | | |
Operating costs
|
| | | | 409,334 | | | | | | 23,416 | | | | | | (32)(a) | | | | | | 432,718 | | |
Depreciation and amortization
|
| | | | 8,289 | | | | | | 629 | | | | | | 1,733(b) | | | | | | 10,651 | | |
Total operating costs
|
| | | | 1,464,923 | | | | | | 210,470 | | | | | | | | | | | | 1,677,094 | | |
Operating loss
|
| | | | (257,603) | | | | | | (14,307) | | | | | | | | | | | | (273,611) | | |
Interest expense, net
|
| | | | — | | | | | | (565) | | | | | | 565(c) | | | | | | — | | |
Loss before income taxes
|
| | | | (257,603) | | | | | | (14,872) | | | | | | | | | | | | (273,611) | | |
Income tax (benefit) expense
|
| | | | (9,161) | | | | | | — | | | | |
|
(d)
|
| | | | | (9,161) | | |
Net loss
|
| | | | $ (248,442) | | | | | | $ (14,872) | | | | | | | | | | | | $ (264,450) | | |
Basic and diluted loss per share and pro forma loss per share attributable to common shareholders
|
| | | | $ (5.47) | | | | | | | | | | | | | | | | | | $ (1.66)(e) | | |
Weighted-average number of shares outstanding and
pro forma weighted-average number of shares used to compute net loss per share attributable to common stockholders, basic and diluted |
| | | | 45,398 | | | | | | | | | | | | | | | | | | 158,940 | | |
| | |
Brand New Day
Four Months Ended Historical April 30, 2020 |
| |
Adjustments
to Conform Presentation |
| |
Brand New
Day Four Months Ended April 30, 2020 As Adjusted |
| |||||||||
(in thousands) | | | | | | | | | | | | | | | | | | | |
Total revenue*
|
| | | | $ 196,163 | | | | | | $ — | | | | | | $ 196,163 | | |
Operating costs: | | | | | | | | | | | | | | | | | | | |
Medical costs*
|
| | | | — | | | | | | 186,425(i) | | | | | | 186,425 | | |
Operating costs*
|
| | | | — | | | | | | 23,416 (ii) | | | | | | 23,416 | | |
Healthcare services
|
| | | | 186,425 | | | | | | (186,425)(i) | | | | | | — | | |
Marketing, general and administrative expenses
|
| | | | 16,740 | | | | | | (16,740)(ii) | | | | | | — | | |
Salaries and benefits
|
| | | | 6,676 | | | | | | (6,676)(ii) | | | | | | — | | |
Depreciation and amortization*
|
| | | | 629 | | | | | | — | | | | | | 629 | | |
Total operating costs
|
| | | | 210,470 | | | | | | — | | | | | | 210,470 | | |
Operating income (loss)
|
| | | | (14,307) | | | | | | — | | | | | | (14,307) | | |
Interest expense, net
|
| | | | (565) | | | | | | — | | | | | | (565) | | |
Loss before income taxes*
|
| | | | (14,872) | | | | | | — | | | | | | (14,872) | | |
Income tax (benefit) expense
|
| | | | — | | | | | | — | | | | | | — | | |
Net loss
|
| | | | $ (14,872) | | | | | | $ — | | | | | | $ (14,872) | | |
| | |
Estimated
Fair Value |
| |
Estimated
Useful Life (in years) |
| |
Depreciation and
Amortization Expense for the 4 Months Ended April 30, 2020 |
| |||||||||
(in thousands) | | | | | | | | | | | | | | | | | | | |
Property, equipment and capitalized software
|
| | | $ | 4,375 | | | | | | 3.7 | | | | | $ | 394 | | |
Member relationships
|
| | | | 46,900 | | | | | | 12 | | | | | | 1,304 | | |
Trade name
|
| | | | 25,600 | | | | | | 15 | | | | | | 569 | | |
Provider network
|
| | | | 2,000 | | | | | | 7 | | | | | | 95 | | |
New depreciation and amortization expense
|
| | | | | | | | | | | | | | | | 2,362 | | |
Eliminate historical Brand New Day depreciation and amortization expense
|
| | | | | | | | | | | | | | | | (629) | | |
Pro forma depreciation and amortization adjustment
|
| | | | | | | | | | | | | | | $ | 1,733 | | |
| | |
For the
Year Ended December 31, 2020 |
| |||
(in thousands, except per share amounts) | | | | | | | |
Numerator: | | | | | | | |
Pro forma net loss attributable to common stockholders
|
| | | | $ (264,450) | | |
Denominator: | | | | | | | |
Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted
|
| | | | 45,398 | | |
Pro forma adjustment to reflect the assumed conversion of preferred stock
|
| | | | 113,542 | | |
Pro forma weighted-average number of shares outstanding used to compute pro forma net loss per share, basic and diluted
|
| | | | 158,940 | | |
Pro forma net loss per share, basic and diluted
|
| | | | $ (1.66) | | |
|
Assumed initial public offering price per share
|
| |
|
| | | $ | | | ||||
|
Net tangible book deficit per share as of March 31, 2021 before giving effect to this offering
|
| | | $ | | | | | | | | | |
|
Increase in net tangible book value per share attributable to new investors purchasing shares in this offering
|
| | | | | | | ||||||
|
Net tangible book deficit per share as adjusted to give effect to this offering and the automatic conversion of all of our outstanding preferred stock into shares of common stock
|
| | | | | | | | | | | | |
|
Dilution per share to new investors in this offering
|
| | | | | | | | | $ | | | |
| | |
Shares Purchased
|
| |
Total Consideration
|
| |
Average
Price Share |
| ||||||||||||||||||
| | |
Number
|
| |
Percent
|
| |
Amount
|
| |
Percent
|
| |||||||||||||||
| | |
(in millions)
|
| | | | | | | |
(in millions)
|
| | | | ||||||||||||
Existing stockholders(1)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
New investors
|
| | | | | | | | | | | | | | | | | | | | | | | | ||||
Total
|
| | | | | | | | | | 100.0% | | | | | | | | | | | | 100.0% | | | | | |
|
Shares of common stock issuable upon conversion of the preferred stock
|
| |
|
| |||
|
Common shares issued and outstanding
|
| | | | | | |
|
Less: Common treasury shares
|
| | | | | | |
|
Total common shares purchased by existing stockholders
|
| | | | | | |
| | |
Year Ended December 31,
|
| |
Three Months Ended
March 31, |
| ||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |
2021
|
| |
2020
|
| |||||||||||||||
| | |
($ in thousands)
|
| |||||||||||||||||||||||||||
Bright HealthCare Consumers Served | | | | | | | | | | | | | | | | | | | | | | ||||||||||
Commercial(1)
|
| | | | 145,459 | | | | | | 54,782 | | | | | | 22,114 | | | | | | 481,958 | | | | | | 152,263 | | |
Medicare Advantage
|
| | | | 61,663 | | | | | | 4,146 | | | | | | 2,262 | | | | | | 67,567 | | | | | | 5,784 | | |
NeueHealth Patients | | | | | | | | | | | | | | | | | | | | | | ||||||||||
Value-based Care Patients
|
| | | | 21,126 | | | | | | — | | | | | | — | | | | | | 30,890 | | | | | | 20,294 | | |
Net loss
|
| | | | $ (248,442) | | | | | | $ (125,337) | | | | | | $ (62,641) | | | | | | $ (21,503) | | | | | | $ (7,280) | | |
Adjusted EBITDA(2)
|
| | | | $ (238,912) | | | | | | $ (121,091) | | | | | | $ (61,354) | | | | | | $ (9,584) | | | | | | $ (3,855) | | |
| | |
Year Ended December 31,
|
| |
Three Months Ended March 31,
|
| ||||||||||||||||||||||||
(in thousands)
|
| |
2020
|
| |
2019
|
| |
2018
|
| |
2021
|
| |
2020
|
| |||||||||||||||
Net loss
|
| | | | $ (248,442) | | | | | | $ (125,337) | | | | | | $ (62,641) | | | | | | $ (21,503) | | | | | | $ (7,280) | | |
Interest expense
|
| | | | — | | | | | | — | | | | | | — | | | | | | 546 | | | | | | — | | |
Income tax (benefit) expense
|
| | | | (9,161) | | | | | | — | | | | | | — | | | | | | 1,166 | | | | | | — | | |
Depreciation and Amortization
|
| | | | 8,289 | | | | | | 1,134 | | | | | | 1,030 | | | | | | 4,581 | | | | | | 787 | | |
Transaction Costs(a)
|
| | | | 4,950 | | | | | | 1,248 | | | | | | — | | | | | | 2,020 | | | | | | 1,695 | | |
Share-based Compensation expense(b)
|
| | | | 5,452 | | | | | | 1,864 | | | | | | 257 | | | | | | 2,134 | | | | | | 943 | | |
Change in fair value of contingent consideration(c)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1,472 | | | | | | — | | |
Adjusted EBITDA
|
| | | | $ (238,912) | | | | | | $ (121,091) | | | | | | $ (61,354) | | | | | | $ (9,584) | | | | | | $ (3,855) | | |
| | |
Three Months Ended March 31,
|
| |||||||||
Consolidated statements of income (loss) and operating data:
|
| |
2021
|
| |
2020
|
| ||||||
| | |
(in thousands, except percentages)
|
| |||||||||
Revenue: | | | | | | | | | | | | | |
Premium revenue
|
| | | $ | 860,631 | | | | | $ | 190,737 | | |
Service revenue
|
| | | | 8,438 | | | | | | 4,820 | | |
Investment income
|
| | | | 5,489 | | | | | | 3,009 | | |
Total revenue
|
| | | | 874,558 | | | | | | 198,566 | | |
Operating costs: | | | | | | | | | | | | | |
Medical costs
|
| | | | 684,570 | | | | | | 130,615 | | |
Operating costs
|
| | | | 205,198 | | | | | | 74,444 | | |
Depreciation and amortization
|
| | | | 4,581 | | | | | | 787 | | |
Total operating costs
|
| | | | 894,349 | | | | | | 205,846 | | |
Operating Loss
|
| | | | (19,791) | | | | | | (7,280) | | |
Interest Expense
|
| | | | 546 | | | | | | — | | |
Loss before income taxes
|
| | | | (20,337) | | | | | | (7,280) | | |
Income tax (benefit) expense
|
| | | | 1,166 | | | | | | — | | |
Net loss
|
| | | | (21,503) | | | | | | (7,280) | | |
Net earnings attributable to noncontrolling interest
|
| | | | (617) | | | | | | — | | |
Net loss attributable to Bright Health Group, Inc. common
shareholders |
| | | $ | (22,120) | | | | | $ | (7,280) | | |
Adjusted EBITDA
|
| | | $ | (9,584) | | | | | $ | (3,855) | | |
Medical Cost Ratio (MCR)(1)
|
| | | | 79.5% | | | | | | 68.5% | | |
Operating Cost Ratio(2)
|
| | | | 23.5% | | | | | | 37.5% | | |
| | |
Three Months Ended March 31,
|
| |||||||||
Statements of income (loss) and operating data:
|
| |
2021
|
| |
2020
|
| ||||||
| | |
(in thousands, except percentages)
|
| |||||||||
Bright HealthCare: | | | | | | | | | | | | | |
Commercial premium revenue(1)
|
| | | $ | 621,056 | | | | | $ | 175,562 | | |
Medicare Advantage premium revenue
|
| | | | 220,869 | | | | | | 13,171 | | |
Investment income
|
| | | | 1,246 | | | | | | 3,009 | | |
Total revenue
|
| | | | 843,171 | | | | | | 191,742 | | |
Operating costs: | | | | | | | | | | | | | |
Medical costs
|
| | | | 675,056 | | | | | | 130,615 | | |
Operating costs
|
| | | | 187,026 | | | | | | 66,975 | | |
Depreciation and amortization
|
| | | | 2,357 | | | | | | 262 | | |
Total operating costs
|
| | | | 864,439 | | | | | | 197,852 | | |
Operating loss
|
| | | $ | (21,268) | | | | | $ | (6,110) | | |
Medical Cost Ratio (MCR)
|
| | | | 80.2% | | | | | | 69.2% | | |
| | |
Three Months Ended March 31,
|
| |||||||||
Statements of income (loss) and operating data:
|
| |
2021
|
| |
2020
|
| ||||||
| | |
(in thousands)
|
| |||||||||
NeueHealth | | | | | | | | | | | | | |
Premium revenue
|
| | | $ | 28,674 | | | | | $ | 2,004 | | |
Service revenue
|
| | | | 15,622 | | | | | | 7,527 | | |
Investment income
|
| | | | 4,243 | | | | | | — | | |
Total revenue
|
| | | | 48,539 | | | | | | 9,531 | | |
Operating costs: | | | | | | | | | | | | | |
Medical costs
|
| | | | 19,482 | | | | | | — | | |
Operating costs
|
| | | | 25,356 | | | | | | 10,176 | | |
Depreciation and amortization
|
| | | | 2,224 | | | | | | 525 | | |
Total operating costs
|
| | | | 47,062 | | | | | | 10,701 | | |
Operating income (loss)
|
| | | $ | 1,477 | | | | | $ | (1,170) | | |
| | |
Year Ended December 31,
|
| |||||||||||||||
Consolidated statements of income (loss) and operating data:
|
| |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
| | |
(in thousands, except percentages)
|
| |||||||||||||||
Revenue: | | | | | | | | | | | | | | | | | | | |
Premium revenue
|
| | | | $ 1,180,338 | | | | | | $ 272,323 | | | | | | $ 127,122 | | |
Service revenue
|
| | | | 18,514 | | | | | | — | | | | | | — | | |
Investment income
|
| | | | 8,468 | | | | | | 8,350 | | | | | | 3,510 | | |
Total revenue
|
| | | | 1,207,320 | | | | | | 280,673 | | | | | | 130,632 | | |
Operating costs: | | | | | | | | | | | | | | | | | | | |
Medical costs
|
| | | | 1,047,300 | | | | | | 224,387 | | | | | | 96,407 | | |
Operating costs
|
| | | | 409,333 | | | | | | 180,489 | | | | | | 95,836 | | |
Depreciation and amortization
|
| | | | 8,289 | | | | | | 1,134 | | | | | | 1,030 | | |
Total operating costs
|
| | | | 1,464,923 | | | | | | 406,010 | | | | | | 193,273 | | |
Loss before income taxes
|
| | | | (257,603) | | | | | | (125,337) | | | | | | (62,641) | | |
Income tax (benefit) expense
|
| | | | (9,161) | | | | | | — | | | | | | — | | |
Net loss
|
| | | | $ (248,442) | | | | | | $ (125,337) | | | | | | $ (62,641) | | |
Adjusted EBITDA
|
| | | | $ (238,912) | | | | | | $ (121,091) | | | | | | $ (61,354) | | |
Medical Cost Ratio (MCR)(1)
|
| | | | 88.7% | | | | | | 82.4% | | | | | | 75.8% | | |
Operating Cost Ratio(2)
|
| | | | 33.9% | | | | | | 64.3% | | | | | | 73.4% | | |
| | |
Year Ended December 31,
|
| |||||||||||||||
Statements of income (loss) and operating data:
|
| |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
| | |
(in thousands, except percentages)
|
| |||||||||||||||
Bright HealthCare: | | | | | | | | | | | | | | | | | | | |
Commercial premium revenue(1)
|
| | | | $ 692,433 | | | | | | $ 236,290 | | | | | | $ 111,412 | | |
Medicare Advantage premium revenue
|
| | | | 480,112 | | | | | | 36,033 | | | | | | 15,710 | | |
Investment income
|
| | | | 8,468 | | | | | | 8,350 | | | | | | 3,510 | | |
Total revenue
|
| | | | 1,181,013 | | | | | | 280,673 | | | | | | 130,632 | | |
Operating costs: | | | | | | | | | | | | | | | | | | | |
Medical costs
|
| | | | 1,047,300 | | | | | | 224,387 | | | | | | 96,407 | | |
Operating costs
|
| | | | 376,215 | | | | | | 180,489 | | | | | | 95,836 | | |
Depreciation and amortization
|
| | | | 6,394 | | | | | | 1,134 | | | | | | 1,030 | | |
Total operating costs
|
| | | | 1,429,909 | | | | | | 406,010 | | | | | | 193,273 | | |
Loss before income taxes
|
| | | | $ (248,896) | | | | | | $ (125,337) | | | | | | $ (62,641) | | |
Medical Cost Ratio (MCR)
|
| | | | 89.3% | | | | | | 82.4% | | | | | | 75.8% | | |
| | |
Year Ended December 31,
|
| |||||||||||||||
Statements of income (loss) and operating data:
|
| |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
| | |
(in thousands)
|
| |||||||||||||||
NeueHealth | | | | | | | | | | | | | | | | | | | |
Service revenue
|
| | | | $ 29,354 | | | | | | $ — | | | | | | $ — | | |
Premium revenue
|
| | | | 7,793 | | | | | | — | | | | | | — | | |
Total revenue
|
| | | | $ 37,147 | | | | | | $ — | | | | | | $ — | | |
Operating costs: | | | | | | | | | | | | | | | | | | | |
Operating costs
|
| | | | 43,959 | | | | | | — | | | | | | — | | |
Depreciation and amortization
|
| | | | 1,895 | | | | | | — | | | | | | — | | |
Total operating costs
|
| | | | 45,854 | | | | | | — | | | | | | — | | |
Loss before income taxes
|
| | | | $ (8,707) | | | | | | $ — | | | | | | $ — | | |
| | |
Three Months Ended March 31,
|
| | | | |||||||||
| | |
2021
|
| |
2020
|
| | ||||||||
| | |
(in thousands)
|
| | |||||||||||
Net cash provided by operating activities
|
| | | $ | 343,603 | | | | | $ | 82,286 | | | | ||
Net cash used in investing activities
|
| | | | (56,275) | | | | | | (338,359) | | | | ||
Net cash provided by financing activities
|
| | | | 200,234 | | | | | | 13 | | | | ||
Net increase (decrease) in cash and cash equivalents
|
| | | | 487,562 | | | | | | (256,060) | | | | ||
Cash and cash equivalents at beginning of period
|
| | | | 488,371 | | | | | | 522,910 | | | | ||
Cash and cash equivalents at end of period
|
| | | $ | 975,933 | | | | | $ | 266,850 | | | |
| | |
Year Ended December 31,
|
| |||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
| | |
(in thousands)
|
| |||||||||||||||
Net cash used in operating activities
|
| | | | $ (57,238) | | | | | | $ (8,208) | | | | | | $ (27,034) | | |
Net cash used in investing activities
|
| | | | (689,742) | | | | | | (94,643) | | | | | | (6,940) | | |
Net cash provided by financing activities
|
| | | | 712,441 | | | | | | 424,060 | | | | | | 203,057 | | |
Net increase in cash and cash equivalents
|
| | | | (34,539) | | | | | | 321,209 | | | | | | 169,083 | | |
Cash and cash equivalents at beginning of year
|
| | | | 522,910 | | | | | | 201,701 | | | | | | 32,618 | | |
Cash and cash equivalents at end of year
|
| | | | $ 488,371 | | | | | | $ 522,910 | | | | | | $ 201,701 | | |
Completion Factors
(Decrease) Increase in Factors |
| |
Increase (Decrease) in
Medical Costs Payable |
| |||
| | |
(in thousands)
|
| |||
(3.00)%
|
| | | | $ 25,826 | | |
(2.00)%
|
| | | | 17,042 | | |
(1.00)%
|
| | | | 8,435 | | |
1.00%
|
| | | | (8,268) | | |
2.00%
|
| | | | (16,374) | | |
3.00%
|
| | | | (24,322) | | |
Name
|
| |
Age
|
| |
Position
|
|
G. Mike Mikan | | |
50
|
| | Chief Executive Officer, President and Director | |
Catherine R. Smith | | |
57
|
| | Chief Financial and Administrative Officer | |
Sam K. Srivastava | | |
53
|
| | Chief Executive Officer, NeueHealth | |
Tomás Valdivia | | |
59
|
| | Chief Health and Equity Officer | |
Keith Nelsen | | |
57
|
| | General Counsel and Corporate Secretary | |
Simeon Schindelman | | |
58
|
| | Chief Executive Officer, Bright HealthCare | |
Robert J. Sheehy | | |
63
|
| | Chairman of the Board | |
Kedrick D. Adkins Jr. | | |
68
|
| | Director | |
Naomi Allen | | |
47
|
| | Director | |
Jeffrey Folick | | |
73
|
| | Director | |
Linda Gooden | | |
68
|
| | Director | |
Jeffery R. Immelt | | |
65
|
| | Director | |
Manuel Kadre | | |
55
|
| | Director | |
Stephen Kraus | | |
44
|
| | Director | |
Mohamad Makhzoumi | | |
41
|
| | Director | |
Adair Newhall | | |
42
|
| | Director | |
Company Name
|
| |
Business Segment
|
|
Adobe Inc. | | | Software | |
Allscripts Healthcare Solutions, Inc. | | | HC Technology | |
American Renal Associates Holdings | | | HC Providers & Services | |
AMN Healthcare Services Inc. | | | HC Providers & Services | |
Athenahealth Inc.* | | | HC Technology | |
Acadia Healthcare | | | HC Providers & Services | |
Cerner Corporation | | | HC Technology | |
DaVita Inc. | | | HC Providers & Services | |
Encompass Health Corporation | | | HC Providers & Services | |
Envision Healthcare Corporation* | | | HC Providers & Services | |
Evolent Health, Inc. | | | HC Providers & Services | |
Gartner, Inc. | | | IT Services | |
Intuit Inc. | | | Software | |
LifePoint Health* | | | HC Providers & Services | |
Magellan Health Inc. | | | HC Providers & Services | |
Mednax, Inc. | | | HC Providers & Services | |
Molina Healthcare Inc. | | | HC Providers & Services | |
Owens & Minor, Inc. | | | HC Providers & Services | |
Paychex, Inc. | | | IT Services | |
VMWare, Inc. | | | Software | |
Workday, Inc. | | | Software | |
Compensation Element
|
| |
Description
|
| |
Objectives
|
|
Base Salary
|
| | Fixed compensation | | | Provide a competitive, fixed level of cash compensation to attract and retain talented and skilled executives | |
Annual Cash Bonus
|
| | Discretionary annual cash bonus determined after considering financial and individual performance | | | Retain and motivate executives to achieve or exceed financial goals and company objectives | |
Stock Options
|
| | Equity-linked compensation that is subject to vesting based on continued employment | | | The value of options is directly related to the appreciation in value delivered to our stockholders over time, aligning the interests of our executives with those of our stockholders | |
Employee Benefits and Perquisites
|
| | Participation in all broad-based employee health and welfare programs and retirement plans | | | Aid in retention of key executives in a highly competitive market for talent by providing an overall competitive benefits package | |
Name
|
| |
Fiscal
Year End 2019 Base Salary ($) |
| |
Fiscal
Year End 2020 Base Salary ($)(1) |
| |
Percentage
Increase (%) |
| |||||||||
G. Mike Mikan
|
| | | | 300,000 | | | | | | 600,000 | | | | | | 100 | | |
Cathy Smith
|
| | | | — | | | | | | 450,000 | | | | | | — | | |
Robert Sheehy
|
| | | | 300,000 | | | | | | 600,000 | | | | | | 100 | | |
Keith Nelsen
|
| | | | — | | | | | | 400,000 | | | | | | — | | |
Simeon Schindelman
|
| | | | 300,000 | | | | | | 400,000 | | | | | | 33 | | |
Sam Srivastava
|
| | | | 300,000 | | | | | | 400,000 | | | | | | 33 | | |
Name
|
| |
2021 Base
Salary ($) |
| |||
G. Mike Mikan
|
| | | | 1,300,000 | | |
Cathy Smith
|
| | | | 650,000 | | |
Keith Nelsen
|
| | | | 550,000 | | |
Simeon Schindelman
|
| | | | 575,000 | | |
Sam Srivastava
|
| | | | 575,000 | | |
Name
|
| |
2020 Base
Salary ($) |
| |
Target Bonus
(%) |
| |
Target Bonus
Amount ($) |
| |
Actual Bonus
Paid ($)(1) |
| ||||||||||||
G. Mike Mikan
|
| | | | 600,000 | | | | | | 75 | | | | | | 450,000 | | | | | | 585,000 | | |
Cathy Smith
|
| | | | 450,000 | | | | | | 75 | | | | | | 337,500 | | | | | | 454,375 | | |
Robert Sheehy
|
| | | | 600,000 | | | | | | 75 | | | | | | 450,000 | | | | | | 540,000 | | |
Keith Nelsen
|
| | | | 400,000 | | | | | | 60 | | | | | | 240,000 | | | | | | 193,600 | | |
Simeon Schindelman
|
| | | | 400,000 | | | | | | 60 | | | | | | 240,000 | | | | | | 327,000 | | |
Sam Srivastava
|
| | | | 400,000 | | | | | | 60 | | | | | | 240,000 | | | | | | 327,000 | | |
Name
|
| |
2021 Target
Bonus (%) |
| |||
G. Mike Mikan
|
| | | | 130 | | |
Cathy Smith
|
| | | | 90 | | |
Keith Nelsen
|
| | | | 70 | | |
Simeon Schindelman
|
| | | | 75 | | |
Sam Srivastava
|
| | | | 75 | | |
Name
|
| |
Grant Date
|
| |
Number of
Options Granted |
| |
Exercise Price
per Share ($) |
| |||||||||
G. Mike Mikan
|
| | | | 2/19/2020 | | | | | | 1,745,000 | | | | | | 5.32 | | |
| | | | | 11/19/2020 | | | | | | 550,000 | | | | | | 6.90 | | |
Cathy Smith
|
| | | | 2/19/2020 | | | | | | 200,000 | | | | | | 5.32 | | |
| | | | | 11/19/2020 | | | | | | 150,000 | | | | | | 6.90 | | |
Robert Sheehy
|
| | | | 2/19/2020 | | | | | | 1,336,000 | | | | | | 5.32 | | |
| | | | | 11/19/2020 | | | | | | 250,000 | | | | | | 6.90 | | |
Keith Nelsen
|
| | | | 5/28/2020 | | | | | | 600,000 | | | | | | 5.32 | | |
| | | | | 11/19/2020 | | | | | | 75,000 | | | | | | 6.90 | | |
Simeon Schindelman
|
| | | | 2/19/2020 | | | | | | 25,178 | | | | | | 5.32 | | |
| | | | | 5/28/2020 | | | | | | 150,000 | | | | | | 5.32 | | |
| | | | | 11/19/2020 | | | | | | 100,000 | | | | | | 6.90 | | |
Sam Srivastava
|
| | | | 2/19/2020 | | | | | | 22,889 | | | | | | 5.32 | | |
| | | | | 5/28/2020 | | | | | | 150,000 | | | | | | 5.32 | | |
| | | | | 11/19/2020 | | | | | | 100,000 | | | | | | 6.90 | | |
Name
|
| |
Number of
Options Granted |
| |||
G. Mike Mikan
|
| | | | 2,604,096 | | |
Cathy Smith
|
| | | | 400,000 | | |
Robert Sheehy
|
| | | | 0 | | |
Keith Nelsen
|
| | | | 225,000 | | |
Simeon Schindelman
|
| | | | 350,000 | | |
Sam Srivastava
|
| | | | 400,000 | | |
Vesting Tranche (25% of PSUs)
|
| |
Appreciation
Required From Public Offering Price |
| |
Price Per
Share Goal |
| ||||||
First Vesting Tranche
|
| | | | 50% | | | | | $ | | | |
Second Vesting Tranche
|
| | | | 100% | | | | | $ | | | |
Third Vesting Tranche
|
| | | | 150% | | | | | $ | | | |
Fourth Vesting Tranche
|
| | | | 200% | | | | | $ | | | |
Name
|
| |
Title
|
| |
Total
PSU Grant |
|
G. Mike Mikan | | | Chief Executive Officer | | | 2,450,000 | |
Cathy Smith | | | Chief Financial and Administrative Officer | | | 350,000 | |
Keith Nelsen | | | General Counsel | | | 350,000 | |
Simeon Schindelman | | |
Chief Executive Officer – Bright HealthCare
|
| | 350,000 | |
Sam Srivastava | | | Chief Executive Officer – NeueHealth | | | 350,000 | |
Other Executive Leadership Team Members | | | N/A | | | 1,050,000 | |
Name and Principal Position
|
| |
Year
|
| |
Salary
($)(1) |
| |
Bonus
($)(2) |
| |
Option Awards
($)(3) |
| |
All Other
Compensation ($)(4) |
| |
Total
($) |
| ||||||||||||||||||
G. Mike Mikan
Chief Executive Officer 5/1/20 – 12/ 31/20 |
| | | | 2020 | | | | | | 600,000 | | | | | | 585,000 | | | | | | 4,141,805 | | | | | | 162,018 | | | | | | 5,488,823 | | |
Cathy Smith
Chief Financial Officer |
| | | | 2020 | | | | | | 445,096 | | | | | | 454,375 | | | | | | 672,660 | | | | | | 10,125 | | | | | | 1,582,256 | | |
Robert Sheehy
Chief Executive Officer 1/1/20 – 4/30/20 |
| | | | 2020 | | | | | | 600,000 | | | | | | 540,000 | | | | | | 2,783,174 | | | | | | 17,925 | | | | | | 3,941,099 | | |
Keith Nelsen
General Counsel |
| | | | 2020 | | | | | | 265,384 | | | | | | 193,600 | | | | | | 1,195,830 | | | | | | 5,000 | | | | | | 1,659,814 | | |
Simeon Schindelman
Chief Executive Officer – Bright HealthCare |
| | | | 2020 | | | | | | 400,000 | | | | | | 327,000 | | | | | | 525,350 | | | | | | 13,031 | | | | | | 1,265,381 | | |
Sam Srivastava
Chief Executive Officer – NeueHealth |
| | | | 2020 | | | | | | 400,000 | | | | | | 327,000 | | | | | | 521,617 | | | | | | 12,946 | | | | | | 1,261,563 | | |
Name
|
| |
Award
Type |
| |
Grant
Date(1) |
| |
All
Other Stock Awards: Number of Shares of Stock or Units (#) |
| |
All Other
Option Awards: Number of Securities Underlying Options (#) |
| |
Exercise
or Base Price of Option Awards ($/ share) |
| |
Grant
Date Fair Value of Stock and Option Awards ($)(2) |
| |||||||||||||||
G. Mike Mikan
|
| | | | Options | | | | | | 2/19/2020 | | | | | | | | | 1,745,000 | | | | | | 5.32 | | | | | | 2,894,955 | | |
| | | | | Options | | | | | | 11/19/2020 | | | | | | | | | 550,000 | | | | | | 6.90 | | | | | | 1,246,850 | | |
Cathy Smith
|
| | | | Options | | | | | | 2/19/2020 | | | | | | | | | 200,000 | | | | | | 5.32 | | | | | | 331,800 | | |
| | | | | Options | | | | | | 11/19/2020 | | | | | | | | | 150,000 | | | | | | 6.90 | | | | | | 340,860 | | |
Robert Sheehy
|
| | | | Options | | | | | | 2/19/2020 | | | | | | | | | 1,336,000 | | | | | | 5.32 | | | | | | 2,216,424 | | |
| | | | | Options | | | | | | 11/19/2020 | | | | | | | | | 250,000 | | | | | | 6.90 | | | | | | 566,750 | | |
Keith Nelsen
|
| | | | Options | | | | | | 5/28/2020 | | | | | | | | | 600,000 | | | | | | 5.32 | | | | | | 1,025,400 | | |
| | | | | Options | | | | | | 11/19/2020 | | | | | | | | | 75,000 | | | | | | 6.90 | | | | | | 170,430 | | |
Simeon Schindelman
|
| | | | Options | | | | | | 2/19/2020 | | | | | | | | | 25,178 | | | | | | 5.32 | | | | | | 41,070 | | |
| | | | | Options | | | | | | 5/28/2020 | | | | | | | | | 150,000 | | | | | | 5.32 | | | | | | 257,040 | | |
| | | | | Options | | | | | | 11/19/2020 | | | | | | | | | 100,000 | | | | | | 6.90 | | | | | | 227,240 | | |
Sam Srivastava
|
| | | | Options | | | | | | 2/19/2020 | | | | | | | | | 22,889 | | | | | | 5.32 | | | | | | 37,337 | | |
| | | | | Options | | | | | | 5/28/2020 | | | | | | | | | 150,000 | | | | | | 5.32 | | | | | | 257,040 | | |
| | | | | Options | | | | | | 11/19/2020 | | | | | | | | | 100,000 | | | | | | 6.90 | | | | | | 227,240 | | |
| | | | | | | | | | | | | | |
Option Awards
|
| ||||||||||||||||||||||||
Name
|
| |
Grant
Date |
| |
Vesting
Commencement Date(1) |
| |
Number of
Securities Underlying Unexercised Options Exercisable (#)(2) |
| |
Number of
Securities Underlying Unexercised Options Unexercisable (#)(3) |
| |
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
| |
Option
Exercise Price ($) |
| |
Option
Expiration Date(4) |
| ||||||||||||||||||
G. Mike Mikan
|
| | | | 1/23/2019 | | | | | | 1/15/2019 | | | | | | 1,804,062 | | | | | | 1,960,938 | | | | | | | | | 3.12 | | | | | | 1/22/2029 | | |
| | | | | 2/19/2020 | | | | | | 2/19/2020 | | | | | | | | | | | | 1,745,000 | | | | | | | | | 5.32 | | | | | | 2/18/2030 | | |
| | | | | 11/19/2020 | | | | | | 11/19/2020 | | | | | | | | | | | | 550,000 | | | | | | | | | 6.90 | | | | | | 11/18/2030 | | |
Cathy Smith
|
| | | | 11/4/2019 | | | | | | 1/6/2020 | | | | | | | | | | | | 850,000 | | | | | | | | | 5.32 | | | | | | 11/3/2029 | | |
| | | | | 2/19/2020 | | | | | | 2/19/2020 | | | | | | | | | | | | 200,000 | | | | | | | | | 5.32 | | | | | | 2/18/2030 | | |
| | | | | 11/19/2020 | | | | | | 12/18/2020 | | | | | | | | | | | | 150,000 | | | | | | | | | 6.90 | | | | | | 11/18/2030 | | |
Robert Sheehy
|
| | | | 2/19/2020 | | | | | | 2/19/2020 | | | | | | | | | | | | 1,336,000 | | | | | | | | | 5.32 | | | | | | 2/18/2030 | | |
| | | | | 11/19/2020 | | | | | | 11/19/2020 | | | | | | | | | | | | 250,000 | | | | | | | | | 6.90 | | | | | | 11/18/2030 | | |
Keith Nelsen
|
| | | | 5/28/2020 | | | | | | 5/4/2020 | | | | | | | | | | | | 600,000 | | | | | | | | | 5.32 | | | | | | 5/27/2030 | | |
| | | | | 11/19/2020 | | | | | | 12/18/2020 | | | | | | | | | | | | 75,000 | | | | | | | | | 6.90 | | | | | | 11/18/2030 | | |
Simeon Schindelman
|
| | | | 11/4/2019 | | | | | | 9/16/2019 | | | | | | 153,079 | | | | | | 378,125 | | | | | | | | | 5.32 | | | | | | 11/3/2029 | | |
| | | 2/19/2020 | | | | | | 9/16/2019 | | | | | | 7,868 | | | | | | 17,310 | | | | | | | | | 5.32 | | | | | | 2/18/2030 | | | ||
| | | 5/28/2020 | | | | | | 5/28/2020 | | | | | | | | | | | | 150,000 | | | | | | | | | 5.32 | | | | | | 5/27/2030 | | | ||
| | | 11/19/2020 | | | | | | 12/18/2020 | | | | | | | | | | | | 100,000 | | | | | | | | | 6.90 | | | | | | 11/18/2030 | | | ||
Sam Srivastava
|
| | | | 11/4/2019 | | | | | | 9/16/2019 | | | | | | 156,250 | | | | | | 343,750 | | | | | | | | | 5.32 | | | | | | 11/3/2029 | | |
| | | | | 2/19/2020 | | | | | | 9/16/2019 | | | | | | 7,152 | | | | | | 15,737 | | | | | | | | | 5.32 | | | | | | 2/18/2030 | | |
| | | | | 5/28/2020 | | | | | | 5/28/2020 | | | | | | | | | | | | 150,000 | | | | | | | | | 5.32 | | | | | | 5/27/2030 | | |
| | | | | 11/19/2020 | | | | | | 12/18/2020 | | | | | | | | | | | | 100,000 | | | | | | | | | 6.90 | | | | | | 11/18/2030 | | |
| | |
Option Awards
|
| |||||||||
Name
|
| |
Number of Shares
Acquired on Exercise (#) |
| |
Value Realized on
Exercise ($)(1) |
| ||||||
Simeon Schindelman
|
| | | | 18,796 | | | | | | 29,698 | | |
Benefit
|
| |
Termination
Without Cause other than in connection with Change in Control ($) |
| |
Death ($)
|
| |
Termination
Without Cause in connection with Change in Control ($) |
| |||||||||
Cash Severance Payment (Salary and Bonus)
|
| | | | 2,100,000(1) | | | | | | | | | | | | 2,100,000(1) | | |
Option Value
|
| | | | 4,821,595(2) | | | | | | 8,331,380(3) | | | | | | 10,169,446(4) | | |
Total
|
| | | | 6,921,595 | | | | | | 8,331,380 | | | | | | 12,269,446 | | |
Benefit
|
| |
Termination
Without Cause ($) |
| |||
Cash Severance Payment (Salary)
|
| | | | 300,000(1) | | |
Total | | | | | 300,000 | | |
Benefit
|
| |
Termination
Without Cause ($) |
| |||
Cash Severance Payment (Salary)
|
| | | | 200,000(1) | | |
Total | | | | | 200,000 | | |
Benefit
|
| |
Termination
Without Cause ($) |
| |||
Cash Severance Payment (Salary and Bonus)
|
| | | | 421,875(1) | | |
Total | | | | | 421,875 | | |
Benefit
|
| |
Termination
Without Cause ($) |
| |||
Cash Severance Payment (Salary)
|
| | | | 400,000(1) | | |
Total | | | | | 400,000 | | |
Employee Level
|
| |
Employee Grade
|
| |
Weeks of Severance Pay
|
|
Executive Leadership Team | | |
23 – 24
|
| | 18 months | |
Senior Vice President | | |
20 – 22
|
| | 12 months | |
Vice President | | |
19
|
| | 6 months | |
Director and Senior Director | | |
17 – 18
|
| | Four weeks plus one week for each completed year of service, with a minimum of 12 weeks and a maximum of 26 weeks | |
All other employees | | |
10 – 16
|
| | Four weeks plus one week for each completed year of service, with a maximum of 26 weeks | |
Employee Level
|
| |
Employee Grade
|
| |
Weeks of Severance Pay
|
|
Executive Leadership Team (ELT) | | |
23 – 24
|
| | 78 weeks of base pay plus an amount equal to 1.5 times the participant’s target bonus, paid over the Severance Period | |
Senior Vice President (SVP) | | |
20 – 22
|
| | 52 weeks of base pay plus an amount equal to the participant’s target bonus, paid over the Severance Period | |
Vice President | | |
19
|
| | 26 weeks of base pay plus an amount equal to 0.5 times the participant’s target bonus amount, paid over the Severance Period | |
Director and Senior Director | | |
17 – 18
|
| | Four weeks plus one week for each completed year of service, with a minimum of 12 weeks and a maximum of 26 weeks | |
All other employees | | |
10 – 16
|
| | Four weeks plus one week for each completed year of service, with a maximum of 26 weeks | |
Employee Level
|
| |
Employee Grade
|
| |
Benefit Subsidy Period
|
|
Executive Leadership Team | | |
23 – 24
|
| | 18 months | |
Senior Vice President | | |
20 – 22
|
| | 12 months | |
Vice President | | |
19
|
| | 6 months | |
Director and Senior Director | | |
17 – 18
|
| | Each calendar month during the Severance Period, with a minimum of 3 months and maximum of 6 months | |
All other employees | | |
10 – 16
|
| | Each calendar month during the Severance Period, with a maximum of 6 months. | |
Employee Grade
|
| |
Non-competition,
non-solicitation and non-disparagement period |
|
23 – 24 | | | 18 months | |
19 – 22 | | | 12 months | |
10 – 18 | | | For the Severance Period (defined above) | |
Name
|
| |
Fees Earned or
Paid in Cash ($)(1) |
| |
Option
Awards ($)(2)(3)(4) |
| |
Total ($)
|
| |||||||||
Kedrick D. Adkins Jr.
|
| | | | 17,250 | | | | | | 298,620 | | | | | | 315,870 | | |
Naomi Allen
|
| | | | 17,250 | | | | | | 298,620 | | | | | | 315,870 | | |
Jeffrey R. Immelt
|
| | | | — | | | | | | 308,448 | | | | | | 308,448 | | |
Manuel Kadre
|
| | | | 2,300 | | | | | | 408,060 | | | | | | 410,360 | | |
Name
|
| |
Shares of
Series C Preferred Stock(1) |
| |
Shares of
Series D Preferred Stock(2) |
| |
Shares of
Series E Preferred Stock(3) |
| |
Aggregate
Purchase Price |
| ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
(in thousands)
|
| |||
New Enterprise Associates and affiliated funds(4)
|
| | | | 8,471,262 | | | | | | 28,572,947 | | | | | | 6,970,570 | | | | | | $ 636,623 | | |
Bessemer Venture Partners and affiliated funds(5)
|
| | | | 3,258,177 | | | | | | 3,993,424 | | | | | | 2,602,800 | | | | | | 138,071 | | |
Greenspring and affiliated funds(6)
|
| | | | 2,606,540 | | | | | | 1,663,924 | | | | | | 1,714,200 | | | | | | 80,000 | | |
Jeffrey Folick(7)
|
| | | | 32,079 | | | | | | 13,311 | | | | | | — | | | | | | 446 | | |
Jeffery R. Immelt(8)
|
| | | | — | | | | | | 13,311 | | | | | | 14,693 | | | | | | 500 | | |
Name
|
| |
Number of
Shares |
| |||
J.P. Morgan Securities LLC
|
| | | | | | |
Goldman Sachs & Co. LLC
|
| | | | | | |
Morgan Stanley & Co. LLC
|
| | | | | | |
Barclays Capital Inc.
|
| | | | | | |
BofA Securities, Inc.
|
| | | | | | |
Citigroup Global Markets Inc.
|
| | | | | | |
Piper Sandler & Co.
|
| | | | | | |
Nomura Securities International, Inc.
|
| | | | | | |
RBC Capital Markets, LLC
|
| | | | | | |
Total
|
| | | | | |
| | |
Without
option to purchase additional shares exercise |
| |
With full
option to purchase additional shares exercise |
|
Per Share
|
| | $ | | | $ | |
Total
|
| | $ | | | $ | |
| Unaudited Condensed Consolidated Financial Statements of Bright Health Group, Inc. | | | | | | | |
| | | | | F-2 | | | |
| | | | | F-3 | | | |
| | | | | F-4 | | | |
| | | | | F-5 | | | |
| | | | | F-6 | | | |
| | | | | F-7 | | | |
| Audited Consolidated Financial Statements of Bright Health Group, Inc. | | | | | | | |
| | | | | F-20 | | | |
| | | | | F-24 | | | |
| | | | | F-25 | | | |
| | | | | F-26 | | | |
| | | | | F-27 | | | |
| | | | | F-28 | | | |
| | | | | F-29 | | | |
| | | | | F-30 | | | |
| Condensed Unaudited Financial Statements of Universal Care, Inc. | | | | | | | |
| | | | | F-60 | | | |
| | | | | F-61 | | | |
| | | | | F-62 | | | |
| | | | | F-63 | | | |
| | | | | F-64 | | | |
| Audited Financial Statements of Universal Care, Inc. | | | | | | | |
| | | | | F-76 | | | |
| | | | | F-77 | | | |
| | | | | F-78 | | | |
| | | | | F-79 | | | |
| | | | | F-80 | | | |
| | | | | F-81 | | |
| | |
March 31
2021 |
| |
December 31
2020 |
| ||||||
Assets | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | | $ 975,933 | | | | | | $ 488,371 | | |
Short-term investments
|
| | | | 274,578 | | | | | | 499,928 | | |
Accounts receivable, net of allowance of $3,750 and $2,602, respectively
|
| | | | 85,486 | | | | | | 60,522 | | |
Prepaids and other current assets
|
| | | | 164,321 | | | | | | 130,986 | | |
Total current assets
|
| | | | 1,500,318 | | | | | | 1,179,807 | | |
Other assets: | | | | | | | | | | | | | |
Long-term investments
|
| | | | 448,903 | | | | | | 175,176 | | |
Property, equipment and capitalized software, net
|
| | | | 15,784 | | | | | | 12,264 | | |
Goodwill
|
| | | | 306,828 | | | | | | 263,035 | | |
Intangible assets, net
|
| | | | 166,726 | | | | | | 152,211 | | |
Other non-current assets
|
| | | | 27,404 | | | | | | 28,309 | | |
Total other assets
|
| | | | 965,645 | | | | | | 630,995 | | |
Total assets
|
| | | | $ 2,465,963 | | | | | | $ 1,810,802 | | |
Liabilities, Redeemable Noncontrolling Interest, Redeemable Preferred Stock and Shareholders’ Deficit | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Medical costs payable
|
| | | | $ 488,859 | | | | | | $ 249,777 | | |
Accounts payable
|
| | | | 85,146 | | | | | | 57,252 | | |
Unearned revenue
|
| | | | 39,311 | | | | | | 34,628 | | |
Risk adjustment payable
|
| | | | 326,310 | | | | | | 187,777 | | |
Short-term borrowings
|
| | | | 200,000 | | | | | | — | | |
Other current liabilities
|
| | | | 56,707 | | | | | | 35,847 | | |
Total current liabilities
|
| | | | 1,196,333 | | | | | | 565,281 | | |
Other liabilities
|
| | | | 35,223 | | | | | | 28,578 | | |
Total liabilities
|
| | | | 1,231,556 | | | | | | 593,859 | | |
Commitments and contingencies (Note 10) | | | | | | | | | | | | | |
Redeemable noncontrolling interests
|
| | | | 40,217 | | | | | | 39,600 | | |
Redeemable preferred stock, $0.0001 par value; 168,065,332 and 166,307,087 shares authorized in 2021
and 2020, respectively; 165,664,947 and 164,244,893 shares issued and outstanding in 2021 and 2020, respectively |
| | | | 1,713,997 | | | | | | 1,681,015 | | |
Shareholders’ deficit: | | | | | | | | | | | | | |
Common stock, $0.0001 par value; 224,864,575 and 219,664,575 shares authorized in 2021 and 2020, respectively; 47,441,170 and 45,887,566 shares issued and outstanding in 2021 and 2020, respectively
|
| | | | 5 | | | | | | 5 | | |
Additional paid-in capital
|
| | | | 16,913 | | | | | | 9,886 | | |
Accumulated deficit
|
| | | | (538,109) | | | | | | (515,989) | | |
Accumulated other comprehensive income
|
| | | | 1,384 | | | | | | 2,426 | | |
Total shareholders’ deficit
|
| | | | (519,807) | | | | | | (503,672) | | |
Total liabilities, redeemable noncontrolling interests, redeemable preferred stock and shareholders’
deficit |
| | | | $ 2,465,963 | | | | | | $ 1,810,802 | | |
| | |
Three Months Ended March 31,
|
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Revenue: | | | | | | | | | | | | | |
Premium revenue
|
| | | | $ 860,631 | | | | | | $ 190,737 | | |
Service revenue
|
| | | | 8,438 | | | | | | 4,820 | | |
Investment income
|
| | | | 5,489 | | | | | | 3,009 | | |
Total revenue
|
| | | | 874,558 | | | | | | 198,566 | | |
Operating costs: | | | | | | | | | | | | | |
Medical costs
|
| | | | 684,570 | | | | | | 130,615 | | |
Operating costs
|
| | | | 205,198 | | | | | | 74,444 | | |
Depreciation and amortization
|
| | | | 4,581 | | | | | | 787 | | |
Total operating costs
|
| | | | 894,349 | | | | | | 205,846 | | |
Operating loss
|
| | | | (19,791) | | | | | | (7,280) | | |
Interest expense
|
| | | | 546 | | | | | | — | | |
Loss before income taxes
|
| | | | (20,337) | | | | | | (7,280) | | |
Income tax (benefit) expense
|
| | | | 1,166 | | | | | | — | | |
Net loss
|
| | | | (21,503) | | | | | | (7,280) | | |
Net earnings attributable to noncontrolling interests
|
| | | | (617) | | | | | | — | | |
Net loss attributable to Bright Health Group, Inc. common shareholders
|
| | | | $ (22,120) | | | | | | $ (7,280) | | |
Basic and diluted loss per share attributable to Bright Health Group, Inc. common shareholders
|
| | | | $ (0.47) | | | | | | $ (0.16) | | |
Basic and diluted weighted-average common shares outstanding
|
| | | | 46,725 | | | | | | 45,708 | | |
| | |
Three Months Ended March 31,
|
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Net loss
|
| | | | $ (21,503) | | | | | | $ (7,280) | | |
Other comprehensive income (loss): | | | | | | | | | | | | | |
Unrealized investment holding gains (losses) arising during the year, net of tax of $0 and $0, respectively
|
| | | | (980) | | | | | | 890 | | |
Less: reclassification adjustments for investment gains (losses), net of tax of $0 and $0, respectively
|
| | | | 62 | | | | | | (61) | | |
Other comprehensive income (loss)
|
| | | | (1,042) | | | | | | 951 | | |
Comprehensive loss
|
| | | | (22,545) | | | | | | (6,329) | | |
Comprehensive income attributable to noncontrolling interests
|
| | | | (617) | | | | | | — | | |
Comprehensive loss attributable to Bright Health Group, Inc. common shareholders
|
| | | | $ (23,162) | | | | | | $ (6,329) | | |
| | |
Redeemable Preferred Stock
|
| | |
Common Stock
|
| |
Additional
Paid-In Capital |
| |
Retained
Earnings (Deficit) |
| |
Accumulated
Other Comprehensive Income (Loss) |
| |
Total
|
| ||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| | |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||
Balance at January 1, 2021
|
| | | | 164,245 | | | | | | 1,681,015 | | | | | | | 45,888 | | | | | | $ 5 | | | | | | $ 9,886 | | | | | | $ (515,989) | | | | | | $ 2,426 | | | | | | $ (503,672) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (22,120) | | | | | | — | | | | | | (22,120) | | |
Issuance of preferred stock
|
| | | | 1,420 | | | | | | 32,982 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of common stock
|
| | | | — | | | | | | — | | | | | | | 1,553 | | | | | | — | | | | | | 4,893 | | | | | | — | | | | | | — | | | | | | 4,893 | | |
Share-based compensation
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 2,134 | | | | | | — | | | | | | — | | | | | | 2,134 | | |
Other comprehensive loss
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,042) | | | | | | (1,042) | | |
Balance at March 31, 2021
|
| | | | 165,665 | | | | | | $ 1,713,997 | | | | | | | 47,441 | | | | | | $ 5 | | | | | | $ 16,913 | | | | | | $ (538,109) | | | | | | $ 1,384 | | | | | | $ (519,807) | | |
Balance at January 1, 2020
|
| | | | 119,222 | | | | | | 871,990 | | | | | | | 45,170 | | | | | | 5 | | | | | | 3,193 | | | | | | (267,547) | | | | | | 982 | | | | | | (263,367) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (7,280) | | | | | | — | | | | | | (7,280) | | |
Issuance of common stock
|
| | | | — | | | | | | — | | | | | | | 61 | | | | | | — | | | | | | 13 | | | | | | — | | | | | | — | | | | | | 13 | | |
Share-based compensation
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 943 | | | | | | — | | | | | | — | | | | | | 943 | | |
Other comprehensive income
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 951 | | | | | | 951 | | |
Balance at March 31, 2020
|
| | | | 119,222 | | | | | | $ 871,990 | | | | | | | 45,231 | | | | | | $ 5 | | | | | | $ 4,149 | | | | | | $ (274,827) | | | | | | $ 1,933 | | | | | | $ (268,740) | | |
| | |
Three Months Ended March 31,
|
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net loss
|
| | | | $ (22,120) | | | | | | $ (7,280) | | |
Adjustments to reconcile net loss to net cash provided by operating activities:
|
| | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 4,581 | | | | | | 787 | | |
Share-based compensation
|
| | | | 2,134 | | | | | | 943 | | |
Deferred income taxes
|
| | | | 1,166 | | | | | | — | | |
Other, net
|
| | | | 2,694 | | | | | | 146 | | |
Changes in assets and liabilities, net of acquired assets and liabilities:
|
| | | | | | | | | | | | |
Accounts receivable
|
| | | | (23,188) | | | | | | (6,805) | | |
Other assets
|
| | | | (15,707) | | | | | | (2,552) | | |
Medical cost payable
|
| | | | 225,814 | | | | | | 53,822 | | |
Risk adjustment payable
|
| | | | 137,215 | | | | | | 48,597 | | |
Accounts payable and other liabilities
|
| | | | 30,096 | | | | | | (6,246) | | |
Unearned revenue
|
| | | | 918 | | | | | | 874 | | |
Net cash provided by operating activities
|
| | | | 343,603 | | | | | | 82,286 | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Purchases of investments
|
| | | | (298,957) | | | | | | (387,665) | | |
Proceeds from sales, paydown, and maturities of investments
|
| | | | 265,521 | | | | | | 49,314 | | |
Purchases of property and equipment
|
| | | | (4,215) | | | | | | (8) | | |
Business acquisition, net of cash acquired
|
| | | | (18,624) | | | | | | — | | |
Net cash used in investing activities
|
| | | | (56,275) | | | | | | (338,359) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Proceeds from short-term borrowings
|
| | | | 200,000 | | | | | | — | | |
Proceeds from issuance of common stock
|
| | | | 4,893 | | | | | | 13 | | |
Payments for debt issuance costs
|
| | | | (3,391) | | | | | | — | | |
Payments for IPO offering costs
|
| | | | (1,268) | | | | | | — | | |
Net cash provided by financing activities
|
| | | | 200,234 | | | | | | 13 | | |
Net increase (decrease) in cash and cash equivalents
|
| | | | 487,562 | | | | | | (256,060) | | |
Cash and cash equivalents – beginning of year
|
| | | | 488,371 | | | | | | 522,910 | | |
Cash and cash equivalents – end of period
|
| | | | $ 975,933 | | | | | | $ 266,850 | | |
Supplemental disclosures of cash flow information: | | | | | | | | | | | | | |
Changes in unrealized gain (loss) on available-for-sale securities in OCI
|
| | | | $ (1,042) | | | | | | $ 951 | | |
Cash paid for interest
|
| | | | 244 | | | | | | — | | |
Supplemental schedule of noncash activities: | | | | | | | | | | | | | |
Redeemable preferred stock issued for acquisitions
|
| | | | $ 32,982 | | | | | | $ — | | |
| | |
2021
|
| |
2020
|
| ||||||
Compensation and fringe benefits
|
| | | | $ 53,984 | | | | | | $ 25,554 | | |
Professional fees
|
| | | | 39,463 | | | | | | 17,212 | | |
Marketing and selling expense
|
| | | | 50,205 | | | | | | 8,640 | | |
Other operating expenses
|
| | | | 61,546 | | | | | | 23,038 | | |
Total operating costs
|
| | | | $ 205,198 | | | | | | $ 74,444 | | |
|
Accounts receivable
|
| | | | $ 5,674 | | |
|
Prepaids and other current assets
|
| | | | 18,692 | | |
|
Property and equipment
|
| | | | 353 | | |
|
Intangible assets
|
| | | | 110,000 | | |
|
Total Assets
|
| | | | 134,719 | | |
|
Medical costs payable
|
| | | | 71,709 | | |
|
Accounts payable
|
| | | | 2,371 | | |
|
Other current liabilities
|
| | | | 7,426 | | |
|
Other liabilities
|
| | | | 17 | | |
|
Total liabilities
|
| | | | 81,523 | | |
|
Net identified assets acquired
|
| | | | 53,196 | | |
|
Goodwill
|
| | | | 167,371 | | |
|
Total purchase consideration
|
| | | | $ 220,567 | | |
| | |
Pro Forma Consolidated Statements of Income (Loss)
(Unaudited) |
| |||||||||||||||||||||
| | |
Three Months Ended March 31,
|
| |
Years Ended December 31,
|
| ||||||||||||||||||
| | |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||
Revenue
|
| | | | $ 1,003,428 | | | | | | $ 330,438 | | | | | | $ 1,766,527 | | | | | | $ 769,722 | | |
Net loss
|
| | | | (10,489) | | | | | | (6,387) | | | | | | (221,023) | | | | | | (132,636) | | |
| | |
THNM
|
| |
Zipnosis
|
| ||||||
Accounts receivable
|
| | | | $ 714 | | | | | | $ 1,062 | | |
Short-term investments
|
| | | | 4,677 | | | | | | $ — | | |
Prepaids and other current assets
|
| | | | 8,337 | | | | | | 141 | | |
Property and equipment
|
| | | | — | | | | | | 232 | | |
Intangible assets
|
| | | | 7,300 | | | | | | 8,970 | | |
Long-term investments
|
| | | | 13,081 | | | | | | — | | |
Other non-current assets
|
| | | | 1,324 | | | | | | 766 | | |
Total Assets
|
| | | | 35,433 | | | | | | 11,171 | | |
Medical costs payable
|
| | | | 13,268 | | | | | | — | | |
Accounts payable
|
| | | | 14,663 | | | | | | 136 | | |
Unearned revenue
|
| | | | 3,645 | | | | | | 120 | | |
Other current liabilities
|
| | | | 2,682 | | | | | | 665 | | |
Other liabilities
|
| | | | 2,499 | | | | | | 2,730 | | |
Total liabilities
|
| | | | 36,757 | | | | | | 3,651 | | |
Net identified assets acquired
|
| | | | (1,324) | | | | | | 7,520 | | |
Goodwill
|
| | | | 4,739 | | | | | | 40,672 | | |
Total purchase consideration
|
| | | | $ 3,415 | | | | | | $ 48,192 | | |
| | |
Pro Forma Consolidated
Statements of Income (Loss) (Unaudited) |
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Revenue
|
| | | | $ 922,457 | | | | | | $ 233,210 | | |
Net loss
|
| | | | (24,091) | | | | | | (8,330) | | |
| | |
Amount Recognized as
of Acquisition Date (as previously reported) |
| |
Measurement
Period Adjustments |
| |
Amounts Recognized as
of Acquisition Date (as adjusted) |
| |||||||||
Accounts receivable
|
| | | | $ 74,128 | | | | | | $ — | | | | | | $ 74,128 | | |
Prepaids and other current assets
|
| | | | 30,583 | | | | | | — | | | | | | 30,583 | | |
Property and equipment
|
| | | | 4,375 | | | | | | — | | | | | | 4,375 | | |
Intangible assets
|
| | | | 72,600 | | | | | | 1,900 | | | | | | 74,500 | | |
Other non-current assets
|
| | | | 2,906 | | | | | | — | | | | | | 2,906 | | |
Total Assets
|
| | | | 184,592 | | | | | | 1,900 | | | | | | 186,492 | | |
Medical costs payable
|
| | | | 119,408 | | | | | | — | | | | | | 119,408 | | |
Other current liabilities
|
| | | | 51,744 | | | | | | 174 | | | | | | 51,918 | | |
Other liabilities
|
| | | | 1,236 | | | | | | 108 | | | | | | 1,344 | | |
Total liabilities
|
| | | | 172,388 | | | | | | 282 | | | | | | 172,670 | | |
Net identified assets acquired
|
| | | | 12,204 | | | | | | 1,618 | | | | | | 13,822 | | |
Goodwill
|
| | | | 197,886 | | | | | | (1,618) | | | | | | 196,268 | | |
Total purchase consideration
|
| | | | $ 210,090 | | | | | | $ — | | | | | | $ 210,090 | | |
| | |
March 31, 2021
|
| |||||||||||||||||||||
| | |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Carrying
Value |
| ||||||||||||
Cash equivalents
|
| | | | $ 233,427 | | | | | | $ — | | | | | | $ — | | | | | | $ 233,427 | | |
Available for sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 459,870 | | | | | | 1,165 | | | | | | (193) | | | | | | 460,842 | | |
Corporate obligations
|
| | | | 219,839 | | | | | | 877 | | | | | | (90) | | | | | | 220,626 | | |
State and municipal obligations
|
| | | | 19,213 | | | | | | 86 | | | | | | — | | | | | | 19,299 | | |
Commercial paper
|
| | | | 4,996 | | | | | | 1 | | | | | | — | | | | | | 4,997 | | |
Certificates of deposit
|
| | | | 5,700 | | | | | | 1 | | | | | | — | | | | | | 5,701 | | |
Mortgage-backed securities
|
| | | | 3,035 | | | | | | 131 | | | | | | | | | | | | 3,166 | | |
Other
|
| | | | 1,100 | | | | | | — | | | | | | — | | | | | | 1,100 | | |
Total available-for-sale securities
|
| | | | 713,753 | | | | | | 2,261 | | | | | | (283) | | | | | | 715,731 | | |
Held to maturity: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 7,220 | | | | | | — | | | | | | — | | | | | | 7,220 | | |
Certificates of deposit
|
| | | | 1,119 | | | | | | — | | | | | | — | | | | | | 1,119 | | |
Total held-to-maturity securities
|
| | | | 8,339 | | | | | | — | | | | | | — | | | | | | 8,339 | | |
Total investments
|
| | | | $ 955,519 | | | | | | $ 2,261 | | | | | | $ (283) | | | | | | $ 957,497 | | |
| | |
December 31, 2020
|
| |||||||||||||||||||||
| | |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Carrying
Value |
| ||||||||||||
Cash equivalents
|
| | | | $ 153,743 | | | | | | $ — | | | | | | $ (3) | | | | | | $ 153,740 | | |
Available for sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 291,834 | | | | | | 1,246 | | | | | | (1) | | | | | | 293,079 | | |
Corporate obligations
|
| | | | 280,557 | | | | | | 1,104 | | | | | | (30) | | | | | | 281,631 | | |
State and municipal obligations
|
| | | | 18,459 | | | | | | 107 | | | | | | — | | | | | | 18,566 | | |
Commercial paper
|
| | | | 14,990 | | | | | | 1 | | | | | | — | | | | | | 14,991 | | |
Certificates of deposit
|
| | | | 53,504 | | | | | | 2 | | | | | | (1) | | | | | | 53,505 | | |
Other
|
| | | | 5,534 | | | | | | 2 | | | | | | — | | | | | | 5,536 | | |
Total available-for-sale securities
|
| | | | 664,878 | | | | | | 2,462 | | | | | | (32) | | | | | | 667,308 | | |
Held to maturity: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 6,677 | | | | | | — | | | | | | — | | | | | | 6,677 | | |
Certificates of deposit
|
| | | | 1,119 | | | | | | — | | | | | | — | | | | | | 1,119 | | |
Total held-to-maturity securities
|
| | | | 7,796 | | | | | | — | | | | | | — | | | | | | 7,796 | | |
Total investments
|
| | | | $ 826,417 | | | | | | $ 2,462 | | | | | | $ (35) | | | | | | $ 828,844 | | |
| | |
March 31, 2021
|
| |||||||||||||||||||||||||||||||||
| | |
Less Than 12 Months
|
| |
12 Months or Greater
|
| |
Total
|
| |||||||||||||||||||||||||||
Description of Investments
|
| |
Fair
Value |
| |
Unrealized
Losses |
| |
Fair
Value |
| |
Unrealized
Losses |
| |
Fair
Value |
| |
Unrealized
Losses |
| ||||||||||||||||||
U.S. government and agency obligations
|
| | | | $ 204,999 | | | | | | $ (193) | | | | | | $ — | | | | | | $ — | | | | | | $ 204,999 | | | | | | $ (193) | | |
Mortgage-backed securities
|
| | | | 21 | | | | | | — | | | | | | | | | | | | | | | | | | 21 | | | | | | | | |
Corporate obligations
|
| | | | 89,185 | | | | | | (90) | | | | | | — | | | | | | — | | | | | | 89,185 | | | | | | (90) | | |
Certificates of deposit
|
| | | | 700 | | | | | | — | | | | | | — | | | | | | — | | | | | | 700 | | | | | | — | | |
Total bonds
|
| | | | $ 294,905 | | | | | | $ (283) | | | | | | $ — | | | | | | $ — | | | | | | $ 294,905 | | | | | | $ (283) | | |
| | |
December 31, 2020
|
| |||||||||||||||||||||||||||||||||
| | |
Less Than 12 Months
|
| |
12 Months or Greater
|
| |
Total
|
| |||||||||||||||||||||||||||
Description of Investments
|
| |
Fair
Value |
| |
Unrealized
Losses |
| |
Fair
Value |
| |
Unrealized
Losses |
| |
Fair
Value |
| |
Unrealized
Losses |
| ||||||||||||||||||
Cash equivalents
|
| | | | $ 25,007 | | | | | | $ (3) | | | | | | $ — | | | | | | $ — | | | | | | $ 25,007 | | | | | | $ (3) | | |
U.S. government and agency obligations
|
| | | | 2,507 | | | | | | (1) | | | | | | — | | | | | | — | | | | | | 12,507 | | | | | | (1) | | |
Corporate obligations
|
| | | | 121,006 | | | | | | (30) | | | | | | — | | | | | | — | | | | | | 121,006 | | | | | | (30) | | |
Commercial paper
|
| | | | 999 | | | | | | — | | | | | | — | | | | | | — | | | | | | 999 | | | | | | — | | |
Certificates of deposit
|
| | | | 14,003 | | | | | | (1) | | | | | | — | | | | | | — | | | | | | 14,003 | | | | | | (1) | | |
Total bonds
|
| | | | $ 173,522 | | | | | | $ (35) | | | | | | $ — | | | | | | $ — | | | | | | $ 173,522 | | | | | | $ (35) | | |
| | |
Amortized
Cost |
| |
Fair
Value |
| ||||||
Due in one year or less
|
| | | | $ 272,016 | | | | | | $ 272,809 | | |
Due after one year through five years
|
| | | | 441,248 | | | | | | 442,409 | | |
Due after five years through 10 years
|
| | | | 489 | | | | | | 513 | | |
Due after 10 years
|
| | | | — | | | | | | — | | |
Total debt securities
|
| | | | $ 713,753 | | | | | | $ 715,731 | | |
| | |
March 31, 2021
|
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash equivalents
|
| | | | $ 221,018 | | | | | | $ 625 | | | | | | $ — | | | | | | $ 221,643 | | |
Available for sale:
|
| | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 320,911 | | | | | | 139,931 | | | | | | — | | | | | | 460,842 | | |
Corporate obligations
|
| | | | 2,384 | | | | | | 218,242 | | | | | | — | | | | | | 220,626 | | |
State and municipal obligations
|
| | | | — | | | | | | 19,299 | | | | | | — | | | | | | 19,299 | | |
Commercial paper
|
| | | | — | | | | | | 4,997 | | | | | | — | | | | | | 4,997 | | |
Certificates of deposit
|
| | | | — | | | | | | 5,701 | | | | | | — | | | | | | 5,701 | | |
Mortgage-backed securities
|
| | | | 3,166 | | | | | | — | | | | | | — | | | | | | 3,166 | | |
Other
|
| | | | — | | | | | | 1,100 | | | | | | — | | | | | | 1,100 | | |
Forward contract on equity securities(1)
|
| | | | — | | | | | | 4,243 | | | | | | — | | | | | | 4,243 | | |
Total assets at fair value
|
| | | | $ 547,479 | | | | | | $ 394,138 | | | | | | $ — | | | | | | $ 941,617 | | |
Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | |
Contingent consideration
|
| | | | $ — | | | | | | $ — | | | | | | $ 7,188 | | | | | | $ 7,188 | | |
| | |
December 31, 2020
|
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash equivalents
|
| | | | $ 149,499 | | | | | | $ 4,019 | | | | | | $ — | | | | | | $ 153,518 | | |
Available for sale:
|
| | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 197,886 | | | | | | 95,193 | | | | | | — | | | | | | 293,079 | | |
Corporate obligations
|
| | | | — | | | | | | 281,631 | | | | | | — | | | | | | 281,631 | | |
State and municipal obligations
|
| | | | — | | | | | | 18,566 | | | | | | — | | | | | | 18,566 | | |
Commercial paper
|
| | | | — | | | | | | 14,991 | | | | | | — | | | | | | 14,991 | | |
Certificates of deposit
|
| | | | — | | | | | | 53,505 | | | | | | — | | | | | | 53,505 | | |
Other
|
| | | | — | | | | | | 5,536 | | | | | | — | | | | | | 5,536 | | |
Total assets at fair value
|
| | | | $ 347,385 | | | | | | $ 473,441 | | | | | | $ — | | | | | | $ 820,826 | | |
Liabilities
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Contingent consideration
|
| | | | $ — | | | | | | $ — | | | | | | $ 5,716 | | | | | | $ 5,716 | | |
| | |
March 31, 2021
|
| | | | | | | | | | |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| | | | ||||||||||||||||||
Cash equivalents
|
| | | | $ 11,784 | | | | | | $ — | | | | | | $ — | | | | | | $ 11,784 | | | | | | ||||||
Held to maturity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
U.S. government and agency obligations
|
| | | | 7,220 | | | | | | — | | | | | | — | | | | | | 7,220 | | | | | | ||||||
Certificates of deposit
|
| | | | — | | | | | | 1,119 | | | | | | — | | | | | | 1,119 | | | | | | ||||||
Total held to maturity
|
| | | | $ 19,004 | | | | | | $ 1,119 | | | | | | $ — | | | | | | $ 20,123 | | | | | |
| | |
December 31, 2020
|
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Cash equivalents
|
| | | | $ 222 | | | | | | $ — | | | | | | $ — | | | | | | $ 222 | | |
Held to maturity: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 6,732 | | | | | | — | | | | | | — | | | | | | 6,732 | | |
Certificates of deposit
|
| | | | — | | | | | | 1,119 | | | | | | — | | | | | | 1,119 | | |
Total held to maturity
|
| | | | $ 6,954 | | | | | | $ 1,119 | | | | | | $ — | | | | | | $ 8,073 | | |
| | |
2021
|
| |
2020
|
| ||||||
Balance at beginning of period
|
| | | | $ 5,716 | | | | | | $ 5,716 | | |
Change in fair value of contingent consideration
|
| | | | 1,472 | | | | | | — | | |
Balance at end of period
|
| | | | $ 7,188 | | | | | | $ 5,716 | | |
| | |
Bright HealthCare
|
| |
NeueHealth
|
| ||||||||||||||||||
| | |
Gross Carrying
Amount |
| |
Cumulative
Impairment |
| |
Gross Carrying
Amount |
| |
Cumulative
Impairment |
| ||||||||||||
Balance at December 31, 2020
|
| | | | $ 197,886 | | | | | | $ — | | | | | | $ 65,149 | | | | | | $ — | | |
Acquisitions
|
| | | | 4,739 | | | | | | | | | | | | 40,672 | | | | | | | | |
Purchase adjustments
|
| | | | (1,618) | | | | | | | | | | | | — | | | | | | | | |
Balance at March 31, 2021
|
| | | | $ 201,007 | | | | | | $ — | | | | | | $ 105,821 | | | | | | $ — | | |
| | |
March 31, 2021
|
| |
December 31, 2020
|
| ||||||||||||||||||
| | |
Gross Carrying
Amount |
| |
Accumulated
Amortization |
| |
Gross Carrying
Amount |
| |
Accumulated
Amortization |
| ||||||||||||
Customer relationships
|
| | | | $ 123,751 | | | | | | $ 6,590 | | | | | | $ 117,451 | | | | | | $ 3,664 | | |
Trade names
|
| | | | 42,831 | | | | | | 2,283 | | | | | | 38,161 | | | | | | 1,604 | | |
Developed technology
|
| | | | 6,200 | | | | | | | | | | | | | | | | | | | | |
Other
|
| | | | 3,000 | | | | | | 183 | | | | | | 2,000 | | | | | | 133 | | |
Total
|
| | | | $ 175,782 | | | | | | $ 9,056 | | | | | | $ 157,612 | | | | | | $ 5,401 | | |
| | |
Fair Value
|
| |
Weighted-Average
Useful Life (in years) |
| ||||||
Customer relationships
|
| | | | $ 5,100 | | | | | | 14.3 | | |
Trade names
|
| | | | 3.970 | | | | | | 13.1 | | |
Developed technology
|
| | | | 6,200 | | | | | | 7.0 | | |
Other
|
| | | | 1,000 | | | | | | 7.0 | | |
Total
|
| | | | $ 16,270 | | | | | | 10.8 | | |
|
2021 (April — December)
|
| | | | $ 11,984 | | |
|
2022
|
| | | | 15,979 | | |
|
2023
|
| | | | 15,979 | | |
|
2024
|
| | | | 15,979 | | |
|
2025
|
| | | | 15,979 | | |
|
2026
|
| | | | 15,864 | | |
| | |
2021
|
| |
2020
|
| ||||||
Medical costs payable — January 1
|
| | | | $ 249,777 | | | | | | $ 44,804 | | |
Incurred related to:
|
| | | | | | | | | | | | |
Current year
|
| | | | 689,572 | | | | | | 141,065 | | |
Prior year
|
| | | | (3,076) | | | | | | (8,324) | | |
Total incurred
|
| | | | 686,496 | | | | | | 132,741 | | |
Paid related to:
|
| | | | | | | | | | | | |
Current year
|
| | | | 307,442 | | | | | | 55,980 | | |
Prior year
|
| | | | 153,240 | | | | | | 22,939 | | |
Total paid
|
| | | | 460,682 | | | | | | 78,919 | | |
Acquired claims liabilities
|
| | | | 13,268 | | | | | | — | | |
Medical costs payable — March 31
|
| | | | $ 488,859 | | | | | | $ 98,626 | | |
| | |
2021
|
| |
2020
|
| ||||||
Claims unpaid
|
| | | | $ 19,652 | | | | | | $ 2,326 | | |
Risk sharing amounts payable
|
| | | | 36,592 | | | | | | 3,564 | | |
Claims adjustment expense liability
|
| | | | 5,038 | | | | | | 3,283 | | |
Incurred but not reported (IBNR)
|
| | | | 427,577 | | | | | | 89,453 | | |
Total medical costs payable
|
| | | | $ 488,859 | | | | | | $ 98,626 | | |
| | |
2021
|
| |
2020
|
| ||||||
Risk-free interest rate
|
| | | | 0.77% | | | | | | 1.45% | | |
Expected volatility
|
| | | | 33.3% | | | | | | 29.0% | | |
Expected dividend rate
|
| | | | 0.0% | | | | | | 0.0% | | |
Forfeiture rate
|
| | | | 14.5% | | | | | | 14.5% | | |
Expected life in years
|
| | | | 6.1 | | | | | | 6.1 | | |
| | |
Shares
|
| |
Weighted-
Average Exercise Price |
| |
Weighted-Average
Remaining Contractual Life (In Years) |
| |
Aggregate
Intrinsic Value |
| ||||||||||||
Outstanding at January 1, 2021
|
| | | | 21,309 | | | | | | 4.42 | | | | | | 8.7 | | | | | | $ 53,573 | | |
Granted
|
| | | | 5,924 | | | | | | 6.90 | | | | | | | | | | | | | | |
Exercised
|
| | | | (1,553) | | | | | | 2.90 | | | | | | | | | | | | | | |
Forfeited
|
| | | | (41) | | | | | | 4.86 | | | | | | | | | | | | | | |
Expired
|
| | | | — | | | | | | — | | | | | | | | | | | | | | |
Outstanding at March 31, 2021
|
| | | | 25,639 | | | | | | $ 5.08 | | | | | | 8.9 | | | | | | $ 46,650 | | |
| | |
2021
|
| |
2020
|
| ||||||
Net loss attributable to Bright Heath Group, Inc. common shareholders
|
| | | | $ (22,120) | | | | | | $ (7,280) | | |
Weighted-average number of shares outstanding used to compute net loss per share
attributable to common stockholders, basic and diluted |
| | | | 46,725 | | | | | | 45,708 | | |
Net loss per share attributable to common stockholders, basic and
diluted |
| | | | $ (0.47) | | | | | | $ (0.16) | | |
| | |
2021
|
| |
2020
|
| ||||||
Redeemable preferred stock
|
| | | | 140,565 | | | | | | 94,122 | | |
Stock options to purchase common stock
|
| | | | 25,639 | | | | | | 16,858 | | |
Total
|
| | | | 166,203 | | | | | | 110,980 | | |
Three Months Ended March 31, 2021
|
| |
Bright
HealthCare |
| |
NeueHealth
|
| |
Eliminations
|
| |
Consolidated
|
| ||||||||||||
Premium revenue
|
| | | | $ 841,925 | | | | | | $ 18,706 | | | | | | $ — | | | | | | $ 860,631 | | |
Service revenue
|
| | | | — | | | | | | 8,438 | | | | | | — | | | | | | 8,438 | | |
Investment income
|
| | | | 1,246 | | | | | | 4,243 | | | | | | — | | | | | | 5,489 | | |
Total unaffiliated revenue
|
| | | | 843,171 | | | | | | 31,387 | | | | | | — | | | | | | 874,558 | | |
Affiliated revenue
|
| | | | — | | | | | | 17,152 | | | | | | (17,152) | | | | | | — | | |
Total segment revenue
|
| | | | 843,171 | | | | | | 48,539 | | | | | | (17,152) | | | | | | 874,558 | | |
Operating loss
|
| | | | (21,268) | | | | | | 1,477 | | | | | | — | | | | | | (19,791) | | |
Depreciation and amortization
|
| | | | $ 2,357 | | | | | | $ 2,224 | | | | | | $ — | | | | | | $ 4,581 | | |
Three Months Ended March 31, 2020
|
| |
Bright
HealthCare |
| |
NeueHealth
|
| |
Eliminations
|
| |
Consolidated
|
| ||||||||||||
Premium revenue
|
| | | | $ 188,733 | | | | | | $ 2,004 | | | | | | $ — | | | | | | $ 190,737 | | |
Service revenue
|
| | | | — | | | | | | 4,820 | | | | | | — | | | | | | 4,820 | | |
Investment income
|
| | | | 3,009 | | | | | | — | | | | | | — | | | | | | 3,009 | | |
Total revenue
|
| | | | 191,742 | | | | | | 6,824 | | | | | | — | | | | | | 198,566 | | |
Affiliated revenue
|
| | | | — | | | | | | 2,707 | | | | | | (2,707) | | | | | | — | | |
Total segment revenue
|
| | | | 191,742 | | | | | | 9,531 | | | | | | (2,707) | | | | | | 198,566 | | |
Operating loss
|
| | | | (6,110) | | | | | | (1,170) | | | | | | — | | | | | | (7,280) | | |
Depreciation and amortization
|
| | | | $ 262 | | | | | | $ 525 | | | | | | $ — | | | | | | $ 787 | | |
| | |
Redeemable
Noncontrolling Interest |
| |||
Balance at January 1, 2021
|
| | | | $ 39,600 | | |
Earnings attributable to noncontrolling interest
|
| | | | 288 | | |
Measurement adjustment
|
| | | | 329 | | |
Balance at March 31, 2021
|
| | | | $ 40,217 | | |
| | |
As of December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Assets | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | | $ 488,371 | | | | | | $ 522,910 | | |
Short-term investments
|
| | | | 499,928 | | | | | | 107,682 | | |
Accounts receivable, net of allowance of $2,602 and $287, respectively
|
| | | | 60,522 | | | | | | 787 | | |
Prepaids and other current assets
|
| | | | 130,986 | | | | | | 17,221 | | |
Total current assets
|
| | | | 1,179,807 | | | | | | 648,600 | | |
Other assets: | | | | | | | | | | | | | |
Long-term investments
|
| | | | 175,176 | | | | | | 115,348 | | |
Property, equipment and capitalized software, net
|
| | | | 12,264 | | | | | | 3,231 | | |
Goodwill
|
| | | | 263,035 | | | | | | 20,125 | | |
Intangible assets, net
|
| | | | 152,211 | | | | | | 18,712 | | |
Other non-current assets
|
| | | | 28,309 | | | | | | 14,339 | | |
Total other assets
|
| | | | 630,995 | | | | | | 171,755 | | |
Total assets
|
| | | | $ 1,810,802 | | | | | | $ 820,355 | | |
Liabilities, Redeemable Noncontrolling Interest, Redeemable Preferred Stock
and Shareholders’ Deficit |
| | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Medical costs payable
|
| | | | $ 249,777 | | | | | | $ 44,804 | | |
Accounts payable
|
| | | | 57,252 | | | | | | 33,143 | | |
Unearned revenue
|
| | | | 34,628 | | | | | | 16,005 | | |
Risk adjustment payable
|
| | | | 187,777 | | | | | | 86,803 | | |
Other current liabilities
|
| | | | 35,847 | | | | | | 14,140 | | |
Total current liabilities
|
| | | | 565,281 | | | | | | 194,895 | | |
Other liabilities
|
| | | | 28,578 | | | | | | 16,837 | | |
Total liabilities
|
| | | | 593,859 | | | | | | 211,732 | | |
Commitments and contingencies (Note 14) | | | | | | | | | | | | | |
Redeemable noncontrolling interests
|
| | | | 39,600 | | | | | | — | | |
Redeemable preferred stock, $0.0001 par value; 166,307,087 and 152,878,225 shares
authorized in 2020 and 2019, respectively; 164,244,893 and 119,221,767 shares issued and outstanding in 2020 and 2019, respectively |
| | | | 1,681,015 | | | | | | 871,990 | | |
Shareholders’ deficit: | | | | | | | | | | | | | |
Common stock, $0.0001 par value; 219,664,575 and 187,870,902 shares authorized in 2020
and 2019, respectively; 45,887,566 and 45,169,695 shares issued and outstanding in 2020 and 2019, respectively |
| | | | 5 | | | | | | 5 | | |
Additional paid-in capital
|
| | | | 9,886 | | | | | | 3,193 | | |
Accumulated deficit
|
| | | | (515,989) | | | | | | (267,547) | | |
Accumulated other comprehensive income (loss)
|
| | | | 2,426 | | | | | | 982 | | |
Total shareholders’ deficit
|
| | | | (503,672) | | | | | | (263,367) | | |
Total liabilities, redeemable noncontrolling interests, redeemable preferred stock and shareholders’ deficit
|
| | | | $ 1,810,802 | | | | | | $ 820,355 | | |
| | |
For the Years Ended December 31,
|
| |||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Revenue: | | | | | | | | | | | | | | | | | | | |
Premium revenue
|
| | | | $ 1,180,338 | | | | | | $ 272,323 | | | | | | $ 127,122 | | |
Service revenue
|
| | | | 18,514 | | | | | | — | | | | | | — | | |
Investment income
|
| | | | 8,468 | | | | | | 8,350 | | | | | | 3,510 | | |
Total revenue
|
| | | | 1,207,320 | | | | | | 280,673 | | | | | | 130,632 | | |
Operating costs: | | | | | | | | | | | | | | | | | | | |
Medical costs
|
| | | | 1,047,300 | | | | | | 224,387 | | | | | | 96,407 | | |
Operating costs
|
| | | | 409,334 | | | | | | 180,489 | | | | | | 95,836 | | |
Depreciation and amortization
|
| | | | 8,289 | | | | | | 1,134 | | | | | | 1,030 | | |
Total operating costs
|
| | | | 1,464,923 | | | | | | 406,010 | | | | | | 193,273 | | |
Loss before income taxes
|
| | | | (257,603) | | | | | | (125,337) | | | | | | (62,641) | | |
Income tax (benefit) expense
|
| | | | (9,161) | | | | | | — | | | | | | — | | |
Net loss
|
| | | | $ (248,442) | | | | | | $ (125,337) | | | | | | $ (62,641) | | |
Basic and diluted loss per share attributable to Bright Health, Inc. common shareholders
|
| | | | $ (5.47) | | | | | | $ (2.80) | | | | | | $ (1.42) | | |
Basic and diluted weighted-average common shares outstanding
|
| | | | 45,398 | | | | | | 44,829 | | | | | | 43,992 | | |
| | |
For the Years Ended December 31,
|
| |||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Net loss
|
| | | | $ (248,442) | | | | | | $ (125,337) | | | | | | $ (62,641) | | |
Other comprehensive income (loss): | | | | | | | | | | | | | | | | | | | |
Unrealized investment holding gains arising during the year,
net of tax of $0, $0 and $0, respectively |
| | | | 1,556 | | | | | | 1,211 | | | | | | 72 | | |
Less: reclassification adjustments for investment gains (losses),
net of tax of $0, $0 and $0, respectively |
| | | | 112 | | | | | | 38 | | | | | | (17) | | |
Other comprehensive income
|
| | | | 1,444 | | | | | | 1,173 | | | | | | 89 | | |
Comprehensive loss
|
| | | | $ (246,998) | | | | | | $ (124,164) | | | | | | $ (62,552) | | |
| | |
Redeemable Preferred Stock
|
| | |
Common Stock
|
| |
Additional
Paid-In Capital |
| |
Retained
Earnings (Deficit) |
| |
Accumulated
Other Comprehensive Income (Loss) |
| |
Total
|
| ||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| | |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||
Balance at January 1, 2018
|
| | | | 64,122 | | | | | | $ 241,690 | | | | | | | 43,421 | | | | | | $ 4 | | | | | | $ 755 | | | | | | $ (79,498) | | | | | | $ (280) | | | | | | $ (79,019) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (62,641) | | | | | | — | | | | | | (62,641) | | |
Issuance of preferred stock
|
| | | | 26,660 | | | | | | 203,000 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of common stock
|
| | | | — | | | | | | — | | | | | | | 1,288 | | | | | | — | | | | | | 57 | | | | | | — | | | | | | — | | | | | | 57 | | |
Share-based compensation
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 257 | | | | | | — | | | | | | — | | | | | | 257 | | |
Other comprehensive gain
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 89 | | | | | | 89 | | |
Balance at December 31, 2018
|
| | | | 90,782 | | | | | | 444,690 | | | | | | | 44,709 | | | | | | 4 | | | | | | 1,069 | | | | | | (142,139) | | | | | | (191) | | | | | | (141,257) | | |
Impact of adoption of accounting standards
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (71) | | | | | | — | | | | | | (71) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (125,337) | | | | | | — | | | | | | (125,337) | | |
Issuance of preferred stock
|
| | | | 28,440 | | | | | | 427,300 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of common stock
|
| | | | — | | | | | | — | | | | | | | 461 | | | | | | 1 | | | | | | 260 | | | | | | — | | | | | | — | | | | | | 261 | | |
Share-based compensation
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 1,864 | | | | | | — | | | | | | — | | | | | | 1,864 | | |
Other comprehensive gain
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,173 | | | | | | 1,173 | | |
Balance at December 31, 2019
|
| | | | 119,222 | | | | | | 871,990 | | | | | | | 45,170 | | | | | | 5 | | | | | | 3,193 | | | | | | (267,547) | | | | | | 982 | | | | | | (263,367) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (248,442) | | | | | | — | | | | | | (248,442) | | |
Issuance of preferred stock
|
| | | | 45,023 | | | | | | 809,025 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of common stock
|
| | | | — | | | | | | — | | | | | | | 718 | | | | | | — | | | | | | 1,241 | | | | | | — | | | | | | — | | | | | | 1,241 | | |
Share-based compensation
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 5,452 | | | | | | — | | | | | | — | | | | | | 5,452 | | |
Other comprehensive gain
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,444 | | | | | | 1,444 | | |
Balance at December 31, 2020
|
| | | | 164,245 | | | | | | $ 1,681,015 | | | | | | | 45,888 | | | | | | $ 5 | | | | | | $ 9,886 | | | | | | $ (515,989) | | | | | | $ 2,426 | | | | | | $ (503,672) | | |
| | |
For the Years Ended December 31,
|
| |||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Cash flows from operating activities: | | | | | | | | | | | | | | | | | | | |
Net loss
|
| | | | $ (248,442) | | | | | | $ (125,337) | | | | | | $ (62,641) | | |
Adjustments to reconcile net loss to net cash used in operating activities:
|
| | | | | | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 8,289 | | | | | | 1,134 | | | | | | 1,030 | | |
Share-based compensation
|
| | | | 5,452 | | | | | | 1,864 | | | | | | 257 | | |
Other, net
|
| | | | 2,667 | | | | | | (1,331) | | | | | | 89 | | |
Changes in assets and liabilities:
|
| | | | — | | | | | | — | | | | | | — | | |
Accounts receivable
|
| | | | 24,631 | | | | | | (201) | | | | | | (568) | | |
Other assets
|
| | | | (44,061) | | | | | | (8,788) | | | | | | (3,697) | | |
Medical cost payable
|
| | | | 78,591 | | | | | | 21,826 | | | | | | 17,133 | | |
Accounts payable and other liabilities
|
| | | | 97,012 | | | | | | 95,690 | | | | | | 17,948 | | |
Unearned revenue
|
| | | | 18,623 | | | | | | 6,935 | | | | | | 3,415 | | |
Net cash used in operating activities
|
| | | | (57,238) | | | | | | (8,208) | | | | | | (27,034) | | |
Cash flows from investing activities: | | | | | | | | | | | | | | | | | | | |
Purchases of investments
|
| | | | (916,823) | | | | | | (300,325) | | | | | | (166,817) | | |
Proceeds from sales, paydown, and maturities of investments
|
| | | | 463,887 | | | | | | 238,330 | | | | | | 160,571 | | |
Purchases of property and equipment
|
| | | | (6,474) | | | | | | (793) | | | | | | (694) | | |
Business acquisitions, net of cash acquired
|
| | | | (230,332) | | | | | | (31,855) | | | | | | — | | |
Net cash used in investing activities
|
| | | | (689,742) | | | | | | (94,643) | | | | | | (6,940) | | |
Cash flows from financing activities: | | | | | | | | | | | | | | | | | | | |
Proceeds from issuance of common stock
|
| | | | 1,241 | | | | | | 260 | | | | | | 57 | | |
Proceeds from issuance of preferred stock
|
| | | | 711,200 | | | | | | 423,800 | | | | | | 203,000 | | |
Net cash provided by financing activities
|
| | | | 712,441 | | | | | | 424,060 | | | | | | 203,057 | | |
Net increase (decrease) in cash and cash equivalents
|
| | | | (34,539) | | | | | | 321,209 | | | | | | 169,083 | | |
Cash and cash equivalents – beginning of year
|
| | | | 522,910 | | | | | | 201,701 | | | | | | 32,618 | | |
Cash and cash equivalents – end of year
|
| | | | $ 488,371 | | | | | | $ 522,910 | | | | | | $ 201,701 | | |
Supplemental disclosures of cash flow information: | | | | | | | | | | | | | | | | | | | |
Changes in unrealized gain on available-for-sale securities in OCI
|
| | | | $ 1,444 | | | | | | $ 1,173 | | | | | | $ 89 | | |
Supplemental schedule of noncash investing activities: | | | | | | | | | | | | | | | | | | | |
Redeemable preferred stock issued for acquisitions
|
| | | | $ 97,825 | | | | | | $ 3,500 | | | | | | $ — | | |
Contingent consideration
|
| | | | — | | | | | | 5,716 | | | | | | — | | |
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Compensation and fringe benefits
|
| | | | $ 133,009 | | | | | | $ 50,325 | | | | | | $ 30,037 | | |
Professional fees
|
| | | | 78,740 | | | | | | 40,601 | | | | | | 24,446 | | |
Technology | | | | | 19,433 | | | | | | 7,243 | | | | | | 2,541 | | |
Marketing and selling expense
|
| | | | 96,942 | | | | | | 49,711 | | | | | | 26,750 | | |
Other operating expenses
|
| | | | 81,210 | | | | | | 32,609 | | | | | | 12,062 | | |
Total operating costs
|
| | | | $ 409,334 | | | | | | $ 180,489 | | | | | | $ 95,836 | | |
|
Accounts receivable
|
| | | | $ 10,238 | | |
|
Prepaids and other current assets
|
| | | | 76 | | |
|
Property and equipment
|
| | | | 1,071 | | |
|
Intangible assets
|
| | | | 66,300 | | |
|
Other non-current assets
|
| | | | 6,468 | | |
|
Total Assets
|
| | | | 84,153 | | |
|
Medical costs payable
|
| | | | 6,973 | | |
|
Other current liabilities
|
| | | | 3,004 | | |
|
Other liabilities
|
| | | | 5,534 | | |
|
Total liabilities
|
| | | | 15,511 | | |
|
Net identified assets acquired
|
| | | | 68,642 | | |
|
Goodwill
|
| | | | 45,142 | | |
|
Redeemable noncontrolling interest
|
| | | | (39,600) | | |
|
Total purchase consideration
|
| | | | $ 74,184 | | |
| | |
Pro Forma Consolidated
Statements of Income (Loss) (Unaudited) |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Revenue | | | | | $ 1,293,923 | | | | | | $ 359,074 | | |
Net loss
|
| | | | (239,907) | | | | | | (123,415) | | |
|
Accounts receivable
|
| | | | $ 74,128 | | |
|
Prepaids and other current assets
|
| | | | 30,583 | | |
|
Property and equipment
|
| | | | 4,375 | | |
|
Intangible assets
|
| | | | 72,600 | | |
|
Other non-current assets
|
| | | | 2,906 | | |
|
Total Assets
|
| | | | 184,592 | | |
|
Medical costs payable
|
| | | | 119,408 | | |
|
Other current liabilities
|
| | | | 42,356 | | |
|
Other liabilities
|
| | | | 10,624 | | |
|
Total liabilities
|
| | | | 172,388 | | |
|
Net identified assets acquired
|
| | | | 12,204 | | |
|
Goodwill
|
| | | | 197,886 | | |
|
Total purchase consideration
|
| | | | $ 210,090 | | |
| | |
Pro Forma Consolidated
Statements of Income (Loss) (Unaudited) |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Revenue | | | | | $ 1,403,483 | | | | | | $ 776,751 | | |
Net loss
|
| | | | (264,400) | | | | | | (173,439) | | |
|
Prepaids and other current assets
|
| | | | $ 2,725 | | |
|
Property and equipment
|
| | | | 1,341 | | |
|
Intangible assets
|
| | | | 18,712 | | |
|
Other non-current assets
|
| | | | 3,962 | | |
|
Total Assets
|
| | | | 26,740 | | |
|
Other current liabilities
|
| | | | 2,776 | | |
|
Other liabilities
|
| | | | 3,018 | | |
|
Total liabilities
|
| | | | 5,794 | | |
|
Net identified assets acquired
|
| | | | 20,946 | | |
|
Goodwill
|
| | | | 20,007 | | |
|
Total purchase price
|
| | | | $ 40,953 | | |
| | |
Pro Forma Consolidated
Statements of Income (Loss) (Unaudited) |
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Revenue | | | | | $ 310,092 | | | | | | $ 155,196 | | |
Net loss
|
| | | | (125,565) | | | | | | (63,416) | | |
| | |
2020
|
| |||||||||||||||||||||
| | |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Carrying
Value |
| ||||||||||||
Cash equivalents
|
| | | | $ 153,743 | | | | | | $ — | | | | | | $ (3) | | | | | | $ 153,740 | | |
Available for sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 291,834 | | | | | | 1,246 | | | | | | (1) | | | | | | 293,079 | | |
Corporate obligations
|
| | | | 280,557 | | | | | | 1,104 | | | | | | (30) | | | | | | 281,631 | | |
State and municipal obligations
|
| | | | 18,459 | | | | | | 107 | | | | | | — | | | | | | 18,566 | | |
Commercial paper
|
| | | | 14,990 | | | | | | 1 | | | | | | — | | | | | | 14,991 | | |
Certificates of deposit
|
| | | | 53,504 | | | | | | 2 | | | | | | (1) | | | | | | 53,505 | | |
Other
|
| | | | 5,534 | | | | | | 2 | | | | | | — | | | | | | 5,536 | | |
Total available-for-sale securities
|
| | | | 664,878 | | | | | | 2,462 | | | | | | (32) | | | | | | 667,308 | | |
Held to maturity: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 6,677 | | | | | | — | | | | | | — | | | | | | 6,677 | | |
Certificates of deposit
|
| | | | 1,119 | | | | | | — | | | | | | — | | | | | | 1,119 | | |
Total held-to-maturity securities
|
| | | | 7,796 | | | | | | — | | | | | | — | | | | | | 7,796 | | |
Total investments
|
| | | | $ 826,417 | | | | | | $ 2,462 | | | | | | $ (35) | | | | | | $ 828,844 | | |
| | |
2019
|
| |||||||||||||||||||||
| | |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Carrying
Value |
| ||||||||||||
Cash equivalents
|
| | | | $ 444,314 | | | | | | $ 1 | | | | | | $ — | | | | | | $ 444,315 | | |
Available for sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 143,746 | | | | | | 638 | | | | | | (10) | | | | | | 144,374 | | |
Corporate obligations
|
| | | | 69,034 | | | | | | 353 | | | | | | (4) | | | | | | 69,383 | | |
Asset-backed securities
|
| | | | 2,501 | | | | | | 4 | | | | | | — | | | | | | 2,505 | | |
Total available-for-sale securities
|
| | | | 215,281 | | | | | | 995 | | | | | | (14) | | | | | | 216,262 | | |
Held to maturity: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 5,577 | | | | | | — | | | | | | — | | | | | | 5,577 | | |
Certificates of deposit
|
| | | | 1,191 | | | | | | — | | | | | | — | | | | | | 1,191 | | |
Total held-to-maturity securities
|
| | | | 6,768 | | | | | | — | | | | | | — | | | | | | 6,768 | | |
Total investments
|
| | | | $ 666,363 | | | | | | $ 996 | | | | | | $ (14) | | | | | | $ 667,345 | | |
| | |
December 31, 2020
|
| |||||||||||||||||||||||||||||||||
| | |
Less Than 12 Months
|
| |
12 Months or Greater
|
| |
Total
|
| |||||||||||||||||||||||||||
Description of Investments
|
| |
Fair
Value |
| |
Unrealized
Losses |
| |
Fair
Value |
| |
Unrealized
Losses |
| |
Fair
Value |
| |
Unrealized
Losses |
| ||||||||||||||||||
Cash equivalents
|
| | | | $ 25,007 | | | | | | $ (3) | | | | | | $ — | | | | | | $ — | | | | | | $ 25,007 | | | | | | $ (3) | | |
U.S. government and agency obligations
|
| | | | 12,507 | | | | | | (1) | | | | | | — | | | | | | — | | | | | | 12,507 | | | | | | (1) | | |
Corporate obligations
|
| | | | 121,006 | | | | | | (30) | | | | | | — | | | | | | — | | | | | | 121,006 | | | | | | (30) | | |
Commercial paper
|
| | | | 999 | | | | | | — | | | | | | — | | | | | | — | | | | | | 999 | | | | | | — | | |
Certificates of deposit
|
| | | | 14,003 | | | | | | (1) | | | | | | — | | | | | | — | | | | | | 14,003 | | | | | | (1) | | |
Total bonds
|
| | | | $ 173,522 | | | | | | $ (35) | | | | | | $ — | | | | | | $ — | | | | | | $ 173,522 | | | | | | $ (35) | | |
| | |
December 31, 2019
|
| |||||||||||||||||||||||||||||||||
| | |
Less Than 12 Months
|
| |
12 Months or Greater
|
| |
Total
|
| |||||||||||||||||||||||||||
Description of Investments
|
| |
Fair
Value |
| |
Unrealized
Losses |
| |
Fair
Value |
| |
Unrealized
Losses |
| |
Fair
Value |
| |
Unrealized
Losses |
| ||||||||||||||||||
U.S. government and agency obligations
|
| | | | 8,469 | | | | | | (9) | | | | | | 1,645 | | | | | | (1) | | | | | | 10,114 | | | | | | (10) | | |
Corporate obligations
|
| | | | 5,498 | | | | | | (4) | | | | | | — | | | | | | — | | | | | | 5,498 | | | | | | (4) | | |
Total bonds
|
| | | | $ 13,967 | | | | | | $ (13) | | | | | | $ 1,645 | | | | | | $ (1) | | | | | | $ 15,612 | | | | | | $ (14) | | |
| | |
2020
|
| |||||||||
| | |
Amortized
Cost |
| |
Fair
Value |
| ||||||
Due in one year or less
|
| | | | $ 497,885 | | | | | | $ 498,865 | | |
Due after one year through five years
|
| | | | 165,793 | | | | | | 167,242 | | |
Due after five years through 10 years
|
| | | | — | | | | | | — | | |
Due after 10 years
|
| | | | 1,200 | | | | | | 1,200 | | |
Total debt securities
|
| | | | $ 664,878 | | | | | | $ 667,307 | | |
| | |
2020
|
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Cash equivalents
|
| | | | $ 149,499 | | | | | | $ 4,019 | | | | | | $ — | | | | | | $ 153,518 | | |
Available for sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 197,886 | | | | | | 95,193 | | | | | | — | | | | | | 293,079 | | |
Corporate obligations
|
| | | | — | | | | | | 281,631 | | | | | | — | | | | | | 281,631 | | |
State and municipal obligations
|
| | | | — | | | | | | 18,566 | | | | | | — | | | | | | 18,566 | | |
Commercial paper
|
| | | | — | | | | | | 14,991 | | | | | | — | | | | | | 14,991 | | |
Certificates of deposit
|
| | | | — | | | | | | 53,505 | | | | | | — | | | | | | 53,505 | | |
Other
|
| | | | — | | | | | | 5,536 | | | | | | — | | | | | | 5,536 | | |
Total assets at fair value
|
| | | | $ 347,385 | | | | | | $ 473,441 | | | | | | $ — | | | | | | $ 820,826 | | |
Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | |
Contingent consideration
|
| | | | $ — | | | | | | $ — | | | | | | $ 5,716 | | | | | | $ 5,716 | | |
| | |
2019
|
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Cash equivalents
|
| | | | $ 444,215 | | | | | | $ 100 | | | | | | $ — | | | | | | $ 444,315 | | |
Available for sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 95,149 | | | | | | 49,225 | | | | | | — | | | | | | 144,374 | | |
Corporate obligations
|
| | | | — | | | | | | 69,383 | | | | | | — | | | | | | 69,383 | | |
Asset-backed securities
|
| | | | — | | | | | | 2,505 | | | | | | — | | | | | | 2,505 | | |
Total assets at fair value
|
| | | | $ 539,364 | | | | | | $ 121,213 | | | | | | $ — | | | | | | $ 660,577 | | |
Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | |
Contingent consideration
|
| | | | $ — | | | | | | $ — | | | | | | $ 5,716 | | | | | | $ 5,716 | | |
| | |
2020
|
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Cash equivalents
|
| | | | $ 222 | | | | | | $ — | | | | | | $ — | | | | | | $ 222 | | |
Held to maturity: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 6,732 | | | | | | — | | | | | | — | | | | | | 6,732 | | |
Certificates of deposit
|
| | | | — | | | | | | 1,119 | | | | | | — | | | | | | 1,119 | | |
Total held to maturity
|
| | | | $ 6,954 | | | | | | $ 1,119 | | | | | | $ — | | | | | | $ 8,073 | | |
| | |
2019
|
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Held to maturity: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | $ 5,577 | | | | | | $ — | | | | | | $ — | | | | | | $ 5,577 | | |
Certificates of deposit
|
| | | | — | | | | | | 1,191 | | | | | | — | | | | | | 1,191 | | |
Total held to maturity
|
| | | | $ 5,577 | | | | | | $ 1,191 | | | | | | $ — | | | | | | $ 6,768 | | |
| | |
2020
|
| |
2019
|
| ||||||
Software | | | | | $ 13,202 | | | | | | $ 3,235 | | |
Leasehold improvements
|
| | | | 3,604 | | | | | | 2,331 | | |
Medical equipment
|
| | | | 705 | | | | | | 33 | | |
Gross property and equipment
|
| | | | 17,511 | | | | | | 5,599 | | |
Less accumulated depreciation
|
| | | | (5,247) | | | | | | (2,368) | | |
Property and equipment, net
|
| | | | $ 12,264 | | | | | | $ 3,231 | | |
| | |
Bright HealthCare
|
| |
NeueHealth
|
| ||||||||||||||||||
| | |
Gross Carrying
Amount |
| |
Cumulative
Impairment |
| |
Gross Carrying
Amount |
| |
Cumulative
Impairment |
| ||||||||||||
Balance at January 1, 2019
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Acquisitions
|
| | | | — | | | | | | — | | | | | | 20,125 | | | | | | — | | |
Balance at December 31, 2019
|
| | | | — | | | | | | — | | | | | | 20,125 | | | | | | — | | |
Acquisitions
|
| | | | 197,886 | | | | | | | | | | | | 45,142 | | | | | | | | |
Purchase adjustments
|
| | | | — | | | | | | — | | | | | | (118) | | | | | | — | | |
Balance at December 31, 2020
|
| | | $ | 197,886 | | | | | $ | — | | | | | $ | 65,149 | | | | | $ | — | | |
| | |
December 31, 2020
|
| |
December 31, 2019
|
| ||||||||||||||||||
| | |
Gross Carrying
Amount |
| |
Accumulated
Amortization |
| |
Gross Carrying
Amount |
| |
Accumulated
Amortization |
| ||||||||||||
Customer relationships
|
| | | | $ 117,451 | | | | | | $ 3,664 | | | | | | $ 11,251 | | | | | | $ — | | |
Trade names
|
| | | | 38,161 | | | | | | 1,604 | | | | | | 7,461 | | | | | | — | | |
Other | | | | | 2,000 | | | | | | 133 | | | | | | — | | | | | | — | | |
Total | | | | | $ 157,612 | | | | | | $ 5,401 | | | | | | $ 18,712 | | | | | | $ — | | |
| | |
2020
|
| |
2019
|
| ||||||||||||||||||
| | |
Fair Value
|
| |
Weighted-
Average Useful Life (in years) |
| |
Fair Value
|
| |
Weighted-
Average Useful Life (in years) |
| ||||||||||||
Customer relationships
|
| | | | $ 106,200 | | | | | | 10.6 | | | | | | $ 11,251 | | | | | | 10.0 | | |
Trade names
|
| | | | 30,700 | | | | | | 15.0 | | | | | | 7,461 | | | | | | 15.0 | | |
Other | | | | | 2,000 | | | | | | 10.0 | | | | | | — | | | | | | — | | |
Total | | | | | $ 138,900 | | | | | | 11.6 | | | | | | $ 18,712 | | | | | | 12.0 | | |
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Medical costs payable – January 1
|
| | | | $ 44,804 | | | | | | $ 22,978 | | | | | | $ 5,845 | | |
Incurred related to:
|
| | | | | | | | | | | | | | |||||
Current year
|
| | | | 1,057,064 | | | | | | 233,447 | | | | | | 97,587 | | |
Prior year
|
| | | | (8,622) | | | | | | (7,427) | | | | | | (1,181) | | |
Total incurred
|
| | | | 1,048,442 | | | | | | 226,020 | | | | | | (96,406) | | |
Paid related to:
|
| | | | | | | | | | | | | | |||||
Current year
|
| | | | 941,401 | | | | | | 188,919 | | | | | | 74,750 | | |
Prior year
|
| | | | 33,479 | | | | | | 15,275 | | | | | | 4,523 | | |
Total paid
|
| | | | 974,880 | | | | | | 204,194 | | | | | | 79,273 | | |
Acquired claims liabilities
|
| | | | 131,411 | | | | | | — | | | | | | — | | |
Medical costs payable – December 31
|
| | | | $ 249,777 | | | | | | $ 44,804 | | | | | | $ 22,978 | | |
| | |
2020
|
| |
2019
|
| ||||||
Claims unpaid
|
| | | | $ 23,269 | | | | | | $ 3,245 | | |
Risk sharing amounts payable
|
| | | | 16,963 | | | | | | 3,572 | | |
Claims adjustment expense liability
|
| | | | 2,487 | | | | | | 1,345 | | |
Incurred but not reported (IBNR)
|
| | | | 207,058 | | | | | | 36,642 | | |
Total medical costs payable
|
| | | | $ 249,777 | | | | | | $ 44,804 | | |
| | |
Incurred Claims and Allocated Claim Adjustment
Expenses, Net of Reinsurance (in thousands) |
| |
Total Incurred but
Not Reported Liabilities Plus Expected Development on Reported Claims |
| ||||||||||||||||||
| | |
For the Years Ended December 31,
|
| |||||||||||||||||||||
Accident Year
|
| |
(Unaudited)
2018 |
| |
(Unaudited)
2019 |
| |
2020
|
| |||||||||||||||
2018 | | | | | 435,729 | | | | | | 435,230 | | | | | | 436,786 | | | | | | 41 | | |
2019 | | | | | — | | | | | | 733,216 | | | | | | 724,120 | | | | | | 1,321 | | |
2020 | | | | | — | | | | | | — | | | | | | 1,303,467 | | | | | | 244,593 | | |
Total
|
| | | | | | | | | | | | | | | | $ 2,464,373 | | | | | | | | |
| | |
Cumulative Paid Claims and Allocated Claim Adjustment
Expenses, Net of Reinsurance (in thousands) |
| |||||||||||||||
| | |
For the Years Ended December 31,
|
| |||||||||||||||
Accident Year
|
| |
(Unaudited)
2018 |
| |
(Unaudited)
2019 |
| |
2020
|
| |||||||||
2018 | | | | | 366,558 | | | | | | 435,065 | | | | | | 436,882 | | |
2019 | | | | | — | | | | | | 620,495 | | | | | | 717,624 | | |
2020 | | | | | — | | | | | | — | | | | | | 1,065,531 | | |
Total
|
| | | | | | | | | | | | | | | | $ 2,220,037 | | |
All outstanding liabilities before 2018, net of reinsurance
|
| | | | | | | | | | | | | | | | 121 | | |
Liabilities for claim and claim adjustment expenses, net of reinsurance
|
| | | | | | | | | | | | | | | | $ 244,457 | | |
| | |
December 31, 2020
|
| |||
Net outstanding liabilities
|
| | | | $ 244,457 | | |
Reinsurance recoverable on unpaid claims
|
| | | | 5,320 | | |
Total gross liability for unpaid claims and claims
|
| | | | $ 249,777 | | |
Preferred Stock Series
|
| |
Preferred
Shares Authorized |
| |
Preferred
Shares Issued |
| |
Preferred
Shares Outstanding |
| |
Carrying
Value |
| |
Liquidation
Preference |
| |
Common Stock
Issuable Upon Conversion |
| ||||||||||||||||||
A | | | | | 32,439 | | | | | | 32,439 | | | | | | 32,439 | | | | | | $ 81,690 | | | | | | $ 82,718 | | | | | | 7,339 | | |
B | | | | | 32,278 | | | | | | 32,278 | | | | | | 32,278 | | | | | | 163,000 | | | | | | 163,000 | | | | | | 32,278 | | |
C | | | | | 26,065 | | | | | | 26,065 | | | | | | 26,065 | | | | | | 200,000 | | | | | | 200,000 | | | | | | 26,065 | | |
D | | | | | 48,101 | | | | | | 48,101 | | | | | | 48,101 | | | | | | 718,500 | | | | | | 722,710 | | | | | | 48,101 | | |
E | | | | | 27,424 | | | | | | 25,362 | | | | | | 25,362 | | | | | | 517,825 | | | | | | 517,825 | | | | | | 25,362 | | |
Total | | | | | 166,307 | | | | | | 164,245 | | | | | | 164,245 | | | | | | $ 1,681,015 | | | | | | $ 1,686,253 | | | | | | 139,145 | | |
Preferred Stock Series
|
| |
Preferred
Shares Authorized |
| |
Preferred
Shares Issued |
| |
Preferred
Shares Outstanding |
| |
Carrying
Value |
| |
Liquidation
Preference |
| |
Common Stock
Issuable Upon Conversion |
| ||||||||||||||||||
A | | | | | 39,778 | | | | | | 32,439 | | | | | | 32,439 | | | | | | $ 81,690 | | | | | | $ 82,718 | | | | | | 7,339 | | |
B | | | | | 32,278 | | | | | | 32,278 | | | | | | 32,278 | | | | | | 163,000 | | | | | | 163,000 | | | | | | 32,278 | | |
C | | | | | 26,065 | | | | | | 26,065 | | | | | | 26,065 | | | | | | 200,000 | | | | | | 200,000 | | | | | | 26,065 | | |
D | | | | | 54,757 | | | | | | 28,440 | | | | | | 28,440 | | | | | | 427,300 | | | | | | 427,300 | | | | | | 28,440 | | |
Total | | | | | 152,878 | | | | | | 119,222 | | | | | | 119,222 | | | | | | $ 871,990 | | | | | | $ 873,018 | | | | | | 94,122 | | |
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Risk-free interest rate
|
| | | | 0.88% | | | | | | 2.22% | | | | | | 2.75% | | |
Expected volatility
|
| | | | 31.3% | | | | | | 28.3% | | | | | | 28.5% | | |
Expected dividend rate
|
| | | | 0.0% | | | | | | 0.0% | | | | | | 0.0% | | |
Forfeiture rate
|
| | | | 14.5% | | | | | | 14.5% | | | | | | 14.5% | | |
Expected life in years
|
| | | | 6.1 | | | | | | 6.1 | | | | | | 6.1 | | |
| | |
Shares
|
| |
Weighted-
Average Exercise Price |
| |
Weighted-Average
Remaining Contractual Life (In Years) |
| |
Aggregate
Intrinsic Value |
| ||||||||||||
Outstanding at January 1, 2020
|
| | | | 12,624 | | | | | | 3.17 | | | | | | 9.0 | | | | | | $ 27,065 | | |
Granted
|
| | | | 10,325 | | | | | | 5.71 | | | | | | | | | | | | | | |
Exercised
|
| | | | (718) | | | | | | 2.23 | | | | | | | | | | | | | | |
Forfeited
|
| | | | (910) | | | | | | 3.72 | | | | | | | | | | | | | | |
Expired
|
| | | | (12) | | | | | | 3.06 | | | | | | | | | | | | | | |
Outstanding at December 31, 2020
|
| | | | 21,309 | | | | | | $ 4.42 | | | | | | 8.7 | | | | | | $ 53,573 | | |
| | |
Shares
|
| |
Weighted-Average
Grant Date Fair Value per Share |
| ||||||
RSA unvested at January 1, 2020
|
| | | | 97 | | | | | | 0.04 | | |
RSA granted during the year
|
| | | | — | | | | | | — | | |
RSA canceled during the year
|
| | | | — | | | | | | — | | |
RSA vested during the year
|
| | | | (97) | | | | | | 0.04 | | |
RSA unvested at December 31, 2020
|
| | | | — | | | | | | $ — | | |
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Net loss
|
| | | | $ (248,442) | | | | | | $ (125,337) | | | | | | $ (62,641) | | |
Weighted-average number of shares outstanding used to compute
net loss per share attributable to common stockholders, basic and diluted |
| | | | 45,398 | | | | | | 44,829 | | | | | | 43,992 | | |
Net loss per share attributable to common stockholders, basic and diluted
|
| | | | $ (5.47) | | | | | | $ (2.80) | | | | | | $ (1.42) | | |
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Redeemable preferred stock
|
| | | | 139,145 | | | | | | 94,122 | | | | | | 65,682 | | |
Stock options to purchase common stock
|
| | | | 21,309 | | | | | | 12,624 | | | | | | 4,240 | | |
Total | | | | | 160,454 | | | | | | 106,746 | | | | | | 69,922 | | |
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Current | | | | | $ — | | | | | | $ — | | | | | | $ — | | |
Deferred | | | | | (9,161) | | | | | | — | | | | | | — | | |
Total income tax (benefit) expense
|
| | | | $ (9,161) | | | | | | $ — | | | | | | $ — | | |
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Tax (benefit) expense at federal statutory rate
|
| | | | $ (52,173) | | | | | | $ (26,321) | | | | | | $ (13,155) | | |
Increase (decrease) in income taxes resulting from: | | | | | | | | | | | | | | | | | | | |
Adjustment to deferred tax valuation allowance
|
| | | | 43,012 | | | | | | 26,321 | | | | | | 13,155 | | |
Income tax (benefit) expense
|
| | | | $ (9,161) | | | | | | $ — | | | | | | $ — | | |
Effective tax rate
|
| | | | 3.6% | | | | | | 0.0% | | | | | | 0.0% | | |
| | |
2020
|
| |
2019
|
| ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Net operating loss carryforward
|
| | | | $ 107,002 | | | | | | $ 53,325 | | |
Premiums received in advance
|
| | | | 1,454 | | | | | | 672 | | |
Accrued salaries and benefits
|
| | | | 5,246 | | | | | | 1,557 | | |
Section 195 startup expenditures
|
| | | | 2,164 | | | | | | 2,364 | | |
Other
|
| | | | 1,173 | | | | | | 371 | | |
| | | | | 117,039 | | | | | | 58,289 | | |
Less valuation allowance
|
| | | | (99,537) | | | | | | (57,491) | | |
Total deferred tax assets
|
| | | | 17,502 | | | | | | 798 | | |
Deferred tax liabilities: | | | | | | | | | | | | | |
Prepaid expenses
|
| | | | (1,195) | | | | | | (373) | | |
Fixed assets
|
| | | | (628) | | | | | | (151) | | |
Goodwill and intangible assets
|
| | | | (15,447) | | | | | | — | | |
Unrealized gains
|
| | | | (509) | | | | | | — | | |
Investment income
|
| | | | (3) | | | | | | (274) | | |
Total deferred tax liabilities
|
| | | | (17,782) | | | | | | (798) | | |
Net deferred tax liabilities
|
| | | | $ (280) | | | | | | $ — | | |
| | |
Balance Sheet Location
|
| |
2020
|
| |
2019
|
| |||||||||
Assets | | | | | | | | | | | | | | | | | | | |
Operating lease ROU assets
|
| | | | Othernon-currentassets | | | | | | $ 26,965 | | | | | | $ 14,028 | | |
Liabilities | | | | | | | | | | | | | | | | | | | |
Operating lease liabilities — current
|
| | | | Othercurrentliabilities | | | | | | 6,569 | | | | | | 3,520 | | |
Operating lease liabilities — noncurrent
|
| | | | Otherliabilities | | | | | | 21,851 | | | | | | 10,950 | | |
Total lease liabilities
|
| | | | | | | | | | $ 28,420 | | | | | | $ 14,470 | | |
| | |
2020
|
| |
2019
|
| ||||||
Operating cash flows from operating leases
|
| | | | $ 6,131 | | | | | | $ 1,998 | | |
ROU assets obtained in exchange for new lease liabilities
|
| | | | 7,793 | | | | | | 274 | | |
ROU assets obtained from acquisitions
|
| | | | 8,392 | | | | | | 3,925 | | |
Weighted-average remaining lease term (in years)
|
| | | | 5.6 | | | | | | 5.2 | | |
Weighted-average discount rate
|
| | | | 6.0% | | | | | | 6.0% | | |
| | |
Minimum Lease
Payments |
| |||
Years ending December 31: | | | | | | | |
2021
|
| | | | $ 7,356 | | |
2022
|
| | | | 6,692 | | |
2023
|
| | | | 5,409 | | |
2024
|
| | | | 4,858 | | |
2025
|
| | | | 3,553 | | |
Thereafter
|
| | | | 6,073 | | |
Undiscounted future minimum payments
|
| | | | 33,941 | | |
Imputed interest
|
| | | | (5,521) | | |
Total reported lease liability
|
| | | | $ 28,420 | | |
| | |
Bright
HealthCare |
| |
NeueHealth
|
| |
Eliminations
|
| |
Consolidated
|
| ||||||||||||
Premium revenue
|
| | | | $ 1,172,545 | | | | | | $ 7,793 | | | | | | $ — | | | | | | $1,180,338 | | |
Service revenue
|
| | | | — | | | | | | 18,514 | | | | | | — | | | | | | 18,514 | | |
Investment income
|
| | | | 8,468 | | | | | | — | | | | | | — | | | | | | 8,468 | | |
Total unaffiliated revenue
|
| | | | 1,181,013 | | | | | | 26,307 | | | | | | — | | | | | | 1,207,320 | | |
Affiliated revenue
|
| | | | — | | | | | | 10,840 | | | | | | (10,840) | | | | | | — | | |
Total segment revenue
|
| | | | 1,181,013 | | | | | | 37,147 | | | | | | (10,840) | | | | | | 1,207,320 | | |
Loss before income taxes
|
| | | | (248,896) | | | | | | (8,707) | | | | | | — | | | | | | (257,603) | | |
Depreciation and amortization
|
| | | | $ 6,394 | | | | | | $ 1,895 | | | | | | $ — | | | | | | $ 8,289 | | |
| | |
Redeemable
Noncontrolling Interest |
| |||
Balance at January 1, 2020
|
| | | | $ — | | |
Acquisitions
|
| | | | 39,600 | | |
Balance at December 31, 2020
|
| | | | $ 39,600 | | |
| | |
For the Years Ended December 31,
|
| |||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Revenue: | | | | | | | | | | | | | | | | | | | |
Investment income
|
| | | | 26 | | | | | | 16 | | | | | | 8 | | |
Total revenue
|
| | | | 26 | | | | | | 16 | | | | | | 8 | | |
Operating costs: | | | | | | | | | | | | | | | | | | | |
Operating costs
|
| | | | 5,867 | | | | | | 2,194 | | | | | | 892 | | |
Total operating costs
|
| | | | 5,867 | | | | | | 2,194 | | | | | | 892 | | |
Loss before income taxes and equity in net loss of subsidiaries
|
| | | | (5,841) | | | | | | (2,178) | | | | | | (884) | | |
Income tax (benefit) expense
|
| | | | — | | | | | | (123) | | | | | | (151) | | |
Loss before equity in net loss of subsidiaries
|
| | | | (5,841) | | | | | | (2,055) | | | | | | (733) | | |
Equity in net loss of subsidiaries
|
| | | | (242,601) | | | | | | (123,282) | | | | | | (61,908) | | |
Net loss
|
| | | | (248,442) | | | | | | (125,337) | | | | | | (62,641) | | |
Unrealized investment holding gains
|
| | | | 1,556 | | | | | | 1,211 | | | | | | 72 | | |
Less: reclassification adjustments for investment gains (losses)
|
| | | | 112 | | | | | | 38 | | | | | | (17) | | |
Other comprehensive income
|
| | | | 1,444 | | | | | | 1,173 | | | | | | 89 | | |
Comprehensive loss
|
| | | | $ (246,998) | | | | | | $ (124,164) | | | | | | $ (62,552) | | |
| | |
As of December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Assets | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | | $ 1,708 | | | | | | $ 563 | | |
Short-term investments
|
| | | | 1,119 | | | | | | 1,191 | | |
Investment in subsidiaries
|
| | | | 1,172,126 | | | | | | 605,702 | | |
Related-party receivable, net
|
| | | | — | | | | | | 123 | | |
Other assets
|
| | | | 64 | | | | | | 62 | | |
Total assets
|
| | | | 1,175,017 | | | | | | 607,641 | | |
Liabilities, Redeemable Preferred Stock and Shareholders’ Deficit | | | | | | | | | | | | | |
Related-party payable, net
|
| | | | 100 | | | | | | — | | |
Commitments and contingencies (Note 14) | | | | | | | | | | | | | |
Redeemable preferred stock, $0.0001 par value; 166,307,087 and 152,878,225 shares authorized in 2020 and 2019, respectively; 164,244,893 and 119,221,767 shares issued and outstanding in 2020 and 2019, respectively
|
| | | | 1,681,015 | | | | | | 871,990 | | |
Shareholders’ equity (deficit): | | | | | | | | | | | | | |
Common stock, $0.0001 par value; 219,664,575 and 187,870,902 shares authorized in 2020 and 2019, respectively; 45,887,566 and 45,169,695 shares issued and outstanding in 2020 and 2019, respectively
|
| | | | 5 | | | | | | 5 | | |
Additional paid-in capital
|
| | | | 9,886 | | | | | | 3,193 | | |
Retained earnings (deficit)
|
| | | | (515,989) | | | | | | (267,547) | | |
Total shareholders’ deficit
|
| | | | (506,098) | | | | | | (264,349) | | |
Total liabilities, redeemable preferred stock and shareholders’ deficit
|
| | | | $ 1,175,017 | | | | | | $ 607,641 | | |
| | |
For the Years Ended December 31,
|
| |||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Net cash used in operating activities
|
| | | | (168) | | | | | | (557) | | | | | | (284) | | |
Cash flows from investing activities: | | | | | | | | | | | | | | | | | | | |
Purchases of investments
|
| | | | (1,119) | | | | | | (1,191) | | | | | | (455) | | |
Proceeds from sales, paydown, and maturities of investments
|
| | | | 1,191 | | | | | | 455 | | | | | | 1,727 | | |
Capital contributions to operating subsidiaries
|
| | | | (480,869) | | | | | | (390,945) | | | | | | (204,300) | | |
Business acquisition, net of cash acquired
|
| | | | (230,331) | | | | | | (31,855) | | | | | | — | | |
Net cash used in investing activities
|
| | | | (711,128) | | | | | | (423,536) | | | | | | (203,028) | | |
Cash flows from financing activities: | | | | | | | | | | | | | | | | | | | |
Proceeds from issuance of common stock
|
| | | | 1,241 | | | | | | 260 | | | | | | 57 | | |
Proceeds from issuance of preferred stock
|
| | | | 711,200 | | | | | | 423,800 | | | | | | 203,000 | | |
Net cash provided by financing activities
|
| | | | 712,441 | | | | | | 424,060 | | | | | | 203,057 | | |
Net increase in cash and cash equivalents
|
| | | | 1,145 | | | | | | (33) | | | | | | (255) | | |
Cash and cash equivalents – beginning of year
|
| | | | 563 | | | | | | 596 | | | | | | 851 | | |
Cash and cash equivalents – end of year
|
| | | | $ 1,708 | | | | | | $ 563 | | | | | | $ 596 | | |
| | |
THNM
|
| |
Zipnosis
|
| ||||||
Cash and cash equivalents
|
| | | | $ 24,059 | | | | | | $ 3,194 | | |
Accounts receivable
|
| | | | 714 | | | | | | 1,062 | | |
Short-term investments
|
| | | | 4,677 | | | | | | — | | |
Prepaids and other current assets
|
| | | | 8,337 | | | | | | 141 | | |
Property and equipment
|
| | | | — | | | | | | 232 | | |
Intangible assets
|
| | | | 8,250 | | | | | | 8,580 | | |
Long-term investments
|
| | | | 13,081 | | | | | | — | | |
Other non-current assets
|
| | | | 1,324 | | | | | | 766 | | |
Total Assets
|
| | | | 60,442 | | | | | | 13,975 | | |
Medical costs payable
|
| | | | 13,268 | | | | | | — | | |
Accounts payable
|
| | | | 14,663 | | | | | | 136 | | |
Other current liabilities
|
| | | | 6,327 | | | | | | 785 | | |
Other liabilities
|
| | | | 993 | | | | | | 1,998 | | |
Total liabilities
|
| | | | 35,251 | | | | | | 2,919 | | |
Net identified assets acquired
|
| | | | 25,191 | | | | | | 11,056 | | |
Goodwill
|
| | | | 2,282 | | | | | | 46,180 | | |
Total purchase consideration
|
| | | | $ 27,473 | | | | | | $ 57,236 | | |
| | |
As of April 30,
2020 |
| |||
Assets | | | | | | | |
Current assets: | | | | | | | |
Cash
|
| | |
|
$ 2,500
|
| |
Premiums and risk adjustment receivables
|
| | |
|
74,578
|
| |
Other receivables
|
| | |
|
25,162
|
| |
Prepaid and other assets
|
| | |
|
4,971
|
| |
Total current assets
|
| | | | 107,211 | | |
Other assets: | | | | | | | |
Restricted cash
|
| | |
|
359
|
| |
Property, plant and equipment, net
|
| | |
|
4,375
|
| |
Other receivables
|
| | |
|
350
|
| |
Deposits and other assets
|
| | |
|
176
|
| |
Total other assets
|
| | | | 5,260 | | |
Total assets
|
| | | | $ 112,471 | | |
Liabilities and Stockholders’ Deficit | | | | | | | |
Current liabilities: | | | | | | | |
Medical claims payable
|
| | |
|
$ 90,118
|
| |
Risk-sharing arrangements
|
| | |
|
31,152
|
| |
Accrued expenses
|
| | |
|
36,074
|
| |
Accounts payable
|
| | |
|
2,354
|
| |
Accrued payroll and related liabilities
|
| | |
|
1,688
|
| |
Total current liabilities
|
| | | | 161,386 | | |
Subordinated notes payable – related parties
|
| | |
|
33,000
|
| |
Total liabilities
|
| | | | 194,386 | | |
Stockholders’ Deficit | | | | | | | |
Common stock:
|
| | | | | | |
Class A-1, no par value, 450,000 shares authorized, 100,000 shares issued and
outstanding |
| | |
|
—
|
| |
Class A-2, no par value, 450,000 shares authorized, 100,000 shares issued and
outstanding |
| | |
|
—
|
| |
Class B, no par value, 100,000 shares authorized, 4,500 shares issued and outstanding
|
| | |
|
—
|
| |
Additional paid-in capital
|
| | |
|
13,322
|
| |
Accumulated deficit
|
| | |
|
(95,237)
|
| |
Total stockholders’ deficit
|
| | | | (81,915) | | |
Total liabilities and stockholders’ deficit
|
| | | | $ 112,471 | | |
| | |
Ten Months
Ended April 30, 2020 |
| |||
Revenue | | | | | | | |
Medicare premiums
|
| | |
|
$ 446,381
|
| |
Medi-Cal premiums
|
| | |
|
370
|
| |
Other revenue
|
| | |
|
109
|
| |
Total revenue
|
| | | | 446,860 | | |
Expenses | | | | | | | |
Healthcare services
|
| | |
|
434,607
|
| |
Healthcare services to affiliates
|
| | |
|
2,620
|
| |
Marketing, general and administrative expenses
|
| | |
|
47,906
|
| |
Salaries and benefits
|
| | |
|
15,467
|
| |
Depreciation and amortization
|
| | |
|
1,293
|
| |
Interest expense, net
|
| | |
|
1,312
|
| |
Other expense
|
| | |
|
4
|
| |
Total expenses
|
| | | | 503,209 | | |
Loss before taxes
|
| | | | (56,349) | | |
Income tax (benefit) expense
|
| | | | 1 | | |
Net loss
|
| | | | $ (56,350) | | |
| | |
Class A-1
Common Stock |
| |
Class A-2
Common Stock |
| |
Class B
Common Stock |
| |
Additional
Paid-In Capital |
| |
Accumulated
Deficit |
| |
Total
|
| ||||||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||
Balance at June 30, 2019
|
| | | | 100,000 | | | | | | — | | | | | | 100,000 | | | | | | — | | | | | | 4,500 | | | | | | — | | | | | | 13,322 | | | | | | (38,887) | | | | | | (25,565) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (56,350) | | | | | | (56,350) | | |
Balance at April 30, 2020
|
| | | | 100,000 | | | | | | — | | | | | | 100,000 | | | | | | — | | | | | | 4,500 | | | | | | — | | | | | | 13,322 | | | | | | (95,237) | | | | | | (81,915) | | |
| | |
Ten Months
Ended April 30, 2020 |
| |||
Cash flows from operating activities | | | | | | | |
Net loss
|
| | |
|
$ (56,350)
|
| |
Adjustments to reconcile net loss to net cash and restricted cash (used in) provided by operating activities:
|
| | | | | | |
Depreciation and amortization
|
| | |
|
1,293
|
| |
Loss on disposal of equipment
|
| | |
|
4
|
| |
Changes in assets and liabilities:
|
| | | | | | |
Premiums and risk adjustment receivable
|
| | |
|
(28,920)
|
| |
Other receivables
|
| | |
|
(11,263)
|
| |
Prepaid and other assets
|
| | |
|
11,444
|
| |
Deposit and other assets
|
| | |
|
411
|
| |
Medical claims payable
|
| | |
|
27,357
|
| |
Risk-sharing arrangements
|
| | |
|
14,701
|
| |
Accrued expenses
|
| | |
|
34,186
|
| |
Accounts payable
|
| | |
|
(322)
|
| |
Accrued payroll and related liabilities
|
| | |
|
237
|
| |
Unearned premiums
|
| | |
|
(41,541)
|
| |
Net cash and restricted cash used in operating activities
|
| | |
|
(48,763)
|
| |
Cash Flows from Investing Activities | | | | | | | |
Purchases of property, plant and equipment
|
| | |
|
(2,600)
|
| |
Net cash and restricted cash used in investing activities
|
| | |
|
(2,600)
|
| |
Cash Flows from Financing Activities
|
| | | | | | |
Proceeds from subordinated notes payable – related party
|
| | |
|
8,000
|
| |
Net cash and restricted cash provided by financing activities
|
| | |
|
8,000
|
| |
Net change in cash and restricted cash
|
| | | | (43,363) | | |
Cash and restricted cash, beginning of year
|
| | | | 46,222 | | |
Cash and restricted cash, end of period
|
| | | | $ 2,859 | | |
Supplemental disclosure information: | | | | | | | |
Cash paid during the period for interest
|
| | |
|
$ 1,366
|
| |
| | |
As of April 30,
2020 |
| |||
Cash
|
| | |
|
$ 2,500
|
| |
Restricted cash
|
| | |
|
359
|
| |
Total cash and restricted cash shown on statement of cash flows
|
| | |
|
$ 2,859
|
| |
| | |
Estimated Lives
|
|
Buildings and improvement equipment | | |
5 to 30 years
|
|
Equipment | | |
5 to 7 years
|
|
Leasehold improvements | | |
Shorter of the none-cancelable lease term or the unique useful life of the asset
|
|
Furniture and fixtures | | |
5 years
|
|
Computer and software | | |
3 to 4 years
|
|
| | |
As of April 30,
2020 |
| |||
CMS risk adjustment – Part C
|
| | |
|
$ 71,292
|
| |
CMS risk adjustment – Part D
|
| | |
|
2,748
|
| |
HealthNet SPD adjustment
|
| | |
|
450
|
| |
CMS Medical Premiums AR
|
| | |
|
88
|
| |
Total
|
| | |
|
$ 74,578
|
| |
| | |
As of April 30,
2020 |
| |||
Current other receivables | | | |||||
Pharmacy rebates
|
| | |
|
$ 18,211
|
| |
Provider IBNR receivable
|
| | |
|
4,490
|
| |
Due from providers
|
| | |
|
1,697
|
| |
Insurance settlement
|
| | |
|
764
|
| |
Total current other receivables
|
| | |
|
25,162
|
| |
Non-current secured third-party note receivable(1)
|
| | |
|
350
|
| |
Total
|
| | |
|
$ 25,512
|
| |
| | |
As of April 30,
2020 |
| |||
Advertising and sales commission
|
| | |
|
$ 3,641
|
| |
Deferred charges
|
| | |
|
790
|
| |
Other
|
| | |
|
540
|
| |
Total
|
| | |
|
$ 4,971
|
| |
| | |
As of April 30,
2020 |
| |||
Equipment
|
| | |
|
$ 5,973
|
| |
Furniture and fixtures
|
| | |
|
573
|
| |
Leasehold improvements
|
| | |
|
567
|
| |
Computer hardware and software
|
| | |
|
7,199
|
| |
Total property, plant and equipment
|
| | |
|
14,312
|
| |
Less: accumulated depreciation and amortization
|
| | |
|
(9,937)
|
| |
Total
|
| | |
|
$ 4,375
|
| |
| | |
As of April 30,
2020 |
| |||
IBNR Beginning balance
|
| | |
|
$ 55,749
|
| |
Incurred related to: | | | | | | | |
Current period
|
| | |
|
184,012
|
| |
Prior periods
|
| | |
|
11,245
|
| |
| | | | | 195,257 | | |
Paid related to: | | | | | | | |
Current period
|
| | |
|
(159,878)
|
| |
Prior periods
|
| | |
|
(25,440)
|
| |
| | | | | (185,318) | | |
IBNR Ending balance
|
| | |
|
65,688
|
| |
Claims payable, risk share, and other reserves
|
| | |
|
24,430
|
| |
Total
|
| | |
|
$ 90,118
|
| |
| | |
As of April 30,
2020 |
| |||
UCAP Promissory Note
|
| | |
|
$ 16,500
|
| |
Family Notes
|
| | |
|
16,500
|
| |
Total
|
| | |
|
$ 33,000
|
| |
As of April 30,
|
| |
Total
|
| |||
Remainder of 2020
|
| | | | $ 204 | | |
2021
|
| | | | 1,250 | | |
2022
|
| | | | 1,188 | | |
Total
|
| | | | $ 2,642 | | |
| | |
As of June 30,
2019 |
| |||
Assets | | | | | | | |
Current assets: | | | | | | | |
Cash
|
| | | | $ 45,870 | | |
Premiums and risk adjustment receivables
|
| | | | 45,658 | | |
Other receivables
|
| | | | 14,249 | | |
Prepaid and other assets
|
| | | | 16,415 | | |
Total current assets
|
| | | | 122,192 | | |
Other assets: | | | | | | | |
Restricted cash
|
| | | | 352 | | |
Property, plant and equipment, net
|
| | | | 3,072 | | |
Deposits and other assets
|
| | | | 587 | | |
Total other assets
|
| | | | 4,011 | | |
Total assets
|
| | | | $ 126,203 | | |
Liabilities and Stockholders’ Deficit | | | | | | | |
Current liabilities: | | | | | | | |
Medical claims payable
|
| | | | $ 62,761 | | |
Risk-sharing arrangements
|
| | | | 16,451 | | |
Accrued expenses
|
| | | | 1,888 | | |
Accounts payable
|
| | | | 2,676 | | |
Accrued payroll and related liabilities
|
| | | | 1,451 | | |
Unearned premiums
|
| | | | 41,541 | | |
Total current liabilities
|
| | | | 126,768 | | |
Subordinated notes payable – related parties
|
| | | | 25,000 | | |
Total liabilities
|
| | | | 151,768 | | |
Stockholders’ Deficit | | | | | | | |
Common stock: | | | | | | | |
Class A-1, no par value, 450,000 shares authorized, 100,000 shares issued and outstanding
|
| | | | — | | |
Class A-2, no par value, 450,000 shares authorized, 100,000 shares issued and outstanding
|
| | | | — | | |
Class B, no par value, 100,000 shares authorized, 4,500 shares issued and outstanding
|
| | | | — | | |
Additional paid-in capital
|
| | | | 13,322 | | |
Accumulated deficit
|
| | | | (38,887) | | |
Total stockholders’ deficit
|
| | | | (25,565) | | |
Total liabilities and stockholders’ deficit
|
| | | | $ 126,203 | | |
| | |
Year Ended
June 30, 2019 |
| |||
Revenue | | | | | | | |
Medicare premiums
|
| | | | $ 419,175 | | |
Medi-Cal premiums
|
| | | | 520 | | |
Other revenue
|
| | | | 83 | | |
Total revenue
|
| | | | 419,778 | | |
Expenses | | | | | | | |
Healthcare services
|
| | | | 371,480 | | |
Healthcare services to affiliates
|
| | | | 3,536 | | |
Marketing, general and administrative expenses
|
| | | | 33,054 | | |
Salaries and benefits
|
| | | | 12,280 | | |
Depreciation and amortization
|
| | | | 1,115 | | |
Interest expense, net
|
| | | | 1,235 | | |
Total expenses
|
| | | | 422,700 | | |
Loss from continuing operations before taxes
|
| | | | (2,922) | | |
Income tax expense
|
| | | | 1 | | |
Loss from continuing operations
|
| | | | (2,923) | | |
Discontinued operations (Note 2) | | | | | | | |
Loss from HealthNet operations
|
| | | | (4,865) | | |
Loss from discontinued operations
|
| | | | (4,865) | | |
Net loss
|
| | | | $ (7,788) | | |
| | |
Class A-1
Common Stock |
| |
Class A-2
Common Stock |
| |
Class B
Common Stock |
| |
Additional
Paid-In Capital |
| |
Accumulated
Deficit |
| |
Total
|
| ||||||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||
Balance at June 30, 2018
|
| | | | 100,000 | | | | | | $ — | | | | | | 100,000 | | | | | | $ — | | | | | | 4,500 | | | | | | $ — | | | | | | $ 13,322 | | | | | | $ (31,099) | | | | | | $ (17,777) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (7,788) | | | | | | (7,788) | | |
Balance at June 30, 2019
|
| | | | 100,000 | | | | | | $ — | | | | | | 100,000 | | | | | | $ — | | | | | | 4,500 | | | | | | $ — | | | | | | $ 13,322 | | | | | | $ (38,887) | | | | | | $ (25,565) | | |
| | |
Year Ended
June 30, 2019 |
| |||
Cash flows from operating activities | | | | | | | |
Net loss
|
| | | | $ (7,788) | | |
Adjustments to reconcile net loss to net cash and restricted cash (used in) provided by operating activities:
|
| | | | | | |
Depreciation and amortization
|
| | | | 1,115 | | |
Changes in assets and liabilities:
|
| | | | | | |
Premiums and risk adjustment receivable
|
| | | | (19,746) | | |
Other receivables
|
| | | | (3,985) | | |
Prepaid and other assets
|
| | | | (309) | | |
Deposit and other assets
|
| | | | (270) | | |
Medical claims payable
|
| | | | 20,165 | | |
Risk-sharing arrangements
|
| | | | 6,382 | | |
Accrued expenses
|
| | | | (2,028) | | |
Accounts payable
|
| | | | 1,899 | | |
Accrued payroll and related liabilities
|
| | | | 254 | | |
Unearned premiums
|
| | | | 13,739 | | |
Net cash provided by operating activities
|
| | | | 9,428 | | |
Cash Flows from Investing Activities | | | | | | | |
Purchases of property, plant and equipment
|
| | | | (2,056) | | |
Net cash used in investing activities
|
| | | | (2,056) | | |
Cash Flows from Financing Activities | | | | | | | |
Proceeds from subordinated notes payable-related party, net of payments
|
| | | | 10,000 | | |
Net cash provided by financing activities
|
| | | | 10,000 | | |
Net change in cash and restricted cash
|
| | | | 17,372 | | |
Cash and restricted cash, beginning of year
|
| | | | 28,850 | | |
Cash and restricted cash, end of period
|
| | | | $ 46,222 | | |
Supplemental disclosure information: | | | | | | | |
Cash paid during the year for interest
|
| | | | $ 1,297 | | |
| | |
As of June 30,
2019 |
| |||
Cash
|
| | |
|
$ 45,870
|
| |
Restricted cash
|
| | |
|
352
|
| |
Total cash and restricted cash shown on statement of cash flows
|
| | |
|
$ 46,222
|
| |
| | |
Estimated Lives
|
|
Buildings and improvement equipment | | |
5 to 20 years
|
|
Equipment | | |
5 to 7 years
|
|
Leasehold improvements | | | Lesser of remaining life of lease or 15 years | |
Furniture and fixtures | | |
7 to 10 years
|
|
Computer and software | | |
3 to 5 years
|
|
| | |
As of June 30,
2019 |
| |||
Revenues: | | | | | | | |
Total net revenue
|
| | | | $ 6,488 | | |
Expenses: | | | | | | | |
Healthcare services
|
| | | | 9,892 | | |
Payroll and benefits
|
| | | | 1,068 | | |
Other expenses
|
| | | | 393 | | |
Total expenses
|
| | | | 11,353 | | |
Loss on discontinued operations before taxes
|
| | | | (4,865) | | |
Tax expense
|
| | | | — | | |
Total loss on discontinued operations in statement of operations
|
| | | | $ (4,865) | | |
| | |
As of June 30,
2019 |
| |||
CMS risk adjustment – Part C
|
| | | | $ 38,873 | | |
CMS risk adjustment – Part D
|
| | | | 5,084 | | |
HealthNet SPD adjustment
|
| | | | 1,188 | | |
Medi-Cal Capitation
|
| | | | 513 | | |
Total
|
| | | | $ 45,658 | | |
| | |
As of June 30,
2019 |
| |||
Due from providers
|
| | | | $ 2,766 | | |
Pharmacy rebates
|
| | | | 10,002 | | |
Insurance settlement
|
| | | | 1,331 | | |
Secured third-party note receivable(1)
|
| | | | 150 | | |
Total
|
| | | | $ 14,249 | | |
| | |
As of June 30,
2019 |
| |||
Advance capitation payment to providers
|
| | | | $ 9,671 | | |
Advertising and sales commission
|
| | | | 3,833 | | |
Deferred charges
|
| | | | 704 | | |
Other
|
| | | | 2,793 | | |
Total
|
| | | | $ 17,002 | | |
| | |
As of June 30,
2019 |
| |||
Equipment
|
| | | | $ 5,762 | | |
Furniture and fixtures
|
| | | | 547 | | |
Leasehold improvements
|
| | | | 353 | | |
Computer hardware and software
|
| | | | 5,050 | | |
Total property, plant and equipment
|
| | | | 11,712 | | |
Less: accumulated depreciation and amortization
|
| | | | 8,640 | | |
Total
|
| | | | $ 3,072 | | |
| | |
As of June 30,
2019 |
| |||
IBNR Beginning balance
|
| | | | $ 40,670 | | |
Incurred related to: | | | | | | | |
Current period
|
| | | | 169,256 | | |
Prior periods
|
| | | | (808) | | |
| | | | | 168,448 | | |
Paid related to: | | | | | | | |
Current period
|
| | | | (114,455) | | |
Prior periods
|
| | | | (38,913) | | |
| | | | | (153,369) | | |
IBNR Ending balance
|
| | | | 55,749 | | |
Claims payable, risk share, and other reserves
|
| | | | 7,012 | | |
Total
|
| | | | $ 62,761 | | |
| | |
As of June 30,
2019 |
| |||
UCAP Promissory Note
|
| | | | $ 12,500 | | |
Family Notes
|
| | | | 12,500 | | |
Total
|
| | | | $ 25,000 | | |
Years Ending June 30,
|
| |
Total
|
| |||
2020
|
| | | | $ 1,037 | | |
2021
|
| | | | 1,191 | | |
Total
|
| | | | $ 2,228 | | |
| | |
As of June 30,
2019 |
| |||
Current: | | | | | | | |
Federal
|
| | | | $ — | | |
State
|
| | | | 1 | | |
| | | | | 1 | | |
Deferred: | | | | | | | |
Federal
|
| | | | (809) | | |
State
|
| | | | (1,134) | | |
Valuation Allowance
|
| | | | 1,943 | | |
| | | | | — | | |
Provision for income taxes
|
| | | | $ 1 | | |
| | |
As of June 30,
2019 |
| |||
Federal statutory rate
|
| | | | 21.0% | | |
Effect of:
|
| | | | | | |
Change in valuation allowance
|
| | | | (17.9)% | | |
Non-deductible expenses
|
| | | | (3.3)% | | |
Other
|
| | | | 0.2% | | |
Provision for taxes
|
| | | | 0.0% | | |
| | |
As of June 30,
2019 |
| |||
Deferred tax assets: | | | | | | | |
Net operating losses
|
| | | | $ 7,540 | | |
Charitable contributions
|
| | | | 40 | | |
Tax credits
|
| | | | 97 | | |
Accrued expenses
|
| | | | 171 | | |
Deferred rent
|
| | | | 2 | | |
State taxes
|
| | | | 272 | | |
Total deferred tax assets
|
| | | | 8,122 | | |
Less: valuation allowance
|
| | | | (7,680) | | |
Total deferred tax assets
|
| | | | 442 | | |
Deferred tax liabilities: | | | | | | | |
Deferred gain on installment sale
|
| | | | — | | |
Property, plant and equipment
|
| | | | (400) | | |
State taxes
|
| | | | — | | |
Prepaid expenses
|
| | | | (42) | | |
Total deferred tax liabilities
|
| | | | (442) | | |
Deferred tax assets, net
|
| | | | $ — | | |
|
BofA Securities
|
| |
Citigroup
|
| |
Piper Sandler
|
|
|
Nomura
|
| |
RBC Capital Markets
|
|
| | |
Amount to be Paid
|
| |||
SEC Registration Fee
|
| | | | $ * | | |
FINRA Filing Fee
|
| | | | * | | |
Initial Listing Fee
|
| | | | * | | |
Legal Fees and Expenses
|
| | | | * | | |
Accounting Fees and Expenses
|
| | | | * | | |
Printing Fees and Expenses
|
| | | | * | | |
Blue Sky Fees and Expenses
|
| | | | * | | |
Transfer Agent and Registrar Fees
|
| | | | * | | |
Miscellaneous Expenses
|
| | | | * | | |
Total
|
| | | | $ * | | |
|
Exhibit
Number |
| |
Description
|
| |||
| | | 1.1* | | | | Form of Underwriting Agreement | |
| | | 3.1 | | | | | |
| | | 3.2* | | | |
Certificate of Amendment to the Eighth Amended and Restated Certificate of Incorporation of
Bright Health Group, Inc. |
|
| | | 3.3 | | | | | |
| | | 3.4* | | | | Form of Ninth Amended and Restated Certificate of Incorporation of Bright Health Group, Inc. | |
| | | 3.5* | | | | Form of Third Amended and Restated Bylaws of Bright Health Group, Inc. | |
| | | 5.1 | | | | | |
| | | 10.1 | | | | Credit Agreement, dated as of March 1, 2021, among Bright Health Group, Inc., JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent, and the other lenders and parties thereto | |
| | | 10.2 | | | |
Second Amended and Restated Registration Rights Agreement, dated as of November 15, 2018,
among Bright Health Group, Inc. (formerly known as Bright Health Inc.), the Holders (as defined therein) party thereto and the FF Beneficial Investor (as defined therein) |
|
| | | 10.3* | | | | Amendment to Second Amended and Restated Registration Rights Agreement among Bright Health Group, Inc. (formerly known as Bright Health Inc.) and the Majority Holders (as defined therein) | |
| | | 10.4† | | | | | |
| | | 10.5† | | | | | |
| | | 10.6† | | | | | |
| | | 10.7† | | | | | |
| | | 10.8*† | | | | Form of Bright Health Group, Inc. 2021 Omnibus Incentive Plan | |
| | | 10.9*† | | | |
Form of Stock Option Agreement under the Bright Health Group, Inc. 2021 Omnibus Incentive
Plan |
|
| | | 10.10*† | | | | Form of Restricted Stock Unit Agreement under the Bright Health Group, Inc. 2021 Omnibus Incentive Plan | |
| | | 10.11*† | | | | Form of Executive Performance Stock Unit Agreement under the Bright Health Group, Inc. 2021 Omnibus Incentive Plan | |
| | | 10.12† | | | | | |
| | | 10.13† | | | | | |
| | | 10.14† | | | | | |
| | | 10.15† | | | | | |
| | | 10.16† | | | | | |
| | | 10.17† | | | | | |
| | | 10.18† | | | | |
|
Exhibit
Number |
| |
Description
|
| |||
| | | 10.19† | | | | | |
| | | 10.20† | | | | | |
| | | 10.21† | | | | | |
| | | 16.1 | | | | | |
| | | 21.1 | | | | | |
| | | 23.1 | | | | | |
| | | 23.2 | | | | | |
| | | 23.3 | | | | | |
| | | 23.4* | | | | | |
| | | 24.1 | | | | |
|
SIGNATURE
|
| |
TITLE
|
|
|
/s/ G. Mike Mikan
G. Mike Mikan
|
| |
Chief Executive Officer, Director
(Principal Executive Officer) |
|
|
/s/ Catherine R. Smith
Catherine R. Smith
|
| |
Chief Administrative and Financial Officer
(Principal Financial Officer) |
|
|
/s/ Jeffrey J. Scherman
Jeffrey J. Scherman
|
| |
Chief Accounting Officer
(Principal Accounting Officer) |
|
|
/s/ Robert J. Sheehy
Robert J. Sheehy
|
| |
Chairman
|
|
|
/s/ Kedrick D. Adkins Jr.
Kedrick D. Adkins Jr.
|
| |
Director
|
|
|
/s/ Naomi Allen
Naomi Allen
|
| |
Director
|
|
|
SIGNATURE
|
| |
TITLE
|
|
|
/s/ Jeffrey Folick
Jeffrey Folick
|
| |
Director
|
|
|
/s/ Linda Gooden
Linda Gooden
|
| |
Director
|
|
|
/s/ Jeffery R. Immelt
Jeffery R. Immelt
|
| |
Director
|
|
|
/s/ Manuel Kadre
Manuel Kadre
|
| |
Director
|
|
|
/s/ Stephen Kraus
Stephen Kraus
|
| |
Director
|
|
|
/s/ Mohamad Makhzoumi
Mohamad Makhzoumi
|
| |
Director
|
|
|
/s/ Adair Newhall
Adair Newhall
|
| |
Director
|
|
Exhibit 3.1
EIGHTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
BRIGHT HEALTH GROUP, INC.
Bright Health Group, Inc., a corporation organized and existing under the Delaware General Corporation Law (the “Corporation”), DOES HEREBY CERTIFY THAT:
FIRST: The present name of the Corporation is “Bright Health Group, Inc.” The Corporation was originally incorporated by the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware on August 7, 2015, under the name “KTNewPlanCo, Inc.”
SECOND: This Eighth Amended and Restated Certificate of Incorporation of the Corporation (this “Certificate”) attached hereto as Exhibit A amends and restates in its entirety the present Certificate of Incorporation of the Corporation, and has been approved in accordance with Sections 141,228,242 and 245 of the Delaware General Corporation Law.
THIRD: This Certificate shall become effective upon its filing with the Secretary of State of the State of Delaware.
FOURTH: The board of directors of the Corporation adopted resolutions proposing to amend and restate the Certificate of Incorporation of the Corporation as set forth on Exhibit A attached hereto, declaring said amendment and restatement advisable and in the best interests of the Corporation.
FIFTH: The stockholders of the Corporation adopted resolutions approving the Certificate as set forth on Exhibit A attached hereto.
SIXTH: Upon the filing of this Certificate with the Secretary of State of the State of Delaware, the Certificate of Incorporation of the Corporation shall be restated in its entirety to read as set forth on Exhibit A attached hereto.
[Signature page to follow]
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by the Secretary this 15th day of March, 2021.
BRIGHT HEALTH GROUP, INC. | ||
By: | /s/ Keith Nelsen | |
Name: | Keith Nelsen | |
Title: | Secretary |
[Eighth A&R Certificate of Incorporation of Bright Health Group, Inc.]
EXHIBIT A
EIGHTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
BRIGHT HEALTH GROUP, INC.
ARTICLE I
The name of the Corporation is Bright Health Group, Inc.
ARTICLE II
The address of the Corporation’s registered office in the State of Delaware is 1209 Orange Street, County of New Castle, Wilmington, DE 19801. The name of its registered agent at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law (“DGCL”).
ARTICLE IV
The total number of shares of capital stock which the Corporation shall have authority to issue is 392,929,907, of which (i) 168,065,332 shares shall be preferred stock, par value $0.0001 per share (the “Preferred Stock”) and (ii) 224,864,575 shares shall be common stock, par value $0.0001 per share (the “Common Stock”).
ARTICLE V
1. | [Reserved]. |
ARTICLE VI
The voting powers, designations, preferences, powers and, relative, participating, optional or other special rights, and the qualifications, limitations or restrictions of each class of capital stock of the Corporation, shall be as provided in this Article VI.
A. PREFERRED STOCK
1. Designation; Rank. Of the authorized Preferred Stock, (i) a total of 32,438,580 shares of the Corporation’s Preferred Stock shall be designated as a series known as Series A Convertible Preferred Stock, par value $0.0001 per share (“Series A Preferred Stock”), (ii) a total of 32,277,856 shares of the Corporation’s Preferred Stock shall be designated as a series known as Series B Convertible Preferred Stock, par value $0.0001 per share (“Series B Preferred Stock”), (iii) a total of 26,065,406 shares of the Corporation’s Preferred Stock shall be designated as a series known as Series C Convertible Preferred Stock, par value $0.0001 per share (“Series C Preferred Stock”), (iv) a total of 48,101,478 shares of the Corporation’s Preferred Stock shall be designated as a series known as Series D Convertible Preferred Stock, par value $0.0001 per share (“Series D Preferred Stock” together with the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, the “Existing Preferred Stock”) and (v) a total of 29,182,012 shares of the Corporation’s Preferred Stock shall be designated as a series known as Series E Convertible Preferred Stock, par value $0.0001 per share (“Series E Preferred Stock” and together with the Existing Preferred Stock, the “Series Preferred Stock”). The Series E Preferred Stock shall rank senior to the Series D Preferred Stock which shall rank senior to any other class or series of capital stock of the Corporation, including the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock (collectively, the “Junior Preferred Stock”) and the Common Stock, whether now existing or hereafter created, with respect to dividends, rights upon liquidation and redemption. The Junior Preferred Stock shall rank pari passu with one another with respect to dividends and rights upon liquidation, and the Junior Preferred Stock collectively shall rank senior to any other class or series of capital stock of the Corporation (other than the Series E Preferred Stock and Series D Preferred Stock), including the Common Stock, whether now existing or hereafter created, with respect to dividends, rights upon liquidation and redemption.
2. | Voting. |
(a) General. Except as otherwise expressly provided herein or required by law, each holder of outstanding shares of Series Preferred Stock shall vote with the holders of shares of Common Stock, as a single class, upon all matters submitted to a vote of stockholders, and such holders shall be entitled to the number of votes in respect of their shares of Series Preferred Stock equal to the number of shares of Common Stock into which the shares of Series Preferred Stock held by such holder could be converted as of the record date; provided, however, that no holder of shares of Series D Preferred Stock and/or Series E Preferred Stock shall be entitled to vote such holder’s shares of Series D Preferred Stock and/or Series E Preferred Stock to the extent, and solely to the extent, such vote is for the purposes of electing a Director (as defined below). Each holder of outstanding shares of Series Preferred Stock shall be entitled to (A) notice of any stockholders meeting or request for stockholders’ written consents in accordance with the by-laws of the Corporation (“By-laws”) and (B) copies of all stockholders’ meeting minutes and stockholders’ written consents.
(b) Series A Preferred Stock Protective Provisions. At any time when shares of Series A Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or this Certificate) the written consent or affirmative vote of the Major Investors, given in writing or by vote at a meeting, consenting or voting (as the case may be) to:
(i) issue or authorize any options, other than the issuance to employees, officers, directors and consultants of the Corporation and/or its subsidiaries of options to purchase up to an aggregate of 33,270,760 shares of Common Stock pursuant to stock purchase or stock option plans approved by the Board, including at least one Investor Director (as such term is defined in the Fourth Amended and Restated Stockholders’ Agreement of the Corporation dated September 9, 2020, as amended, supplemented or modified from time to time, the “Stockholders’ Agreement”);
2
(ii) issue (including by way of dividend) or authorize any equity securities, debt securities, warrants or other securities convertible or exchangeable into equity securities or any other rights to purchase equity or debt securities of the Corporation or its subsidiaries (including stock appreciation or similar rights, contractual or otherwise);
(iii) declare or pay any dividends;
(iv) redeem or repurchase any debt or equity securities other than the exercise by the Corporation of contractual rights of first refusal or the redemption of the Series A Preferred Stock as set forth herein;
(v) incur or guarantee indebtedness greater than $500,000 USD;
(vi) take any action that could result in a Liquidation Event, the sale of a material part of the Corporation, or the sale, lease or other disposition of assets outside the ordinary course of business;
(vii) alter or amend the rights, preferences, privileges, priorities or powers of the Series A Preferred Stock;
(viii) alter the size of the board of directors of the Corporation (“Board”);
(ix) amend or modify the certificate of incorporation or By-laws of the Corporation or any subsidiary;
(x) acquire or dispose of any assets in excess of $500,000 USD not included in the annual budget, or pledge or encumber any assets of the Corporation;
(xi) engage in any transaction with any Affiliate, other than on an arms’-length basis and as approved by the Board, including at least one Investor Director;
(xii) invest in any person or entity;
(xiii) change the strategic lines of business of the Corporation;
(xiv) take any action with respect to any direct or indirect subsidiary of the Corporation that, if taken by the Corporation, would require approval under this Section VI.A.2(b); or
(xv) agree to take any of the foregoing actions.
3
(c) Investor Director Protective Provisions. At any time when shares of Series A Preferred Stock are outstanding and the holders of Series A Preferred Stock are entitled to elect the Investor Directors, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or this Certificate) the written consent or affirmative vote of the Board (including the approval of at least one (1) Investor Director), given in writing or by vote at a meeting, consenting or voting (as the case may be) to:
(i) materially change or modify the compensation of any member of senior management of the Corporation or any of its subsidiaries;
(ii) terminate or hire any member of senior management of the Corporation or any of its subsidiaries, or amend the terms of any employment agreement with any such member of senior management of the Corporation or any of its subsidiaries;
(iii) terminate the Corporation’s or any of its subsidiaries’ auditors, or make changes in the Corporation’s accounting policies (other than as required under U.S. generally accepted accounting principles);
(iv) create any new subsidiary; or
(v) agree to take any of the foregoing actions.
(d) Series B Preferred Stock Protective Provisions. At any time when shares of Series B Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or this Certificate), the written consent or affirmative vote of the Series B Majority, given in writing or by vote at a meeting, consenting or voting (as the case may be) to:
(i) amend or waive (whether by merger, consolidation or otherwise) any of the rights, preferences, or privileges of the Series B Preferred Stock in a manner that disproportionately and adversely affects the rights, preferences, or privileges of the Series B Preferred Stock as compared to the other holders of Series Preferred Stock;
(ii) increase or decrease the number of authorized shares of Series B Preferred Stock; or
(iii) reclassify any outstanding shares of capital stock of the Corporation to have rights, preferences, or privileges with respect to dividends, liquidation, redemption, or voting that are senior to or pari passu to the Series B Preferred Stock;
provided, that, for the avoidance of doubt, in no event shall the creation, authorization and/or issuance of any new class of capital stock having rights, preferences or privileges senior to those of the Series B Preferred Stock be deemed to adversely affect the rights, preferences or privileges of the Series B Preferred Stock, and no such creation, authorization and/or issuance shall require the consent of any holder of Series B Preferred Stock, except to the extent required by applicable law.
4
(e) Series C Preferred Stock Protective Provisions. At any time when shares of Series C Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or this Certificate), the written consent or affirmative vote of the Series C Majority, given in writing or by vote at a meeting, consenting or voting (as the case may be) to:
(i) amend or waive (whether by merger, consolidation or otherwise) any of the rights, preferences, or privileges of the Series C Preferred Stock in a manner that disproportionately and adversely affects the rights, preferences, or privileges of the Series C Preferred Stock as compared to the other holders of Series Preferred Stock;
(ii) increase or decrease the number of authorized shares of Series C Preferred Stock; or
(iii) reclassify any outstanding shares of capital stock of the Corporation to have rights, preferences, or privileges with respect to dividends, liquidation, redemption, or voting that are senior to or pari passu to the Series C Preferred Stock;
provided, that, for the avoidance of doubt, in no event shall the creation, authorization and/or issuance of any new class of capital stock having rights, preferences or privileges senior to those of the Series C Preferred Stock be deemed to adversely affect the rights, preferences or privileges of the Series C Preferred Stock, and no such creation, authorization and/or issuance shall require the consent of any holder of Series C Preferred Stock, except to the extent required by applicable law.
(f) Series D Preferred Stock Protective Provisions. At any time when shares of Series D Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or this Certificate), the written consent or affirmative vote of the Series D Majority, given in writing or by vote at a meeting, consenting or voting (as the case may be) to:
(i) amend or waive (whether by merger, consolidation or otherwise) any of the rights, preferences, or privileges of the Series D Preferred Stock in a manner that disproportionately and adversely affects the rights, preferences, or privileges of the Series D Preferred Stock as compared to the other holders of Series Preferred Stock;
(ii) increase or decrease the number of authorized shares of Series D Preferred Stock; or
(iii) reclassify any outstanding shares of capital stock of the Corporation to have rights, preferences, or privileges with respect to dividends, liquidation, redemption, or voting that are senior to or pari passu to the Series D Preferred Stock;
5
provided, that, for the avoidance of doubt, in no event shall the creation, authorization and/or issuance of any new class of capital stock having rights, preferences or privileges senior to those of the Series D Preferred Stock be deemed to adversely affect the rights, preferences or privileges of the Series D Preferred Stock, and no such creation, authorization and/or issuance shall require the consent of any holder of Series D Preferred Stock, except to the extent required by applicable law.
(g) Series E Preferred Stock Protective Provisions. At any time when shares of Series E Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or this Certificate), the written consent or affirmative vote of the Series E Majority, given in writing or by vote at a meeting, consenting or voting (as the case may be) to:
(i) amend or waive (whether by merger, consolidation or otherwise) any of the rights, preferences, or privileges of the Series E Preferred Stock in a manner that disproportionately and adversely affects the rights, preferences, or privileges of the Series E Preferred Stock as compared to the other holders of Series Preferred Stock;
(ii) increase or decrease the number of authorized shares of Series E Preferred Stock; or
(iii) reclassify any outstanding shares of capital stock of the Corporation to have rights, preferences, or privileges with respect to dividends, liquidation, redemption, or voting that are senior to or pari passu to the Series E Preferred Stock;
provided, that, for the avoidance of doubt, in no event shall the creation, authorization and/or issuance of any new class of capital stock having rights, preferences or privileges senior to those of the Series E Preferred Stock be deemed to adversely affect the rights, preferences or privileges of the Series E Preferred Stock, and no such creation, authorization and/or issuance shall require the consent of any holder of Series E Preferred Stock, except to the extent required by applicable law.
3. Dividends. Subject to any consent required by Section VI.A.2, the holders of the Series Preferred Stock shall be entitled to receive dividends out of funds legally available therefor at such times and in such amounts as the Board may declare in its sole discretion (the “Series Preferred Dividend”). Any declared but unpaid Series Preferred Dividend shall be paid upon a Liquidation Event as set forth in Section VI.A.4 below. The Corporation shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Corporation unless (in addition to obtaining any consent required under Section VI.A.2),
(a) the holders of the Series E Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series E Preferred Stock in an amount equal to the quotient obtained by dividing (y) the aggregate amount of any such dividend on shares of such other class or series of capital stock of the Corporation by (z) the total number of shares of Series Preferred Stock then outstanding (the “Series E Preferred Dividend”);
6
(b) after payment of any declared Series E Preferred Dividend in full in respect of each outstanding share of Series E Preferred Stock, the holders of the Series D Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series D Preferred Stock in an amount equal to the quotient obtained by dividing (y) the aggregate amount of any such dividend on shares of such other class or series of capital stock of the Corporation by (z) the total number of shares of Series Preferred Stock then outstanding (the “Series D Preferred Dividend”, and together with the Series E Preferred Dividend, the “Senior Preferred Dividend”); and
(c) after payment of any declared Senior Preferred Dividend in full in respect of each outstanding share of Series E Preferred Stock and Series D Preferred Stock, the holders of the Junior Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Junior Preferred Stock in an amount equal to the quotient obtained by dividing (y) the aggregate amount of any such dividend on shares of such other class or series of capital stock of the Corporation by (z) the total number of shares of Series Preferred Stock then outstanding (the “Junior Preferred Dividend”).
4. | Liquidation; Deemed Liquidation Event. |
(a) Preferential Payments to Holders of Series Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event (a “Liquidation Event”), unless otherwise determined in writing by each of (v) the Major Investors, (w) a Series B Majority, (x) a Series C Majority, (y) a Series D Majority and (z) a Series E Majority prior to the occurrence of the applicable Liquidation Event,
(i) the holders of shares of Series E Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, before any payment shall be made to the holders of Existing Preferred Stock or the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the greater of (A) the Series E Original Issue Price plus any Series E Preferred Dividends declared and unpaid thereon and (B) such amount as would have been payable pursuant to Subsection 4(b) had all shares of Series E Preferred Stock been converted to Common Stock pursuant to Subsection 7 hereof immediately prior to such Liquidation Event (such greater amount, the “Series E Liquidation Amount”). If upon any such Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series E Preferred Stock the Series E Liquidation Amount in full in respect of each outstanding share of Series E Preferred Stock, the holders of shares of Series E Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the preferential amount each such holder is otherwise entitled to receive pursuant to this Subsection 4(a)(i);
7
(ii) after the payment of the Series E Liquidation Amount in full in respect of each outstanding share of Series E Preferred Stock, the holders of shares of Series D Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, before any payment shall be made to the holders of Junior Preferred Stock or the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the greater of (A) the Series D Original Issue Price plus any Series D Preferred Dividends declared and unpaid thereon and (B) such amount as would have been payable pursuant to Subsection 4(b) had all shares of Series D Preferred Stock been converted to Common Stock pursuant to Subsection 7 hereof immediately prior to such Liquidation Event (such greater amount, the “Series D Liquidation Amount”). If upon any such Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series D Preferred Stock the Series D Liquidation Amount in full in respect of each outstanding share of Series D Preferred Stock, the holders of shares of Series D Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the preferential amount each such holder is otherwise entitled to receive pursuant to this Subsection 4(a)(ii); and
(iii) after the payment of the Series E Liquidation Amount and Series D Liquidation Amount in full in respect of each outstanding share of Series E Preferred Stock and Series D Preferred Stock, the holders of shares of Junior Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to (i) in the case of the Series A Preferred Stock, (A) if the Series A Original Issue Price plus any Junior Preferred Dividends declared and unpaid thereon (the “Series A Base Amount”) is greater than or equal to the Series A Adjusted Common Amount, an amount equal to the Series A Base Amount less the amount payable pursuant to Subsection 4(b) in respect of one (1) share of Common Stock (assuming such share of Common Stock was one of the shares of Common Stock actually then issued and outstanding), and (B) if the Series A Base Amount is less than the Series A Adjusted Common Amount, such amount as would have been payable pursuant to Subsection 4(b) had all shares of Series A Preferred Stock been converted to Common Stock pursuant to Subsection 7 hereof immediately prior to such Liquidation Event (the amounts described in clauses (A) or (B), as applicable, the “Series A Liquidation Amount”), (ii) in the case of the Series B Preferred Stock, the greater of (A) the Series B Original Issue Price plus any Junior Preferred Dividends declared and unpaid thereon and (B) such amount as would have been payable pursuant to Subsection 4(b) had all shares of Series B Preferred Stock been converted to Common Stock pursuant to Subsection 7 hereof immediately prior to such Liquidation Event (such greater amount, the “Series B Liquidation Amount”) and (iii) in the case of the Series C Preferred Stock, the greater of (A) the Series C Original Issue Price plus any Junior Preferred Dividends declared and unpaid thereon and (B) such amount as would have been payable pursuant to Subsection 4(b) had all shares of Series C Preferred Stock been converted to Common Stock pursuant to Subsection 7 hereof immediately prior to such Liquidation Event (such greater amount, the “Series C Liquidation Amount”). If upon any such Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Junior Preferred Stock, the Series A Liquidation Amount, Series B Liquidation Amount and Series C Liquidation Amount in full in respect of each outstanding share of Junior Preferred Stock, the holders of shares of Junior Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the preferential amount each such holder is otherwise entitled to receive pursuant to this Section 4(a). “Major Investors” shall mean New Enterprise Associates 15, L.P., Bessemer Venture Partners IX L.P. and each of their Affiliates who hold Series A Preferred Stock. “Original Issue Price” shall mean, with respect to the Series A Preferred Stock, $2.55, with respect to the Series B Preferred Stock, $5.0499, with respect to the Series C Preferred Stock, $7.6730, with respect to the Series D Preferred Stock, $15.0247 and with respect to the Series E Preferred Stock, $20.4177. “Series A Adjusted Common Amount” means such aggregate amount as would be payable in connection with a Liquidation Event pursuant to Subsection 4(b) to a holder of one (1) share of Common Stock (assuming such share of Common Stock was one of the shares of Common Stock actually then issued and outstanding) and one (1) share of Series A Preferred Stock, if such share of Series A Preferred Stock had been converted to Common Stock pursuant to Subsection 7 hereof immediately prior to such Liquidation Event. “Series B Majority” shall mean, as of any date of determination, the holders of a majority of the then-outstanding shares of Series B Preferred Stock. “Series C Majority” shall mean, as of any date of determination, the holders of a majority of the then-outstanding shares of Series C Preferred Stock. “Series D Majority” shall mean, as of any date of determination, the holders of a majority of the then-outstanding shares of Series D Preferred Stock. “Series E Majority” shall mean, as of any date of determination, the holders of a majority of the then-outstanding shares of Series E Preferred Stock.
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(b) Payments to Holders of Common Stock. After the payment of the Series A Liquidation Amount, Series B Liquidation Amount, Series C Liquidation Amount, Series D Liquidation Amount and Series E Liquidation Amount in full in respect of each outstanding share of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock, respectively, the remaining assets and funds of the Corporation available for distribution to its stockholders shall be distributed among the holders of shares of Common Stock, pro rata based on the number of shares held by each such holder.
(c) Valuation of Securities or Other Non-Cash Consideration. For purposes of valuing any securities or other noncash consideration to be delivered to the holders of the Series Preferred Stock or Common Stock in connection with any transaction to which this Section VI.A.4 is applicable, the value shall be the fair market value thereof, as mutually determined in good faith by the Corporation and the Major Investors; provided, that if the Corporation and the Major Investors are unable to reach agreement, then the fair market value of such securities or other noncash consideration shall be determined by the independent appraisal of a mutually agreed to investment banker, the fees of which shall be paid by the Corporation.
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(d) Deemed Liquidation Events.
(i) Definition. Each of the following events shall be considered a “Deemed Liquidation Event” unless the Major Investors, the Series B Majority, the Series C Majority, the Series D Majority and Series E Majority elect otherwise by written notice sent to the Corporation at least five (5) days prior to the effective date of any such event: (A) a merger, reorganization, stock sale, stock issuance or other transaction if the stockholders of the Corporation immediately prior to the effective date of such merger, reorganization, stock sale, stock issuance or other transaction own immediately following the effective date of such merger, reorganization, stock sale, stock issuance or other transaction, directly or indirectly, securities of the surviving corporation or the Corporation (as the case may be) representing 50% or less of the voting power of the surviving corporation or the Corporation (as the case may be); (B) a sale, conveyance or disposition of all or substantially all of the assets of the Corporation; (C) any other transaction or series of transactions pursuant to, or as a result of, which a single person (or group of affiliated persons) acquires (from the Corporation or directly from the stockholders of the Corporation) or holds, directly or indirectly, capital stock of the Corporation representing a majority of the Corporation’s outstanding voting power, except for any such transaction pursuant to which the Major Investors acquire capital stock of the Corporation; (D) an initial public offering; or (E) a sale (or multiple related sales) of one or more subsidiaries of the Corporation (whether by way of merger, consolidation, reorganization or sale of all or substantially all assets or securities) which constitutes all or substantially all of the consolidated assets of the Corporation. “Affiliate” means, with respect to any Person, any (a) director, officer, limited or general partner, member or stockholder holding 5% or more of the outstanding capital stock or other equity interests of such Person, (b) spouse, parent, sibling or descendant of such Person (or a spouse, parent, sibling or descendant of a Person specified in clause (a) above) and (c) other Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such Person. The term “control” includes, without limitation, the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
(ii) Effecting a Deemed Liquidation Event. The Corporation shall not have the power to effect a Deemed Liquidation Event unless the agreement for such transaction (the “Sale Agreement”) provides that the consideration payable to the stockholders of the Corporation shall be allocated among the holders of capital stock of the Corporation in accordance with Sections VI.A.4(a) and (b). In the event of a Deemed Liquidation Event referred to in Section VI.A.4(d)(i)(B) or (E), if the Corporation does not effect a dissolution of the Corporation under the General Corporation Law within ninety (90) days after such Deemed Liquidation Event, then (i) the Corporation shall send a written notice to each holder of Preferred Stock no later than the ninetieth (90th) day after the Deemed Liquidation Event advising such holders of their right (and the requirements to be met to secure such right) pursuant to the terms of the following clause; (ii) to require the redemption of such shares of Preferred Stock, and (iii) if the holders of at least a majority of the then outstanding shares of Preferred Stock so request in a written instrument delivered to the Corporation not later than one hundred twenty (120) days after such Deemed Liquidation Event, the Corporation shall use the consideration received by the Corporation for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board of Directors of the Corporation), together with any other assets of the Corporation available for distribution to its stockholders, all to the extent permitted by Delaware law governing distributions to stockholders (the “Available Proceeds”), on the one hundred fiftieth (150th) day after such Deemed Liquidation Event, to redeem all outstanding shares of Preferred Stock at a price per share equal to the Series A Liquidation Amount, Series B Liquidation Amount, Series C Liquidation Amount, Series D Liquidation Amount and Series E Liquidation Amount, respectively. Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to redeem all outstanding shares of Preferred Stock, the Corporation shall redeem each holder’s shares of Preferred Stock to the fullest extent of such Available Proceeds in accordance with the allocation among holders of capital stock of the Corporation set forth in Subsections 4(a)(i) and 4(a)(ii) (pro rata based on the respective aggregate amounts which would otherwise be payable to the holders of Series Preferred Stock under such Subsections in connection with a Liquidation Event), and shall redeem the remaining shares as soon as it may lawfully do so under Delaware law governing distributions to stockholders. Prior to the distribution or redemption provided for in this Section VI.A.4(d)(ii), the Corporation shall not expend or dissipate the consideration received for such Deemed Liquidation Event, except to discharge expenses incurred in connection with such Deemed Liquidation Event.
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(iii) Amount Deemed Paid or Distributed. The amount deemed paid or distributed to the holders of capital stock of the Corporation upon any such merger, consolidation, sale, transfer, exclusive license, other disposition or redemption shall be the cash or the value of the property, rights or securities paid or distributed to such holders by the Corporation or the acquiring Person, firm or other entity (or any group thereof).
(e) Allocation of Escrow and Contingent Consideration. In the event of a Deemed Liquidation Event pursuant to Section VI.A.4(d), if any portion of the consideration payable to the stockholders of the Corporation is payable only upon satisfaction of contingencies (the “Additional Consideration”), the Sale Agreement shall provide that (a) the portion of such consideration that is not Additional Consideration (such portion, the “Initial Consideration”) shall be allocated among the holders of capital stock of the Corporation in accordance with Sections VI.A.4(a) and (b) as if the Initial Consideration were the only consideration payable in connection with such Deemed Liquidation Event; and (b) any Additional Consideration which becomes payable to the stockholders of the Corporation upon satisfaction of such contingencies shall be allocated among the holders of capital stock of the Corporation in accordance with Sections VI.A.4(a) and (b) after taking into account the previous payment of the Initial Consideration as part of the same transaction. For the purposes of this Section VI.A.4(e), consideration placed into escrow or retained as holdback to be available for satisfaction of indemnification or similar obligations in connection with such Deemed Liquidation Event shall be deemed to be Additional Consideration.
5. No Reissuance of Series Preferred Stock. No share or shares of Series Preferred Stock acquired by the Corporation by reason of redemption, purchase or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue.
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6. Contractual Rights of Holders. The various provisions set forth herein for the benefit of the holders of the Series Preferred Stock shall be deemed contractual rights enforceable by such holders of Series Preferred Stock, including, without limitation, one or more actions for specific performance.
7. Automatic Conversion of Series Preferred Stock. The issued and outstanding shares of Series Preferred Stock shall be convertible into Common Stock as follows:
(a) Automatic Conversion. Each share of Series Preferred Stock shall automatically be converted into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the applicable Original Issue Price (subject to appropriate adjustment from time to time as set forth elsewhere herein), by the applicable Conversion Price then applicable to such shares (such quotient is referred to herein as the “Conversion Rate”), determined as hereafter provided, in effect at the Mandatory Conversion Time (as defined below), upon the earlier of: (i) the vote or written consent of the Major Investors, the Series B Majority, the Series C Majority, the Series D Majority and Series E Majority, and (ii) an IPO which results in aggregate net cash proceeds to the Corporation of not less than $200,000,000 (before underwriting discounts, fees and commissions) (the time of the closing of such IPO or the date and time of such vote or written consent is referred to herein as the “Mandatory Conversion Time”). The initial “Conversion Price” with respect to the Series A Preferred Stock shall be $11.2707394, with respect to the Series B Preferred Stock shall be the Series B Original Issue Price, with respect to the Series C Preferred Stock shall be the Series C Original Issue Price, with respect to the Series D Preferred Stock shall be the Series D Original Issue Price and with respect to the Series E Preferred Stock shall be the Series E Original Issue Price, and shall in each case be subject to adjustment as set forth herein. For the avoidance of doubt, the Series Preferred Stock shall not be convertible into Common Stock except in the case of the occurrence of one of the events described in clauses (i) and (ii) of this Section 7(a).
(b) Procedural Requirements. All holders of record of shares of Series Preferred Stock shall be sent written notice of the Mandatory Conversion Time and the place designated for mandatory conversion of all such shares of Series Preferred Stock pursuant to this Section 7. Such notice need not be sent in advance of the occurrence of the Mandatory Conversion Time. Upon receipt of such notice, each holder of shares of Series Preferred Stock in certificated form shall surrender his, her or its certificate or certificates for all such shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation at the place designated in such notice. If so required by the Corporation, any certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by his, her or its attorney duly authorized in writing. All rights with respect to the Series Preferred Stock converted pursuant to Section 7(a), including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate at the Mandatory Conversion Time (notwithstanding the failure of the holder or holders thereof to surrender any certificates at or prior to such time), except only the rights of the holders thereof, upon surrender of any certificate or certificates of such holders (or lost certificate affidavit and agreement) therefor, to receive the items provided for in the next sentence of this Section 7(b). As soon as practicable after the Mandatory Conversion Time and, if applicable, the surrender of any certificate or certificates (or lost certificate affidavit and agreement) for Series Preferred Stock, the Corporation shall (i) issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof and (ii) pay cash as provided in Section 7(f) in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and the payment of any declared but unpaid dividends on the shares of Series Preferred Stock converted. Such converted Series Preferred Stock shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Series Preferred Stock accordingly.
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(c) Adjustments for Subdivisions or Combinations of Common Stock. In the event the outstanding shares of Common Stock shall be subdivided (by stock split, by payment of a stock dividend or otherwise), into a greater number of shares of Common Stock, the Conversion Prices in effect immediately prior to such subdivision shall, concurrently with the effectiveness of such subdivision, be proportionately decreased. In the event the outstanding shares of Common Stock shall be combined (by reclassification or otherwise) into a lesser number of shares of Common Stock, the Conversion Prices in effect immediately prior to such combination shall, concurrently with the effectiveness of such combination, be proportionately increased.
(d) Dividends. In the event the Corporation should at any time after the filing date of this Certificate fix a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or securities or rights convertible into, exercisable or exchangeable into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (the “Common Stock Equivalents”) without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of such dividend distribution if no record date is fixed), the Conversion Prices shall be proportionally decreased by multiplying the Conversion Prices then in effect by a fraction:
(i) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and
(ii) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution and those issuable with respect to such Common Stock Equivalents.
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Notwithstanding the foregoing, (A) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Conversion Price shall be adjusted pursuant to this subsection as of the time of actual payment of such dividends or distributions; and (B) that no such adjustment shall be made if the holders of Series Preferred Stock simultaneously receive a dividend or other distribution of shares of Common Stock or Common Stock Equivalents in a number equal to the number of shares of Common Stock or Common Stock Equivalents as they would have received if all outstanding shares of Series Preferred Stock had been converted into Common Stock on the date of such event.
(e) Recapitalizations. If at any time or from time to time there shall be a recapitalization of the Common Stock (other than a subdivision or combination provided for elsewhere in this Section 7), provision shall be made so that the holders of Series Preferred Stock shall thereafter be entitled to receive upon conversion of such Series Preferred Stock the number of shares of stock or other securities or property of the Corporation or otherwise, to which a holder of Common Stock deliverable upon conversion would have been entitled on such recapitalization. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 7 with respect to the rights of the holders of such Series Preferred Stock after the recapitalization to the end that the provisions of this Section 7 (including adjustment of the Conversion Price then in effect and the number of shares issuable upon conversion of such Series Preferred Stock) shall be applicable after that event and be as nearly equivalent as practicable.
(f) No Fractional Shares and Notices as to Adjustments.
(i) No fractional shares shall be issued upon the conversion of any share or shares of Series Preferred Stock, and the number of shares of Common Stock to be issued to a particular stockholder shall be rounded down to the nearest whole share. The number of shares issuable upon such conversion shall be determined on the basis of the total number of shares of Series Preferred Stock the holder is at the time converting into Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion. If the conversion would result in any fractional share, the Corporation shall, in lieu of issuing any such fractional share, upon demand by the stockholder otherwise entitled to such fractional share, pay the holder thereof an amount in cash equal to the fair market value of such fractional share on the date of conversion, as determined in good faith by the Board.
(ii) Upon the occurrence of each adjustment or readjustment of the Conversion Price of any shares of Series Preferred Stock pursuant to this Section 7, the Corporation, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of such Series Preferred Stock a notice setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any holder of such Series Preferred Stock, furnish or cause to be furnished to such holder a notice setting forth such adjustment and readjustment, the Conversion Price and the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of a share of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock.
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(g) Notices of Record Date. In the event of any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the Corporation shall mail to each holder of Series Preferred Stock, at least ten (10) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.
(h) Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Series Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Series Preferred Stock and, if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Series Preferred Stock, in addition to such other remedies as shall be available to the holder of such Series Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this Certificate.
B. COMMON STOCK
1. Voting. Except as otherwise expressly provided herein or required by law, each holder of outstanding shares of Common Stock shall vote upon all matters submitted to a vote of stockholders. Notwithstanding the provisions of Section 242(b)(2) of the DGCL, the number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding or reserved for issuance) by the affirmative vote of the holders of a majority of the outstanding shares of Common Stock.
2. Dividends. Subject to the payment in full of all preferential dividends to which the holders of the Series Preferred Stock are entitled hereunder and any consent required by Section VI.A.2(b), the holders of Common Stock shall be entitled to receive dividends out of funds legally available therefor at such times and in such amounts as the Board may declare in its sole discretion.
3. Liquidation. In the event of any Liquidation Event, after the payment or provision for payment of all debts and liabilities of the Corporation and the Series A Liquidation Amount, Series B Liquidation Amount, Series C Liquidation Amount, Series D Liquidation Amount and Series E Liquidation Amount in full in respect of each outstanding share of Series Preferred Stock, the remaining assets and funds of the Corporation available for distribution to its stockholders shall be distributed among the holders of shares of Common Stock, pro rata based on the number of shares held by each such holder, as contemplated by Section VI.A.4.
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ARTICLE VII
In furtherance of and not in limitation of powers conferred by statute, it is further provided that:
1. the election of directors of the Corporation (“Directors”) need not be by written ballot unless By-laws so provide; and
2. subject to any consent required by Section VI.A.2(b), the Board is expressly authorized to adopt, amend or repeal the By-laws to the extent specified therein.
ARTICLE VIII
Meetings of stockholders may be held within or outside of the State of Delaware, as the By-laws may provide.
ARTICLE IX
To the extent permitted by law, the books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated in the By-laws or from time to time by its Board.
ARTICLE X
1. A Director shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director, except for liability (a) for any breach of the Director’s duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the DGCL or (d) for any transaction from which the Director derived an improper personal benefit. If the DGCL is amended after the effective date of this Certificate to authorize corporate action further eliminating or limiting the personal liability of Directors, then the liability of a Director shall be eliminated or limited to the fullest extent permitted by the DGCL.
2. Any repeal or modification of this Article X by the stockholders of the Corporation or by an amendment to the DGCL shall not adversely affect any right or protection existing at the time of such repeal or modification with respect to any acts or omissions of a Person serving as a Director occurring either before or at the time of such repeal or modification.
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ARTICLE XI
1. The Corporation shall, to the fullest extent permitted by the provisions of Section 145 of the DGCL, as the same now exists or may be amended and supplemented, indemnify and advance expenses to its Directors as to action taken in their capacity as such or to actions taken in such other capacity at the request of the Corporation. The Corporation may, by action of the Board, extend such indemnification and advancement of expenses to any and all Persons whom it shall have power to indemnify, including, but not limited to, its officers, employees or agents, on such terms and conditions and to the extent determined by the Board in its sole and absolute discretion. The indemnification and advancement of expenses provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any provision of the By-laws, agreement, vote of the stockholders or disinterested Directors or otherwise and shall continue as to any Person who has ceased to be a Director, officer, employee or agent and shall inure to the benefit of the heirs, executors, and administrators of such Person. The Corporation shall have the power to purchase and maintain insurance on behalf of any Person who is or was a Director, officer, employee or agent of the Corporation against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under this Article XI. “Person” shall mean any individual, corporation, association, partnership (general or limited), joint venture, trust, estate, limited liability company or other legal entity or organization.
2. The Corporation hereby acknowledges that the Directors may have certain rights to indemnification, advancement of expenses and/or insurance provided by direct and indirect stockholders or Affiliates of such Directors (other than the subsidiaries of the Corporation) (collectively, the “Shareholder Affiliates”) separate from the indemnification obligations of the Corporation under this Certificate or otherwise. The Corporation hereby agrees (a) that it is the indemnitor of first resort (i.e., its obligations to the Directors under this Certificate (or any other indemnity provided by the Corporation) are primary and any obligation of any Shareholder Affiliate to advance expenses or to provide indemnification for the same expenses or liabilities incurred by the Directors are secondary), (b) that the Corporation shall be required to advance the full amount of expenses incurred by the Directors and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by this Certificate (or any other indemnity provided by the Corporation), without regard to any rights the Directors may have against any Shareholder Affiliate and (c) that the Corporation irrevocably waives, relinquishes and releases the Shareholder Affiliates from any and all claims against the Shareholder Affiliates for contribution, subrogation or any other recovery of any kind in respect thereof. The Corporation further agrees that no advancement or payment by any Shareholder Affiliate on behalf of a Director with respect to any claim for which the Director has sought indemnification from the Corporation pursuant to this Certificate (or any other indemnity provided by the Corporation) shall affect the foregoing and the Shareholder Affiliates shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of the Director against the Corporation.
3. If this Article XI or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify or advance expenses to each Person entitled to indemnification or advancement of expenses, as the case may be, as to all expense, liability and loss actually and reasonably incurred or suffered by such Person and for which indemnification or advancement of expenses, as the case may be, is available to such Person pursuant to this Article XI to the full extent permitted by any applicable portion of this Article XI that shall not have been invalidated and to the full extent permitted by applicable law.
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4. Any amendment, repeal or modification of the foregoing paragraphs, or the adoption of any provision inconsistent with this Article XI, shall not adversely affect any right or protection existing at the time of such amendment, repeal, modification or adoption.
ARTICLE XII
The Corporation renounces any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, any Excluded Opportunity. An “Excluded Opportunity” is any matter, transaction or interest that is presented to, or acquired, created or developed by, or which otherwise comes into the possession of, any Director (other than any Director who is an employee of the Corporation or any of its subsidiaries) or any Institutional Stockholder (as defined in the Stockholders’ Agreement), unless such matter, transaction or interest is presented to, acquired, created or developed by or otherwise comes into the possession of such Director in his or her capacity as a Director or such Institutional Stockholder in its capacity as a stockholder of the Corporation, in each case as applicable.
ARTICLE XIII
Except as otherwise provided herein, the Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation; provided, that no such amendment which disproportionately adversely affects any class of capital stock of the Corporation shall be made without the prior written consent of the holders of a majority of the then-outstanding shares of such disproportionately adversely affected class (it being understood that any amendment which creates an additional class or series of stock with rights, privileges or preferences which are senior to any existing class or series of stock shall not be deemed to adversely affect such exiting class or series).
ARTICLE XIV
Notwithstanding anything herein or in the By-laws to the contrary, any Director who is an NEA Director (as defined in the Stockholders’ Agreement) at the time of the taking of any applicable action of the Board shall have two (2) votes in such Person’s capacity as a Director with respect to such action. Each other Director serving on the Board at any such time shall have one (1) vote in such Person’s capacity as a Director with respect to such action.
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Exhibit 3.3
AMENDED
AND RESTATED BYLAWS
OF
BRIGHT HEALTH GROUP, INC.
(the
“Company”)
ARTICLE
I.
OFFICES
Section 1. Registered Office. The registered office of the Company shall be in the City of Wilmington, County of New Castle, State of Delaware.
Section 2. Other Offices. The Company may also have offices at such other places both within and without the State of Delaware as the Company’s Board of Directors (the “Board of Directors”) may from time to time determine.
ARTICLE
II.
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The annual meetings of stockholders shall be held on such date and at such time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which meetings the stockholders shall elect by a plurality vote a Board of Directors, and transact such other business as may properly be brought before the meeting. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting.
Section 3. Special Meetings. Unless otherwise prescribed by law or by the Certificate of Incorporation, special meetings of stockholders, for any purpose or purposes, may be called by either (i) the Chairman, if there be one, or (ii) the Chief Executive Officer, and shall be called by any such officer at the request in writing of a majority of the Board of Directors or at the request in writing of stockholders owning not less than 25% of the capital stock of the Company issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting.
Section 4. Quorum. Except as otherwise provided by law or by the Certificate of Incorporation, the holders of a majority of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting.
Section 5. Voting. Unless otherwise required by law, the Certificate of Incorporation or these Bylaws, any question brought before any meeting of stockholders shall be decided by the vote of the holders of a majority of the stock represented and entitled to vote. Each stockholder represented at a meeting of stockholders shall be entitled to cast one vote for each share of the capital stock entitled to vote held by such stockholder. Such votes may be cast in person or by proxy but no proxy shall be voted on or after three (3) years from its date, unless such proxy provides for a longer period. The Board of Directors, in its discretion, or the officer of the Company presiding at a meeting of stockholders, in his or her discretion, may require that any votes cast at such meeting shall be cast by written ballot.
Section 6. Consent of Stockholders in Lieu of Meeting. Unless otherwise provided in the Certificate of Incorporation, any action required or permitted to be taken at any annual or special meeting of stockholders of the Company, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, or by electronic transmission, setting forth the action so taken, shall be signed or communicated by electronic transmission by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.
Section 7. List of Stockholders Entitled to Vote. The officer of the Company who has charge of the stock ledger of the Company shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder of the Company who is present.
Section 8. Stock Ledger. The stock ledger of the Company shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 7 of this Article II or the books of the Company, or entitled to vote in person or by proxy at any meeting of stockholders.
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ARTICLE
III.
DIRECTORS
Section 1. Number and Election of Directors. The Board of Directors shall consist of one (1) or more members, which number may be fixed from time to time by resolution of the Board of Directors. Except as otherwise permitted by statute or as provided in Section 2 of this Article or the Stockholders’ Agreement, dated as of September 9, 2020, among the Company and the stockholders named therein (as amended, the “Stockholders’ Agreement”), the directors shall be elected at each annual meeting of the Company’s stockholders (or at any special meeting of the stockholders called for that purpose) by a plurality of the votes cast at such meeting, and each director so elected shall hold office until the next annual meeting of the stockholders and thereafter until his or her successor is duly elected and qualified, unless a prior vacancy occurs by reason of death, resignation, or removal from office. Directors shall be natural persons, but need not be stockholders.
Section 2. Vacancies. Except as set forth in the Stockholders’ Agreement, vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and thereafter until their successors are duly elected and qualified, or until their earlier death, resignation or removal.
Section 3. Removal and Resignation. Except as set forth in the Stockholders’ Agreement, any director may be removed from the Board of Directors, with or without cause, by the holders of a majority of the shares of capital stock entitled to vote, either by written consent or consents or at any special meeting of the stockholders called for that purpose, and the office of such director shall forthwith become vacant. Any director may resign at any time upon notice to the Company. Such resignation shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective, unless so specified therein.
Section 4. Duties and Powers. The business of the Company shall be managed by or under the direction of the Board of Directors, which may exercise all such powers of the Company and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders.
Section 5. Meetings. The Board of Directors may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board of Directors may be held without notice at such time and at such place as may from time to time be determined by the Board of Directors. Special meetings of the Board of Directors may be called by the Chairman, if there be one, the Chief Executive Officer, or any two (2) directors. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than forty-eight (48) hours before the date of the meeting, by telephone, facsimile, e-mail or telegram on twenty-four (24) hours’ notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances.
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Section 6. Quorum. Except as may be otherwise specifically provided by law, the Certificate of Incorporation or these Bylaws, at all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, provided that at least one member who is not an officer or employee of the Company or any entity controlling, controlled by, or under common control with the Company and who is not a beneficial owner of a controlling interest in the voting stock of the Company or such entity is present. If a quorum shall not be present at any meeting of the Board of Directors, the directors present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Actions of Board. Unless otherwise provided by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all the members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee.
Section 8. Meetings by Means of Telephone Conference. Unless otherwise provided by the Certificate of Incorporation or these Bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 8 shall constitute presence in person at such meeting.
Section 9. Committees. The Board of Directors may, by resolution passed by a majority of the entire Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the Company. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. Any committee, to the extent allowed by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Company. Each committee shall keep regular minutes and report to the Board of Directors when required. The composition of each committee will comply with all applicable state or federal laws or regulations regarding committee composition.
Section 10. Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Company in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.
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Section 11. Interested Directors. No contract or transaction between the Company and one or more of its directors or officers, or between the Company and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his, her or their votes are counted for such purpose if (i) the material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum, or (ii) the material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders, or (iii) the contract or transaction is fair as to the Company as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee that authorizes the contract or transaction.
Section 12. Voting. Except as otherwise permitted by the Certificate of Incorporation, these Bylaws or the Stockholders’ Agreement, any director who is an NEA Director (as defined in the Stockholders’ Agreement) at the time of the taking of any applicable action of the Board shall have two (2) votes in such person’s capacity as a director with respect to such action and each other director serving on the Board of Directors at any such time shall have one (1) vote in such person’s capacity as a director with respect to such action.
ARTICLE
IV.
OFFICERS
Section 1. General. The officers of the Company shall be chosen by the Board of Directors and may include a President or Chief Executive Officer, a Chief Financial Officer or a Treasurer, a Secretary, and such other officers as the Board of Directors may from time to time deem appropriate. The Board of Directors, in its discretion, may also choose a Chairman of the Board of Directors (who must be a director) and appoint such other officers or agents as it deems necessary for the operation and management of the Company, with such powers, rights, duties and responsibilities as may be determined by the Board of Directors, including, without limitation, one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers. Any number of offices may be held by the same person, unless otherwise prohibited by law, the Certificate of Incorporation or these Bylaws. The officers of the Company need not be stockholders of the Company nor, except in the case of the Chairman of the Board of Directors, need such officers be directors of the Company.
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Section 2. Election. The Board of Directors at its first meeting held after each annual meeting of stockholders shall elect the officers of the Company who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors; and all officers of the Company shall hold office until their successors are chosen and qualified, or until their earlier resignation or removal. Any officer elected by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. Any vacancy occurring in any office of the Company shall be filled by the Board of Directors. The salaries of all officers of the Company shall be fixed by the Board of Directors.
Section 3. Voting Securities Owned by the Company. Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Company may be executed in the name of and on behalf of the Company by the President, the Chief Executive Officer or any Vice President and any such officer may, in the name of and on behalf of the Company, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Company may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Company might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons.
Section 4. Chairman of the Board of Directors. The Chairman of the Board of Directors, if there be one, shall preside at all meetings of the stockholders and of the Board of Directors. Except where by law the signature of the President or Chief Executive Officer is required, the Chairman of the Board of Directors shall possess the same power as the President and the Chief Executive Officer to sign all contracts, certificates and other instruments of the Company which may be authorized by the Board of Directors. During the absence or disability of the President and the Chief Executive Officer, the Chairman of the Board of Directors shall exercise all the powers and discharge all the duties of the President and the Chief Executive Officer. The Chairman of the Board of Directors shall also perform such other duties and may from time to time exercise such other powers as from time to time may be assigned to him or her by these Bylaws or by the Board of Directors.
Section 5. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Company. Unless provided otherwise by a resolution adopted by the Board of Directors, the Chief Executive Officer shall, subject to the control of the Board of Directors and, if there be one, the Chairman of the Board of Directors, have general supervision of the business of the Company and shall see that all orders and resolutions of the Board of Directors are carried into effect. He or she shall execute all bonds, mortgages, contracts and other instruments of the Company requiring a seal, under the seal of the Company, except where required or permitted by law to be otherwise signed and executed and except that the other officers of the Company may sign and execute documents when so authorized by these Bylaws, the Board of Directors or the Chief Executive Officer. In the absence or disability of the Chairman of the Board of Directors, or if there be none, the Chief Executive Officer shall preside at all meetings of the stockholders and the Board of Directors. The Chief Executive Officer shall perform such other duties and may exercise such other powers as from time to time may be assigned to him or her by these Bylaws or by the Board of Directors. The positions of President and Chief Executive Officer may, but need not be, held by the same individual. If the positions of President and Chief Executive Officer are held by different individuals, the President shall report to the Chief Executive Officer.
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Section 6. Chief Financial Officer or Treasurer. The Chief Financial Officer or Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Company and shall deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Board of Directors. The Chief Financial Officer or Treasurer shall disburse the funds of the Company as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Chief Executive Officer and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his or her transactions as Chief Financial Officer or Treasurer and of the financial condition of the Company. If required by the Board of Directors, the Chief Financial Officer or Treasurer shall give the Company a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his or her office and for the restoration to the Company, in case of his or her death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his or her possession or under his or her control belonging to the Company.
Section 7. Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of stockholders and record all the proceedings thereat in a book or books to be kept for that purpose; the Secretary shall also perform like duties for the standing committees when required. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or Chief Executive Officer, under whose supervision he or she shall be. If the Secretary shall be unable or shall refuse to cause to be given notice of all meetings of the stockholders and special meetings of the Board of Directors, and if there be no Assistant Secretary, then either the Board of Directors or the Chief Executive Officer may choose another officer to cause such notice to be given. The Secretary shall have custody of the seal of the Company and the Secretary or any Assistant Secretary, if there be one, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or by the signature of any such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Company and to attest the affixing by his or her signature. The Secretary shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed, are properly kept or filed, as the case may be.
Section 8. Vice Presidents. At the request of the President or the Chief Executive Officer or in the absence of both or in the event of the inability or refusal to act of Both (and if there be no Chairman of the Board of Directors), the Vice President or the Vice Presidents if there is more than one (in the order designated by the Board of Directors) shall perform the duties of the President and the Chief Executive Officer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President and the Chief Executive Officer. Each Vice President shall perform such other duties and have such other powers as the Board of Directors from time to time may prescribe. If there be no Chairman of the Board of Directors and no Vice President, the Board of Directors shall designate the officer of the Company who, in the absence of both the President and the Chief Executive Officer or in the event of the inability or refusal of both the President and the Chief Executive Officer to act, shall perform the duties of the President and the Chief Executive Officer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President and the Chief Executive Officer.
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Section 9. Assistant Secretaries. Except as may be otherwise provided in these Bylaws, Assistant Secretaries, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the President, the Chief Executive Officer, any Vice President, if there be one, or the Secretary, and in the absence of the Secretary or in the event of his or her disability or refusal to act, shall perform the duties of the Secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary.
Section 10. Other Officers. Such other officers as the Board of Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors. The Board of Directors may delegate to any other officer of the Company the power to choose such other officers and to prescribe their respective duties and powers.
ARTICLE
V.
STOCK
Section 1. Form of Certificates. Every holder of stock in the Company shall be entitled to have a certificate signed, in the name of the Company (i) by the Chairman of the Board of Directors, the President, the Chief Executive Officer, or a Vice President, and (ii) by the Secretary or an Assistant Secretary of the Company, or such other officer of the Company as the Board of Directors may designate, certifying the number of shares owned by him, her or it in the Company.
Section 2. Signatures. Where a certificate is countersigned by (i) a transfer agent other than the Company or its employee, or (ii) a registrar other than the Company or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Company with the same effect as if he, she or it were such officer, transfer agent or registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors may direct a new certificate to be issued in place of any certificate theretofore issued by the Company alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his, her or its legal representative, to advertise the same in such manner as the Board of Directors shall require and/or to give the Company a bond in such sum as it may direct as indemnity against any claim that may be made against the Company with respect to the certificate alleged to have been lost, stolen or destroyed.
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Section 4. Transfers. Stock of the Company shall be transferable in the manner prescribed by law and in these Bylaws. Transfers of stock shall be made on the books of the Company only by the person named in the certificate or by his, her or its attorney lawfully constituted in writing and upon the surrender of the certificate therefor, which shall be cancelled before a new certificate shall be issued.
Section 5. Record Date. In order that the Company may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
Section 6. Beneficial Owners. The Company shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.
ARTICLE
VI.
NOTICES
Section 1. Notices. Whenever written notice is required by law, the Certificate of Incorporation or these Bylaws, to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at his or her address as it appears on the records of the Company, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Written notice may also be given personally or by facsimile, telegram, telex, e-mail or cable and will be deemed given when delivered or transmitted.
Section 2. Waivers of Notice. Whenever any notice is required by law, the Certificate of Incorporation or these Bylaws, to be given to any director, member of a committee or stockholder, a waiver thereof in writing, signed, by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE
VII.
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the Company, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, and may be paid in cash, in property, or in shares of the capital stock. Before payment of any dividend, there may be set aside out of any funds of the Company available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Company, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve.
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Section 2. Disbursements. All checks or demands for money and notes of the Company shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the Company shall be fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The Company may, but need not, have a corporate seal. In the event the Company has a seal, the seal need not be affixed for any contract, resolution or other document executed by or on behalf of the Company to be valid and duly authorized.
ARTICLE
VIII.
AMENDMENTS
Section 1. General. These Bylaws may be altered, amended or repealed, in whole or in part, or new Bylaws may be adopted by the stockholders or by the Board of Directors; provided, however, that notice of such alteration, amendment, repeal or adoption of new Bylaws be contained in the notice of such meeting of stockholders or Board of Directors as the case may be. All such amendments must be approved by either the holders of a majority of the outstanding capital stock entitled to vote thereon or by a majority of the entire Board of Directors then in office.
Section 2. Entire Board of Directors. As used in this Article VIII and in these Bylaws generally, the term “entire Board of Directors” means the total number of directors which the Company would have if there were no vacancies.
As adopted by the Board of Directors
January 29, 2021
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Exhibit 5.1
Simpson Thacher & Bartlett LLP | ||
2475 hanover street palo alto, ca 94304
|
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telephone: +1-650-251-5000 facsimile: +1-650-251-5002 |
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Direct Dial Number |
E-mail Address |
, 2021
Bright Health Group, Inc.
8000 Norman Center Drive, Suite 1200
Minneapolis, MN 55437
Ladies and Gentlemen:
We have acted as counsel to Bright Health Group, Inc., a Delaware corporation (the “Company”), in connection with the Registration Statement on Form S-1 (the “Registration Statement”) filed by the Company with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Act”), relating to the issuance by the Company of an aggregate of shares of common stock, par value $0.0001 per share (together with any additional shares of such stock that may be issued by the Company pursuant to Rule 462(b) (as prescribed by the Commission pursuant to the Act) in connection with the offering described in the Registration Statement, the “Shares”).
We have examined the Registration Statement, a form of the share certificate and a form of Ninth Amended and Restated Certificate of Incorporation of the Company (the “Amended and Restated Charter”), each of which have been filed with the Commission as an exhibit to the Registration Statement. In addition, we have examined, and have relied as to matters of fact upon, originals, or duplicates or certified or conformed copies, of such records, agreements, documents and other instruments and such certificates or comparable documents of public officials and of officers and representatives of the Company and have made such other investigations as we have deemed relevant and necessary in connection with the opinions hereinafter set forth.
New York | BEIJING | HONG KONG | Houston | LONDON | Los Angeles | SÃO PAULO | TOKYO | Washington, D.C. |
Bright Health Group, Inc. | -2- | , 2021 |
In rendering the opinion set forth below, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as duplicates or certified or conformed copies and the authenticity of the originals of such latter documents. We have also assumed that the Amended and Restated Charter is filed with the Secretary of State for the State of Delaware in the form filed with the Commission as an exhibit to the Registration Statement prior to the issuance of any of the Shares.
Based upon the foregoing, and subject to the qualifications, assumptions and limitations stated herein, we are of the opinion that, (1) when the Board of Directors of the Company (the “Board”) has taken all necessary corporate action to authorize and approve the issuance of the Shares, (2) when the Amended and Restated Charter has been duly filed and (3) upon payment and delivery in accordance with the applicable definitive underwriting agreement approved by the Board, the Shares will be validly issued, fully paid and nonassessable.
We do not express any opinion herein concerning any law other than the law of the State of New York and the Delaware General Corporation Law.
We hereby consent to the filing of this opinion letter as Exhibit 5.1 to the Registration Statement and to the use of our name under the caption “Legal Matters” in the prospectus included in the Registration Statement.
Very truly yours, |
SIMPSON THACHER & BARTLETT LLP |
Exhibit 10.1
Execution Version
CREDIT AGREEMENT
dated as of March 1, 2021,
among
BRIGHT HEALTH GROUP, INC.,
as the Company,
THE VARIOUS FINANCIAL INSTITUTIONS PARTY HERETO,
as Lenders,
and
JPMORGAN
CHASE BANK, N.A.,
as Administrative Agent and Collateral Agent
$350,000,000
JPMorgan Chase bank, n.a.,
BARCLAYS BANK PLC,
Goldman sachs lending partners llc,
MORGAN STANLEY SENIOR FUNDING, INC.
and
Bank of America, n.a.
as Joint Lead Arrangers, Joint Bookrunners and Co-Syndication Agents.
Table of Contents
Page | ||
SECTION 1 | DEFINITIONS | 1 |
1.1 | Definitions | 1 |
1.2 | Other Interpretive Provisions | 45 |
1.3 | Limited Condition Transactions | 46 |
1.4 | Divisions | 46 |
1.5 | Timing of Payment or Performance | 47 |
1.6 | Exchange Rates | 47 |
SECTION 2 | COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION AND LETTER OF CREDIT PROCEDURES | 47 |
2.1 | Commitments | 47 |
2.2 | Loan Procedures | 49 |
2.3 | Letter of Credit | 52 |
2.4 | Funding of Borrowings | 59 |
2.5 | Availability of Funds | 59 |
2.6 | Defaulting Lenders | 60 |
SECTION 3 | EVIDENCING OF LOANS | 61 |
3.1 | Notes | 61 |
3.2 | Recordkeeping | 61 |
SECTION 4 | INTEREST | 61 |
4.1 | Interest Rates | 61 |
4.2 | Interest Payment Dates | 62 |
4.3 | Setting and Notice of Rates | 62 |
4.4 | Computation of Interest | 62 |
SECTION 5 | FEES | 62 |
5.1 | Commitment Fee | 62 |
5.2 | Letter of Credit Fees | 63 |
5.3 | Administrative Agent’s Fees | 63 |
SECTION 6 | REDUCTION OR TERMINATION OF THE COMMITMENT; PREPAYMENTS | 63 |
6.1 | Reduction or Termination of the Commitment | 63 |
6.2 | Prepayments | 64 |
6.3 | Manner of Prepayments | 64 |
6.4 | Repayments | 64 |
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SECTION 7 | MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES | 65 |
7.1 | Making of Payments | 65 |
7.2 | Application of Certain Payments | 65 |
7.3 | Due Date Extension | 66 |
7.4 | Setoff | 66 |
7.5 | Proration of Payments | 66 |
7.6 | Taxes | 67 |
SECTION 8 | INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS | 70 |
8.1 | Increased Costs | 70 |
8.2 | Alternate Rate of Interest | 72 |
8.3 | Funding Losses | 74 |
8.4 | Right of Lenders to Fund through Other Offices | 74 |
8.5 | Discretion of Lenders as to Manner of Funding | 74 |
8.6 | Mitigation of Circumstances; Replacement of Lenders | 75 |
8.7 | Conclusiveness of Statements | 76 |
SECTION 9 | REPRESENTATIONS AND WARRANTIES | 76 |
9.1 | Organization | 76 |
9.2 | Authorization; No Conflict | 76 |
9.3 | Validity and Binding Nature | 77 |
9.4 | Financial Condition | 77 |
9.5 | No Material Adverse Change | 77 |
9.6 | Litigation and Guarantee Obligations | 77 |
9.7 | Ownership of Properties; Liens | 77 |
9.8 | Equity Ownership; Subsidiaries | 78 |
9.9 | Pension Plans | 78 |
9.10 | Investment Company Act | 78 |
9.11 | Regulation U, T, and X | 79 |
9.12 | Taxes | 79 |
9.13 | Solvency, etc. | 79 |
9.14 | Environmental Matters | 79 |
9.15 | Insurance | 80 |
9.16 | Real Property | 80 |
9.17 | Information | 80 |
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9.18 | Intellectual Property | 81 |
9.19 | Labor Matters | 81 |
9.20 | No Default | 81 |
9.21 | Material Licenses | 81 |
9.22 | Compliance with Material Laws | 81 |
9.23 | Subordinated Debt | 81 |
9.24 | Collateral Matters | 81 |
9.25 | PATRIOT Act; OFAC; Sanctions and Anti-Corruption and Anti-Money Laundering Laws | 81 |
SECTION 10 | AFFIRMATIVE COVENANTS | 82 |
10.1 | Reports, Certificates and Other Information | 82 |
10.2 | Books, Records and Inspections | 85 |
10.3 | Maintenance of Property; Insurance | 86 |
10.4 | Compliance with Laws; Payment of Taxes and Liabilities | 86 |
10.5 | Maintenance of Existence; Material Licenses | 86 |
10.6 | Use of Proceeds | 87 |
10.7 | Employee Benefit Plans | 87 |
10.8 | Environmental Matters | 87 |
10.9 | [Reserved] | 88 |
10.10 | Further Assurances | 88 |
10.11 | Additional Subsidiaries | 88 |
10.12 | [Reserved] | 89 |
10.13 | Information Regarding Collateral | 89 |
SECTION 11 | NEGATIVE COVENANTS | 89 |
11.1 | Debt | 89 |
11.2 | Liens | 92 |
11.3 | Restricted Payments | 95 |
11.4 | Mergers, Consolidations, Sales | 96 |
11.5 | Modification of Organizational Documents | 98 |
11.6 | Transactions with Affiliates | 98 |
11.7 | Inconsistent Agreements | 99 |
11.8 | Business Activities | 99 |
11.9 | Investments | 100 |
11.10 | [Reserved] | 101 |
11.11 | Fiscal Year | 101 |
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11.12 | Financial Covenants | 101 |
SECTION 12 | CONDITIONS OF LENDING, ETC. | 101 |
12.1 | Effective Date | 101 |
12.2 | Conditions | 103 |
SECTION 13 | EVENTS OF DEFAULT AND THEIR EFFECT | 103 |
13.1 | Events of Default | 103 |
13.2 | Effect of Event of Default | 105 |
SECTION 14 | AGENTS | 106 |
14.1 | Authorization and Action | 106 |
14.2 | Administrative Agent’s Reliance, Limitation of Liability, Etc. | 108 |
14.3 | [Reserved] | 110 |
14.4 | The Administrative Agent Individually | 110 |
14.5 | Successor Administrative Agent | 110 |
14.6 | Acknowledgments of Lenders and Issuing Banks | 111 |
14.7 | Collateral Matters | 112 |
14.8 | Credit Bidding | 113 |
14.9 | Certain ERISA Matters | 114 |
SECTION 15 | GENERAL | 116 |
15.1 | Waiver; Amendments | 116 |
15.2 | Notices | 118 |
15.3 | Accounting Terms; GAAP | 119 |
15.4 | Costs and Expenses | 119 |
15.5 | Successors and Assigns | 120 |
15.6 | Forum Selection and Consent to Jurisdiction | 124 |
15.7 | Governing Law | 125 |
15.8 | Confidentiality | 126 |
15.9 | Severability | 126 |
15.10 | Nature of Remedies | 127 |
15.11 | Entire Agreement | 127 |
15.12 | Release of Liens and Guarantees | 127 |
15.13 | Captions | 128 |
15.14 | Customer Identification – Certain Notices | 128 |
15.15 | Indemnification by the Company | 128 |
15.16 | Limitations on Liability | 129 |
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15.17 | Posting of Communications | 129 |
15.18 | Counterparts; Effectiveness; Electronic Execution | 131 |
15.19 | Acknowledgement Regarding Any Supported QFCs | 132 |
15.20 | WAIVER OF JURY TRIAL | 132 |
15.21 | Statutory Notice-Oral Commitments | 132 |
15.22 | Survival of Representation, Warranties and Agreements | 133 |
15.23 | Acknowledgement and Consent to Bail-In of Affected Financial Institutions | 134 |
15.24 | No Fiduciary Relationship | 134 |
ANNEXES
ANNEX A | Lenders and Pro Rata Shares |
ANNEX B | Addresses for Notices |
SCHEDULES
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EXHIBITS
EXHIBIT A | Form of Borrowing Request (Section 2.2.1) |
EXHIBIT B | Form of Interest Election Request (Section 2.2.2) |
EXHIBIT C | Form of Note (Section 3.1) |
EXHIBIT D | Form of Notice of Prepayment (Section 6.2.1) |
EXHIBIT E | Form of Solvency Certificate (Section 9.13) |
EXHIBIT F | Form of Compliance Certificate (Section 10.1.3) |
EXHIBIT G | Form of Perfection Certificate (Section 10.13) |
EXHIBIT H | Form of Assignment and Assumption (Section 15.5) |
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CREDIT AGREEMENT
This CREDIT AGREEMENT dated as of March 1, 2021 (this “Agreement”), is entered into among BRIGHT HEALTH GROUP, INC. (the “Company”), the financial institutions from time to time party hereto as lenders (together with their respective successors and assigns, the “Lenders”) and JPMORGAN CHASE BANK, N.A., as administrative agent and collateral agent for the Lenders.
In consideration of the mutual agreements herein contained, the parties hereto agree as follows:
SECTION 1 DEFINITIONS.
1.1 Definitions. When used herein the following terms shall have the following meanings:
“Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of all or substantially all of any business or division of a Person, (b) the acquisition of the Equity Interests of any Person causing such Person to become a Subsidiary or (c) a merger or consolidation or any other combination with another Person.
“Adjusted LIBO Rate” means, with respect to any LIBOR Borrowing for any Interest Period (or, solely for purposes of clause (c) of the defined term “Base Rate”, for purposes of determining the Base Rate as of any date), an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period (or such date, as applicable) multiplied by (b) the Statutory Reserve Rate.
“Administrative Agent” means JPMCB, in its capacity as administrative agent for the Lenders and any successor thereto in such capacity. Where the context requires, references herein to the Administrative Agent shall also include JPMCB acting in its capacity as Collateral Agent under each of the Security Documents.
“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent or such other form as may be reasonably acceptable to the Administrative Agent.
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” of any Person means (a) any other Person which, directly or indirectly, controls or is controlled by or is under common control with such Person and (b) with respect to any Lender, any entity administered or managed by such Lender or an Affiliate or investment advisor thereof and which is engaged in making, purchasing, holding or otherwise investing in commercial loans. The term “control”, as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of Voting Stock, by agreement or otherwise. The terms “controlling”, “controlled” and “under common control” have meanings correlative thereto.
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“Agent-Related Person” has the meaning assigned to such term in Section 15.4.2.
“Agents” means each of the Administrative Agent and the Collateral Agent and, solely for purposes of Section 14, the Arrangers.
“Agreement” has the meaning assigned to such term in the Preamble.
“Ancillary Document” has the meaning assigned to such term in Section 15.18.
“Anti-Corruption Laws” means all Laws of any jurisdiction applicable to the Company or any of its Subsidiaries from time to time concerning or relating to bribery or corruption.
“Approved Electronic Platform” has the meaning assigned to such term in Section 14.3.
“Approved Fund” has the meaning assigned to such term in Section 15.5(b).
“Arranger” means JPMCB, Barclays Bank PLC, Goldman Sachs Lending Partners LLC, Morgan Stanley Senior Funding Inc. and Bank of America, N.A., in their capacities as joint lead arrangers.
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 15.5), and accepted by the Administrative Agent, in the form of Exhibit H or any other form (including electronic records generated by the use of an electronic platform) approved by the Administrative Agent in its reasonable discretion.
“Attorney Costs” means, with respect to any Person, all reasonable and documented and invoiced fees and charges of any counsel to such Person, and all reasonable and documented court costs and similar legal expenses.
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark or payment period for interest calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of an Interest Period pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to clause (f) of Section 8.2.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of any Affected Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country which has implemented, or which at any time implements, Article 55 BRRD, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time; and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
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“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”, as now and hereafter in effect, or any successor statute.
“Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus 1/2 of 1.00% per annum and (c) the Adjusted LIBO Rate for a one-month Interest Period on such day (or, if such day is not a Business Day, the immediately preceding Business Day) plus 1.00% per annum. If the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the NYFRB Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition thereof, then the Base Rate shall be determined without regard to clause (b) of the preceding sentence until the circumstances giving rise to such inability no longer exist. For purposes of clause (c) above, the Adjusted LIBO Rate on any day shall be based on the LIBO Screen Rate at approximately 11:00 a.m., London time, on such day for deposits in U.S. Dollars (assuming an Interest Period of one month); provided that (i) if no LIBO Screen Rate shall be available for a one-month Interest Period but LIBO Screen Rates shall be available for maturities both longer and shorter than a one-month Interest Period, then the LIBO Screen Rate for purposes of this sentence shall be the Interpolated Screen Rate and (ii) if such rate shall be less than zero, then such rate shall be deemed to be zero. Any change in the Base Rate due to a change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate, respectively. If the Base Rate is being used as an alternate rate of interest pursuant to Section 8.2 (for the avoidance of doubt, only until any Benchmark Replacement has become effective pursuant to Section 8.2(b)), then the Base Rate shall be the greater of clauses (a) and (b) of this definition and shall be determined without reference to clause (c) of this definition. Notwithstanding the foregoing, if the Base Rate as determined pursuant to the foregoing would be less than 1.00% per annum, then such rate shall be deemed to be 1.00% per annum for purposes of this Agreement.
“Base Rate Loan” means any Loan or Borrowing which bears interest at or by reference to the Base Rate.
“Base Rate Margin” means 4.00%.
“Benchmark” means, initially, the Adjusted LIBO Rate; provided that if a Benchmark Transition Event, a Term SOFR Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred with respect to the Adjusted LIBO Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (b) or clause (c) of Section 8.2.
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“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:
(1) the sum of: (a) Term SOFR and (b) the related Benchmark Replacement Adjustment;
(2) the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment;
(3) the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Company as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for U.S. Dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment;
provided that, in the case of clause (1), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion; provided further that, notwithstanding anything to the contrary in this Agreement or in any other Loan Document, upon the occurrence of a Term SOFR Transition Event, and the delivery of a Term SOFR Notice, on the applicable Benchmark Replacement Date the “Benchmark Replacement” shall revert to and shall be deemed to be the sum of (a) Term SOFR and (b) the related Benchmark Replacement Adjustment, as set forth in clause (1) of this definition (subject to the first proviso above).
If the Benchmark Replacement as determined pursuant to clause (1), (2) or (3) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement:
(1) for purposes of clauses (1) and (2) of the definition of “Benchmark Replacement,” the first alternative set forth in the order below that can be determined by the Administrative Agent:
(a) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor;
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(b) the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable Corresponding Tenor; and
(2) for purposes of clause (3) of the definition of “Benchmark Replacement,” the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Company for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for dollar-denominated syndicated credit facilities;
provided that, in the case of clause (1) above, such adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by the Administrative Agent in its reasonable discretion.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides in its reasonable discretion may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
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“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof);
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein;
(3) in the case of a Term SOFR Transition Event, the date that is thirty (30) days after the date a Term SOFR Notice is provided to the Lenders and the Company pursuant to Section 8.2(c); or
(4) in the case of an Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, so long as the Administrative Agent has not received, by 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election from Lenders comprising the Required Lenders.
For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the NYFRB, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
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(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 8.2 and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 8.2.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 CFR § 1010.230.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.
“BHC Act Affiliate” means, with respect to any Person, an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. § 1841(k)) of such Person.
“Board of Directors” means, with respect to any Person, (i) in the case of any corporation, the board of directors of such Person, (ii) in the case of any limited liability company, the board of managers of such Person, (iii) in the case of any partnership, the Board of Directors of the general partner of such Person and (iv) in any other case, the functional equivalent of the foregoing.
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“Board of Governors” means the Board of Governors of the Federal Reserve System of the United States.
“Borrowing” means Loans of the same class and Type made, converted or continued on the same date and, in the case of LIBOR Loans, as to which a single Interest Period is in effect.
“Borrowing Minimum” means $1,000,000.
“Borrowing Multiple” means $100,000.
“Borrowing Request” means a request by the Company for a Borrowing in accordance with Section 2.2.1, which shall be substantially in the form of Exhibit A or any other form approved by the Administrative Agent in its reasonable discretion and otherwise consistent with the requirements of Section 2.2.1.
“Business Day” means any day that is not a Saturday, a Sunday or any other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a LIBOR Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in U.S. Dollar deposits in the London interbank market.
“Cash Collateralize” means to deliver cash collateral to the Administrative Agent to be held as cash collateral for outstanding Letters of Credit in accordance with the procedures set forth in Section 2.3.9. Derivatives of such term have corresponding meanings.
“Cash Management Services” means any treasury management services (including controlled disbursements, zero balance arrangements, cash sweeps, automated clearinghouse transactions, return items, overdrafts, temporary advances, interest and fees and interstate depository network services) provided to the Company or any Subsidiary.
“CFC” means (a) any Person that is a “controlled foreign corporation” (within the meaning of Section 957 of the Code); (b) any Foreign Subsidiary Holding Company and (c) each Subsidiary of any Person described in clause (a) or (b).
“Change in Law” means the occurrence after the Effective Date of (a) the adoption of or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) compliance by any Lender or Issuing Bank (or, for purposes of Section 8.1(b), by any lending office of such Lender or by such Lender’s or Issuing Bank’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Effective Date (other than any such request, guideline or directive to comply with any law, rule or regulation that was in effect on the Effective Date); provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith or in the implementation thereof and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall, in each case, be deemed to be a “Change in Law,” regardless of the date enacted, adopted, issued or implemented.
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“Change of Control” means (i)(A) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act (or any successor provision)), other than the Permitted Holders, of Equity Interests in the IPO Entity representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding Voting Stock of the IPO Entity and (B) the ownership, directly or indirectly, beneficially or of record, by the Permitted Holders of Equity Interests in the IPO Entity representing in the aggregate a lesser percentage of the aggregate ordinary voting power represented by the issued and outstanding Voting Stock of the IPO Entity than such Person or group or (ii) if the Company is not the IPO entity, the failure by the IPO Entity to own, directly or indirectly through one or more wholly owned subsidiaries, all of the Equity Interests of the Company.
Notwithstanding anything to the contrary in this definition or any provision of Rule 13d-3 of the Exchange Act (or any successor provision), (i) a Person or group shall not be deemed to beneficially own Voting Stock (x) to be acquired by such Person or group pursuant to an equity or asset purchase agreement, merger agreement, option agreement, warrant agreement or similar agreement (or voting or option or similar agreement related thereto) until the consummation of the acquisition of the Voting Stock in connection with the transactions contemplated by such agreement or (y) solely as a result of veto or approval rights in any joint venture agreement, shareholder agreement, investor rights agreement or other similar agreement, (ii) if any group (other than a Permitted Holder) includes one or more Permitted Holders, the issued and outstanding Voting Stock of the Company (or, following a Qualified IPO, the IPO Entity) owned, directly or indirectly, by any Permitted Holders that are part of such group shall not be treated as being beneficially owned by such group or any other member of such group for purposes of determining whether a Change of Control has occurred, (iii) a Person or group (other than Permitted Holders) will not be deemed to beneficially own Voting Stock of another Person as a result of its ownership of Equity Interests or other securities of such other Person’s Parent Entity (or related contractual rights) unless it owns more than 50.0% of the total voting power of the Voting Stock of such Person’s Parent Entity and (iv) the right to acquire Voting Stock (so long as such Person does not have the right to direct the voting of the Voting Stock subject to such right) or any veto power in connection with the acquisition or disposition of Voting Stock will not cause a party to be a beneficial owner.
“Code” means the Internal Revenue Code of 1986.
“Collateral” means all property and interests in property now owned or hereafter acquired in or upon which a Lien has been or is purported or intended to have been granted to the Administrative Agent, the Collateral Agent or any Lender under any of the Security Documents.
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“Collateral Agent” means JPMCB, in its capacity as collateral agent for the Secured Parties and any successor thereto in such capacity.
“Collateral Agreement” means the Guarantee and Collateral Agreement among the Company, the Guarantors and the Collateral Agent, dated the Effective Date, together with all supplements thereto.
“Collateral and Guarantee Requirement” means, at any time, the requirement that:
(a) the Collateral Agent shall have received from the Company and each Designated Subsidiary either (i) a counterpart of the Collateral Agreement duly executed and delivered on behalf of such Person or (ii) in the case of any Person that becomes a Designated Subsidiary after the Effective Date or following a Qualified IPO, an IPO Entity to the extent such IPO Entity is not the Company, a supplement to the Collateral Agreement duly executed and delivered on behalf of such Designated Subsidiary, together with documents and opinions of the type referred to in paragraphs (b) and (c) of Section 12.1 with respect to such Designated Subsidiary within 45 days after such Person becoming a Designated Subsidiary or an IPO Entity (or such longer period as the Administrative Agent may, in its reasonable discretion, agree to in writing);
(b) (i) all Equity Interests in any Subsidiary (other than any Equity Interests constituting Excluded Assets) owned directly by any Loan Party shall have been pledged in favor of the Collateral Agent, for the benefit of the Secured Parties, pursuant to the Collateral Agreement and (ii) the Collateral Agent shall, to the extent required by the Collateral Agreement, have received any certificates representing such Equity Interests (to the extent then in existence), together with undated stock powers with respect thereto endorsed in blank;
(c) all Debt for borrowed money in a principal amount of $2,500,000 or more that is owing to any Loan Party and evidenced by a promissory note and shall have been pledged pursuant to the Collateral Agreement, and the Collateral Agent shall have received all such promissory notes in a principal amount of $2,500,000 or more, together with undated instruments of transfer with respect thereto endorsed in blank;
(d) all documents and instruments, including Uniform Commercial Code financing statements, required by applicable law or reasonably requested by the Collateral Agent to be filed, registered or recorded to create the Liens intended to be created by the Security Documents and perfect such Liens to the extent required by, and with the priority required by, the Security Documents and this Agreement, shall have been filed, registered or recorded or delivered to the Collateral Agent for filing, registration or recording;
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(e) the Collateral Agent shall have received (i) counterparts of a Mortgage with respect to each Mortgaged Property duly executed and delivered by the record owner of such Mortgaged Property, (ii) a policy or policies of title insurance (or an unconditional commitment to issue such policy or policies of title insurance) issued by a nationally recognized title insurance company insuring the Lien of each such Mortgage as a valid and enforceable Lien on the Mortgaged Property described therein, free of any other Liens except as expressly permitted by Section 11.2, in an amount not to exceed the fair market value of such Mortgaged Property (as reasonably determined by the Company), together with such endorsements (but only to the extent available in the applicable jurisdiction at commercially reasonable rates), coinsurance and reinsurance as the Collateral Agent may reasonably request, (iii) to the extent required by applicable Law, a completed standard “life of loan” flood hazard determination form with respect to each Mortgaged Property, (iv) surveys sufficient to delete the standard survey exception from the title policy or policies being issued, and (v) customary legal opinions and other documents as may be reasonably required by the Collateral Agent or the Required Lenders with respect to any such Mortgage or Mortgaged Property; provided that, for purposes of Sections 10.10 and 10.11, this clause (e) may be satisfied within 120 days after the acquisition of such Mortgaged Property by a Loan Party (or such longer period as the Administrative Agent may, in its reasonable discretion, agree to in writing) or within 120 days after the applicable Person becomes a Loan Party (or such longer period as the Administrative Agent may, in its reasonable discretion, agree to in writing); provided, further, that this clause (e) shall be deemed satisfied with respect to a Material Real Property if any Lender has not provided confirmation to the Administrative Agent as required by the proviso to the definition of “Mortgaged Property” prior to the end of such 120-day period; and
(f) the Collateral Agent shall have received a counterpart, duly executed and delivered by the applicable Loan Party and the applicable depositary bank of a Control Agreement with respect to each deposit account (other than any deposit account constituting Excluded Assets) maintained by any Loan Party with any depositary bank; provided, however, that this clause (f) may be satisfied within 60 days after the Effective Date (or such longer period as the Administrative Agent may, in its reasonable discretion).
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Notwithstanding the foregoing provisions of this definition or anything in this Agreement or any other Loan Document to the contrary, (a) the foregoing definition shall not require the creation or perfection of pledges of or security interests in, or the obtaining of legal opinions or other deliverables with respect to, particular assets of the Loan Parties, or the Guarantee Obligations of any Subsidiary, if, and for so long as the Administrative Agent, in consultation with the Company, determines in its reasonable discretion that the cost of creating or perfecting such pledges or security interests in such assets, or obtaining such legal opinions or other deliverables in respect of such assets, or incurring such Guarantee Obligations (taking into account any adverse tax consequences to the Company and its Subsidiaries(including the imposition of withholding or other material Taxes)), shall be excessive in view of the benefits to be obtained by the Lenders therefrom, (b) Liens required to be granted from time to time pursuant to the term “Collateral and Guarantee Requirement” shall be subject to exceptions and limitations set forth in the Security Documents, (c) in no event shall control agreements or other control or similar arrangements be required with respect to securities accounts, commodities accounts or other assets specifically requiring perfection by control agreements (other than deposit accounts and certificated securities), (d) no perfection actions shall be required with respect to vehicles and other assets subject to certificates of title, (e) no perfection actions shall be required with respect to commercial tort claims with a value less than $2,500,000 and no perfection shall be required with respect to promissory notes evidencing debt for borrowed money in a principal amount of less than $2,500,000, (f) no actions in any non-U.S. jurisdiction or required by the laws of any non-U.S. jurisdiction shall be required to be taken to create any security interests in assets located or titled outside of the United States (including any Equity Interests of Foreign Subsidiaries and any foreign Intellectual Property) or to perfect or make enforceable any security interests in any such assets (it being understood that there shall be no security agreements or pledge agreements governed under the laws of any non-U.S. jurisdiction), (g) no actions shall be required to perfect a security interest in letter of credit rights (other than the filing of UCC financing statements), (h) no Loan Party shall be required to deliver or obtain any landlord lien waivers, estoppel certificates or collateral access agreements or letters and (i) in no event shall the Collateral include any Excluded Assets. The Administrative Agent may grant extensions of time for the creation and perfection of security interests in or the obtaining of legal opinions or other deliverables with respect to particular assets or the incurrence of Guarantee Obligations by any Subsidiary (including extensions beyond the Effective Date or in connection with assets acquired, or Subsidiaries formed or acquired, after the Effective Date) where it, in consultation with the Company, determines in its reasonable discretion that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by this Agreement or the Security Documents.
“Commitment” means, as to any Lender, such Lender’s commitment to make Loans and issue or participate in Letters of Credit, in each case under this Agreement as set forth on Annex A under the caption “Commitment”, or in the Assignment and Assumption pursuant to which such Lender assumed its Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 6.1 or 8.6, (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 15.5 or (c) increased pursuant to Section 2.1.2. The initial amount of each Lender’s commitment to make Loans is set forth on Annex A and the aggregate amount of the Commitments as of the Effective Date is $350,000,000; provided that such Annex A and the aggregate amount of the Commitments may be updated in the manner set forth in such Annex A.
“Commitment Fee Rate” means 0.75%.
“Commitment Increase” has the meaning assigned to such term in Section 2.1.2(a).
“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.) and any successor statute, and any rule, regulation, or order promulgated thereunder, in each case as amended from time to time.
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“Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of any Loan Party pursuant to this Agreement or any other Loan Document or the transactions contemplated herein or therein that is distributed to the Administrative Agent, any Lender or any Issuing Bank by means of electronic communications pursuant to Section 14.3, including through an Approved Electronic Platform.
“Company” has the meaning assigned to such term in the Preamble.
“Compliance Certificate” means a Compliance Certificate which shall be in substantially the form of Exhibit F or such other form as may be reasonably acceptable to the Administrative Agent.
“Computation Period” means each period of four consecutive Fiscal Quarters of the Company for which financial statements have been (or are required to have been) delivered, pursuant to Section 10.1.1 or 10.1.2, ending on the last day of any such Fiscal Quarter.
“Consolidated Total Assets” means, at any date, total assets of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP, as reflected in the consolidated financial statements of the Company most recently delivered to the Administrative Agent and the Lenders pursuant to Section 10.1.1 or 10.1.2 hereof (or, prior to the first delivery of any such financial statements, as of the end of the Fiscal Quarter ended September 30, 2020.
“Control Agreement” means, with respect to any deposit account (other than any deposit account constituting Excluded Assets) maintained by any Loan Party, a control agreement in form and substance reasonably satisfactory to the Administrative Agent, duly executed and delivered by such Loan Party and the depositary bank with which such account is maintained.
“Controlled Group” means all members of a controlled group of corporations, all members of a controlled group of trades or businesses (whether or not incorporated) under common control and all members of an affiliated service group which, together with the Company or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code or Section 4001 of ERISA.
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Covered Entity” means any of (a) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (b) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (c) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
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“Covered Matters” means (a) the execution or delivery of this Agreement, any other Loan Document, or any agreement or instrument contemplated hereby or thereby, or the performance by the parties hereto of their respective obligations hereunder or thereunder, (b) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by an Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (c) any actual or alleged presence or release of Hazardous Substances on or from any property owned or operated by the Company or any of its Subsidiaries, or any Environmental Claim related in any way to the Company or any of its Subsidiaries or (d) Proceeding relating to any of the foregoing, regardless of whether or not such Proceeding is brought by the Company or any other Loan Party or its or their respective equity holders, Affiliates, creditors or any other third Person and whether or not based on contract, tort or any other theory and regardless of whether any Agent-Related Person, Lender-Related Person or Indemnitee is a party thereto.
“Covered Party” has the meaning assigned to such term in Section 15.18(b).
“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Administrative Agent in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for business loans; provided that if the Administrative Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may establish another convention in its reasonable discretion.
“Debt” of any Person means, without duplication, (a) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (b) all borrowed money of such Person, whether or not evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person as lessee under Financing Lease Obligation, (d) all obligations of such Person to pay the deferred purchase price of property or services (excluding trade accounts or similar obligations payable in the ordinary course of business), including any purchase price adjustment, earnout or deferred payment of a similar nature incurred in connection with an acquisition (but only to the extent that such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP), (e) all indebtedness secured by a Lien on the property of such Person, whether or not such indebtedness shall have been assumed by such Person; provided that if such Person has not assumed or otherwise become liable for such indebtedness, such indebtedness shall be measured at the fair market value of such property securing such indebtedness at the time of determination, (f) all obligations, contingent or otherwise, with respect to the face amount of all letters of credit (whether or not drawn), bankers’ acceptances and similar obligations issued for the account of such Person (including the Letters of Credit), (g) all Hedging Obligations of such Person, (h) all obligations of such Person in respect of mandatory redemption or cash mandatory dividend or similar rights on all Disqualified Equity Interests of such Person, (i) all Guarantee Obligations of such Person with respect to Debt of others and (j) all Debt of any partnership of which such Person is a general partner, solely to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Debt expressly provide that such Person is not liable therefor; provided, further, that Debt shall not include (i) prepaid or deferred revenue arising in the ordinary course of business, (ii) purchase price holdbacks arising in the ordinary course of business in respect of a portion of the purchase price of an asset to satisfy warrants or other unperformed obligations of the seller of such asset, (iii) amounts owed to dissenting equityholders in connection with, or as a result of, their exercise of appraisal rights and the settlement of any claims or actions (whether actual, contingent or potential) with respect thereto (including any accrued interest), with respect to any Acquisition permitted under the Loan Documents, (iv) liabilities associated with customer prepayments and deposits and other accrued obligations (including transfer pricing), in each case incurred in the ordinary course of business, (v) Non-Financing Lease Obligations or other obligations under or in respect of straight-line leases, operating leases or sale leasebacks (except resulting in Financing Lease Obligation), (vi) customary obligations under employment agreements and deferred compensation arrangements, (vii) contingent post-closing purchase price adjustments, non-compete or consulting obligations or earn-outs to which the seller in an Acquisition or Investment may become entitled and (viii) indebtedness of any Parent Entity (other than an IPO Entity) appearing on the balance sheet of the Company or any of its Subsidiary solely by reason of “pushdown” accounting under GAAP.
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“Default Rate” means an interest rate equal to 2% per annum in excess of the interest rate otherwise payable hereunder with respect to the applicable Loans (or, in the case of any such fees and other amounts, a rate which is 2% per annum in excess of the interest rate otherwise payable hereunder for Base Rate Loans).
“Default Right” has the meaning assigned to such term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“Defaulting Lender” means any Lender that (a) has failed to fund any portion of its Commitment within one Business Day of the date required to be funded by it hereunder, unless the subject of a good faith dispute, (b) has notified the Company, the Administrative Agent or any Lender in writing, or has otherwise indicated through a public statement, that it does not intend to comply with its funding obligations generally under agreements in which it commits to extend credit, (c) has failed, within three Business Days after receipt of a written request from the Administrative Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Commitments, (d) has otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute, (e) has, or has a direct or indirect parent company that has, become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, custodian, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or (f) has, or has a direct or indirect parent company that has, become the subject of a Bail-In Action (as defined in Section 15.23); provided that (i) the Administrative Agent and the Company may declare (A) by joint notice to the Lenders that a Defaulting Lender is no longer a “Defaulting Lender” or (B) that a Lender is not a Defaulting Lender if in the case of both clauses (A) and (B) the Administrative Agent and the Company each determines, in its sole respective discretion, that (x) the circumstances that resulted in such Lender becoming a “Defaulting Lender” no longer apply or (y) it is satisfied that such Lender will continue to perform its funding obligations hereunder and (ii) a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of Voting Stock in such Lender or a parent company thereof by a Governmental Authority or an instrumentality thereof so long as such ownership or acquisition of Equity Interests does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.
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“Designated Subsidiary” means each Wholly-Owned Subsidiary of the Company other than an Excluded Subsidiary.
“Disqualified Equity Interests” means, with respect to any Person, any Equity Interests of such Person that, by their terms (or by the terms of any securities or other Equity Interests into which they are convertible or for which they are exchangeable) or upon the happening of any event or condition, (i) mature or are mandatorily redeemable (other than solely for Equity Interests that are not otherwise Disqualified Equity Interests), pursuant to a sinking fund obligation or otherwise, (ii) are redeemable at the option of the holder thereof (other than solely for Equity Interests which are not otherwise Disqualified Equity Interests), in whole or in part, (iii) provide for scheduled payments or dividends in cash or (iv) are or become convertible into or exchangeable for Debt or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is 91 days after the Maturity Date then in effect, except, in the case of clauses (i) and (ii), if as a result of a change of control or asset sale, so long as any rights of the holders thereof upon the occurrence of such a change of control or asset sale event are subject to the prior payment in full of all Obligations that are accrued and payable (other than contingent amounts not yet due), the cancellation or expiration of all Letters of Credit and the termination of the Commitments; provided that if such Equity Interests are issued pursuant to a plan for the benefit of the Company or its subsidiaries or by any such plan to employees, such Equity Interests shall not constitute Disqualified Equity Interests solely because they may be required to be repurchased by the Company or its subsidiaries in order to satisfy applicable statutory or regulatory obligations.
“Dollars” and “$” means dollars in lawful currency of the United States.
“Early Opt-in Election” means, if the then-current Benchmark is the Adjusted LIBO Rate, the occurrence of:
(1) | a notification by the Administrative Agent to (or the request by the Company to the Administrative Agent to notify) each of the other parties hereto that at least five currently outstanding dollar-denominated syndicated credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review), and |
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(2) | the joint election by the Administrative Agent and the Company to trigger a fallback from the Adjusted LIBO Rate and the provision by the Administrative Agent of written notice of such election to the Lenders. |
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clause (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any member state of the European Union, Iceland, Liechtenstein and Norway.
“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Effective Date” means the date on which the conditions specified in Section 12.1 are satisfied (or waived in accordance with Section 15.1), which date was March 1, 2021.
“Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.
“Employee Investors” means the current, former or future officers, directors, employees, managers, consultants and other advisors, representatives and affiliates (and Immediate Family Members of the foregoing) of the Company, the Subsidiaries, the IPO Entity or any other Parent Entity who are or who become direct or indirect investors in the Company, the IPO Entity or any other Parent Entity, including any such officers, directors, employees, managers, consultants and other advisors, representatives and affiliates (and any Immediate Family Members of the foregoing) owning through an Equityholding Vehicle.
“Equityholding Vehicle” means any Parent Entity and any equityholder thereof through which current, former or future officers, directors, employees, managers, members, partners, independent contractors or consultants (or any Immediate Family Member of the foregoing) of the Company, the Subsidiaries, the IPO Entity or any other Parent Entity that holds Equity Interests of such Parent Entity.
“Equity Interests” means, with respect to any Person, all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person’s capital, whether now outstanding or issued or acquired after the Effective Date, including common shares, preferred shares, membership interests in a limited liability company, limited or general partnership interests in a partnership, interests in a trust, interests in other unincorporated organizations or any other equivalent of such ownership interest, but excluding any debt securities convertible into such Equity Interests.
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“Environmental Claims” means all claims, however asserted, by any Governmental Authority or other Person alleging potential liability or responsibility for any violation of, or liability arising under, any Environmental Law, including any release or threatened release of any Hazardous Substance.
“Environmental Laws” means all Laws relating to any matter arising out of or relating to public or workplace health and safety, pollution or protection of the environment or natural resources, including to the presence, use, production, generation, handling, transport, treatment, storage, disposal, distribution, discharge, emission, release, threatened release, control or cleanup of any Hazardous Substance.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations thereunder.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“Event of Default” means any of the events described in Section 13.1.
“Excluded Assets” means each of the following:
(a) any asset the grant of a security interest in which would (i) be prohibited by any enforceable anti-assignment provision set forth in any contract relating to such asset that is permitted or otherwise not prohibited by the terms of this Agreement or (ii) violate the terms of any contract relating to such asset that is permitted or otherwise not prohibited by the terms of this Agreement (in the case of clause (i) above and this clause (ii), after giving effect to any applicable anti-assignment provision of the UCC or other applicable requirements of Law); it being understood that (A) the term “Excluded Asset” shall not include proceeds or receivables arising out of any contract described in this clause (a) to the extent that the assignment of such proceeds or receivables is expressly deemed to be effective under the UCC or any other applicable requirement of Law notwithstanding the relevant prohibition, violation or termination right, (B) the exclusions referenced in clauses (a)(i) and (a)(ii) above shall not apply to the extent that the relevant contract prohibits the grant of a security interest in all or substantially all of the assets of any Loan Party and (C) the exclusion set forth in this clause (a) shall only apply if the contractual prohibitions or contractual provisions that would be so violated or that would trigger any such termination under clause (a)(i) or (a)(ii) above (x) existed on the Effective Date (or in the case of any contract of a subsidiary that is acquired following the Effective Date, as of the date of such Acquisition) and were not entered into in contemplation of the Effective Date (or such Acquisition) and (y) cannot be waived unilaterally by the Company or any of its Wholly-Owned Subsidiaries,
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(b) (A) the Equity Interests of any not-for-profit or special purpose subsidiary, and/or (B) Voting Stock representing in excess of 65% of the Voting Stock of any CFC,
(c) any intent-to-use (or similar) Trademark application prior to the filing and acceptance of a “Statement of Use” or “Amendment to Allege Use” notice and/or filing with respect thereto,
(d) any asset, the grant of a security interest in which would (i) require any governmental consent, approval, license or authorization that has not been obtained, (ii) be prohibited by applicable requirements of Law, except, in each case of clause (i) above and this clause (ii), to the extent such requirement or prohibition would be rendered ineffective under the UCC or any other applicable Law notwithstanding such requirement or prohibition; it being understood that the term “Excluded Asset” shall not include proceeds or receivables arising out of any asset described in clause (d)(i) or clause (d)(ii) to the extent that the assignment of such proceeds or receivables is expressly deemed to be effective under the UCC or any other applicable requirement of Law notwithstanding the relevant requirement or prohibition or (iii) result in material adverse tax consequences to the Company or any Parent Entity of the Company or any of the Company’s direct or indirect subsidiaries as reasonably determined by the Company in consultation with (but without the consent of) the Administrative Agent, including as a result of the operation of Section 956 of the Code,
(e) (i) any leasehold real property interests and (ii) any fee owned real property that is not a Material Real Property or which is located in an area identified by the Federal Emergency Management Agency (or any successor agency) as a special flood hazard area,
(f) any Margin Stock,
(g) any interest in any partnership, joint venture or non-Wholly-Owned Subsidiary which cannot be pledged without (i) the consent of one or more third parties other than the Company or any of its Subsidiaries under the organizational documents (and/or shareholders’ or similar agreement) of such partnership, joint venture or non-Wholly-Owned Subsidiary or (ii) giving rise to a “right of first refusal”, a “right of first offer” or a similar right permitted or otherwise not prohibited by the terms of this Agreement that may be exercised by any third party other than the Company or any of its Subsidiaries in accordance with the organizational documents (and/or shareholders’ or similar agreement) of such partnership, joint venture or non-Wholly-Owned Subsidiary,
(h) (i) motor vehicles, aircraft, aircraft engines and other assets subject to certificates of title, (ii) letter-of-credit rights not constituting supporting obligations of other Collateral and (iii) Commercial Tort Claims with a value (as reasonably estimated by the Company) of less than $2,500,000, except, in each case of clauses (i)-(iii), to the extent a security interest therein can be perfected solely by the filing of a UCC financing statement (including a Transmitting Utility filing),
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(i) any Permitted Investments, Excluded Deposit Account, commodities account or securities account (including securities entitlements and related assets but excluding Permitted Investments representing the proceeds of assets otherwise constituting Collateral),
(j) any lease, license or agreement or any asset subject thereto (including pursuant to a purchase money security interest, Financing Lease Obligation or similar arrangement) that is, in each case, permitted by this Agreement to the extent that the grant of a security interest therein would violate or invalidate such lease, license or agreement or purchase money, Financing Lease Obligation or similar arrangement or trigger a right of termination in favor of any other party thereto (other than the Company or any of its Subsidiaries) after giving effect to the applicable anti-assignment provisions of the UCC or any other applicable Law; it being understood that the term “Excluded Asset” shall not include any proceeds or receivables arising out of any asset described in this clause (j) to the extent that the assignment of such proceeds or receivables is expressly deemed to be effective under the UCC or any other applicable Law notwithstanding the relevant requirement or prohibition,
(k) any asset with respect to which the Administrative Agent in consultation with the Company has reasonably determined that the cost, burden, difficulty or consequence (including any effect on the ability of the relevant Loan Party to conduct its operations and business in the ordinary course of business) of obtaining or perfecting a security interest therein outweighs the benefit of a security interest to the relevant Secured Parties afforded thereby, which determination is evidenced in writing, and
(l) any governmental licenses or state or local franchises, charters or authorizations, to the extent a security interest in any such license, franchise, charter or authorization would be prohibited or restricted thereby (including any legally effective prohibition or restriction, except to the extent such prohibition or restriction would be rendered ineffective under the UCC or any other applicable Law notwithstanding such prohibition or restriction).
“Excluded Deposit Accounts” means (a) any deposit account the funds in which are used solely for the payment of salaries and wages, workers’ compensation and similar expenses (including payroll taxes) in the ordinary course of business, (b) any deposit account that is a zero-balance disbursement account, (c) any deposit account the funds in which consist solely of (i) withheld income taxes and federal, state or local employment taxes in such amounts as are required in the reasonable judgment of the Company to be paid to the Internal Revenue Service or state or local government agencies within the following two months with respect to employees, (ii) funds held in trust for any director, officer or employee or any employee benefit plan maintained or (iii) funds representing deferred compensation for the directors and employees, (d) any deposit account the funds in which consist solely of cash earnest money deposits or funds deposited under escrow or similar arrangements in connection with any letter of intent or purchase agreement for any transaction permitted hereunder, (e) any deposit account constituting (and the balance of which consists solely of funds set aside to be used in connection with) taxes bank accounts, (f) any deposit account the funds in which consist solely of Medicare or Medicaid payments and (g) other deposit accounts to the extent (x) the daily balance in any such account does not at any time exceed $500,000 and (y) the aggregate daily balance in all such accounts does not at any time exceed $1,000,000.
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“Excluded Subsidiary” means:
(a) any Subsidiary that is not a Wholly-Owned Subsidiary of the Company,
(b) any Immaterial Subsidiary,
(c) any Subsidiary:
(i) that is prohibited from providing a guarantee under the Collateral Agreement by (A) any requirement of Law or (B) any contractual obligation that, in the case of this clause (B), exists on the Effective Date or, if such Subsidiary is acquired after the Effective Date, at the time such Subsidiary is acquired and which contractual obligation was not entered into in contemplation of such Acquisition and only for so long as such prohibition is continuing,
(ii) that would require a governmental consent, approval, license or authorization to provide a guarantee under the Collateral Agreement (including any regulatory consent, approval, license or authorization) unless such consent, approval, license or authorization has been obtained (it being understood that the Company shall not be required to obtain such consent, approval, license or authorization), or
(iii) the provision of a guarantee under the Collateral Agreement by which would result in material adverse tax consequences to the Company or any of its Parent Entity of the Company or any of the Company’s direct or indirect subsidiaries, as reasonably determined by the Company in consultation with (but without the consent of) the Administrative Agent, including as a result of the operation of Section 956 of the Code,
(d) any not-for-profit subsidiary,
(e) any Insurance Subsidiary or other special purpose subsidiaries designated by the Company from time to time,
(f) any CFC,
(g) any Subsidiary acquired by the Company or any Subsidiary after the Effective Date in a transaction not prohibited by this Agreement that, at the time of the relevant Acquisition, is an obligor in respect of assumed Debt permitted by Section 6.01 to the extent (A) the documentation governing the applicable assumed Debt prohibits such subsidiary from providing a guarantee under the Collateral Agreement and (B) the relevant prohibition was not implemented in contemplation of the applicable Acquisition, for so long as such prohibition exists, and
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(h) any other Subsidiary with respect to which, in the reasonable judgment of the Administrative Agent and the Company, the burden or cost of providing a guarantee under the Collateral Agreement outweighs the benefits afforded thereby.
“Excluded Swap Obligations” means, with respect to any Guarantor, (a) any Swap Obligation if, and to the extent that, all or a portion of the Guarantee Obligations of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee Obligations in respect thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) (i) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder (determined after giving pro forma effect to any applicable keep well, support, or other agreement for the benefit of such Guarantor and any and all applicable guarantees of such Guarantor’s Swap Obligations by other Loan Parties) at the time the Guarantee Obligations of such Guarantor becomes or would become effective with respect to such Swap Obligation or such Swap Obligation becomes secured by such security interest or (ii) in the case of a Swap Obligation that is subject to a clearing requirement pursuant to section 2(h) of the Commodity Exchange Act, because such Guarantor is a “financial entity,” as defined in section 2(h)(7)(C) of the Commodity Exchange Act, at the time the guarantee of (or grant of such security interest by, as applicable) such Guarantor becomes or would become effective with respect to such Swap Obligation or (b) any other Swap Obligation designated as an “Excluded Swap Obligation” of such Guarantor as specified in any agreement between the relevant Loan Parties and the counterparty to any Hedging Agreement applicable to such Swap Obligations. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to the swap for which such guarantee or security interest is or becomes excluded in accordance with the first sentence of this definition.
“Excluded Taxes” means (a) Taxes based upon, or measured by, the Lender’s or the Administrative Agent’s (or a branch of the Lender’s or the Administrative Agent’s) overall net income, overall net receipts or overall net profits, and franchise Taxes and branch profits Taxes, but, in each case, only to the extent such Taxes are Other Connection Taxes or are imposed by a taxing authority (i) in a jurisdiction in which such Lender or the Administrative Agent is organized, (ii) in a jurisdiction in which such Lender’s or the Administrative Agent’s principal office is located or (iii) in a jurisdiction in which such Lender’s or the Administrative Agent’s lending office (or branch) in respect of which payments under this Agreement are made is located; (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than as a result of an assignment made at the request of the Company pursuant to Section 8.6(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 7.6, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office; (c) Taxes attributable to a Recipient’s failure to comply with Section 7.6(d); and (d) any U.S. federal withholding Taxes imposed under FATCA.
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“Exposure” means, with respect to any Lender at any time, the sum of (a) the aggregate amount of such Lender’s Loans outstanding at such time and (b) such Lender’s LC Exposure at such time.
“Extended Commitments” has the meaning assigned to such term in the definition of Extension Permitted Amendment.
“Extended Loans” has the meaning assigned to such term in the definition of Extension Permitted Amendment.
“Extending Lenders” has the meaning assigned to such term in Section 15.1.1(a).
“Extension Agreement” means an Extension Agreement, in form and substance reasonably satisfactory to the Administrative Agent, among the Company, the Administrative Agent and one or more Extending Lenders, effecting an Extension Permitted Amendment and such other amendments hereto and to the other Loan Documents as are contemplated by Section 15.1.1.
“Extension Offer” has the meaning assigned to such term in Section 15.1.1(a).
“Extension Permitted Amendment” means an amendment to this Agreement and the other Loan Documents, effected in connection with an Extension Offer pursuant to Section 15.1.1, providing for an extension of the Termination Date applicable to the Extending Lenders’ Loans and/or Commitments of the applicable Extension Request Class (such Loans or Commitments being referred to as the “Extended Loans” or “Extended Commitments”, as applicable) and, in connection therewith, (a) any increase or decrease in the rate of interest accruing on such Extended Loans, (b) any increase in the fees payable to, or the inclusion of new fees to be payable to, the Extending Lenders in respect of such Extension Offer or their Extended Loans or Extended Commitments, (c) such amendments to this Agreement and the other Loan Documents as shall be appropriate, in the reasonable judgment of the Administrative Agent, to provide the rights and benefits of this Agreement and other Loan Documents to each new “class” of loans and/or commitments resulting therefrom and (d) any additional amendments to the terms of this Agreement applicable to the applicable Loans and/or Commitments of the Extending Lenders that are (i) no more favorable to such Extending Lenders than the terms of this Agreement prior to giving effect to such Extension Permitted Amendments (as determined in good faith by the Company) or (ii) applicable only to periods after the Maturity Date then in effect (determined prior to giving effect to such Extension Permitted Amendment).
“Extension Request Class” has the meaning assigned to such term in Section 15.1.1(a).
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“FATCA” means Sections 1471 through 1474 of the Code, as of the Effective Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any intergovernmental agreements with respect thereto (or any law, regulation, rule, promulgation, guidance notes, practices or official agreement implementing any such intergovernmental agreements).
“Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary institutions, as determined in such manner as shall be set forth on the NYFRB’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as the effective federal funds rate; provided, however, that if such rate shall be less than zero, then such rate shall be deemed to be zero for all purposes of this Agreement.
“Financing Lease Obligation” means, as applied to any Person, an obligation that is required to be accounted for as a financing or capital lease (and, for the avoidance of doubt, not a straight-line or operating lease) on both the balance sheet and income statement for financial reporting purposes in accordance with GAAP. At the time any determination thereof is to be made, the amount of the liability in respect of a financing or capital lease would be the amount required to be reflected as a liability on such balance sheet (excluding the footnotes thereto) in accordance with GAAP.
“Fiscal Quarter” means a fiscal quarter of a Fiscal Year.
“Fiscal Year” means the fiscal year of the Company and its Subsidiaries, which period shall be the 12-month period ending on December 31 of each year. References to a Fiscal Year with a number corresponding to any calendar year (e.g., “Fiscal Year 2020” or “2020 Fiscal Year”) refer to the Fiscal Year ending on December 31 of such calendar year.
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the LIBO Rate.
“Foreign Subsidiary” means any Subsidiary that is organized under the laws of a jurisdiction other than the United States of America, any State thereof or the District of Columbia.
“Foreign Subsidiary Holding Company” means any Subsidiary (other than a Foreign Subsidiary) that has no material assets other than Equity Interests (including any debt instrument treated as equity for U.S. federal income tax purposes) of one or more Subsidiaries that are “controlled foreign corporations” (within the meaning of Section 957 of the Code).
“GAAP” means United States generally accepted accounting principles which are applicable to the circumstances as of any date of determination and as in effect from time to time.
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“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Guarantee Obligation” means, with respect to any Person, each obligation and liability of such Person guaranteeing or having the economic effect of guaranteeing any Debt or other monetary obligation of any other Person in a manner, which directly or indirectly, including any obligations of such Person, directly or indirectly, (i) to purchase, repurchase, or otherwise acquire any debt or other monetary obligation of any other Person or any property or assets constituting security therefor, (ii) to advance or provide funds for the payment or discharge of any debt or other monetary obligation of any other Person (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain solvency, assets, level of income, working capital or other financial condition of any other Person, (iii) to lease property or to purchase securities, property or services from such other Person with the purpose of assuring the owner of such indebtedness or monetary obligation of the ability of such other Person to make payment of the indebtedness or obligation, (iv) which induces the issuance of, or in connection with the issuance of, any letter of credit for the benefit of such other Person or (v) to assure a creditor against loss: provided that the term Guarantee Obligations shall not include endorsement of instruments in the course of collection or deposit or customary and reasonable indemnity obligations in effect on the Effective Date or entered into in connection with any acquisition or disposition of assets permitted under this Agreement (other than such obligations with respect to Debt). The amount of any Guarantee Obligation shall (subject to any limitation set forth herein) be deemed to be the outstanding principal amount (or maximum stated principal amount, if larger) of the indebtedness, obligation or other liability guaranteed or supported thereby.
“Guarantors” means the Subsidiary Loan Parties and after a Qualified IPO, to the extent that the IPO Entity is not the Company, such IPO Entity.
“Hazardous Substances” means (a) any petroleum or petroleum products, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, radon gas and mold; (b) any chemicals, materials, pollutant or substances defined as or included in the definition of “hazardous substances”, “hazardous waste”, “hazardous materials”, “extremely hazardous substances”, “restricted hazardous waste”, “toxic substances”, “toxic pollutants”, “contaminants”, “pollutants” or words of similar import, under any applicable Environmental Law; and (c) any other chemical, material or substance, the exposure to, or release of, which is prohibited, limited or regulated by any Governmental Authority or could give rise to liability, or for which any duty or standard of care is imposed, pursuant to any Environmental Law.
“Hedging Agreement” means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement, foreign exchange contract, futures contract, option contract, synthetic cap and any other agreement or arrangement, each of which is designed to protect a Person against fluctuations in interest rates, currency exchange rates or commodity prices.
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“Hedging Obligation” means, with respect to any Person, any liability (other than an accounting liability which is offset by a corresponding asset pursuant to shortcut method hedge accounting) of such Person under any Hedging Agreement.
“Immaterial Subsidiary” means any Subsidiary that is not a Material Subsidiary.
“Immediate Family Members” means with respect to any individual, such individual’s child, stepchild, grandchild or more remote descendant, parent, stepparent, grandparent, spouse, former spouse, domestic partner, former domestic partner, sibling, mother in law, father in law, son in law and daughter in law (including adoptive relationships), any trust, partnership or other bona fide estate planning vehicle the only beneficiaries of which are any of the foregoing individuals, such individual’s estate (or an executor or administrator acting on its behalf), heirs, legatees or any private foundation or fund that is controlled by any of the foregoing individuals or any donor advised fund of which any such individual is the donor.
“Incur” means create, issue, assume, guarantee, incur or otherwise become directly or indirectly liable, contingently or otherwise, for any Debt; provided, however, that any Debt of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Subsidiary. The term “Incurrence” when used as a noun shall have a correlative meaning. Solely for purposes of determining compliance with Section 11.1:
(a) amortization of debt discount or the accretion of principal with respect to a non-interest bearing or other discount security;
(b) the payment of regularly scheduled dividends on Equity Interests in the form of additional Equity Interests of the same class and with the same terms; and
(c) the obligation to pay a premium in respect of Debt arising in connection with the issuance of a notice of prepayment, redemption, repurchase, defeasance, acquisition or similar payment or making of a mandatory offer to prepay, redeem, repurchase, defease, acquire, or similarly pay such Debt;
will not be deemed to be the Incurrence of Debt.
“Increased Amount Date” has the meaning assigned to such term in Section 2.1.2(b).
“Incremental Lender” means any Lender or other financial institution with respect to a Commitment Increase.
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“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Company under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.
“Indemnitee” has the meaning assigned to such term in Section 15.16.
“Ineligible Institution” has the meaning assigned to such term in Section 15.5(b).
“Information” has the meaning assigned to such term in Section 15.8.
“Initial Maturity Date” has the meaning assigned to such term in the definition of Maturity Date.
“Insurance Subsidiary” means any Subsidiary which is subject to the regulation of, is required to file statements with, and holds an active risk-bearing license issued by any governmental body, agency or official in any state or territory of the United States or the District of Columbia which regulates insurance companies or the doing of an insurance business therein.
“Interest Election Request” means a request by the Company to convert or continue a Borrowing in accordance with Section 2.2.2, which shall be in a form approved by the Administrative Agent or such other form reasonably acceptable to the Administrative Agent that is consistent with the requirements of Section 2.2.2.
“Interest Payment Date” means (a) with respect to any Base Rate Loan, the last day of each March, June, September and December and (b) with respect to any LIBOR Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a LIBOR Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that shall occur at an interval of three months’ duration after the first day of such Interest Period.
“Interest Period” means, with respect to any LIBOR Borrowing, the period commencing on the date of such Borrowing and ending on the date one, two, three or six months or, if consented to by each Lender, twelve months or a period shorter than one month, thereafter as selected by the Company pursuant to Section 2.2.1 or 2.2.2, as the case may be; provided that:
(a) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the following Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the preceding Business Day;
(b) any Interest Period that begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period shall end on the last Business Day of the calendar month at the end of such Interest Period; and
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(c) the Company may not select any Interest Period for a Loan which would extend beyond the scheduled Termination Date.
“Interpolated Screen Rate” means, with respect to any LIBOR Borrowing for any Interest Period (or for purposes of determining the Base Rate in accordance with clause (c) of the definition thereof and assuming an Interest Period of one month), a rate per annum which results from interpolating on a linear basis between (a) the applicable LIBO Screen Rate for the longest maturity for which a LIBO Screen Rate is available that is shorter than such Interest Period and (b) the applicable LIBO Screen Rate for the shortest maturity for which a LIBO Screen Rate is available that is longer than such Interest Period, in each case at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period (or, for purposes of determining the Base Rate in accordance with clause (c) of the definition thereof, on the applicable date of determination).
“Investment” means, with respect to any Person, any investment in another Person, whether by means of (a) the purchase or other acquisition of Equity Interests or Debt or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee Obligation with respect to any obligation of, or purchase or other acquisition of any other Debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person, excluding, in the case of the Company and its Subsidiaries, intercompany loans among the Company and the Subsidiaries, advances or Debt related to cash management arrangements and made in the ordinary course of business or (c) the purchase or other acquisition (in one transaction or a series of transactions) of the property and assets or business of another Person or assets constituting a business unit, line of business or division of such Person. The amount, as of any date of determination, of (i) any Investment in the form of a loan or an advance shall be the principal amount thereof outstanding on such date, minus any payments in cash or Permitted Investments actually received by such investor representing principal payments in respect of such Investment, but without any adjustment for write-downs or write-offs (including as a result of forgiveness of any portion thereof) with respect to such loan or advance after the date thereof, (ii) any Investment in the form of a guarantee shall be equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof, as determined in good faith by a Responsible Officer of the Company, (iii) any Investment in the form of a transfer of Equity Interests or other non-cash property or services by the investor to the investee, including any such transfer in the form of a capital contribution, shall be the fair market value of such Equity Interests or other property or services as of the time of the transfer, minus, any payments actually received by such investor representing a Return in respect of such Investment, but without any other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to, such Investment after the date of such Investment, and (iv) any Investment (other than any Investment referred to in clause (i), (ii) or (iii) above) by the specified Person in the form of a purchase or other acquisition for value of any Equity Interests, evidences of Debt or other securities of any other Person shall be the original cost of such Investment, except that the amount of any Investment in the form of an Acquisition shall be the acquisition consideration, minus the amount of any portion of such Investment that has been repaid to the investor as a Return in respect of such Investment, but without any other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to, such Investment after the date of such Investment. For purposes of Section 11.9, if an Investment involves the acquisition of more than one Person, the amount of such Investment shall be allocated among the acquired Persons in accordance with GAAP; provided that pending the final determination of the amounts to be so allocated in accordance with GAAP, such allocation shall be as reasonably determined by a Responsible Officer of the Company. For the avoidance of doubt, if the Company or any Subsidiary issues, sells or otherwise disposes of any Equity Interests of a Person that is a Subsidiary such that, after giving effect thereto, such Person is no longer a Subsidiary, any Investment by the Company or any Subsidiary in such Person remaining after giving effect thereto shall not be deemed to be a new Investment at such time.
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“Investors” mean, collectively (and including each of their respective successors) New Enterprise Associates, Bessemer Venture Partners and Greenspring Associates, and each of its Affiliates and any funds, partnerships, other co-investment vehicles and managed account arrangements established, operated, managed, advised or controlled directly or indirectly by the foregoing, but not including, however, any operating portfolio companies of any of the foregoing.
“IP Security Agreements” has the meaning assigned to such term in the Collateral Agreement.
“IPO Entity” means, at any time at and after a Qualified IPO, the Company or a Parent Entity of the Company, as the case may be, the Equity Interests in which were issued or otherwise sold pursuant to the Qualified IPO or, in the case of a Qualified IPO described in clause (b) of the definition thereof, the publicly traded entity immediately following such Qualified IPO, so long as such entity is the Company or a Parent Entity of the Company. To the extent that the IPO Entity is not the Company, the references to the Company in Sections 10 and 11 hereof shall be deemed to refer to such IPO Entity.
“IRS” means the United States Internal Revenue Service.
“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.
“ISP” means, with respect to any standby Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practices, Inc. (or such later version thereof as may be in effect at the time of issuance of such Letter of Credit).
“Issuing Bank” means JPMCB, Barclays Bank PLC, Goldman Sachs Lending Partners LLC, Morgan Stanley Senior Funding Inc. and Bank of America, N.A. and any other Lender from time to time (x) designated on Annex A or (y) designated by the Company as an Issuing Bank with the consent of such Lender, in its sole discretion, and the Administrative Agent (such consent not to be unreasonably withheld or delayed), in each case in its capacity as an issuer of Letters of Credit hereunder, and their successors and assigns in such capacity.
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“JPMCB” means JPMorgan Chase Bank, N.A.
“Law” means any statute, rule, regulation, order, permit, license, judgment, award or decree of any Governmental Authority.
“LC Disbursement” means a payment made by an Issuing Bank pursuant to a Letter of Credit.
“LC Exposure” means, at any time, the sum of (a) the aggregate amount of all Letters of Credit that remains available for drawing at such time and (b) the aggregate amount of all Letter of Credit disbursements that have not yet been reimbursed by or on behalf of the Company at such time. The LC Exposure of any Lender at any time shall be its Pro Rata Share of the total LC Exposure at such time, adjusted to give effect to any reallocation under Section 2.6(b) of the LC Exposure of Defaulting Lenders in effect at such time.
“LC Fee Rate” means 5.00%.
“LCT Election” means the Company’s election, by notice to the Administrative Agent, to exercise its right to designate any permitted Acquisition or Investment as a Limited Condition Transaction pursuant to the terms hereof.
“LCT Test Date” means the date on which the definitive agreement for an applicable Limited Condition Transaction is entered into.
“Lender” has the meaning assigned to such term in the Preamble. References to the “Lenders” shall include each Issuing Bank and any Person that is added to Annex A pursuant to the terms thereof after the Effective Date; for purposes of clarification only, to the extent that JPMCB (or any other Issuing Bank) may have any rights or obligations in addition to those of the other Lenders due to its status as an Issuing Bank its status as such will be specifically referenced.
“Lender-Related Person” has the meaning assigned to such term in Section 15.17.
“Letter of Credit” means any letter of credit issued pursuant to this Agreement, other than any such letter of credit that shall have ceased to be a “Letter of Credit” outstanding hereunder pursuant to Section 15.21.
“Letter of Credit Agreement” has the meaning assigned to such term in Section 2.3.2.
“Letter of Credit Commitment” means, (a) with respect to each Issuing Bank set forth on Annex A, the amount set forth opposite such Issuing Bank’s name on Annex A or (b) in the case of any other Issuing Bank, such amount as may be agreed among such Issuing Bank, the Company and the Administrative Agent.
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“Liabilities” means any losses, claims (including intraparty claims), demands, damages or liabilities of any kind.
“LIBO Rate” means, with respect to any LIBOR Borrowing for any Interest Period, the LIBO Screen Rate at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period. If no LIBO Screen Rate shall be available for a particular Interest Period but LIBO Screen Rates shall be available for maturities both longer and shorter than such Interest Period, then the LIBO Rate for such Interest Period shall be the Interpolated Screen Rate. Notwithstanding the foregoing, if the LIBO Rate, determined as provided above, shall be less than zero, then the LIBO Rate shall be deemed to be zero for all purposes of this Agreement.
“LIBO Screen Rate” means, for any day and time, with respect to any LIBOR Borrowing for any Interest Period, a rate per annum equal to the London interbank offered rate as administered by the ICE Benchmark Administration (or any other Person that takes over the administration of such rate) for deposits in U.S. Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period as displayed on such day and time on pages LIBOR01 or LIBOR02 of the Reuters screen page that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate as shall be selected by the Administrative Agent from time to time in its reasonable discretion); provided that if the LIBO Screen Rate shall be less than zero, then such rate shall be deemed to be zero for purposes of this Agreement.
“LIBOR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, shall bear interest at a rate determined by reference to the Adjusted LIBO Rate.
“LIBOR Loan” means any Loan or Borrowing which bears interest at a rate determined by reference to the Adjusted LIBO Rate.
“LIBOR Margin” means 5.00%.
“Lien” means, with respect to any Person, any interest granted by such Person in any real or personal property, asset or other right owned or being purchased or acquired by such Person (including an interest in respect of Financing Lease Obligations) which secures payment or performance of any obligation and shall include any mortgage, lien, encumbrance, title retention lien, charge or other security interest of any kind, whether arising by contract, as a matter of law, by judicial process or otherwise; provided that in no event shall a Non-Financing Lease Obligation be deemed to be a Lien.
“Limited Condition Transaction” means any Acquisition or Investment by the Company or one or more of the Subsidiaries permitted hereunder, the consummation of which is not conditioned on the availability of, or on obtaining, third party financing.
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“Loan” has the meaning assigned to such term in Section 2.1.1.
“Loan Availability” means the Commitments of all of the Lenders.
“Loan Documents” means this Agreement, the Security Documents, the Notes, the Letters of Credit, the Letter of Credit Agreements and all documents, instruments and agreements delivered in connection with the foregoing from time to time.
“Loan Party” means the Company and each Guarantor.
“Margin Stock” means any “margin stock” as defined in Regulation U.
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the financial condition, operations, assets, business or properties of the Company and its Subsidiaries, taken as a whole, (b) a material impairment of the ability of the Loan Parties, taken as a whole, to perform their payment Obligations under the Loan Documents or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document.
“Material Law” means any separately enforceable provision of a Law whose violation by a Person would have a Material Adverse Effect on such Person.
“Material License” means (a) as to any Person, any license, permit, authorization, qualification, order or consent from, any recordation, registration, notice or filing with, any exemption by or other action in respect of, a Governmental Authority or other Person which if not obtained, held or made would have a Material Adverse Effect and (b) as to any Person who is a party to this Agreement or any of the other Loan Documents, any license, permit, authorization, qualification, order or consent from, any recordation, registration, notice or filing with, any exemption by or other action in respect of, a Governmental Authority or other Person that is necessary for the execution, delivery, consummation or performance by such party, or the legality, validity, binding effect or enforceability against such party, of this Agreement or such other Loan Document
“Material Subsidiary” means each Subsidiary (a) the consolidated total assets of which equal 2.5% or more of the consolidated total assets of the Company and its Subsidiaries or (b) the consolidated revenue (after intercompany eliminations) of which equal 2.5% or more of the consolidated revenues of the Company and its Subsidiaries, in each case as of the end of or for the most recent period of four consecutive Fiscal Quarters for which financial statements have been delivered pursuant to Section 10.1.1 or 10.1.2 (or, prior to the first delivery of any such financial statements, as of the end of or for the period of four consecutive Fiscal Quarters most recently ended prior to the date of this Agreement); provided that if, at any time and from time to time after the Effective Date, Subsidiaries that are not Material Subsidiaries (other than Subsidiaries that are Excluded Subsidiaries by virtue of any of clauses (a) and (c) through (h) of the definition of “Excluded Subsidiary”) have, in the aggregate, (a) total assets at the last day of such Computation Period equal to or greater than 5.0% of the Consolidated Total Assets of the Company and the Subsidiaries at such date or (b) revenues during such Computation Period equal to or greater than 5.0% of the consolidated revenues of the Company and the Subsidiaries for such period, in each case determined in accordance with GAAP, then the Company shall, on the date on which financial statements for such quarter are delivered pursuant to this Agreement, designate in writing to the Administrative Agent one or more of such Subsidiaries as Material Subsidiaries for each fiscal period until this proviso is no longer applicable; provided, further, if no such designation is made by the Company, then one or more of such excluded Subsidiaries shall be deemed to be Material Subsidiaries in descending order based on the amounts of their consolidated total assets or consolidated revenues, as applicable, until such excess shall have been eliminated.
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“Material Real Property” means each fee owned parcel of real property owned by a Loan Party having a fair market value in excess of $2,500,000.
“Maturity Date” means February 28, 2022 (the “Initial Maturity Date”); provided that, after a Qualified IPO, the Company may elect, in its sole discretion by providing notice to the Administrative Agent and each Lender at least 30 days prior to the Initial Maturity Date, to extend the Initial Maturity Date to February 28, 2024, as for Initial Maturity Date or such extended Maturity Date may also be extended pursuant to Section 15.1.1.
“Minimum Liquidity” means, as of any date, (a) Unrestricted Cash of the Loan Parties, plus (b) the excess, if any, of (x) the Loan Availability in effect on such date over (y) the Total Outstandings as of such date.
“Moody’s” means Moody’s Investor Services, Inc. and any successor thereto of its rating business.
“Mortgage” means a mortgage, deed of trust, assignment of leases and rents or other security document granting a Lien on any Mortgaged Property to secure the Secured Obligations. Each Mortgage shall be reasonably satisfactory in form and substance to the Collateral Agent, with such provisions as may be required by local jurisdictions, provided, however, if any Mortgaged Property is located in a jurisdiction which imposes mortgage recording taxes, intangible or documentary stamp taxes or other similar charges or fees, such Mortgage shall only secure an amount not to exceed the fair market value of such Mortgaged Property (as reasonably determined by the Company).
“Mortgaged Property” means, initially, each parcel of fee owned Material Real Property and the improvements thereto owned by a Loan Party and identified on Schedule 1.1(a), and includes each other parcel of fee owned real property and the improvements thereto owned by a Loan Party with respect to which a Mortgage is required to be granted pursuant to Section 10.10 or 10.11; provided that no Material Real Property shall become a Mortgaged Property unless the Lenders have confirmed to the Administrative Agent that the deliverables described in clause (e)(iii) of the definition of “Collateral and Guarantee Requirement” are satisfactory.
“Multiemployer Pension Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the Company or any other member of the Controlled Group may have any liability or obligation to contribute.
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“Non-Financing Lease Obligations” means a lease obligation that is not required to be accounted for as a financing or capital lease on both the balance sheet and the income statement for financial reporting purposes in accordance with GAAP. For avoidance of doubt, a straight-line or operating lease shall be considered a Non-Financing Lease Obligation.
“Non-U.S. Lender” has the meaning assigned to such term in Section 7.6(d).
“Note” means a promissory note substantially in the form of Exhibit C.
“NYFRB” means the Federal Reserve Bank of New York.
“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or, for any day that is not a Business Day, for the immediately preceding Business Day); provided, however, that, if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a Federal funds transaction quoted at 11:00 a.m., New York City time, on such day to the Administrative Agent from a federal funds broker of recognized standing selected by it; provided further, however, that if any of the aforesaid rates shall be less than zero, then such rate shall be deemed to be zero for all purposes of this Agreement.
“NYFRB’s Website” means the website of the NYFRB at http://www.newyorkfed.org or any successor source.
“Obligations” means all obligations (monetary (including post-petition interest, allowed or not) or otherwise) of any Loan Party under this Agreement and any other Loan Document including Attorney Costs and any reimbursement obligations of each Loan Party in respect of Letters of Credit, all in each case howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due.
“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.
“Other Connection Taxes” means, with respect to any Lender or the Administrative Agent, Taxes imposed as a result of a present or former connection between such Lender or the Administrative Agent and the jurisdiction imposing such Taxes (other than a connection arising solely from such Lender or the Administrative Agent having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, or engaged in any other transaction pursuant to, or enforced any Loan Document, or sold or assigned an interest in any Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed as a result of an assignment (other than an assignment made pursuant to Section 8.6(b)).
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“Overnight Bank Funding Rate” means, for any date, the rate comprised of both overnight federal funds and overnight LIBOR borrowings by U.S.-managed banking offices of depositary institutions, as such composite rate shall be determined by the NYFRB as set forth on the NYFRB’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate.
“Parent Entity” means any Person that is a direct or indirect parent company (which may be organized as, among other things, a partnership) of the Company.
“Participant” has the meaning assigned to such term in Section 15.5(c).
“Participant Register” has the meaning assigned to such term in Section 15.5(c).
“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Requires to Intercept and Obstruct Terrorism Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).
“PBGC” means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA.
“Pension Plan” means a “pension plan”, as such term is defined in Section 3(2) of ERISA, which is subject to Title IV of ERISA or the minimum funding standards of ERISA (other than a Multiemployer Pension Plan), and as to which the Company or any member of the Controlled Group may have any liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any time.
“Perfection Certificate” means a certificate in a form substantially consistent with Exhibit G.
“Permitted Holders” means (a) each of the Investors and each Employee Investor (including, for the avoidance of doubt, any Investor or Employee Investor holding Equity Interests through an Equityholding Vehicle), (b) any Permitted Plan and (c) any Person who is acting solely as an underwriter or initial purchaser in connection with a public or private offering of Equity Interests of the Company or any Parent Entity, acting in such capacity.
“Permitted Investments” means:
(a) direct obligations of the United States of America (including U.S. Treasury bills, notes and bonds) that are backed by the full faith and credit of the United States of America;
(b) direct obligations of any agency of the United States of America that are backed by the full faith and credit of the United States of America and direct obligations of United States of America government-sponsored enterprises (including the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation) that are rated the same as direct obligations of the United States of America;
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(c) direct obligations of, and obligations fully guaranteed by, any State of the United States of America that, on the date of acquisition, are rated investment grade by Moody’s or by S&P, including general obligation and revenue notes and bonds, insured bonds (including all insured bonds having, on the date of acquisition, a credit rating of Aaa by Moody’s and AAA by S&P) and refunded bonds (reissued bonds collateralized by U.S. Treasury securities);
(d) Debt of any county or other local governmental body within the United States of America having, on the date of acquisition, a credit rating of Aaa by Moody’s or AAA by S&P, or Auction Rate Securities, Tax-Exempt Commercial Paper or Variable Rate Demand Notes issued by such bodies that is, on the date of acquisition, rated at least A3/P-1/VMIG-1 by Moody’s or A-/A-1/SP-1 by S&P;
(e) commercial paper issued by any corporation or bank having a maturity of nine months or less and having, on the date of acquisition, a credit rating of at least P1 or the equivalent thereof from Moody’s or A1 or the equivalent thereof from S&P;
(f) money market investments, deposits, bankers acceptances, certificates of deposit, notes and other like instruments, in each case issued by any bank that has a combined capital and surplus and undivided profits of not less than US$500,000,000;
(g) money market funds and mutual funds consisting primarily of investments described in clauses (a) through (f) above, in each case having a credit rating of at least Aaa from Moody’s or AAA from S&P, and in each case having at least US$500,000,000 of assets under management; and
(h) money market investments, deposits, bankers acceptances, certificates of deposit, notes and other like instruments to the extent that (i) the issuing bank is organized under the laws of a country in which the Company or any of its Subsidiaries conducts operations and (ii) the aggregate amount of such instruments issued by any individual bank or its Affiliates held by the Company and its Subsidiaries does not exceed US$2,000,000.
“Permitted Plan” means any employee benefit plan of the Company, any Parent Entity or any of their Affiliates and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan.
“Person” means any natural person, corporation, partnership, trust, limited liability company, association or governmental authority, or any other entity, whether acting in an individual, fiduciary or other capacity.
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“Prime Rate” means the rate of interest per annum last quoted by The Wall Street Journal as the “prime rate” in the United States or, if The Wall Street Journal ceases to quote such rate, the highest per annum rate published by the Board of Governors in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as reasonably determined by the Administrative Agent) or any similar release by the Board of Governors (as reasonably determined by the Administrative Agent). Each change in the Prime Rate shall be effective from and including the date such change is publicly announced or quoted as being effective.
“Principal Office” means for the Administrative Agent and each Issuing Bank, such Person’s “Principal Office” as set forth on Annex B, or such other office or office of a third party or sub-agent, as appropriate, as such Person may from time to time designate in writing to the Company, the Administrative Agent and each Lender.
“Pro Rata Share” means, with respect to a Lender’s obligation to make Loans, participate in Letters of Credit, reimburse the applicable Issuing Bank and receive payments of principal, interest, fees, costs, and expenses with respect thereto, (x) prior to the Commitments being terminated or reduced to zero, the percentage obtained by dividing (i) such Lender’s Commitment, by (ii) the Loan Availability and (y) from and after the time the Commitments have been terminated or reduced to zero, the percentage obtained by dividing (i) the aggregate unpaid principal amount of such Lender’s Exposure by (ii) the Total Outstandings.
“Proceeding” means any claim, litigation, investigation, action, suit, arbitration or judicial proceeding in any jurisdiction.
“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. § 5390(c)(8)(D).
“QFC Credit Support” has the meaning assigned to such term in Section 15.18(a).
“Qualified IPO” means (a) any transaction (other than a public offering pursuant to a registration statement on Form S 8) that results in the common Equity Interests of the Company or a Parent Entity of the Company being publicly held or traded (whether alone or in connection with an underwritten primary public offering, a secondary public offering or any other offering) or (b) the acquisition, purchase, merger or combination of the Company or a Parent Entity of the Company, by, or with, a publicly traded special acquisition company that (i) is an entity organized or existing under the laws of the US, any State thereof or the District of Columbia, (ii) prior to the Qualified IPO, shall have engaged in no business or activities in any material respect other than activities related to becoming and acting as a publicly traded special acquisition company and entry into the Qualified IPO and (iii) immediately prior to the Qualified IPO, shall have no material assets other than cash and Permitted Investments; provided that the net proceeds received by the Company in any such transaction described in clause (a) or (b) above are greater than or equal to $1,000,000,000.
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“Recipient” means (a) the Administrative Agent, (b) any Lender and (c) any Issuing Bank, as applicable.
“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is the Adjusted LIBO Rate, 11:00 a.m. (London time) on the day that is two London banking days preceding the date of such setting, and (2) if such Benchmark is not the Adjusted LIBO Rate, the time determined by the Administrative Agent in its reasonable discretion.
“Refinancing Debt” has the meaning assigned to such term in Section 11.1(n).
“Register” has the meaning assigned to such term in Section 15.5(b).
“Regulation D” means Regulation D of the Board of Governors.
“Regulation T” means Regulation T of the Board of Governors.
“Regulation U” means Regulation U of the Board of Governors.
“Regulation X” means Regulation X of the Board of Governors.
“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, partners, agents, managers, advisors, representatives and controlling persons of such Person.
“Relevant Governmental Body” means the Federal Reserve Board or the NYFRB, or a committee officially endorsed or convened by the Federal Reserve Board or the NYFRB, or any successor thereto.
“Replacement Lender” has the meaning assigned to such term in Section 8.6(b).
“Reportable Event” means a reportable event as defined in Section 4043 of ERISA and the regulations issued thereunder as to which the PBGC has not waived the notification requirement of Section 4043(a), or the failure of a Pension Plan to meet the minimum funding standards of Section 412 of the Code (without regard to whether the Pension Plan is a plan described in Section 4021(a)(2) of ERISA) or under Section 302 of ERISA.
“Required Lenders” means, at any time, Lenders who have Pro Rata Shares which exceed 50% as determined pursuant to the definition of “Pro Rata Share”. For purposes of this definition, Required Lenders shall be determined by excluding all Loans and Commitments held or beneficially owned by any Defaulting Lender.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
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“Responsible Officer” means, with respect to any Person, the president, the chief executive officer, the chief financial officer, the treasurer, manager of treasury activities, any assistant treasurer, any executive vice president, any senior vice president, any senior vice president (finance), any vice president or the chief operating officer of such Person and any other individual or similar official thereof responsible for the administration of the obligations of such Person in respect of this Agreement, and, as to any document delivered on the Effective Date, shall include any secretary or assistant secretary or any other individual or similar official thereof with substantially equivalent responsibilities of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of any Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party, and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party. Unless otherwise specified, all references herein to a “Responsible Officer” shall refer to a Responsible Officer of the Company.
“Restricted Payment” has the meaning assigned to such term in Section 11.3.
“Return” means, with respect to any Investment, any dividend, distribution, interest, fee, premium, return of capital, repayment of principal, income, profit (from a disposition or otherwise) and any other similar amount received or realized in respect thereof.
“S&P” means S&P Global Ratings, a division of Standard & Poor’s Global Inc. and any successor thereto of its rating business.
“Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of comprehensive Sanctions (which, as of the Effective Date, includes Crimea, Cuba, Iran, North Korea and Syria).
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC or the U.S. Department of State or by the United Nations Security Council, the European Union, any European Union member state, or Her Majesty’s Treasury of the United Kingdom, (b) any Person organized or resident in a Sanctioned Country, (c) any Person owned or controlled by any such Person or Persons described in the foregoing clause (a) or (b) or (d) any Person otherwise the subject of any Sanction.
“Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any European Union member state, or Her Majesty’s Treasury of the United Kingdom .
“SEC” means the Securities and Exchange Commission or any other governmental authority succeeding to any of the principal functions thereof.
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“Secured Cash Management Obligations” means the due and punctual payment and performance of any and all obligations of the Company and each Subsidiary (whether absolute or contingent and however and whenever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor)) arising in respect of Cash Management Services that (a) are owed to the Administrative Agent, an Arranger or an Affiliate of any of the foregoing, or to any Person that, at the time such obligations were incurred, was the Administrative Agent, an Arranger or an Affiliate of any of the foregoing, (b) are owed on the Effective Date to a Person that is a Lender or an Affiliate of a Lender as of the Effective Date or (c) are owed to a Person that is a Lender or an Affiliate of a Lender at the time such obligations are incurred.
“Secured Hedging Obligations” means the due and punctual payment and performance of any and all obligations of the Company and each Subsidiary arising under each Hedging Agreement that (a) is with a counterparty that is the Administrative Agent, an Arranger or an Affiliate of any of the foregoing, or any Person that, at the time such Hedging Agreement was entered into, was the Administrative Agent, an Arranger or an Affiliate of any of the foregoing, (b) is in effect on the Effective Date with a counterparty that is a Lender or an Affiliate of a Lender as of the Effective Date or (c) is entered into after the Effective Date with a counterparty that is a Lender or an Affiliate of a Lender at the time such Hedging Agreement is entered into. Notwithstanding the foregoing, “Secured Hedging Obligations” shall not include Excluded Swap Obligations.
“Secured Obligations” means, collectively, (a) all the Obligations, (b) all the Secured Cash Management Obligations and (c) all the Secured Hedging Obligations.
“Secured Parties” means, collectively, (a) the Lenders, (b) the Administrative Agent, (c) the Arrangers, (d) each Issuing Bank, (e) each provider of Cash Management Services the obligations under which constitute Secured Cash Management Obligations, (f) each counterparty to any Hedging Agreement the obligations under which constitute Secured Hedging Obligations and (g) the beneficiaries of each indemnification obligation undertaken by any Loan Party under this Agreement or any other Loan Document.
“Securities Act” means the United States Securities Act of 1933 and the rules and regulations of the SEC promulgated thereunder.
“Security Documents” means the Collateral Agreement, the IP Security Agreements, the Control Agreements, the Mortgages and each other security agreement or other instrument or document executed and delivered pursuant thereto or pursuant to Section 10.10 or 10.11 to secure any of the Secured Obligations.
“Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” within the meaning of Rule 1-02 of the SEC’s Regulation S-X.
“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website at approximately 8:00 a.m. (New York City time) on the immediately succeeding Business Day.
“SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate).
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“SOFR Administrator’s Website” means the NYFRB’s Website, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“Solvent” means (i) the sum of the debt and liabilities (subordinated, contingent or otherwise) of the Company and its Subsidiaries, taken as a whole, does not exceed the fair value of the assets (at a fair valuation) of the Company and its Subsidiaries, taken as a whole; (ii) the present fair saleable value of the assets (at a fair valuation) of the Company and its Subsidiaries, taken as a whole, is greater than the amount that will be required to pay the probable liabilities of the Company and its Subsidiaries, taken as a whole, on their debts and other liabilities subordinated, contingent or otherwise as they become absolute and matured; (iii) the capital of the Company and its Subsidiaries, taken as a whole, is not unreasonably small in relation to the business of the Company and its Subsidiaries, taken as a whole, as conducted or contemplated as of the relevant date; and (iv) the Company and its Subsidiaries, taken as a whole, have not incurred and do not intend to incur, or believe that they will incur, debts or other liabilities (including current obligations and contingent liabilities) beyond their ability to pay such debt or other liabilities as they become due (whether at maturity or otherwise). For the purposes hereof, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
“Spot Rate” for any currency means the rate determined by the Administrative Agent to be the rate quoted by the Administrative Agent as the spot rate for the purchase by the Administrative Agent of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date of such determination; provided that the Administrative Agent may obtain such spot rate from another financial institution designated by the Administrative Agent if it does not have as of the date of determination a spot buying rate for any such currency.
“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board of Governors and any other banking authority (domestic or foreign) to which the Administrative Agent or any Lender (including any branch, Affiliate or fronting office making or holding a Loan) is subject for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board of Governors). Such reserve percentages shall include those imposed pursuant to such Regulation D. LIBOR Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
“Subordinated Debt” means any Debt for borrowed money of any Loan Party that is by its terms subordinated in right of payment to the Obligations.
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“Subordinated Debt Documents” means all documents and instruments relating to the Subordinated Debt.
“Subsidiary” means, with respect to any Person, a corporation, partnership, limited liability company or other entity of which such Person owns, directly or indirectly, such number of outstanding Equity Interests as have more than 50% of the ordinary voting power for the election of directors or other managers of such corporation, partnership, limited liability company or other entity. Unless the context otherwise requires, each reference to Subsidiaries herein shall be a reference to Subsidiaries of the Company (or, following a Qualified IPO, Subsidiaries of the IPO Entity).
“Subsidiary Loan Party” means each Designated Subsidiary that is, or is required to be, a party to the Collateral Agreement and specifically including those listed on Schedule 1.1(b).
“Supported QFC” has the meaning assigned to such term in Section 15.18(a).
“Swap Obligation” means any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of §1a(47) of the Commodity Exchange Act.
“Taxes” means any and all present and future taxes, duties, levies, imposts, deductions, assessments, charges or withholdings, and any and all liabilities (including interest and penalties and other additions to taxes) with respect to the foregoing.
“Term SOFR” means, for the applicable Corresponding Tenor as of the applicable Reference Time, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.
“Term SOFR Notice” means a notification by the Administrative Agent to the Lenders and the Company of the occurrence of a Term SOFR Transition Event.
“Term SOFR Transition Event” means the determination by the Administrative Agent that (a) Term SOFR has been recommended for use by the Relevant Governmental Body, (b) the administration of Term SOFR is administratively feasible for the Administrative Agent and (c) a Benchmark Transition Event or an Early Opt-in Election, as applicable, has previously occurred resulting in a Benchmark Replacement in accordance with Section 8.2 that is not Term SOFR.
“Termination Date” means the earlier to occur of (a) the Maturity Date and (b) such other date on which the Commitments terminate pursuant to Section 6 or Section 13.
“Termination Event” means, with respect to a Pension Plan or a Multiemployer Pension Plan, as applicable, (a) a Reportable Event, (b) the withdrawal of the Company or any other member of the Controlled Group from such Pension Plan during a plan year in which the Company or any other member of the Controlled Group was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or the imposition of a lien on the property of the Company or any other member of the Controlled Group pursuant to Section 4068 of ERISA, (c) the termination of such Pension Plan, the filing of a notice of intent to terminate the Pension Plan or the treatment of an amendment of such Pension Plan as a termination under Section 4041 of ERISA, (d) the institution by the PBGC of proceedings to terminate such Pension Plan, (e) any event or condition that might constitute grounds under Section 4042 of ERISA for the termination of, or appointment of a trustee to administer, such Pension Plan, (f) such Pension Plan is in “at risk” status within the meaning of Section 430(i) of the Code, or such Multiemployer Pension Plan is in “endangered status” or “critical status” within the meaning of Section 432(b) of the Code, or (g) a complete or partial withdrawal from a Multiemployer Pension Plan.
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“Total Capitalization” means, at any date, for the Company and its Subsidiaries, the sum of, without duplication, (i) Total Debt plus (ii) Total Net Worth.
“Total Debt” means the aggregate outstanding principal amount of all Debt outstanding under clauses (a), (b) and (c) of the definition thereof and all unreimbursed obligations in respect of drawn letters of credit, bankers acceptances or similar instruments (but only to the extent not reimbursed within one Business Day after the date on which the Company receives written notice of such payment or disbursement), in each case of the Company and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, excluding for the avoidance of doubt (a) Hedging Agreements and (b) Debt of the Company to its Subsidiaries and Debt of Subsidiaries to the Company or to other Subsidiaries.
“Total Debt to Total Capitalization Ratio” means, as of the last day of each Computation Period, the ratio of (a) Total Debt as of such day to (b) Total Capitalization for the such Computation Period.
“Total Net Worth” means, at any date, the consolidated shareholders’ equity, determined in accordance with GAAP, of the Company and its Subsidiaries.
“Total Outstandings” means, at any time, the sum of (a) the aggregate principal amount of all outstanding Loans, plus (b) LC Exposure.
“Total Plan Liability” means, at any time, the present value of all vested and unvested accrued benefits under the applicable Pension Plan(s), determined as of the then most recent valuation date for each applicable Pension Plan, using PBGC actuarial assumptions for single employer plan terminations.
“Transactions” means (a) the execution, delivery and performance by the Company of the Loan Documents on the Effective Date, (b) the use of the proceeds thereof, and (c) the payment of the fees and expenses incurred in connection with the foregoing (such fees and expenses, the “Transaction Costs”).
“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Base Rate.
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“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York or any other state the laws of which are required to be applied in connection with the creation or perfection of security interests.
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any Person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
“Unfunded Liability” means the amount (if any) by which the present value of all vested and unvested accrued benefits under the applicable Pension Plan(s) exceeds the fair market value of all assets allocable to those benefits, all determined as of the then most recent valuation date for each applicable Pension Plan, using PBGC actuarial assumptions for single employer plan terminations.
“U.S. Dollars” and the sign “$” mean lawful money of the United States of America.
“U.S. Special Resolution Regimes” has the meaning assigned to such term in Section 15.18(a).
“Unmatured Event of Default” means any event that, if it continues uncured, will, with lapse of time or notice or both, constitute an Event of Default.
“Unrestricted Cash” means, as of any date with respect to any Person, cash and Permitted Investments directly owned on such date by such Person, as such amount would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP; provided that such cash and Permitted Investments do not appear (and are not required to appear) as “restricted” on a balance sheet of such Person prepared in accordance with GAAP.
“Voting Stock” means, with respect to any Person, shares of such Person’s Equity Interests that is at the time generally entitled, without regard to contingencies, to vote in the election of the Board of Directors of such Person. To the extent that a partnership agreement, limited liability company agreement or other agreement governing a partnership or limited liability company provides that the members of the Board of Directors of such partnership or limited liability company (or, in the case of a limited partnership whose business and affairs are managed or controlled by its general partner, the Board of Directors of the general partner of such limited partnership) is appointed or designated by one or more Persons rather than by a vote of Voting Stock, each of the Persons who are entitled to appoint or designate the members of such Board of Directors will be deemed to own a percentage of Voting Stock of such partnership or limited liability company equal to (a) the aggregate votes entitled to be cast on such Board of Directors by the members of such Board of Directors which such Person or Persons are entitled to appoint or designate divided by (b) the aggregate number of votes of all members of such Board of Directors.
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“Wholly-Owned Subsidiary” means, as to any Person, a Subsidiary all of the Equity Interests of which (except directors’ qualifying Equity Interests) are at the time directly or indirectly owned by such Person and/or another Wholly-Owned Subsidiary of such Person.
“Withholding Certificate” has the meaning assigned to such term in Section 7.6(d).
“Write-Down and Conversion Powers” means (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that Person or any other Person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
1.2 Other Interpretive Provisions.
1.2.1 The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.
1.2.2 Section, Annex, Schedule and Exhibit references are to this Agreement unless otherwise specified.
1.2.3 The term “including” is not limiting and means “including without limitation.”
1.2.4 In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”, and the word “through” means “to and including.”
1.2.5 Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement and the other Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, supplements and other modifications thereto, but only to the extent such amendments, restatements, supplements and other modifications are not prohibited by the terms of any Loan Document, (ii) references to any statute or regulation shall be construed as including all statutory and regulatory provisions amending, replacing, supplementing or interpreting such statute or regulation and (iii) any reference herein or in any Loan Document to any Person shall be construed to include such Person’s successors and permitted assigns.
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1.2.6 This Agreement and the other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and each shall be performed in accordance with its terms.
1.2.7 This Agreement and the other Loan Documents are the result of negotiations among, and have been reviewed by counsel to, the Administrative Agent, the Company, the Lenders and the other parties thereto and are the products of all parties. Accordingly, they shall not be construed against the Administrative Agent or the Lenders merely because of the Administrative Agent’s or the Lenders’ involvement in their preparation.
1.3 Limited Condition Transactions. Solely for the purpose of (i) measuring the relevant ratios and baskets with respect to the incurrence of any Debt or the making of any permitted Acquisition or other Investment or (ii) determining the occurrence of any Event of Default or Unmatured Event of Default, in each case, in connection with a Limited Condition Transaction, if the Company makes an LCT Election, the date of determination in determining whether any such incurrence of any Debt or the making of any permitted Acquisition or other Investment is permitted shall be deemed to be the LCT Test Date (provided that for the purpose of determining the occurrence of any Event of Default under Sections 13.1(a) or 13.1(c), such determination shall also be made at the time of the consummation of the Limited Condition Transaction), and if, after giving effect to the applicable Limited Condition Transaction and the other transactions to be entered into in connection therewith as if they had occurred as of such date of determination, ending prior to the LCT Test Date on a pro forma basis, the Company could have taken such action on the relevant LCT Test Date in compliance with any such ratio or basket, such ratio or basket shall be deemed to have been complied with. If the Company has made an LCT Election for any Limited Condition Transaction, then in connection with any subsequent calculation of any ratio or basket (but excluding, for the avoidance of doubt, for purposes of determining compliance with Section 11.12) on or following the relevant LCT Test Date and prior to the earlier of (i) the date on which such Limited Condition Transaction is consummated or (ii) the date that the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction, any such ratio or basket shall be calculated and tested on a pro forma basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence of debt and the use of proceeds thereof) have been consummated.
1.4 Divisions. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws), including the Delaware Limited Liability Company Act: (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such time.
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1.5 Timing of Payment or Performance. Except as otherwise provided herein, when the payment of any obligation or the performance of any covenant, duty, or obligation is stated to be due or performance required on (or before) a day which is not a Business Day, the date of such payment (other than as described in the definition of Interest Period) or performance shall extend to the immediately succeeding Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.
1.6 Exchange Rates. Notwithstanding the foregoing, for purposes of any determination under Section 10, Section 11 or Section 13 or any determination under any other provision of this Agreement expressly requiring the use of a current exchange rate, all amounts incurred, outstanding, or proposed to be Incurred or outstanding in currencies other than Dollars shall be translated into Dollars at the Spot Rate; provided, however, that for purposes of determining compliance with Section 11 with respect to the amount of any Debt, Investment, Lien, asset sale, or Restricted Payment in a currency other than Dollars, no Unmatured Event of Default or Event of Default shall be deemed to have occurred solely as a result of changes in rates of exchange occurring after the time such Debt, Lien or Investment is Incurred or after such asset sale or Restricted Payment is made; provided that, for the avoidance of doubt, the foregoing provisions of this Section 1.6 shall otherwise apply to such Sections, including with respect to determining whether any Debt, Lien, or Investment may be incurred or asset sale or Restricted Payment made at any time under such Sections. For purposes of any determination of Total Debt to Total Capitalization Ratio and Minimum Liquidity, amounts in currencies other than Dollars shall be translated into Dollars at the currency exchange rates used in preparing the consolidated financial statements of the Company most recently delivered to the Administrative Agent and the Lenders pursuant to Section 10.1.1 or 10.1.2 hereof.
SECTION 2 COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION AND LETTER OF CREDIT PROCEDURES.
2.1 Commitments. On and subject to the terms and conditions of this Agreement, each of the Lenders, severally and for itself alone, agrees to make loans to, and to issue or participate in Letters of Credit for the account of, the Company as follows:
2.1.1 Commitment. Each Lender with a Commitment severally agrees to make loans in U.S. Dollars on a revolving basis (“Loans”) on and after the Effective Date from time to time until the Termination Date in an amount equal to such Lender’s Pro Rata Share of such aggregate amounts as the Company may request from all Lenders; provided that (i) the Total Outstandings will not at any time exceed the Loan Availability and (ii) the Exposure of any Lender will not at any time exceed its Commitment.
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2.1.2 Increase in Commitment.
(a) The Company may, at its option any time after the consummation of a Qualified IPO and before the Termination Date, seek to increase the Commitments (any such increase, a “Commitment Increase”) upon written notice to the Administrative Agent; provided that, the aggregate principal amount of all Commitment Increases shall not exceed $200,000,000.
(b) Any such notice delivered to the Administrative Agent in connection with a Commitment Increase shall be delivered at a time when no Unmatured Event of Default or Event of Default has occurred and is continuing and shall specify (i) the amount of such Commitment Increase (which shall not be less than $10,000,000 (unless otherwise agreed by the Administrative Agent) or, if less, the maximum amount of Commitment Increase remaining to be established hereunder) sought by the Company, (ii) the date (each, an “Increased Amount Date”) on which the Company proposes that such Commitment Increase shall be effective, which shall be a date not less than ten Business Days after the date on which such notice is delivered to the Administrative Agent (unless otherwise agreed by the Administrative Agent in its reasonable discretion) and (iii) the identity of each Incremental Lender to whom the Company proposes any portion of such Commitment Increase be allocated and the amounts of such allocations. The Administrative Agent, subject to the consent of the Company, which shall not be unreasonably withheld, may allocate the Commitment Increase (which may be declined by any Lender (including in its reasonable discretion)) on either a ratable basis to the Lenders or on a non pro-rata basis to one or more Lenders and/or other Persons (other than Ineligible Institutions) reasonably acceptable to each of the Administrative Agent, each Issuing Bank and the Company which have expressed a desire to accept the Commitment Increase. The Administrative Agent will then notify each existing Lender and Incremental Lender of such revised allocations of the Commitments, including the desired increase. No Commitment Increase shall become effective until each of the Incremental Lenders extending such Commitment Increase and the Company shall have delivered to the Administrative Agent a document in form reasonably satisfactory to the Administrative Agent pursuant to which any such Incremental Lender states the amount of its Commitment Increase and agrees to assume and accept the obligations and rights of a Lender hereunder, and the Company accepts such new Commitments.
(c) Notwithstanding the foregoing, no Commitment Increase shall be established unless, subject to Section 1.3, (i) no Unmatured Event of Default or Event of Default shall exist on such Increased Amount Date before or after giving effect to such Commitment Increase; (ii) all fees and expenses, if any, owing in respect of such increase to the Administrative Agent and the Lenders will have been paid; (iii) the Company shall be in pro forma compliance with each of the covenants set forth in Section 11.12 as of the last day of the most recently ended Computation Period after giving effect to such Commitment Increase and other customary and appropriate pro forma adjustment events, including any Acquisitions or dispositions after the beginning of the relevant Computation Period but on or prior to or simultaneous with the establishment of such Commitment Increase; and (iv) the Company shall deliver or cause to be delivered any customary legal opinions or other customary closing documents reasonably requested by the Administrative Agent in connection with any such transaction.
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(d) Upon the effectiveness of any Commitment Increase of any Incremental Lender that is not already a Lender pursuant to this Section 2.1.2, such Incremental Lender shall be deemed to be a “Lender” hereunder, and henceforth shall be entitled to all the rights of, and benefits accruing to, Lenders hereunder and shall be bound by all agreements, acknowledgements and other obligations of Lenders hereunder. After giving effect to any Commitment Increase, all Loans and all such other credit exposure shall be held ratably by the Lenders in proportion to their respective Commitments, as revised to reflect the increase in the Commitments. The terms of any such Commitment Increase and the extensions of credit made pursuant thereto shall be identical to those of the other Commitments and the extensions of credit made pursuant thereto. Each Commitment Increase shall be deemed for all purposes a Commitment and each Loan made thereunder shall be deemed, for all purposes, a Loan. The Administrative Agent may elect or decline to arrange the increase in Commitment sought by the Company but is under no obligation to arrange or consummate any such increase. The Company will cooperate with the Administrative Agent in such efforts.
2.2 Loan Procedures.
(a) Various Types of Loans. Each Loan shall be made as part of a Borrowing consisting of Loans of the same Type made by the Lenders ratably in accordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required. Subject to Section 8.2, each Borrowing shall be comprised entirely of Base Rate Loans or LIBOR Loans as the Company may request in accordance herewith.
(b) At the commencement of each Interest Period for any LIBOR Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum; provided that a LIBOR Borrowing that results from a continuation of an outstanding LIBOR Borrowing may be in an aggregate amount that is equal to such outstanding Borrowing. At the time that each Base Rate Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum. Borrowings of more than one Type may be outstanding at the same time; provided that there shall not at any time be more than a total of 10 (or such greater number as may be agreed to by the Administrative Agent) LIBOR Borrowings outstanding. Notwithstanding anything to the contrary herein, a Base Rate Borrowing may be in an aggregate amount that is equal to the entire unused balance of the Loan Availability or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.3.5.
(c) Notwithstanding any other provision of this Agreement, the Company shall not be entitled to request, or to elect to convert to or continue, any LIBOR Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date applicable thereto.
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2.2.1 Requests for Borrowings. To request a Borrowing, the Company shall notify the Administrative Agent of such request by submitting a Borrowing Request (a) in the case of a LIBOR Borrowing, not later than noon, New York City time, three Business Days before the date of the proposed Borrowing or (b) in the case of a Base Rate Borrowing, not later than noon, New York City time, on the day of the proposed Borrowing. Each such Borrowing Request shall be irrevocable and shall be signed by a Responsible Officer of the Company. Each such Borrowing Request shall specify the following information (to the extent applicable, in compliance with Sections 2.1.1 and 2.2(a)):
(i) the aggregate amount of such Borrowing;
(ii) the requested date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be a Base Rate Borrowing or a LIBOR Borrowing;
(iv) in the case of a LIBOR Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”;
(v) the location and number of the account of the Company to which funds are to be disbursed or, in the case of any Base Rate Borrowing requested to finance the reimbursement of an LC Disbursement as provided in Section 2.3.5, the identity of the Issuing Bank that made such LC Disbursement; and
(vi) that as of such date Sections 12.2.1(a) and 12.2.1(b) are satisfied.
If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be a Base Rate Borrowing. If no Interest Period is specified with respect to any requested LIBOR Borrowing, then the Company shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section 2.2.1, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.
2.2.2 Interest Elections.
(a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a LIBOR Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Company may elect to convert such Borrowing to a Borrowing of a different Type or to continue such Borrowing and, in the case of a LIBOR Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.2.2. The Company may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders, and the Loans comprising each such portion shall be considered a separate Borrowing.
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(b) To make an election pursuant to this Section 2.2.2, the Company shall notify the Administrative Agent of such election by the time that a Borrowing Request would be required under Section 2.2.1 if the Company were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such Interest Election Request shall be irrevocable and shall be signed by a Responsible Officer of the Company.
(c) Each Interest Election Request shall specify the following information in compliance with Section 2.2.1:
(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be a Base Rate Borrowing or a LIBOR Borrowing; and
(iv) if the resulting Borrowing is to be a LIBOR Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.
If any such Interest Election Request requests a LIBOR Borrowing but does not specify an Interest Period, then the Company shall be deemed to have selected an Interest Period of one month’s duration.
(d) Promptly following receipt of an Interest Election Request in accordance with this Section 2.2.2, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.
(e) If the Company fails to deliver a timely Interest Election Request with respect to a LIBOR Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be continued as a Base Rate Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default under Section 13.1(c) has occurred and is continuing with respect to the Company, or if any other Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders has notified the Company of the election to give effect to this sentence on account of such other Event of Default, then, in each such case, so long as such Event of Default is continuing, (i) no outstanding Borrowing may be converted to or continued as a LIBOR Borrowing and (ii) unless repaid, each LIBOR Borrowing shall be converted to a Base Rate Borrowing at the end of the Interest Period applicable thereto.
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2.3 Letter of Credit.
2.3.1 General. Subject to the terms and conditions set forth herein, the Company may request any Issuing Bank to issue Letters of Credit for the Company’s own account (or, so long as the Company is a joint and several co-applicant with respect thereto, the account of any Subsidiary), denominated in U.S. Dollars and in a form reasonably acceptable to the Administrative Agent and the applicable Issuing Bank, at any time and from time to time during the period from the Effective Date to the Termination Date. The Company unconditionally and irrevocably agrees that, in connection with any Letter of Credit issued for the account of any Subsidiary as provided in the first sentence of this paragraph, it will be fully responsible for the reimbursement of LC Disbursements, the payment of interest thereon and the payment of fees due under Section 5.2 to the same extent as if it were the sole account party in respect of such Letter of Credit. Notwithstanding anything contained in any letter of credit application or other agreement (other than this Agreement or any Security Document) submitted by the Company to, or entered into by the Company with, any Issuing Bank relating to any Letter of Credit, (i) all provisions of such letter of credit application or other agreement purporting to grant Liens in favor of such Issuing Bank to secure obligations in respect of such Letter of Credit shall be disregarded, it being agreed that such obligations shall be secured to the extent provided in this Agreement and in the Security Documents, and (ii) in the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any Letter of Credit Agreement, the terms and conditions of this Agreement shall control. Notwithstanding anything herein to the contrary, the Company shall not request, and no Issuing Bank shall have any obligation to issue, any Letter of Credit the proceeds of which would be made available to any Person (i) to fund any activity or business of or with any Sanctioned Person or in any country or territory that, at the time of such issuance, is the subject of any Sanctions, (ii) in any manner that would result in a violation of any Sanctions by any party to this Agreement or (iii) in any manner that would result in a violation of one or more policies of such Issuing Bank applicable to letters of credit generally.
2.3.2 Notice of Issuance, Amendment, Extension; Certain Conditions. To request the issuance of a Letter of Credit or the amendment or extension of an outstanding Letter of Credit (other than an automatic extension permitted pursuant to Section 2.3.3), the Company shall hand deliver or fax (or transmit by electronic communication, if arrangements for doing so have been approved by the recipient) to the applicable Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended or extended, and specifying the requested date of issuance, amendment or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with Section 2.3.3), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be requested by the applicable Issuing Bank as necessary to enable such Issuing Bank to prepare, amend or extend such Letter of Credit. In addition, as a condition to any such Letter of Credit issuance, the Company shall have entered into a continuing agreement (or other letter of credit agreement) for the issuance of letters of credit and/or shall submit a letter of credit application, in each case as required by the applicable Issuing Bank and using such Issuing Bank’s standard form (each such agreement or application, a “Letter of Credit Agreement”). A Letter of Credit shall be issued, amended or extended only if (and upon each issuance, amendment or extension of any Letter of Credit the Company shall be deemed to represent and warrant that), after giving effect to such issuance, amendment or extension, (i) the LC Exposure will not exceed $50,000,000, (ii) the portion of the LC Exposure attributable to Letters of Credit issued by any Issuing Bank will not exceed the Letter of Credit Commitment of such Issuing Bank, (iii) no Lender will have Exposure greater than its Commitment and (iv) the Loan Availability will not exceed the Total Outstandings. The Company may, at any time and from time to time, reduce the Letter of Credit Commitment of any Issuing Bank with the consent of such Issuing Bank; provided that the Company shall not reduce the Letter of Credit Commitment of any Issuing Bank if, after giving effect to such reduction, the condition set forth in clauses (i) through (iv) above shall not be satisfied. Each Issuing Bank agrees that it shall not permit any issuance, amendment or extension of a Letter of Credit to occur unless it shall have given to the Administrative Agent written notice thereof as required under Section 2.3.13. Notwithstanding the foregoing, no Issuing Bank shall be required to issue a commercial or trade Letter of Credit unless otherwise agreed between the Company and the applicable Issuing Bank, in its sole discretion.
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2.3.3 Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date that is one year after the date of the issuance of such Letter of Credit (or, in the case of any extension thereof, one year after such extension) and (ii) the date that is five Business Days prior to the Maturity Date; provided, however, that any Letter of Credit may contain customary automatic extension provisions agreed upon by the Company and the applicable Issuing Bank pursuant to which the expiration date of such Letter of Credit shall be automatically extended for a period of up to 12 months (but not to a date later than the date set forth in clause (ii) above), subject to a right on the part of such Issuing Bank to prevent any such extension from occurring by giving notice to the beneficiary in advance of any such extension.
2.3.4 Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the applicable Issuing Bank or any Lender, the Issuing Bank that is the issuer of thereof hereby grants to each Lender, and each Lender hereby acquires from such Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Pro Rata Share of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the applicable Issuing Bank, such Lender’s Pro Rata Share of each LC Disbursement made by such Issuing Bank and not reimbursed by the Company on the date due as provided in Section 2.3.5, or of any reimbursement payment required to be refunded to the Company for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment or extension of any Letter of Credit, the occurrence and continuance of a Unmatured Event of Default, any reduction or termination of the Commitments or any force majeure or other event that under any rule of law or uniform practices to which any Letter of Credit is subject (including Section 3.14 of ISP) permits a drawing to be made under such Letter of Credit after the expiration thereof or of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Lender further acknowledges and agrees that, in issuing, amending or extending any Letter of Credit, the applicable Issuing Bank shall be entitled to rely, and shall not incur any liability for relying, upon the representation and warranty of the Company deemed made pursuant to Section 12.2.1 unless, at least one Business Day prior to the time such Letter of Credit is issued, amended or extended (or, in the case of an automatic extension permitted pursuant to Section 2.3.3, at least one Business Day prior to the time by which the election not to extend must be made by the applicable Issuing Bank), the Required Lenders shall have notified the applicable Issuing Bank (with a copy to the Administrative Agent) in writing that, as a result of one or more events or circumstances described in such notice, one or more of the conditions precedent set forth in Section 12.2.1 would not be satisfied if such Letter of Credit were then issued, amended or extended (it being understood and agreed that, in the event any Issuing Bank shall have received any such notice, no Issuing Bank shall have any obligation to issue, amend or extend any Letter of Credit until and unless it shall be satisfied that the events and circumstances described in such notice shall have been cured or otherwise shall have ceased to exist).
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2.3.5 Reimbursements. If an Issuing Bank shall make an LC Disbursement in respect of a Letter of Credit, the Company shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than (i) if the Company shall have received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on any Business Day, then 1:30 p.m., New York City time, on the next Business Day immediately following the day that the Company receives such notice, or (ii) otherwise, 1:30 p.m., New York City time, on the second Business Day immediately following the day that the Company receives such notice; provided that, if the amount of such LC Disbursement is $100,000 or more, the Company may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.2.1 that such payment be financed with a Base Rate Borrowing in an equivalent amount and, to the extent so financed, the Company’s obligation to make such payment shall be discharged and replaced by the resulting Base Rate Borrowing. If the Company fails to reimburse any LC Disbursement by the time specified above in this paragraph, then the Administrative Agent shall notify each Lender of such failure, the payment then due from the Company in respect of the applicable LC Disbursement and such Lender’s Pro Rata Share thereof. Promptly following receipt of such notice, each Lender shall pay to the Administrative Agent its Pro Rata Share of the amount then due from the Company, in the same manner as provided in Section 2.4 with respect to Loans made by such Lender (and Section 2.4 shall apply, mutatis mutandis, to the payment obligations of the Lenders pursuant to this paragraph), and the Administrative Agent shall promptly remit to the applicable Issuing Bank the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the Company pursuant to this paragraph, the Administrative Agent shall distribute such payment to the applicable Issuing Bank or, to the extent that Lenders have made payments pursuant to this paragraph to reimburse such Issuing Bank, then to such Lenders and such Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this paragraph to reimburse an Issuing Bank for an LC Disbursement (other than the funding of a Base Rate Borrowing) shall not constitute a Loan and shall not relieve the Company of its obligation to reimburse such LC Disbursement.
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2.3.6 Obligations Absolute. The Company’s obligation to reimburse LC Disbursements as provided in Section 2.3.5 is absolute, unconditional and irrevocable and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit, any Letter of Credit Agreement or this Agreement, or any term or provision thereof or hereof, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by an Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, (iv) any force majeure or other event that under any rule of law or uniform practices to which any Letter of Credit is subject (including Section 3.14 of ISP) permits a drawing to be made under such Letter of Credit after the stated expiration date thereof or of the Commitments or (v) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this paragraph, constitute a legal or equitable discharge of, or provide a right of setoff against, the Company’s obligations hereunder. None of the Administrative Agent, the Lenders, the Issuing Banks or any of their Related Parties shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit, any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any other act, failure to act or other event or circumstance; provided that the foregoing shall not be construed to excuse any Issuing Bank from liability to the Company to the extent of any direct damages (as opposed to special, indirect, consequential or punitive damages, claims in respect of which are hereby waived by the Company to the extent permitted by applicable law) suffered by the Company that are caused by such Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or wilful misconduct on the part of an Issuing Bank (with such absence to be presumed unless otherwise determined by a court of competent jurisdiction in a final and nonappealable judgment), such Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented that appear on their face to be in substantial compliance with the terms of a Letter of Credit, an Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit, and any such acceptance or refusal shall be deemed not to constitute gross negligence or wilful misconduct.
2.3.7 Disbursement Procedures. Each Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. Each Issuing Bank shall promptly notify the Administrative Agent and the Company by telephone (confirmed by facsimile or electronic mail) of such demand for payment and whether such Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Company of its obligation to reimburse such Issuing Bank and the Lenders with respect to any such LC Disbursement in accordance with Section 2.3.5.
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2.3.8 Interim Interest. If an Issuing Bank shall make any LC Disbursement, then, unless the Company shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Company reimburses such LC Disbursement in full, at the rate per annum then applicable to Base Rate Loans; provided that, if the Company fails to reimburse such LC Disbursement in full when due pursuant to Section 2.3.5, then the proviso to Section 4.1(b) shall apply. Interest accrued pursuant to this paragraph shall be paid to the Administrative Agent, for the account of the applicable Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to Section 2.3.5 to reimburse such Issuing Bank shall be for the account of such Lender to the extent of such payment, and shall be payable on demand or, if no demand has been made, on the date on which the Company reimburses the applicable LC Disbursement in full.
2.3.9 Cash Collateralization. If any Event of Default shall occur and be continuing, on the Business Day that the Company receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, the Required Lenders) demanding the deposit of cash collateral pursuant to this paragraph, the Company shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Company described in Section 13.1(c). The Company also shall deposit cash collateral in accordance with this paragraph as and to the extent required by Section 6.2.2(a), 2.6(c) or 15.1.1(b). Each such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Company under this Agreement. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and reasonable discretion of the Administrative Agent and at the Company’s risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Notwithstanding the terms of any Security Document, moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Banks for LC Disbursements for which they have not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Company for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to (i) the consent of Required Lenders and (ii) in the case of any such application at a time when any Lender is a Defaulting Lender (but only if, after giving effect thereto, the remaining cash collateral shall be less than the aggregate LC Exposure of all the Defaulting Lenders), the consent of each Issuing Bank), be applied to satisfy other obligations of the Company under this Agreement. If the Company is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Company within three Business Days after all Events of Default have been cured, waived or no longer continuing. If the Company is required to provide an amount of cash collateral hereunder pursuant to Section 6.2.2(a), such amount (to the extent not applied as aforesaid) shall be returned to the Company to the extent that, after giving effect to such return, the Total Outstandings would not exceed the Loan Availability and no Event of Default shall then be continuing. If the Company is required to provide an amount of cash collateral hereunder pursuant to Section 2.6(c), such amount (to the extent not applied as aforesaid) shall be returned to the Company as promptly as practicable to the extent that, after giving effect to such return, no Issuing Bank shall have any exposure in respect of any outstanding Letter of Credit that is not fully covered by the Commitments of the non-Defaulting Lenders and/or the remaining cash collateral and no Event of Default shall then be continuing.
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2.3.10 Designation of Additional Issuing Banks. The Company may, at any time and from time to time, with the consent of the Administrative Agent (which consent shall not be unreasonably withheld), designate as additional Issuing Banks one or more Lenders that agree to serve in such capacity as provided below. The acceptance by a Lender of an appointment as an Issuing Bank hereunder shall be evidenced by an agreement, which shall be in form and substance reasonably satisfactory to the Administrative Agent (and which shall specify the initial Letter of Credit Commitment of such Issuing Bank), executed by the Company, the Administrative Agent and such designated Lender and, from and after the effective date of such agreement, (i) such Lender shall have all the rights and obligations of an Issuing Bank under this Agreement and (ii) references herein or in any other Loan Document to the term “Issuing Bank” shall be deemed to include such Lender in its capacity as an issuer of Letters of Credit hereunder.
2.3.11 Termination of an Issuing Bank. The Company may terminate the appointment of any Issuing Bank as an “Issuing Bank” hereunder by providing a written notice thereof to such Issuing Bank, with a copy to the Administrative Agent. Any such termination shall become effective upon the earlier of (i) such Issuing Bank acknowledging receipt of such notice and (ii) the tenth Business Day following the date of the delivery thereof; provided that no such termination shall become effective until and unless the LC Exposure attributable to Letters of Credit issued by such Issuing Bank (or its Affiliates) shall have been reduced to zero. At the time any such termination shall become effective, the Company shall pay all unpaid fees accrued for the account of the terminated Issuing Bank pursuant to Section 5.2. Notwithstanding the effectiveness of any such termination, the terminated Issuing Bank shall remain a party hereto and shall continue to have all the rights of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such termination, but shall not be required to issue any additional Letters of Credit.
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2.3.12 Replacement or Resignation of an Issuing Bank.
(a) An Issuing Bank may be replaced at any time by written agreement among the Company, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of an Issuing Bank. At the time any such replacement shall become effective, the Company shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 5.2. From and after the effective date of any such replacement, (x) the successor Issuing Bank shall have all the rights and obligations of the replaced Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (y) references herein or in any other Loan Document to the term “Issuing Bank” shall be deemed to refer to such successor Issuing Bank or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party thereto and shall continue to have all the rights and obligations of an Issuing Bank hereunder and under each other Loan Document with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.
(b) Subject to the appointment and acceptance of a successor Issuing Bank, any Issuing Bank may resign as an Issuing Bank at any time upon thirty days’ prior written notice to the Administrative Agent, the Company and the Lenders, in which case, such Issuing Bank shall be replaced in accordance with Section 2.3.11.
2.3.13 Issuing Bank Reports to the Administrative Agent. Unless otherwise agreed by the Administrative Agent, each Issuing Bank shall, in addition to its notification obligations set forth elsewhere in this Section 2.3, report in writing to the Administrative Agent (i) periodic activity (for such period or recurrent periods as shall be requested by the Administrative Agent) in respect of Letters of Credit issued by such Issuing Bank, including all issuances, extensions and amendments, all expirations and cancelations and all disbursements and reimbursements, (ii) reasonably prior to the time that such Issuing Bank issues, amends or extends any Letter of Credit, the date of such issuance, amendment or extension, and the stated amount of the Letters of Credit issued, amended or extended by it and outstanding after giving effect to such issuance, amendment or extension (and whether the amounts thereof shall have changed), (iii) on each Business Day on which such Issuing Bank makes any LC Disbursement, the date and amount of such LC Disbursement, (iv) on any Business Day on which the Company fails to reimburse an LC Disbursement required to be reimbursed to such Issuing Bank on such day, the date of such failure and the amount of such LC Disbursement and (v) on any other Business Day, such other information as the Administrative Agent shall reasonably request as to the Letters of Credit issued by such Issuing Bank.
2.3.14 LC Exposure Determination. For all purposes of this Agreement, the amount of a Letter of Credit that, by its terms or the terms of any document related thereto, provides for one or more automatic increases in the stated amount thereof shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases (other than any such increase consisting of the reinstatement of an amount previously drawn thereunder and reimbursed), whether or not such maximum stated amount is in effect at the time of determination.
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2.3.15 Letters of Credit Issued for Account of Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary, or states that a Subsidiary is the “account party”, “applicant”, “customer”, “instructing party” or the like of or for such Letter of Credit, and without derogating from any rights of the applicable Issuing Bank (whether arising by contract, at law, in equity or otherwise) against such Subsidiary in respect of such Letter of Credit, the Company (i) shall reimburse, indemnify and compensate the applicable Issuing Bank hereunder for such Letter of Credit (including to reimburse any and all drawings thereunder) as if such Letter of Credit had been issued solely for the account of the Company and (ii) irrevocably waives any and all defenses that might otherwise be available to it as a guarantor or surety of any or all of the obligations of such Subsidiary in respect of such Letter of Credit. The Company hereby acknowledges that the issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of the Company, and that the Company’s business derives substantial benefits from the businesses of such Subsidiaries.
2.4 Funding of Borrowings. Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof solely by wire transfer of immediately available funds, by 1:00 p.m., New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. Except in respect of the provisions of this Agreement covering the reimbursement of Letters of Credit, the Administrative Agent will make such Loans available to the Company by promptly crediting the funds so received in the aforesaid account of the Administrative Agent to an account of the Company maintained with the Administrative Agent in New York City and designated by the Company in the applicable Borrowing Request; provided that Base Rate Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.3.5 shall be remitted by the Administrative Agent to the Issuing Bank.
2.5 Availability of Funds. Unless the Administrative Agent shall have been notified by any Lender prior to the applicable date of the making of a Loan or the issuing or extension of a Letter of Credit that such Lender does not intend to make available to the Administrative Agent the amount of such Lender’s Loan requested on such date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such date and the Administrative Agent may, in its reasonable discretion, but shall not be obligated to, make available to the Company a corresponding amount on such date. If such corresponding amount is not in fact made available to the Administrative Agent by such Lender, the Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon, for each day from such date until the date such amount is paid to the Administrative Agent, at the customary rate set by the Administrative Agent for the correction of errors among banks for three Business Days and thereafter at the Base Rate. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent shall promptly notify the Company and the Company shall immediately pay such corresponding amount to the Administrative Agent together with interest thereon, for each day from such date until the date such amount is paid to the Administrative Agent, at the rate payable hereunder for Base Rate Loans. Nothing in this Section 2.5 shall be deemed to relieve any Lender from its obligation to fulfill its Commitment hereunder or to prejudice any rights that the Company may have against any Lender as a result of any default by such Lender hereunder.
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2.6 Defaulting Lenders. Notwithstanding anything to the contrary contained in this Agreement, if any Letter of Credit Commitment exists at the time a Lender having a Commitment becomes a Defaulting Lender then:
(a) such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Required Lenders and Section 15.1;
(b) all or any part of such Letter of Credit Commitment shall be reallocated among the non-Defaulting Lenders in accordance with their respective Pro Rata Share of such Letter of Credit Commitment but only to the extent (i) the sum of the non-Defaulting Lenders’ Pro Rata Shares of the sum, as at any date of determination, of (x) the aggregate principal amount of all Loans (other than Loans made for the purpose of reimbursing an Issuing Bank for any amount drawn under any Letter of Credit, but not yet so applied) and (y) the LC Exposure, plus such Defaulting Lender’s Pro Rata Share of Exposure do not exceed the total of all non-Defaulting Lenders’ Commitments and (ii) the conditions set forth in Section 12.2.1 are satisfied at such time; provided that the aggregate obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit shall not exceed the positive difference, if any, of (A) the Commitment of that non-Defaulting Lender minus (B) the sum of the aggregate outstanding principal amount of the Loans of such non-Defaulting Lender plus such non-Defaulting Lender’s Pro Rata Share of the outstanding LC Exposure;
(c) if the reallocation described in clause (b) above cannot, or can only partially, be effected, the Company shall, within five Business Days following notice by the Administrative Agent, Cash Collateralize such Defaulting Lender’s Pro Rata Share of the Letter of Credit Commitment (after giving effect to any partial reallocation pursuant to clause (b) above) for so long as such Letter of Credit Commitment is outstanding;
(d) if the Letter of Credit Commitment of the non-Defaulting Lenders is reallocated pursuant to clause (b) above, then the fees payable to the Lenders pursuant to Section 5 solely in respect of the unfunded portion of such Lenders’ Commitment shall be adjusted in accordance with such non-Defaulting Lenders’ Pro Rata Shares; and
(e) if the Company, the Administrative Agent and each Issuing Bank agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any cash collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit to be held pro rata by the Lenders in accordance with the Commitments (without giving effect to paragraph (b) above), whereupon, such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Company while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
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SECTION 3 EVIDENCING OF LOANS.
3.1 Notes. If so requested by any Lender by written notice to the Company (with a copy to the Administrative Agent), the Loans of each Lender shall be evidenced by a Note, with appropriate insertions, payable to such Lender in a face principal amount equal to such Lender’s Commitment.
3.2 Recordkeeping. The Administrative Agent, on behalf of each Lender, shall record in its records, the date and amount of each Loan made by each Lender, each repayment or conversion thereof and, in the case of each LIBOR Loan, the dates on which each Interest Period for such Loan shall begin and end. The aggregate unpaid principal amount so recorded shall be rebuttably presumptive evidence of the principal amount of the Loans owing and unpaid. The failure to so record any such amount or any error in so recording any such amount shall not, however, limit or otherwise affect the Obligations of the Company hereunder or under any Note to repay the principal amount of the Loans hereunder, together with all interest accruing thereon. The Administrative Agent will provide to the Company, at the Company’s expense, copies of such records pertaining to the Company from time to time upon the Company’s reasonable written request.
SECTION 4 INTEREST.
4.1 Interest Rates. The Company promises to pay interest on the unpaid principal amount of each Loan for the period commencing on the date of such Loan until such Loan is paid in full as follows:
(a) at all times while such Loan is a Base Rate Loan, at a rate per annum equal to the sum of the Base Rate from time to time in effect plus the Base Rate Margin;
(b) at all times while such Loan is a LIBOR Loan, at a rate per annum equal to the sum of the Adjusted LIBO Rate applicable to each Interest Period for such Loan plus the LIBOR Margin;
provided that (i) if any amount payable by the Company under the Loan Documents is not paid when due, whether at stated maturity, by acceleration or otherwise, during the continuance of an Event of Default under Section 13.1(a) or 13.1(c), then such overdue amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws; and (ii) accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable on demand; provided, further, that no amount shall be payable pursuant to this Section 4.1(b) to a Defaulting Lender so long as such Lender shall be a Defaulting Lender; provided, further, that no amounts shall accrue pursuant to this Section 4.1(b) on any overdue amount, reimbursement obligation in respect of any LC Disbursement or other amount payable to a Defaulting Lender so long as such Lender shall be a Defaulting Lender.
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4.2 Interest Payment Dates. Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date and at the Maturity Date. After the Maturity Date, and at any time an Event of Default exists, accrued interest on all Loans shall be payable on demand.
4.3 Setting and Notice of Rates. The applicable rate for each Interest Period shall be determined by the Administrative Agent, and notice thereof shall be given by the Administrative Agent promptly to the Company and each Lender. The Administrative Agent shall, upon written request of the Company or any Lender, deliver to the Company or such Lender a statement showing the computations used by the Administrative Agent in determining the Adjusted LIBO Rate hereunder.
4.4 Computation of Interest.
(a) Interest shall be computed for the actual number of days elapsed on the basis of a year of (a) 360 days for interest calculated at the Adjusted LIBO Rate, and (b) 365/366 days for interest calculated at the Base Rate. The applicable interest rate for each Base Rate Loan shall change simultaneously with each change in the Base Rate.
(b) Except as otherwise set forth herein, interest on each Loan (i) shall accrue on a daily basis and shall be payable in arrears on each Interest Payment Date with respect to interest accrued on and to each such Interest Payment Date; (ii) shall accrue on a daily basis and shall be payable in arrears upon any prepayment of such Loan, whether voluntary or mandatory, to the extent accrued on the amount being prepaid; and (iii) shall accrue on a daily basis and shall be payable in arrears at maturity of such Loan, including final maturity of such Loan; provided, that with respect to any voluntary prepayment of a Base Rate Loan, accrued interest shall instead be payable on the applicable Interest Payment Date.
(c) Each determination of an interest rate by the Administrative Agent shall be conclusive and binding upon the parties hereto, in the absence of demonstrable error.
SECTION 5 FEES.
5.1 Commitment Fee. The Company agrees to pay to the Administrative Agent at its Principal Office for the account of each Lender based on such Lender’s Pro Rata Share a commitment fee in U.S. Dollars, which shall accrue at the Commitment Fee Rate on the daily unused amount of the Commitment of such Lender during the period from the Effective Date to the Termination Date; provided, that any commitment fee accrued with respect to any of the unused Commitments of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall be payable by the Company so long as such commitment fee shall otherwise have been due and payable by the Company prior to such time of such Lender becoming a Defaulting Lender. Commitment fees shall be payable in arrears on the last day of each Fiscal Quarter and on the Termination Date for any period then ending for which such commitment fees shall not have previously been paid. The commitment fee shall be computed for the actual number of days elapsed on the basis of a year of 360 days. For purposes of computing commitment fees, a Commitment of a Lender shall be deemed to be used to the extent of the outstanding Loans and LC Exposure of such Lender.
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5.2 Letter of Credit Fees.
(a) The Company agrees to pay to the Administrative Agent at its Principal Office for the account of each Lender a letter of credit fee for each Letter of Credit equal to the LC Fee Rate in effect from time to time of such Lender’s Pro Rata Share (as adjusted from time to time) of the undrawn amount of such Letter of Credit (computed for the actual number of days elapsed on the basis of a year of 360 days). Such letter of credit fees shall be payable in arrears on the last Business Day of each calendar quarter and on the Termination Date (or such later date on which such Letter of Credit expires or is terminated) for the period from the date of the issuance of each Letter of Credit (or the last day on which the letter of credit fee was paid with respect thereto) to the date such payment is due or, if earlier, the date on which such Letter of Credit expired or was terminated.
(b) In addition, with respect to each Letter of Credit, the Company agrees to pay to each Issuing Bank, for its own account, (i) such fees and expenses as such Issuing Bank customarily requires in connection with the issuance, negotiation, processing and/or administration of letters of credit in similar situations and (ii) a letter of credit fronting fee of 0.125% per annum on the aggregate face amount of all outstanding Letters of Credit issued by such Issuing Bank. Such letter of credit fronting fee shall be payable in arrears on the last Business Day of each calendar quarter and on the Termination Date (or such later date on which such Letter of Credit expires or is terminated) for the period from the date of the issuance of each Letter of Credit (or the last day on which the letter of credit fee was paid with respect thereto) to the date such payment is due or, if earlier, the date on which such Letter of Credit expired or was terminated.
5.3 Administrative Agent’s Fees. The Company agrees to pay to the Administrative Agent such agent’s fees in the amounts and at times separately agreed upon.
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENT; PREPAYMENTS.
6.1 Reduction or Termination of the Commitment.
6.1.1 Voluntary Reduction or Termination of the Commitment. The Company may from time to time on at least three Business Days’ prior written notice received by the Administrative Agent (which shall promptly advise each Lender thereof) permanently reduce the Commitments to an amount not less than the Total Outstandings; provided that a notice of termination or reduction of the Commitments under this Section 6.1.1 may state that such notice is conditioned upon the occurrence of one or more events specified therein, in which case such notice may be revoked by the Company (by notice to the Administrative Agent on or prior to the specified effective date). Any such reduction shall be in an amount not less than the Borrowing Minimum or a higher integral multiple of the Borrowing Multiple. Concurrently with any reduction of the Commitments to zero, the Company shall pay all interest on the Loans, all commitment fees and all letter of credit fees and shall Cash Collateralize in full all obligations arising with respect to the Letters of Credit.
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6.1.2 All Reductions of the Commitments. All reductions of the Commitments shall reduce the Commitments ratably among the Lenders according to their respective Pro Rata Shares.
6.2 Prepayments.
6.2.1 Voluntary Prepayments. The Company may from time to time prepay the Loans in whole or in part; provided that the Company shall give the Administrative Agent (which shall promptly advise each Lender) written notice thereof, which shall be substantially in the form of Exhibit D, not later than (i) with respect to Base Rate Loans, 12:00 P.M., New York City time, one Business Day prior to the proposed date of such prepayment and (ii) in the case of LIBOR Loans, 12:00 P.M., New York City time, three Business Days prior to the proposed date of such prepayment, which shall, in each case, be a Business Day, specifying the Loans to be prepaid and the date and amount of prepayment. Any such partial prepayment shall be in an amount equal to the Borrowing Minimum or a higher integral multiple of the Borrowing Multiple.
6.2.2 Mandatory Prepayments. (a) If on any day the Total Outstandings exceeds the Commitments, the Company shall immediately prepay Loans (or, if no Loans are outstanding, Cash Collateralize the outstanding Letters of Credit), in an amount sufficient to eliminate such excess.
(b) Within three Business Days after a Qualified IPO, the Company shall apply a portion of the net cash proceeds therefrom to prepay any then outstanding Loans (which, for the avoidance of doubt, shall not reduce the amount of the Commitments). The Company shall provide the Administrative Agent with notice of such prepayment in the same manner as provided in Section 6.2.1 with respect to a voluntary prepayment.
6.3 Manner of Prepayments. Each voluntary partial prepayment shall be in a principal amount of the Borrowing Minimum or a higher integral multiple of the Borrowing Multiple. Any prepayment of a LIBOR Loan on a day other than the last day of an Interest Period therefor shall include interest on the principal amount being repaid and shall be subject to Section 8.3. Except as otherwise provided by this Agreement, all principal payments in respect of the Loans shall be applied first, to repay outstanding Base Rate Loans to the full extent thereof; and second, to repay outstanding LIBOR Loans in direct order of Interest Period maturities.
6.4 Repayments.
(a) The Loans of each Lender shall be paid in full and the Commitment shall terminate on the Termination Date.
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(b) On or prior to the Termination Date, the Company shall terminate, Cash Collateralize or make such other arrangement as each applicable Issuing Bank shall reasonably agree with respect to each Letter of Credit that otherwise would remain outstanding as of the Termination Date.
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments.
(a) All payments of principal or interest on Loans denominated in U.S. Dollars, and of all fees, shall be made by the Company to the Administrative Agent in U.S. Dollars in same day funds, without defense, setoff or counterclaim, free of any restriction or condition, at the Principal Office designated by the Administrative Agent not later than 12:00 P.M., New York City time, on the date due; and funds received after that hour shall be deemed to have been received by the Administrative Agent on the following Business Day. The Administrative Agent shall promptly remit to each Lender its share of all such payments received in collected funds by the Administrative Agent for the account of such Lender. All payments under Section 8.1 shall be made by the Company directly to the Lender entitled thereto without setoff, counterclaim or other defense.
(b) Unless the Administrative Agent shall have received, prior to any date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Banks pursuant to the terms hereof or any other Loan Document (including any date that is fixed for prepayment by notice from the Company to the Administrative Agent pursuant to Section 6.2.1), notice from the Company that the Company will not make such payment or prepayment, the Administrative Agent may assume that the Company has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Banks, as the case may be, the amount due. In such event, if the Company has not in fact made such payment, then each of the Lenders or the Issuing Banks, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.
7.2 Application of Certain Payments. Prior to the exercise of remedies provided for in Section 13.2, voluntary and mandatory prepayments shall be applied as set forth in Sections 6.2 and 6.3. After the exercise of remedies provided for in Section 13.2, all amounts collected or received by the Administrative Agent or any Lender shall be applied in the following order, and concurrently with each remittance to any Lender of its share of any such payment, the Administrative Agent shall advise such Lender as to the application of such payment: (i) first, to the payment of all fees, costs, expenses and indemnities of the Administrative Agent (in its capacity as such), including Attorney Costs, in each case then due and owing, until paid in full; (ii) second, to the payment of all fees, costs, expenses and indemnities of the Lenders, pro-rata, in each case then due and owing, until paid in full; (iii) third, to the payment of all of the Obligations consisting of accrued and unpaid interest, in each case then due and owing, to any Lender, pro-rata, until paid in full; (iv) fourth, to the payment of all Obligations consisting of principal, in each case then due and owing, to any Lender, unreimbursed disbursements under Letters of Credit, in each case then due and owing, to any Issuing Bank and all Secured Cash Management Obligations and Secured Hedging Obligations, in each case, then due and owing, to any Secured Party, pro-rata, until paid in full; (v) fifth, to Cash Collateralize all Obligations in respect of outstanding Letters of Credit; (vi) sixth, to the payment of all other Obligations, in each case then due and owing, to each Secured Party, pro-rata, until paid in full; and (vii) seventh, to the applicable Loan Parties or their successors or assigns or to whomever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.
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7.3 Due Date Extension. If any payment of principal or interest with respect to any of the Loans, or of any fees, falls due on a day which is not a Business Day, then such due date shall be extended to the immediately following Business Day (unless, in the case of a LIBOR Loan, such immediately following Business Day is the first Business Day of a calendar month, in which case such due date shall be the immediately preceding Business Day) and, in the case of principal, additional interest shall accrue and be payable for the period of any such extension.
7.4 Setoff. The Company agrees that the Administrative Agent and each Lender have, during the continuance of any Event of Default, all rights of set-off and bankers’ lien provided by applicable Law, in any currency, and in addition thereto, the Company agrees that at any time any Event of Default is there continuing, the Administrative Agent and each Lender may apply to the payment of any Obligations of the Company hereunder, that are then due and owing, any and all balances, credits, deposits, accounts or moneys of the Company then or thereafter with the Administrative Agent or such Lender.
7.5 Proration of Payments.
(a) Except as otherwise set forth in this Agreement, if any Lender shall obtain any payment or other recovery (whether voluntary, involuntary, by application of offset or otherwise, on account of (i) principal of or interest on any Loan, but excluding any payment pursuant to Section 8.6 or 15.4) or (ii) its participation in any Letter of Credit in excess of its applicable Pro Rata Share of payments and other recoveries obtained by all Lenders on account of principal of and interest on the Loans (or such participation) then held by them, then such Lender shall purchase from the other Lenders such participations in the Loans (or sub-participations in Letters of Credit) held by them as shall be necessary to cause such purchasing Lender to share the excess payment or other recovery ratably with each of them; provided that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Lender, the purchase shall be rescinded and the purchase price restored to the extent of such recovery.
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(b) Except as otherwise set forth in this Agreement, all Loans shall be made, and all participations purchased, by Lenders simultaneously and proportionally to their respective Pro Rata Shares, it being understood that no Lender shall be responsible for any default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder or purchase a participation required hereby nor shall any Commitment of any Lender be increased or decreased as a result of a default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder or purchase a participation required hereby.
7.6 Taxes.
(a) (i) To the extent permitted by applicable Law, all payments hereunder or under the Loan Documents (including any payment of principal, interest or fees) to, or for the benefit, of the Lenders or the Administrative Agent shall be made by the Company free and clear of and without deduction or withholding for, or account of, any Taxes now or hereinafter imposed by any taxing authority.
(ii) In addition, the Company shall pay any Other Taxes to the relevant taxing authority in accordance with applicable Law, or at the option of the Administrative Agent timely reimburse it for, Other Taxes.
(b) If the Company makes any payment hereunder or under any Loan Document in respect of which it is required by applicable Law to, and does in fact, deduct or withhold any Taxes, the Company shall pay the full amount deducted or withheld to the relevant taxing authority within the time allowed for payment under applicable Law and shall deliver to the Administrative Agent as soon as practicable after it has made payment to such authority a receipt issued by such authority (or other evidence satisfactory to the Administrative Agent) evidencing the payment of all amounts so required to be deducted or withheld from such payment. In addition, if the Taxes that the Company deducts or withholds are Indemnified Taxes, the Company shall increase the payment hereunder or under any such Loan Document such that after the reduction for the amount of such Taxes (and any Indemnified Taxes deducted or withheld with respect to the additional payments required under this Section 7.6(b)), the amounts received by the Lenders or the Administrative Agent equal the amounts that would have been received had no such deduction or withholding been made.
(c) If any Lender or the Administrative Agent is required by Law to make any payments of any Indemnified Taxes on or in relation to any amounts received or receivable hereunder or under any other Loan Document, or any Indemnified Tax is assessed against a Lender or the Administrative Agent with respect to amounts received or receivable hereunder or under any other Loan Document, the Company will indemnify such Person against (i) such Indemnified Taxes (and any reasonable expenses associated with such Indemnified Taxes) and (ii) any Indemnified Taxes imposed as a result of the receipt of the payment under this Section 7.6(c), whether or not such Indemnified Taxes were correctly or legally imposed or asserted by relevant taxing authority. A certificate prepared in good faith as to the amount of such payment by such Lender or the Administrative Agent (on its own behalf or on behalf of a Lender) shall, absent manifest error, be final, conclusive, and binding on all parties.
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(d) (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Company and the Administrative Agent, at the time or times reasonably requested by the Company or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Company or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Company or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Company or the Administrative Agent as will enable the Company or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.
(ii) Each Lender that is not a United States person within the meaning of Code Section 7701(a)(30) (a “Non-U.S. Lender”) shall deliver to the Company and the Administrative Agent on or prior to the Effective Date (or in the case of a Lender that is an assignee, on the date of such assignment to such Lender) two accurate and complete signed copies of IRS Form W-8BEN, W-8BEN-E, W-8ECI, or W-8IMY (or any successor or other applicable form prescribed by the IRS), as applicable, certifying to such Lender’s entitlement to a complete exemption from, or a reduced rate in, United States withholding tax on interest payments to be made hereunder or any Loan. If a Lender that is a Non-U.S. Lender is claiming a complete exemption from withholding on interest pursuant to Code Sections 871(h) or 881(c), the Lender shall deliver (along with two accurate and complete signed copies of IRS Form W-8BEN, or W-8BEN-E, as applicable) a certificate in form and substance reasonably acceptable to the Company and the Administrative Agent to the effect that such Non-U.S. Lender is not a “bank” within the meaning of Code Section 881(c)(3)(A), a “10-percent shareholder” of the Company within the meaning of Code Section 881(c)(3)(B), or a “controlled foreign corporation” described in Code Section 881(c)(3)(C) (any such certificate, a “Withholding Certificate”). In addition, each Lender that is a Non-U.S. Lender agrees that from time to time after the Effective Date (or in the case of a Lender that is an assignee, after the date of the assignment to such Lender), when a lapse in time or a change in circumstances renders the prior certificates hereunder obsolete or inaccurate, such Lender shall, to the extent permitted under applicable Law, deliver to the Company and the Administrative Agent two new and accurate and complete signed copies of IRS Form W-8BEN, W-8BEN-E, W-8ECI, or W-8IMY (or any successor or other applicable forms prescribed by the IRS), and if applicable, a new Withholding Certificate, to confirm or establish the entitlement to an exemption from, or reduction in, United States withholding tax on interest payments to be made hereunder or any Loan.
(iii) Each Lender that is a United States person within the meaning of Code Section 7701(a)(30) shall provide two properly completed and duly executed copies of IRS Form W-9 (or any successor or other applicable form) to the Company and the Administrative Agent on or prior to the Effective Date (or in the case of a Lender that is an assignee, on the date of such assignment to such Lender) certifying that such Lender is exempt from United States backup withholding tax. To the extent that a form provided pursuant to this Section 7.6(d)(iii) is rendered obsolete or inaccurate as result of a change in circumstances with respect to the status of a Lender, such Lender shall, to the extent permitted by applicable Law, deliver to the Company and the Administrative Agent revised forms necessary to confirm or establish the entitlement to such Lender’s exemption from United States backup withholding tax.
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(iv) If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Company and the Administrative Agent at the time or times prescribed by Law and at such time or times reasonably requested by the Company or the Administrative Agent such documentation prescribed by applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Company or the Administrative Agent as may be necessary for the Company and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this Section 7.6(d)(iv), “FATCA” shall include any amendments made to FATCA after the Effective Date.
(v) Each Lender agrees to indemnify and hold harmless the Administrative Agent for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Company has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Company to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 15.5(c) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. This indemnification shall be made within 30 days from the date the Administrative Agent makes written demand therefor.
(e) If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any taxes as to which it has been indemnified pursuant to this Section 7.6 (including by the payment of additional amounts pursuant to this Section 7.6), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 7.6 with respect to the Taxes giving rise to such refund), net of all reasonable out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (e) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (e), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (e) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
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(f) Each party’s obligations under this Section 7.6 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS.
8.1 Increased Costs.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including any compulsory loan requirement, insurance charge or other assessment) against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or Issuing Bank;
(ii) impose on any Lender or Issuing Bank or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein; or
(iii) subject any Recipient to any Taxes (other than (A) Taxes on or in relation to any amounts received or receivable under any Loan Document, (B) Excluded Taxes, (C) Other Connection Taxes and (D) Other Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto;
and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, continuing, converting or maintaining any Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender, such Issuing Bank or such other Recipient of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender, such Issuing Bank or such other Recipient hereunder (whether of principal, interest or otherwise), then the Company will pay to such Lender, such Issuing Bank or such other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, such Issuing Bank or such other Recipient, as the case may be, for such additional costs incurred or reduction suffered.
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(b) If any Lender or Issuing Bank determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s or Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below that which such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or Issuing Bank’s policies and the policies of such Lender’s or Issuing Bank’s holding company with respect to capital adequacy and liquidity), then from time to time the Company will pay to such Lender or Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company for any such reduction suffered.
(c) A certificate of a Lender or Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section 8.1 shall be delivered to the Company and shall be conclusive absent manifest error. The Company shall pay such Lender or Issuing Bank, as the case may be, the amount shown as due on any such certificate within 30 days after receipt thereof.
(d) Notwithstanding the foregoing, no Lender or Issuing Bank shall be entitled to seek compensation under this Section 8.1 based on the occurrence of a Change in Law arising solely from (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act or any requests, rules, guidelines or directives thereunder or issued in connection therewith or (y) Basel III or any requests, rules, guidelines or directives thereunder or issued in connection therewith, unless such Lender or Issuing Bank is generally seeking compensation from other borrowers in the U.S. leveraged loan market with respect to its similarly affected commitments, loans and/or participations under agreements with such borrowers having provisions similar to this Section 8.1.
(e) Failure or delay on the part of any Lender or Issuing Bank to demand compensation pursuant to this Section 8.1 shall not constitute a waiver of such Lender’s or Issuing Bank’s right to demand such compensation; provided that the Company shall not be required to compensate a Lender or Issuing Bank pursuant to this Section 8.1 for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or Issuing Bank, as the case may be, notifies the Company of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or Issuing Bank’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
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8.2 Alternate Rate of Interest.
(a) Subject to clauses (b), (c), (d), (e), (f) and (g) of this Section 8.2, if prior to the commencement of any Interest Period for a LIBOR Borrowing:
(i) the Administrative Agent reasonably determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate (including because the LIBO Screen Rate is not available or published on a current basis), for such Interest Period; provided that no Benchmark Transition Event shall have occurred at such time; or
(ii) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their LIBOR Loans included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Company and the Lenders by telephone, telecopy or electronic mail as promptly as practicable thereafter and, until the Administrative Agent notifies the Company and the Lenders that the circumstances giving rise to such notice no longer exist, which the Administrative Agent agrees promptly to do, (A) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a LIBOR Borrowing shall be ineffective and (B) if any Borrowing Request requests a LIBOR Borrowing, such Borrowing shall be made as a Base Rate Borrowing; provided that if the circumstances giving rise to such notice affect only one Type of Borrowings, then the other Type of Borrowings shall be permitted.
(b) Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) or (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (3) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders.
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(c) Notwithstanding anything to the contrary herein or in any other Loan Document and subject to the proviso to this paragraph, if a Term SOFR Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then the applicable Benchmark Replacement will replace the then-current Benchmark for all purposes hereunder or under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document; provided that, this clause (c) shall not be effective unless the Administrative Agent has delivered to the Lenders and the Company a Term SOFR Notice. For the avoidance of doubt, the Administrative Agent shall not be required to deliver a Term SOFR Notice after a Term SOFR Transition Event and may do so in its reasonable discretion.
(d) In connection with the implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.
(e) The Administrative Agent will promptly notify the Company and the Lenders of (i) any occurrence of a Benchmark Transition Event, a Term SOFR Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes, (iv) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (f) below and (v) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 8.2, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their reasonable discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 8.2.
(f) Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR or the Adjusted LIBO Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Administrative Agent may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.
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(g) Upon the Company’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Company may revoke any request for a LIBOR Borrowing of, conversion to or continuation of LIBOR Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Company will be deemed to have converted any such request into a request for a Borrowing of or conversion to Base Rate Loans. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of Base Rate.
8.3 Funding Losses. The Company hereby agrees that upon demand by any Lender (which demand shall be accompanied by a statement setting forth the basis for the amount being claimed, a copy of which shall be furnished to the Administrative Agent), the Company will indemnify such Lender against any net loss or expense which such Lender may sustain or incur (including any net loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund or maintain any LIBOR Loan but excluding a loss of profits), as reasonably determined by such Lender, as a result of (a) any payment, prepayment or conversion of any LIBOR Loan of such Lender on a date other than the last day of an Interest Period for such Loan (including any conversion pursuant to Section 8.2) or (b) any failure of the Company to borrow, convert or continue any Loan on a date specified therefor in a Borrowing Request or Interest Election Request pursuant to this Agreement.
8.4 Right of Lenders to Fund through Other Offices. Each Lender may, if it so elects, fulfill its commitment as to any LIBOR Loan by causing a foreign branch or Affiliate of such Lender to make such Loan; provided that in such event for the purposes of this Agreement such Loan shall be deemed to have been made by such Lender and the obligation of the Company to repay such Loan shall nevertheless be to such Lender and shall be deemed held by it, to the extent of such Loan, for the account of such branch or Affiliate.
8.5 Discretion of Lenders as to Manner of Funding. Notwithstanding any provision of this Agreement to the contrary, each Lender shall be entitled to fund and maintain its funding of all or any part of its Loans in any manner it sees fit, it being understood, however, that for the purposes of this Agreement all determinations hereunder shall be made as if such Lender had actually funded and maintained each LIBOR Loan during each Interest Period for such Loan through the purchase of deposits having a maturity corresponding to such Interest Period and bearing an interest rate equal to the Adjusted LIBO Rate for such Interest Period.
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8.6 Mitigation of Circumstances; Replacement of Lenders.
(a) Each Lender shall promptly notify the Company and the Administrative Agent of any event of which it has knowledge which will result in, and will use reasonable commercial efforts available to it (and not, in such Lender’s sole judgment, otherwise disadvantageous to such Lender) to mitigate or avoid, (i) any obligation by the Company to pay any amount pursuant to Section 7.6 or 8.1 or (ii) the occurrence of any circumstances described in Section 8.2 (and, if any Lender has given notice of any such event described in clause (i) or (ii) above and thereafter such event ceases to exist, such Lender shall promptly so notify the Company and the Administrative Agent). Without limiting the foregoing, each Lender will designate a different funding office if such designation will avoid (or reduce the cost to the Company of) any event described in clause (i) or (ii) above and such designation will not, in such Lender’s sole judgment, be otherwise disadvantageous to such Lender.
(b) If the Company becomes obligated to pay additional amounts to any Lender pursuant to Section 7.6 or 8.1, or any Lender gives notice of the occurrence of any circumstances described in Section 8.1 or 8.3, the Company may designate another bank which is reasonably acceptable to the Administrative Agent and each Issuing Bank in their reasonable discretion (such other bank being called a “Replacement Lender”) to purchase the Loans of such Lender and such Lender’s rights hereunder, without recourse to or warranty by, or expense to, such Lender, for a purchase price equal to the outstanding principal amount of the Loans payable to such Lender plus any accrued but unpaid interest on such Loans and all accrued but unpaid fees owed to such Lender and any other amounts payable to such Lender under this Agreement, and to assume all the obligations of such Lender hereunder provided (i) in the case of any assignment resulting from a claim for payment under Section 7.6 or 8.1, such assignment will result in a reduction in such payments, (ii) such assignment does not conflict with applicable law and (iii) in the case of any proposed amendment, waiver or consent requiring the consent of “each Lender” or “each Lender directly affected thereby” (or any other class or group of Lenders other than the Required Lenders) with respect to which Required Lender consent (or the consent of Lenders holding loans or commitments of such Class or lesser group representing more than 50% of the sum of the total loans and unused commitments of such Class or lesser group at such time) has been obtained, as applicable, any Lender becoming a non-consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent. Upon such purchase and assumption (pursuant to an Assignment and Assumption), such Lender shall no longer be a party hereto or have any rights hereunder (other than rights with respect to indemnities and similar rights applicable to such Lender prior to the date of such purchase and assumption) and shall be relieved from all obligations to the Company hereunder, and the Replacement Lender shall succeed to the rights and obligations of such Lender hereunder. Each Lender agrees that if it is replaced pursuant to this Section 8.6, it shall execute and deliver to the Administrative Agent an Assignment and Assumption to evidence such sale and purchase and shall deliver to the Administrative Agent any Note (if the assigning Lender’s Loans are evidenced by one or more Notes) subject to such Assignment and Assumption (provided that the failure of any Lender replaced pursuant to this Section 8.6to execute an Assignment and Assumption or deliver any such Note shall not render such sale and purchase (or the corresponding assignment) invalid), such assignment shall be recorded in the Register and any such Note shall be deemed cancelled. In connection with any replacement under this Section 8.6, if the replaced Lender does not execute and deliver to the Administrative Agent a duly executed Assignment and Assumption by the time all Obligations of the Company owing to such Lender have been paid in full to such replaced Lender (other than in respect of contingent indemnification claims as to which no claim has been asserted), then such replaced Lender shall be deemed to have executed and delivered such Assignment and Assumption.
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8.7 Conclusiveness of Statements. Any Lender requesting compensation under Section 8.1or 8.3 shall be required to deliver a certificate to the Company that (A) sets forth any amount or amounts that such Lender is entitled to receive pursuant to this Section, the basis therefor and, in reasonable detail, the manner in which such amount or amounts were determined and (B) certifies that such Lender is generally charging the relevant amounts to similarly situated borrowers, which certificate shall be conclusive absent manifest error.
SECTION 9 REPRESENTATIONS AND WARRANTIES.
To induce the Administrative Agent and the Lenders to enter into this Agreement and to induce the Lenders to make Loans and issue and participate in Letters of Credit hereunder, the Company represents and warrants to the Administrative Agent and the Lenders that:
9.1 Organization. (a) Each of the Company and its Subsidiaries is validly existing and, to the extent such concept is applicable in the relevant jurisdiction, in good standing under the Laws of its jurisdiction of organization; and (b) each of the Company and its Subsidiaries is duly qualified to do business in each jurisdiction where, because of the nature of its activities or properties, such qualification is required, except for such jurisdictions where the failure to so qualify would not have a Material Adverse Effect.
9.2 Authorization; No Conflict. (a) The execution, delivery and performance by each Loan Party of each Loan Document to which it is a party has been duly authorized by all necessary action on the part of each Loan Party that is party thereto and each such Loan Document has been duly executed and delivered by each such Loan Party party thereto and (b) the execution, delivery and performance by each Loan Party of each Loan Document to which it is a party, and the borrowings by the Company hereunder, do not (i) require any consent or approval of, filing with or notice to, any Governmental Authority or any other Person (other than any consent or approval which has been obtained or filing or notice which has been made, and, in each case, which is in full force and effect), (ii) conflict with (A) any provision of Law, (B) the charter, by-laws or other organizational documents of the Company or any Subsidiary or (C) any agreement, indenture, instrument or other document, or any judgment, order or decree, which is binding upon the Company, any Subsidiary or any of their respective properties, except with respect to clauses (A) or (C) to the extent such conflict would not have a Material Adverse Effect or (iii) require, or result in, the creation or imposition of any Lien on any asset of any Loan Party other the creation or imposition of any Lien pursuant to the Security Documents.
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9.3 Validity and Binding Nature. Each Loan Document to which any Loan Party is a party is the legal, valid and binding obligation of such Person, enforceable against such Person in accordance with its terms, subject to bankruptcy, insolvency and similar Laws affecting the enforceability of creditors’ rights generally and to general principles of equity.
9.4 Financial Condition.
(a) The Company has heretofore furnished to the Lenders its consolidated balance sheet and consolidated statements of operations and comprehensive income, stockholders’ equity and cash flows (i) as of and for the Fiscal Year ended December 31, 2019, audited by and accompanied by an opinion of RSM US LLP, independent public accountants (without a “going concern” or like qualification and without any qualification as to the scope of such audit) and (ii) as of and for the Fiscal Quarter and the portion of the Fiscal Year ended September 30, 2020 (and comparable periods for the prior Fiscal Year). Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Company and its Subsidiaries on a consolidated basis as of such dates and for such periods in all material respects accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes in the case of the statements referred to in clause (ii) above.
9.5 No Material Adverse Change. Since December 31, 2019, there has been no event or condition that has had either individually or in the aggregate, a Material Adverse Effect.
9.6 Litigation and Guarantee Obligations. No litigation (including derivative actions), arbitration proceeding or governmental investigation or proceeding is pending or, to the Company’s knowledge, threatened against the Company or any Subsidiary which would reasonably be expected to have a Material Adverse Effect. As of the Effective Date, none of the Company or any Subsidiary has any Guarantee Obligations that are not in the ordinary course of business and that are not listed on Schedule 9.6 or permitted by Section 11.1.
9.7 Ownership of Properties; Liens. Each of the Company and its Subsidiaries owns good and, in the case of real property, record title to all of the properties (including the Mortgaged Properties) and assets, real and personal, tangible and intangible, of any nature whatsoever which are material to its business which it purports to own or which are reflected in its financial statements (except for personal property sold in the ordinary course of business after the date of such financial statements), free and clear of all Liens, charges and claims except as permitted by Section 11.2, in each case, except (i) for defects in title that do not materially interfere with their ability to conduct their business as currently conducted or to utilize such properties and assets for their intended purposes or (ii) where the failure to have such title would not reasonably be expected to have a Material Adverse Effect.
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9.8 Equity Ownership; Subsidiaries. Schedule 9.8 describes each Subsidiary as of the Effective Date and identifies the ownership of each Subsidiary. As of the Effective Date, except as identified on Schedule 9.8, there are no pre-emptive or other outstanding rights, options, warrants, conversion rights or other similar agreements or understandings for the purchase or acquisition of any Equity Interests of any Subsidiary.
9.9 Pension Plans.
(a) The Unfunded Liability of all Pension Plans does not in the aggregate exceed 20% of the Total Plan Liability for all such Pension Plans. Each Pension Plan complies in all material respects with all applicable requirements of Law and regulations. No failure to make contributions under Section 412 of the Code, Section 302 of ERISA or the terms of any Pension Plan has occurred with respect to any Pension Plan, sufficient to give rise to a Lien under Section 303(k) of ERISA, or otherwise to have a Material Adverse Effect. There are no pending or, to the knowledge of the Company, threatened, claims, actions, investigations or lawsuits against any Pension Plan, any fiduciary of any Pension Plan, or the Company or other any member of the Controlled Group with respect to a Pension Plan or a Multiemployer Pension Plan which could reasonably be expected to have a Material Adverse Effect. Neither the Company nor any other member of the Controlled Group has engaged in any prohibited transaction (within the meaning of Section 4975 of the Code or Section 406 of ERISA) in connection with any Pension Plan or Multiemployer Pension Plan which would subject that Person to any material liability. Within the past five years, neither the Company nor any other member of the Controlled Group has engaged in a transaction which resulted in a Pension Plan with an Unfunded Liability being transferred out of the Controlled Group, which could reasonably be expected to have a Material Adverse Effect. No Termination Event has occurred or is reasonably expected to occur which could reasonably be expected to have a Material Adverse Effect.
(b) All contributions (if any) have been made to any Multiemployer Pension Plan that are required to be made by the Company or any other member of the Controlled Group under the terms of the plan or of any collective bargaining agreement or by applicable Law; neither the Company nor any other member of the Controlled Group has withdrawn or partially withdrawn from any Multiemployer Pension Plan, incurred any withdrawal liability with respect to any such plan or received notice of any claim or demand for withdrawal liability or partial withdrawal liability from any such plan, and no condition has occurred which, if continued, could result in a withdrawal or partial withdrawal from any such plan; and neither the Company nor any other member of the Controlled Group has received any notice that any Multiemployer Pension Plan is in endangered or critical status (within the meaning of Section 432 of the Code or Section 305 of ERISA), that increased contributions may be required to avoid a reduction in plan benefits or the imposition of any excise tax, that any such plan is or has been funded at a rate less than that required under Section 412 of the Code, that any such plan is or may be terminated, or that any such plan is or may become insolvent.
9.10 Investment Company Act. None of the Company or any Subsidiary is an “investment company” or a company “controlled” by an “investment company” or a “subsidiary” of an “investment company,” within the meaning of the Investment Company Act of 1940.
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9.11 Regulation U, T, and X. The Company is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock. None of the proceeds of any Loans will be used for any purpose which violates the provisions of Regulation U, Regulation T or Regulation X.
9.12 Taxes. Each of the Company and its Subsidiaries has timely filed all Tax returns and reports required by Law to have been filed by it and has paid all Taxes and governmental charges due and payable with respect to such returns and reports, except any such Taxes or charges which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books or where the failure to file such returns and reports or to pay such Taxes or charges could not reasonably be expected to have a Material Adverse Effect. The Company and its Subsidiaries have made adequate reserves on their books and records in accordance with GAAP for all Taxes that have accrued but which are not yet due and payable. None of the Company or any Subsidiary has participated in any transaction that relates to a year of the taxpayer (which is still open under the applicable statute of limitations) which is a “listed transaction” within the meaning of Section 6707A(c)(2) of the Code and Treasury Regulation Section 1.6011-4(b)(2) (irrespective of the date when the transaction was entered into).
9.13 Solvency, etc. On the Effective Date, immediately after giving effect to the issuance of each Letter of Credit and the borrowing if any made on the Effective Date and the use of the proceeds thereof, the Company and its Subsidiaries on a consolidated basis, are Solvent.
9.14 Environmental Matters. Each of the Company and its Subsidiaries complies is in compliance with all Environmental Laws, except such non-compliance which could not (if enforced in accordance with applicable Law) reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect. Each of the Company and its Subsidiaries has obtained, and maintained in good standing, all licenses, permits, authorizations, registrations and other approvals required under any Environmental Law for their respective operations, and for their reasonably anticipated future operations, and each of the Company and its Subsidiaries is in compliance with all terms and conditions thereof, except where the failure to do so could not reasonably be expected to result in material liability to the Company or any Subsidiary, or, either individually or in the aggregate, in a Material Adverse Effect. None of the Company or its Subsidiaries and none of their respective properties or operations is subject to any written order from or agreement with any Governmental Authority, and none of the Company or any Subsidiary and none of their respective properties or operations is subject to any pending, or to the Company’s knowledge threatened litigation, arbitration, investigation or other proceeding, respecting any Environmental Law, Environmental Claim or Hazardous Substance, except with respect to orders, agreements, litigation, arbitration, investigations or other proceedings that could not reasonably be expected to result in material liability to the Company or any Subsidiary, or, either individually or in the aggregate, in a Material Adverse Effect. There are no Hazardous Substances or other environmental conditions or circumstances existing with respect to any property currently owned, leased or operated by the Company or any Subsidiary or, to the Company’s knowledge, any other location (including any site at which the Company has disposed or arranged for the disposal of Hazardous Substances) or relating to any release or threatened release of any Hazardous Substance, which would reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.
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9.15 Insurance. Set forth on Schedule 9.15 is a complete and accurate summary of the property and casualty insurance program of the Company and its Subsidiaries as of the Effective Date (including the names of all insurers, policy numbers, expiration dates, amounts and types of coverage, deductibles and self-insured retention).Each of the Company, its Subsidiaries and their respective properties are insured with financially sound and reputable insurance companies, in at least such amounts (after giving effect to self-insurance) which the Company (in the good faith judgment of the management of the Company) believes is reasonable and prudent in light of the size and nature of its business).
9.16 Real Property. Set forth on Schedule 9.16 is a complete and accurate list, as of the Effective Date, of the addresses of all real property owned by the Company or any Subsidiary.
9.17 Information. As of the Effective Date, all information heretofore or contemporaneously herewith furnished in writing by the Company or any Subsidiary to the Administrative Agent or any Lender for purposes of or in connection with this Agreement and the transactions contemplated hereby is, and all written information hereafter furnished by or on behalf of the Company or any Subsidiary to the Administrative Agent or any Lender pursuant hereto or in connection herewith (in each case, other than projections, other forward-looking information and information of a general economic or general industry nature) when taken as a whole, did not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made (after giving effect to all supplements and updates thereto from time to time prior to the Effective Date). All financial projections concerning the Company and its Subsidiaries heretofore or contemporaneously herewith furnished in writing by the Company or any Subsidiary to the Administrative Agent or any Lender for purposes of or in connection with this Agreement and the transactions contemplated hereby are, and all such financial projections hereafter furnished by or on behalf of the Company or any Subsidiary to the Administrative Agent or any Lender pursuant hereto or in connection herewith will be, prepared in good faith based upon assumptions believed by the Company to be reasonable at the time furnished (it being recognized by the Administrative Agent and the Lenders that (w) financial projections are as to future events and are not to be viewed as facts, (x) financial projections are subject to significant uncertainties and contingencies, many of which are beyond the Company or any Subsidiaries’ control, (y) no assurance can be given that any particular financial projections will be realized and (z) actual results during the period or periods covered by any such financial projections may differ significantly from the projected results and such differences may be material).
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9.18 Intellectual Property. Each of the Company and its Subsidiaries owns and possesses or has a license or other right to use all patents, patent rights, trademarks, trademark rights, trade names, trade name rights, service marks, service mark rights, copyrights, license and other intellectual property rights as are necessary for the conduct of the businesses of the Company and its Subsidiaries, and does not infringe upon any rights of any other Person which could reasonably be expected to have a Material Adverse Effect.
9.19 Labor Matters. Except as set forth on Schedule 9.19, none of the Company or any Subsidiary is subject to any labor or collective bargaining agreement. There are no existing or, to the Company’s knowledge, threatened strikes, lockouts or other labor disputes involving the Company or any Subsidiary that singly or in the aggregate could reasonably be expected to have a Material Adverse Effect. Hours worked by and payment made to employees of the Company and its Subsidiaries are not in violation of the Fair Labor Standards Act or any other applicable Law dealing with such matters except any violation which could not reasonably be expected to have a Material Adverse Effect.
9.20 No Default. No Event of Default or Unmatured Event of Default has occurred or is continuing.
9.21 Material Licenses. All Material Licenses have been obtained or exist for each of the Company and its Subsidiaries.
9.22 Compliance with Material Laws. To the Company’s knowledge, each of the Company and its Subsidiaries is in compliance with all Material Laws except to the extent that any relevant violation would not reasonably be expected to have a Material Adverse Effect.
9.23 Subordinated Debt. The subordination provisions of the Subordinated Debt (if any) are enforceable against the holders of the Subordinated Debt by the Administrative Agent and the Lenders. All Obligations constitute Debt which is senior to the Subordinated Debt and entitled to the benefits of the subordination provisions contained in the Subordinated Debt Documents, if any.
9.24 Collateral Matters. Subject to exceptions and limitations set forth herein or therein, the Security Documents, upon execution and delivery thereof by the parties thereto and the making of the filings and taking of the other required actions will be effective under applicable law to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a valid and enforceable security interest in the Collateral subject thereto, and such Lien will constitute a perfected security interest in all right, title and interest of the Loan Parties in the Collateral subject thereto, prior and superior to the rights of any other Person, except for rights secured by Liens permitted under Section 11.2.
9.25 PATRIOT Act; OFAC; Sanctions and Anti-Corruption and Anti-Money Laundering Laws.
(a) PATRIOT Act. To the extent applicable, each of the Company and its Subsidiaries is in compliance in all material respects with the Patriot Act.
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(b) Other Laws. The Company and its Subsidiaries are in compliance, in all material respects, with Anti-Corruption Laws, including, for the avoidance of doubt, the United States Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”) and the UK Bribery Act of 2010.
(c) Sanctions. The Company has implemented and maintains in effect policies and procedures reasonably designed to ensure compliance by the Company and its Subsidiaries and their respective directors and officers, and to the knowledge of the Company, their respective employees with the FCPA and applicable Sanctions, and the Company and its Subsidiaries and, to the knowledge of the Company, their respective officers, employees and directors, are in compliance with the FCPA and applicable Sanctions in all material respects and are not knowingly engaged in any activity that would reasonably be expected to result in the Company or any Subsidiary being designated as a Sanctioned Person. None of the Company or its Subsidiaries or, to the knowledge of Company or such Subsidiary, any of their respective directors, officers, employees is a Sanctioned Person.
(d) Use of Proceeds. No part of the proceeds of the Loans or Letters of Credit will be used by the Company or its Subsidiaries, directly or, to the knowledge of the Company, indirectly, (i) for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the FCPA, (ii) in violation of Sanctions or (iii) in violation of the FCPA or other applicable anti-terrorism Laws and anti-money laundering Laws, including, for the avoidance of doubt, the Patriot Act.
SECTION 10 AFFIRMATIVE COVENANTS.
From and after the Effective Date and until the Termination Date and thereafter until all Obligations hereunder and under the other Loan Documents are paid in full (other than contingent amounts not yet due) and all Letters of Credit have been terminated, expired or Cash Collateralized, the Company agrees that, unless at any time the Required Lenders shall otherwise expressly consent in writing, it will:
10.1 Reports, Certificates and Other Information. Furnish to the Administrative Agent for further distribution by the Administrative Agent to each Lender:
10.1.1 Annual Financial Statements. Within ninety days after the end of each Fiscal Year (or, following a Qualified IPO, such later date as may be permitted by the SEC for the filing of the Annual Report on Form 10-K by the IPO Entity with the SEC) a copy of the annual audit report of the Company (or, following a Qualified IPO, the IPO Entity) and its Subsidiaries for such Fiscal Year, including therein consolidated balance sheets and statements of operations and cash flows of the Company (or, following a Qualified IPO, the IPO Entity) and its Subsidiaries as at the end of such Fiscal Year, which report shall be unqualified as to “going concern” and scope of audit (except for any such qualification solely with respect to or resulting from an upcoming maturity of any Debt of the Company or its Subsidiaries or any potential inability to satisfy any financial maintenance covenant on a future date or in a future period (or, other than in the case of any financial maintenance covenant included herein, any actual inability to satisfy any financial maintenance covenant on a future date or in a future period)) by independent auditors of recognized standing selected by the Company (or, following a Qualified IPO, the IPO Entity); provided that the Company shall be deemed to have delivered and certified the information required in this Section 10.1.1 to the extent, and on the date, that such information is posted at the Company’s website on the internet at www.brighthealthplan.com, at www.sec.gov, or at such other website identified by the Company, in all cases so long as such website is accessible by the Administrative Agent and the Lenders without charge.
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10.1.2 Quarterly Financial Statements. Promptly when available and in any event within forty-five days after the end of each Fiscal Quarter (or, following a Qualified IPO, such later date as may be permitted by the SEC for the filing of the Form 10-Q by the IPO Entity with the SEC) (other than the fourth Fiscal Quarter of each Fiscal Year), consolidated balance sheets of the Company(or, following a Qualified IPO, the IPO Entity) and its Subsidiaries as of the end of such Fiscal Quarter, together with consolidated statements of income and consolidated statements of cash flows for such Fiscal Quarter and for the period beginning with the first day of such Fiscal Year and ending on the last day of such Fiscal Quarter; provided that the Company shall be deemed to have delivered and certified the information required in this Section 10.1.2 to the extent, and on the date, that such information is posted at the Company’s website on the internet at www.brighthealthplan.com, at www.sec.gov, or at such other website identified by the Company, in all cases so long as such website is accessible by the Administrative Agent and the Lenders without charge.
10.1.3 Compliance Certificates. No later than 5 Business Days after the date that each annual audit report is required to be furnished pursuant to Section 10.1.1 and each set of quarterly statements is required to be furnished pursuant to Section 10.1.2, a duly completed compliance certificate in the form of Exhibit B, with appropriate insertions, dated the date of such annual report or such quarterly statements and signed by a Responsible Officer of the Company, containing (i) in respect of Section 10.1.2, a certification of such Responsible Officer that the financial statements accompanying such compliance certificate have been prepared in all material respects in accordance with GAAP applied consistently throughout the periods covered thereby and with prior periods (except as otherwise expressly indicated therein, including the notes thereto), (ii) a computation of each of the applicable financial ratios and restrictions set forth in Section 11.12 and to the effect that such officer has not become aware of any Event of Default or Unmatured Event of Default as of the last day of the Fiscal Quarter or the Fiscal Year has occurred and is continuing or, if there is any such event, describing it and the steps, if any, being taken to cure it and (iii) prior to a Qualified IPO, a written statement of the Company’s management setting forth a discussion of the Company’s financial condition, changes in financial condition and results of operations.
10.1.4 Reports to the SEC and to Shareholders. Promptly upon the filing or sending thereof, copies of all regular, periodic or special reports of the Company or any Subsidiary filed with the SEC; copies of all registration statements of the Company or any Subsidiary filed with the SEC (other than on Form S-8); and copies of all proxy statements or other communications made to public security holders generally; provided that the Company shall be deemed to have delivered and certified the information required in this Section 10.1.4 to the extent, and on the date, that such information is posted at the Company’s website on the internet at www.brighthealthplan.com, at www.sec.gov, or at such other website identified by the Company, in all cases so long as such website is accessible by the Administrative Agent and the Lenders without charge.
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10.1.5 Notice of Default and Litigation Matters. Promptly after a Responsible Officer of the Company obtains actual knowledge of any of the following, written notice describing the same and the steps being taken by the Company or the Subsidiary affected thereby with respect thereto:
(a) the occurrence of an Event of Default or an Unmatured Event of Default;
(b) any litigation, arbitration, investigation or proceeding not previously disclosed by the Company to the Lenders which has been instituted or, to the knowledge of the Company, is threatened against the Company or any of its Subsidiaries or to which any of the properties of any thereof is subject which could reasonably be expected to result in a Material Adverse Effect;
(c) the receipt of any written notice from any Governmental Authority (i) of the expiration without renewal, revocation or suspension of, or the institution of any proceedings to revoke or suspend, any Material License now or hereafter held by the Company or any Insurance Subsidiary which is required to conduct insurance business in compliance with all applicable laws and regulations and the expiration, revocation or suspension of which could reasonably be expected to have a Material Adverse Effect or (ii) of the institution of any disciplinary proceedings against or in respect of the Company or any Insurance Subsidiary, or the issuance of any order, the taking of any action or any request for a for-cause audit by the U.S. Department of Health and Human Services which could reasonably be expected to have a Material Adverse Effect;
(d) any violation by any Insurance Subsidiary of the minimum statutory net worth requirements imposed by any Governmental Authority to which such Insurance Subsidiary is subject which could reasonably be expected to result in a Material Adverse Effect; and
(e) any other event (including (i) any violation of any Environmental Law or the assertion of any Environmental Claim or (ii) the effectiveness of any federal statute) which could reasonably be expected to result in a Material Adverse Effect.
10.1.6 Budgets. Within 90 days after the end of each Fiscal Year, commencing with a budget for the Fiscal Year ending December 31, 2022, a budget for such Fiscal Year for the Company and its Subsidiaries as customarily prepared by management of the Company for its internal use (including, in any event, a projected consolidated statement of operations and a statement of projected cash flow of the Company and its Subsidiaries for the current Fiscal Year but not a projected consolidated balance sheet).
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10.1.7 Monthly Liquidity. No later than five Business Days after the end of each calendar month ending prior to the date of a Qualified IPO, a reasonably detailed computation of Minimum Liquidity as of the end of such calendar month.
10.1.8 Other Information. With reasonable promptness, but subject to the limitations set forth in the last sentence of Section 10.2 and Section 15.8, such other information (financial or otherwise) as the Administrative Agent on its own behalf or on behalf of any Lender may reasonably request in writing from time to time.
10.2 Books, Records and Inspections. Keep, and cause each Subsidiary to keep, its books and records in accordance with sound business practices sufficient to allow the preparation of financial statements in accordance with GAAP; permit, and cause each Subsidiary to permit, any Lender or the Administrative Agent or any representative thereof, after reasonable notice and at reasonable times during normal business hours, to inspect the properties and operations of the Company and its Subsidiaries; and permit, and cause each Subsidiary to permit, at any reasonable times during normal business hours and with reasonable notice, the Administrative Agent or any representative thereof to visit any or all of its offices, to discuss its financial matters with its officers and its independent auditors (and the Company hereby authorizes such independent auditors to discuss such financial matters with any Lender or the Administrative Agent or any representative thereof) (provided that the Company (or any of its subsidiaries) may, if it so chooses, be present at or participate in any such discussion), and to examine (and, at the expense of the Company and its Subsidiaries, photocopy extracts from) any of its books or other records; and permit, and cause each Subsidiary to permit, the Administrative Agent and its representatives to inspect, at any reasonable times during normal business hours and with reasonable notice the tangible assets of the Company and its Subsidiaries, to perform appraisals, and to inspect, audit, check and make copies of and extracts from the books, records, computer data, computer programs, journals, orders, receipts, correspondence and other data relating to the Company and its Subsidiaries; provided that (x) except during the continuance of an Event of Default, the Administrative Agent shall not exercise such rights more often than one time during any calendar year and (y) only the Administrative Agent on behalf of the Lenders may exercise the rights of the Administrative Agent and the Lenders under this Section 10.2. All such inspections or audits by the Administrative Agent shall be at the Company’s expense; provided that so long as no Event of Default exists, the Company shall not be required to reimburse the Administrative Agent for inspections or audits more frequently than once each Fiscal Year. Notwithstanding anything to the contrary in this Section 10.2, none of the Company or its Subsidiaries will be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter that (a) constitutes non-financial trade secrets or non-financial proprietary information, (b) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by law or any binding agreement or (c) is subject to attorney-client or similar privilege or constitutes attorney work product.
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10.3 Maintenance of Property; Insurance.
(a) Keep, and cause each Subsidiary to keep, all property useful and necessary in the business of the Company and its Subsidiaries in good working order and condition, ordinary wear and tear excepted, except as expressly permitted by this Agreement or where the failure to do so would not reasonably be expected to have a Material Adverse Effect.
(b) Maintain, and cause each Subsidiary to maintain, with responsible insurance companies, such insurance coverage as may be required by any Law or court decree or order applicable to it and such other insurance, to such extent and against such hazards and liabilities, as is customarily maintained by companies similarly situated. Each policy of liability or casualty insurance maintained by or on behalf of the Company or any Subsidiary will (a) in the case of each liability insurance policy (other than workers’ compensation, director and officer liability or other policies in which such endorsements are not customary), name the Administrative Agent, on behalf of the Secured Parties, as an additional insured thereunder and (b) in the case of each casualty insurance policy, contain a lender’s loss payable clause or endorsement that names the Administrative Agent, on behalf of the Secured Parties, as the lender’s loss payee thereunder; provided that, the Company may satisfy such requirements within 60 days of the Effective Date (as extended by the Administrative Agent in its reasonable discretion).
10.4 Compliance with Laws; Payment of Taxes and Liabilities. (a) comply, and cause each Subsidiary to comply with all applicable Laws (including Environmental Laws) except where failure to comply could not reasonably be expected to have a Material Adverse Effect; (b) without limiting clause (a) above, comply, and cause each Subsidiary to comply, with all applicable Bank Secrecy Act and anti-money laundering Laws in all material respects, (c) maintain in effect and enforce policies and procedures reasonably designed to ensure compliance by the Company and its Subsidiaries and their respective directors, officers and employees with Anti-Corruption Laws and applicable Sanctions and (d) pay, and cause each Subsidiary to pay, prior to delinquency, all Taxes and other governmental charges against it, as well as claims of any kind which, if unpaid, could become a Lien on any of its property; provided that the foregoing shall not require the Company or any Subsidiary to pay any such Tax or charge (i) so long as it shall contest the validity thereof in good faith by appropriate proceedings and shall set aside on its books adequate reserves with respect thereto in accordance with GAAP or (ii) where the failure to pay such Tax or charge could not reasonably be expected to have a Material Adverse Effect.
10.5 Maintenance of Existence; Material Licenses. Maintain and preserve, and (subject to Section 11.4) cause each Subsidiary to maintain and preserve, (a) to the extent such concept is applicable in the relevant jurisdiction, (i) its existence except, other than with respect to the preservation of the existence of the Company, to the extent that the failure to do so would not reasonably be expected to result in a Material Adverse Effect and (ii) good standing in the jurisdiction of its organization, and its qualification to do business and good standing in each jurisdiction where the ownership, lease or operation of its properties or conduct of its business requires such qualification (other than such jurisdictions in which the failure to be qualified or in good standing, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect) and (b) all Material Licenses of each of the Company and its Subsidiaries.
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10.6 Use of Proceeds. Use the proceeds of the Loans, and the Letters of Credit to (a) finance ongoing working capital requirements and for other general corporate purposes of the Company and its Subsidiaries and (b) pay the Transaction Costs; and not use or permit any proceeds of any Loan to be used (a) for the purpose, whether immediate, incidental or ultimate, of “purchasing or carrying” any Margin Stock or (b)(i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of the FCPA, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country in violation of Sanctions or (iii) in any other manner that would result in the violation of any Sanctions applicable to any party hereto.
10.7 Employee Benefit Plans.
(a) Maintain, and cause each other member of the Controlled Group to maintain, each Pension Plan in substantial compliance with all applicable requirements of Law and regulations, unless the actions or events individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect.
(b) Make, and cause each other member of the Controlled Group to make, on a timely basis, all required contributions to any Pension Plan or Multiemployer Pension Plan unless the actions or events individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect.
(c) Not, and not permit any other member of the Controlled Group to (i) seek a waiver of the minimum funding standards of ERISA, (ii) terminate or withdraw from any Pension Plan or Multiemployer Pension Plan or (iii) take any other action with respect to any Pension Plan that would reasonably be expected to entitle the PBGC to terminate, impose liability in respect of, or cause a trustee to be appointed to administer, any Pension Plan, unless the actions or events described in clauses (i), (ii) and (iii) individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect.
10.8 Environmental Matters. If any release or threatened release of Hazardous Substances shall occur or shall have occurred on any real property or any other assets of the Company or any Subsidiary for which the Company could be held liable pursuant to applicable Environmental Law, the Company shall, or shall cause the applicable Subsidiary or shall make commercially reasonable efforts to cause the other responsible party to, undertake the prompt containment and removal of such Hazardous Substances and the remediation of such real property or other assets as necessary to comply with all Environmental Laws and to preserve the value of such real property or other assets except to the extent such non-compliance would not reasonably be expected to have a Material Adverse Effect. Without limiting the generality of the foregoing, the Company shall, and shall cause each Subsidiary or shall make commercially reasonable efforts to cause the other responsible party to, comply with any all requirements of any Governmental Authority relating to the performance of activities in response to the release or threatened release of a Hazardous Substance except to the extent such non-compliance would not reasonably be expected to have a Material Adverse Effect.
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10.9 [Reserved].
10.10 Further Assurances.
(a) The Company will, and will cause each Subsidiary Loan Party to, execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents), that may be required under any applicable law, or that is deemed necessary upon request of the Administrative Agent, to cause the Collateral and Guarantee Requirement to be and remain satisfied, all at the expense of the Loan Parties.
(b) If any material assets (including any fee owned Material Real Property, other than any Excluded Assets) are acquired by the Company or any Subsidiary Loan Party after the Effective Date (other than assets constituting Collateral under the Collateral Agreement that become subject to the Lien created by the Collateral Agreement upon acquisition thereof), the Company will notify the Administrative Agent, and, if requested by the Administrative Agent or the Required Lenders, the Company will cause such assets to be subjected to a Lien securing the Secured Obligations within the period required by the Collateral and Guarantee Requirement and will take, and cause the Subsidiary Loan Parties to take, such actions as shall be required by applicable law or that are necessary as reasonably requested by the Administrative Agent to grant and perfect such Liens to the extent required by the Collateral and Guarantee Requirement, including actions described in paragraph (a) of this Section 10.10, all at the expense of the Loan Parties.
(c) No subsidiary that is an Excluded Subsidiary shall be required to take any action described in this Section 10.10.
10.11 Additional Subsidiaries.
(a) If any additional Designated Subsidiary is formed or acquired (or otherwise becomes a Designated Subsidiary) after the Effective Date, then the Company will, as promptly as practicable and, in any event, within 30 days (or such longer period as the Administrative Agent may, in its reasonable discretion, agree to in writing) after such Subsidiary is formed or acquired (or otherwise becomes a Designated Subsidiary), notify the Administrative Agent thereof and cause the Collateral and Guarantee Requirement to be satisfied (i) with respect to such Designated Subsidiary (if such Subsidiary is or has become a Designated Subsidiary) and (ii) with respect to any Equity Interests in or Debt of such Subsidiary owned by or on behalf of any Loan Party.
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(b) If, upon the consummation of a Qualified IPO, the IPO Entity is not the Company, then the Company will, as promptly as practicable and, in any event, within 45 days (or such longer period as the Administrative Agent may, in its reasonable discretion, agree to in writing) after the date of such Qualified IPO, notify the Administrative Agent thereof and cause the Collateral and Guarantee Requirement to be satisfied (i) with respect to such IPO Entity and (ii) with respect to all Equity Interests in the Company.
(c) The Company may elect to designate any Subsidiary that is an Excluded Subsidiary as a Designated Subsidiary in its sole discretion.
10.12 [Reserved].
10.13 Information Regarding Collateral. (a) The Company will furnish to the Administrative Agent prompt (and, in any event, within 100 days of the relevant change) written notice of any change (i) in any Loan Party’s legal name, as set forth in such Loan Party’s organizational documents, (ii) in the jurisdiction of incorporation or organization of any Loan Party, (iii) in the form of organization of any Loan Party or (iv) in any Loan Party’s organizational identification number, if any, or, with respect to a Loan Party organized under the laws of a jurisdiction that requires such information to be set forth on the face of a Uniform Commercial Code financing statement, the Federal Taxpayer Identification Number of such Loan Party, in each case to the extent such information is necessary to enable the Collateral Agent to perfect or maintain the perfection of its security interest in the Collateral of the relevant Loan Party.
(b) At the time of delivery of financial statements pursuant to Section 10.1.1, the Company shall deliver to the Administrative Agent a certificate of a Responsible Officer of the Company confirming that, since the date of the Perfection Certificate delivered on the Effective Date, as supplemented by the updated Perfection Certificate delivered on the Effective Date and as supplemented by the certificates delivered pursuant to this Section 10.13(b), there has been no change in the information set forth in Schedules 1(a), (b) and 2 therein or identifying all such changes in the information set forth therein.
SECTION 11 NEGATIVE COVENANTS.
From and after the Effective Date and until the Termination Date and thereafter until all Obligations hereunder and under the other Loan Documents are paid in full (other than contingent amounts not yet due) and all Letters of Credit have been terminated, expired or Cash Collateralized, the Company agrees that, unless at any time the Required Lenders shall otherwise expressly consent in writing, it will:
11.1 Debt. Not, and not permit any Subsidiary to, create, incur, assume or suffer to exist any Debt, except:
(a) Obligations under this Agreement and the other Loan Documents;
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(b) Debt of the Company and/or any Subsidiary existing, or pursuant to commitments existing, on the Effective Date; provided that Debt or other obligations in excess of $5,000,000 in the aggregate shall be permitted under this Section 11.1(b) only if set forth on Schedule 11.1(b);
(c) after a Qualified IPO, Debt which is unsecured in an aggregate amount at any one time outstanding not to exceed the greater of (x) $75,000,000 and (y) 2.50% of Consolidated Total Assets at the time of Incurrence; provided that (i) no Unmatured Event of Default or Event of Default shall have occurred and be continuing on the date of incurrence of such Debt or could reasonably be expected to occur as a result thereof, (ii) the documents governing such Debt do not contain covenants (including quantitative covenants and financial covenants) which are, taken as a whole, more restrictive in any material respect than the covenants contained in this Agreement (other than covenants or other provisions (x) applicable only to periods after the Maturity Date then in effect or (y) made applicable to this Agreement), (iii) the final maturity of such Debt shall be no earlier than ninety days after the Maturity Date then in effect and (iv) the weighted average life to maturity of such Debt shall not be shorter than the weighted average life to maturity of any Loans or Commitments outstanding as of the time of the issuance thereof; provided that clauses (i), (ii) and (iii) shall not apply to any bridge facility on customary terms if the long-term indebtedness that such bridge facility is to be converted into satisfies such clauses.
(d) Hedging Obligations incurred so long as of the time of incurrence they were entered into for bona fide hedging purposes and not for speculation and Debt incurred in the ordinary course of business in respect of netting services, overdraft protections and otherwise in connection with deposit accounts;
(e) Debt (including with respect to Financing Lease Obligations and purchase money Debt) of the Company and/or any Subsidiary Incurred to finance the acquisition, construction, lease, expansion, development, installation, repair, replacement, relocation, renewal, maintenance, upgrade or improvement of property (real or personal), equipment or any other asset (whether through the direct purchase of property, equipment or other assets or any Person owning such property, equipment or other assets); provided that, at the time of incurrence thereof and after giving pro forma effect thereto and the use of the proceeds thereof, the aggregate principal amount of such Debt then outstanding pursuant to this clause (e) (when aggregated with the aggregate principal amount of Refinancing Debt Incurred pursuant to Section 6.01(n) in respect of such Debt then outstanding) shall not, except as contemplated by Section 6.01(n), exceed an amount equal to the greater of (x) $25,000,000 and (y) 1.50% of Consolidated Total Assets at the time of incurrence;
(f) Guarantee Obligations arising with respect to customary indemnification obligations in favor of sellers, adjustment of purchase price or similar obligations or from guaranties or letters of credit, surety bonds, performance bonds or similar obligations securing the performance of the Company or any Subsidiary pursuant to such agreements, in each case in connection with Acquisitions permitted under Section 11.4 and purchasers in connection with dispositions permitted under Section 11.4;
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(g) Guarantee Obligations arising with respect to guaranties (which may include payment obligations) provided by the Company or any Subsidiary on behalf of the Company or any Subsidiary in the ordinary course of business;
(h) (i) Debt of the Company to any Subsidiary and (ii) Debt of any Subsidiary to the Company or any other Subsidiary; provided that (A) Debt of any Subsidiary that is not a Loan Party owing to any Loan Party shall be subject to Section 11.9 and (B) Debt of any Loan Party owing to any Subsidiary that is not a Loan Party shall be unsecured and subordinated to the Obligations on terms reasonably acceptable to the Administrative Agent;
(i) Debt of the Company or any Subsidiary (excluding Guarantee Obligations) in an aggregate amount at any one time outstanding not to exceed (i) prior to a Qualified IPO, the greater of (x) $25,000,000 and (y) 1.50% of Consolidated Total Assets at the time of Incurrence, and (ii) after a Qualified IPO, the greater of (x) $75,000,000 and (y) 2.50% of Consolidated Total Assets at the time of incurrence;
(j) assumed Debt of any Person that becomes a Subsidiary after the Effective Date; provided that (i) on a pro forma basis after giving effect to the incurrence of such Debt, the Company will be in compliance with the financial covenant in Section 11.12.2 as of the last day of the most recently ended Computation Period, (ii) such Debt exists at the time such Person becomes a Subsidiary and is not created in contemplation or in connection with such Person becoming a Subsidiary, (iii) neither the Company nor any Subsidiary that was not an obligor with respect to such Debt prior to such Person becoming a Subsidiary shall become an obligor for such Debt; and (iv) such Debt shall not be secured by a Lien on any property of the Company or any Subsidiary that did not secure such Debt prior to such Person becoming a Subsidiary (except for proceeds and the products thereof and, in the case of multiple financings of equipment provided by any lender, other equipment financed by such lender); provided, further, that, (i) prior to a Qualified IPO, the aggregate principal amount of Debt that is not listed on Schedule 11.1(j) incurred in reliance of this clause (j) shall not exceed the greater of (x) $25,000,000 and (y) 1.5% of Consolidated Total Assets at any time outstanding and (ii) after a Qualified IPO, the aggregate principal amount of Debt that is not listed on Schedule 11.1(j) incurred in reliance of this clause (j) shall not exceed the greater of (x) $50,000,000 and (y) 3.0% of Consolidated Total Assets at any time outstanding;
(k) Debt of the Company or any Subsidiary (other than any letter of credit) (i) pursuant to tenders, statutory obligations, bids, leases, governmental contracts, trade contracts, surety, stay, customs, appeal, performance or return of money bonds or other similar obligations incurred in the ordinary course of business and (ii) in respect of surety bonds, performance bonds or similar instruments to support any of the foregoing items;
(l) Debt of the Company or any Subsidiary (other than any letter of credit, but including obligations in respect of bank guaranties, surety bonds, performance bonds or similar instruments with respect to such Debt) incurred by the Company or such Subsidiary, as applicable, in respect of workers compensation claims, unemployment insurance (including premiums related thereto), other types of social security, pension obligations, vacation pay, health, disability or other employee benefits;
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(m) Debt representing the deferred purchase price of property (including intellectual property) or services, including earn-out obligations, purchase price adjustments, escrow arrangements or other arrangements representing deferred payments incurred in connection with any Acquisition permitted or consented to hereunder; and
(n) the Incurrence or issuance by the Company or any Subsidiary of Debt which serves to extend, replace, refund, renew, defease or refinance any Debt incurred as permitted under clauses (b), (e), (i) and (j) of this Section 11.1 or any Debt issued to so extend, replace, refund, renew, defease or refinance such Debt (“Refinancing Debt”); provided, however, that, (i) other than in the case of Debt Incurred under clause (e), the final maturity date of such Refinancing Debt shall be no earlier than the earlier of the maturity date of the Debt being refinanced and ninety days after the Maturity Date then in effect, (ii) the weighted average life to maturity of such Refinancing Debt shall not be shorter than the weighted average life to maturity of the Debt being extended, replaced, refunded, renewed, defeased or refinanced, (iii) to the extent such Refinancing Debt extends, replaces, refunds, renews, defeases or refinances Debt subordinated, such Refinancing Debt is subordinated to the Obligations at least to the same extent (as determined in good faith by the board of directors of the Company) as the Debt being extended, replaced, refunded, renewed, defeased or refinanced and (iv) such Refinancing Debt shall be in an amount not greater than the amount of the Debt being extended, replaced, refunded, renewed, defeased or refinanced plus an additional amount incurred to pay reasonable premiums (including tender premiums) outstanding and unpaid interest and reasonable fees and expenses incurred in connection therewith; provided, further, however, that to the extent that any Debt incurred under clauses (e), (i) or (j) is refinanced pursuant to this clause (n), including any additional amounts described in clause (iv) above, then the aggregate outstanding principal amount of such Refinancing Debt shall be deemed to utilize the related basket under the applicable clause on a dollar-for-dollar basis (it being understood that an Unmatured Event of Default or Event of Default shall be deemed not to have occurred solely to the extent that the incurrence of such Refinancing Debt would cause the permitted amount under such clause to be exceeded and such excess shall be permitted hereunder).
11.2 Liens. Not, and not permit any Subsidiary to, create or permit to exist any Lien on any of its real or personal properties, assets or rights of whatsoever nature (whether now owned or hereafter acquired), except:
(a) Liens for Taxes, payments in lieu of Taxes, assessments, special assessments or other governmental charges not at the time delinquent or thereafter payable without penalty or being contested in good faith by appropriate proceedings and, in each case, for which it maintains adequate reserves;
(b) Liens arising in the ordinary course of business (such as (i) Liens of landlords, carriers, warehousemen, mechanics and materialmen and other similar Liens imposed by Law and (ii) Liens in the form of deposits or pledges incurred in connection with worker’s compensation, unemployment compensation and other types of social security (excluding Liens arising under ERISA) or in connection with surety bonds, bids, performance bonds and similar obligations) for sums not overdue by more than thirty days or being contested in good faith by appropriate proceedings and not involving any advances or borrowed money or the deferred purchase price of property or services and, in each case, for which it maintains adequate reserves;
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(c) Liens existing on the Effective Date or pursuant to agreements in existence on the Effective Date and any replacement, extension or renewal thereof upon or in the same property subject thereto arising out of the extension, renewal or replacement of the Debt secured thereby (without increase in the amount thereof (other than on account of any accrued but unpaid interest, fees and premium payable by the terms of such Debt thereon)); provided that Liens securing Debt in excess of $5,000,000 in the aggregate shall only be permitted under this clause (c) if set forth on Schedule 11.2;
(d) (i) Liens that constitute purchase money security interests on any property (including mortgage liens on real property) securing debt incurred for the purpose of financing all or any part of the cost of acquiring such property; provided that any such Lien attaches to such property within ninety days of the acquisition thereof and attaches solely to the property so acquired and any improvements thereon or proceeds from the disposition thereof and customary security deposits, related contract rights and payment intangibles and other assets related thereto, and the replacement, extension or renewal of any Lien permitted by this clause (i) upon or in the same property subject thereto arising out of the extension, renewal or replacement of the Debt secured thereby (without increase in the amount thereof (other than on account of any accrued but unpaid interest, fees and premium payable by the terms of such Debt thereon)); and (ii) subject to the limitations set forth in Section 11.1(e), Liens arising in connection with Financing Lease Obligations (and attaching only to the property subject to such Financing Lease Obligations and any improvements thereon or proceeds from the disposition thereof);
(e) attachments, appeal bonds, judgments and other similar Liens; provided the execution or other enforcement of such Liens incurred pursuant to this clause (e) are effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings;
(f) zoning, entitlements and other land uses and environmental restrictions or regulations imposed by a Governmental Authority, easements, rights of way, restrictions, minor defects or irregularities in title and other similar Liens or encumbrances not interfering in any material respect with the ordinary conduct of the business of the Company or any Subsidiary, taken as a whole;
(g) Liens arising under the Loan Documents;
(h) Liens securing Debt permitted by Section 11.1(d);
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(i) Liens securing Debt permitted pursuant to Section 11.1(j) on the relevant acquired assets or on the Equity Interests and assets of the relevant newly acquired Subsidiary or Liens otherwise existing on property at the time of its acquisition or existing on the property or Equity Interests or other assets of any Person at the time such Person becomes a Subsidiary; provided that no such Lien (A) extends to or covers any other assets (other than (w) the proceeds or products thereof, accessions or additions thereto and improvements thereon, (x) with respect to such Person, any replacements of such property or assets and additions and accessions thereto, or proceeds and products thereof, (y) after-acquired property to the extent such Debt requires or includes, pursuant to its terms at the time assumed, a pledge of after-acquired property of such Person, and the proceeds and the products thereof and customary security deposits in respect thereof and (z) in the case of multiple financings of equipment provided by any lender or its affiliates, other equipment financed by such lender or its affiliates, it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition) or (B) was created in contemplation of the applicable acquisition of the Person, assets or Equity Interests;
(j) Liens in connection with the sale or transfer of any assets in a transaction permitted hereunder, customary rights and restrictions contained in agreements relating to such sale or transfer pending the completion thereof;
(k) Liens securing, in the case of any joint venture, any put and call arrangements related to its Equity Interests set forth in its organizational documents or any related joint venture or similar agreement;
(l) any interest or title of a lessor or lessee under any lease or sublease entered into by the Company or any Subsidiary in the ordinary course of its business and other statutory and common law landlords’ Liens under leases;
(m) any interest or title of a licensor under any license or sublicense entered into by the Company or any Subsidiary as a licensee or sublicensee (A) existing on the Effective Date or (B) in the ordinary course of its business;
(n) any interest or title of a licensor or lessor under any licenses, sublicenses, leases or subleases granted to other Persons permitted hereunder;
(o) Liens evidenced by the filing of precautionary UCC financing statements (or any similar precautionary filings) relating solely to operating leases of personal property entered into in the ordinary course of business;
(p) Liens on earnest money deposits of cash or Permitted Investments, escrow arrangements or similar arrangements made by the Company or any Subsidiary in connection with any letter of intent or purchase agreement for an Acquisition permitted by Section 11.4 or other Investment permitted pursuant to Section 11.9;
(q) Liens arising from the assignment of monies due and to become due under contracts between the Company or any Subsidiary and the United States of America, any state, commonwealth, territory or possession thereof or any Governmental Authority of any thereof; or Liens in favor of the United States of America, any state, commonwealth, territory or possession thereof or any Governmental Authority of any thereof, to secure progress, advance or other payments pursuant to any contract or provision of any statute, or pursuant to the provisions of any contract not directly or indirectly in connection with securing Debt;
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(r) any deposit or pledge as security for the performance of any statutory obligations, bid, tender, contract, lease, government contract, performance bond or undertaking not made directly or indirectly in connection with the securing of Debt; any deposit or pledge with any governmental agency required or permitted to qualify the Company or any Subsidiary to conduct business or to maintain self-insurance, or to obtain any stay or discharge in any legal or administrative proceedings; and
(s) other Liens securing obligations in an aggregate principal amount not to exceed an amount equal to (A) (i) prior to a Qualified IPO, the greater of (x) $12,500,000 and (y) 0.75% of Consolidated Total Assets, and (ii) after a Qualified IPO, the greater of (x) $25,000,000 and (y) 1.50% of Consolidated Total Assets at the time of incurrence minus (B) the aggregate amount of outstanding Liens incurred pursuant to clause (e) above.
11.3 Restricted Payments. Not, and not permit any Subsidiary to, (a) make any distribution to any holders of its Equity Interests (except for dividends or distributions from a Subsidiary to a Wholly-Owned Subsidiary or to the Company and dividends or distributions from a Subsidiary ratably to any non-Wholly-Owned Subsidiary), (b) purchase or redeem any of its Equity Interests, (c) pay any management fees or similar fees to any of its equityholders, (d) make any redemption, prepayment, defeasance, repurchase or any other payment in respect of any Subordinated Debt more than one year prior to the scheduled maturity date thereof or (e) set aside funds for any of the foregoing (items (a) through (e) above, collectively, “Restricted Payments”). Notwithstanding the foregoing, (i) the Company may make a distribution to holders of its Equity Interests in the form of stock of the Company, (ii) the Company may pay cash dividends in lieu of fractional shares in association with a stock dividend or exercise of warrants, options or other securities exchangeable into Equity Interests of the Company, (iii) so long as no Event of Default has occurred and is continuing or could reasonably be expected to occur as a result thereof, after a Qualified IPO, the Company may make any Restricted Payments not otherwise permitted hereby in an aggregate amount not to exceed $5,000,000, (iv) the Company may make other Restricted Payments to repurchase Equity Interests of the Company upon the exercise of stock options if such Equity Interests represent a portion of the exercise price of such options, so long as substantially concurrently with such Restricted Payment, the Company applies the proceeds of such Restricted Payment to repurchase such Equity Interests, (v) so long as no Event of Default has occurred and is continuing or could reasonably be expected to occur as a result thereof, the Company may make any payment on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in the Company or any option, warrant or other right to acquire any such Equity Interests in an aggregate amount not to exceed $5,000,000 in any Fiscal Year (which shall increase to $10,000,000 subsequent to the consummation of a Qualified IPO), which, if not used in such Fiscal Year, may be carried forward to succeeding Fiscal Years, (vi) the Company may make payments of regularly scheduled interest as and when due in respect of any Subordinated Debt, (vii) the Company may (or may make Restricted Payments to allow any Parent Entity to) (x) pay cash in lieu of the issuance of fractional shares in connection with any Restricted Payment (including in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Equity Interests), share split, reverse share split or combination thereof or any Acquisition or other Investment and (y) honor any conversion request by a holder of convertible Debt and make cash payments in lieu of fractional shares in connection with any such conversion and may make payments on convertible Debt in accordance with its terms, (viii) the Company may make any Restricted Payment to the extent the Company is filing an income tax return as a member of a consolidated, combined, unitary or aggregate group with a Parent Entity, the proceeds of which shall be used to pay (or to make Restricted Payments to allow any Parent Entity of the Company to pay) any tax liability in respect of income attributable to the Company and its Subsidiaries, but not in excess of the tax liability that the Company would incur if it filed tax returns as the parent of a consolidated, combined, unitary or aggregate group for itself and its Subsidiaries (and net of any payment already made and to be made by the Company or its Subsidiaries to a taxing authority to satisfy such tax liability) and (ix) the Company may make any Restricted Payment the proceeds of which shall be used to pay (or to make Restricted Payments to allow any Parent Entity of the Company to pay) franchise, excise and similar taxes and other fees, taxes and expenses, in each case, required to maintain its (or any of its Parent Entities’) corporate or other legal existence.
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11.4 Mergers, Consolidations, Sales. Not, and not permit any Subsidiary to,
(a) be a party to any merger or consolidation, or purchase or otherwise acquire all or substantially all of the assets or any Equity Interests of any class of, or any partnership or joint venture interest in, any other Person, except for Investments otherwise permitted by Section 11.9,
(b) sell, transfer, convey or lease all or substantially all of its assets (including the sale of all or substantially all of the Equity Interests of any Subsidiary) except (i) for sales of inventory and obsolete equipment in the ordinary course of business or (ii) so long as no Unmatured Event of Default or Event of Default has occurred and is continuing, after giving effect thereto on a pro forma basis, the Company and the other Loan Parties shall be in compliance with (x) a Total Debt to Total Capitalization ratio set forth in Section 11.12.1 and (y) a Minimum Liquidity amount set forth in Section 11.12.2 (giving effect, if applicable, to the provisos thereto) as of the last day of the most recently ended Computation Period (other than a sale, transfer, conveyance or lease of all or substantially all of the assets of the Loan Parties, taken as a whole) or
(c) sell or assign with or without recourse any receivables;
except that the restrictions set forth in clauses (a)-(c) above shall not apply to
(i) any merger, consolidation, sale, transfer, conveyance, lease or assignment of or by (A) any Subsidiary into the Company (provided that the Company shall be the continuing or surviving entity), (B) any Subsidiary Loan Party into the Company or any other Subsidiary Loan Party or (C) any Subsidiary that is not a Loan Party into any other Subsidiary;
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(ii) any such purchase or other acquisition by the Company or any Subsidiary Loan Party of the assets or Equity Interests of any Subsidiary;
(iii) any Subsidiary may liquidate, dissolve or wind-up if the Company determines in good faith that such liquidation or dissolution is in the best interests of the Company and is not materially disadvantageous to the Lenders;
(iv) the discount or sale, in each case without recourse and in the ordinary course of business, of past due receivables arising in the ordinary course of business, but only in connection with the compromise or collection thereof consistent with customary industry practice (and not as part of any bulk sale or financing of receivables),
(v) Investments made in accordance with Section 11.9,
(vi) Liens incurred in compliance with Section 11.2,
(vii) any Acquisition (a) existing on, or contractually committed to or contemplated as of, the Effective Date and described on Schedule 11.4 and (b) any modification, replacement, renewal or extension of any Investment described in clause (a) above so long as no such modification, replacement, renewal or extension increases the amount of such Investment except by the terms thereof in effect on the Effective Date (including as a result of the accrual or accretion of interest or original issue discount or the issuance of pay-in-kind securities) or as otherwise permitted by this Section 11.4
(viii) any Acquisition by the Company, any Subsidiary Loan Party or any Insurance Subsidiary where:
(A) the Acquisition is of a Person in a line of business which is similar or complementary to the lines of business of the Company and its Subsidiaries as of the Effective Date;
(B) immediately after giving effect to such Acquisition, no Event of Default shall exist or would result of such Acquisition;
(C) immediately after giving effect to such Acquisition, the Company is in pro forma compliance with all the financial ratios and restrictions set forth in Section 11.12 as of the last day of the most recently ended Computation Period;
(D) in the case of the Acquisition of any Person, to the extent that an Acquisition which is structured as a merger involving the Company, the Company is the surviving Person; and
(E) the Collateral and Guarantee Requirement is satisfied after giving effect to such Acquisition. All sales, transfers or dispositions made by the Company or any Subsidiary pursuant to this Section 11.4 (other than those permitted by clause (ii) or (iii)) shall be made for fair value and for at least 75% cash consideration.
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11.5 Modification of Organizational Documents. Not permit the charter, by-laws or other organizational documents of the Company or any of its Subsidiaries to be amended or modified in any way unless in all cases, such amendment or modification is not reasonably likely to have a Material Adverse Effect.
11.6 Transactions with Affiliates(a). Not, and not permit any Subsidiary to, enter into, or cause, suffer or permit to exist any transaction, arrangement or contract with any of its Affiliates involving aggregate payments, for any such transaction or series of related transactions, in excess of $5,000,000; provided, however, that (a) the Company and its Subsidiaries may engage in such transactions pursuant to the reasonable requirements of its business on terms and conditions which are not materially less favorable to such Affiliates than are obtainable in an arm’s length transaction involving a Person which is not one of its Affiliates, (b) the Company and its Subsidiaries may declare or make Restricted Payments permitted by Section 11.3, (c) the Company and its Subsidiaries may enter into transactions between or among the Company and the Subsidiaries, (d) to the extent that any physician owned practices with which the Company or its Subsidiary has a management agreement are deemed to be an Affiliate of the Company, the Company and its Subsidiaries may enter into transactions with such entities, (e) the Company and its Subsidiaries may make payments of reasonable fees to directors of the Company or any Subsidiary who are not employees of the Company or any Subsidiary, and provide compensation, employee benefit arrangements and indemnities for the benefit of, directors, officers or employees of the Company or any Subsidiary in the ordinary course of business, (f) the Company and its Subsidiaries may adopt, enter into, maintain and perform their obligations under customary employment, compensation, severance or indemnification plans and arrangements for current or former directors, officers, employees and consultants of the Company and its Subsidiaries entered into in the ordinary course of business, (g) the Company may grant stock options or similar rights to directors, officers, employees and consultants if approved by the Company and (h) any transaction, arrangement or contract described on Schedule 11.6.
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11.7 Inconsistent Agreements. Not, and not permit any Subsidiary Loan Party to, enter into any agreement containing any provision which would (a) be violated or breached by any borrowing by the Company hereunder or by the performance by the Company or any Subsidiary Loan Party of any of its Obligations hereunder or under any other Loan Document, (b) prohibit the Company or any Subsidiary Loan Party from granting a Lien on any of its assets to the Administrative Agent and the Lenders or (c) create or permit to exist or become effective any encumbrance or restriction on the ability of any Subsidiary to (i) pay dividends or make other distributions to the Company or any other Subsidiary, or pay any Debt owed to the Company or any other Subsidiary, (ii) make loans or advances to any Subsidiary Loan Party or (iii) transfer any of its assets or properties to any Subsidiary, other than: (A) customary restrictions and conditions contained in agreements relating to the sale of all or a substantial part of the assets of any Subsidiary pending such sale, provided that such restrictions and conditions apply only to the Subsidiary to be sold and such sale is permitted hereunder, (B) restrictions or conditions imposed by any agreement relating to purchase money Debt, Financing Lease Obligations and other secured Debt permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Debt or that expressly permits Liens for the benefit of the Collateral Agent and the Lenders with respect to the Loans and the Obligations under the Loan Documents on a senior basis without the requirement that such holders of such Debt be secured by Liens on an equal and ratable, or junior, basis, (C) customary provisions in leases and other contracts restricting the assignment thereof, (D) restrictions and conditions imposed by Law, (E) restrictions and conditions binding on any person in existence at the time such person first became a Subsidiary, so long as such restrictions or conditions were not entered into in contemplation of such person becoming a Subsidiary, (F) solely in the case of clauses (b) and (c)(iii), restrictions and conditions imposed by any other Debt issued in reliance on Sections 11.1(c), (G) solely in the case of clause (b), customary restrictions that arise in connection with any Liens in favor of any holder of Debt permitted under Section 11.2 but solely to the extent any negative pledge relates to the property secured by such Lien or that expressly permits Liens for the benefit of the Administrative Agent and the Lenders with respect to the Loans and the Obligations under the Loan Documents on a senior basis without the requirement that such holders of such Debt be secured by Liens on an equal and ratable, or junior, basis, (H) customary provisions in partnership agreements, limited liability company organizational governance documents, joint venture agreements and other similar agreements (other than in respect of any Wholly-Owned Subsidiary) entered into in the ordinary course of business that restrict the transfer of ownership interests in such partnership, limited liability company, joint venture or similar Person, (I) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business, (J) restrictions and conditions imposed by this Agreement or any other Loan Document, (K) restrictions described on Schedule 11.7 and (L) restrictions and conditions imposed by any amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing of any contract, instrument or obligation referred to in clauses (A) through (L) above; provided that such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing is, in the good faith judgment of the Company, not materially more restrictive with respect to such restrictions taken as a whole than those in existence prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.
11.8 Business Activities. Not, and not permit any Subsidiary to, engage in any line of business other than (a) reasonably similar to the businesses engaged in on the Effective Date, (b) the health insurance and health care business and (c) similar, incidental, complementary, ancillary, supportive, synergetic or reasonably related businesses or reasonable extensions of the businesses (and non-core incidental businesses acquired in connection with any Acquisition or Investment or other immaterial businesses) conducted or proposed to be conducted by the Company and its Subsidiaries on the Effective Date.
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11.9 Investments. Not, and not permit any Subsidiary to, make or permit to exist any Investment in any other Person, except the following:
(a) Investments by (i) the Company in any Subsidiary Loan Party or any Insurance Subsidiary and (ii) any Subsidiary Loan Party in the Company, any other Subsidiary Loan Party of any Insurance Subsidiary;
(b) Investments in Permitted Investments;
(c) Investments to consummate Acquisitions permitted by Section 11.4;
(d) any additional Investments, as valued at the fair market value of such Investment at the time each such Investment is made; provided that the amount of such Investment (as so valued) shall not cause the aggregate amount of all such Investments made pursuant to this Section 11.9(d) measured at the time such Investment is made, to exceed, after giving pro forma effect to such Investment, the greater of (x) $50,000,000 and (y) 3.00% of Consolidated Total Assets for the Computation Period most recently ended on or prior the date such Investment;
(e) Guarantee Obligations constituting Debt permitted by Section 11.1;
(f) Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business;
(g) Investments made as a result of the receipt of non-cash consideration from a disposition of any asset permitted hereunder;
(h) Investments in the form of Hedging Obligations permitted by Section 11.1;
(i) payroll, travel and similar advances to directors, officers and employees of the Company or the Loan Parties that are made in the ordinary course of business in an aggregate amount at any one time outstanding not to exceed (x) prior to a Qualified IPO, $2,000,000 and (y) after a Qualified IPO, $5,000,000;
(j) Investments to the extent the consideration paid therefor consists of Equity Interests of the Company (other than Disqualified Equity Interests); and
(k) Investments held by a Subsidiary acquired after the Effective Date or of a Person merged or consolidated with or into the Company or a Subsidiary after the Effective Date, to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation;
(l) Investments consisting of Guarantee Obligations of the Company or any Subsidiary in respect of Non-Financing Lease Obligations of the Company or any subsidiary (other than obligations with respect to Financing Lease Obligations) or of other obligations not constituting Debt, in each case entered into in the ordinary course of business;
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(m) Investments (i) existing on, or contractually committed to or contemplated as of, the Effective Date and described on Schedule 11.9 and (ii) any modification, replacement, renewal or extension of any Investment described in clause (i) above so long as no such modification, replacement, renewal or extension increases the amount of such Investment except by the terms thereof in effect on the Effective Date (including as a result of the accrual or accretion of interest or original issue discount or the issuance of pay-in-kind securities) or as otherwise permitted by this Section 11.9; and
(n) Investments consisting of Restricted Payments permitted by Section 11.3.
11.10 [Reserved].
11.11 Fiscal Year. Not change its Fiscal Year.
11.12 Financial Covenants.
11.12.1 Total Debt to Total Capitalization Ratio. Not permit the Total Debt to Total Capitalization Ratio as of the last day of each Computation Period, beginning with the Computation Period ending June 30, 2021, to exceed (x) prior to a Qualified IPO, 0.25 to 1.00 or (y) after a Qualified IPO, 0.30 to 1.00.
11.12.2 Minimum Liquidity. Not permit the Minimum Liquidity to be less than $150,000,000 at any time.
SECTION 12 CONDITIONS OF LENDING, ETC.
12.1 Effective Date. The obligations of the Lenders to make Loans and of the Issuing Banks to issue Letters of Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 15.1):
(a) The Administrative Agent shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include facsimile transmission or other electronic imaging of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a customary written opinion (addressed to the Administrative Agent, the Issuing Banks and the Lenders) of Simpson, Thacher & Bartlett LLP, counsel for the Company and its Subsidiaries, (A) dated as of the Effective Date and (B) in form and substance reasonably satisfactory to the Administrative Agent. The Company hereby requests such counsel to deliver such opinions.
(c) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of each Loan Party, the authorization of the Transactions and any other legal matters relating to the Loan Parties, the Loan Documents or the Transactions, all in form and substance reasonably satisfactory to the Administrative Agent and its counsel.
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(d) The Administrative Agent shall have received a certificate, dated the Effective Date and signed by a Responsible Officer of the Company, confirming compliance with the conditions set forth in paragraphs (a) and (b) of Section 12.2.1.
(e) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Effective Date, including (i) for the account of each Lender (including JPMCB), an upfront fee in an amount equal to 0.75% of the aggregate principal amount of the Commitment of such Lender as set forth on Annex A on the Effective Date and (ii) to the extent invoiced at least two Business Days prior to the Effective Date, reimbursement or payment of all out-of-pocket expenses (including fees, charges and disbursements of counsel) required to be reimbursed or paid by any Loan Party hereunder, under any other Loan Document or under any other agreement entered into by any of the Arranger, the Administrative Agent and the Lenders, on the one hand, and any of the Loan Parties, on the other hand.
(f) The Collateral and Guarantee Requirement shall have been satisfied, and the Administrative Agent, on behalf of the Secured Parties, shall have a security interest in the Collateral of the type and priority described in each Security Document. The Administrative Agent shall have received a completed Perfection Certificate dated the Effective Date and signed by a Responsible Officer of the Company, together with all attachments contemplated thereby.
(g) The Administrative Agent shall have received the results of a search of the Uniform Commercial Code (or equivalent) filings made with respect to the Loan Parties in the jurisdictions contemplated by the Perfection Certificate and copies of the financing statements (or similar documents) disclosed by such search, together with Federal and State tax lien searches and judgment lien searches in respect of the Loan Parties and their respective assets in those jurisdictions reasonably requested by the Administrative Agent.
(h) The Lenders shall have received a certificate from a Responsible Officer of the Company, certifying as to the Solvency of the Company and its Subsidiaries, on a consolidated basis, after giving effect to the Transactions as of the Effective Date.
(i) (i) The Administrative Agent shall have received at least three Business Days prior to the Effective Date, all documentation and other information required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA Patriot Act, that has been requested at least five Business Days prior to the Effective Date, and (ii) to the extent that the Company qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, at least five days prior to the Effective Date, any Lender that has requested, in a written notice to the Company at least five Business Days prior to the Effective Date, a Beneficial Ownership Certification in relation to the Company shall have received such Beneficial Ownership Certification (provided that, upon the execution and delivery by such Lender of its signature page to this Agreement, the condition set forth in this clause (ii) shall be deemed to be satisfied).
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(j) The Administrative Agent shall be satisfied that, after giving effect to the Transactions on the Effective Date, the Total Debt to Total Capitalization Ratio on the Effective Date shall be no more than 0.25 to 1.00, and the Lenders shall have received a certificate of a Responsible Officer certifying to that effect.
The Administrative Agent shall notify the Company and the Lenders of the Effective Date, and such notice shall be conclusive and binding.
12.2 Conditions. The obligation (a) of each Lender to make each Loan after the Effective Date and (b) of each Issuing Bank to issue each Letter of Credit after the Effective Date is subject to the following further conditions precedent that:
12.2.1 Compliance with Warranties, No Default, etc. Both before and after giving effect to any borrowing and the issuance of any Letter of Credit, the following statements shall be true and correct:
(a) the representations and warranties of each Loan Party set forth in this Agreement and the other Loan Documents shall be true and correct in all material respects with the same effect as if then made (except to the extent stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct as of such earlier date); provided that to the extent any such representation or warranty is already qualified by materiality or material adverse effect, such representation or warranty shall be true and correct in all respects; and
(b) no Event of Default or Unmatured Event of Default shall have then occurred and be continuing.
(c) Borrowing Notice. The Company shall have delivered to the Administrative Agent the notice required by Section 2.2.1.
SECTION 13 EVENTS OF DEFAULT AND THEIR EFFECT.
13.1 Events of Default. Each of the following shall constitute an Event of Default under this Agreement:
(a) Non-Payment of the Loans, etc. Default in the payment when due of the principal of any Loan; or default, and continuance thereof for five days, in the payment when due of any interest, fee, reimbursement obligation with respect to any Letter of Credit or other amount payable by the Company hereunder or under any other Loan Document.
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(b) Default under Other Debt. (i) Failure by the Company or any of its Subsidiaries to pay when due any principal of or interest on or any other amount payable in respect of one or more items of Debt (other than Debt referred to in clause (a) above) with an aggregate outstanding principal amount exceeding (x) prior to a Qualified IPO, $25,000,000 and (y) after a Qualified IPO, $50,000,000, in each case beyond the grace period, if any, provided therefor; or (ii) failure by the Company or any of its Subsidiaries to comply with any other term of one or more items of Debt (other than, for the avoidance of doubt, (x) with respect to Debt consisting of Hedging Obligations, termination events or equivalent events pursuant to the terms of the relevant Hedging Agreement and (y) secured Debt that becomes due solely as a result of the sale, transfer or other sale of the property or assets securing such Debt if the sale, transfer or other sale is not prohibited hereunder) with an aggregate outstanding principal amount exceeding x) prior to a Qualified IPO, $25,000,000 and (y) after a Qualified IPO, $50,000,000, in each case beyond the grace period, if any, provided therefor, if the effect of such failure is to cause, or to permit the holder or holders of such Debt (or a trustee or agent on behalf of such holder or holders) to cause, such Debt to become or be declared due and payable (or redeemable) prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be.
(c) Bankruptcy, Insolvency, etc. The Company or any of its Significant Subsidiaries applies for, consents to, or acquiesces in the appointment of a trustee, receiver or other custodian for the Company or any of its Significant Subsidiaries or any property thereof, or makes a general assignment for the benefit of creditors; or, in the absence of such application, consent or acquiescence, a trustee, receiver or other custodian is appointed for the Company or any of its Significant Subsidiaries or for a substantial part of the property of any thereof and is not discharged within 90 days; or any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency Law, or any dissolution or liquidation proceeding, is commenced in respect of the Company or any of its Significant Subsidiaries, and if such case or proceeding is not commenced by the Company or any of its Significant Subsidiaries, it is consented to or acquiesced in by the Company or such Subsidiary or remains for 90 days undismissed; or the Company or any of its Significant Subsidiaries takes any action to authorize, or in furtherance of, any of the foregoing.
(d) Non-Compliance with Loan Documents. (i) Failure of any Loan Party to perform or comply with any term or condition contained in Section 10.1.5(a), Section 10.5(a) (solely with respect to the Company and solely with respect to its existence) or Section 11 or (ii) any Loan Party shall default in the performance of or compliance with any term contained herein or any of the other Loan Documents, other than any such term referred to in any other section of this Section 13, and such default shall not have been remedied or waived within thirty days after the earlier of (A) receipt by the Company of written notice from the Administrative Agent or the Required Lenders of such default and (B) a Responsible Officer of any Loan Party having obtained knowledge of such default.
(e) Representations; Warranties. Any representation or warranty made by any Loan Party herein or any other Loan Document or any certificate required to be delivered pursuant hereto or thereto is untrue in any material respect when made or deemed made.
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(f) Judgments. Any one or more final money judgments or orders is entered against the Company or any of its Subsidiaries or any attachment or other levy is made against the property of the Company or any of its Subsidiaries in an amount greater than (x) prior to a Qualified IPO, $25,000,000 and (y) after a Qualified IPO, $50,000,000 (to the extent not paid or adequately covered by self-insurance (if applicable) or by insurance as to which the relevant third party insurance company has been notified and not denied coverage or otherwise indemnified by a creditworthy indemnitor), which judgment remains unpaid, undischarged, unvacated, unbonded or unstayed pending the appeal for a period of 60 days.
(g) [Reserved].
(h) Change of Control. A Change of Control shall occur.
(i) Security Documents. Any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on a material portion of the Collateral, with the priority required by the applicable Security Document, except as a result of (i) a sale or transfer of the applicable Collateral in a transaction permitted under the Loan Documents, (ii) the release thereof as provided in the applicable Security Document or Section 15.12 or (iii) as a result of the Administrative Agent’s failure to (A) maintain possession of any stock certificate, promissory note or other instrument delivered to it under the Collateral Agreement or (B) file Uniform Commercial Code continuation statements;
(j) Guarantee Obligations. Any Guarantee Obligations purported to be created under any Loan Document shall cease to be, or shall be asserted by any Loan Party not to be, in full force and effect, except as a result of the release thereof as provided in the applicable Loan Document or Section 15.12;
13.2 Effect of Event of Default.
If any Event of Default described in Section 13.1(c) shall occur in respect of the Company, the Commitments shall immediately terminate and the Loans and all other Obligations hereunder shall become immediately due and payable and the Company shall become immediately obligated to Cash Collateralize all Letters of Credit, all without presentment, demand, protest or notice of any kind; and, if any other Event of Default shall occur and be continuing, the Administrative Agent may (and, upon the written request of the Required Lenders shall) declare the Commitments to be terminated in whole or in part and/or declare all or any part of the Loans and all other Obligations hereunder to be due and payable and/or demand that the Company immediately Cash Collateralize all or any Letters of Credit, whereupon the Commitments shall immediately terminate (or be reduced, as applicable) and/or the Loans and other Obligations hereunder shall become immediately due and payable (in whole or in part, as applicable) and/or the Company shall immediately become obligated to Cash Collateralize the Letters of Credit (all or any, as applicable), all without presentment, demand, protest or notice of any kind. The Administrative Agent shall promptly advise the Company of any such declaration, but failure to do so shall not impair the effect of such declaration. Any cash collateral delivered hereunder shall be held by the Administrative Agent (without liability for interest thereon) and applied to the Obligations arising in connection with any drawing under a Letter of Credit. After the expiration or termination of all Letters of Credit, such cash collateral shall be applied by the Administrative Agent to any remaining Obligations hereunder and any excess shall be delivered to the Company or as a court of competent jurisdiction may elect.
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SECTION 14 AGENTS.
14.1 Authorization and Action.
(a) Each Lender and each Issuing Bank hereby irrevocably appoints the entity named as Administrative Agent in the heading of this Agreement and its successors and assigns to serve as the administrative agent and collateral agent under the Loan Documents and each Lender and each Issuing Bank authorizes the Administrative Agent to take such actions as agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Administrative Agent under such agreements and to exercise such powers as are reasonably incidental thereto. Without limiting the foregoing, each Lender and each Issuing Bank hereby authorizes the Administrative Agent to execute and deliver, and to perform its obligations under, each of the Loan Documents to which the Administrative Agent is a party, and to exercise all rights, powers and remedies that the Administrative Agent may have under such Loan Documents.
(b) As to any matters not expressly provided for herein and in the other Loan Documents (including enforcement or collection), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the written instructions of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, pursuant to the terms in the Loan Documents), and, unless and until revoked in writing, such instructions shall be binding upon each Lender and each Issuing Bank; provided, however, that the Administrative Agent shall not be required to take any action that (i) the Administrative Agent in good faith believes exposes it to liability unless the Administrative Agent receives an indemnification and is exculpated in a manner satisfactory to it from the Lenders and the Issuing Banks with respect to such action or (ii) is contrary to this Agreement or any other Loan Document or applicable law, including any action that may be in violation of the automatic stay under any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors; provided, further, that the Administrative Agent may seek clarification or direction from the Required Lenders prior to the exercise of any such instructed action and may refrain from acting until such clarification or direction has been provided. Except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Company, any Subsidiary or any Affiliate of any of the foregoing that is communicated to or obtained by the Person serving as Administrative Agent or any of its Affiliates in any capacity. Nothing in this Agreement shall require the Administrative Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
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(c) In performing its functions and duties hereunder and under the other Loan Documents, the Administrative Agent is acting solely on behalf of the Lenders and the Issuing Banks (except in limited circumstances expressly provided for herein relating to the maintenance of the Register), and its duties are entirely mechanical and administrative in nature. Without limiting the generality of the foregoing:
(i) the Administrative Agent does not assume and shall not be deemed to have assumed any obligation or duty or any other relationship as the agent, fiduciary or trustee of or for any Lender, Issuing Bank or holder of any other obligation other than as expressly set forth herein and in the other Loan Documents, regardless of whether an Unmatured Event of Default or an Event of Default has occurred and is continuing (and it is understood and agreed that the use of the term “agent” (or any similar term) herein or in any other Loan Document with reference to the Administrative Agent is not intended to connote any fiduciary duty or other implied (or express) obligations arising under agency doctrine of any applicable law, and that such term is used as a matter of market custom and is intended to create or reflect only an administrative relationship between contracting parties); additionally, each Lender agrees that it will not assert any claim against the Administrative Agent based on an alleged breach of fiduciary duty by the Administrative Agent in connection with this Agreement and the transactions contemplated hereby; and
(ii) nothing in this Agreement or any other Loan Document shall require the Administrative Agent to account to any Lender for any sum or the profit element of any sum received by the Administrative Agent for its own account.
(d) The Administrative Agent may perform any of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any of their respective duties and exercise their respective rights and powers through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities pursuant to this Agreement. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agent except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agent.
(e) No Arranger shall have obligations or duties whatsoever in such capacity under this Agreement or any other Loan Document and shall incur no liability hereunder or thereunder in such capacity, but all such Persons shall have the benefit of the indemnities provided for hereunder.
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(f) In case of the pendency of any proceeding with respect to any Loan Party under any Federal, State or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, the Administrative Agent (irrespective of whether the principal of any Loan or any other Secured Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Company) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, LC Disbursements and all other Secured Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Issuing Banks and the Administrative Agent (including any claim under Sections 4, 5, 7.6, 8.1, 8.3, 15.4 and 15.16) allowed in such judicial proceeding; and
(ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such proceeding is hereby authorized by each Lender, each Issuing Bank and each other Secured Party to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, the Issuing Banks or the other Secured Parties, to pay to the Administrative Agent any amount due to it, in its capacity as the Administrative Agent, under the Loan Documents (including under Section 15.4 or 15.16). Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or Issuing Bank any plan of reorganization, arrangement, adjustment or composition affecting the Secured Obligations or the rights of any Lender or Issuing Bank or to authorize the Administrative Agent to vote in respect of the claim of any Lender or Issuing Bank in any such proceeding.
(g) The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Banks, and, except solely to the extent of the Company’s rights to consent pursuant to and subject to the conditions set forth in this Section 14, none of the Company or any Subsidiary, or any of their respective Affiliates, shall have any rights as a third party beneficiary under any such provisions. Each Secured Party, whether or not a party hereto, will be deemed, by its acceptance of the benefits of the Collateral and of the Guarantee Obligations created under the Loan Documents, to have agreed to the provisions of this Section 14.
14.2 | Administrative Agent’s Reliance, Limitation of Liability, Etc. |
(a) None of the Administrative Agent, any Arranger, any Syndication Agent, any Documentation Agent or any Related Party of any of the foregoing Persons shall be (i) liable to any Lender for any action taken or omitted to be taken by such party under or in connection with this Agreement or the other Loan Documents (x) with the consent of or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith to be necessary, under the circumstances as provided in the Loan Documents) or (y) in the absence of its own gross negligence or willful misconduct (such absence to be presumed unless otherwise determined by a court of competent jurisdiction by a final and non-appealable judgment) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party to perform its obligations hereunder or thereunder.
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(b) The Administrative Agent shall be deemed not to have knowledge of any (x) notice of any of the events or circumstances set forth or described in Section 10.1.5 unless and until written notice thereof stating that it is a “notice under Section 10.1.5” in respect of this Agreement and identifying the specific clause under such Section is given to the Administrative Agent by the Company or (y) notice of any Unmatured Event of Default or Event of Default unless and until written notice thereof (stating that it is a “notice of Unmatured Event of Default” or a “notice of Event of Default”) is given to the Administrative Agent by the Company, a Lender or an Issuing Bank. Furthermore, the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document or the occurrence of any Unmatured Event of Default or Event of Default, (iv) the sufficiency, validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, (v) the satisfaction of any condition set forth in Section 12 or elsewhere in any Loan Document, other than to confirm receipt of items (which on their face purport to be such times) expressly required to be delivered to the Administrative Agent or satisfaction of any condition that expressly refers to the matters described therein being acceptable or satisfactory to the Administrative Agent or (vi) the creation, perfection or priority of Liens on the Collateral. Notwithstanding anything herein to the contrary, the Administrative Agent shall not be liable for, or be responsible for any losses, claims, damages, liabilities, costs or expenses suffered by the Company, any Subsidiary, any Lender or any Issuing Bank as a result of, any determination of the Exposure, any of the component amounts thereof or any portion thereof attributable to each Lender or Issuing Bank.
(c) Without limiting the foregoing, the Administrative Agent (i) may rely on the Register to the extent set forth in Section 15.5, (ii) may consult with legal counsel (including counsel to the Company), independent public accountants and other experts selected by it, and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts, (iii) makes no warranty or representation to any Lender or Issuing Bank and shall not be responsible to any Lender or Issuing Bank for any statements, warranties or representations made by or on behalf of any Loan Party in connection with this Agreement or any other Loan Document, (iv) in determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or an Issuing Bank, may presume that such condition is satisfactory to such Lender or Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or Issuing Bank sufficiently in advance of the making of such Loan or the issuance of such Letter of Credit and (v) shall be entitled to rely on, and shall incur no liability under or in respect of this Agreement or any other Loan Document by acting upon, any notice, consent, certificate or other instrument or writing (which writing may be a fax, any electronic message, Internet or intranet website posting or other distribution) or any statement made to it orally or by telephone and believed by it to be genuine and signed or sent or otherwise authenticated by the proper party or parties (whether or not such Person in fact meets the requirements set forth in the Loan Documents for being the maker thereof).
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14.3 | [Reserved]. |
14.4 The Administrative Agent Individually. With respect to its Commitment, Loans, Letter of Credit Commitments and Letters of Credit, the Person serving as the Administrative Agent shall have and may exercise the same rights and powers hereunder and is subject to the same obligations and liabilities as and to the extent set forth herein for any other Lender or Issuing Bank, as the case may be. The terms “Issuing Banks”, “Lenders”, “Required Lenders” and any similar terms shall, unless the context clearly otherwise indicates, include the Administrative Agent in its individual capacity as a Lender, Issuing Bank or as one of the Required Lenders, as applicable. The Person serving as the Administrative Agent and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of banking, trust or other business with, the Company, any Subsidiary or any Affiliate of any of the foregoing as if such Person was not acting as the Administrative Agent and without any duty to account therefor to the Lenders or the Issuing Banks.
14.5 | Successor Administrative Agent. |
(a) The Administrative Agent may resign at any time by giving 30 days’ prior written notice thereof to the Lenders, the Issuing Banks and the Company, whether or not a successor Administrative Agent has been appointed. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Banks, appoint a successor Administrative Agent, which shall be a bank with an office in New York, New York or an Affiliate of any such bank. In either case, such appointment shall be subject to the prior written approval of the Company (which approval may not be unreasonably withheld and shall not be required while an Event of Default has occurred and is continuing). Upon the acceptance of any appointment as Administrative Agent by a successor Administrative Agent, such successor Administrative Agent shall succeed to, and become vested with, all the rights, powers, privileges and duties of the retiring Administrative Agent. Upon the acceptance of appointment as Administrative Agent by a successor Administrative Agent, the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. Prior to any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the retiring Administrative Agent shall take such action as may be reasonably necessary to assign to the successor Administrative Agent its rights as Administrative Agent under the Loan Documents.
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(b) Notwithstanding paragraph (a) of this Section 14.5, in the event no successor Administrative Agent shall have been so appointed and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its intent to resign, the retiring Administrative Agent may give notice of the effectiveness of its resignation to the Lenders, the Issuing Banks and the Company, whereupon, on the date of effectiveness of such resignation stated in such notice, (i) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents; provided that, solely for purposes of maintaining any security interest granted to the Administrative Agent under any Security Document for the benefit of the Secured Parties, the retiring Administrative Agent shall continue to be vested with such security interest as collateral agent for the benefit of the Secured Parties, and continue to be entitled to the rights set forth in such Security Document and the other Loan Documents, and, in the case of any Collateral in the possession of the Administrative Agent, shall continue to hold such Collateral, in each case until such time as a successor Administrative Agent is appointed and accepts such appointment in accordance with this Section 14.5 (it being understood and agreed that the retiring Administrative Agent shall have no duty or obligation to take any further action under any Security Document, including any action required to maintain the perfection of any such security interest), and (ii) the Required Lenders shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent; provided that (A) all payments required to be made hereunder or under any other Loan Document to the Administrative Agent for the account of any Person other than the Administrative Agent shall be made directly to such Person and (B) all notices and other communications required or contemplated to be given or made to the Administrative Agent shall directly be given or made to each Lender and each Issuing Bank. Following the effectiveness of the Administrative Agent’s resignation from its capacity as such, the provisions of this Section 14 and Sections 15.4 and 15.16, as well as any exculpatory, reimbursement and indemnification provisions set forth in any other Loan Document, shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent and in respect of the matters referred to in the proviso to clause (i) above.
14.6 | Acknowledgments of Lenders and Issuing Banks. |
(a) Each Lender represents that it is engaged in making, acquiring or holding commercial loans in the ordinary course of its business and that it has, independently and without reliance upon the Administrative Agent, any Arranger, any Syndication Agent, any Documentation Agent or any other Lender, or any of the Related Parties of any of the foregoing, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement as a Lender, and to make, acquire or hold Loans hereunder. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, any Arranger, any Syndication Agent, any Documentation Agent or any other Lender, or any of the Related Parties of any of the foregoing, and based on such documents and information (which may contain material, non-public information within the meaning of the United States securities laws concerning the Company and its Affiliates) as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
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(b) Each Lender, by delivering its signature page to this Agreement on the Effective Date, or delivering its signature page to an Assignment and Assumption or any other Loan Document pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Administrative Agent or the Lenders on the Effective Date.
14.7 | Collateral Matters. |
(a) Except with respect to the exercise of setoff rights in accordance with Section 7.4 or with respect to a Secured Party’s right to file a proof of claim in an insolvency proceeding, no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce any Guarantee Obligations created under the Loan Documents, it being understood and agreed that all powers, rights and remedies under the Loan Documents may be exercised solely by the Administrative Agent on behalf of the Secured Parties in accordance with the terms thereof.
(b) In furtherance of the foregoing and not in limitation thereof, no arrangements in respect of Cash Management Services the obligations under which constitute Secured Cash Management Obligations and no Hedging Agreement the obligations under which constitute Secured Hedging Obligations, will create (or be deemed to create) in favor of any Secured Party that is a party thereto any rights in connection with the management or release of any Collateral or of the obligations of any Loan Party under any Loan Document. By accepting the benefits of the Collateral, each Secured Party that is a party to any such arrangement in respect of Cash Management Services or Hedging Agreement, as applicable, shall be deemed to have appointed the Administrative Agent to serve as administrative agent and collateral agent under the Loan Documents and agreed to be bound by the Loan Documents as a Secured Party thereunder, subject to the limitations set forth in this paragraph.
(c) The Secured Parties irrevocably authorize the Administrative Agent, at its option and in its discretion, to subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 11.2(d). The Administrative Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Administrative Agent’s Lien thereon or any certificate prepared by any Loan Party in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders or any other Secured Party for any failure to monitor or maintain any portion of the Collateral.
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14.8 Credit Bidding. The Secured Parties hereby irrevocably authorize the Administrative Agent, at the direction of the Required Lenders, to credit bid all or any portion of the Secured Obligations (including by accepting some or all of the Collateral in satisfaction of some or all of the Secured Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral (a) at any sale thereof conducted under the provisions of the Bankruptcy Code, including under Sections 363, 1123 or 1129 of the Bankruptcy Code, or any similar laws in any other jurisdictions to which a Loan Party is subject, or (b) at any other sale, foreclosure or acceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Administrative Agent (whether by judicial action or otherwise) in accordance with any applicable law. In connection with any such credit bid and purchase, the Secured Obligations owed to the Secured Parties shall be entitled to be, and shall be, credit bid by the Administrative Agent at the direction of the Required Lenders on a ratable basis (with Secured Obligations with respect to contingent or unliquidated claims receiving contingent interests in the acquired assets on a ratable basis that shall vest upon the liquidation of such claims in an amount proportional to the liquidated portion of the contingent claim amount used in allocating the contingent interests) for the asset or assets so purchased (or for the equity interests or debt instruments of the acquisition vehicle or vehicles that are issued in connection with such purchase). In connection with any such bid, (i) the Administrative Agent shall be authorized to form one or more acquisition vehicles and to assign any successful credit bid to such acquisition vehicle or vehicles, (ii) each of the Secured Parties’ ratable interests in the Secured Obligations which were credit bid shall be deemed without any further action under this Agreement to be assigned to such vehicle or vehicles for the purpose of closing such sale, (iii) the Administrative Agent shall be authorized to adopt documents providing for the governance of the acquisition vehicle or vehicles (provided that any actions by the Administrative Agent with respect to such acquisition vehicle or vehicles, including any disposition of the assets or equity interests thereof, shall be governed, directly or indirectly, by, and the governing documents shall provide for, control by the vote of the Required Lenders or their permitted assignees under the terms of this Agreement or the governing documents of the applicable acquisition vehicle or vehicles, as the case may be, irrespective of the termination of this Agreement and without giving effect to the limitations on actions by the Required Lenders contained in Section 15.1), (iv) the Administrative Agent on behalf of such acquisition vehicle or vehicles shall be authorized to issue to each of the Secured Parties, ratably on account of the relevant Secured Obligations which were credit bid, interests, whether as equity, partnership interests, limited partnership interests or membership interests, in any such acquisition vehicle and/or debt instruments issued by such acquisition vehicle, all without the need for any Secured Party or acquisition vehicle to take any further action, and (v) to the extent that Secured Obligations that are assigned to an acquisition vehicle are not used to acquire Collateral for any reason (as a result of another bid being higher or better, because the amount of Secured Obligations assigned to the acquisition vehicle exceeds the amount of Secured Obligations credit bid by the acquisition vehicle or otherwise), such Secured Obligations shall automatically be reassigned to the Secured Parties pro rata with their original interest in such Secured Obligations and the equity interests and/or debt instruments issued by any acquisition vehicle on account of such Secured Obligations shall automatically be cancelled, without the need for any Secured Party or any acquisition vehicle to take any further action. Notwithstanding that the ratable portion of the Secured Obligations of each Secured Party are deemed assigned to the acquisition vehicle or vehicles as set forth in clause (ii) above, each Secured Party shall execute such documents and provide such information regarding the Secured Party (and/or any designee of the Secured Party which will receive interests in or debt instruments issued by such acquisition vehicle) as the Administrative Agent may reasonably request in connection with the formation of any acquisition vehicle, the formulation or submission of any credit bid or the consummation of the transactions contemplated by such credit bid.
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14.9 | Certain ERISA Matters. |
(a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Company or any other Loan Party, that at least one of the following is and will be true:
(i) such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) of one or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments or this Agreement,
(ii) the prohibited transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable so as to exempt from the prohibitions of Section 406 of ERISA and Section 4975 of the Code such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,
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(iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or
(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.
(b) In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Company or any other Loan Party, that the Administrative Agent is not a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto).
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SECTION 15 GENERAL.
15.1 Waiver; Amendments. No delay on the part of the Administrative Agent or any Lender in the exercise of any right, power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by any of them of any right, power or remedy preclude other or further exercise thereof, or the exercise of any other right, power or remedy. Except as otherwise set forth in this Agreement or any other Loan Document (including on Annex A), no amendment, modification or waiver of, or consent with respect to, any provision of this Agreement or the other Loan Documents shall in any event be effective unless the same shall be in writing and acknowledged by the Company and by the Required Lenders, and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that, in no case shall an amendment, modification, waiver or consent (a) extend or increase the Commitment of any Lender without the written consent of such Lender, (b) extend the date scheduled for payment of any principal (excluding mandatory prepayments) of or interest on the Loans or any fees payable hereunder without the written consent of each Lender directly affected thereby, (c) reduce the principal amount of any Loan, the rate of interest thereon or any fees payable hereunder, without the consent of each Lender directly affected thereby, (d) change the requisite percentage of Lenders in the definition of Required Lenders or any provision of this Section 15.1, or reduce the aggregate Pro Rata Share required to effect an amendment, modification, waiver or consent, without, in each case, the written consent of all Lenders; (e) change Section 7.2, Section 7.5 or Section 5.02 of the Collateral Agreement in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender directly affected thereby, (f) release all or substantially all of the value of the Guarantee Obligations of (x) the Subsidiary Loan Parties or (y) an IPO Entity (including, in each case, by limiting liability in respect thereof), in each case created under the Collateral Agreement, in each case without the written consent of each Lender (except as expressly provided in Section 15.12 or the Collateral Agreement (including any such release by the Administrative Agent in connection with any sale or other disposition of any Subsidiary upon the exercise of remedies under the Security Documents), it being understood and agreed that an amendment or other modification of the type of obligations guaranteed under the Collateral Agreement shall not be deemed to be a release or limitation of any such Guarantee Obligations) or (g) release all or substantially all the Collateral from the Liens of the Security Documents, or subordinate any such Liens to Liens securing any other Indebtedness for borrowed money, in each case, without the written consent of each Lender (except as expressly provided in Section 15.12 or the applicable Security Document (including any such release by the Administrative Agent in connection with any sale or other disposition of the Collateral upon the exercise of remedies under the Security Documents), it being understood and agreed that an amendment or other modification of the type of obligations secured by the Security Documents shall not be deemed to be a release of the Collateral from the Liens of the Security Documents); provided that any provision of this Agreement or any other Loan Document may be amended by an agreement in writing entered into by the Company and the Administrative Agent to cure any ambiguity, omission, defect, error, mistake or inconsistency (including amendments, supplements or waivers to any of the Security Documents, guarantees, intercreditor agreements or related documents executed by any Loan Party or any other Subsidiary in connection with this Agreement if such amendment, supplement or waiver is delivered in order to cause such Security Documents, guarantees, intercreditor agreements or related documents to be consistent with this Agreement and the other Loan Documents), so long as, in each case, the Lenders shall have received at least five Business Days’ prior written notice thereof and the Administrative Agent shall not have received, within five Business Days of the date of such notice to the Lenders, a written notice from the Required Lenders stating that the Required Lenders object to such amendment. No provision of Section 14 or other provision of this Agreement affecting the Administrative Agent in its capacity as such shall be amended, modified or waived without the consent of the Administrative Agent. No provision of this Agreement relating to the rights or duties of an Issuing Bank in its capacity as such shall be amended, modified or waived without the consent of such Issuing Bank.
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15.1.1 Extension Offers.
(a) The Company may on one or more occasions after the Effective Date, by written notice to the Administrative Agent, make one or more offers (each, an “Extension Offer”) to all the Lenders of one or more classes (each class subject to such an Extension Offer, an “Extension Request Class”) to enter into one or more Extension Permitted Amendments pursuant to procedures reasonably specified by the Administrative Agent and reasonably acceptable to the Company. Such notice shall set forth (i) the terms and conditions of the requested Extension Permitted Amendment(s) and (ii) the date on which such Extension Permitted Amendment(s) are requested to become effective (which shall not be less than five Business Days nor more than 30 Business Days after the date of such notice, unless otherwise agreed to by the Administrative Agent). Extension Permitted Amendments shall become effective only with respect to the Loans and Commitments of the Lenders of the Extension Request Class that accept the applicable Extension Offer (such Lenders, the “Extending Lenders”) and, in the case of any Extending Lender, only with respect to such Lender’s Loans and Commitments of such Extension Request Class as to which such Lender’s acceptance has been made. The Company shall have the right to withdraw any Extension Offer upon written notice to the Administrative Agent in the event that the aggregate amount of Loans and Commitments of the Extending Lenders is less than the aggregate amount specified by the Company in the Extension Offer to be extended.
(b) An Extension Permitted Amendment shall be effected pursuant to an Extension Agreement executed and delivered by the Company, each applicable Extending Lender and the Administrative Agent; provided that no Extension Permitted Amendment shall become effective unless (i) no Unmatured Event of Default shall have occurred and be continuing on the date of effectiveness thereof, (ii) on the date of effectiveness thereof, the representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct (A) in the case of the representations and warranties qualified as to materiality, in all respects, and (B) otherwise, in all material respects, in each case on and as of such date, except in the case of any such representation and warranty that specifically relates to an earlier date, in which case such representation and warranty shall be so true and correct on and as of such earlier date, and (iii) the Company shall have delivered to the Administrative Agent such customary legal opinions, board resolutions, secretary’s certificates, officer’s certificates and other customary documents as shall reasonably be requested by the Administrative Agent in connection therewith. The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Extension Agreement. Each Extension Agreement may, without the consent of any Lender other than the applicable Extending Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of the Administrative Agent, to give effect to the provisions of this Section 15.1.1, including any amendments necessary to treat the applicable Loans and/or Commitments of the accepting Lenders as a new “class” of loans and/ commitments hereunder; provided that, except as otherwise agreed to by each Issuing Bank, (i) the allocation of the participation exposure with respect to any then-existing or subsequently issued or made Letter of Credit as between the commitments of such new “class” and the remaining Commitments shall be made on a ratable basis as between the commitments of such new “class” and the remaining Commitments and (ii) the Termination Date, as such term is used in reference to Letters of Credit, may not be extended without the prior written consent of each Issuing Bank unless the Company Cash Collateralizes all Letters of Credit issued by each such non-consenting Issuing Bank.
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15.2 | Notices. |
15.2.1 Notices Generally. Except as otherwise provided in Sections 2.2.1 and 2.2.2, all notices hereunder shall be in writing (including facsimile transmission) and shall be sent to the applicable party at (i) in the case of the Company, the Administrative Agent or any Issuing Bank, its address shown on Annex B or at such other address as such party may, by written notice received by the other parties, have designated as its address for such purpose or (ii) in the case of any Lender, its address specified in an administrative questionnaire in the form supplied by the Administrative Agent. Notices sent by facsimile transmission shall be deemed to have been given when sent; notices sent by mail shall be deemed to have been given three Business Days after the date when sent by registered or certified mail, postage prepaid; and notices sent by hand delivery or overnight courier service shall be deemed to have been given when received.
15.2.2 Electronic Communications.
(a) Notices and other communications to the Company, any Loan Party, the Lenders and the Issuing Banks hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites, including the Approved Electronic Platform) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Section 2.2.1 or 2.2.2 unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or the Company may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. Each Loan Party understands that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution and agrees and assumes the risks associated with such electronic distribution.
(b) Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.
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15.3 Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that (a) if the Company notifies the Administrative Agent that the Company requests an amendment to any provision (including any definition) hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Company that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then (i) such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith and (ii) if requested by the Administrative Agent or the Required Lenders, the Company shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of any ratio or requirement made hereunder before and after giving effect to such change in GAAP and (b) notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, (A) without giving effect to any election under Accounting Standards Codification 825, The Fair Value Option for Financial Assets and Financial Liabilities (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Debt of the Company or any Subsidiary at “fair value”, as defined therein and (B) without giving effect to any treatment of Debt under Accounting Standards Codification 470-20, Debt with Conversion and Other Options, or Accounting Standards Codification 2015-03, Interest (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Debt in a reduced or bifurcated manner as described therein, and such Debt shall at all times be valued at the full stated principal amount thereof.
15.4 | Costs and Expenses. |
15.4.1 The Company shall pay (i) all reasonable and documented out of pocket expenses (without duplication) incurred by the Administrative Agent and the Arrangers, which in the case of legal fees shall be limited to the reasonable fees, charges and disbursements of one firm or counsel for all of the foregoing, in connection with the structuring, arrangement and syndication of the credit facilities provided for herein or similar facility refinancing or replacing, in whole or in part, any of the credit facilities provided for herein, as well as the preparation, negotiation, execution, delivery and administration of this Agreement, the other Loan Documents or any waiver, amendments or modifications of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable and documented out of-pocket expenses incurred by any Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable out-of-pocket expenses incurred by the Administrative Agent or any Lender, which in the case of legal fees shall be limited to the reasonable and documented or invoiced out-of-pocket fees, expenses, disbursements and other charges of a single firm of counsel for the Administrative Agent and Lenders, taken as a whole and, to the extent necessary, a single firm of local counsel in each appropriate local jurisdiction (which may include a single special counsel acting in multiple jurisdictions) (and, in the case of an actual or perceived conflict of interest where such Administrative Agent and/or Lenders affected by such conflict notifies the Company of any existence of such conflict and in connection with the investigating, responding to or defending any of the foregoing has retained its own counsel, of one other firm of counsel for such affected Person in each appropriate jurisdiction)), in connection with the enforcement or protection of its rights in connection with the Loan Documents, including its rights under this Section 15.4.1, or in connection with the Loans made or Letters of Credit issued hereunder.
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15.4.2 Lender Reimbursement. Each Lender severally agrees to pay any amount required to be paid by the Company under Section 15.4.1, 15.16 or 15.17 to the Administrative Agent, each Issuing Bank and each Related Party of any of the foregoing Persons (each, an “Agent-Related Person”) (to the extent not reimbursed by the Company and without limiting the obligation of the Company to do so), ratably according to their respective Pro Rata Share in effect on the date on which such payment is sought under this Section 15.4.2 (or, if such payment is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with such Pro Rata Share immediately prior to such date), from and against any and all Liabilities and related expenses, including the fees, charges and disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against such Agent-Related Person in any way relating to or arising out of the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent-Related Person under or in connection with any of the foregoing; provided that the unreimbursed expense or Liability or related expense, as the case may be, was incurred by or asserted against such Agent-Related Person in its capacity as such; provided further that no Lender shall be liable for the payment of any portion of such Liabilities, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted primarily from such Agent-Related Person’s gross negligence or willful misconduct. The agreements in this Section 15.4.2 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
15.4.3 Payments. All amounts due under Section 15.4, 15.6 or 15.7 shall be payable within 30 days from the date such Lender or such Administrative Agent (as the case may be) makes written demand therefor.
15.5 | Successors and Assigns. |
(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of an Issuing Bank that issues any Letter of Credit), except that (i) the Company may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Company without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 15.5. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of an Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in paragraph (c) of this Section 15.5) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
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(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Persons (other than an Ineligible Institution) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment, participations in Letters of Credit and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld, conditioned or delayed) of:
(A) the Company; provided that, the Company shall be deemed to have consented to an assignment of all or a portion of the Loans and Commitments unless it shall have objected thereto by written notice to the Administrative Agent within ten Business Days after having received notice thereof provided that no consent of the Company shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default under Section 13.1(a) or 13.1(c) has occurred and is continuing, any other assignee;
(B) the Administrative Agent; provided that no consent of the Administrative Agent shall be required for an assignment of any Commitment to an assignee that is a Lender (other than a Defaulting Lender) with a Commitment immediately prior to giving effect to such assignment; and
(C) each Issuing Bank.
(i) Assignments shall be subject to the following additional conditions:
(A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Company and the Administrative Agent otherwise consent; provided that no such consent of the Company shall be required if an Event of Default has occurred and is continuing;
(B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement;
(C) the parties to each assignment shall execute and deliver to the Administrative Agent (x) an Assignment and Assumption provided that assignments made pursuant to Section 8.6 shall not require the signature of the assigning Lender to become effective or (y) to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Administrative Agent and the parties to the Assignment and Assumption are participants, together with a processing and recordation fee of $3,500 (which fee may be waived or reduced in the sole discretion of the Administrative Agent); and
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(D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire in which the assignee designates one or more “credit contacts” to whom all syndicate-level information (which may contain material non-public information about the Company, the other Loan Parties and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including federal and state securities laws.
For the purposes of this Section 15.5(b), the term “Approved Fund” and “Ineligible Institution” have the following meanings:
“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“Ineligible Institution” means (a) a natural person, (b) a Defaulting Lender or any Person as to which such Defaulting Lender is, directly or indirectly, a subsidiary, (c) a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person or relative(s) thereof or (d) the Company or any of its Affiliates.
(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section 15.5, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 7.6, 8.1, 8.3, 15.4 and 15.16). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 15.5 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section 15.5.
(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Company, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount (and stated interest) of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Company, the Administrative Agent, the Issuing Banks and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Company and solely with respect to Letters of Credit, the applicable Issuing Bank, at any reasonable time and from time to time upon reasonable prior notice.
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(v) Upon its receipt of (x) a duly completed Assignment and Assumption executed by an assigning Lender and, if applicable, an assignee and the assignee’s completed administrative questionnaire or (y) to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Administrative Agent and the parties to the Assignment and Assumption are participants, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section 15.5 and any written consent to such assignment required by paragraph (b) of this Section 15.5, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by it pursuant to Section 2.3.4 or 2.3.5, 2.05, 7.1(b) or 15.4.2, the Administrative Agent shall have no obligation to accept such Assignment and Assumption and record the information therein in the Register unless and until such payment shall have been made in full, together with all accrued interest thereon. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.
(c) Any Lender may, without the consent of, or notice to, the Company, the Administrative Agent or the Issuing Banks, sell participations to one or more banks or other entities (a “Participant”), other than an Ineligible Institution, in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged; (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; and (C) the Company, the Administrative Agent, the Issuing Banks and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the third sentence of Section 15.1 that affects such Participant. The Company agrees that each Participant shall be entitled to the benefits of Sections 7.6, 8.1 and 8.3 (subject to the requirements and limitations therein, including the requirements under Section 7.6 (it being understood that the documentation required under Section 7.6 shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Section 8.6 as if it were an assignee under paragraph (b) of this Section; and (B) shall not be entitled to receive any greater payment under Section 7.6 or 8.1, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Company’s request and expense, to use reasonable efforts to cooperate with the Company to effectuate the provisions of Section 8.6(b) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 7.4 as though it were a Lender; provided that such Participant agrees to be subject to Section 7.5(a) as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Company, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans, Letters of Credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations or Section 1.163-5(b) of the United States Proposed Treasury Regulations (or, in each case, any amended or successor version). The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
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(d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section 15.5 shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
15.6 | Forum Selection and Consent to Jurisdiction. |
(a) Each party hereto irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Administrative Agent, any Lender, any Issuing Bank or any Related Party of any of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits, for itself and its property, to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York state court or, to the fullest extent permitted by applicable law, in such federal court. Each party hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent, any Lender or any Issuing Bank may otherwise have to bring any action, litigation or proceeding relating to this Agreement or any other Loan Document against any Loan Party or any of its properties in the courts of any jurisdiction.
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(b) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action, litigation or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (a) of this Section 15.6. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
15.7 Governing Law. This Agreement and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement and the transactions contemplated hereby shall be governed by, and construed in accordance with, the law of the State of New York.
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15.8 Confidentiality. As required by federal law and the Administrative Agent’s policies and practices, the Administrative Agent may need to obtain, verify, and record certain customer identification information and documentation in connection with opening or maintaining accounts, or establishing or continuing to provide services. The Administrative Agent and each Lender (which term shall, for the purposes of this Section 15.8, include each Issuing Bank) agree to maintain, using efforts the Administrative Agent or such Lender applies to maintain the confidentiality of its own confidential information, as confidential all information provided to them by any Loan Party, except that the Administrative Agent and each Lender may disclose such information (a) to its Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of the Administrative Agent, such Lender or such Affiliate on a “need to know” basis (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential or are subject to customary confidentiality obligations of professional practice or who agree in writing to be bound by the terms of this paragraph (or language substantially similar to this paragraph) (and to the extent a person’s compliance is within the control of the Administrative Agent, Issuing Bank or Lender, such Administrative Agent, Issuing Bank or Lender will be responsible for such compliance)); (b) to any assignee or participant or potential assignee or participant that has agreed to comply with the covenant contained in this Section 15.8 (and any such assignee or participant or potential assignee or participant may disclose such information to Persons employed or engaged by them as described in clause (a) above); (c) as required or requested by any federal or state regulatory authority or examiner, or any insurance industry association, or as reasonably believed by the Administrative Agent or such Lender to be compelled by any court decree, subpoena or legal or administrative order or process; (d) as, on the advice of the Administrative Agent’s or such Lender’s counsel, is required by Law; (e) in connection with (i) the exercise of any remedy or the enforcement of any right under this Agreement or any other Loan Document in any litigation or arbitration action or proceeding relating thereto, to the extent such disclosure is reasonably necessary in connection with such litigation or arbitration action or proceeding (provided that the Company shall be given notice thereof and a reasonable opportunity to seek a protective court order with respect to such Information prior to such disclosure (it being understood that the refusal by a court to grant such a protective order shall not prevent the disclosure of such Information thereafter)) and (ii) any foreclosure, sale or other disposition of any Collateral in connection with the exercise of remedies under the Security Documents, subject to each potential transferee of such Collateral having entered into customary confidentiality undertakings with respect to such Collateral prior to the disclosure thereof to such Person (which confidentiality obligations will cease to apply to any transferee upon the consummation of its acquisition of such Collateral); (f) to any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender; (g) to any Affiliate of the Administrative Agent or each Issuing Bank (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential or are subject to customary confidentiality obligations of professional practice or who agree in writing to be bound by the terms of this paragraph (or language substantially similar to this paragraph) (and to the extent a person’s compliance is within the control of the Administrative Agent, Issuing Bank or Lender, such Administrative Agent, Issuing Bank or Lender will be responsible for such compliance)); (h) on a confidential basis to (x) any rating agency in connection with rating the Company or its Subsidiaries or the facilities provided for in this Agreement or (y) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the facilities provided for in this Agreement; or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section 15.8, (y) becomes available to the Administrative Agent, any Lender, the Issuing Bank or any of their respective Affiliates on a non-confidential basis from a source that is not subject to these confidentiality provisions. Notwithstanding the foregoing, the Company consents to the publication by the Administrative Agent or any Lender of a tombstone or similar advertising material relating to the financing transactions contemplated by this Agreement, and the Administrative Agent reserves the right to provide to industry trade organizations information necessary and customary for inclusion in league table measurements. For purposes of this Section 15.8, “Information” means all information received from the Company relating to the Company or any Subsidiary or their respective businesses, other than (i) any information that is available to the Administrative Agent, any Lender or any Issuing Bank on a nonconfidential basis prior to disclosure by the Company and (ii) information pertaining to this Agreement routinely provided by arrangers to data service providers, including league table providers, that serve the lending industry; provided that, in the case of information received from the Company after the date hereof, such information is clearly identified at the time of delivery as confidential.
15.9 Severability. Whenever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision of this Agreement shall be prohibited by or invalid under applicable Law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. All obligations of the Company and rights of the Administrative Agent and the Lenders expressed herein or in any other Loan Document shall be in addition to and not in limitation of those provided by applicable Law.
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15.10 Nature of Remedies. All Obligations of the Company and rights of the Administrative Agent and the Lenders expressed herein or in any other Loan Document shall be in addition to and not in limitation of those provided by applicable Law. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
15.11 Entire Agreement. This Agreement, together with the other Loan Documents and Annex A, embodies the entire agreement and understanding among the parties hereto and supersedes all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof (except as relates to the fees described in Section 5.3 and any prior arrangements made with respect to the payment by the Company of (or any indemnification for) any fees, costs or expenses payable to or incurred (or to be incurred) by or on behalf of the Administrative Agent or the Lenders).
15.12 Release of Liens and Guarantees.
(a) Subject to the reinstatement provisions set forth in the Collateral Agreement, (A) a Guarantor shall automatically be released from its obligations under the Loan Documents, and all security interests created by the Security Documents in Collateral owned by such Guarantor shall be automatically released (i) upon the occurrence of the Termination Date and the payment in full of the Obligations (other than contingent amounts not yet due) and (ii) upon the consummation of any transaction permitted by this Agreement as a result of which such Subsidiary Loan Party ceases to be a Designated Subsidiary (provided that release of any Subsidiary that no longer is a Designated Subsidiary by virtue of being an Immaterial Subsidiary shall require the Company’s consent) and (B) the security interests created by the Security Documents in Collateral owned by a Guarantor shall be automatically released, (i) with respect to any property of such Guarantor that becomes an Excluded Asset (including, for the avoidance of doubt, any Material Real Property that subsequently becomes located in a special flood hazard area) and (ii) with respect to all property of such Guarantor, upon the release of such Guarantor from its Guarantee of the Obligations otherwise in accordance with the Loan Documents. Upon any sale or other transfer by any Loan Party (other than to the Company or any other Loan Party, or to any Subsidiary that, upon the consummation of such sale or other transfer would be required to become a Loan Party) of any Collateral in a transaction permitted under this Agreement, or upon the effectiveness of any written consent to the release of the security interest created under any Security Document in any Collateral pursuant to Section 15.1, the security interests in such Collateral created by the Security Documents shall be automatically released. Notwithstanding anything to the contrary in this Agreement or in any other Loan Document, without the consent of the Required Lenders, no Loan Party shall be released from its obligations under the Loan Documents if such Loan Party ceases to be a Wholly-Owned Subsidiary solely by virtue of a disposition or issuance of Equity Interests, unless such disposition or issuance is a good faith disposition or issuance to a bona-fide unaffiliated third party whose primary purpose is not the release of the Guarantee and obligations of such Loan Party under the Loan Documents. In connection with any termination or release pursuant to this Section 15.12, the Administrative Agent shall execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence such termination or release. Any execution and delivery of documents pursuant to this Section 15.12 shall be without recourse to or warranty by the Administrative Agent. Each of the Secured Parties irrevocably authorize the Administrative Agent, at its option and in its discretion, to effect the releases set forth in this Section 15.12.
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(b) In connection with any termination or release pursuant to paragraph (a) of this Section 15.12, the Administrative Agent shall execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence such termination or release so long as the applicable Loan Party shall have provided the Administrative Agent such certifications or documents as the Administrative Agent shall reasonably request in order to demonstrate compliance with this Section 15.12. Any execution and delivery of documents by the Administrative Agent pursuant to this Section 15.12 shall be without recourse to or warranty by the Administrative Agent.
15.13 Captions. Section captions used in this Agreement are for convenience only and shall not affect the construction of this Agreement.
15.14 Customer Identification – Certain Notices. Each Lender and JPMCB (for itself and not on behalf of any other party), hereby notifies the Loan Parties that, pursuant to the requirements of the Patriot Act and the Beneficial Ownership Regulation, it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of the Loan Parties and other information that will allow such Lender or JPMCB, as applicable, to identify the Loan Parties in accordance with the Patriot Act and the Beneficial Ownership Regulation.
15.15 Indemnification by the Company. The Company shall indemnify the Administrative Agent, each Issuing Bank, each Lender, each Arranger, the Syndication Agent, the Documentation Agent and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all Liabilities and reasonable and documented or invoiced out-of-pocket fees and expenses of one firm of counsel for all Indemnitees, taken as a whole, selected by the Administrative Agent (and, in the case of an actual or perceived conflict of interest where the Indemnitee affected by such conflict notifies the Company of any existence of such conflict and in connection with the investigating or defending any of the foregoing (including the reasonable fees) has retained its own counsel, of another firm of counsel for such affected Indemnitee), and to the extent required, one firm or local counsel in each relevant jurisdiction (which may include a single special counsel acting in multiple jurisdictions), incurred by or asserted against any Indemnitee arising out of any claim, actions, suits, inquiries, litigation, investigation or proceeding in connection with, or as a result of the Covered Matters; in each case, whether based on contract, tort or any other theory, and regardless of whether such matter is brought by a third party or by the Company or any Subsidiary or any of their respective Affiliates and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities, costs or related expenses are determined by a court of competent jurisdiction in a final and non-appealable judgment to have resulted from (x) the gross negligence, willful misconduct or bad faith of such Indemnitee or any of its Related Parties, (y) a material breach of an obligation under the Loan Documents by such Indemnitee or any of its Related Parties or (z) any claim, action, suit, inquiry, litigation, investigation or proceeding that does not involve an act or omission of the Company or any of its Affiliates and that is brought by an Indemnitee against any other Indemnitee (other than any claim, action, suit, inquiry, litigation, investigation or proceeding against the Administrative Agent, any Issuing Bank, any Arranger, the Syndication Agent or the Documentation Agent in its capacity as such). This paragraph shall not apply with respect to Taxes other than any Taxes that represent losses, claims or damages arising from any non-Tax claim.
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15.16 Limitations on Liability. None of the Administrative Agent, any Arranger, any Syndication Agent, any Documentation Agent, any Issuing Bank, any Lender or any Related Party of any of the foregoing Persons (each such Person being called a “Lender-Related Person”) shall have any Liabilities (whether direct or indirect and whether based on contract, tort or any other theory and whether or not related to third party claims, intraparty claims, or the indemnification rights set forth in Section 15.16) to the Company or its Subsidiaries and each Related Party of any of the foregoing for or in connection with any Covered Matter, except to the extent that such Liabilities are determined by a court of competent jurisdiction by final and nonappealable judgment to have primarily resulted from the gross negligence or willful misconduct of such Lender-Related Person. In addition to the foregoing, to the extent permitted by applicable law (i) none of the Company or any other Loan Party shall assert, and each of the Company and each other Loan Party hereby waives, any claim against any Lender-Related Person for any Liabilities arising from the use by others of information or other materials obtained through telecommunications, electronic or other information transmission systems (including the Internet), and (ii) no party hereto shall assert, and each such party hereby waives, any Liabilities against any other party hereto, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document, or any agreement or instrument contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof; provided that, nothing in this clause (ii) shall relieve the Company of any obligation it may have to indemnify an Indemnitee against special, indirect, consequential or punitive damages asserted against such Indemnitee by a third party.
15.17 Posting of Communications.
(a) The Company agree that the Administrative Agent may, but shall not be obligated to, make any Communications available to the Lenders and the Issuing Banks by posting the Communications on IntraLinks™, DebtDomain, SyndTrak, ClearPar or any other electronic platform chosen by the Administrative Agent to be its electronic transmission system (the “Approved Electronic Platform”).
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(b) Although the Approved Electronic Platform and its primary web portal are secured with generally-applicable security procedures and policies implemented or modified by the Administrative Agent from time to time (including, as of the Effective Date, a user ID/password authorization system) and the Approved Electronic Platform is secured through a per-deal authorization method whereby each user may access the Approved Electronic Platform only on a deal-by-deal basis, each of the Lenders, each of the Issuing Banks and the Company acknowledges and agrees that the distribution of material through an electronic medium is not necessarily secure, that the Administrative Agent is not responsible for approving or vetting the representatives or contacts of any Lender that are added to the Approved Electronic Platform, and that there may be confidentiality and other risks associated with such distribution. Each of the Lenders, each of the Issuing Banks and the Company hereby approves distribution of the Communications through the Approved Electronic Platform and understands and assumes the risks of such distribution.
(c) THE APPROVED ELECTRONIC PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” NEITHER THE ADMINISTRATIVE AGENT NOR ANY OF ITS RELATED PARTIES WARRANTS THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS OR THE ADEQUACY OF THE PLATFORM AND EACH EXPRESSLY DISCLAIMS LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS IS MADE BY THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES HAVE ANY LIABILITY TO ANY LOAN PARTY, ANY LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, WHETHER OR NOT BASED ON STRICT LIABILITY AND INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY LOAN PARTY’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY SUCH PERSON IS FOUND IN A FINAL RULING BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(d) Each Lender and each Issuing Bank agrees that notice to it (as provided in the next sentence) specifying that Communications have been posted to the Approved Electronic Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents. Each Lender and Issuing Bank agrees (i) to notify the Administrative Agent in writing (which could be in the form of electronic communication) from time to time of such Lender’s or Issuing Bank’s (as applicable) email address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such email address.
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(e) Each of the Lenders, each of the Issuing Banks and the Company agrees that the Administrative Agent may, but (except as may be required by applicable law) shall not be obligated to, store the Communications on the Approved Electronic Platform in accordance with the Administrative Agent’s generally applicable document retention procedures and policies.
(f) Nothing herein shall prejudice the right of the Administrative Agent, any Lender or any Issuing Bank to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.
15.18 Counterparts; Effectiveness; Electronic Execution. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of (x) this Agreement, (y) any other Loan Document and/or (z) any document, amendment, approval, consent, information, notice (including, for the avoidance of doubt, any notice delivered pursuant to Section 15. 2), certificate, request, statement, disclosure or authorization related to this Agreement, any other Loan Document and/or the transactions contemplated hereby and/or thereby (each an “Ancillary Document”) that is an Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page shall be effective as delivery of a manually executed counterpart of this Agreement, such other Loan Document or such Ancillary Document, as applicable. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Agreement, any other Loan Document and/or any Ancillary Document shall be deemed to include Electronic Signatures, deliveries or the keeping of records in any electronic form (including deliveries by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page), each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be; provided that nothing herein shall require the Administrative Agent to accept Electronic Signatures in any form or format without its prior written consent and pursuant to procedures approved by it (it being understood that an electronic copy of a “wet ink” signature page transmitted by telecopy or emailed pdf. is acceptable to the Administrative Agent); provided, further, without limiting the foregoing, (i) to the extent that the Administrative Agent has agreed to accept any Electronic Signature, the Administrative Agent and each of the applicable Lenders and Issuing Banks shall be entitled to rely on such Electronic Signature purportedly given by or on behalf of the Company or any other Loan Party without further verification thereof and without any obligation to review the appearance or form of any such Electronic signature and (ii) upon the request of the Administrative Agent, any Electronic Signature shall be promptly followed by a manually executed counterpart.
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15.19 Acknowledgement Regarding Any Supported QFCs.
(a) To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Hedging Agreements or any other agreement or instrument that is a QFC (such support, “QFC Credit Support” and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States).
(b) In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
15.20 WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE ADMINISTRATIVE AGENT, EACH ARRANGER AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
15.21 Statutory Notice-Oral Commitments. Nothing contained in the following notice shall be deemed to limit or modify the terms of this Agreement and the other Loan Documents:
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ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT THE COMPANY AND EACH OTHER LOAN PARTY (BORROWER) AND THE ADMINISTRATIVE AGENT AND THE LENDERS (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS THE COMPANY AND THE ADMINISTRATIVE AGENT AND THE LENDERS REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.
The Company acknowledges that there are no other agreements between the Administrative Agent, the Lenders, the Company and the other Loan Parties, oral or written, concerning the subject matter of the Loan Documents, and that all prior agreements concerning the same subject matter, including any proposal or commitment letter, are merged into the Loan Documents and thereby extinguished.
15.22 Survival of Representation, Warranties and Agreements. All covenants, agreements, representations and warranties made by the Loan Parties in this Agreement and the other Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the other Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, any Arranger, any Syndication Agent, any Documentation Agent, any Issuing Bank, any Lender or any Affiliate of any of the foregoing may have had notice or knowledge of any Unmatured Event of Default or incorrect representation or warranty at the time this Agreement or any other Loan Document is executed and delivered or any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any LC Exposure is outstanding and so long as the Commitments have not expired or terminated. Notwithstanding the foregoing or anything else to the contrary set forth in this Agreement or any other Loan Document, in the event that, in connection with the refinancing or repayment in full of the credit facilities provided for herein, an Issuing Bank shall have provided to the Administrative Agent a written consent to the release of the Lenders from their obligations hereunder with respect to any Letter of Credit issued by such Issuing Bank (whether as a result of the obligations of the Company (and any other account party) in respect of such Letter of Credit having been collateralized in full by a deposit of cash with such Issuing Bank, or being supported by a letter of credit that names such Issuing Bank as the beneficiary thereunder, or otherwise), then from and after such time such Letter of Credit shall cease to be a “Letter of Credit” outstanding hereunder for all purposes of this Agreement and the other Loan Documents, and the Lenders shall be deemed to have no participations in such Letter of Credit, and no obligations with respect thereto, under Section 2.3.4 or 2.3.5. The provisions of Sections 7.6, 8.1, 8.3, 14, 15.4 and 15.16 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment or prepayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.
133
15.23 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among the parties hereto, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.
15.24 No Fiduciary Relationship. The Company, on behalf of itself and its Subsidiaries, agrees that in connection with all aspects of the transactions contemplated hereby and any communications in connection therewith, the Company and its Subsidiaries, on the one hand, and the Administrative Agent, the Lenders and the Issuing Banks, on the other hand, will have a business relationship that does not create, by implication or otherwise, any fiduciary duty on the part of the Administrative Agent, the Lenders or the Issuing Banks, and no such duty will be deemed to have arisen in connection with any such transactions or communications. The Administrative Agent, the Arrangers, the Lenders and the Issuing Banks may be engaged, for their own accounts or the accounts of customers, in a broad range of transactions that involve interests that differ from, and may have economic interests that conflict with, those of the Company and its Subsidiaries, and none of the Administrative Agent, the Arrangers, the Lenders or the Issuing Banks has any obligation to disclose any of such interests to the Company or any of its Subsidiaries.
[Signature Pages Follow]
134
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
BRIGHT HEALTH GROUP, INC., | |||
by | |||
/s/ Cathy Smith | |||
Name: Cathy Smith | |||
Title: | Executive Vice President and | ||
Chief Financial Officer and | |||
Chief Administrative Officer |
[Signature Page to Credit Agreement]
JPMORGAN CHASE BANK, N.A., | ||
as Administrative Agent and Collateral Agent | ||
by | ||
By | /s/ Dawn Lee Lum | |
Name: Dawn Lee Lum | ||
Title: Executive Director |
[Signature Page to Credit Agreement]
JPMORGAN CHASE BANK, N.A., | |||
by | |||
By | /s/ Dawn Lee Lum | ||
Name: | Dawn Lee Lum | ||
Title: | Executive Director |
[Signature Page to Credit Agreement]
BARCLAYS BANK PLC, | |||
By: | /s/ Ronnie Glenn | ||
Name: | Ronnie Glenn | ||
Title: | Director |
[Signature Page to Credit Agreement]
GOLDMAN SACHS LENDING PARTNERS LLC, | |||
by | |||
/s/ Thomas Manning | |||
Name: | Thomas Manning | ||
Title: | Authorized Signatory |
[Signature Page to Credit Agreement]
MORGAN STANLEY SENIOR FUNDING, INC. | |||
by | |||
/s/ Michael King | |||
Name: | Michael King | ||
Title: | Vice President |
[Signature Page to Credit Agreement]
BANK OF AMERICA, N.A., | |||
by | |||
/s/ Yinghua Zhang | |||
Name: | Yinghua Zhang | ||
Title: | Director |
[Signature Page to Credit Agreement]
EXHIBIT A
[FORM OF]
BORROWING REQUEST
JPMorgan Chase Bank, N.A.,
as Administrative Agent (the “Administrative Agent”) for
the Lenders party to the Credit Agreement referred to below
JPMorgan Chase Bank, N.A.
500 Stanton Christiana Rd.
NCC5 / 1st Floor
Newark, DE 19713
Attention: Loan & Agency Services Group
Tel: 302-634-1027
Email: himran.aziz@chase.com, with a copy to harmeet.kaur@chase.com
[Date]
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement dated as of March [•], 2021 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Bright Health Group, Inc. (the “Company”), the lenders party thereto from time to time (the “Lenders”) and you, as Administrative Agent and Collateral Agent for such Lenders. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. The Company hereby gives you notice pursuant to Section 2.2.1 of the Credit Agreement that it requests a borrowing under the Credit Agreement, and in that connection sets forth below the terms on which such borrowing is requested to be made:
(i) | Date of Borrowing (which is a Business Day) |
(ii) | Aggregate Amount of Borrowing |
(iii) | Type of Borrowing1 |
(iv) | Interest Period and the last day thereof2 |
(v) |
Funds
are requested to be disbursed to the [Company’s] [Issuing Bank’s] account
as follows (Account No. [ ])
|
1 Specify Base Rate Borrowing or LIBOR Borrowing.
2 Which shall be subject to the definition of “Interest Period” and end not later than the Termination Date (applicable for LIBOR Loans).
The Company hereby represents and warrants to the Administrative Agent and the Lenders that, on the date of this Borrowing Request and on the date of the related borrowing, the conditions to lending specified in Section 12.2 of the Credit Agreement have been satisfied (or waived).
BRIGHT HEALTH GROUP, INC. |
by | ||
Name: | ||
Title: [Responsible Officer] |
2
EXHIBIT B
[FORM OF]
INTEREST ELECTION REQUEST
Reference is made to that Credit Agreement dated as of March [•], 2021 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Bright Health Group, Inc. (the “Company”), the lenders party thereto from time to time and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent. All terms used herein but not otherwise defined herein are used herein as defined in the Credit Agreement.
Pursuant to Section 2.2.2 of the Credit Agreement, the Company desires to convert or to continue the following Loans, each such conversion and/or continuation to be effective as of [___], 202[__]:
$[_____] | LIBOR Loans3 to be converted to Base Rate Loans |
$[_____] | Base Rate Loans to be converted to LIBOR Loans4 with Interest Period of [one] [two] [three] [six] [twelve] month[s]5 |
[_____] | LIBOR Loans to be continued6 with Interest Period of [one] [two] [three] [six] [twelve] month[s]7 |
3 LIBOR Loans may only be converted on the expiration of the applicable Interest Period unless the Company shall pay all breakage costs incurred in connection with such conversion.
4 No Loan may be converted into a LIBOR Loan when any Unmatured Event of Default or Event of Default has occurred and is continuing.
5 Twelve month Interest Periods must be agreed to by each Lender.
6 No LIBOR Loan may be continued when any Unmatured Event of Default or Event of Default has occurred and is continuing.
7 Twelve month Interest Periods must be agreed to by each Lender.
Date: [_____], 202[__]
BRIGHT HEALTH GROUP, INC. |
by | ||
Name: | ||
Title: |
2
EXHIBIT C
[FORM OF]
NOTE
$[________]
[ ], 202[__]
New York, New York
FOR VALUE RECEIVED, BRIGHT HEALTH GROUP, INC. (the “Company”), promises to pay [NAME OF LENDER] (“Payee”) or its registered assigns, on or before [ ], 202[ ], the lesser of (a) $[ ] and (b) the unpaid principal amount of all advances made by Payee to the Company as Loans under the Credit Agreement referred to below.
The Company also promises to pay interest on the unpaid principal amount hereof time to time outstanding at the rates and at the times which shall be determined in accordance with the provisions of that certain Credit Agreement dated as of March [•], 2021 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Company, the lenders party thereto from time to time and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent. All terms used herein but not otherwise defined herein are used herein as defined in the Credit Agreement.
The date, amount, type, interest rate and duration of Interest Period (if applicable) of each Loan made by the Lenders to the Company, and each payment made on account of the principal thereof, shall be recorded by the Lender on its books and, prior to any transfer of this Note, endorsed by the Lender on the schedule attached hereto or any continuation thereof; provided that the failure of the Lender to make any such recordation or endorsement shall not affect the obligations of the Company to make a payment when due of any amount owing under the Credit Agreement in respect of the Loans made by the Lender.
This Note is one of the “Notes” referred to and issued pursuant to the Credit Agreement, to which reference is hereby made for a more complete statement of the terms and conditions under which the Loans evidenced hereby were made and are to be repaid.
This Note is subject to voluntary and mandatory prepayment by the Company, each as provided in the Credit Agreement.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE CREDIT AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF THE CREDIT AGREEMENT.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE COMPANY AND PAYEE HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.
Upon the occurrence of an Event of Default which is continuing, the unpaid balance of the principal amount of this Note, together with all accrued and unpaid interest thereon, may become, or may be declared to be, due and payable, all as provided in the Credit Agreement.
The terms of this Note are subject to amendment only in the manner provided in the Credit Agreement.
[Remainder of page intentionally left blank]
2
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed and delivered by its officer thereunto duly authorized as of the date and at the place first written above.
BRIGHT HEALTH GROUP, INC. |
by | ||
Name: | ||
Title: |
3
SCHEDULE OF LOANS
Date |
Type
of
Loan |
Interest
Rate |
Amount
of Loan Made This Date |
Amount
of
Principal Paid This Date |
Outstanding
Principal Balance This Date |
Notation
Made By |
||||||
4
EXHIBIT D
[FORM OF]
NOTICE OF PREPAYMENT
JPMorgan Chase Bank, N.A.,
as Administrative Agent (the “Administrative Agent”) for
the Lenders party to the Credit Agreement referred to below
JPMorgan Chase Bank, N.A.
500 Stanton Christiana Rd.
NCC5 / 1st Floor
Newark, DE 19713
Attention: Loan & Agency Services Group
Tel: 302-634-1027
Email: himran.aziz@chase.com, with a copy to harmeet.kaur@chase.com
[Date]
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of March [•], 2021 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Bright Health Group, Inc. (the “Company”), the lenders party thereto from time to time (the “Lenders”) and you, as Administrative Agent and Collateral Agent for such Lenders. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.
The Company hereby gives you notice pursuant to Section 6.2.1 of the Credit Agreement that it shall be making a prepayment under the Credit Agreement:
(i) | Prepayment date _________________ |
(ii) | Type of Loans being prepaid [LIBOR Loan]8 [Base Rate Loan]9 |
(iii) | Principal amount of Loans or portion thereof being prepaid _________________ |
[signature page follows]
8 Hand delivery, telecopy, facsimile or other electronic transmission of notice regarding prepayment of LIBOR Loans must be delivered not later than 12:00 p.m., New York City time, three (3) Business Days before the date of prepayment.
9 Hand delivery, telecopy, facsimile or other electronic transmission of notice regarding prepayment of Base Rate Loans must be delivered not later than 12:00 p.m., New York City time, one (1) Business Day before the date of prepayment.
BRIGHT HEALTH GROUP, INC. |
by | ||
Name: | ||
Title: [Responsible Officer] |
2
EXHIBIT E
[FORM OF]
SOLVENCY CERTIFICATE
[DATE]
This Solvency Certificate is being executed and delivered pursuant to Section 12.1(h) of that certain Credit Agreement dated as of March [•], 2021 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Bright Health Group, Inc. (the “Company”), the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent. Capitalized terms used but not defined herein have the meanings assigned thereto in the Credit Agreement.
I, [ ], the Chief Financial Officer of Company, in such capacity and not in an individual capacity, hereby certify as of the date hereof as follows:
1. | I am generally familiar with the businesses and assets of the Company and its Subsidiaries, taken as a whole, and am duly authorized to execute this Solvency Certificate on behalf of the Company pursuant to the Credit Agreement; and |
2. | as of the date hereof, immediately after giving effect to the Transactions on the date hereof that, (i) the sum of the debt and liabilities (subordinated, contingent or otherwise) of the Company and its Subsidiaries, taken as a whole, does not exceed the fair value of the assets (at a fair valuation) of the Company and its Subsidiaries, taken as a whole; (ii) the present fair saleable value of the assets (at a fair valuation) of the Company and its Subsidiaries, taken as a whole, is greater than the amount that will be required to pay the probable liabilities of the Company and its Subsidiaries, taken as a whole, on their debts and other liabilities subordinated, contingent or otherwise as they become absolute and matured; (iii) the capital of the Company and its Subsidiaries, taken as a whole, is not unreasonably small in relation to the business of the Company and its Subsidiaries, taken as a whole, as conducted or contemplated as of the date hereof; and (iv) the Company and its Subsidiaries, taken as a whole, have not incurred and do not intend to incur, or believe that they will incur, debts or other liabilities (including current obligations and contingent liabilities) beyond their ability to pay such debt or other liabilities as they become due (whether at maturity or otherwise). For the purposes hereof, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. |
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, I have executed this Solvency Certificate on the date first written above.
BRIGHT HEALTH GROUP, INC. | |||
by | |||
Name: | |||
Title: |
2
EXHIBIT F
[FORM OF]
COMPLIANCE CERTIFICATE
[•] [•], 202[•]
To: JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent
Please refer to the Credit Agreement dated as of March [•], 2021 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Bright Health Group, Inc. (the “Company”), the lenders party thereto from time to time and JPMorgan Chase Bank, as Administrative Agent and Collateral Agent. Terms used but not otherwise defined herein are used herein as defined in the Credit Agreement.
The undersigned hereby certifies, as a Responsible Officer of the Company, in such capacity and not in an individual capacity, that:
1. | I am a Responsible Officer of the Company; |
2. | I have reviewed the terms of the Credit Agreement and I have made, or have caused to be made under my supervision, a review in reasonable detail of the transactions and conditions of the Company and its Subsidiaries, on a consolidated basis, during the [Fiscal Quarter][Fiscal Year] covered by the attached financial statements; |
3. | A copy of the [annual audited/quarterly] report of the Company as at __ (the “Computation Date”), which report fairly presents in all material respects the financial condition and results of operations of the Company as of the Computation Date and has been prepared in accordance with GAAP [is enclosed herewith] [may be found at [the Company’s website at www.brighthealthplan.com][www.sec.gov]. |
4. | Following is a calculation of the Total Debt to Total Capitalization Ratio demonstrating compliance with the covenant set forth in Section 11.12.1 of the Credit Agreement: |
5. | Following is a calculation of the Minimum Liquidity demonstrating compliance with the covenant set forth in Section 11.12.2 of the Credit Agreement: |
6. | [Except as described in the disclosure set forth below, the][The] examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes an Event of Default or Unmatured Event of Default that exists as of the date of this Compliance Certificate [and the disclosure set forth below specifies, in reasonable detail, the nature of any such condition or event and any action taken or proposed to be taken with respect thereto.] |
7. | [Management Discussion] |
[•]10]
[Signature Page Follows]
10 A discussion of the Company’s financial condition, changes in financial condition and results of operations to be included prior to a Qualified IPO.
2
The foregoing certifications, together with the financial statements delivered with this Compliance Certificate in support hereof, are made and delivered as of the date first written above.
BRIGHT HEALTH GROUP, INC. | |||
by | |||
Name: | |||
Title: |
3
EXHIBIT G
[FORM OF PERFECTION CERTIFICATE]
EXHIBIT H
[FORM OF]
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the Effective Date (referred to below) and is entered into by and between the Assignor[s] identified below ([each an][the] “Assignor”) and the Assignee[s] identified below ([each an][the] “Assignee”). [The parties hereto hereby agree that the rights and obligations of the [Assignors][and][Assignees] hereunder are several and not joint.]1 Capitalized terms used but not defined herein shall have the meanings set forth in the Credit Agreement identified below (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”). The parties hereto hereby agree to the Standard Terms and Conditions for Assignment and Assumption (the “Standard Terms and Conditions”) specified in Annex 1 attached hereto which are incorporated herein by reference and made a part of this Assignment and Assumption as if set forth in full herein. [Each][The] Assignee hereby acknowledges receipt of a copy of the Credit Agreement.
Subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date (selected by the Administrative Agent identified below), and for an agreed consideration, [each][the] Assignor hereby irrevocably sells and assigns to the [respective] Assignee[s], and [each][the] Assignee hereby irrevocably purchases and assumes from the [respective] Assignor[s], (a) all of the [respective] Assignor[‘s][s’] rights and obligations as a Lender under the Credit Agreement, the other Loan Documents and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the [respective] Assignor[s] under the facilities identified below (including any letters of credit included therein) and (b) to the extent permitted by applicable law, all suits, claims, causes of action and any other right of the [respective] Assignor[s] (as [a Lender][Lenders]) against any Person, whether known or unknown, arising under or with respect to the Credit Agreement, any other Loan Document, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or otherwise based on or related to any of the foregoing, including, but not limited to, contract claims, statutory claims, tort claims, malpractice claims and all other claims at law or in equity with respect to the rights and obligations sold and assigned pursuant to clause (a) above (the rights and obligations sold and assigned pursuant to clauses (a) and (b) above, collectively, [an][the] “Assigned Interest”). Such sale and assignment is without recourse to [any][the] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [any][the] Assignor.
1. Assignor[s]: [and is [not] a Defaulting Lender]
2. Assignee[s]: [and is an Affiliate/Approved Fund of [NAME OF LENDER]]
3. Borrower: BRIGHT HEALTH GROUP, INC.
1 Include bracketed language if there are either multiple Assignors or multiple Assignees.
4. Administrative Agent: JPMorgan Chase Bank, N.A., as the administrative agent under the Credit Agreement
5. Credit Agreement: Credit Agreement dated as of March [•], 2021, among Bright Health Group, Inc., the lenders party thereto from time to time and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent
6. Assigned Interest[s]:
Assignor | Assignee |
Aggregate Amount of
Commitment/ Loans for all Lenders 2 |
Amount of
Commitment/ Loans Assigned |
Percentage of
Commitment/ Loans Assigned 3 |
CUSIP No. | ||||||||
_______ | _______ | $ | ____ | $ | ______ | _____ | % | ______ | |||||
_______ | _______ | $ | ____ | $ | ______ | _____ | % | ______ | |||||
_______ | _______ | $ | ____ | $ | ______ | _____ | % | ______ | |||||
_______ | _______ | $ | ____ | $ | ______ | _____ | % | ______ |
7. [Trade Date:[DATE] (COMPLETE IF THE PARTIES HERETO INTEND THAT THE MINIMUM ASSIGNMENT AMOUNT WILL BE DETERMINED AS OF THE TRADE DATE.)
Effective Date: [DATE] (THIS WILL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR; TO BE INSERTED BY THE ADMINISTRATIVE AGENT.)
8. | [[Each][The] Assignor attaches the Note[s] held by it and requests that the Administrative Agent exchange such Note[s] for new Note[s] payable to the [respective] Assignee in [an amount/amounts] equal to the [Commitment][and][ Loan[s]] assumed by the [respective] Assignee pursuant hereto [and to the [respective] Assignor in [an amount/amounts] equal to the [Commitment][and][Loan[s]] retained by the [respective] Assignor].] |
[SIGNATURE PAGE FOLLOWS]
2 Amounts in this column and in the column immediately to the right to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.
3 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.
2
The terms set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR | ||
[NAME OF ASSIGNOR] | ||
By: | ||
Name: | ||
Title: | ||
ASSIGNEE | ||
[NAME OF ASSIGNEE] | ||
By: | ||
Name: | ||
Title: |
3
[Consented to and]4 Accepted: | ||
JPMORGAN CHASE BANK, N.A., | ||
as Administrative Agent | ||
By: | ||
Name: | ||
Title: | ||
Consented to: | ||
[ ], as Issuing Bank | ||
By: | ||
Name: | ||
Title: | ||
[Consented to: | ||
BRIGHT HEALTH GROUP, INC. | ||
By: | ||
Name: | ||
Title:]5 |
4 To be added for Administrative Agent for assignments if such assignment is to a Person that is not a Lender, an Affiliate of a Lender or an Approved Fund.
5 To be added unless (1) an Event of Default under clauses (a) or (c) of Section 13.1 of the Credit Agreement has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund.
4
ANNEX 1 TO ASSIGNMENT AND ASSUMPTION
STANDARD
TERMS AND CONDITIONS FOR ASSIGNMENT
AND ASSUMPTION
1. Representations and Warranties.
1.1 Assignor[s]. [Each][The] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [its][the] Assigned Interest, (ii) [its][the] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and (iv) it is [not] a Defaulting Lender; and (b) except as set forth herein, makes no representation or warranty and assumes no responsibility with respect to (i) any statements, representations or warranties made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, validity, legality, enforceability, sufficiency, genuineness or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, the Credit Agreement, any other Loan Document or any other instrument or document furnished pursuant thereto or any collateral thereunder, (iii) the performance or observance by the Company, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under the Credit Agreement, any other Loan Document or any other instrument or document furnished pursuant thereto or (iv) the financial condition of the Company, any of its Subsidiaries or Affiliates or any other Person obligated in respect of the Credit Agreement or any other Loan Document.
1.2 Assignee[s]. [Each][The] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement (subject to receipt of such consents as may be required under the Credit Agreement), (iii) it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [its][the] Assigned Interest, shall have the obligations of a Lender thereunder, from and after the Effective Date, (iv) it is sophisticated regarding decisions to purchase assets such as those represented by [its][the] Assigned Interest and either it, or the Person exercising discretion in making its decision to purchase [its][the] Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement and the other Loan Documents, together with (or been given the opportunity to receive) copies of the most recent financial statements delivered pursuant to Section 10.1.1 or 10.1.2 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [its][the] Assigned Interest and, on the basis of such documents and information, it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender and (vi) if it is a Non-U.S. Participant, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the [relevant] Assignee; and (b) agrees that (i) it will, based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or refraining from taking action under the Loan Documents, independently and without reliance on the Administrative Agent, [any][the] Assignor or any other Lender, (ii) [it appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to the Administrative Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto;] (iii) it will be bound by the provisions of the Loan Documents and (iv) it will perform in accordance with their terms all of the obligations that are required to be performed by it as a Lender under the Credit Agreement and the other Loan Documents.
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2. Payments. [From and after the Effective Date, the Administrative Agent shall make all payments of principal, interest, fees and other amounts in respect of [each][the] Assigned Interest to the [relevant] Assignor[s] for amounts which have accrued prior to but excluding the Effective Date and to the [relevant] Assignee[s] for amounts which have accrued from and after the Effective Date. Notwithstanding the foregoing, the Administrative Agent shall make all payments of interest, fees or other amounts paid or payable in kind from and after the Effective Date to the [relevant] Assignee.] [From and after the Effective Date, the Administrative Agent shall make all payments of principal, interest, fees and other amounts in respect of [each][the] Assigned Interest to the [relevant] Assignee[s] whether such amounts have accrued prior to or on or after the Effective Date. [Each][The] Assignor and [each][the] Assignee shall make all appropriate adjustments in payments made by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves.] Each of the Assignor[s] and the Assignee[s] agrees that it will hold in trust for the other applicable party any interest, fees and other amounts which it may receive to which such other party is entitled pursuant to this clause and pay to such other party any such amounts which it may receive promptly upon receipt.
3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. THIS ASSIGNMENT AND ASSUMPTION AND THE OTHER LOAN DOCUMENTS AND ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS ASSIGNMENT AND ASSUMPTION (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Exhibit 10.2
Execution Version
BRIGHT HEALTH INC.
SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
November 15, 2018
SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, dated as of November 15, 2018 (the “Agreement”) is entered into by and among Bright Health Inc., a Delaware corporation (the “Corporation”), the Holders (as herein defined) and the FF Beneficial Investor (as defined herein).
WHEREAS, each Holder owns or has the right to purchase or otherwise acquire shares of the Common Stock (as hereinafter defined) of the Corporation. The Corporation and each Holder deem it to be in their respective best interests to set forth their rights in connection with public offerings and sales of the Common Stock and are entering into this Agreement as a condition to and in connection with certain Holders entering into the Securities Purchase Agreement (as herein defined); and
WHEREAS, the Corporation and certain of the Holders are party to a Registration Rights Agreement, dated as of March 26, 2016 (the “Original Agreement”);
WHEREAS, the Corporation and such Holders amended and restated the Original Agreement by entering into an Amended and Restated Registration Rights Agreement, dated May 31, 2017 (the “Restated Agreement”), and now desire to amend and restate the Restated Agreement in its entirety.
NOW, THEREFORE, in consideration of the premises and mutual covenants and obligations hereinafter set forth, the Corporation and each Holder hereby agree as follows:
Section 1. Definitions. As used in this Agreement, the following terms shall have the following meanings:
“Affiliate” means, (a) with respect to any Person, any (i) director, officer, limited or general partner, member or stockholder holding 50% or more of the outstanding capital stock or other equity interests of such Person, (ii) any spouse, parent, sibling or descendant of such Person (or a spouse, parent, sibling or descendant of a Person specified in clause (i) above relating to such Person) and (iii) other Person that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person and (b) with respect to the FF Investor and the FF Beneficial Investor, includes an FF Permitted Transferee (as hereinafter defined). The term “control” includes, without limitation, the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Board” means the Board of Directors of the Corporation.
“Charter” means the Third Amended and Restated Certificate of Incorporation of the Corporation in effect as of the date hereof, as the same may be amended, modified or supplemented after the date hereof.
“Commission” means the Securities and Exchange Commission or any other agency at the time administering the Securities Act.
“Common Stock” has the meaning set forth in the Charter.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect from time to time.
“Excluded Registration” means (i) a registration relating to the sale of securities to employees of the Corporation or a subsidiary pursuant to a stock option, stock purchase, or similar plan; (ii) a registration relating to an SEC Rule 145 transaction; (iii) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Shares; or (iv) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered.
“FF Beneficial Investor” means Future Fund Investment Company No.4 Pty Ltd (ACN 134 338 908).
“FF Investor” means The Northern Trust Company (ABN 62 126 279 918), a company incorporated in the State of Illinois in the United States of America, in its capacity as custodian for the FF Beneficial Investor.
“FF Permitted Transferee” means (i) the Future Fund Board of Guardians; (ii) any person controlling, controlled by, or under common control with, the Future Fund Board of Guardians; (iii) the trustee of a trust in which all or substantially all of the beneficial interests are held directly or indirectly by the Future Fund Board of Guardians; (iv) any person controlling, controlled by, or under common control with, the Future Fund Board of Guardians; or (v) any custodian for any of the foregoing persons listed in (i)-(iv).
“FINRA” means the Financial Industry Regulatory Authority, Inc.
“Free Writing Prospectus” means a free writing prospectus as defined in Rule 405 under the Securities Act.
“Holder” means each holder of Registrable Shares identified on Annex I hereto and includes any successor to, or assignee or transferee of, any such Person who or which agrees in writing to be treated as a Holder hereunder and to be bound by the terms and comply with all applicable provisions hereof.
“Initial Investors” means New Enterprise Associates 15, L.P. and Bessemer Venture Partners IX, L.P.
“Investor” has the meaning ascribed to such term in the Stockholders’ Agreement.
“Investor Director” has the meaning ascribed to such term in the Stockholders’ Agreement.
“IPO” shall mean the Corporation’s initial registration of shares of its Common Stock pursuant to a registration statement filed under the Securities Act.
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“Issuer Free Writing Prospectus” means an issuer free writing prospectus as defined in Rule 133 under the Securities Act.
“Other Shares” means at any time those shares of Common Stock which do not constitute Primary Shares or Registrable Shares hereunder.
“Person” shall be construed in the broadest sense and means and includes a natural person, a partnership, a corporation, an association, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization and any other entity and any federal, state, municipal, foreign or other government, governmental department, commission, board, bureau, agency or instrumentality, or any private or public court or tribunal.
“Primary Shares” means at any time authorized but unissued shares of Common Stock.
“Registrable Shares” means shares of Common Stock held by any Holder and any other securities which by their terms are exercisable or exchangeable for or convertible into Common Stock which are held by such Holder (including exercised or unexercised warrants for preferred stock or Common Stock or convertible debt securities). As to any particular Registrable Shares, once issued, such Registrable Shares shall cease to be Registrable Shares upon the earliest to occur of (i) the date when they have been registered under the Securities Act, the registration statement in connection therewith has been declared effective and they have been disposed of pursuant to such effective registration statement, (ii) the date when they, together with all other securities held by any Holder, are eligible to be sold or distributed pursuant to Rule 144 (or another similar exemption) in a single transaction by such Holder without limitation, or (iii) the date when they shall have ceased to be outstanding.
“Registration Date” means the date upon which the registration statement pursuant to an IPO shall have been declared effective.
“Rule 144” means Rule 144 promulgated under the Securities Act or any successor rule thereto or any complementary rule thereto (such as Rule 144A).
“Securities Act” means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time.
“Securities Purchase Agreement” shall mean that certain Stock Purchase Agreement dated as of the date hereof, by and among the Corporation and the other parties thereto, as the same may be amended, restated, supplemented, or modified from time to time.
“Stockholders’ Agreement” means that certain Second Amended and Restated Stockholders’ Agreement of the Corporation, dated as of the date hereof, as amended, supplemented or modified from time to time.
Section 2. Required Registration.
(a) At any time after one hundred eighty (180) days after the Registration Date, if the Initial Investors shall request that the Corporation effect the registration under the Securities Act of not less than ten percent (10%) of the aggregate number of Registrable Shares then outstanding, the Corporation shall promptly use commercially reasonable efforts to effect the registration under the Securities Act of such Registrable Shares.
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(b) Notwithstanding anything contained in this Section 2 to the contrary, the Corporation shall not be obligated to effect any registration under the Securities Act except in accordance with the following provisions:
(i) The Corporation shall not be obligated to file and cause to become effective more than three (3) registration statements initiated pursuant to Section 2(a) above on Form S-l promulgated under the Securities Act (or any successor form thereto).
(ii) The Corporation shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2 (A) during the period that is sixty (60) days before the Corporation’s good faith estimate of the date of filing of, and ending on a date that is one hundred eighty (180) days after the effective date of, a Corporation- initiated registration, provided that the Corporation is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; or (B) if the Holders propose to dispose of shares of Registrable Shares that may be immediately registered on Form S-3 pursuant to a request made pursuant to Section 4.
(iii) The Board reasonably determines that such registration and offering would (A) interfere with any material transaction involving the Corporation, (B) require premature disclosure of material information that the Corporation has a bona fide business purpose for preserving as confidential; or (C) render the Corporation unable to comply with requirements under the Securities Act or Exchange Act, then the Corporation shall have the right to defer taking action with respect to such filing, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than ninety (90) days after the request of the Holders is given; provided, however, that the Corporation shall only be entitled to invoke its rights under this Section 2(b)(iii) one time during any 12-month period.
(iv) With respect to any registration pursuant to this Section 2, the Corporation shall give notice of such registration, in accordance with the provisions of Section 3 hereunder, to the Holders who do not request registration hereunder (and the FF Beneficial Investor, if the FF Investor is a Holder and does not request registration) and the Corporation may include in such registration any Primary Shares or Other Shares; provided, however, that if the managing underwriter advises the Corporation that the inclusion of all Registrable Shares, Primary Shares and/or Other Shares proposed to be included in such registration would interfere with the successful marketing (including pricing) of the Registrable Shares proposed to be included in such registration, then the number of Registrable Shares, Primary Shares and/or Other Shares proposed to be included in such registration shall be included in the following order:
(A) first, the Registrable Shares held by the Holders (or, if necessary, such Registrable Shares pro rata among the holders thereof based upon the number of Registrable Shares requested to be registered by each such holder);
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(B) second, the Primary Shares; and
(C) third, the Other Shares.
(v) If the holders of the Registrable Shares requesting to be included in a registration pursuant to Section 2(a) so elect, the offering of such Registrable Shares pursuant to such registration shall be in the form of an underwritten offering. The holders of Registrable Shares requesting such registration shall select one or more nationally recognized firms of investment bankers reasonably acceptable to the Corporation to act as the lead managing underwriter or underwriters in connection with such offering.
(vi) At any time before the registration statement covering such Registrable Shares becomes effective, the holders of a majority of such shares may request the Corporation to withdraw or not to file the registration statement. In that event, unless such request of withdrawal was caused by, or made in response to (A) a material adverse effect or a similar event related to the business, properties, condition, or operations of the Corporation not known (without imputing the knowledge of any other Person to such holders) by the holders initiating such request at the time their request was made, (B) due to pricing conditions which in the good faith judgment of the holders requesting the registration are adverse, or (C) other material facts not known to such holders at the time their request was made, the holders shall be deemed to have used one of their registration rights under Section 2(a). In addition, in the event that the registration statement covering such Registrable Shares is not declared effective within one hundred twenty (120) days from the date of first filing with the Commission, the holders shall not be deemed to have used one of their registration rights pursuant to Section 2(a).
Section 3. Piggyback Registration. If the Corporation at any time proposes for any reason to register Primary Shares or Other Shares under the Securities Act (other than an Excluded Registration), it shall give written notice to each Holder and the FF Beneficial Investor of its intention to so register such Primary Shares or Other Shares at least thirty (30) days before the initial filing of the registration statement related thereto and, upon the request, delivered to the Corporation within twenty (20) days after delivery of any such notice by the Corporation, of any Holder to include in such registration Registrable Shares (which request shall specify the number of Registrable Shares proposed to be included in such registration), the Corporation shall use commercially reasonable efforts to cause all such Registrable Shares to be included in such registration on the same terms and conditions as the securities otherwise being sold in such registration; provided, however, that if the managing underwriter advises the Corporation that the inclusion of all Registrable Shares requested to be included in such registration would interfere with the successful marketing (including pricing) of the Primary Shares or Other Shares proposed to be registered by the Corporation, then (i) the number of Primary Shares, Registrable Shares and Other Shares proposed to be included in such registration shall be included in the following order:
(i) first, the Primary Shares;
(ii) second, the Registrable Shares held by the Holders (or, if necessary, such Registrable Shares pro rata among the holders thereof based upon the number of Registrable Shares requested to be registered by each such holder); and
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(iii) third, the Other Shares;
provided, that in no event shall the managing underwriter include in such registration less than fifty percent (50%) of Registrable Shares proposed to be included in such registration by the Holders. The Corporation shall have the right to terminate or withdraw any registration initiated by it under this Section 3 before the effective date of such registration, whether or not any Holder has elected to include Registrable Shares in such registration.
Section 4. Registrations on Form S-3. Anything contained in Section 2 to the contrary notwithstanding, at such time as the Corporation shall have qualified for the use of Form S-3 promulgated under the Securities Act or any successor form thereto, any Holder or Holders collectively holding at least 20% of the then outstanding Registrable Shares shall have the right to request an unlimited number of registrations of Registrable Shares on Form S-3 (which may, at such holders’ request, be shelf registrations pursuant to Rule 415 promulgated under the Securities Act) or its successor form, which request or requests shall (a) specify the number of Registrable Shares intended to be sold or disposed of and the holders thereof and (b) relate to Registrable Shares having an aggregate offering price of at least $500,000. The Corporation shall not be obligated to effect, or to take any action to effect, any registration pursuant to this Section 4: (i) during the period that is sixty (60) days before the Corporation’s good faith estimate of the date of filing of, and ending on a date that is one hundred eighty (180) days after the effective date of, a Corporation-initiated registration; provided, that the Corporation is actively employing in good faith reasonable efforts to cause such registration statement to become effective; (ii) if the Corporation has effected a registration pursuant to this Section 4 within the six (6) month period immediately preceding the date of such request; or (iii) if the Board reasonably determines that such registration and offering would interfere with any material transaction involving the Corporation or require premature disclosure of material information that the Corporation has a bona fide business purpose for preserving as confidential or render the Corporation unable to comply with requirements under the Securities Act or Exchange Act. A requested registration on Form S-3 (or its successor form) in compliance with this Section 4 shall not count as a registration statement initiated pursuant to Section 2(a) for purposes of the registration request limitation set forth under Section 2(a), but shall otherwise be treated as a registration initiated pursuant to Section 2(b) and shall be subject to the provisions thereof (including Section 2(b)(iii)).
Section 5. Holdback Agreement. In connection with the IPO, each Holder agrees that he, she or it, shall not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of, any Registrable Shares (other than transfers to such Holder’s Affiliates) without the prior written consent of the managing underwriter, for a period (the “Lockup Period”) determined by the Board (including at least one (1) Investor Director) and designated by the Corporation in writing to the Holders, which period shall not last more than one hundred eighty (180) days after the consummation of such offering, and to execute an agreement reflecting the foregoing as may be reasonably requested by the Board (including at least one (1) Investor Director); provided, that any applicable period shall terminate on such earlier date as the Corporation gives notice to the Holders and the FF Beneficial Investor that the Corporation will not proceed with the offering; and provided, further, that (a) all executive officers and directors must agree to a Lockup Period of at least the same duration and on substantially similar terms and (b) all parties subject to a Lockup Period shall only be released early from their obligations thereunder on a pro rata basis.
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Section 6. Preparation and Filing.
(a) If and whenever the Corporation is under an obligation pursuant to the provisions of this Agreement to effect the registration of any Registrable Shares, the Corporation shall, as expeditiously as practicable:
(i) use commercially reasonable efforts to cause a registration statement that registers such Registrable Shares to become effective and, upon the request of the Holders of a majority of the Registrable Shares registered thereunder, keep such registration statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated in the registration statement has been completed; provided, however, that (a) such one hundred twenty (120) day period shall be extended for a period of time equal to the period the Holders refrain, at the request of an underwriter of Common Stock (or other securities) of the Corporation, from selling any securities included in such registration, and (b) in the case of any registration of Registrable Shares on Form S-3 that are intended to be offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, such one hundred twenty (120) day period shall be extended for up to one hundred eighty (180) days, if necessary, to keep the registration statement effective until all such Registrable Shares are sold;
(ii) furnish, as far in advance as possible but in no event less than five (5) business days before filing a registration statement that registers such Registrable Shares, a prospectus relating thereto or any amendments or supplements relating to such a registration statement or prospectus, to one counsel selected by the holders of Registrable Shares requesting such registration (the “Investor’s Counsel”), copies of all such documents proposed to be filed, and shall use commercially reasonable efforts to reflect in each such document, when so filed with the Commission, such comments as the holders of Registrable Shares whose Registrable Shares are to be covered by such registration statement may reasonably propose and shall not file any such document to which any Holder objects in writing, unless in the judgment of the Corporation such filing is necessary to comply with applicable law;
(iii) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act in order to enable the disposition of the Registrable Shares subject to such registration;
(iv) notify in writing the Investor’s Counsel (A) of the receipt by the Corporation of any notification with respect to any comments by the Commission with respect to such registration statement or prospectus or any amendment or supplement thereto or any request by the Commission for the amending or supplementing thereof or for additional information with respect thereto, (B) of the receipt by the Corporation of any notification with respect to the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or prospectus or any amendment or supplement thereto or the initiation or threatening of any proceeding for that purpose and (C) of the receipt by the Corporation of any notification with respect to the suspension of the qualification of such Registrable Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purposes;
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(v) use commercially reasonable efforts to register or qualify such Registrable Shares under such other securities or blue sky laws of such jurisdictions as the holders of Registrable Shares reasonably request and do any and all other acts and things which may be reasonably necessary or advisable to enable each Holder to consummate the disposition in such jurisdictions of the Registrable Shares owned by such Holder; provided, however, that the Corporation will not be required to qualify generally to do business, subject itself to general taxation or consent to general service of process in any jurisdiction where it would not otherwise be required to do so but for this Section 6(a)(v);
(vi) furnish to each Holder such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as any such Holder may reasonably request in order to facilitate the public sale or other disposition of such Registrable Shares;
(vii) without limiting this Section 6(a)(v) above, use commercially reasonable efforts to cause such Registrable Shares to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Corporation to enable each Holder holding such Registrable Shares to consummate the disposition of such Registrable Shares;
(viii) notify each Holder holding such Registrable Shares on a timely basis at any time when a prospectus relating to such Registrable Shares or any document related thereto includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and, at the request of any Holder prepare and furnish to such Holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the offerees of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;
(ix) make available upon reasonable notice and during normal business hours, for inspection by each Holder holding such Registrable Shares, the FF Beneficial Investor (provided that the FF Beneficial Investor remains a Holder holding such Registrable Shares), any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by such Holder, the FF Beneficial Investor (if applicable) or underwriter (collectively, the “Inspectors”), all pertinent financial and other records, pertinent documents and properties of the Corporation (collectively, the “Records”), as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Corporation’s officers, directors and employees to supply all information (together with the Records, the “Information”) reasonably requested by any such Inspector in connection with such registration statement. Any of the Information which the Corporation determines in good faith to be confidential, and of which determination the Inspectors are so notified, shall not be disclosed by the Inspectors unless (A) the disclosure of such Information is necessary to avoid or correct a material misstatement or omission in the registration statement, (B) the release of such Information is ordered pursuant to a subpoena or other order from a court or governmental agency or authority of competent jurisdiction, (C) such Information has been made generally available to the public through no breach of the nondisclosure obligations of the Inspectors or their Affiliates or (D) such disclosure is required to be made under applicable law;
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(x) prevent the issuance of an order suspending the effectiveness of a registration statement, and if one is issued, use commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of a registration statement at the earliest possible moment;
(xi) use commercially reasonable efforts to obtain from its independent certified public accountants “cold comfort” letters in customary form and at customary times and covering matters of the type customarily covered by “cold comfort” letters;
(xii) use commercially reasonable efforts to obtain from its counsel an opinion or opinions in customary form (which shall also be addressed to the holders selling Registrable Shares);
(xiii) enter into such customary agreements (including, if applicable, an underwriting agreement in customary form, including customary representations, warranties, covenants and indemnities) and take such action as the underwriters may reasonably request in order to expedite or facilitate the disposition of Registrable Shares.
(xiv) provide a transfer agent and registrar (which may be the same entity and which may be the Corporation) for such Registrable Shares;
(xv) permit any selling stockholder that might reasonably be deemed a controlling Person of the Corporation to participate in the preparation of a registration statement and to require the insertion therein of material which, in the reasonable judgment of such stockholder and its counsel, should be included;
(xvi) promptly issue to any underwriter to which any Holder holding such Registrable Shares may sell shares in such offering certificates evidencing such Registrable Shares;
(xvii) in connection with an underwritten offering, participate, to the extent reasonably requested by the managing underwriter for the offering or any Holder selling Registrable Shares in the offering, in customary efforts to sell Registrable Shares being offered, and cause such steps to be taken to ensure good faith participation of senior management officers of the Corporation in due diligence meetings and “road shows” as is customary;
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(xviii) use commercially reasonable efforts to list such Registrable Shares on any national securities exchange on which any shares of the Common Stock are listed;
(xix) comply with all applicable rules and regulations of the Commission and make available to its security holders, as soon as reasonably practicable, earnings statements covering a period of twelve (12) months beginning within three months after the effective date of the subject registration statement; and
(xx) otherwise use commercially reasonable efforts to take all other steps necessary to effect the registration of such Registrable Shares contemplated hereby.
(b) Each holder of the Registrable Shares, upon receipt of any notice from the Corporation of any event of the kind described in Section 6(a)(viii) hereof, shall forthwith discontinue disposition of the Registrable Shares pursuant to the registration statement covering such Registrable Shares until such holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 6(a)(viii) hereof, and, if so directed by the Corporation, such holder shall deliver to the Corporation all copies, other than permanent file copies then in such holder’s possession, of the prospectus covering such Registrable Shares at the time of receipt of such notice.
(c) The Corporation shall not permit any officer, director, underwriter, broker or any other Person acting on behalf of the Corporation to use any Free Writing Prospectus in connection with the registration statement covering Registrable Shares, without the prior written consent of the Holders of a majority of the Registrable Shares then outstanding, which consent shall not be unreasonably withheld or delayed. Any consent to the use of a Free Writing Prospectus included in an underwriting agreement to which the Holders are parties shall be deemed to satisfy the requirement of such consent.
Section 7. Expenses. All expenses incurred by the Corporation and the Holders in complying with their obligations pursuant to this Agreement and in connection with the registration and disposition of Registrable Shares, including, without limitation, (a) all registration and filing fees, and any other fees and expenses associated with filing fees, and any other fees and expenses associated with filings required to be made with any stock exchange, the Commission and FINRA (including, if applicable, the fees and expenses of any “qualified independent underwriter” and its counsel as may be required by the rules and regulations of FINRA); (b) all fees and expenses of compliance with state securities or “blue sky” laws (including fees and disbursements of counsel for the underwriters or the Holders in connection with “blue sky” qualifications of the Registrable Shares and determination of their eligibility for investment under the laws of such jurisdictions as the managing underwriters may designate); all printing and related messenger and delivery expenses (including expenses of printing certificates for the Registrable Shares in a form eligible for deposit with The Depositary Trust Company) and of printing prospectuses, all fees and disbursements of all independent certified public accountants of the Corporation (including the expenses of any special audit and “cold comfort” letters required by or incident to such performance); (d) Securities Act liability insurance if the Corporation so desires or the underwriters so require; (e) all fees and expenses incurred in connection with the listing of Registrable Shares on any securities exchange and all rating agency fees; (f) all reasonable fees and disbursements of one (1) counsel to the holders of Registrable Shares to represent such Persons in connection with such registration (including such fees and disbursements incurred in connection with any registration or qualification of Registrable Shares under the securities or “blue sky” laws of any state); (g) all fees and disbursements of underwriters customarily paid by an issuer, excluding underwriting discounts and commissions and transfer taxes, if any, related to the disposition by any Holder of Registrable Shares (collectively, the “Selling Expenses”); and (h) reasonable fees and expenses of outside counsel and advisors to the Corporation, will be borne by the Corporation, regardless of whether a registration statement becomes effective; provided, however, that the Corporation shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Shares to be registered (in which case all selling Holders shall bear such expenses pro rata based upon the number of Registrable Shares that were to be included in the withdrawn registration),. All Selling Expenses relating to Registrable Shares shall be borne and paid by the Holders pro rata on the basis of the number of Registrable Shares registered on their behalf.
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Section 8. Indemnification.
(a) In connection with any registration of any Registrable Shares under the Securities Act pursuant to this Agreement, the Corporation shall indemnify and hold harmless the holders of Registrable Shares (which for the purposes of this Section 8 shall include the FF Beneficial Investor for so long as the FF Investor is a holder of Registrable Shares), each of such holder’s officers, directors, employees, members, partners, and advisors and their respective Affiliates, each underwriter, broker or any other Person acting on behalf of the holders of Registrable Shares and each other Person, if any, who controls any of the foregoing Persons within the meaning of the Securities Act against any losses, claims, damages, liabilities, or actions joint or several (or actions in respect thereof), to which any of the foregoing Persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or allegedly untrue statement of a material fact contained in the registration statement under which such Registrable Shares were registered under the Securities Act, any preliminary prospectus, Issuer Free Writing Prospectus, or final prospectus contained therein or otherwise filed with the Commission, any amendment or supplement thereto or any document incident to registration or qualification of any Registrable Shares, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or, with respect to any prospectus, necessary to make the statements therein in light of the circumstances under which they were made not misleading, or any violation by the Corporation of the Securities Act or state securities or blue sky laws applicable to the Corporation or relating to action or inaction required of the Corporation in connection with such registration or qualification under such state securities or blue sky laws; and shall promptly reimburse such Persons for any legal or other expenses reasonably incurred by any of them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Corporation shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action (including any legal or other expenses incurred) arises out of or is based upon an untrue statement or allegedly untrue statement or omission or alleged omission made in said registration statement, preliminary prospectus, Issuer Free Writing Prospectus, final prospectus, amendment, supplement or document incident to registration or qualification of any Registrable Shares in reliance upon and in conformity with written information furnished to the Corporation by the holders of Registrable Shares specifically for use in the preparation thereof.
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(b) In connection with any registration of Registrable Shares under the Securities Act pursuant to this Agreement, each Holder of Registrable Shares shall severally (based on the percentage of the securities included in such registration that were owned by such Holder) and not jointly and severally indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 8(a)) the Corporation, each director of the Corporation, each officer of the Corporation who shall sign such registration statement, each underwriter, broker or other Person acting on behalf of the holders of Registrable Shares and each Person who controls any of the foregoing Persons within the meaning of the Securities Act with respect to any statement or omission from such registration statement, any preliminary prospectus, Issuer Free Writing Prospectus or final prospectus contained therein or otherwise filed with the Commission, any amendment or supplement thereto or any document incident to registration or qualification of any Registrable Shares, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Corporation or such underwriter by such holder of Registrable Shares specifically for use in connection with the preparation of such registration statement, preliminary prospectus, Issuer Free Writing Prospectus, final prospectus, amendment, supplement or document; provided, however, that the maximum amount of liability in respect of such indemnification shall be limited, in the case of each holder of Registrable Shares, to an amount equal to the net proceeds actually received by such holder from the sale of Registrable Shares effected pursuant to such registration.
(c) Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in this Section 8, such indemnified party will, if a claim in respect thereof is made against an indemnifying party, give written notice to the latter of the commencement of such action. The failure of any indemnified party to notify an indemnifying party of any such action shall not (unless such failure shall have a material adverse effect on the indemnifying party) relieve the indemnifying party from any liability in respect of such action that it may have to such indemnified party hereunder. In case any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be responsible for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof; provided, however, that if any indemnified party shall have reasonably concluded that there may be one or more legal or equitable defenses available to such indemnified party which are additional to or conflict with those available to the indemnifying party, or that such claim or litigation involves or could have an effect upon matters beyond the scope of the indemnity agreement provided hereunder, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party (but shall have the right to participate therein with counsel of its choice) and such indemnifying party shall reimburse such indemnified party and any Person controlling such indemnified party for that portion of the fees and expenses of any counsel retained by the indemnified party which is reasonably related to the matters covered by the indemnity agreement provided hereunder. No indemnifying party shall be liable for any settlement of any proceeding affected without its prior written consent. If the indemnifying party is not entitled to, or elects not to, assume the defense of a claim, it will not be obligated to pay the fees and expenses of more than one counsel with respect to such claim.
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(d) If the indemnification provided for hereunder is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage, liability or action referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties agree that it would not be just and equitable if contribution pursuant hereto were determined by pro rata allocation or by any other method or allocation which does not take account of the equitable considerations referred to herein. No indemnifying party shall be required to contribute pursuant to this Section 8(d) if there has been a settlement of any proceeding affected without its prior written consent. No Person guilty or liable of fraudulent misrepresentation shall be entitled to contribution from any Person. Notwithstanding the foregoing, (i) in no event shall a Holder’s liability pursuant to this Section 8(d), when combined with the amounts paid or payable by such Holder pursuant to Section 8(b), exceed the amount equal to the net proceeds from the offering actually received by such Holder from the sale of Registrable Shares, except in the case of willful misconduct or fraud by such Holder and (ii) to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.
Section 9. Underwriting Agreement.
(a) Notwithstanding any provisions of this Agreement, to the extent that in connection with a proposed sale of Registrable Shares which have been registered with the Commission pursuant to this Agreement, the holders of Registrable Shares shall enter into an underwriting agreement or similar agreement that contains customary provisions covering one or more issues addressed in this Agreement, the provisions contained in such Sections of this Agreement addressing such issue or issues shall be of no force or effect with respect to such registration, but this provision shall not apply to the Corporation if the Corporation is not a party to the underwriting agreement or similar agreement. In such event, the right of any holder of Registrable Shares to include such holder’s Registrable Shares in such registration shall be conditioned upon such holder’s participation in such underwriting and the inclusion of such holder’s Registrable Shares in the underwriting to the extent provided herein.
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(b) In connection with any proposed sale through an underwritten offering of Registrable Shares which have been registered with the Commission pursuant to this Agreement through an underwritten offering, the Corporation shall negotiate in good faith and enter into a reasonable and customary underwriting agreement with the underwriters thereof. The Corporation shall be entitled to receive customary indemnities from lead underwriters, selling brokers, dealer managers and similar security industry professionals participating in the distribution, to the same extent as provided above with respect to the information so furnished in writing by such Persons specifically for inclusion in any prospectus or registration statement.
(c) No underwriting agreement (or other agreement in connection with a proposed sale of Registrable Shares) shall require any holder of Registrable Shares to make any representations or warranties to or agreements with the Corporation or the underwriters other than representations, warranties or agreements regarding such holder, the ownership of such holder’s Registrable Shares and such holder’s intended method or methods of disposition and any other representation required by law or to furnish any indemnity to any Person which is broader than the indemnity furnished by such holder hereunder. Notwithstanding anything to the contrary in the foregoing, neither the FF Investor nor the FF Beneficial Investor shall be required to execute any agreement, instrument or other document pursuant to this Section 9 unless such agreement, instrument or other document contains a limitation of liability provision in the form of Section 24.
Section 10. Information by Holder. It shall be a condition precedent to the obligations of the Corporation to take any action pursuant to Section 2 through Section 7 with respect to the Registrable Shares of any selling Holder that such Holder shall furnish to the Corporation such written information regarding such Holder and the distribution proposed by any Holder as the Corporation may reasonably request in writing and as shall be reasonably required in connection with any registration referred to in this Agreement.
Section 11. Exchange Act Compliance. From the Registration Date or such earlier date as a registration statement filed by the Corporation pursuant to the Exchange Act relating to any class of the Corporation’s securities shall have become effective, the Corporation shall comply with all of the reporting requirements of the Exchange Act applicable to it and shall comply with all other public information reporting requirements of the Commission which are conditions to the availability of Rule 144. The Corporation shall cooperate with each Holder in supplying such information as may be necessary for such Holder to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of Rule 144.
Section 12. No Conflict of Rights: Future Rights. The Corporation shall not, after the date hereof, without the prior written consent of the holders of a majority of the Registrable Shares then outstanding, enter into any agreement with any present or future stockholder of the Corporation that would grant any registration or other rights that conflict with, or are senior to or pari passu with, the rights granted to the Holders hereby. If at any time following the date hereof, the Corporation shall grant to any present or future stockholder of the Corporation rights to in any manner cause or participate in any registration statement of the Corporation that, in the judgment of the holders of a majority of the Registrable Shares then outstanding, conflict with, or are senior to or pari passu with, the rights granted to the Holders hereby, such grant shall be null, void and ultra vires.
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Section 13. Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Corporation shall not, without the prior written consent of the Holders of a majority of the Registrable Securities then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Corporation that would allow such holder or prospective holder (i) to include such securities in any registration unless, under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of such securities will not reduce the number of the Registrable Securities of the Holders that are included or (ii) allow such holder or prospective holder to initiate a demand for registration of any securities held by such holder or prospective holder; provided that the limitation set forth in this Section 13 shall not prohibit any additional Investor from becoming a party to this Agreement.
Section 14. Termination. This Agreement shall terminate and be of no further force or effect upon the earlier of (i) the occurrence or closing of a Deemed Liquidation Event as defined in the Charter and (ii) the date when there shall no longer be any Registrable Shares outstanding.
Section 15. Benefits of Agreement; Third Party Beneficiaries. Except as provided herein, this Agreement shall bind and inure to the benefit of the Corporation, the Holders and subject to Section 16, the respective successors and assigns of the Corporation and any Holder. The managing underwriter(s) of the IPO are intended third party beneficiaries of the agreements of the Holders contained in Section 6 and any Persons designated pursuant to Section 5 are intended third party beneficiaries of the agreements set forth therein.
Section 16. Assignment. Each Holder may assign its rights hereunder to any purchaser or transferee of Registrable Shares; provided, however, that such purchaser or transferee shall, as a condition to the effectiveness of such assignment, be required to execute a counterpart to this Agreement agreeing to be treated as a Holder whereupon such purchaser or transferee shall have the benefits of, and shall be subject to the restrictions contained in, this Agreement as if such purchaser or transferee was originally included in the definition of Holder herein and had originally been a party hereto. The Corporation may not assign any rights hereunder without the consent of the holders of a majority of the Registrable Shares then outstanding. Notwithstanding the foregoing, the FF Investor and the FF Beneficial Investor may transfer or assign any of their respective rights or obligations under this Agreement, without prior written consent, to any FF Permitted Transferee, or otherwise with the consent of the Corporation. Following such transfer or assignment to a FF Permitted Transferee, the FF Permitted Transferee shall be entitled to receive the benefit of the terms of this Agreement, as if such FF Permitted Transferee had executed this Agreement.
Section 17. Entire Agreement. This Agreement, and the other writings referred to herein or delivered pursuant hereto, contain the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all prior and contemporaneous arrangements or understandings with respect thereto; provided, that to the extent any party shall have entered into one or more side letter agreements with the Company, then such side letter agreements shall be deemed to modify this Agreement with respect to the applicable party.
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Section 18. Notices. All notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or sent by telecopy, email, nationally-recognized overnight courier or first class registered or certified mail, return receipt requested, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by such party to the other parties:
(a) if to the Corporation, to:
Bright
Health Inc.
[redacted]
Telephone: [redacted]
Attention: [redacted]
Email: [redacted]
with a copy to:
Fox
Rothschild LLP
[redacted]
Attn: [redacted]
Email: [redacted]
(b) if to any Holder, to their respective addresses set forth on Annex 1 hereto.
All such notices, requests, consents and other communications shall be deemed to have been delivered (i) in the case of personal delivery, delivery by telecopy or delivery by email, on the date of such delivery, (ii) in the case of dispatch by nationally-recognized overnight courier, on the next business day following such dispatch and (iii) in the case of mailing, on the third business day after the posting thereof.
Section 19. Modifications; Amendments; Waivers. Any party may waive any provision hereof intended for its benefit in writing. No failure or delay on the part of any party hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to any party hereto at law, in equity or otherwise. This Agreement may be amended with the prior written consent of the Corporation and holders of a majority of the Registrable Shares then outstanding; provided, however, that no such amendment shall be made that, by its terms, affects any Holder in a disproportionately adverse manner as compared to the other Holders with respect to the same class of Registrable Shares held by such Holders without obtaining the consent of such adversely and disproportionately affected Holder. Each Holder shall be bound by any amendment or waiver effected in accordance with this Section 19, whether or not such Holder has consented to such amendment or waiver.
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Section 20. Counterparts; Electronic Signatures. This Agreement may be executed in any number of original or electronic counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.
Section 21. Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.
Section 22. Governing Law; Consent to Jurisdiction and Venue; Waiver of Jury Trial. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any law or rule that would cause the laws of any jurisdiction other than the State of Delaware to be applied. The parties hereby irrevocably submit to the jurisdiction of the courts of Delaware and the federal courts of the United States of America located in Delaware solely in respect of the interpretation and enforcement of the provisions of this Agreement, and hereby waive, and agree not to assert, as a defense in any action for the interpretation or enforcement of this Agreement that it is not subject thereto or that such action may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement may not be enforced in or by such courts. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY DISPUTE ARISING OUT OF THIS AGREEMENT, AND HEREBY ACKNOWLEDGE THAT ANY SUCH ACTION MAY BE TRIED BY A JUDGE SITTING WITHOUT A JURY.
Section 23. Severability. It is the desire and intent of the parties that the provisions of this Agreement be enforced to the fullest extent permissible under the law and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, in the event that any provision of this Agreement would be held in any jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly construed so as not be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly construed, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
Section 24. The Northern Trust Company Limitation of Liability. The FF Investor enters into and is liable under (a) this Agreement, (b) any other document or agreement which the FF Investor may be required to provide under this Agreement and (c) any document or agreement executed by the Corporation or any other person as agent or attorney of the FF Investor under this Agreement, only in its capacity as custodian for the FF Beneficial Investor, and to the extent that it is actually indemnified by the FF Beneficial Investor. To the extent that this Section 24 operates to reduce the amounts for which the FF Investor would otherwise be liable to any person, the FF Beneficial Investor will pay or procure the payment of such shortfall to such person.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Registration Rights Agreement on the date first written above.
COMPANY:
BRIGHT HEALTH INC. |
||
By: | /s/ Robert Sheehy | |
Name: | Robert Sheehy | |
Title: | Chief Executive Officer |
[Signature Page to Second Amended and Restated Registration Rights Agreement]
DECLARATION CAPITAL PE SPV VIII LLC | ||
By: | /s/ Rob Jackowitz | |
Name: | Rob Jackowitz | |
Title: | Authorized Person |
[Signature Page to Second Amended and Restated Registration Rights Agreement]
MERITECH CAPITAL PARTNERS VI L.P. | ||
By: | Meritech Capital Associates VI L.L.C. its General Partner | |
By: | /s/ Craig Sherman | |
Craig Sherman, a managing member |
MERITECH CAPITAL AFFILIATES VI L.P. | ||
By: | Meritech Capital Associates VI L.L.C. its General Partner | |
By: | /s/ Craig Sherman | |
Craig Sherman, a managing member |
MERITECH CAPITAL ENTREPRENEURS VI L.P. | ||
By: | Meritech Capital Associates VI L.L.C. its General Partner | |
By: | /s/ Craig Sherman | |
Craig Sherman, a managing member |
[Signature Page to Second Amended and Restated Registration Rights Agreement]
TOWN HALL VENTURES, L.P. | ||
By: | /s/ David Whelan | |
Name: | David Whelan | |
Title: | General Partner |
[Signature Page to Second Amended and Restated Registration Rights Agreement]
NEW ENTERPRISE ASSOCIATES 15, L.P | ||
By: | NEA Partners 15, L.P., its general partner | |
By: | NEA 15 GP, LLC, its general partner | |
By: | /s/ Louis Citron | |
Name: | Louis Citron | |
Title: | Chief Legal Officer |
NEW VENTURES 2016, LIMITED PARTNERSHIP | ||
By: | /s/ Louis Citron | |
Name: | Louis Citron | |
Title: | Vice President |
NEW ENTERPRISE ASSOCIATES 16, L.P. | ||
By: | NEA Partners 16, L.P., its general partner | |
By: | NEA 16 GP, LLC, its general partner | |
By: | /s/ Louis Citron | |
Name: | Louis Citron | |
Title: | Chief Legal Officer |
[Signature Page to Second Amended and Restated Registration Rights Agreement]
BESSEMER VENTURE PARTNERS IX L.P. | ||
yorkBy: | Deer IX & Co. L.P., General Partner | |
By: | Deer IX & Co. Ltd., its General Partner | |
By: | /s/ Scott Ring | |
Name: | Scott Ring | |
Title: | General Counsel |
BESSEMER VENTURE PARTNERS IX INSTITUTIONAL L.P. | ||
By: | Deer IX & Co. L.P., General Partner | |
By: | Deer IX & Co. Ltd., its General Partner | |
By: | /s/ Scott Ring | |
Name: | Scott Ring | |
Title: | General Counsel |
[Signature Page to Second Amended and Restated Registration Rights Agreement]
FLARE CAPITAL PARTNERS I, L.P. | ||
By: | Flare Capital Managers, LLC. its General Partner | |
By: | /s/ William Geary | |
Name: | William Geary | |
Title: | Manager |
FLARE CAPITAL PARTNERS I-A, L.P. | ||
By: | Flare Capital Managers, LLC, its General Partner | |
By: | /s/ William Geary | |
Name: | William Geary | |
Title: | Manager |
[Signature Page to Second Amended and Restated Registration Rights Agreement]
GREENSPRING GLOBAL PARTNERS VII-A, L.P. | ||
By: |
Greenspring General Partner VII, L.P.,
its General Partner |
|
By: |
Greenspring GP VII, Ltd.
its General Partner |
|
By: | /s/ Eric Thompson | |
Name: | Eric Thompson | |
Title: | Chief Operating Officer |
GREENSPRING GLOBAL PARTNERS VII-C, L.P. | ||
By: |
Greenspring General Partner VII, L.P.,
its General Partner |
|
By: |
Greenspring GP VII, Ltd.
its General Partner |
|
By: | /s/ Eric Thompson | |
Name: | Eric Thompson | |
Title: | Chief Operating Officer |
[Signature Page to Second Amended and Restated Registration Rights Agreement]
GREENSPRING OPPORTUNITIES IV, L.P. | ||
By: |
Greenspring
Opportunities General Partner IV, L.P.,
its General Partner |
|
By: |
Greenspring Opportunities GP IV, LLC,
its General Partner |
|
By: |
Greenspring Associates, Inc.,
its sole member |
|
By: | /s/ Eric Thompson | |
Name: | Eric Thompson | |
Title: | Chief Operating Officer |
[Signature Page to Second Amended and Restated Registration Rights Agreement]
GREYCROFT GROWTH II, L.P. | ||
By: | Greycroft Growth II, LLC, its general partner | |
By: | /s/ Matthew Parker | |
Name: | Matthew Parker | |
Title: | Chief Financial Officer | |
Address: | ||
[redacted] |
[Signature Page to Second Amended and Restated Registration Rights Agreement]
E.VENTURES GROWTH II, L.P. | ||
By: | E.VENTURES GROWTH II GP, LLC, its General Partner | |
By: | /s/ Mathias Schilling | |
Name: | Mathias Schilling | |
Title: | Managing Member of the General Partner | |
Address: | [redacted] |
[Signature Page to Second Amended and Restated Registration Rights Agreement]
REDPOINT OMEGA II, L.P., by its General Partner Redpoint Omega II, LLC | ||
By: | /s/ Elliot Geidt | |
Elliot Geidt, Manager |
REDPOINT OMEGA ASSOCIATES II, LLC, as nominee | ||
By: | /s/ Elliot Geidt | |
Elliot Geidt, Manager | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
CROSS CREEK CAPITAL II, L.P. | ||
By: |
Cross Creek Capital II GP, LLC
Its Sole General Partner |
|
By: | /s/ Tyler Christenson | |
Name: | Tyler Christenson | |
Title: | Managing Director |
CROSS CREEK CAPITAL PARTNERS III, L.P. | ||
By: |
Cross Creek Capital Partners III GP, LLC
Its Sole General Partner |
|
By: | /s/ Tyler Christenson | |
Name: | Tyler Christenson | |
Title: | Managing Director |
CROSS CREEK CAPITAL PARTNERS IV, L.P. | ||
By: |
Cross Creek Capital Partners IV GP. LLC
Its Sole General Partner |
|
By: | /s/ Tyler Christenson | |
Name: | Tyler Christenson | |
Title: | Managing Director |
[Signature Page to Second Amended and Restated Registration Rights Agreement]
RAM PASTURE LLC | ||
By: | /s/ Ryan Drant | |
Name: | Ryan Drant | |
Title: | President |
[Signature Page to Second Amended and Restated Registration Rights Agreement]
WHITNEY CAPITAL, LLC | ||
By: | /s/ Richard K. Whitney | |
Name: | Richard K. Whitney | |
Title: | Managing Member |
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
Waterline Ventures I, L.P. | ||
(Name) | ||
By: | /s/ Robert M. Greenglass | |
Name: | Robert M. Greenglass | |
Title: | Managing Director | |
If an individual: | ||
By: | ||
Name: | ||
Address: | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
Robert J. Sheehy Trust | ||
(Name) | ||
By: | /s/ Robert J. Sheehy | |
Name: | ||
Title: | ||
If an individual: | ||
By: | ||
Name: | ||
Address: | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
MBA Entrepreneur Ventures, LLC | ||
(Name) | ||
By: | /s/ E. Jeffrey Lyons | |
Name: | E. Jeffrey Lyons | |
Title: | Manager / Member | |
If an individual: | ||
By: | ||
Name: | ||
Address: | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
John M. Nehra | ||
(Name) | ||
By: | /s/ John M. Nehra | |
Name: | ||
Title: | ||
If an individual: | ||
By: | /s/ John M. Nehra | |
Name: | John M. Nehra | |
Address: | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
(Name) | ||
By: | ||
Name: | ||
Title: | ||
If an individual: | ||
By: | /s/ Martin S. Rash | |
Name: | Martin S. Rash | |
Address: | ||
[redacted] | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
(Name) | ||
By: | ||
Name: | ||
Title: | ||
If an individual: | ||
By: | /s/ Charles M. Linehan | |
Name: | Charles M. Linehan | |
Address: | ||
[redacted] | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
(Name) | ||
By: | ||
Name: | ||
Title: | ||
If an individual: | ||
By: | /s/ Stephen Oesterle | |
Name: | Stephen Oesterle | |
Address: | ||
[redacted] | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
(Name) | ||
By: | ||
Name: | ||
Title: | ||
If an individual: | ||
By: | /s/ Christine Guo | |
Name: | Christine Guo | |
Address: | ||
[redacted] | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
(Name) | ||
By: | ||
Name: | ||
Title: | ||
If an individual: | ||
By: | /s/ Rachel Winokur | |
Name: | Rachel Winokur | |
Address: | ||
[redacted] | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
(Name) | ||
By: | ||
Name: | ||
Title: | ||
If an individual: | ||
By: | /s/ Jeffry Folick | |
Name: | Jeffry Folick | |
Address: | ||
[redacted] | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
Alan M. Muney Revocable Trust dated June 2, 2011 | ||
(Name) | ||
By: | /s/ Alan M. Muney | |
Name: | Alan M. Muney | |
Title: | Grantor and Trustee | |
If an individual: | ||
By: | ||
Name: | Alan Muney | |
Address: | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
(Name) | ||
By: | ||
Name: | ||
Title: | ||
If an individual: | ||
By: | /s/ Matt McAviney | |
Name: | Matt McAviney | |
Address: | ||
[redacted] | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
(Name) | ||
By: | ||
Name: | ||
Title: | ||
If an individual: | ||
By: | /s/ Jason Fuller | |
Name: | Jason Fuller | |
Address: | ||
[redacted] | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
(Name) | ||
By: | ||
Name: | ||
Title: | ||
If an individual: | ||
By: | /s/ Tak Cheung | |
Name: | Tak Cheung | |
Address: | ||
[redacted] | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
(Name) | ||
By: | ||
Name: | ||
Title: | ||
If an individual: | ||
By: | /s/ Lily Huang | |
Name: | Lily Huang | |
Address: | ||
[redacted] | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
(Name) | ||
By: | ||
Name: | ||
Title: | ||
If an individual: | ||
By: | /s/ Matt Chavez | |
Name: | Matt Chavez | |
Address: | ||
[redacted] | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
(Name) | ||
By: | ||
Name: | ||
Title: | ||
If an individual: | ||
By: | /s/ Kyle Rolfing | |
Name: | Kyle Rolfing | |
Address: | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
(Name) | ||
By: | ||
Name: | ||
Title: | ||
If an individual: | ||
By: | /s/ Tom Valdivia | |
Name: | Tom Valdivia | |
Address: | ||
[redacted] | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
(Name) | ||
By: | ||
Name: | ||
Title: | ||
If an individual: | ||
By: | /s/ Jon Watson | |
Name: | Jon Watson | |
Address: | ||
[redacted] | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
(Name) | ||
By: | ||
Name: | ||
Title: | ||
If an individual: | ||
By: | /s/ Don Powers | |
Name: | Don Powers | |
Address: | ||
[redacted] | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
(Name) | ||
By: | ||
Name: | ||
Title: | ||
If an individual: | ||
By: | /s/ Brian Beutner | |
Name: | Brian Beutner | |
Address: | ||
[redacted] | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
If an entity: | ||
(Name) | ||
By: | ||
Name: | ||
Title: | ||
If an individual: | ||
By: | /s/ Blake Wu | |
Name: | Blake Wu | |
Address: | ||
[redacted] | ||
[Signature Page to Second Amended and Restated Registration Rights Agreement]
FF INVESTOR
EXECUTED on behalf of THE NORTHERN TRUST COMPANY (ABN 62 126 279 918), a company incorporated in the State of Illinois in the United States of America, in its capacity as custodian for the Future Fund Investment Company No. 4 Pty Ltd (CAN 134 338 908), by
Jonathan Carstens being a person who, in accordance with the laws of that territory, is acting under the authority of the company in the presence of: |
)
) ) ) ) ) ) ) ) ) ) ) ) ) |
||
/s/ Jonathan Carstens | ) | ||
Signature of witness | ) | ||
) | |||
William Owen | ) | ||
Name of witness (block letters | ) | ||
) | |||
[redacted] | ) | By executing this agreement the signatory warrants that the signatory is duly | |
) | authorized to execute this agreement on behalf of THE NORTHERN TRUST COMPANY | ||
Address of witness | |||
Address: | [redacted] | ||
Telephone: | [redacted] | ||
Attention: | [redacted] | ||
Email(s): | [redacted] | ||
With a copy to those persons and entities in the contact information contained in Exhibit B of the Future Fund Side Letter. |
[Signature Page to Second Amended and Restated Registration Rights Agreement]
FF BENEFICIAL INVESTOR
Signed for Future Fund Investment Company No. 4 Pty Ltd by its attorney under power of attorney dated 29 March 2016 (who, by signing, confirms they have received no notice of revocation of that power) in the presence of: | ||
/s/ William Owen | /s/ Paul Mann | |
Witness Signature | Attorney Signature | |
William Owen | Paul Mann | |
Print Name | Print Name | |
15 November 2018 | ||
Date | ||
With a copy to those persons and entities in the contact information contained in Exhibit B of the Future Fund Side Letter. |
[Signature Page to Second Amended and Restated Registration Rights Agreement]
Annex I
[Holder Notice Information]
Exhibit 10.4
BRIGHT HEALTH INC.
2016 STOCK INCENTIVE PLAN
(AS AMENDED THROUGH DECEMBER 21, 2020)
1. Purpose of Plan.
The purpose of the Bright Health Inc. 2016 Stock Incentive Plan (the “Plan”) is to advance the interests of Bright Health Inc., a Delaware corporation (the “Company”), and its stockholders by enabling the Company and its Subsidiaries to attract and retain persons of ability to perform services for the Company and its Subsidiaries by providing an incentive to such individuals through opportunities for equity participation in the Company and by rewarding such individuals who contribute to the achievement by the Company of its economic objectives.
2. Definitions.
The following terms will have the meanings set forth below, unless the context clearly otherwise requires. Terms defined elsewhere in the Plan will have the same meaning throughout the Plan.
2.1 “Adverse Action” means any action or conduct by a Participant that the Committee, in its sole discretion, determines to be injurious, detrimental, prejudicial or adverse to the interests of the Company or any Subsidiary, including the Participant, during or within one year after the termination of Service, (a) being employed or retained by or rendering services to any organization that, directly or indirectly, competes with or becomes competitive with the Company or any Subsidiary, or rendering such services that are prejudicial or in conflict with the interests of the Company or any Subsidiary, or otherwise violating any non-compete or non- solicitation agreement with the Company or any Subsidiary, or (b) violating any confidentiality agreement or agreement governing the ownership or assignment of intellectual property rights with the Company or any Subsidiary.
2.2 “Board” means the Board of Directors of the Company.
2.3 “Cause” means “cause” as defined in any employment or other agreement or policy applicable to the Participant’s Service, or if no such agreement or policy exists, will mean (a) dishonesty, fraud, misrepresentation, embezzlement or deliberate injury or attempted injury, in each case related to the Company or any Subsidiary, (b) any unlawful or criminal activity of a serious nature, (c) any intentional and deliberate breach of a duty or duties that, individually or in the aggregate, are material in relation to the Participant’s overall duties, or (d) any material breach by a Participant of any employment, service, independent contractor, consulting, confidentiality, invention, non-compete or non-solicitation agreement entered into with the Company or any Subsidiary; provided, however, that if there is a separate written agreement between the Participant and the Company or any Subsidiary, such agreement shall control in the event of an inconsistency with the definition in this Section 2.3.
2.4 “Change in Control” means an event described in Section 11.1 of the Plan; provided, however, if a change in the time or form of payment of an Incentive Award subject to Section 409A of the Code is triggered by a Change in Control, the term Change in Control will mean a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, as such term is defined in Section 409A of the Code.
2.5 “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code in the Plan will be deemed to include a reference to any applicable rules and regulations thereunder and any successor or amended section of the Code.
2.6 “Committee” means the group of individuals administering the Plan, as provided in Section 3 of the Plan.
2.7 “Common Stock” means the common stock of the Company, $0.0001 par value, or the number and kind of shares of stock or other securities into which such common stock may be changed in accordance with Section 4.3 of the Plan.
2.8 “Director” means a member of the Board.
2.9 “Disability” means the disability of the Participant such as would entitle the Participant to receive disability income benefits pursuant to the long-term disability plan of the Company or Subsidiary then covering the Participant or, if no such plan exists or is applicable to the Participant, the permanent and total disability of the Participant within the meaning of Section 22(e)(3) of the Code; provided, however, if a change in the time or form of payment of an Incentive Award subject to Section 409A of the Code is triggered by an Eligible Recipient’s Disability, such term will mean that the Eligible Recipient is disabled as defined by Section 409A of the Code.
2.10 “Eligible Recipients” means all Employees, any Directors who are not Employees and all Third-Party Service Providers.
2.11 “Employee” means any person treated as an employee (including an officer of the Company or a Director who is also treated as an employee) in the records of the Company or any Subsidiary. The Committee will determine in good faith and in the exercise of its sole discretion whether an individual has become or has ceased to be an Employee and the effective date of such individual’s employment or termination of employment, as the case may be. For purposes of an individual’s rights, if any, under the terms of the Plan as of the time of the Committee’s determination of whether or not the individual is an Employee, all such determinations by the Committee will be final, binding and conclusive as to such rights, if any, notwithstanding that the Company or any court of law or governmental agency subsequently makes a contrary determination as to such individual’s status as an Employee.
2.12 “Exchange Act” means the Securities Exchange Act of 1934, as amended. Any reference to a section of the Exchange Act in the Plan will be deemed to include a reference to any applicable rules and regulations thereunder.
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2.13 “Fair Market Value” means, with respect to the Common Stock, as of any date: (a) the closing sale price of the Common Stock as of such date at the end of the regular trading session, as reported on any national securities exchange on which the Common Stock is then listed (or, if no shares were traded on such date, as of the next preceding date on which there was such a trade); or (b) if the Common Stock is not so listed, admitted to unlisted trading privileges, or reported on any national securities exchange, the closing sale price as of such date at the end of the regular trading session, as reported by the OTC Bulletin Board or the OTC Markets Group Inc., or other comparable service (or, if no shares were traded or quoted on such date, as of the next preceding date on which there was such a trade or quote); or (c) if the Common Stock is not so listed or reported, such price as the Committee determines in good faith by the reasonable application of a reasonable valuation method, taking into account all available information material to the value of the Common Stock, and consistent with the definition of “fair market value” under Section 409A of the Code and in conformity with generally accepted accounting principles in the United States. If determined by the Committee, such determination will be final, conclusive and binding for all purposes and on all persons, including the Company, the stockholders of the Company, the Participants and their respective heirs and other successors-in- interest. No member of the Committee will be liable for any determination regarding the fair market value of the Common Stock that is made in good faith.
2.14 “Incentive Award” means an Option, Restricted Stock Award, Restricted Stock Unit or Other Stock-Based Award granted to an Eligible Recipient pursuant to the Plan.
2.15 “Incentive Award Agreement” means a written or electronic agreement between the Company and a Participant setting forth the terms, conditions and restrictions of the Incentive Award granted to the Participant.
2.16 “Incentive Stock Option” means a right to purchase shares of Common Stock granted to an Eligible Recipient pursuant to Section 6 of the Plan that qualifies as an “incentive stock option” within the meaning of Section 422 of the Code.
2.17 “Non-Statutory Stock Option” means a right to purchase shares of Common Stock granted to an Eligible Recipient pursuant to Section 6 of the Plan that does not qualify as an Incentive Stock Option.
2.18 “Option” means an Incentive Stock Option or a Non-Statutory Stock Option.
2.19 “Other Stock-Based Award” means an equity-based or equity-related Incentive Award not otherwise described by the terms of the Plan, granted pursuant to Section 8 of the Plan.
2.20 “Participant” means an Eligible Recipient who receives one or more Incentive Awards under the Plan.
2.21 “Previously Acquired Shares” means shares of Common Stock that are already owned by the Participant or, with respect to any Incentive Award, that are to be issued to the Participant upon the grant, exercise or vesting of such Incentive Award.
2.22 “Restricted Stock Award” means an Incentive Award of shares of Common Stock granted to an Eligible Recipient pursuant to Section 7 of the Plan that is subject to restrictions on transferability and a risk of forfeiture.
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2.23 “Restricted Stock Unit” means an Incentive Award of shares of Common Stock granted to an Eligible Recipient pursuant to Section 7 of the Plan to receive an amount of cash, a number of shares of Common Stock, or a combination of both, contingent upon the achievement of specified performance objectives or that the Participant remain in the continuous employment or service with the Company for a certain period or other conditions.
2.24 “Retirement” means termination of Service pursuant to and in accordance with the regular (or, if approved by the Board for purposes of the Plan, early) retirement/pension plan or practice of the Company or Subsidiary then covering the Participant, or as otherwise provided by the Committee in its sole discretion.
2.25 “Securities Act” means the Securities Act of 1933, as amended. Any reference to a section of the Securities Act in the Plan will be deemed to include a reference to any applicable rules and regulations thereunder.
2.26 “Service” means a Participant’s employment or service with the Company or any Subsidiary, whether in the capacity of an Employee, a Director or a Third-Party Service Provider. A change in the capacity in which the Participant renders service to the Company or a Subsidiary as an Employee, Director, or Third Party Service Provider, provided that there is no interruption or termination of the Participant’s service with the Company or a Subsidiary, shall not terminate a Participant’s Service, unless the Committee otherwise determines in its sole discretion. A Participant’s Service will be deemed to have terminated either upon an actual termination of Service or upon the Subsidiary for which the Participant performs Service ceasing to be a subsidiary of the Company (unless the Participant continues in the Service of the Company or another Subsidiary). Subject to the foregoing, the Committee, in its sole discretion, will have the authority to determine whether the Participant’s Service has terminated and the effective date of and reason for such termination.
2.27 “Subsidiary” means any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity interest, as determined by the Committee, provided the Company has a “controlling interest” in the Subsidiary as defined in Treas. Reg. Sec. 1.409A-1(b)(5)(iii)(E)(1).
2.28 “Tax Date” means the date any withholding tax obligation arises under the Code or other applicable tax statute for a Participant with respect to an Incentive Award.
2.29 “Third-Party Service Provider” means any consultant, agent, advisor or independent contractor who renders services to the Company or a Subsidiary that: (a) are not in connection with the offer and sale of the Company’s securities in a capital raising transaction, and (b) do not directly or indirectly promote or maintain a market for the Company’s securities.
3. Plan Administration.
3.1 The Committee. The Plan will be administered by the Board or by a committee of the Board. Such a committee, if established, will act by majority approval of the members (but may also take action by the written consent of all of the members of such committee), and a majority of the members of such a committee will constitute a quorum. As used in the Plan, “Committee” will refer to the Board or to such a committee, if established. To the extent consistent with the applicable corporate law of the Company’s jurisdiction of incorporation, the Committee may delegate to any officers of the Company the duties, power and authority of the Committee under the Plan pursuant to such conditions or limitations as the Committee may establish. The Committee may exercise its duties, power and authority under the Plan in its sole and absolute discretion without the consent of any Participant or other party, unless the Plan specifically provides otherwise. The Committee will not be obligated to treat Participants or Eligible Recipients uniformly, and determinations made under this Plan may be made by the Committee selectively among Participants or Eligible Recipients, whether or not such Participants and Eligible Recipients are similarly situated. Each determination, interpretation or other action made or taken by the Committee pursuant to the provisions of the Plan, including the determination of Fair Market Value, will be final, conclusive and binding for all purposes and on all persons, including the Company, the stockholders of the Company, the Participants and their respective heirs and other successors-in-interest. No member of the Board or the Committee will be liable for any action or determination made in good faith with respect to the Plan or any Incentive Award granted under the Plan, including any determination regarding current values of the Common Stock that is made in good faith.
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3.2 Authority of the Committee.
(a) In accordance with and subject to the provisions of the Plan, the Committee will have the authority to determine all provisions of Incentive Awards as the Committee may deem necessary or desirable and as consistent with the terms of the Plan, including the following: (i) the Eligible Recipients to be selected as Participants; (ii) the nature and extent of the Incentive Awards to be made to each Participant (including the number of shares of Common Stock to be subject to each Incentive Award, any exercise price, the manner in which Incentive Awards will vest or become exercisable and whether Incentive Awards will be granted in tandem with other Incentive Awards) and the form of Incentive Award Agreement, if any, evidencing such Incentive Award; (iii) the time or times when Incentive Awards will be granted; (iv) the duration of each Incentive Award; and (v) the restrictions and other conditions to which the payment or vesting of Incentive Awards may be subject. In addition, the Committee will have the authority under the Plan in its sole discretion to pay the economic value of any Incentive Award in the form of cash, Common Stock or any combination of both.
(b) The Committee will have the authority under the Plan to amend or modify the terms of any outstanding Incentive Award in any manner, including the authority to modify the number of shares or other terms and conditions of an Incentive Award, extend the term of an Incentive Award, accelerate the exercisability or vesting or otherwise terminate any restrictions relating to an Incentive Award, accept the surrender of any outstanding Incentive Award or, to the extent not previously exercised or vested, authorize the grant of new Incentive Awards in substitution for surrendered Incentive Awards; provided, however that the amended or modified terms are permitted by the Plan as then in effect and that (i) such amendment or modification is permissible pursuant to Section 15 of the Plan, (ii) the amended or modified terms are permitted by the Plan as then in effect and (iii) any Participant adversely affected by such amended or modified terms has consented to such amendment or modification. No amendment or modification to an Incentive Award, however, whether pursuant to this Section 3.2 or any other provisions of the Plan, will be deemed to be a re-grant of such Incentive Award for purposes of this Plan.
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(c) In the event of (i) any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, combination of shares, rights offering, extraordinary dividend or divestiture (including a spin-off) or any other similar change in corporate structure or shares; (ii) any purchase, acquisition, sale, disposition or write-down of a significant amount of assets or a significant business; (iii) any change in accounting principles or practices, tax laws or other such laws or provisions affecting reported results; (iv) any uninsured catastrophic losses or extraordinary non-recurring items as described in Accounting Standards Codification 225-20; or (v) any other similar change, in each case with respect to the Company or any other entity whose performance is relevant to the grant or vesting of an Incentive Award, the Committee (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) may, without the consent of any affected Participant, amend or modify the vesting criteria (including any performance objectives) of any outstanding Incentive Award that is based in whole or in part on the financial performance of the Company (or any Subsidiary or division or other sub-unit thereof) or such other entity so as equitably to reflect such event, with the desired result that the criteria for evaluating such financial performance of the Company or such other entity will be substantially the same (in the sole discretion of the Committee or the board of directors of the surviving corporation) following such event as prior to such event; provided, however, that the amended or modified terms are permitted by the Plan as then in effect, including the limitations in Section 3.2(a) and 3.2(b).
(d) In addition to the authority of the Committee under Section 3.2(b) of the Plan and notwithstanding any other provision of the Plan, the Committee may, in its sole discretion, amend the terms of the Plan or Incentive Awards with respect to Participants resident outside of the United States or employed by a non-U.S. Subsidiary in order to comply with local legal requirements, to otherwise protect the Company’s or Subsidiary’s interests, or to meet objectives of the Plan, and may, where appropriate, establish one or more sub-plans (including the adoption of any required rules and regulations) for the purposes of qualifying for preferred tax treatment under foreign tax laws. The Committee will have no authority, however, to take action pursuant to this Section 3.2(d): (i) to reserve shares of Common Stock or grant Incentive Awards in excess of the limitations provided in Section 4.1 of the Plan; (ii) to grant Options having an exercise price in violation of Section 6.2 of the Plan; or (iii) for which stockholder approval would then be required pursuant to Section 422 of the Code.
4. Shares Available for Issuance.
4.1 Maximum Number of Shares Available. Subject to adjustment as provided in Section 4.3 of the Plan, the maximum number of shares of Common Stock that will be available for issuance under the Plan, which is the maximum number of shares that may be issued pursuant to the exercise of Incentive Stock Options granted under the Plan, will be 28,070,760 shares. The shares of Common Stock available for issuance under the Plan may, at the election of the Committee, be either treasury shares or shares authorized but unissued, and, if treasury shares are used, all references in the Plan to the issuance of shares will, for corporate law purposes, be deemed to mean the transfer of shares from treasury.
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4.2 Accounting for Incentive Awards. The grant of any Incentive Award under the Plan will reduce the maximum number of available shares of Common Stock remaining available for issuance under the Plan by the number of shares subject to such Incentive Award. All shares so subtracted from the amount available under the Plan with respect to an Incentive Award that lapses, expires, is forfeited (including issued shares forfeited under a Restricted Stock Award) or for any reason is terminated unexercised or unvested will automatically again become available for issuance under the Plan; provided, however, that (a) any shares which would have been issued upon any exercise of an Option but for the fact that the exercise price was paid by a “net exercise” pursuant to Section 6.4(b) of the Plan or the tender or attestation as to ownership of Previously Acquired Shares pursuant to Section 6.4(a) of the Plan will not again become available for issuance under the Plan; and (b) shares withheld by the Company to satisfy any tax withholding obligation will not again become available for issuance under the Plan.
4.3 Adjustments to Incentive Awards. Except to the extent that Section 11 applies, in the event of any change in the corporate structure or shares of the Company, whether through reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, combination of shares, rights offering, divestiture or extraordinary dividend (including a spin-off) or any other similar change in the corporate structure or shares of the Company, the Committee (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) will make appropriate adjustment (which determination will be conclusive) as to the number and kind of securities or other property (including cash) available for issuance or payment under the Plan and, in order to prevent dilution or enlargement of the rights of Participants, (a) the number and kind of securities or other property (including cash) subject to outstanding Incentive Awards, and (b) the exercise price of outstanding Options.
5. Participation.
Participants in the Plan will be those Eligible Recipients who, in the judgment of the Committee, have contributed, are contributing or are expected to contribute to the achievement of economic objectives of the Company or its Subsidiaries. Eligible Recipients may be granted from time to time one or more Incentive Awards, singly or in combination or in tandem with other Incentive Awards, as may be determined by the Committee in its sole discretion. Incentive Awards will be deemed to be granted as of the date specified in the grant resolution of the Committee, which date will be the date of any related Incentive Award Agreement with the Participant.
6. Options.
6.1 Grant. An Eligible Recipient may be granted one or more Options under the Plan; provided, however, that only an Eligible Recipient who is an Employee may be granted an Incentive Stock Option. Options granted under the Plan will be subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion. The Committee may designate whether an Option is to be considered an Incentive Stock Option or a Non-Statutory Stock Option. To the extent that any Incentive Stock Option (or portion thereof) granted under the Plan ceases for any reason to qualify as an “incentive stock option” for purposes of Section 422 of the Code, such Incentive Stock Option (or portion thereof) will continue to be outstanding for purposes of the Plan but will thereafter be deemed to be a Non-Statutory Stock Option.
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6.2 Exercise Price. The per share price to be paid by a Participant upon exercise of an Option will be determined by the Committee in its sole discretion at the time of the Option grant; provided, however, that such price will not be less than 100% of the Fair Market Value of one share of Common Stock on the date of grant (or 110% of the Fair Market Value if, at the time the Incentive Stock Option is granted, the Participant owns, directly or indirectly, more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company).
6.3 Exercisability and Duration. An Option will become exercisable at such times and in such installments and upon such terms and conditions as may be determined by the Committee in its sole discretion at the time of grant (including (a) the achievement of one or more specified performance objectives; or that (b) the Participant remain in the continuous Service of the Company or a Subsidiary for a certain period); provided, however, that no Incentive Stock Option may be exercisable after ten (10) years from its date of grant (five (5) years from its date of grant if, at the time the Incentive Stock Option is granted, the Participant owns, directly or indirectly, more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company). Notwithstanding the foregoing, if the exercise of an Option that is exercisable in accordance with its terms is prevented by the provisions of Section 13.1 of the Plan, the Option will remain exercisable until thirty (30) days after the date such exercise first would no longer be prevented by such provisions, but in any event no later than the expiration date of such Option.
6.4 Payment of Exercise Price.
(a) The total purchase price of the shares to be purchased upon exercise of an Option must be paid entirely in cash or cash equivalent (including check, bank draft or money order); provided, however, that the Committee, in its sole discretion and upon terms and conditions established by the Committee, may allow such payments to be made, in whole or in part, by: (i) tender, or attestation as to ownership, of Previously Acquired Shares that are acceptable to the Committee; (ii) by a “net exercise” of the Option (as further described in paragraph (b) below); (iii) a promissory note (on terms acceptable to the Committee in its sole discretion); (iv) such other consideration as may be approved by the Committee from time to time; or (v) a combination of such methods.
(b) In the case of a “net exercise” of an Option, the Company will not require a payment of the exercise price of the Option from the Participant but will reduce the number of shares of Common Stock issued upon the exercise by the largest number of whole shares that has a Fair Market Value on the exercise date that does not exceed the aggregate exercise price for the shares exercised under this method. Shares of Common Stock will no longer be outstanding under an Option (and will therefore not thereafter be exercisable) following the exercise of such Option to the extent of (i) shares used to pay the exercise price of an Option under the “net exercise,” (ii) shares actually delivered to the Participant as a result of such exercise and (iii) any shares withheld for purposes of tax withholding pursuant to Section 10.1 of the Plan.
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(c) Previously Acquired Shares tendered or covered by an attestation as payment of an Option exercise price will be valued at their Fair Market Value on the exercise date.
6.5 Manner of Exercise. An Option may be exercised by a Participant in whole or in part from time to time, subject to the conditions contained in the Plan and in the Incentive Award Agreement evidencing such Option, by delivery in person, by facsimile or electronic transmission or through the mail of written notice of exercise to the Company (Attention: Chief Executive Officer) at its principal executive office and by paying in full the total exercise price for the shares of Common Stock to be purchased in accordance with Section 6.4 of the Plan.
6.6 Aggregate Limitation of Stock Subject to Incentive Stock Options. To the extent that the aggregate Fair Market Value (determined as of the date an Incentive Stock Option is granted) of the shares of Common Stock with respect to which incentive stock options (within the meaning of Section 422 of the Code) are exercisable for the first time by a Participant during any calendar year (under the Plan and any other incentive stock option plans of the Company or any subsidiary or parent corporation of the Company (within the meaning of the Code)) exceeds $100,000 (or such other amount as may be prescribed by the Code from time to time), such excess Options will be treated as Non-Statutory Stock Options. The determination will be made by taking incentive stock options into account in the order in which they were granted. If such excess only applies to a portion of an Incentive Stock Option, the Committee, in its discretion, will designate which shares will be treated as shares to be acquired upon exercise of an Incentive Stock Option.
6.7 Early Exercise. The Committee may, in its sole discretion, include in an Incentive Award Agreement for an Option a provision pursuant to which the Participant may at any time before termination of the Participant’s Service and prior to the full vesting of the Option elect to exercise the Option as to any part or all of the shares of Common Stock subject to the Option. Any unvested shares of Common Stock so purchased by the Participant will continue to vest in accordance with the vesting terms of the Option and may be subject to a repurchase option in favor of the Company on terms established by the Committee in its sole discretion or to any other restriction(s) the Committee determines to be appropriate.
7. Restricted Stock Awards and Restricted Stock Units.
7.1 Grant. An Eligible Recipient may be granted one or more Restricted Stock Awards or Restricted Stock Units under the Plan. The Committee may (but need not) require the payment by the Participant of a specified purchase price in connection with a Restricted Stock Award. Restricted Stock Units will be similar to Restricted Stock Awards except that no shares of Common Stock are actually awarded to the Participant on the date of grant of the Restricted Stock Units. Restricted Stock Units will be denominated in shares of Common Stock but paid in cash, shares of Common Stock or a combination of cash and shares of Common Stock as the Committee, in its sole discretion, will determine, and as provided in the Incentive Award Agreement.
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7.2 Vesting Requirements. Restricted Stock Awards and Restricted Stock Units will be subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion, and which will be set forth in an Incentive Award Agreement evidencing such Restricted Stock Award or Restricted Stock Unit. The Committee may (but need not) impose such restrictions or conditions, not inconsistent with the provisions of the Plan, to the vesting of such Restricted Stock Awards or Restricted Stock Units as it deems appropriate, including: (a) the achievement of one or more specified performance objectives; or (b) that the Participant remain in the continuous Service of the Company or a Subsidiary for a certain period. If any vesting requirements of a Restricted Stock Award or Restricted Stock Unit are not satisfied, the Restricted Stock Award or Restricted Stock Unit will be forfeited and the shares of Common Stock subject to the forfeited Restricted Stock Award will be returned to the Company and no shares of Common Stock or other consideration will be issued with respect to the forfeited Restricted Stock Unit. If the Participant paid any purchase price with respect to such forfeited shares, unless otherwise provided by the Committee in the Incentive Award Agreement evidencing the Restricted Stock Award, the Company will refund to the Participant the lesser of (x) such purchase price and (y) the Fair Market Value of such shares on the date of forfeiture. Notwithstanding the foregoing, Restricted Stock Awards may in the sole discretion of the Committee be granted without any restrictions or conditions.
7.3 Rights as a Stockholder; Transferability. Except as provided in Sections 7.4, 7.5, 7.6 and 12.3 of the Plan or unless the Committee determines otherwise in its sole discretion (either in the Incentive Award Agreement evidencing the Restricted Stock Award at the time of grant or at any time after the grant of the Restricted Stock Award), a Participant will have all voting, dividend, liquidation and other rights with respect to shares of Common Stock subject to such Restricted Stock Award upon the Participant becoming the holder of record of such shares as if such Participant were a holder of record of shares of unrestricted Common Stock. A Participant will have no voting, dividend, liquidation and other rights with respect to any shares of Common Stock underlying any Restricted Stock Units granted hereunder unless and until the shares of Common Stock are issued under the terms thereof and the Participant becomes the holder of record of such shares.
7.4 Restrictions on Shares Subject to Restricted Stock Awards. In addition to any transfer restrictions set forth in Sections 12 or 13 of the Plan, shares granted under any Restricted Stock Award that are subject to vesting restrictions related to the achievement of any performance objectives or the Participant remaining in the continuous Service of the Company or a Subsidiary for a certain period, and any interest of the Participant in such shares, may not be sold, assigned, transferred, pledged or otherwise disposed of by the Participant, directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, until all such restrictions are removed or have expired, unless otherwise allowed by the Committee in its sole discretion. To enforce the restrictions referred to in this Section 7, the Committee may place a legend on the stock certificates referring to such restrictions and may require the Participant, until the restrictions have lapsed, to keep the stock certificates, together with duly endorsed stock powers, in the custody of the Company or its transfer agent, or to maintain evidence of stock ownership, together with duly endorsed stock powers, in a certificateless book-entry stock account with the Company’s transfer agent.
7.5 Settlement. Upon the vesting of a Restricted Stock Unit, the Restricted Stock Unit will be settled, subject to the terms and conditions of the applicable Incentive Award Agreement, (a) in cash, based upon the Fair Market Value of the vested underlying shares of Common Stock, (b) in shares of Common Stock or (c) a combination thereof, as provided in the Incentive Award Agreement, except to the extent that a Participant has properly elected to defer income that may be attributable to a Restricted Stock Unit under a Company deferred compensation plan or arrangement.
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7.6 Dividends, Etc.
(a) Unless the Committee determines otherwise in its sole discretion (either in the Incentive Award Agreement evidencing the Restricted Stock Award at the time of grant or at any time after the grant of the Restricted Stock Award), any dividends or distributions paid with respect to shares of Common Stock subject to any unvested portion of a Restricted Stock Award will be subject to the same restrictions as the shares to which such dividends, distributions or such other payments relate. The Committee will determine in its sole discretion whether any interest will be paid on such dividends or distributions.
(b) Unless the Committee determines otherwise in its sole discretion (either in the Incentive Award Agreement evidencing the Restricted Stock Unit at the time of grant or at any time after the grant of the Restricted Sock Unit), any Restricted Stock Unit shall carry with it a right to dividend equivalents, as granted by the Committee in its sole discretion based on the dividends declared on shares of Common Stock that are subject to any Restricted Stock Unit, to be credited as of dividend payment dates, during the period between the date of grant of the Restricted Stock Unit and the date the Restricted Stock Unit is settled. Such dividend equivalents will be converted to cash or additional shares of Common Stock by such formula and at such time and subject to such limitations as may be determined by the Committee.
7.7 Section 83(b) Election for Stock Award. If a Participant makes an election pursuant to Section 83(b) of the Code with respect to a Restricted Stock Award, the Participant must file, within 30 days following the date of grant, a copy of such election with the Company and with the Internal Revenue Service, in accordance with the regulations under Section 83 of the Code. The Committee may provide in the Incentive Award Agreement evidencing the Restricted Stock Award that the Restricted Stock Award is conditioned upon the Participant’s making or refraining from making an election with respect to the Restricted Stock Award under Section 83(b) of the Code.
8. Other Stock-Based Awards.
8.1 Other Stock-Based Awards. Subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion, the Committee may grant Other Stock-Based Awards not otherwise described by the terms of the Plan (including the grant or offer for sale of unrestricted shares of Common Stock) in such amounts and subject to such terms and conditions as the Committee will determine. Such Incentive Awards may involve the transfer of actual shares of Common Stock to Participants or payment in cash or otherwise of amounts based on the value of shares of Common Stock, and may include Incentive Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.
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8.2 Value of Other Stock-Based Awards. Each Other Stock-Based Award will be expressed in terms of shares of Common Stock or units based on shares of Common Stock, as determined by the Committee. The Committee may establish performance objectives in its sole discretion for any Other Stock-Based Award. If the Committee exercises its discretion to establish performance objectives for any such Incentive Awards, the number or value of Other Stock-Based Awards that will be paid out to the Participant will depend on the extent to which the specified performance objectives are met.
8.3 Payment of Other Stock-Based Awards. Payment, if any, with respect to an Other Stock-Based Award will be made in accordance with the terms of the Incentive Award and in cash or shares of Common Stock, as the Committee determines, except to the extent that a Participant has properly elected to defer payment that may be attributable to an Other Stock- Based Award under a Company deferred compensation plan or arrangement.
9. Termination of Service.
The following provisions will apply upon termination of a Participant’s Service, except to the extent that the Committee provides otherwise in an Incentive Award Agreement at the time of grant or determines otherwise pursuant to Section 9.3, 9.4 or 9.5 of this Plan (and such provisions and determinations need not be uniform among all Incentive Awards granted pursuant to this Plan). Notwithstanding anything to the contrary in the Plan or any Incentive Award Agreement, with respect to any Incentive Award that constitutes the deferral of compensation subject to Code Section 409A, if any amount is payable under such Incentive Award as a result of a Participant’s termination of Service, a termination of Service will be deemed to have occurred only at such time as the Participant has experienced a “separation from service” as such term is defined for purposes of Code Section 409A.
9.1 Termination Due to Death, Disability or Retirement. Subject to Sections 9.4 and 9.5 of the Plan, if a Participant’s Service is terminated by reason of death, Disability or Retirement:
(a) all outstanding Options held by the Participant as of the effective date of such termination will, to the extent exercisable as of the date of such termination, remain exercisable in full for a period of six (6) months after the date of such termination (but in no event after the expiration date of any such Option), and Options not exercisable as of the date of such termination will be forfeited and terminate; and
(b) all Restricted Stock Awards held by the Participant as of the effective date of such termination that have not vested as of the date of such termination will be terminated and forfeited.
(c) all outstanding but unpaid Restricted Stock Units and Other Stock-Based Awards then held by the Participant will be terminated and forfeited; provided, however, that with respect to any such Incentive Awards the vesting of which is based on the achievement of specified performance objectives, if a Participant’s employment or other service with the Company or any Subsidiary, as the case may be, is terminated by reason of death or Disability prior to the end of the performance period of such Incentive Award, but after the conclusion of a portion of the performance period (but in no event less than one year), the Committee may, in its sole discretion, cause shares of Common Stock to be delivered or payment made with respect to the Participant’s Incentive Award, but only if otherwise earned for the entire performance period and only with respect to the portion of the applicable performance period completed at the date of such event, with proration based on full fiscal years only and no shares to be delivered for partial fiscal years. The Committee will consider the provisions of Sections 9.4 and 9.5 of the Plan and will have the discretion to consider any other fact or circumstance in making its decision as to whether to deliver such shares of Common Stock or other payment, including whether the Participant again becomes employed.
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9.2 Termination for Reasons Other than Death, Disability or Retirement. Subject to Sections 9.4 and 9.5 of the Plan, if a Participant’s Service is terminated for any reason other than death, Disability or Retirement:
(a) all outstanding Options held by the Participant as of the effective date of such termination will, to the extent exercisable as of the date of such termination, remain exercisable in full for a period of ninety (90) days after the date of such termination (but in no event after the expiration date of any such Option), and Options not exercisable as of the date of such termination will be forfeited and terminate; and
(b) all Restricted Stock Awards held by the Participant as of the effective date of such termination that have not vested as of the date of such termination will be terminated and forfeited.
(c) all outstanding but unpaid Restricted Stock Units and Other Stock-Based Awards then held by the Participant will be terminated and forfeited.
9.3 Modification of Rights Upon Termination. Notwithstanding the other provisions of this Section 9, upon a Participant’s termination of Service, the Committee may, in its sole discretion (which may be exercised at any time on or after the date of grant, including following such termination) cause Options (or any part thereof) then held by such Participant to terminate, to vest and become exercisable, or to continue to vest and become exercisable or to remain exercisable following such termination of Service, and Restricted Stock Awards, Restricted Stock Units or Other Stock-Based Awards then held by such Participant to terminate, vest or become free of restrictions and conditions to payment, as the case may be, following such termination of Service, in each case in the manner determined by the Committee; provided, however, that (a) no Option may remain exercisable beyond its expiration date and (b) any such action adversely affecting any outstanding Incentive Award may not be effective without the consent of the affected Participant (subject to the right of the Committee to take whatever action it deems appropriate under Sections 3.2(c), 4.3, 9.4, 9.5 and 10 of the Plan).
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9.4 Additional Forfeiture Events. Notwithstanding anything in this Plan, if a Participant is determined by the Committee, acting in its sole discretion, to have taken any action that would constitute Cause or an Adverse Action, irrespective of whether such action or the Committee’s determination occurs before or after termination of such Participant’s Service and irrespective of whether or not the Participant was terminated for Cause: (a) all rights of the Participant under this Plan and any Incentive Award Agreements evidencing an Incentive Award then held by the Participant will terminate and be forfeited without notice of any kind, and (b) the Committee in its sole discretion may require the Participant to surrender and return to the Company all or any shares of Common Stock received, or to disgorge all or any profits or any other economic value (however defined by the Committee) made or realized by the Participant, during the period beginning one year prior to the Participant’s termination of Service in connection with any Incentive Awards or any shares of Common Stock issued upon the exercise or vesting of any Incentive Awards. The Company may defer the exercise of any Option for a period of up to six (6) months after receipt of the Participant’s written notice of exercise or the issuance of share certificates upon the vesting of any Stock Award for a period of up to six (6) months after the date of such vesting in order for the Committee to make any determination as to the existence of Cause or an Adverse Action. Unless otherwise provided by the Committee in an applicable Incentive Award Agreement, this Section 9.4 will not apply to any Participant following a Change in Control.
9.5 Clawback of Incentive Awards. All Incentive Awards under the Plan will be subject to forfeiture or other penalties required by applicable law or under the requirements of any stock exchange or market upon which the Common Stock is then listed or traded. In addition, all Incentive Awards under the Plan will be subject to any compensation “clawback,” forfeiture or recoupment policy that the Committee may adopt from time to time that is applicable by its terms to the Participant and such forfeiture and/or penalty conditions or provisions as determined by the Committee and set forth in the applicable Incentive Award Agreement.
10. Payment of Withholding Taxes.
10.1 General Rules. The Company is entitled to (a) withhold and deduct from future wages of the Participant (or from other amounts that may be due and owing to the Participant from the Company or a Subsidiary), or make other arrangements for the collection of, an amount the Company reasonably determines to be the minimum statutory amount necessary to satisfy any and all federal, foreign, state and local withholding and employment-related tax requirements attributable to an Incentive Award, including the grant, exercise or vesting of, or payment of dividends with respect to, an Incentive Award or a disqualifying disposition of stock received upon exercise of an Incentive Stock Option; (b) withhold cash paid or payable or shares of Common Stock from the shares issued or otherwise issuable to the Participant in connection with an Incentive Award; or (c) require the Participant promptly to remit the amount of such withholding to the Company before taking any action, including issuing any shares of Common Stock, with respect to an Incentive Award. Shares of Common Stock issued or otherwise issuable to the Participant in connection with an Incentive Award that gives rise to the tax withholding obligation that are withheld for purposes of satisfying the Participant’s withholding or employment-related tax obligation will be valued at their Fair Market Value on the Tax Date.
10.2 Special Rules. The Committee may, in its sole discretion and upon terms and conditions established by the Committee, permit or require a Participant to satisfy, in whole or in part, any withholding or employment-related tax obligation described in Section 10.1 of the Plan by electing to tender, or by attestation as to ownership of, Previously Acquired Shares, by delivery of a promissory note (on terms acceptable to the Committee in its sole discretion), or by a combination of such methods. For purposes of satisfying a Participant’s withholding or employment-related tax obligation, Previously Acquired Shares tendered or covered by an attestation will be valued at their Fair Market Value on the Tax Date.
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11. Change in Control.
11.1 Definition. For purposes of this Section 11, a “Change in Control” of the Company means the occurrence of any one of the following: (a) the sale, lease, exchange or other transfer, directly or indirectly, of substantially all of the assets of the Company or an exclusive license granted by the Company of substantially all of its intellectual property (in one transaction or in a series of related transactions) to a person or entity that is not controlled by the Company; (b) the approval by the stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company; (c) any person becomes after the effective date of the Plan, other than as the result of the sale by the Company of its securities in a financing completed primarily for capital raising purposes, the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the combined voting power of the Company’s outstanding securities ordinarily having the right to vote at elections of directors; or (d) a merger or consolidation to which the Company is a party if the stockholders of the Company immediately prior to effective date of such merger or consolidation have “beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act) immediately following the effective date of such merger or consolidation of securities of the surviving corporation representing 50% or less of the combined voting power of the surviving corporation’s then outstanding securities ordinarily having the right to vote at elections of directors.
11.2 Effect of Change in Control. In connection with a Change in Control, unless provision is made in connection with the Change in Control in the sole discretion of the parties to the Change in Control for the assumption or continuation by the successor entity of Incentive Awards theretofore granted, all outstanding Incentive Awards granted under this Plan, whether or not exercisable or vested, as the case may be, will be canceled and terminated and that in connection with such cancellation and termination the holder of any vested Incentive Award will receive for each share of Common Stock subject to such Incentive Award a cash payment (or the delivery of shares of stock, other securities or a combination of cash, stock and securities with a fair market value (as determined by the Committee in good faith) equivalent to such cash payment) equal to the difference, if any, between the consideration received by stockholders of the Company in respect of a share of Common Stock in connection with such Change in Control and the purchase price per share, if any, under the Incentive Award, multiplied by the number of shares of Common Stock subject to such Incentive Award that were vested at the time of cancellation (or in which such Incentive Award is denominated); provided, however, that if such product is zero ($0) or less or to the extent that the Incentive Award is not then vested or exercisable, the Incentive Award may be canceled and terminated without payment therefor. If any portion of the consideration pursuant to a Change in Control may be received by holders of shares of Common Stock on a contingent or delayed basis, the Committee may, in its sole discretion, determine the fair market value per share of such consideration as of the time of the Change in Control on the basis of the Committee’s good faith estimate of the present value of the probable future payment of such consideration.
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11.3 Limitation on Change in Control Payments. Notwithstanding anything in Section 11.2 of the Plan to the contrary, if, with respect to a Participant, the acceleration of the vesting or exercisability of an Incentive Award or the payment of cash or other property in exchange for all or part of an Incentive Award (which acceleration or payment could be deemed a “payment” within the meaning of Section 280G(b)(2) of the Code), together with any other “payments” that such Participant has the right to receive from the Company or any corporation that is a member of an “affiliated group” (as defined in Section 1504(a) of the Code without regard to Section 1504(b) of the Code) of which the Company is a member, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then the “payments” to such Participant pursuant to Section 11.2 of the Plan will be reduced to the largest amount as will result in no portion of such “payments” being subject to the excise tax imposed by Section 4999 of the Code; provided, however, that such reduction will be made only if the aggregate amount of the payments after such reduction exceeds the difference between (a) the amount of such payments absent such reduction minus (b) the aggregate amount of the excise tax imposed under Section 4999 of the Code attributable to any such excess parachute payments. Notwithstanding the foregoing sentence, if a Participant is subject to a separate agreement with the Company or a Subsidiary that expressly addresses the potential application of Sections 280G or 4999 of the Code (including that “payments” under such , agreement or otherwise will be reduced, that the Participant will have the discretion to determine which “payments” will be reduced, that such “payments” will not be reduced or that such “payments” will be “grossed up” for tax purposes), then this Section 11.3 will not apply, and any “payments” to a Participant pursuant to Section 11.2 of the Plan will be treated as “payments” arising under such separate agreement.
11.4 Stockholders’ Representative. For purposes of this Section 11.4, “Stockholders’ Representative” means one or more persons or entities appointed by the Company’s stockholders to represent the interests of the stockholders in connection with a Change in Control, including with respect to matters such as: (a) determining any purchase price adjustment after the closing of the Change in Control; (b) taking any actions on behalf of the stockholders between the signing and closing of any agreement providing for such Change in Control (an “Acquisition Agreement”), including determining whether any closing conditions have been satisfied; (c) determining the amount to be paid to the stockholders after the closing of the Change in Control as the result of an earnout or other post closing contingent payment obligation; (d) resolving any disputes relating to the payment to the stockholders of any amounts pursuant to the Acquisition Agreement, including any amounts placed in escrow in connection with the Change in Control, (e) receiving notices on behalf of the stockholders; (f) approving amendments to the Acquisition Agreement or (g) enforcing and protecting the rights and interests of the stockholders arising out of or under or in any manner relating to the Acquisition Agreement and any related agreements or documents, including entering into any settlement or instituting or defending any claim or litigation against the stockholders with respect to the matters contemplated by the Acquisition Agreement and any related agreements or documents and the transactions contemplated thereby. By receiving the grant of an Incentive Award under the Plan, each Participant agrees that (x) any Stockholders’ Representative appointed by the Company’s stockholders in connection with a Change in Control shall, without any further authorization or other action by the Participant, be appointed as such Participant’s representative and attorney-in-fact in connection with such Change in Control on the same terms and to the same extent as such Stockholders’ Representative is appointed by the Company’s stockholders in connection with such Change in Control and (y) the Participant will execute promptly on request of the Company any documents the Company deems necessary or desirable to provide further assurance of the foregoing appointment.
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12. Rights of Eligible Recipients and Participants; Transferability.
12.1 Service. Nothing in the Plan or in any Incentive Award Agreement confers upon any Eligible Recipient or Participant any right to continue in the Service of the Company or any Subsidiary or interferes with or limits in any way the right of the Company or any Subsidiary to terminate: (a) the Service of any Employee at any time, with or without notice and with or without cause; (b) the Service of a Third-Party Service Provider pursuant to the terms of such Third-Party Service Provider’s agreement with the Company or any Subsidiary; or (c) the Service of a Director pursuant to the Bylaws of the Company or any Subsidiary, and any applicable provisions of the corporate law of the state in which the Company or the Subsidiary is incorporated, as the case may be.
12.2 No Rights to Incentive Awards. No Participant or Eligible Recipient will have any claim to be granted any Incentive Award under the Plan.
12.3 Rights as a Stockholder; Dividends. As a holder of an Option, a Participant will have no rights as a stockholder unless and until such Option is exercised for, or paid in the form of, shares of Common Stock and the Participant becomes the holder of record of such shares. Except as otherwise provided in the Plan or otherwise provided by the Committee, no adjustment will be made in the number of shares of Common Stock issuable under an Option as a result of cash dividends or distributions paid to holders of Common Stock prior to the payment of, or issuance of shares of Common Stock under, such Option. In its sole discretion, the Committee may provide in an Incentive Award Agreement for an Option that the Participant will be entitled to receive dividend equivalents, in the form of a cash credit to an account for the benefit of the Participant, for any such dividends and distributions.
12.4 Restrictions on Transfer.
(a) Except pursuant to testamentary will or the laws of descent and distribution or as otherwise expressly permitted by subsections (b) and (c) below, unless approved by the Committee in its sole discretion, no right or interest of any Participant in an Incentive Award prior to the exercise (in the case of Options) or vesting or issuance (in the case of Restricted Stock Awards, Restricted Stock Units or Other Stock-Based Awards) of such Incentive Award will be assignable or transferable, or subjected to any lien, during the lifetime of the Participant, either voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise.
(b) A Participant will be entitled to designate a beneficiary to receive an Incentive Award upon such Participant’s death, and in the event of such Participant’s death, payment of any amounts due under the Plan will be made to, and exercise of any Options (to the extent permitted pursuant to Section 9 of the Plan) may be made by, such beneficiary. If a deceased Participant has failed to designate a beneficiary, or if a beneficiary designated by the Participant fails to survive the Participant, payment of any amounts due under the Plan will be made to, and exercise of any Options (to the extent permitted pursuant to Section 9 of the Plan) may be made by, the Participant’s legal representatives, heirs and legatees. If a deceased Participant has designated a beneficiary and such beneficiary survives the Participant but dies before complete payment of all amounts due under the Plan or exercise of all exercisable Options, then such payments will be made to, and the exercise of such Options may be made by, the legal representatives, heirs and legatees of the beneficiary. Any beneficiary, legal representative, heir or legatee of a Participant who receives an Incentive Award will remain subject to all the terms and conditions applicable to the Participant prior to such receipt.
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(c) Upon a Participant’s request, the Committee may, in its sole discretion, permit a transfer of all or a portion of a Non-Statutory Stock Option, other than for value, to such Participant’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, any person sharing such Participant’s household (other than a tenant or employee), a trust in which any of the foregoing have more than 50% of the beneficial interests, a foundation in which any of the foregoing (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than 50% of the voting interests. Any permitted transferee will remain subject to all the terms and conditions applicable to the Participant prior to the transfer. A permitted transfer may be conditioned upon such requirements as the Committee may, in its sole discretion, determine, including execution or delivery of appropriate acknowledgements, opinion of counsel, or other documents by the transferee.
12.5 Non-Exclusivity of the Plan. Nothing contained in the Plan is intended to modify or rescind any previously approved compensation plans or programs of the Company or create any limitations on the power or authority of the Board to adopt such additional or other compensation arrangements as the Board may deem necessary or desirable.
13. Securities Law and Other Restrictions.
13.1 Securities Law Restrictions. Notwithstanding any other provision of the Plan or any Incentive Award Agreements, the Company will not be required to issue any shares of Common Stock under this Plan, and a Participant may not sell, assign, transfer or otherwise dispose of shares of Common Stock issued pursuant to Incentive Awards granted under the Plan: (a) unless there is in effect with respect to such shares a registration statement under the Securities Act and any applicable securities laws of a state or foreign jurisdiction or an exemption from such registration under the Securities Act and applicable state or foreign securities laws; (b) unless there has been obtained any other consent, approval or permit from any other U.S. or foreign regulatory body which the Committee, in its sole discretion, deems necessary or advisable; and (c) if at any time at which the Company is not required to file reports with the Securities and Exchange Commission (the “SEC”) pursuant to Sections 12(b), 12(g) or 15(d) of the Exchange Act or the rules and regulations thereunder, such issuance, sale or transfer would cause the number of stockholders of the Company to increase such that the Company would be within ten (10) stockholders of the number that would cause the Company to be required to file reports with the SEC pursuant to Sections 12(g) or 15(d) of the Exchange Act and the rules and regulations thereunder. The Company may condition such issuance, sale or transfer upon the receipt of any representations or agreements from the parties involved, and the placement of any legends on certificates representing shares of Common Stock, as may be deemed necessary or advisable by the Company in order to comply with such securities law or other restrictions.
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13.2 “Market Stand-Off” Restrictions. Except as otherwise approved by the Committee, the shares of Common Stock acquired in connection with the grant, exercise or vesting of an Incentive Award will be restricted following the effective date of a registration of the Company’s securities under the Securities Act, and the holder thereof will not, without the prior written consent of the Company or the representative(s) of any underwriters, (a) sell, pledge, offer to sell, contract to sell (including any short sale), sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock (whether such shares or any such securities are then owned by the Participant who exercised such Option or are thereafter acquired); or (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (a) or (b) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The provisions of this Section 13.2 will not apply (w) unless the executive officers and directors of the Company have agreed to be bound by substantially the same terms and conditions; (x) to public offerings other than the Company’s initial public offering and any public offering made within two (2) years thereafter; (y) to registrations relating solely to securities in connection with employee benefit plans or in connection with mergers, consolidations, reorganizations, or other transactions pursuant Rule 145 under the Securities Act; or (z) to transfers to donees who agree to be similarly bound. The time period for such market stand-off will be determined by the Company and the representative(s) of any underwriters but will in no event exceed one hundred eighty (180) days from the date of the final prospectus with respect to the applicable public offering. The Company may impose stop-transfer instructions during such stand-off period with respect to the shares of Common Stock subject to this restriction if necessary to enforce such restrictions. The underwriters in connection with any such public offering are intended third party beneficiaries of this Section 13.2 and will have the right, power and authority to enforce the provisions hereof as though they were a party hereto.
14. Compliance with Section 409A.
It is intended that the Plan and all Incentive Awards hereunder be administered in a manner that will comply with the requirements of Section 409A of the Code, or the requirements of an exception to Section 409A of the Code. The Committee is authorized to adopt rules or regulations deemed necessary or appropriate to qualify for an exception from or to comply with the requirements of Section 409A of the Code. Notwithstanding anything in this Section 14 to the contrary, with respect to any Incentive Award subject to Section 409A of the Code: (a) no amendment to or payment under such Incentive Award will be made unless and only to the extent permitted under Section 409A of the Code; and (b) if any amount is payable with respect to any such Incentive Award as a result of a Participant’s “separation from service” at such time as the Participant is a “specified employee” within the meaning of Code Section 409A, then no payment will be made, except as permitted by Code Section 409A, prior to the first business day after the earlier of (i) the date that is six months after the Participant’s separation from service, or (ii) the Participant’s death.
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15. Plan Amendment, Modification and Termination.
The Board may suspend or terminate the Plan or any portion thereof at any time. In addition to the authority of the Committee to amend the Plan under Section 3.2(d) of the Plan, the Board may amend the Plan from time to time in such respects as the Board may deem advisable in order that Incentive Awards under the Plan will conform to any change in applicable laws or regulations or in any other respect the Board may deem to be in the best interests of the Company; provided, however, that no amendments to the Plan will be effective without approval of the stockholders of the Company if stockholder approval of the amendment is then required pursuant to Section 422 of the Code. No termination, suspension or amendment of the Plan may adversely affect any outstanding Incentive Award without the consent of the affected Participant; provided, however, that this sentence will not impair the right of the Committee to take whatever action it deems appropriate under Sections 3.2, 4.3, 9.4, 9.5 and 11 of the Plan.
16. Effective Date and Duration of the Plan.
The Plan is effective March 25, 2016, the date it was approved by the Board and the Company’s stockholders. The Plan will terminate at midnight on March 24, 2026, and may be terminated prior to such time by Board action. No Incentive Award will be granted after termination of the Plan. Incentive Awards outstanding upon termination of the Plan may continue to be exercised or become free of restrictions in accordance with their terms.
17. Acceleration Provision Approval.
Notwithstanding any provision of the Plan to the contrary, no Incentive Award shall include the acceleration of the vesting or exercisability of such Incentive Award in connection with a Change in Control, unless such acceleration provision is approved by the Board (including at least one (1) Investor Director (as defined in the Stockholders’ Agreement)).
18. Miscellaneous.
18.1 Fractional Shares. No fractional shares of Common Stock will be issued or delivered under the Plan or any Incentive Award. The Committee will determine whether cash, other Incentive Awards or other property will be issued or paid in lieu of fractional shares of Common Stock or whether such fractional shares of Common Stock or any rights thereto will be forfeited or otherwise eliminated by rounding up or down.
18.2 Delivery and Execution of Electronic Documents. To the extent permitted by applicable law, the Company may: (a) deliver by email or other electronic means (including posting on a web site maintained by the Company or by a third party under contract with the Company) all documents relating to this Plan or any Incentive Award hereunder (including prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including annual reports and proxy statements), and (b) permit Participants to electronically execute applicable Plan documents (including Incentive Award Agreements) in a manner prescribed by the Committee.
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18.3 Usage. In this Plan, except where otherwise indicated by clear contrary intention, (a) any masculine term used herein also includes the feminine, (b) the plural includes the singular, and the singular includes the plural, (c) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term, and (d) “or” is used in the inclusive sense of “and/or”.
18.4 No Representations or Warranties Regarding Tax Effect. Notwithstanding any provision of the Plan to the contrary, the Company, its Subsidiaries, the Board and the Committee neither represent nor warrant the tax treatment under any federal, state, provincial, local, foreign or other laws of any Incentive Award granted or amounts paid to any Participant under the Plan, including when and to what extent such Incentive Award or amounts may be subject to tax, penalties and interest.
18.5 Governing Law. The validity, construction, interpretation, administration and effect of the Plan and any rules, regulations and actions relating to the Plan will be governed by and construed exclusively in accordance with the laws of the State of Delaware, notwithstanding the conflicts of laws principles of any jurisdictions.
18.6 Mandatory Jurisdiction. Unless otherwise provided in an Incentive Award Agreement, recipients of an Incentive Award under the Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of the State of Minnesota to resolve any and all issues that may arise out of or relate to the Plan or any related Incentive Award Agreement.
18.7 Successors and Assigns. The Plan will be binding upon and inure to the benefit of the successors and permitted assigns of the Company and the Participants.
18.8 Construction. Wherever possible, each provision of the Plan and any Incentive Award Agreement will be interpreted so that it is valid under the applicable law. If any provision of the Plan or any Incentive Award Agreement is to any extent invalid under the applicable law, that provision will still be effective to the extent it remains valid. The remainder of the Plan and the Incentive Award Agreement also will continue to be valid, and the entire Plan and Incentive Award Agreement will continue to be valid in other jurisdictions.
18.9 Stockholders’ Agreement. It shall be a condition to the exercise of a Option, or the issuance of Common Stock pursuant to any other Incentive Award, that the optionee or grantee (or its beneficiary, if applicable) agrees in writing to be bound by the terms and conditions of the Stockholders’ Agreement of the Company, dated as of March 25, 2016 (as amended, the “Stockholders’ Agreement”). The rights and obligations of optionees and grantees with respect to Common Stock obtained through any Option or Incentive Award provided in the Plan shall be governed by the terms and conditions of the Stockholders’ Agreement.
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Exhibit 10.5
BRIGHT HEALTH INC.
OPTION GRANT NOTICE
2016 STOCK INCENTIVE PLAN
Bright Health Inc., a Delaware corporation (the “Company”), pursuant to its 2016 Stock Incentive Plan (the “Plan”), hereby grants to the Optionee an option to purchase the number of shares of the Company’s Common Stock, par value $0.0001 (the “Common Stock”), set forth below (the “Option”). The Option is subject to all of the terms and conditions as set forth herein and in the Option Agreement attached hereto and the Plan.
Optionee: | ||
Date of Grant: | ||
Number of Option Shares: | ||
Exercise Price per Share: | ||
Expiration Date: | ||
Type of Grant: | ☐ Incentive Stock Option ☐ Non-Statutory Stock Option | |
Exercise and Vesting Schedule: |
The undersigned Optionee acknowledges that he or she has received a copy of this Grant Notice, the Option Agreement and the Plan. As an express condition to the grant of the Option hereunder, the Optionee agrees to be bound by the terms of this Grant Notice, the Option Agreement and the Plan. The undersigned Optionee further acknowledges that as of the Date of Grant, this Grant Notice, the Option Agreement and the Plan set forth the entire understanding between the Optionee and the Company regarding the acquisition of stock in the Company and supersede all prior oral and written agreements on that subject with the exception of (i) options previously granted and delivered to the Optionee under the Plan, and (ii) any agreements noted in an attachment to this Grant Notice.
BRIGHT HEALTH INC. | OPTIONEE | |||
By: | ||||
Signature | Signature | |||
Title: | Date: | |||
Date: | Address: | |||
OPTION AGREEMENT
UNDER THE
BRIGHT HEALTH INC. 2016 STOCK INCENTIVE PLAN
Pursuant to the Grant Notice (the “Grant Notice”), and subject to the terms of this Option Agreement and the Bright Health Inc. 2016 Stock Incentive Plan (the “Plan”), Bright Health Inc., a Delaware corporation (the “Company”), and the Optionee agree as follows. Capitalized terms not otherwise defined in this Agreement or in the Grant Notice will have the same meanings as set forth in the Plan.
1. Grant of Option. Subject to the terms and conditions set forth herein and in the Plan, the Company hereby grants to the Optionee the Option to purchase up to the number of shares of Common Stock provided in the Grant Notice (the “Option Shares”), at an exercise price per share as provided in the Grant Notice.
2. Termination of Service. Subject to the limitations contained herein and in the Plan: (a) if the Optionee’s Service is terminated by reason of death, Disability or Retirement, then this Option will, to the extent exercisable as of the date of such termination, remain exercisable in full for a period of six (6) months after the date of such termination (but in no event after the expiration date of this Option, as set forth in the Grant Notice (the “Expiration Date”)); and (b) if the Optionee’s Service is terminated for any reason other than death, Disability or Retirement, then this Option will, to the extent exercisable as of the date of such termination, remain exercisable in full for a period of ninety (90) days after the date of such termination (but in no event after the Expiration Date).
3. Forfeiture Events. If the Optionee is determined by the Committee, acting in its sole discretion, to have taken any action that would constitute Cause or an Adverse Action, irrespective of whether such action or the Committee’s determination occurs before or after termination of the Optionee’s Service and irrespective of whether or not the Optionee was terminated for Cause: (a) all rights of the Optionee under this Agreement and the Plan will terminate and be forfeited without notice of any kind; and (b) the Committee in its sole discretion may require the Optionee to surrender and return to the Company all or any shares of Common Stock received, or to disgorge all or any profits or any other economic value (however defined by the Committee) made or realized by the Optionee, during the period beginning one year prior to the Optionee’s termination of Service in connection with this Option or any shares of Common Stock issued upon the exercise of this Option.
4. Method of Exercise; Withholding.
(a) Notice. This Option may be exercised by the Optionee in whole or in part from time to time, subject to the conditions contained in the Plan and in this Agreement, by delivery, in person, by facsimile or electronic transmission (if confirmed) or through the mail, to the Company at its principal executive office in Minnesota (Attention: Chief Financial Officer), of a written notice of exercise. Such notice must be in a form satisfactory to the Committee, must identify this Option, must specify the number of Option Shares with respect to which this Option is being exercised, and must be signed by the person or persons so exercising this Option. Such notice must be accompanied by payment in full of the total purchase price of the Option Shares purchased. If this Option is being exercised, as provided by the Plan, by any person or persons other than the Optionee, the notice must be accompanied by appropriate proof of right of such person or persons to exercise this Option. As soon as practicable after the effective exercise of this Option, the Optionee will be recorded on the books of the Company as the owner of the shares purchased, and the Company will deliver to the Optionee one or more duly issued stock certificates evidencing such ownership.
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(b) Stockholders’ Agreement. The Optionee hereby agrees that upon exercise of this Option, the Optionee (or his or her beneficiary, if applicable) shall be bound by the terms and conditions of the Stockholders’ Agreement of the Company, dated as of March 25, 2016 (as amended, the “Stockholders’ Agreement”). The rights and obligations of the Optionee with respect to Common Stock obtained upon exercise of this Option shall be governed by the terms and conditions of the Stockholders’ Agreement.
(c) Payment. The total purchase price of the shares to be purchased upon exercise of this Option must be paid entirely in cash or cash equivalent (including check, bank draft or money order); provided, however, that the Committee, in its sole discretion, may allow such payments to be made, in whole or in part, by: (i) tender, or attestation as to ownership, of Previously Acquired Shares; (ii) a promissory note (on terms acceptable to the Committee in its sole discretion); (iii) such other consideration as may be approved by the Committee from time to time; or (iv) a combination of such methods.
(d) Withholding. The Company is entitled to (i) withhold and deduct from future wages of the Optionee (or from other amounts that may be due and owing to the Optionee from the Company or a Subsidiary), or make other arrangements for the collection of, an amount the Company deems necessary to satisfy its obligation to withhold federal, foreign, state or local income or other taxes attributable to this Option, including the grant or exercise of this Option or a disqualifying disposition of stock if this Option is an Incentive Stock Option; (ii) withhold cash paid or payable or shares of Common Stock from the shares issued or otherwise issuable to the Optionee in connection with this Option; or (iii) require the Optionee promptly to remit the amount of such withholding to the Company before taking any action, including issuing any shares of Common Stock, with respect to this Option.
5. Rights of Optionees; Transferability
(a) Service. Nothing in the Plan or in this Agreement confers upon the Optionee any right to continue in the Service of the Company or any Subsidiary or interferes with or limits in any way the right of the Company or any Subsidiary to terminate the Service of the Optionee at any time, with or without notice and with or without cause.
(b) Rights as a Stockholder. The Optionee or a permitted transferee of this Option will have no rights and no privileges as a stockholder of the Company unless and until this Option is duly exercised and the Optionee (or such transferee) has become the holder of record of shares of Common Stock.
(c) Non-Transferability. Except pursuant to testamentary will or the laws of descent and distribution or as otherwise expressly permitted by the Plan, unless approved by the Committee in its sole discretion, no right or interest of the Optionee in this Option prior to the exercise of this Option will be assignable or transferable, or subjected to any lien, during the lifetime of the Optionee, either voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise.
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6. Change in Control.
(a) Treatment. Pursuant to Section 11.2 of the Plan, in connection with a Change in Control, unless provision is made in connection with the Change in Control in the sole discretion of the parties to the Change in Control for the assumption or continuation of this Option by the successor entity, this Option, whether or not vested, will be canceled and terminated and in connection with such cancellation and termination the Optionee will receive for each Option Share a cash payment (or the delivery of shares of stock, other securities or a combination of cash, stock and securities with a fair market value (as determined by the Committee in good faith) equivalent to such cash payment) equal to the difference, if any, between the consideration received by stockholders of the Company in respect of a share of Common Stock in connection with such Change in Control and the purchase price per share under this Option, multiplied by the number of Option Shares subject to this Option that were vested at the time of cancellation; provided, however, that if such product is zero ($0) or less this Option may be canceled and terminated without payment therefor.
(b) Stockholders’ Representative. In connection with any Change in Control, the Optionee agrees that (i) any Stockholders’ Representative appointed by the Company’s stockholders in connection with such Change in Control will, without any further authorization or other action by the Optionee, be appointed as such Optionee’s representative and attorney-in-fact in connection with such Change in Control on the same terms and to the same extent as such Stockholders’ Representative is appointed by the Company’s stockholders in connection with such Change in Control and (ii) the Optionee will execute promptly on request of the Company any documents the Company deems necessary or desirable to provide further assurance of the foregoing appointment.
7. Securities Laws Restrictions.
(a) General Restrictions. The Company will not be required to issue any shares of Common Stock pursuant to this Option, and the Optionee may not sell, assign, transfer or otherwise dispose of shares of Common Stock issued pursuant to this Option unless: (i) there is in effect with respect to such shares a registration statement under the Securities Act and any applicable securities laws of a state or foreign jurisdiction or an exemption from such registration under the Securities Act and applicable state or foreign securities laws; and (ii) any other conditions set forth in Section 13.1 of the Plan are satisfied. The Company may condition such issuance, sale or transfer upon the receipt of any representations or agreements from the parties involved, and the placement of any legends on certificates representing shares of Common Stock, as may be deemed necessary or advisable by the Company in order to comply with such securities law or other restrictions.
(b) Market Stand-Off Agreement. The holder of any shares of Common Stock issued pursuant to this Option may not sell, assign, transfer or otherwise dispose of, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale of, any Common Stock (or other securities) of the Company held by such holder for a period of time after the effective date of certain registration statements of the Company filed under the Securities Act (other than those included in the registration), as set forth in Section 13.2 of the Plan.
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8. Miscellaneous.
(a) Option Subject to Plan. This Option and the Option Shares granted and issued pursuant to this Agreement have been granted and issued under, and are subject to the terms of, the Plan. The terms of the Plan are incorporated by reference in this Agreement in their entirety, and the Optionee, by execution of the Grant Notice, acknowledges having received a copy of the Plan. The provisions of this Agreement will be interpreted as to be consistent with the Plan, and any ambiguities in this Agreement will be interpreted by reference to the Plan. If any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan will prevail.
(b) Binding Effect. This Agreement will be binding upon the heirs, executors, administrators and successors of the parties to this Agreement.
(c) Changes in Capital Structure. The Option granted under this Agreement will be subject to adjustment or substitution as provided in Section 4.3 of the Plan.
(d) Governing Law. All rights and obligations under this Agreement will be construed in accordance with the Plan and governed by the laws of the State of Delaware, without regard to conflicts of laws provisions.
(e) Entire Agreement. This Agreement, the Grant Notice, the Plan and the Stockholders’ Agreement set forth the entire agreement and understanding of the parties to this Agreement with respect to the grant and exercise of this Option and the administration of the Plan and supersede all prior agreements, arrangements, plans and understandings relating to the grant and exercise of this Option and the administration of the Plan.
(f) Amendment and Waiver. Other than as provided in the Plan, this Agreement may be amended, waived, modified or canceled only by a written instrument executed by the parties to this Agreement or, in the case of a waiver, by the party waiving compliance.
(g) Construction. Wherever possible, each provision of this Agreement will be interpreted so that it is valid under the applicable law. If any provision of this Agreement is to any extent invalid under the applicable law, such provision will still be effective to the extent it remains valid. The remainder of this Agreement also will continue to be valid, and the entire Agreement will continue to be valid in other jurisdictions.
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Exhibit 10.6
BRIGHT HEALTH MANAGEMENT INC.
ANNUAL INCENTIVE PLAN
SECTION I. | ESTABLISHMENT AND PURPOSE |
Bright Health Management Inc. (the “Company”) hereby establishes this Annual Incentive Plan (the “Plan”), effective January 1, 2020 through December 31, 2020. The Plan complements the Company’s compensation philosophy by providing market-competitive incentive compensation designed to reward employees for Company profitability, individual performance, and overall collaboration.
The incentive provided to a Participant under the Plan is termed an “Individual Incentive Award.” The Plan sets out the terms under which an Individual Incentive Award may be granted and payable to a Participant.
SECTION II. | DEFINITIONS |
For purposes of the Plan, unless the context otherwise requires, the following terms have the meanings set out below:
2.1. | “Board” means the Board of Directors of the Company, as constituted from time to time. |
2.2. | “Business Leader” means the Company-designated Business or Functional leader, or successor position, to whom the Participant reports, directly or indirectly. |
2.3. | “Cause” means the Participant’s dishonesty, fraud, misappropriation of funds, theft, harassment, acts of violence, acts punishable by law, gross misconduct, misconduct as described in the Bright Health Employee Handbook. |
2.4. | “Code” means the Internal Revenue Code of 1986, as amended, and the Treasury Regulations or authoritative guidance promulgated thereunder, and any successor thereto. |
2.5. | “Committee” means the committee appointed by the Board to administer the Plan pursuant to Section 6.1. |
2.6. | “Disabled” or “Disability,” with respect to an employee, means that the employee is unable to engage in any substantial gainful activity by reason of medically determinable physical or mental impairment that is expected to last for a continuous period of not less than 12 months. |
2.7. | “Executive Leader” means a member of the Executive Leadership Team of the Company. |
2.8. | “Fiscal Year” means the Company’s fiscal year, January 1st through December 31st. |
2.9. | “Incentive Award Payment Date” means the date that the Incentive Award is paid. This date is after end of the Fiscal Year in which the Individual Incentive Award is granted, but no later than the 15th day of March of that year. |
2.10. | “Individual Incentive Award” means the amount that may be awarded to a Participant, as a lump sum cash award. |
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2.11. | “Participant,” with respect to an Individual Incentive Award, means an employee to whom the Individual Incentive Award has been granted. In order to be granted an Individual Incentive Award the employee must satisfy all of the eligibility requirements set out in Section III. |
2.12. | “Termination of Employment” means the voluntary or involuntary end of the employment relationship between a Participant and the Company (and all related entities). |
SECTION III. | ELIGIBILITY |
3.1. | Eligibility Requirements. An employee must satisfy the following requirements in order to be granted an Individual Incentive Award: |
(a) | Minimum Service. The employee must have been employed by the Company for at least two consecutive months ending on the last day of the Fiscal Year in which the Individual Incentive Award is granted. |
(b) | Employment. To be eligible to be granted an Individual Incentive Award, the employee must have been employed by the Company continuously until the Incentive Award Payment Date. |
(c) | Exception for Death or Disability. An employee who otherwise satisfies the eligibility requirements but fails to satisfy the employment requirement solely due to the employee’s death or Disability and meets the eligibility requirements in Section 3.1 (a) will nevertheless be eligible to be granted an Individual Incentive Award. |
3.2. | Termination of Employment for Cause. Notwithstanding anything in the Plan to the contrary, in no event will a Participant be entitled to receive any Individual Incentive Award if the Participant has a termination of employment due to Cause. |
SECTION IV. | INDIVIDUAL INCENTIVE AWARDS |
A participant’s Individual Incentive Award for a Fiscal Year, if any, is completely discretionary based on individual, team and Company performance results, and are subject to the eligibility requirements set forth in the Plan. Individual Incentive Awards are prorated for time employed during the Fiscal Year.
The Business Leader, with the approval of an Executive Leader and the CEO, will determine the amount of the Individual Incentive Award, if any, granted to an employee for a Fiscal Year. Executive Leader Individual Incentive Awards, including the CEO, will be approved by the Board of Directors.
SECTION V. | PAYMENT OF AWARDS |
5.1 | Time and Form of Payment |
Individual Incentive Awards will be paid as lump sum cash awards on the Incentive Award Payment Date.
5.2 | Death or Disability |
If, after the Fiscal Year but before the Incentive Award Payment Date, a Participant becomes Disabled or dies, the Participant’s entire Individual Incentive Award will be paid on the Incentive Award Payment Date. Payment of an Award following a Participant’s death shall be made to the Participant’s designated beneficiary, surviving spouse or estate.
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SECTION VI. | ADMINISTRATION |
6.1 | Administration by the Committee; Decisions Binding |
The Plan will be interpreted and administered by the Committee, which shall consist of at least two members appointed by the Board. The actions of the Committee will be final and binding on all persons, including the Participants and any Beneficiary, and will be given the maximum deference permitted by law.
6.2 | Authority of the Committee |
The Committee, in its sole discretion, will have the power, subject to, and within the limitations of, the express provisions of the Plan to:
(a) | Determine from time to time which employees of the Company will be designated as eligible to participate in the Plan and the terms under which they will be entitled to participate; |
(b) | Establish, change and adjust, in its sole discretion, an eligible employee’s Individual Incentive Award; and |
(c) | Interpret all Plan provisions and decide all disputes concerning eligibility and payment under the Plan. |
6.3 | Delegation by the Committee |
The Committee may delegate its powers and responsibilities under the Plan to one or more officers of the Company.
SECTION VII. | GENERAL PROVISIONS |
7.1 | Amendment and Termination of the Plan |
The Plan may be terminated, modified, amended, or changed at any time for any reason by the Committee, provided however, that no payments under this Plan will be made except as may be allowable by Section 409A of the Code and other applicable law.
7.2 | Funding |
The Plan will be funded out of the Company’s general assets. No provision of the Plan will require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor will the Company maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes. No Participant or Beneficiary will have a right under the Plan other than as an unsecured general creditor of the Company.
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7.3 | No Guarantee of Future Service |
Selection of an employee to participate under the Plan will not provide any guarantee or promise of continued employment with the Company (or any of its subsidiaries), and the Company (or any subsidiary employing the employee) retains the right to terminate the employment of any employee at any time, with or without cause, for any reason or no reason, except as may be restricted by law or contract.
7.4 | No Right to Award |
The Plan does not create a contractual obligation on the part of the Company to provide Individual Incentive Awards (except as specifically provided in the Plan) or other compensation. The grant or payment of an Individual Incentive Award in any Fiscal Year does not imply any entitlement to such grant or payment for any subsequent Fiscal Year.
7.5 | Tax Withholding/Social Charges |
The Company has the power and the right to deduct or withhold an amount sufficient to satisfy all Federal, state, local taxes (including social charges) that the Company reasonably determines is required to be withheld with respect to any Individual Incentive Award made under the Plan.
7.6 | Compliance with Section 409A |
Notwithstanding anything in the Plan to the contrary, Individual Incentive Awards are intended to be exempt from the requirements of Section 409A of the Code as “short term deferral,” and in the event that any Individual Incentive Award does not qualify for treatment as an exempt short-term deferral, it is intended that such amount will be paid in a manner that satisfies the requirements of Section 409A of the Code. The Plan and any Individual Incentive Award shall be construed and administered to give full effect to such intention. Notwithstanding anything in the Plan to the contrary, the Company makes no guarantee of any tax result with respect to the payments hereunder, and each Participant is fully responsible for all individual income and employment taxes owed upon any payment made to the Participant.
7.7 | No Assignment or Transfer |
To the maximum extent permitted by law, a Participant’s right or benefits under this Plan will not be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same will be void. No right or benefit hereunder will in any manner be liable for or subject to the debts, contracts, liabilities, or torts of the person entitled to such benefit.
7.8 | Governing Law and Jurisdiction |
The Plan and each Individual Incentive Award made under and/or in accordance with the Plan, and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the Internal Revenue Code or other laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to any principles of conflicts of laws. Any legal proceeding regarding controversies, disputes, and claims arising hereunder shall be submitted to the state courts located in Hennepin County, State of Minnesota or the United States District Court for the District of Minnesota sitting in Hennepin County, State of Minnesota.
7.10 | Successors and Assigns |
The Plan will be binding upon and will inure to the benefit of the Company and its successor(s) and assign(s).
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This Bright Health Management Inc. Annual Incentive Plan is adopted by an authorized officer of the Company effective as of the 15 day of Oct., 2020.
By: | /s/ Keith Nelsen | |
Name: | Keith Nelsen | |
Title: | General Counsel |
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Exhibit 10.7
BRIGHT HEALTH MANAGEMENT INC.
SEVERANCE BENEFITS PLAN
(Updated effective June 1, 2021)
AND
SUMMARY PLAN DESCRIPTION
SECTION 1. | ESTABLISHMENT AND PURPOSE |
1.1 Introduction. Bright Health Management Inc. hereby establishes this Severance Benefits Plan (the “Plan”), effective as of January 1, 2021.
1.2 Purpose. The purpose of this Plan is to provide certain employees of the Company or an adopting Affiliate with financial assistance by providing post-termination severance payments if their employment with the Company is terminated under circumstances that render the employee eligible for severance. The benefits provided under this Plan are intended to replace and supersede all other severance, employment agreements, offer letters and/or severance type benefit plans or agreements, formal and informal, of the Company.
SECTION 2. | DEFINITIONS |
For purposes of the Plan, unless the context otherwise requires, the following terms have the meanings set out below:
2.1 “Administrator” means the person or persons specified in Section 5.1.
2.2 “Affiliate” means any corporation, including a subsidiary of the Company, or other entity that is treated as a single employer with the Company under Sections 414(b) or 414(c) of the Code.
2.3 “Base Pay” means all regular straight time earnings, exclusive of payments for overtime, shift premiums, incentive compensation and payments, bonuses, commissions, or other compensation, as in effect immediately prior to the Participant’s termination; provided, however, that any reductions in Base Pay following the date of the Change in Control will not be taken into account when determining Base Pay hereunder.
2.4 “Board” means the Board of Directors of the Company, as constituted from time to time.
2.5 “Cause” means, exclusively for the purpose of this Plan, that in the Company’s exclusive judgment, (i) conduct or statements that violate the Company’s employee and member relations standards, including those which require that Company employees treat each other with dignity and respect, (ii) violation of the Company’s standards, policies, or individual directives, regarding the prohibition of unlawful discrimination, harassment or retaliation, (iii) unsatisfactory attendance, conduct, or performance, (iv) violation of the Company’s standards of conduct, (v) violation of any Company or regulatory standard regarding protection of confidential information, and trade secrets, (vi) refusal to satisfactorily perform the duties, responsibilities and obligations of an employee’s position, (vii) dishonesty or other breach of an employee’s duty of loyalty affecting the Company or any customer, vendor or other Company employee, (viii) use of alcohol or prohibited substances in a manner that adversely affects the employee’s performance of the employee’s duties, responsibilities, and obligations as a Company employee, (ix) the employee’s conviction of any crime which has a nexus with the employee’s position, (x) commission of any other willful or intentional act the Company believes may injure the reputation, business or business relationships of the Company and/or the employee, (xi) the existence of any court order or settlement agreement prohibiting the employee’s continued employment with the Company, (xii) insubordination, (xiii) violation of any statutory or regulatory standard applicable to the Company, or violation of any Company policy or procedure, which adversely affects the Company’s legal rights.
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2.6 “Change in Control” means the occurrence of any of the following:
(a) the sale, lease, exchange or other transfer, directly or indirectly, of substantially all of the assets of the Company or an exclusive license granted by the Company of substantially all of its intellectual property (in one transaction or in a series of related transactions) to a person or entity that is not controlled by the Company;
(b) approval by the stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company;
(c) any person becomes after the effective date of the Plan, other than as the result of the sale by the Company of its securities in a financing completed primarily for capital raising purposes, the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the combined voting power of the Company’s outstanding securities ordinarily having the right to vote at elections of directors; or
(d) a merger or consolidation to which the Company is a party if the stockholders of the Company immediately prior to effective date of such merger or consolidation have “beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act) immediately following the effective date of such merger or consolidation of securities of the surviving corporation representing 50% or less of the combined voting power of the surviving corporation’s then outstanding securities ordinarily having the right to vote at elections of directors.
Notwithstanding the foregoing, a Change in Control shall not occur unless such transaction constitutes a change in the ownership of the Company, a change in the effective control of the Company, or a change in the ownership of a substantial portion of the Company's assets under Section 409A of the Code.
2.7 “Code” means the Internal Revenue Code of 1986, as amended, and the Treasury Regulations or authoritative guidance promulgated thereunder, and any successor thereto.
2.8 “Committee” means the compensation committee of the Board.
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2.9 “Company” means Bright Health Management Inc. and each Affiliate that adopts this Plan.
2.10 “Completed Year of Service” means the completion of twelve (12) months of employment based on the Participant’s date of employment with the Company. A Participant must complete a full twelve (12) months of employment to receive credit for a Completed Year of Service.
2.11 “Employee” means an individual is classified as an employee of the Company or an Affiliate that has adopted the Plan.
2.12 “Excluded Employee” has the meaning provided in Section 3.2.
2.13 “Good Reason” means, without the express written consent of the Participant:
(a) the assignment to the Participant of any duties that results in a material diminution in such Participant’s position, authority or responsibilities or any other substantial adverse change in such position, authority or responsibilities, that results in a reduction of the Participant’s grade level, excluding an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company as set forth below;
(b) the material diminution in the Participant’s total compensation (including Base Salary and incentive pay), other than (A) an insubstantial and inadvertent failure remedied by the Company as set forth below, or (B) a reduction in compensation which is applied to all similarly situated employees of the Company in the same dollar amount or percentage; or
(c) the Company’s requiring the Participant to be based or to perform services at any office or location that is in excess of 50 miles from the principal location of the Participant’s work, except for travel reasonably required in the performance of the Participant’s responsibilities.
Before a termination by the Participant will constitute termination for Good Reason, (i) the Participant must give the Company written notice of the termination within sixty (60) calendar days of the initial occurrence of the event that constitutes Good Reason, (ii) the Company is provided an opportunity to remedy the event or events constituting Good Reason within thirty (30) days after receipt of the notice from the Participant, (iii) the Company fails to cure the event or events constituting Good Reason, and (iv) the Participant terminates employment within sixty (60) days of the end of the Company’s cure period.
2.14 “Participant” means an Employee who satisfies the eligibility requirements of Section 3.
2.15 “Release” means the Release of Claims described in Section 4.6.
2.16 “Severance Period” has the meaning provided under Section 4.1(a).
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SECTION 3. | ELIGIBILITY AND PARTICIPATION |
3.1 Eligibility. An Employee is eligible for benefits under this Plan if the Employee:
(a) Is regularly scheduled to work at least thirty (30) hours per week;
(b) Has completed ninety (90) days of active employment with the Company (or adopting Affiliate);
(c) Is not an Excluded Employee, as described in section 3.2, with respect to all or a portion of the benefits provided under this Plan;
(d) Performs all transition and other matters required of the Participant by the Company prior to the date of the Participant’s involuntary termination;
(e) Has executed an Employee Confidentiality, Assignment of Inventions and Non-Competition Agreement (for Employees at grade level 19 through 24) or an Employee Confidentiality and Assignment of Inventions Agreement (for Employees at grade level 10 through 18);
(f) Executes, returns and does not revoke the Severance Agreement and Release required under Section 4.6.
3.2 Excluded Employee. An Employee is an Excluded Employee if such Employee is:
(a) Not employed by the Company (or any adopting Affiliate) at the time of termination;
(b) Covered by a subsequent written employment agreement that the Company entered into in lieu of providing any benefits under this Plan;
(c) Offered continued employment with the Company or an Affiliate in a comparable or better position in the same general location;
(d) Offered and refuses to accept employment in a comparable or better position in the same general location with an organization that acquires the business or assets of the business in which he or she is employed;
(e) Reassigned to or accepts another position with the Company or an Affiliate;
(f) Classified by the Company or an Affiliate as a leased, contingent, temporary, contract or part-time employee of the Company or an Affiliate; and
(g) Identified by the Company as in a class or position that is not eligible to participate in this Plan, provided such exclusion is reflected in a writing that is communicated to such Employee(s).
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3.3 Involuntary Termination. An Employee is entitled to severance benefits if such Employee is terminated for reasons determined by the Administrator to be an “involuntary termination” of employment of the Employee by the Company (or an adopting Affiliate) for reasons beyond the Employee’s control or by the Employee for Good Reason, and is not an excluded termination under Section 3.4.
3.4 Terminations Not Covered. For purposes of this Plan, an Employee’s termination of employment is not an involuntary termination if such termination is:
(a) A termination by the Company or Affiliate for Cause;
(b) A voluntary termination by an Employee other than for Good Reason;
(c) A termination by the Employee prior to the date specified by the Company (or adopting Affiliate) for the Employee’s involuntary termination of the Employee’s active employment with the Company or Affiliate;
(d) A termination on account of the Employee’s death, or disability. For this purpose, “disability” means a determination of disability by the Company’s long term disability carrier or the Social Security Administration.
SECTION 4. | SEVERANCE BENEFITS |
4.1 Severance Pay.
(a) Severance pay will be paid for the number of weeks (the “Severance Period”) determined under the following schedule:
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Employee Level | Employee Grade | Severance Pay |
Executive Leadership Team (ELT) | 23-24 | Seventy-eight (78) weeks of base pay plus an amount equal to 1.5 times the Participant’s target bonus, paid over the Severance Period. |
Senior Vice President (SVP) | 20-22 | Fifty-two (52) weeks of base pay plus an amount equal to the Participant’s target bonus, paid over the Severance Period. |
Vice President | 19 | Twenty-six (26) weeks of base pay plus an amount equal to .5 times the Participant’s target bonus amount, paid over the Severance Period. |
Director and Senior Director | 17-18 | Four weeks plus one (1) week for each Completed Year of Service, with a minimum of twelve (12) weeks and a maximum of twenty-six (26) weeks |
All other employees | 10-16 | Four (4) weeks plus one (1) week for each Completed Year of Service, with a maximum of twenty-six (26) weeks |
(b) Severance pay will be paid at regular payroll intervals following the Participant’s last day worked.
(c) An Employee who does not sign a Release in time for the rescission period to expire within the required 60 day period following termination of employment is not entitled to receive any severance pay.
(d) Gross severance payments will be made on a bi-weekly basis, distributed in the course of the Company’s regular payroll, subject to applicable payroll withholdings and commencing on the pay date following the date that the Participant’s Release becomes effective following expiration of any applicable rescission periods. Any severance pay that has accrued following termination of employment and prior to the date the Severance Agreement and Release has become effective will be paid with the first payment of severance pay due following the date the Severance Agreement and Release becomes effective and any applicable rescission periods have expired.
(e) Any severance pay remaining unpaid at the death of a Participant who has unpaid severance payments will be paid in a lump sum to the estate of the Participant as soon as possible following the death, but in no event later than March 15 of the calendar year following the calendar year in which the Participant died.
4.2 COBRA Subsidy. Participants will be entitled to elect and pay for continued coverage under the Company’s group medical, dental and/or vision plans pursuant to Code section 4980B (“COBRA”), in accordance with ordinary plan practices. If Participant was enrolled in the Company’s group medical, dental and/or vision plans at the time of the Participant’s termination of employment and timely elects continuation coverage under COBRA, the Company will, on a monthly basis, directly pay for the amount of the COBRA coverage cost for medical plan coverage that is in excess of the cost of coverage payable by an active employee of the Company for the “benefit subsidy period.” The benefit subsidy period begins immediately following the month active employee coverage terminates on account of the Participant’s termination of employment, and includes the period of time determined under the following schedule:
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Employee Level | Employee Grade | Benefit Subsidy Period |
Executive Leadership Team (ELT) | 23-24 | 18 months |
Senior Vice President (SVP) | 20-22 | Twelve (12) months |
Vice President | 19 | Six (6) months |
Director and Senior Director | 17-18 | Each calendar month during the Severance Period, with a minimum of three (3) months and maximum of six (6) months |
All other employees | 10-16 | Each calendar month during the Severance Period, with a maximum of six (6) months |
Participants will receive the necessary enrollment forms and further information about rights and responsibilities, including the requisite premiums and fees, with respect to the COBRA continuation coverage from the Company’s COBRA administrator shortly after Participant’s date of termination. In order to receive the subsidized COBRA continuation benefits, the Participant must enroll in the COBRA continuation coverage. Following the expiration of benefit subsidy period, the Participant may continue the Participant’s COBRA coverage by paying the full COBRA continuation rates to the extent the Participant remains eligible under COBRA. If the Participant obtains employment and becomes eligible for medical, dental or visions benefits with another employer during the premium subsidy period, the Participant’s premium subsidy period for such benefit coverage shall cease as soon as possible following the date Participant becomes eligible for such benefits with the Participant’s new employer.
4.3 Bonus. If a Participant is at a level of Vice President or higher (Grade 19 – 24), the Participant will be paid a prorated portion of the bonus, if any, payable in accordance with the terms of the applicable Company bonus plan for the calendar year in which the Participant’s termination of employment occurs (other than any requirement that Participant remain employed through the end of the calendar year or at the time of payment), with such proration based on the full calendar months of the Participant’s employment during such year. The prorated bonus will be based on Company performance impacting bonus eligible employees and will be paid at the time the Company pays the bonus to other employees, but not later than March 15th of calendar year following the end of the calendar year in which the Participant’s employment terminated.
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4.4 Equity. If a Participant is at a level of Vice President or higher (Grade 19 – 24), any outstanding equity awards subject to time-based vesting will continue vesting during the Severance Period.
4.5 Change in Control. In the event of a termination of employment within twelve (12) months following the occurrence of a Change in Control, the following provisions will apply:
(a) The severance pay determined under Section 4.1 will be paid in a single lump sum as soon as practicable, but not later than sixty (60) days, following the Participant’s termination of employment;
(b) For a Participant who is at a level of Senior Vice President or greater (Grade 20-24), the bonus payable under Section 4.3 will be equal to 100% of the Participant’s target bonus amount, and will be paid in a lump sum within sixty (60) days following the Participant’s termination of employment.
(c) For a Participant who is at a level of Senior Vice President or greater (Grade 20-24), any unvested outstanding equity award subject to time-based vesting shall vest in full at the time of the Participant’s termination of employment.
4.6 Other Benefits. Other benefits may be provided, at the sole discretion of the Administrator, to a Participant who is being terminated.
4.7 Severance Agreement; Release of Claims. In order to be entitled to any severance benefits under this Plan, a Participant must sign a Severance Agreement, and Release of Claims in the form prescribed by the Company, and must not exercise such Participant’s right, if applicable, to revoke that Severance Agreement or Release of Claims, all within 60 days following the Participant’s termination of employment. Executing and not subsequently revoking the Severance Agreement and/or Release of Claims is a pre-condition to be entitled to severance benefits under this Plan. The Severance Agreement and Release of a Participant shall include non-competition, non-solicitation and non-disparagement provisions for the following periods:
Employee Grade |
Non-competition,
non-solicitation and non-disparagement period |
23-24 | 18 months |
19-22 | 12 months |
10-18 | For the Severance Period defined in Section 4.1 (a) |
4.8 Withholding of Taxes. The Company may withhold from any taxable amounts payable under this Plan all foreign, federal, state, or other taxes the Company reasonably determines are required pursuant to any law or government regulation or ruling.
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4.9 Payment Recovery (Recoupment). Notwithstanding any other provisions of this Plan, the Company may recover, or “claw back,” from Participant any amounts previously paid pursuant to the Plan if, following such payment, the Administrator becomes aware of circumstances existing on the date of payment that could reasonably have been grounds for the Participant’s termination of employment for Cause or if the Participant violates the terms of the Severance Agreement and/or Release of Claims. In order to exercise its payment recovery rights under this Section 4.7, the Administrator must provide notice to the Participant with a demand for repayment (i) within ninety (90) days of the date the Administrator became aware of the circumstances that could reasonably have been grounds for a termination of employment for Cause, and (ii) within twenty four (24) months following payment of the amount subject to recovery.
SECTION 5. | ADMINISTRATION |
5.1 Administrator. The Administrator will be responsible for the general supervision of the Plan. The Administrator will also be the named fiduciary of the Plan in accordance with Section 402 of the Employee Retirement Income Security Act of 1974 (ERISA) and therefore will have authority to control and manage the operation and administration of the Plan. The Administrator will perform any and all acts necessary or appropriate for the proper management and administration of the Plan. The Company’s Chief People Officer is the Administrator unless the Committee has designated a person or persons other than its Chief People Officer to be the Administrator. The Committee will be the Administrator if the person or persons so designated cease to be the Administrator.
5.2 Powers of Administrator. The Administrator will have all powers necessary to administer the Plan, including but not limited to interpreting the terms of the Plan.
5.3 Expenses. The Company will bear all administrative costs of the Plan.
5.4 Delegation. The Administrator may delegate any of its duties under the Plan to such individuals or entities from time to time as it may designate.
5.5 Source of Information. The Administrator shall utilize the records of the Company with respect to a Participant’s service with the Company or Affiliates, the Participant’s pay and all other relevant matters and such records shall be conclusive for purposes of the Plan.
5.6 Reports and Records. The Administrator, and others to whom the Administrator or the Committee has delegated duties and responsibilities under the Plan, will keep accurate and detailed records of any matters pertaining to administration of the Plan or compliance with applicable law.
5.7 COVID-19 Pandemic Deadline Extensions. In response to the proclamation declaring that the coronavirus disease (COVID-19) constitutes a National Emergency, federal agencies issued rules extending various deadlines applicable to the Bright Health Management Inc. group medical, dental and vision plans and the Bright Health Management Inc. Severance Benefits Plan. Under these rules, during the COVID-19 Outbreak Period, which began on March 1, 2020, and will end 60 days after the National Emergency officially ends or such other date as the federal agencies later provide, the Outbreak Period is disregarded when calculating (i) the deadline of the Plan Administrator or its delegate to notify a qualified beneficiary of the right to elect COBRA after a COBRA qualifying event; and (ii) a Participant’s deadline associated with the following:
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(a) Electing COBRA;
(b) Making COBRA premium payments;
(c) Notifying the Plan Administrator or its delegate of a COBRA qualifying event;
(d) Notifying the Plan Administrator or its delegate of the Social Security Administration’s determination of disability of you or another qualified beneficiary;
(e) Filing an ERISA claim for benefits;
(f) Filing an appeal of a claim denial.
SECTION 6. | AMENDMENT AND TERMINATION |
6.1 Amendment. The Company expressly reserves the right, by action of the Committee, to make, from time to time, any amendment to this Plan, including any amendment it determines necessary or desirable, with or without retroactive effect, to comply with the law. Any such amendment shall not adversely affect the right of any Participant who is, or is entitled to begin, receiving benefits under the Plan at the time such amendment is adopted. Such amendment shall be made in writing.
6.2 Termination. The Company reserves the right to terminate the Plan or any portion of the Plan at any time. In the event of the dissolution, merger, consolidation, or reorganization of the Company, the Plan shall terminate unless the Plan is continued by a successor to the Company in accordance with the resolution of such successor’s managing body. Such termination shall not affect any right to benefits that accrued prior to such termination. Such action shall be taken in writing.
SECTION 7. | CLAIMS PROCEDURES |
7.1 Initial Claims. In order to file a claim to receive benefits under the Plan, the Participant or the Participant’s authorized representative must submit a written claim for benefits to the Administrator within 60 days after the Participant's termination of employment. Claims should be addressed and sent to Plan’s Administrator at the address indicated in Section 9. If the Participant's claim is denied, in whole or in part, the Participant will be furnished with written notice of the denial within 90 days after the Administrator's receipt of the Participant's written claim, unless special circumstances require an extension of time for processing the claim, in which case a period not to exceed 180 days will apply. If such an extension of time is required, written notice of the extension will be furnished to the Participant before the termination of the initial 90 day period and will describe the special circumstances requiring the extension, and the date on which a decision is expected to be rendered. Written notice of the denial of the Participant's claim will contain the following information:
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(a) the specific reason or reasons for the denial of the Participant's claim;
(b) references to the specific Plan provisions on which the denial of the Participant's claim was based;
(c) a description of any additional information or material required by the Administrator to reconsider the Participant's claim (to the extent applicable) and an explanation of why such material or information is necessary; and
(d) a description of the Plan's review procedure and time limits applicable to such procedures, including a statement of the Participant's right to bring a civil action under Section 502(a) of ERISA following a benefit claim denial on review.
7.2 Appeal of Denied Claims. If the Participant's claim is denied and he wishes to submit a request for a review of the denied claim, the Participant or the Participant’s authorized representative must follow the procedures described below:
(a) Upon receipt of the denied claim, the Participant (or the Participant’s authorized representative) may file a request for review of the claim in writing with the Administrator. This request for review must be filed no later than 60 days after the Participant has received written notification of the denial.
(b) The Participant has the right to submit in writing to the Administrator any comments, documents, records or other information relating to the Participant’s claim for benefits.
(c) The Participant has the right to be provided with, upon request and free of charge, reasonable access to and copies of all pertinent documents, records and other information that is relevant to the Participant’s claim for benefits.
(d) The review of the denied claim will take into account all comments, documents, records and other information that the Participant submitted relating to the Participant’s claim, without regard to whether such information was submitted or considered in the initial denial of the Participant’s claim.
7.3 Administrator's Response to Appeal. The Administrator will provide the Participant with written notice of its decision within 60 days after the Administrator's receipt of the Participant's written claim for review. There may be special circumstances which require an extension of this 60 day period. In any such case, the Administrator will notify the Participant in writing within the 60 day period and the final decision will be made no later than 120 days after the Administrator's receipt of the Participant's written claim for review. The Administrator's decision on the Participant's claim for review will be communicated to the Participant in writing and will clearly state:
(a) the specific reason or reasons for the denial of the Participant's claim;
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(b) reference to the specific Plan provisions on which the denial of the Participant's claim is based;
(c) a statement that the Participant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, the Plan and all documents, records and other information relevant to the Participant’s claim for benefits; and
(d) a statement describing the Participant's right to a final dispute resolution under Section 7.5.
7.4 Limitations on Legal Actions. A Participant or Employee who fails to complete the appeal procedures of Section VII will be barred from asserting the Participant’s claim for severance benefits in any judicial or administrative proceeding. No legal action by be brought more than six (6) months following the Administrator’s final benefit determination.
7.5 Final Dispute Resolution.
(a) Any and all claims and disputes under the Plan (including but not limited to claims and disputes regarding interpretation, scope, or validity of the Plan, and any pendant state claims if not otherwise preempted by ERISA) must follow the claims procedures described above, before a Participant may take action in any other forum regarding a claim for benefits under the Plan. Furthermore, any action a Participant initiates under the Plan must be brought in accordance with this provision and must be brought within six (6) months of a final determination on the claim for benefits under these claims procedures, otherwise the Participant’s benefit claim will be deemed permanently waived and abandoned and the Participant will be precluded from reasserting it.
(b) In the event of any such further dispute, claim, question, or disagreement arising out of or relating to this Plan, the Participant shall use Participant’s best efforts and the Company shall use its best efforts to settle such dispute, claim, question, or disagreement. To this effect, the Participant and the Company shall consult and negotiate with each other, in good faith, and, recognizing mutual interests, attempt to reach a just and equitable resolution satisfactory to both parties.
(c) If the Participant and the Company do not reach a resolution within a period of 30 days, then such unresolved dispute, claim, question, or disagreement, upon notice by any party to the other, shall be submitted to and finally settled by arbitration in accordance with the Streamlined or Comprehensive Arbitration Rules and Procedures (the “Rules”) of the Judicial Arbitration and Mediation Service (“JAMS”) in effect at the time demand for arbitration is made by any such party. The parties shall mutually agree upon a single arbitrator within 30 days of such demand. In the event that the parties are unable to so agree within such 30-day period, then within the following 30-day period, the parties will request from JAMS a list of qualified arbitrators and will select an arbitrator in accordance with the Rules. Unless otherwise mutually agreed, the arbitrator shall be a practicing attorney with at least 15 years of experience and at least five years of experience as an arbitrator. Arbitration shall occur in the JAMS office closest to Minneapolis, Minnesota or such other location as may be mutually agreed by the parties.
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(d) All awards made by the arbitrators shall be final and binding, and judgment may be entered based upon such award in any court of law having competent jurisdiction. Any such award is subject to confirmation, modification, correction, or vacation only as explicitly provided in Title 9 of the United States Code (the “Federal Arbitration Act”). The parties acknowledge that this Plan evidences a transaction involving interstate commerce. The Federal Arbitration Act and the Rules shall govern the interpretation, enforcement, and proceedings pursuant to this provision. Any provisional remedy that would be available from a court of law shall be available from the arbitrator to the parties to this Plan pending arbitration. Either party may make an application to the arbitrators seeking injunctive relief to maintain the status quo, or may seek from a court of competent jurisdiction any interim or provisional relief that may be necessary to protect the rights and property of that party, until such times as the arbitration award is rendered or the controversy otherwise resolved. To the extent consistent with applicable law, the arbitrator may award fees and costs to the successful party.
(e) By participating in the Plan, you are agreeing to binding arbitration of any disputes that may arise relating to the Plan and waiving your right to a jury trial.
SECTION 8. | MISCELLANEOUS |
8.1 Applicable Law. The Plan is intended to be construed and all rights and duties are to be governed, in accordance with the laws of the State of Minnesota, without reference to its choice of law rules and except to the extent such laws are preempted by the laws of the United States of America.
8.2 Venue. All litigation in any way related to the Plan (including but not limited to any and all claims brought under ERISA, such as claims for benefits and claims for breach of fiduciary duty) must be brought, as appropriate, in the United States District Court for the District of Minnesota sitting in Hennepin County, State of Minnesota, or in the state courts located in Hennepin County, State of Minnesota.
8.3 Alienation. No benefit due at any time under this Plan is to be subject in any manner to alienation, sale, transfer, assignment, pledge, attachment or encumbrance of any kind.
8.4 No Employment or Other Service Rights. Nothing in the Plan shall confer upon any Participant any right to continue to serve the Company or an Affiliate or interfere in any way with the right of the Company or any Affiliate to terminate the Participant's employment or service at any time with or without notice and with or without Cause.
8.5 Successors and Assigns. The Plan will be binding upon and will inure to the benefit of the Company and its successor(s) and assign(s).
8.6 General Assets; Trust. All amounts provided under the Plan shall be paid from the general assets of the Company and no separate fund shall be established to secure payment.
8.7 Severability. If any provision of this Plan is declared or determined by any court to be illegal or invalid, and cannot be reformed or modified by the court to make the provision valid and enforceable, the validity of the remaining parts, terms or provisions shall not be affected thereby and the illegal or invalid part, term or provision will be deemed not to be a part of this Plan.
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8.8 Compliance with Section 409A. The Company intends that the Plan be exempt from the requirements of Section 409A of the Code, or if not exempt, to comply with the requirements of Section 409A and the Plan shall be construed and operated consistent with and to give full effect to such intent. Notwithstanding anything in the Plan to the contrary, if a payment under this Plan is considered deferred compensation subject to Section 409A of the Code and the Participant is a “specified employee” (as such term is defined under Section 409A of the Code and applicable regulations) as of the date of the Participant’s termination of employment, then no distribution of such amounts shall be made until the first payroll date of the seventh month following the Participant's termination (or, if earlier, upon the date of the Participant's death). Any suspended payments to which a specified employee is entitled under the Plan shall be accumulated and paid in a lump sum payment on the date payment is permitted under the preceding sentence. Any reference in this Plan to a Participant’s termination of employment shall mean the Participant has also experienced a “separation from service” as defined in under Section 409A of the Code and applicable regulations. Notwithstanding anything in the Plan to the contrary, the Company makes no guarantee of any tax result with respect to the payments hereunder, and each Participant is fully responsible for all individual income and employment taxes owed upon any payment made to the Participant.
SECTION 9. | GENERAL ADMINISTRATIVE INFORMATION |
Plan Name: | Bright Health Management Inc. Severance Benefits Plan |
Plan Number: | 550 |
Plan Sponsor: |
Bright Health Management Inc. 219 North 2nd Street, Suite 401 Minneapolis, MN 55401 612-238-1321 |
EIN: | 47-4991296 |
Type of Plan: | Welfare plan providing for severance benefits |
Plan Year: | January 1 to December 31. |
Plan Administrator/Claims Administrator: | The Plan Sponsor noted above. |
Funding: | Benefits and plan expenses are self-funded and paid from general corporate assets. |
Agent for Service of Legal Process: | The Plan Sponsor’s General Counsel, who may be contacted at the address of the Plan Sponsor listed above, is the agent for service of legal process with respect to this Plan. Service of process may also be made on the Plan Administrator. |
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SECTION 10. | ERISA RIGHTS |
As a Participant in the Bright Health Management Inc. Severance Benefits Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (“ERISA”).
ERISA imposes duties upon the people who are responsible for the operation of the Plan. The people who operate your plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and the other Plan Participants. No one, including your employer or any other person, may discriminate against you in any way to prevent you from obtaining a benefit or exercising your rights under ERISA. If your claim for a benefit is denied in whole or in part, you must receive a written explanation of the reason for the denial. You have the right to have the Administrator review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights. If you have a claim for benefits which is denied or ignored, in whole or in part, you may initiate arbitration as provided in Section 7.5 Final Dispute Resolution after you have exhausted the claims procedure. If it should happen that fiduciaries of the Plan misuse the Plan’s money, or if you are discriminated against for asserting your rights, you may seek assistance from the United States Department of Labor, or you may initiate arbitration as provided in Section 7.5 Final Dispute Resolution after you have exhausted the claims procedure. The arbitrator will decide who should pay court costs and legal fees. If you are successful, the arbitrator may order the person you have sued to pay these costs and fees. If you lose, the arbitrator may order you to pay these costs and fees (for example, if it is found that your claim is frivolous).
If you have any questions about the Plan, you should contact the Administrator. If you have any questions about this statement or about your rights under ERISA, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Office of Outreach, Education and Assistance, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210.
The Company reserves the right to amend, reduce, modify, interpret or discontinue all or part of this Plan.
The Administrator’s determinations regarding coverage, claims, and all other aspects of the Plan are binding. The Administrator has complete discretionary power and authority with respect to all Plan matters, including eligibility and benefits, factual determinations, and interpretation of Plan provisions. A Plan benefit is not payable unless the Administrator determines that it is. The Administrator may delegate its authority to Plan service providers.
No clerical error or other mistake will create a right to Plan benefits. The terms of the Plan may not be amended by oral statements made by the Company, the Administrator, or any other person. In the event an oral statement conflicts with any terms of the Plan, the Plan terms will control.
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Exhibit 10.12
Final Form
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this “Agreement”), effective as of December 19, 2019, is between Bright Health Management, Inc., a Delaware corporation (together with its direct and indirect parents and subsidiaries, the “Company”), with its principal place of business at 219 North 2nd Street, Suite 401, Minneapolis, MN 55401, and George L. Mikan III, an individual with his principal residence at 4901 Rolling Green Parkway, Edina, MN 55436 (the “Executive”).
A. The Executive is currently employed by the Company pursuant to that certain Employment Agreement, dated as of January 15, 2019 (as amended, restated, supplemented or otherwise modified from time to time, the “Existing Agreement”).
B. The Executive and the Company wish to enter into this Agreement to amend and restate the Existing Agreement to modify the terms of the Executive’s employment with the Company as set forth herein.
C. The Executive wishes to receive compensation from the Company for the Executive’s services, including severance payments in accordance with Section 5 to which the Executive would not otherwise be entitled, and the Company wants reasonable protection of its confidential business and technical information that has been acquired and is being developed by the Company at substantial expense.
D. The Company wishes to obtain reasonable protection against unfair competition from the Executive following termination of employment and to further protect against unfair use of its confidential business and technical information and the Executive is willing to grant the Company the benefits of a covenant not-to-compete for these purposes, in exchange for severance payments in accordance with Section 5 to which the Executive would not otherwise be entitled absent execution of this Agreement.
E. The Executive acknowledges and agrees that neither the Company’s tendering of this Agreement nor this Agreement taking effect constitutes Succession Good Reason (as defined in the Existing Agreement).
Accordingly, the Company and the Executive, each intending to be legally bound, agree as follows:
1. Employment. Subject to all of the terms and conditions of this Agreement, the Company agrees to employ the Executive as President, Chief Financial Officer and a Member of the Office of the CEO of Bright Health, Inc. and any of its affiliates, as appropriate, and the Executive accepts such employment; provided, that the Company and the Executive agree that that the Company will appoint the Executive as the Chief Executive Officer of the Company (“CEO”) no later than December 16, 2020. Executive will serve as Vice Chair of the Board of Directors of the Company (the “Board”) while he holds these positions, subject to applicable Delaware law and the Company’s financing agreements and corporate documents as entered into and amended from time to time. If Executive no longer holds such positions, his position as a member of the Board will be subject to mutual reevaluation by the Company and Executive.
2. Duties. The Executive will devote substantially all of his business hours to, and, during such time, make the best use of his energy, knowledge and training in advancing the Company’s interests. The Executive will diligently and conscientiously perform such duties as are customarily associated with the Executive’s position from time to time, and such other duties as are agreed upon between the Board and the Executive. The Executive will perform such duties within the general guidelines to be determined by the Board. The Executive will report to the CEO, who will be responsible for evaluating his job performance; provided, that following the Executive’s appointment as CEO, the Executive will report directly to the Board. While the Executive is employed by the Company, the Executive will keep the Company informed of any other business activities and will promptly stop any activity that might conflict with the Company’s interests or adversely affect the performance of the Executive’s duties for the Company. Notwithstanding anything to the contrary herein, the Executive may (i) continue to provide services to the entities set forth on Exhibit A attached hereto and (ii) provide services to any other corporations or entities with the prior consent of the Board; provided that the services that the Executive provides to any corporations or entities other than the Company shall not conflict or materially interfere with the effective discharge of the Executive’s duties for the Company; or be competitive with any products or services of the Company.
3. Term. This Agreement will remain in effect for the period beginning on the date hereof and ending as provided in Section 5 hereof (the “Employment Period”).
4. Compensation.
(a) Salary. The Company agrees to pay the Executive an annual base salary of $300,000 (the “Base Salary”), in equal semi-monthly installments, and in arrears, in accordance with the standard payroll practices of the Company. The Board will review the Base Salary on an annual basis, considering the Executive’s performance, salary benchmarks for similar companies and the Company’s financial performance, and may increase, but not decrease the Base Salary; provided, however, that the Board may decrease the Executive’s Base Salary to the extent decreased in connection with, and proportionally with, across-the-board salary reductions based on the Company’s financial performance similarly affecting all or substantially all management employees of the Company.
(b) Bonus. The Executive will be eligible to receive an annual bonus, with the amount of any bonus to be based upon the achievement of certain qualitative and quantitative objectives approved by the Board. The Executive’s target annual bonus will be 50% of the Executive’s Base Salary (“Target Annual Bonus”) for the applicable calendar year; provided that the amount of the bonus, if any, will be at the discretion of the Board. The bonus will be paid no later than March 15 of the following calendar year. The Board will review the Target Annual Bonus on an annual basis, considering the Executive’s performance, target bonus benchmarks for similar companies and the Company’s financial performance, and may increase, but not decrease the Target Annual Bonus, except to the extent it is decreased in connection with, and proportionally with, across-the-board reductions based on the Company’s financial performance similarly affecting all or substantially all of the executive-level employees of the Company.
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(c) Reimbursement of Business Expenses. The Company agrees to reimburse the Executive for all reasonable out-of-pocket business expenses incurred by the Executive on behalf of the Company, provided that the Executive properly accounts to the Company for all such expenses in accordance with the rules and regulations of the Internal Revenue Service under the Internal Revenue Code of 1986, as amended (including, when the context requires, all regulations, rulings and authoritative interpretations issued thereunder) (the “Code”), and in accordance with the standard policies of the Company relating to reimbursement of business expenses. Without limiting the foregoing, the Company shall reimburse the Executive up to $100,000.00 annually for the costs of the purchase of a life insurance policy of Executive’s choosing (plus the amount of any incremental tax liabilities resulting from such reimbursement).
(d) Benefits and Vacation. The Executive will be entitled to participate in all benefit plans adopted by the Company to the extent that the terms of such benefit plans permit the Executive to participate. The Executive will be entitled to paid time off and all legal holidays observed by the Company, in each case, in accordance with the Company’s policies as in effect from time-to-time.
(e) Equity. Pursuant to the Company’s 2016 Stock Incentive Plan (the “Plan”), the Executive has previously received option grants, and subject to approval by the Board, may receive further option grants in the future (collectively, the “Option Grants”).
(i) Subject to Sections 4(e)(ii), 5(b) and 5(c), the Option Grant shall vest in accordance with the applicable option grant agreements; provided, that it is expected that any Option Grants awarded following the date hereof will vest on the following schedule, provided that the Executive is providing services to the Company on each applicable vesting date: 25% on the first anniversary of the date of grant, and the remaining 75% in equal monthly installments over the next three years.
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(ii) Notwithstanding the foregoing or anything in the Plan or this Agreement, upon a Sale of the Company in which the consideration is cash or liquid securities or the unvested shares subject to the Option Grants are not converted into securities of the acquirer or the Company’s successor, as the case may be (the “Acquirer”) on the same terms as shares of Bright Health Inc.’s common stock, if the Executive is offered employment with the Acquirer on terms no less favorable to the Executive in the aggregate than the terms on which the Executive is then-employed by the Company, then the unvested shares subject to the Option Grants shall be cancelled in connection with such Sale of the Company and shall be converted into a contingent right to receive an amount in cash (the “Holdback Amount”) equal to the proceeds that would otherwise be payable to the Executive in respect of such unvested shares in connection with such Sale of the Company had such unvested shares become vested immediately prior to such Sale of the Company and had been exercised and sold at the time of the Sale of the Company. The Holdback Amount shall not be paid to the Executive at the closing of such Sale of the Company, but rather shall be withheld by the Acquirer at the closing of such Sale of the Company and paid to the Executive on the earliest to occur of (a) the date that is the 12-month anniversary of the closing of such Sale of the Company, (b) the date on which the Executive is terminated without Cause (as defined below) and (c) the date on which the Executive resigns for Sale Good Reason (as defined below), so long as, in the case of this clause (c), such date is at least six (6) months following the closing of such Sale of the Company; provided, further, that in the event that the Executive resigns for any reason other than for Sale Good Reason or is terminated for Cause prior to the 12-month anniversary of the closing of such Sale of the Company, the Executive’s right to receive the Holdback Amount (or any portion thereof) shall be forfeited without any payment thereof. If the Executive is (y) terminated without Cause in connection with a Sale of the Company or (z) not offered employment with the Acquirer in connection with a Sale of the Company on terms no less favorable to the Executive in the aggregate than the terms on which the Executive is then-employed by the Company, then in either case all unvested shares subject to the Option Grants shall automatically vest in full immediately prior to such Sale of the Company. For purposes of this Agreement, “Sale Good Reason” means the Executive’s voluntary termination of employment with the Company or the Acquirer following the occurrence of any of the following without the Executive’s written consent: (i) a material reduction or change in job duties, responsibilities or requirements inconsistent with the Executive’s position, provided that a mere change in title following a Sale of the Company shall not constitute Sale Good Reason, so long as the Executive is assigned to a position that is substantially equivalent to the position held prior to the Sale of the Company in terms of job duties, responsibilities and requirements; (ii) a material reduction in the Executive’s compensation; (iii) the Executive’s refusal to relocate the principal place for performance of his duties to a location more than fifty (50) miles from the location at which he performed his duties at the time of the Sale of the Company.
5. Termination.
(a) The Employment Period and Executive’s employment will continue until the Executive’s resignation, Disability or death or until terminated by the Company with or without Cause (as defined below). Except as otherwise provided herein, any termination of Executive’s employment and the Employment Period by the Company will be effective as specified in a written notice from the Company to the Executive. The Executive’s employment with the Company will be “at-will.” This means that either the Executive or the Company may terminate the Executive’s employment at any time, with or without Cause, with or without notice, and for any reason or no reason.
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(b) If Executive’s employment is terminated by the Company without Cause or terminated by the Executive for Succession Good Reason (as defined below), (i) the Company will pay the Executive an amount equal to two times the sum of the (x) annual Base Salary and (y) Target Annual Bonus payment (the “Severance Amount”) in effect as of the effective date of the termination (the “Termination Date”), less all applicable withholdings and deductions, provided that the Executive (1) complies in all material respects with the terms of this Agreement, including without limitation, the terms set forth in Section 8 and (2) executes (and does not rescind) an agreement (in form and substance satisfactory to the Company and which is provided to the Executive within 10 days of the Executive’s termination) releasing any and all claims against the Company and related persons and entities (a “Release Agreement”) within 45 days of receipt of the Release Agreement. In addition, if the Executive is terminated without Cause, the number of unvested shares under the Option Grants as of the date of termination which would have vested over the twelve (12) month period commencing on the date of termination (assuming continued employment throughout such period) in accordance with the terms of the applicable grant agreements shall automatically vest in full. The payment of the Severance Amount shall be in substantially equal installments in accordance with the Company’s payroll practice over twelve (12) months commencing within sixty (60)-days after the Termination Date; provided, however, that if the sixty (60)-day period begins in one calendar year and ends in a second calendar year, the Severance Amount shall begin to be paid in the second calendar year by the last day of such sixty (60)-day period; provided, further, that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Termination Date. The Executive will not be entitled to any other salary, compensation or benefits after termination of the Employment Period, except as specifically provided for in the Company’s employee benefit plans or as otherwise expressly required by applicable law.
(c) If the Employment Period is terminated due to the Executive’s death or Disability, or under any circumstance other than pursuant to Section 5(b), then the Executive will not be entitled to receive his Base Salary, any Bonus or any employee benefits or bonuses, for any periods after the Termination Date, except as otherwise specifically provided for in the Company’s employee benefit plans or as otherwise expressly required by applicable law. In the event that the Employment Period is terminated due to the Executive’s death, then a number of unvested shares subject to the Option Grants shall become vested as follows:
(i) If, at the time of the Executive’s death, fewer than one third (1/3) of the shares subject to the Option Grants have vested, then such number of shares shall become vested in full automatically such that one third (1/3) of the shares subject to the Option Grants shall be vested; and
(ii) If, at the time of the Executive’s death, one third (1/3) or more of the shares subject to the Option Grants have vested, then the number of unvested shares under the Option Grants as of the date of the Executive’s death which would have vested over the three (3) month period commencing on the date of the Executive’s death (assuming continued employment throughout such period) in accordance with the terms of the applicable grant agreements shall automatically vest in full.
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(d) Except as otherwise expressly provided herein, all of the Executive’s rights to salary, bonuses, employee benefits and other compensation hereunder which would have accrued or become payable after the termination or expiration of the Employment Period will cease upon such termination or expiration, other than those expressly required under applicable law (such as COBRA). However, in connection with any termination of the Employment Agreement, the Executive will be entitled to receive his Base Salary through the Termination Date, and any accrued but unused vacation under Section 4(d) and unreimbursed business expenses that are reimbursable in accordance with Section 4(c). The Company may offset any amounts the Executive owes it against any amounts it owes the Executive hereunder, provided, however, that in no event will any payment under this Agreement that constitutes “deferred compensation” for purposes of Code section 409A be subject to offset by any other amount unless otherwise permitted by Code section 409A.
(e) For purposes of this Agreement, “Cause” means with respect to the Executive one or more of the following: (i) a material breach of this Agreement by the Executive and the Executive’s failure to cure such breach within ten (10) business days following written notice by the Company; (ii) a breach of the Executive’s duty of loyalty to the Company; (iii) the indictment or charging of the Executive of, or the plea by the Executive of nolo contendere to, a felony or a misdemeanor involving moral turpitude or other willful act or omissions causing material harm to the standing and reputation of the Company; (iv) the Executive’s repeated failure to perform in any material respect his duties under this Agreement, and the Executive’s failure to cure such failures within ten (10) business days following written notice by the Company; (v) theft, embezzlement, or willful misappropriation of funds or property of the Company by the Executive; (vi) a material violation by the Executive of the Company’s written employment policies, and the Executive’s failure to cure such violation within ten (10) business days following written notice by the Company; or (vii) failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by the Company to cooperate, or the willful destruction or willful failure to preserve documents or other materials known to be relevant to such investigation or the inducement of others to fail to cooperate or to produce documents or other materials in connection with such investigation. Notwithstanding the foregoing, the Executive will not be deemed to have been terminated for Cause unless and until there has been delivered to Executive a written statement, executed by the Chairman of the Board (after reasonable notice to the Executive and an opportunity for the Executive to be heard by the Board), stating that in the good faith opinion of the Chairman of the Board the Executive was guilty of conduct constituting “Cause” as set forth above and specifying the particulars thereof in reasonable detail.
(f) For purposes of this Agreement, “Disability” means the Executive’s inability to perform the essential duties, responsibilities and functions of his position with the Company for a period of ninety (90) consecutive days or for a total of one hundred eighty (180) days during any 12-month period as a result of any mental or physical illness, disability or incapacity even with reasonable accommodations for such illness, disability or incapacity provided by the Company or if providing such accommodations would be unreasonable, all as determined by the Board in good faith.
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(g) For purposes of this Agreement, “Succession Good Reason” means the Executive’s voluntary termination of employment with the Company following December 16, 2020 (or such date which may be modified as mutually agreed by the Company and Executive), if the Executive shall not have been named CEO on or prior to such date. A resignation will not be considered to have occurred for “Succession Good Reason” unless the Executive gives the Company written notice of the condition constituting grounds for “Succession Good Reason” within 30 days after the condition comes into existence, the Company fails to remedy the condition within 30 days after receiving such written notice and the Executive resigns within 30 days after the end of the cure period.
(h) In the event that Executive: (i) is no longer employed by the Company such that Section 5(b) above applies, (ii) acquires Common Stock through exercise of the Option Grant (the “Acquired Shares”) and (iii) the Company has not had any public offering of the Company’s shares, then the Executive shall have the right to exercise a put option (the “Put Option”) to have the Company purchase all of Acquired Shares at the most recent price of the Company’s Common Stock determined by the Board of Directors. The Executive shall make such election to exercise the Put Option within thirty (30) days after exercise of the Option Grant. The Put Option shall be exercised by a written and dated notice (the “Written Notice”) to the Company from the Executive demanding that the Company purchase the Acquired Shares pursuant to the provisions of this Agreement. If the Put Option is exercised, the closing of the purchase and sale of the Acquired Shares shall occur within sixty (60) business days of the date of the Written Notice. Notwithstanding the foregoing, the Put Option shall terminate if, in the Company’s reasonable determination, the execution of the Put Option will significantly negatively impact the Company’s financial standing or ability to pursue it business (including any impact on capital requirements), or if the execution of the Put Option would be a violation of the terms of the Company’s then-existing credit facilities.
6. Inventions.
(a) Definition. “Inventions,” as used in this Section 6, means any inventions, discoveries, improvements and ideas (whether or not they are in writing or reduced to practice) or works of authorship (whether or not they can be patented or copyrighted) that the Executive makes, authors, or conceives (either alone or with others) and that both: (a) result from any work the Executive performs for the Company; and (b) relate in any way to the Company’s businesses, products or services, past, present, anticipated or under development. Notwithstanding anything to the contrary herein, the Executive may continue to provide services to the entities set forth on Exhibit A attached hereto and the provisions of this Section 6 shall not apply to any inventions, discoveries, improvements and ideas or works of authorship that the Executive makes, authors, or conceives in connection with such services.
(b) Ownership of Inventions. The Executive agrees that all Inventions made by the Executive during or within six months after the term of this Agreement will be the Company’s sole and exclusive property. The Executive will assign (and the Executive hereby assigns) to the Company all of the Executive’s rights to the Invention, any applications the Executive makes for patents or copyrights in any country, and any patents or copyrights granted to the Executive in any country. The Executive represents that, except as previously disclosed to the Company in writing, as of the date of this Agreement, the Executive does not have any rights under, and will not make any claim against the Company with respect to, any inventions, discoveries, improvements, ideas or works of authorship which would be Inventions if made, conceived, authored or acquired by the Executive during the term of this Agreement.
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(c) Notice to Executive. The requirements of Section 6(b) do not apply to any Invention (i) for which no equipment, supplies, facility or trade secret information of the Company was used, (ii) which was developed entirely on the Executive’s own time, (iii) which does not relate directly to the Company’s businesses or to the Company’s actual or demonstrably anticipated research or development, and (iv) which does not result from any work the Executive performed for the Company.
(d) Works Made for Hire. To the extent that any Invention qualifies as “work made for hire” as defined in 17 U.S.C. § 101 (1976), as amended, such Invention will constitute “work made for hire” and, as such, will be the exclusive property of the Company.
(e) Survival. The obligations of this Section 6 will survive the termination of this Agreement.
7. Confidential Information.
(a) “Confidential Information,” as used in this Section 7, means information that is not generally known and that is proprietary to the Company or that the Company is obligated to treat as proprietary. Any information that the Executive reasonably considers Confidential Information, or that the Company treats as Confidential Information, will be presumed to be Confidential Information (whether the Executive or others originated it and regardless of how the Executive obtained it). Except as specifically authorized by an authorized officer of the Company or by written Company policies, the Executive will not, either during or after the term of this Agreement, use or disclose Confidential Information to any person who is not an employee of the Company, except as is necessary to perform his or her duties under this Agreement. The Executive agrees that all Confidential Information will remain the sole property of the Company. The Executive also agrees to take all reasonable precautions to prevent any unauthorized disclosure of such Confidential Information.
(b) Former Employer Confidential Information. The Executive agrees that the Executive will not, during the term of this Agreement, improperly use or disclose any proprietary information or trade secrets of any former employer of the Executive or other person or entity with which the Executive has an agreement or duty to keep in confidence information acquired by the Executive, if any. The Executive also agrees that the Executive will not bring onto the Company’s premises any unpublished document or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.
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(c) Third Party Confidential Information. The Executive recognizes that the Company have received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. The Executive agrees that, during the term of this Agreement and thereafter, the Executive owes the Company and such third parties a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person or entity or to use it except as necessary in carrying out the services for the Company consistent with the Company’s agreement with such third party.
(d) Return of Materials. Upon termination of this Agreement, the Executive will promptly deliver to the Company all records and any compositions, articles, devices, apparatus and other items that disclose, describe or embody Confidential Information or any Invention.
(e) Survival. The obligations of this Section 7 will survive the termination of this Agreement.
8. Competitive Activities.
(a) Past Activities. The Executive represents and warrants to the Company that the Executive is not currently subject to a non-competition, confidentiality or other such agreement with a former employer which prohibits or restricts him from working for the Company or performing the services contemplated by this Agreement. Further, the Executive represents and warrants to the Company that he has not brought any proprietary information, customer lists, trade secrets, or any other property with him which belongs to any former employer. The Executive further agrees and understands that any misrepresentation, including, but not limited to a misrepresentation that he is not subject to a non-competition or other such agreement with a former employer which prohibits or restricts him from working for the Company, may result in the termination of employment with the Company, regardless of when the Company discovers such misrepresentation. The Company acknowledges that the Executive has provided the Company with copies of his (i) Separation and Release Agreement executed July 5, 2011; (ii) Additional Separation and Release Agreement executed November 18, 2011; Settlement Agreement and Amendment to Separation and Release Agreement dated March 12, 2014; Amendment to Settlement Agreement and Amended Separation and Release Agreement dated July 13, 2017; and letter from UnitedHealth Group to Fidelity Investments dated January 2, 2019 stating that “he has met the requirements of the Settlement Agreement and Amendment to Separation and Release Agreement with UnitedHealth Group dated March 12, 2014.”, has reviewed such agreements and recognizes Executive’s continuing obligations with respect to confidential information of third parties.
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(b) Non-Compete. The Executive agrees that, during the term of employment with the Company and for a period of one (1) year after employment with the Company ends, the Executive will not alone, or in any capacity with another firm:
(i) directly or indirectly render services to, invest in or lend to any person, firm or corporation conducting business in North America in connection with the research, development, manufacture, marketing, sale or promotion of any products or services that are competitive with any products or services of the Company (whether commercially available or under development);
(ii) (A) disrupt, damage, impair, or interfere with the business of the Company whether by way of interfering with or disrupting the relationship of the Company with its clients, customers, representatives, vendors or suppliers or (B) directly or indirectly call upon or solicit any customer or supplier of the Company in violation of Section 8(b)(i) or induce, encourage or influence any customer or supplier to terminate or otherwise modify adversely to the Company its business relationship with the Company other than as undertaken in the course of the Executive’s employment with the Company consistent with the terms of this Agreement; or
(iii) employ, contract, affiliate, or create any relationship with (by soliciting or assisting anyone else in the solicitation of) any of the Company’s current employees or any other person who had been employed by the Company within the twelve (12) months prior to the Executive’s departure from the Company, on behalf of the Executive or any other entity, whether or not such entity competes with the Company.
(c) Exceptions to Non-Compete. The restrictions contained in Section 8(a) of this Agreement will not prevent the Executive from accepting employment with a large diversified organization with separate and distinct divisions that do not compete, directly or indirectly, with the Company, as long as prior to accepting such employment the Company receives a written assurance from the Executive, satisfactory to the Company, to the effect that the Executive will not render any services to, or have any ability to provide strategic direction or oversight to, any division or business unit that competes, directly or indirectly, with the Company. During the restrictive period set forth in Section 8(a), the Executive will inform any new employer, prior to accepting employment, of the existence of this Agreement and provide such employer with a copy of this Agreement. Nothing in this Section 8 will prevent Executive from beneficially owning an entirely passive interest of less than 1% of the shares of any public company.
(d) Cessation of Business. Section 8(a) of this Agreement will cease to be applicable to any activity of the Executive from and after such time as the Company (i) has ceased all business activities for a period of six (6) months or (ii) has made a decision through its Board not to continue, or has ceased for a period of six (6) months, the business activities with which such activity of the Executive would be competitive.
(e) No Additional Compensation. In the event that the Executive’s employment terminates for any reason, no additional compensation will be paid for this non-competition obligation other than as set forth in this Agreement.
(f) Survival. The obligations of this Section 8 will survive the termination of this Agreement.
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9. Deferred Compensation.
(a) The intent of the parties is that payments and benefits under this Agreement are exempt from the requirements of Code section 409A because they are short term deferrals under Treas. Reg. Sec. 1.409A-1(b)(4) or payments under a separation pay plan within the meaning of Treas. Reg. Sec. 1.409A-1(b)(9) and this Agreement will be construed and administered in a manner consistent with such intent. To the extent any payment or benefits are not exempt from the requirements of Code section 409A they will comply in form and operation with Code section 409A and the regulations and guidance promulgated thereunder and, accordingly, to the maximum extent permitted, this Agreement will be interpreted and administered in a manner to be in compliance therewith.
(b) A termination of employment will not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment,” “resignation” or like terms will mean “separation from service.” The parties acknowledge that in determining whether a separation from service has occurred, the rules of Treas. Reg. Sec. 1.409A-1(h)(5), concerning “dual status” employee directors, will apply.
(c) Severance payments are intended to constitute separate payments for purposes of Treas. Reg. Sec. 1.409A-2(b)(2), and to be subject to the distribution requirements of Code section 409A(a)(2)(A) of the Code, including, without limitation, the requirement of Code section 409A(a)(2)(B)(i) that payments due on account of a “separation from service” be delayed until six months after such separation (or, if earlier, upon death) if Executive is a “specified employee” within the meaning of the aforesaid Section of the Code at the time of such separation.
10. Miscellaneous.
(a) Exit Interview. Upon termination of employment with the Company, the Executive agrees to participate in an exit interview with representatives of the Company to discuss the Executive’s continuing obligations under this Agreement.
(b) Conflicts of Interest. The Executive agrees that he will not, directly or indirectly, transact business with the Company personally, or as an agent, owner, partner or shareholder of any other entity; provided, however, that any such transaction may be entered into if approved by the Board.
(c) No Adequate Remedy. The Executive understands that if the Executive fails to fulfill the Executive’s obligations under Sections 6, 7 or 8 of this Agreement the damages to the Company would be very difficult to determine. Therefore, in addition to any other rights or remedies available to the Company at law, in equity, or by statute, the Executive hereby consents to the specific enforcement of Sections 6, 7 and 8 of this Agreement by the Company through an injunction or restraining order issued by an appropriate court, without the requirement of posting a bond in connection therewith.
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(d) Successors and Assigns. This Agreement is binding on and inures to the benefit of the Company’s successors and assigns, (all of which are included in the term the “Company” as it is used in this Agreement); provided, however, that the Company may assign this Agreement only (i) to its affiliates or (ii) in connection with a merger, consolidation, assignment, sale or other disposition of substantially all of its assets, stock or business.
(e) Modification. This Agreement may be modified or amended only by a written statement signed by both the Company and the Executive.
(f) Governing Law. This Agreement and the legal relations among the parties as to all matters, including, without limitation, matters of validity, interpretation, construction, performance and remedies, will be governed by and construed exclusively in accordance with the internal laws of the State of Minnesota (without regard to the conflict of laws principles of any jurisdiction). Any legal proceeding related to this Agreement will be brought in an appropriate Minnesota court, and both the Company and the Executive hereby consent to the exclusive jurisdiction of that court for this purpose.
(g) Construction. Wherever possible, each provision of this Agreement will be interpreted or construed (as applicable) so that it is valid under the applicable law. If any provision of this Agreement is to any extent invalid under the applicable law, that provision will still be effective to the extent it remains valid. The remainder of this Agreement also will continue to be valid, and the entire Agreement will continue to be valid in other jurisdictions. To the extent that the scope, time or geographical limitations contained in Section 8 are deemed or held by a court of competent jurisdiction to be overbroad and/or unreasonable and therefore unenforceable, such court shall apply such provision to the extent reasonable and not overbroad by modifying such provision to be limited in scope, time and/or geography to the maximum extent reasonable and enforceable.
(h) Waivers. No failure or delay by either the Company or the Executive in exercising any right or remedy under this Agreement will waive any provision of the Agreement. Nor will any single or partial exercise by either the Company or the Executive of any right or remedy under this Agreement preclude either of them from otherwise or further exercising these rights or remedies, or any other rights or remedies granted by any law or any related document.
(i) Captions. The headings in this Agreement are for convenience only and do not affect this Agreement’s interpretation.
(j) Entire Agreement. With the exception of the terms and conditions in the standard documentation with respect to the Option Grants, this Agreement supersedes all previous and contemporaneous oral negotiations, commitments, writings and understandings between the parties concerning the matters in this Agreement, including without limitation any policy or personnel manuals of the Company and the Existing Agreement.
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(k) Notices. All notices and other communications required or permitted under this Agreement will be in writing and will be (i) hand delivered or sent by registered or certified first class mail, postage prepaid, and will be effective upon delivery if hand delivered, or three (3) days after mailing if mailed to the address stated at the beginning of this Agreement or (ii) delivered electronically to the email addresses set forth on the signature pages hereto, and will be effective upon delivery. These addresses and email addresses may be changed at any time by like notice.
(l) Counterparts. This Agreement may be executed in several counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same instrument. Signature pages may be detached from the counterparts and attached to a single copy of this Agreement to physically form one document. Execution and delivery of this Agreement by facsimile and/or .pdf transmission by electronic mail will be legal, valid and binding execution and delivery for all purposes.
[Signature Page Follows]
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The Company and the Executive have duly executed this Agreement as of the date set forth above.
BRIGHT HEALTH MANAGEMENT, INC. | ||
By: | /s/ Robert J. Sheehy | |
Name: | Robert J. Sheehy | |
Title: | CEO | |
Email: | [redacted] | |
EXECUTIVE | ||
/s/ George L. Mikan III | ||
George L. Mikan III | ||
Email: | [redacted] |
[Signature Page to Amended and Restated Employment Agreement]
EXHIBIT A
(List of Shot-Rock Entities)
15
Exhibit 10.13
December 19, 2019
Dear Cathy,
Welcome and congratulations!
We are so excited to offer you the opportunity to join our team and help us advance our mission! This offer is an expression of our confidence in you, which is manifested in your attitude, potential, and demonstrated experience. We look forward to a satisfying employment relationship and mutual commitment to living our values and delivering on better healthcare for our members.
This letter contains the details of your employment, including salary and benefits, along with some legalese to make sure that we are in agreement. Please don’t hesitate to follow up with any questions. We look forward to your response and the opportunity to Make Healthcare Right. Together.
SUMMARY OFFER (details below)
In the role of Chief Financial and Administrative Officer, Bright Health, you will be expected to fulfill the duties and responsibilities listed in your job description. We will make sure to keep it updated and on file, working with you and your manager to ensure it reflects your role.
Position – Chief Financial and Administrative Officer
Manager – Bob Sheehy and Mike Mikan
Annual Salary – $300,000.00
Location – Minneapolis, MN
Bonus Target - 50% of base salary
Option Grant: 1,050,000 shares
Vesting Schedule - 1-year cliff from start date and then 1/48 monthly for remaining
Start Date – January 6, 2020
Employee Benefits - Full Participation
Classification – Exempt
INITIAL COMPENSATION
If you accept this offer, you will receive $300,000.00 on an annualized basis. Your salary will be paid in accordance with the Company’s normal payroll procedures.
You will be eligible to receive an annual (calendar year) incentive bonus of up to 50% of your base salary based on evaluation of your achievement of certain corporate and individual performance goals. The bonus will be prorated during your first year of employment and will be paid no later than March 15th each calendar year. To be eligible for a bonus, you must be employed prior to September 1st of the bonus calendar year and also be employed on the date that the bonus is paid.
Effective January 1, 2020, your salary will be increased to $450,000 on an annualized basis and your annual (calendar year) target incentive bonus will be set at 75% of your base salary. This salary adjustment is subject to approval by the Company’s Board of Directors.
BENEFITS
As a fulltime employee of Bright Health, you are eligible to participate in our company-sponsored benefit plans. We offer the following coverages, some paid in part by Bright Health: medical, dental, vision, flexible spending account, commuter and life & disability. In addition, employees may enroll in our 401k plan following 90 days of employment. Our plan offers a 3% safe harbor contribution. The Company may change these benefits from time to time. You are entitled to paid time off “PTO” according to our current Company policies and subject to the approval of your immediate supervisor.
STOCK OPTIONS
As part of your offer, we are providing you with an opportunity to own equity in Bright Health and participate in the growth of the Company. This comes in the form of Stock Options to purchase the Company’s Common Stock. We will recommend that our Board of Directors grant to you a stock option of 1,050,000 shares. These will be available to you at an exercise price equal to fair market value per share, as determined by the Board of Directors at the time of your grant.
These options will vest over 4 years, and vesting will begin after 12 months of employment (your cliff date). After you vest in shares, you will have earned the right to buy the number of shares that have vested. You will vest 25% of your options on your cliff date. After that, you’ll vest at the rate of 1/48 of the total grant every month thereafter. The option will be subject to the terms and conditions of the Company’s 2016 Stock Incentive Plan and Standard Stock Option Agreement. The option shall be granted under the Company’s standard form option agreement with an amendment that provides for acceleration of all unvested options upon the occurrence of two events: 1) the sale of the Company and, 2) in connection with such sale of the Company, your termination without cause (or resignation for good reason).
EMPLOYMENT RELATIONSHIP
This offer of employment is contingent upon successful completion of your background and reference checks and your ability to provide us with documents deemed acceptable by the USCIS (United States Citizenship & Immigration Services) to demonstrate your identity and eligibility to work in the United States. Please call if you have any questions about what documents are acceptable to the USCIS.
As a condition of your employment, you are also required to sign and return to us - before your first day of employment - and to comply with the terms of the Employee Confidentiality, Assignment of Inventions and Non-Competition Agreement (“Agreement”). That Agreement requires, among other provisions, your assignment of rights to any invention made during your employment at the Company, non-disclosure of Company proprietary information, and a restriction on certain aspects of your conduct during the one year following termination of your employment, including severance payments during that one year set forth in the agreement.
We also require that, if you have not already done so, you disclose to the Company any and all agreements relating to your prior employment that may affect your eligibility to be employed by the Company or limit the manner in which you may be employed. As more fully described in the Agreement, we understand that any such agreements will not prevent you from performing the duties of your position and you represent that such is the case. Similarly, you agree not to bring any third-party confidential information to the Company, including that of your former employer, and that in performing your duties for the Company you will not in any way utilize any such information
Finally, although Bright Health strives to maintain long-term successful relationships with its employees, this offer of employment is not for a definite period of time and will be at-will employment. You will be free to resign at any time, for any reason or for no reason. Similarly, the Company will be free to conclude its employment relationship with you at any time, with or without cause or notice, for any lawful reason. Your at-will employment status may not be modified other than in writing and signed by an authorized officer of the Company.
CONCLUSION
This letter and the enclosed Agreement set forth the initial terms of your employment with the Company, and supersede any prior representations or agreements including, but not limited to, any representations made during your recruitment, interviews or pre-employment negotiations, whether written or oral. This letter, the enclosed Agreement, and your employment will be governed by the laws of Minnesota.
To accept the Company’s offer, please sign and date this letter in the space provided below. We look forward to your favorable reply and to working with you at Bright Health.
Very truly yours,
/s/ Bob Sheehy and Mike Mikan | ||
Bob Sheehy and Mike Mikan |
Office of the CEO
Enclosures:
Employee Confidentiality, Assignment of Inventions and Non-Competition Agreement
ACKNOWLEDGEMENT AND ACCEPTANCE
By signing below, I accept the offer to join Bright Health and the mission to Make Healthcare Right. Together!
I acknowledge that I have read, understand, and agree to the above offer of employment letter, and the enclosed Employee Confidentiality and Assignment of Inventions Agreement, Confidentiality Assignment and Non-Competition and successful completion of background check and references.
Name: Cathy Smith | ||
Signature: | /s/ Cathy Smith | |
Date: | 12/23/19 |
Exhibit 10.14
EXECUTION VERSION
EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”), effective as of March 25, 2016, is between Bright Health Management, Inc., a Delaware corporation (together with its direct and indirect parents and subsidiaries, the “Company”), with its principal place of business at 219 North 2nd Street, Suite 310, Minneapolis, MN 55401, and Robert Sheehy, an individual with his principal residence at 5805 Mait Lane, Edina, MN 55436 (the “Executive”).
A. The Executive is currently employed by the Company, and the parties wish to enter into this Agreement setting forth the terms of the Executive’s continued employment.
B. The Executive wishes to continue to receive compensation from the Company for the Executive’s services, including severance payments in accordance with Section 5 to which the Executive would not otherwise be entitled, and the Company wants reasonable protection of its confidential business and technical information that has been acquired and is being developed by the Company at substantial expense.
C. The Company wishes to obtain reasonable protection against unfair competition from the Executive following termination of employment and to further protect against unfair use of its confidential business and technical information and the Executive is willing to grant the Company the benefits of a covenant not-to-compete for these purposes, in exchange for severance payments in accordance with Section 5 to which the Executive would not otherwise be entitled absent execution of this Agreement.
Accordingly, the Company and the Executive, each intending to be legally bound, agree as follows:
1. Employment. Subject to all of the terms and conditions of this Agreement, the Company agrees to employ the Executive as Chief Executive Officer, and the Executive accepts such employment.
2. Duties. The Executive will devote substantially all of his business hours to, and, during such time, make the best use of his energy, knowledge and training in advancing the Company’s interests. The Executive will diligently and conscientiously perform the duties of the Executive’s position within the general guidelines to be determined by the Board of Directors of the Company (the “Board”). The Executive will report to the Board, which will be responsible for evaluating his job performance. While the Executive is employed by the Company, the Executive will keep the Company informed of any other business activities, and will promptly stop any activity that might conflict with the Company’s interests or adversely affect the performance of the Executive’s duties for the Company.
3. Term. This Agreement will remain in effect for the period beginning on the date hereof and ending as provided in Section 5 hereof (the “Employment Period”).
4. Compensation.
(a) Salary. The Company agrees to pay the Executive an annual base salary of $250,000 (the “Base Salary”), in equal semi-monthly installments, and in arrears, in accordance with the standard payroll practices of the Company. The Board will review the Base Salary on an annual basis, considering the Executive’s performance, salary benchmarks for similar companies and the Company’s financial performance, and may increase, but not decrease the Base Salary; provided, however, that the Board may decrease the Executive’s Base Salary to the extent decreased in connection with, and proportionally with, across-the-board salary reductions based on the Company’s financial performance similarly affecting all or substantially all management employees of the Company.
(b) Bonus. The Company agrees to establish an annual bonus plan in which the Executive will be eligible to participate, beginning with the first calendar year in which the Company achieves positive cash flow, with the amount of any bonus to be based upon the achievement of certain qualitative and quantitative objectives established by the Executive and approved by the Board. The bonus will be paid no later than March 15 of following calendar year.
(c) Reimbursement of Business Expenses. The Company agrees to reimburse the Executive for all reasonable out-of-pocket business expenses incurred by the Executive on behalf of the Company, provided that the Executive properly accounts to the Company for all such expenses in accordance with the rules and regulations of the Internal Revenue Service under the Internal Revenue Code of 1986, as amended (including, when the context requires, all regulations, rulings and authoritative interpretations issued thereunder) (the “Code”), and in accordance with the standard policies of the Company relating to reimbursement of business expenses.
(d) Benefits and Vacation. The Executive will be entitled to participate in all benefit plans adopted by the Company to the extent that the terms of such benefit plans permit the Executive to participate. The Executive will be entitled to paid time off and all legal holidays observed by the Company, in each case, in accordance with the Company’s policies as in effect from time-to-time.
5. Termination.
(a) The Employment Period and Executive’s employment will continue until the Executive’s resignation, Disability or death or until terminated by the Company with or without Cause (as defined below). Except as otherwise provided herein, any termination of Executive’s employment and the Employment Period by the Company will be effective as specified in a written notice from the Company to the Executive. The Executive’s employment with the Company will be “at-will.” This means that either the Executive or the Company may terminate the Executive’s employment at any time, with or without Cause, with or without notice, and for any reason or no reason.
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(b) If Executive’s employment is terminated by the Company without Cause, the Company will pay the Executive an amount equal to six (6) months’ Base Salary (the “Severance Amount”) in effect as of the effective date of the termination (the “Termination Date”), less all applicable withholdings and deductions, provided that the Executive (i) complies in all material respects with the terms of this Agreement, including without limitation, the terms set forth in Section 8 and (ii) executes (and does not rescind) an agreement (in form and substance satisfactory to the Company and which is provided to the Executive within 10 days of the Executive’s termination) releasing any and all claims against the Company and related persons and entities (a “Release Agreement”) within 45 days of receipt of the Release Agreement. The payment of the Severance Amount shall be in substantially equal installments in accordance with the Company’s payroll practice over six (6) months commencing within sixty (60)-days after the Termination Date; provided, however, that if the sixty (60)-day period begins in one calendar year and ends in a second calendar year, the Severance Amount shall begin to be paid in the second calendar year by the last day of such sixty (60)-day period; provided, further, that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Termination Date. The Executive will not be entitled to any other salary, compensation or benefits after termination of the Employment Period, except as specifically provided for in the Company’s employee benefit plans or as otherwise expressly required by applicable law.
(c) If the Employment Period is terminated due to the Executive’s death or Disability, or under any circumstance other than pursuant to Section 5(b), then the Executive will not be entitled to receive his Base Salary, any Bonus or any employee benefits or bonuses, for any periods after the Termination Date, except as otherwise specifically provided for in the Company’s employee benefit plans or as otherwise expressly required by applicable law.
(d) Except as otherwise expressly provided herein, all of the Executive’s rights to salary, bonuses, employee benefits and other compensation hereunder which would have accrued or become payable after the termination or expiration of the Employment Period will cease upon such termination or expiration, other than those expressly required under applicable law (such as COBRA). However, in connection with any termination of the Employment Agreement, the Executive will be entitled to receive his Base Salary through the Termination Date, and any accrued but unused vacation under Section 4(d) and unreimbursed business expenses that are reimbursable in accordance with Section 4(c). The Company may offset any amounts the Executive owes it against any amounts it owes the Executive hereunder, provided, however, that in no event will any payment under this Agreement that constitutes “deferred compensation” for purposes of Code section 409A be subject to offset by any other amount unless otherwise permitted by Code section 409A.
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(e) For purposes of this Agreement, “Cause” means with respect to the Executive one or more of the following: (i) a material breach of this Agreement by the Executive and the Executive’s failure to cure such breach within ten (10) business days following written notice by the Company; (ii) a breach of the Executive’s duty of loyalty to the Company; (iii) the indictment or charging of the Executive of, or the plea by the Executive of nolo contendere to, a felony or a misdemeanor involving moral turpitude or other willful act or omissions causing material harm to the standing and reputation of the Company; (iv) the Executive’s repeated failure to perform in any material respect his duties under this Agreement, and the Executive’s failure to cure such failures within ten (10) business days following written notice by the Company; (v) theft, embezzlement, or willful misappropriation of funds or property of the Company by the Executive; (vi) a material violation by the Executive of the Company’s written employment policies, and the Executive’s failure to cure such violation within ten (10) business days following written notice by the Company; or (vii) failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by the Company to cooperate, or the willful destruction or willful failure to preserve documents or other materials known to be relevant to such investigation or the inducement of others to fail to cooperate or to produce documents or other materials in connection with such investigation. Notwithstanding the foregoing, the Executive will not be deemed to have been terminated for Cause unless and until there has been delivered to Executive a written statement, executed by the Board (after reasonable notice to the Executive and an opportunity for the Executive to be heard by the Board), stating that in the good faith opinion of the Board the Executive was guilty of conduct constituting “Cause” as set forth above and specifying the particulars thereof in reasonable detail.
(f) For purposes of this Agreement, “Disability” means the Executive’s inability to perform the essential duties, responsibilities and functions of his position with the Company for a period of ninety (90) consecutive days or for a total of one hundred eighty (180) days during any 12-month period as a result of any mental or physical illness, disability or incapacity even with reasonable accommodations for such illness, disability or incapacity provided by the Company or if providing such accommodations would be unreasonable, all as determined by the Board in its reasonable good faith judgment.
6. Inventions.
(a) Definition. “Inventions,” as used in this Section 6, means any inventions, discoveries, improvements and ideas (whether or not they are in writing or reduced to practice) or works of authorship (whether or not they can be patented or copyrighted) that the Executive makes, authors, or conceives (either alone or with others) and that both: (a) result from any work the Executive performs for the Company; and (b) relate in any way to the Company’s businesses, products or services, past, present, anticipated or under development.
(b) Ownership of Inventions. The Executive agrees that all Inventions made by the Executive during or within six months after the term of this Agreement will be the Company’s sole and exclusive property. The Executive will assign (and the Executive hereby assigns) to the Company all of the Executive’s rights to the Invention, any applications the Executive makes for patents or copyrights in any country, and any patents or copyrights granted to the Executive in any country. The Executive represents that, except as previously disclosed to the Company in writing, as of the date of this Agreement, the Executive does not have any rights under, and will not make any claim against the Company with respect to, any inventions, discoveries, improvements, ideas or works of authorship which would be Inventions if made, conceived, authored or acquired by the Executive during the term of this Agreement.
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(c) Notice to Executive. The requirements of Section 6(b) do not apply to any Invention (i) for which no equipment, supplies, facility or trade secret information of the Company was used, (ii) which was developed entirely on the Executive’s own time, (iii) which does not relate directly to the Company’s businesses or to the Company’s actual or demonstrably anticipated research or development, and (ii) which does not result from any work the Executive performed for the Company.
(d) Works Made for Hire. To the extent that any Invention qualifies as “work made for hire” as defined in 17 U.S.C. § 101 (1976), as amended, such Invention will constitute “work made for hire” and, as such, will be the exclusive property of the Company.
(e) Survival. The obligations of this Section 6 will survive the termination of this Agreement.
7. Confidential Information.
(a) “Confidential Information,” as used in this Section 7, means information that is not generally known and that is proprietary to the Company or that the Company is obligated to treat as proprietary. Any information that the Executive reasonably considers Confidential Information, or that the Company treats as Confidential Information, will be presumed to be Confidential Information (whether the Executive or others originated it and regardless of how the Executive obtained it). Except as specifically authorized by an authorized officer of the Company or by written Company policies, the Executive will not, either during or after the term of this Agreement, use or disclose Confidential Information to any person who is not an employee of the Company, except as is necessary to perform his or her duties under this Agreement. The Executive agrees that all Confidential Information will remain the sole property of the Company. The Executive also agrees to take all reasonable precautions to prevent any unauthorized disclosure of such Confidential Information.
(b) Former Employer Confidential Information. The Executive agrees that the Executive will not, during the term of this Agreement, improperly use or disclose any proprietary information or trade secrets of any former employer of the Executive or other person or entity with which the Executive has an agreement or duty to keep in confidence information acquired by the Executive, if any. The Executive also agrees that the Executive will not bring onto the Company’s premises any unpublished document or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.
(c) Third Party Confidential Information. The Executive recognizes that the Company have received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. The Executive agrees that, during the term of this Agreement and thereafter, the Executive owes the Company and such third parties a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person or entity or to use it except as necessary in carrying out the services for the Company consistent with the Company’s agreement with such third party.
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(d) Return of Materials. Upon termination of this Agreement, the Executive will promptly deliver to the Company all records and any compositions, articles, devices, apparatus and other items that disclose, describe or embody Confidential Information or any Invention.
(e) Survival. The obligations of this Section 7 will survive the termination of this Agreement.
8. Competitive Activities.
(a) Non-Compete. The Executive agrees that, during the term of employment with the Company and for a period of two (2) years after employment with the Company ends, the Executive will not alone, or in any capacity with another firm:
(i) directly or indirectly render services to, invest in or lend to any person, firm or corporation conducting business in North America in connection with the research, development, manufacture, marketing, sale or promotion of any products or services that are competitive with any products or services of the Company (whether commercially available or under development);
(ii) (A) disrupt, damage, impair, or interfere with the business of the Company whether by way of interfering with or disrupting the relationship of the Company with its clients, customers, representatives, vendors or suppliers or (B) directly or indirectly call upon or solicit any customer or supplier of the Company in violation of Section 3(a)(i) or induce, encourage or influence any customer or supplier to terminate or otherwise modify adversely to the Company its business relationship with the Company other than as undertaken in the course of the Executive’s employment with the Company consistent with the terms of this Agreement; or
(iii) employ, contract, affiliate, or create any relationship with (by soliciting or assisting anyone else in the solicitation of) any of the Company’s current employees or any other person who had been employed by the Company within the twelve (12) months prior to the Executive’s departure from the Company, on behalf of the Executive or any other entity, whether or not such entity competes with the Company.
(b) Exceptions to Non-Compete. The restrictions contained in Section 8(a) of this Agreement will not prevent the Executive from accepting employment with a large diversified organization with separate and distinct divisions that do not compete, directly or indirectly, with the Company, as long as prior to accepting such employment the Company receives a written assurance from the Executive, satisfactory to the Company, to the effect that the Executive will not render any services to, or have any ability to provide strategic direction or oversight to, any division or business unit that competes, directly or indirectly, with the Company. During the restrictive period set forth in Section 8(a), the Executive will inform any new employer, prior to accepting employment, of the existence of this Agreement and provide such employer with a copy of this Agreement.
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(c) Cessation of Business. Section 8(a) of this Agreement will cease to be applicable to any activity of the Executive from and after such time as the Company (i) has ceased all business activities for a period of six (6) months or (ii) has made a decision through its Board not to continue, or has ceased for a period of six (6) months, the business activities with which such activity of the Executive would be competitive.
(d) No Additional Compensation. In the event that the Executive’s employment terminates for any reason, no additional compensation will be paid for this non-competition obligation.
(e) Other Agreements. The Executive represents and warrants to the Company that he is not currently subject to a non-competition, confidentiality or other such agreement with a former employer which prohibits the Executive from working for the Company.
(f) Survival. The obligations of this Section 8 will survive the termination of this Agreement.
9. Deferred Compensation.
(a) The intent of the parties is that payments and benefits under this Agreement are exempt from the requirements of Code section 409A because they are short term deferrals under Treas. Reg. Sec. 1.409A-1(b)(4) or payments under a separation pay plan within the meaning of Treas. Reg. Sec. 1.409A-1(b)(9) and this Agreement will be construed and administered in a manner consistent with such intent. To the extent any payment or benefits are not exempt from the requirements of Code section 409A they will comply in form and operation with Code section 409A and the regulations and guidance promulgated thereunder and, accordingly, to the maximum extent permitted, this Agreement will be interpreted and administered in a manner to be in compliance therewith.
(b) A termination of employment will not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment,” “resignation” or like terms will mean “separation from service.” The parties acknowledge that in determining whether a separation from service has occurred, the rules of Treas. Reg. Sec. 1.409A-1(h)(5), concerning “dual status” employee directors, will apply.
(c) Severance payments are intended to constitute separate payments for purposes of Treas. Reg. Sec. 1.409A-2(b)(2), and to be subject to the distribution requirements of Code section 409A(a)(2)(A) of the Code, including, without limitation, the requirement of Code section 409A(a)(2)(B)(i) that payments due on account of a “separation from service” be delayed until six months after such separation (or, if earlier, upon death) if Executive is a “specified employee” within the meaning of the aforesaid Section of the Code at the time of such separation.
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10. Miscellaneous.
(a) Exit Interview. Upon termination of employment with the Company, the Executive agrees to participate in an exit interview with representatives of the Company to discuss the Executive’s continuing obligations under this Agreement.
(b) Conflicts of Interest. The Executive agrees that he will not, directly or indirectly, transact business with the Company personally, or as an agent, owner, partner or shareholder of any other entity; provided, however, that any such transaction may be entered into if approved by the Board.
(c) No Adequate Remedy. The Executive understands that if the Executive fails to fulfill the Executive’s obligations under Sections 6, 7 or 8 of this Agreement the damages to the Company would be very difficult to determine. Therefore, in addition to any other rights or remedies available to the Company at law, in equity, or by statute, the Executive hereby consents to the specific enforcement of Sections 6, 7 and 8 of this Agreement by the Company through an injunction or restraining order issued by an appropriate court, without the requirement of posting a bond in connection therewith.
(d) Successors and Assigns. This Agreement is binding on and inures to the benefit of the Company’s successors and assigns, (all of which are included in the term the “Company” as it is used in this Agreement); provided, however, that the Company may assign this Agreement only (i) to its affiliates or (ii) in connection with a merger, consolidation, assignment, sale or other disposition of substantially all of its assets, stock or business.
(e) Modification. This Agreement may be modified or amended only by a written statement signed by both the Company and the Executive.
(f) Governing Law. This Agreement and the legal relations among the parties as to all matters, including, without limitation, matters of validity, interpretation, construction, performance and remedies, will be governed by and construed exclusively in accordance with the internal laws of the State of Minnesota (without regard to the conflict of laws principles of any jurisdiction). Any legal proceeding related to this Agreement will be brought in an appropriate Minnesota court, and both the Company and the Executive hereby consent to the exclusive jurisdiction of that court for this purpose.
(g) Construction. Wherever possible, each provision of this Agreement will be interpreted or construed (as applicable) so that it is valid under the applicable law. If any provision of this Agreement is to any extent invalid under the applicable law, that provision will still be effective to the extent it remains valid. The remainder of this Agreement also will continue to be valid, and the entire Agreement will continue to be valid in other jurisdictions. To the extent that the scope, time or geographical limitations contained in Section 8 are deemed or held by a court of competent jurisdiction to be overbroad and/or unreasonable and therefore unenforceable, such court shall apply such provision to the extent reasonable and not overbroad by modifying such provision to be limited in scope, time and/or geography to the maximum extent reasonable and enforceable.
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(h) Waivers. No failure or delay by either the Company or the Executive in exercising any right or remedy under this Agreement will waive any provision of the Agreement. Nor will any single or partial exercise by either the Company or the Executive of any right or remedy under this Agreement preclude either of them from otherwise or further exercising these rights or remedies, or any other rights or remedies granted by any law or any related document.
(i) Captions. The headings in this Agreement are for convenience only and do not affect this Agreement’s interpretation.
(j) Entire Agreement. This Agreement supersedes all previous and contemporaneous oral negotiations, commitments, writings and understandings between the parties concerning the matters in this Agreement, including without limitation any policy or personnel manuals of the Company.
(k) Notices. All notices and other communications required or permitted under this Agreement will be in writing and will be (i) hand delivered or sent by registered or certified first class mail, postage prepaid, and will be effective upon delivery if hand delivered, or three (3) days after mailing if mailed to the address stated at the beginning of this Agreement or (ii) delivered electronically to the email addresses set forth on the signature pages hereto, and will be effective upon delivery. These addresses and email addresses may be changed at any time by like notice.
(l) Counterparts. This Agreement may be executed in several counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same instrument. Signature pages may be detached from the counterparts and attached to a single copy of this Agreement to physically form one document. Execution and delivery of this Agreement by facsimile and/or .pdf transmission by electronic mail will be legal, valid and binding execution and delivery for all purposes.
[Signature Page Follows]
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The Company and the Executive have duly executed this Agreement as of the date set forth above.
BRIGHT HEALTH INC. | ||
By: | /s/ Kyle Rolfing | |
Name: Kyle Rolfing | ||
Title: President | ||
Email: [redacted] | ||
EXECUTIVE | ||
/s/ Robert Sheehy | ||
Robert Sheehy | ||
Email: [redacted] |
[Signature Page to Sheehy Employment Agreement]
Exhibit 10.15
March 26, 2020
Dear Keith,
Welcome and congratulations!
We are so excited to offer you the opportunity to join our team and help us advance our mission! This offer is an expression of our confidence in you, which is manifested in your attitude, potential, and demonstrated experience. We look forward to a satisfying employment relationship and mutual commitment to living our values and delivering on better healthcare for our members.
This letter contains the details of your employment, including salary and benefits, along with some legalese to make sure that we are in agreement. Please don’t hesitate to follow up with any questions. We look forward to your response and the opportunity to Make Healthcare Right. Together.
SUMMARY OFFER (details below)
In the role of General Counsel, you will be expected to fulfill the duties and responsibilities listed in your job description. We will make sure to keep it updated and on file, working with you and your manager to ensure it reflects your role.
Position – General Counsel
Manager – Cathy Smith
Annual Salary – $400,000.00
Location – Minneapolis, MN
Bonus Target – 60% of base salary
Option Grant – 600,000
Vesting Schedule - 1-year cliff from start date and then 1/48 monthly for remaining
Anticipated Start Date – 5/4/20
Employee Benefits - Full Participation
Classification - Exempt
INITIAL COMPENSATION
If you accept this offer, you will receive $400,000.00 on an annualized basis. Your salary will be paid in accordance with the Company’s normal payroll procedures.
You will be eligible to receive an annual (calendar year) incentive bonus of up to 60% of your base salary based on evaluation of your achievement of certain corporate and individual performance goals. The bonus will be prorated during your first year of employment and will be paid no later than March 15th each calendar year. To be eligible for a bonus, you must be employed prior to November 1st of the bonus calendar year and also be employed on the date that the bonus is paid.
BENEFITS
As a fulltime employee of Bright Health, you are eligible to participate in our company-sponsored benefit plans. We offer the following coverages, some paid in part by Bright Health: medical, dental, vision, flexible spending account, commuter and life & disability. In addition, employees may enroll in our 401k plan following 90 days of employment. Our plan offers a 3% safe harbor contribution. The Company may change these benefits from time to time. You are entitled to paid time off “PTO” according to our current Company policies and subject to the approval of your immediate supervisor.
STOCK OPTIONS
As part of your offer, we are providing you with an opportunity to own equity in Bright Health and participate in the growth of the Company. This comes in the form of Stock Options to purchase the Company’s Common Stock. We will recommend that our Board of Directors grant to you a stock option of 600,000 shares. These will be available to you at an exercise price equal to fair market value per share, as determined by the Board of Directors at the time of your grant.
These options will vest over 4 years, and vesting will begin after 12 months of employment (your cliff date). After you vest in shares, you will have earned the right to buy the number of shares that have vested. You will vest 25% of your options on your cliff date. After that, you’ll vest at the rate of 1/48 of the total grant every month thereafter.
The option will be subject to the terms and conditions of the Company’s 2016 Stock Incentive Plan and Standard Stock Option Agreement.
EMPLOYMENT RELATIONSHIP
This offer of employment is contingent upon successful completion of your background and reference checks and your ability to provide us with documents deemed acceptable by the USCIS (United States Citizenship & Immigration Services) to demonstrate your identity and eligibility to work in the United States. Please call if you have any questions about what documents are acceptable to the USCIS.
As a condition of your employment, you are also required to sign and return to us - before your first day of employment - and to comply with the terms of the Employee Confidentiality, Assignment of Inventions and Non-Competition Agreement (“Agreement”). That Agreement requires, among other provisions, your assignment of rights to any invention made during your employment at the Company, non-disclosure of Company proprietary information, and a restriction on certain aspects of your conduct during the one year following termination of your employment.
We also require that, if you have not already done so, you disclose to the Company any and all agreements relating to your prior employment that may affect your eligibility to be employed by the Company or limit the manner in which you may be employed. As more fully described in the Agreement, we understand that any such agreements will not prevent you from performing the duties of your position and you represent that such is the case. Similarly, you agree not to bring any third-party confidential information to the Company, including that of your former employer, and that in performing your duties for the Company you will not in any way utilize any such information
Finally, although Bright Health strives to maintain long-term successful relationships with its employees, this offer of employment is not for a definite period of time and will be at-will employment. You will be free to resign at any time, for any reason or for no reason. Similarly, the Company will be free to conclude its employment relationship with you at any time, with or without cause or notice, for any lawful reason. Your at-will employment status may not be modified other than in writing and signed by an authorized officer of the Company.
CONCLUSION
This letter and the enclosed Agreement set forth the initial terms of your employment with the Company, and supersede any prior representations or agreements including, but not limited to, any representations made during your recruitment, interviews or pre-employment negotiations, whether written or oral. This letter, the enclosed Agreement, and your employment will be governed by the laws of Minnesota.
To accept the Company’s offer, please sign and date this letter in the space provided below. We look forward to your favorable reply and to working with you at Bright Health.
Very truly yours,
/s/ Cathy Smith | |
Cathy Smith |
Chief Financial and Administrative Officer
Enclosures:
Employee Confidentiality, Assignment of Inventions and Non-Competition Agreement
ACKNOWLEDGEMENT AND ACCEPTANCE
By signing below, I accept the offer to join Bright Health and the mission to Make Healthcare Right. Together!
I acknowledge that I have read, understand, and agree to the above offer of employment letter, and the enclosed Employee Confidentiality and Assignment of Inventions Agreement, successful completion of background check and references.
Name: Keith Nelson
Signature: | /s/ Keith Nelson |
3/28/2020
Exhibit 10.16
September 11, 2019
Simeon Schindelman
45
E. 22nd Street, Apt. 23A
New York, NY 10010
Dear Simeon,
Welcome and congratulations!
We are so excited to offer you the opportunity to join our team and help us advance our mission! This offer is an expression of our confidence in you, which is manifested in your attitude, potential, and demonstrated experience. We look forward to a satisfying employment relationship and mutual commitment to living our values and delivering on better healthcare for our members.
This letter contains the details of your employment, including salary and benefits, along with some legalese to make sure that we are in agreement. Please don’t hesitate to follow up with any questions. We look forward to your response and the opportunity to Make Healthcare Right. Together.
SUMMARY OFFER (details below)
In the role of Chief Executive Officer Bright Health Plan, you will be expected to fulfill the duties and responsibilities listed in your job description. We will make sure to keep it updated and on file, working with you and your manager to ensure it reflects your role.
Position – Chief Executive Officer Bright Health Plan
Manager – Bob Sheehy and Mike Mikan
Annual Salary – $300,000
Location – New York, NY
Bonus Target - 50% of base salary, as described more fully below
Option Grant: 550,000 shares
Vesting Schedule - 1-year cliff from start date and then 1/48 monthly for remaining
Start Date – September 16, 2019
Employee Benefits - Full Participation
Classification - Exempt
INITIAL COMPENSATION
If you accept this offer, you will receive $300,000 on an annualized basis. Your salary will be paid in accordance with the Company’s normal payroll procedures.
You will be eligible to receive an annual (calendar year) incentive bonus of up to 50% of your base salary based on evaluation of your achievement of certain corporate and individual performance goals. To be eligible for a bonus, you must be employed prior to September 1st of the bonus calendar year and also be employed on the date that the bonus is paid. Given the nature of your role and the importance of your 2019 contributions, you will eligible for a discretionary bonus at the recommendation of the Office of the CEO for calendar year 2019 based on all compensation paid to you during 2019 whether as a consultant or an employee.
Effective January 1, 2020, your salary will be increased to $400,000 on an annualized basis and your annual (calendar year) target incentive bonus will be set at 60% of your base salary.
BENEFITS
As a fulltime employee of Bright Health, you are eligible to participate in our company-sponsored benefit plans. We offer the following coverages, some paid in part by Bright Health: medical, dental, vision, flexible spending account, commuter and life & disability. In addition, employees may enroll in our 401k plan following 90 days of employment. Our plan offers a 3% safe harbor contribution. The Company may change these benefits from time to time. You are entitled to paid time off “PTO” according to our current Company policies and subject to the approval of your immediate supervisor. Additionally, as travel is a significant component of your role, the Company will permit you to use your discretion to purchase first class airfare when you deem it appropriate and to make travel arrangements directly.
STOCK OPTIONS
As part of your offer, we are providing you with an opportunity to own equity in Bright Health and participate in the growth of the Company. This comes in the form of Stock Options to purchase the Company’s Common Stock. We will recommend that our Board of Directors grant to you a stock option of 550,000 shares. These will be available to you at an exercise price equal to fair market value per share, as determined by the Board of Directors at the time of your grant.
These options will vest over 4 years, and vesting will begin after 12 months of employment (your cliff date). After you vest in shares, you will have earned the right to buy the number of shares that have vested. You will vest 25% of your options on your cliff date. After that, you’ll vest at the rate of 1/48 of the total grant every month thereafter.
The option will be subject to the terms and conditions of the Company’s 2016 Stock Incentive Plan and Standard Stock Option Agreement.
EMPLOYMENT RELATIONSHIP
This offer of employment is contingent upon successful completion of your background and reference checks and your ability to provide us with documents deemed acceptable by the USCIS (United States Citizenship & Immigration Services) to demonstrate your identity and eligibility to work in the United States. Please call if you have any questions about what documents are acceptable to the USCIS.
As a condition of your employment, you are also required to sign and return to us - before your first day of employment - and to comply with the terms of the Employee Confidentiality, Assignment of Inventions and Non- Competition Agreement (“Agreement”). That Agreement requires, among other provisions, your assignment of rights to any invention made during your employment at the Company, non-disclosure of Company proprietary information, and a restriction on certain aspects of your conduct during the one year following termination of your employment.
We also require that, if you have not already done so, you disclose to the Company any and all agreements relating to your prior employment that may affect your eligibility to be employed by the Company or limit the manner in which you may be employed. As more fully described in the Agreement, we understand that any such agreements will not prevent you from performing the duties of your position and you represent that such is the case. Similarly, you agree not to bring any third-party confidential information to the Company, including that of your former employer, and that in performing your duties for the Company you will not in any way utilize any such information. We recognize that you have some continuing obligations to Brighton Health Plan Services Holdings Corp. and Brighton Health Group Holdings, LLC (“Brighton Health”). The Company agrees to indemnify and hold you harmless in any action taken by Brighton Health related to your post-employment obligations, exclusive of any reimbursement for any payment obligations of Bright Health to you that Brighton Health may choose not to pay to you. With respect to such payment obligations, the Company acknowledges the receipt of such payments are pre-existing the terms of your employment with the Company and thus do not cause you to derive an improper personal benefit at the expense of the Company.
Finally, although Bright Health strives to maintain long-term successful relationships with its employees, this offer of employment is not for a definite period of time and will be at-will employment. You will be free to resign at any time, for any reason or for no reason. Similarly, the Company will be free to conclude its employment relationship with you at any time, with or without cause or notice, for any lawful reason. Your at-will employment status may not be modified other than in writing and signed by an authorized officer of the Company.
CONCLUSION
This letter and the enclosed Agreement set forth the initial terms of your employment with the Company, and supersede any prior representations or agreements including, but not limited to, any representations made during your recruitment, interviews or pre-employment negotiations, whether written or oral. This letter, the enclosed Agreement, and your employment will be governed by the laws of Minnesota.
To accept the Company’s offer, please sign and date this letter in the space provided below. We look forward to your favorable reply and to working with you at Bright Health.
Very truly yours,
Bob Sheehy and Mike Mikan
Office of the CEO
Enclosures:
Employee Confidentiality, Assignment of Inventions and Non-Competition Agreement
ACKNOWLEDGEMENT AND ACCEPTANCE
By signing below, I accept the offer to join Bright Health and the mission to Make Healthcare Right. Together!
I acknowledge that I have read, understand, and agree to the above offer of employment letter, and the enclosed Employee Confidentiality, Assignment of Inventions Agreement, Non-competition Agreement and successful completion of background check and references.
Name: Simeon Schindelman |
Signature: | /s/ Simeon Schindelman |
Date: | September 12, 2019 |
Exhibit 10.17
September 20, 2019
Sam Srivastava
210 Silver Spring Road
Wilton, CT 06897
Dear Sam,
Welcome and congratulations!
We are so excited to offer you the opportunity to join our team and help us advance our mission! This offer is an expression of our confidence in you, which is manifested in your attitude, potential, and demonstrated experience. We look forward to a satisfying employment relationship and mutual commitment to living our values and delivering on better healthcare for our members.
This letter contains the details of your employment, including salary and benefits, along with some legalese to make sure that we are in agreement. Please don’t hesitate to follow up with any questions. We look forward to your response and the opportunity to Make Healthcare Right. Together.
SUMMARY OFFER (details below)
In the role of Chief Operating Officer, you will be expected to fulfill the duties and responsibilities listed in your job description. We will make sure to keep it updated and on file, working with you and your manager to ensure it reflects your role.
Position – Chief Operating Officer
Manager – Bob Sheehy and Mike Mikan
Annual Salary – $300,000
Location – New York, NY
Bonus Target - 50% of base salary
Option Grant: 500,000 shares
Vesting Schedule - 1-year cliff from start date and then 1/48 monthly for remaining
Start Date – September 16, 2019
Employee Benefits - Full Participation
Classification - Exempt
INITIAL COMPENSATION
If you accept this offer, you will receive $300,000 on an annualized basis. Your salary will be paid in accordance with the Company’s normal payroll procedures.
You will be eligible to receive an annual (calendar year) incentive bonus of up to 50% of your base salary based on evaluation of your achievement of certain corporate and individual performance goals. To be eligible for a bonus, you must be employed prior to September 1st of the bonus calendar year and also be employed on the date that the bonus is paid. Given the nature of your role and the importance of your 2019 contributions, you will eligible for a discretionary bonus at the recommendation of the Office of the CEO for calendar year 2019.
BENEFITS
As a fulltime employee of Bright Health, you are eligible to participate in our company-sponsored benefit plans. We offer the following coverages, some paid in part by Bright Health: medical, dental, vision, flexible spending account, commuter and life & disability. In addition, employees may enroll in our 401k plan following 90 days of employment. Our plan offers a 3% safe harbor contribution. The Company may change these benefits from time to time. You are entitled to paid time off “PTO” according to our current Company policies and subject to the approval of your immediate supervisor.
STOCK OPTIONS
As part of your offer, we are providing you with an opportunity to own equity in Bright Health and participate in the growth of the Company. This comes in the form of Stock Options to purchase the Company’s Common Stock. We will recommend that our Board of Directors grant to you a stock option of 500,000 shares. These will be available to you at an exercise price equal to fair market value per share, as determined by the Board of Directors at the time of your grant.
These options will vest over 4 years, and vesting will begin after 12 months of employment (your cliff date). After you vest in shares, you will have earned the right to buy the number of shares that have vested. You will vest 25% of your options on your cliff date. After that, you’ll vest at the rate of 1/48 of the total grant every month thereafter.
The option will be subject to the terms and conditions of the Company’s 2016 Stock Incentive Plan and Standard Stock Option Agreement.
EMPLOYMENT RELATIONSHIP
This offer of employment is contingent upon successful completion of your background and reference checks and your ability to provide us with documents deemed acceptable by the USCIS (United States Citizenship & Immigration Services) to demonstrate your identity and eligibility to work in the United States. Please call if you have any questions about what documents are acceptable to the USCIS.
As a condition of your employment, you are also required to sign and return to us - before your first day of employment - and to comply with the terms of the Employee Confidentiality, Assignment of Inventions and Non-Competition Agreement (“Agreement”). That Agreement requires, among other provisions, your assignment of rights to any invention made during your employment at the Company, non-disclosure of Company proprietary information, and a restriction on certain aspects of your conduct during the one year following termination of your employment, including severance payments during that one year as set forth in the Agreement.
We also require that, if you have not already done so, you disclose to the Company any and all agreements relating to your prior employment that may affect your eligibility to be employed by the Company or limit the manner in which you may be employed. As more fully described in the Agreement, we understand that any such agreements will not prevent you from performing the duties of your position and you represent that such is the case. Similarly, you agree not to bring any third-party confidential information to the Company, including that of your former employer, and that in performing your duties for the Company you will not in any way utilize any such information
Finally, although Bright Health strives to maintain long-term successful relationships with its employees, this offer of employment is not for a definite period of time and will be at-will employment. You will be free to resign at any time, for any reason or for no reason. Similarly, the Company will be free to conclude its employment relationship with you at any time, with or without cause or notice, for any lawful reason. Your at-will employment status may not be modified other than in writing and signed by an authorized officer of the Company.
CONCLUSION
This letter and the enclosed Agreement set forth the initial terms of your employment with the Company, and supersede any prior representations or agreements including, but not limited to, any representations made during your recruitment, interviews or pre-employment negotiations, whether written or oral. This letter, the enclosed Agreement, and your employment will be governed by the laws of Minnesota.
To accept the Company’s offer, please sign and date this letter in the space provided below. We look forward to your favorable reply and to working with you at Bright Health.
Very truly yours,
Bob Sheehy and Mike Mikan
Office of the CEO
Enclosures:
Employee Confidentiality, Assignment of Inventions and Non-Competition Agreement
ACKNOWLEDGEMENT AND ACCEPTANCE
By signing below, I accept the offer to join Bright Health and the mission to Make Healthcare Right. Together!
I acknowledge that I have read, understand, and agree to the above offer of employment letter, and the enclosed Employee Confidentiality, Assignment of Inventions Agreement, Non-competition Agreement and successful completion of background check and references.
Name: Sam Srivastava |
Signature: | /s/ Sam Srivastava |
Date: | 9/20/19 |
Exhibit 10.18
EMPLOYEE
CONFIDENTIALITY
AND ASSIGNMENT OF INVENTIONS
AGREEMENT
THIS AGREEMENT, effective as of Jan 7, 2020 , is between Bright Health Management, Inc. (together with any of its direct or indirect parent or subsidiary entities, the “Company”) and (Please Print your name) Cathy R Smith (the “Employee”), an employee of Bright Health Management, Inc.
A. The Company is in the business of developing and commercializing health insurance products and services.
B. The Company has expended considerable time, effort and resources in the development of its trade secrets and certain confidential information, which must be maintained as confidential in order to ensure the success of the Company’s business.
C. The Company has expended considerable funds, time, effort and resources in the recruiting and training its highly trained workforce, which must also be maintained in order to ensure the success of the Company’s business.
D. By virtue of the Employee’s employment with the Company, the Employee will be entrusted by the Company with its valuable assets, will be performing services in a confidential capacity and will be acquiring knowledge about the Company’s valuable trade secrets and confidential information.
E. The Company desires reasonable protection of its confidential business and technical information, its trade secrets, and its highly trained workforce and Employee recognizes the importance of protecting these Company assets.
F. The Company requires the Employee to agree and the Employee hereby does agree, in exchange for the promise of at-will employment with the Company, to reasonable restrictions on the Employee’s activities during and for a reasonable period of time after the Employee’s termination of employment, for the purpose of ensuring the preservation and protection of the Company’s assets, including its intellectual property, proprietary information, trade secrets, physical assets, and its highly trained workforce.
The Company and the Employee, each intending to be legally bound, agree as follows:
1. Confidential Information.
(a) “Confidential Information,” as used in this Section 1, means information that is not generally known and that is proprietary to the Company or that the Company is obligated to treat as proprietary, including, but not limited to Protected Health Information (“PHI”) as defined by the Health Insurance Portability and Accountability Act (HIPAA). Any information that the Employee reasonably considers Confidential Information, or that the Company treats as Confidential Information, will be presumed to be Confidential Information (whether the Employee or others originated it and regardless of how the Employee obtained it). Except as specifically authorized by an authorized officer of the Company or by written Company policies, the Employee will not, either during or after the term of this Agreement, use or disclose Confidential Information to any person who is not an employee of the Company, except as is necessary to perform his or her duties under this Agreement and consistent with the obligations of the Company under HIPAA. The Employee agrees that all Confidential Information will remain the sole property of the Company. The Employee also agrees to take all reasonable precautions to prevent any unauthorized disclosure of such Confidential Information.
(b) Former Employer Confidential Information. The Employee agrees that the Employee will not, during the term of this Agreement, improperly use or disclose any proprietary information or trade secrets of any former employer of the Employee or other person or entity with which the Employee has an agreement or duty to keep in confidence information acquired by the Employee, if any. The Employee also agrees that the Employee will not bring onto the Company’s premises any unpublished document or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.
(c) Third Party Confidential Information. The Employee recognizes that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. The Employee agrees that, during the term of this Agreement and thereafter, the Employee owes the Company and such third parties a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person or entity or to use it except as necessary in carrying out the services for the Company consistent with the Company’s agreement with such third party.
(d) Return of Materials. Upon termination of this Agreement, the Employee will promptly deliver to the Company all records and any compositions, articles, devices, apparatus and other items that disclose, describe or embody Confidential Information or any Invention.
(e) Acknowledgement. By signing below, the Employee acknowledges that the Employee understands the obligation of the Employee to preserve the confidentiality of all Confidential Information, including treating PHI as required by HIPAA.
2. Inventions.
(a) “Inventions,” as used in this Section 2, means any inventions, discoveries, improvements and ideas (whether or not they are in writing or reduced to practice) or works of authorship (whether or not they can be patented or copyrighted) that the Employee makes, authors, or conceives (either alone or with others) and that both: (a) result from any work the Employee performs for the Company; and (b) relate in any way to the Company’s businesses, products or services, past, present, anticipated or under development.
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(b) Ownership of Inventions. The Employee agrees that all Inventions made by the Employee during or within six months after the term of this Agreement will be the Company’s sole and exclusive property. The Employee will assign (and the Employee hereby assigns) to the Company all of the Employee’s rights to the Invention, any applications the Employee makes for patents or copyrights in any country, and any patents or copyrights granted to the Employee in any country. The Employee represents that, except as previously disclosed to the Company in writing, as of the date of this Agreement, the Employee does not have any rights under, and will not make any claim against the Company with respect to, any inventions, discoveries, improvements, ideas or works of authorship which would be Inventions if made, conceived, authored or acquired by the Employee during the term of this Agreement.
(c) Notice to Employee. The requirements of Section 2(b) do not apply to any Invention (i) for which no equipment, supplies, facility or trade secret information of the Company was used, (ii) which was developed entirely on the Employee’s own time, (iii) which does not relate directly to the Company’s businesses or to the Company’s actual or demonstrably anticipated research or development, and (ii) which does not result from any work the Employee performed for the Company.
(d) Works Made for Hire. To the extent that any Invention qualifies as “work made for hire” as defined in 17 U.S.C. § 101 (1976), as amended, such Invention will constitute “work made for hire” and, as such, will be the exclusive property of the Company.
3. Miscellaneous.
(a) Survival. The obligations of Sections 1 and 2 will survive the expiration or termination of this Agreement.
(b) Exit Interview. Upon termination of employment with the Company, the Employee agrees to participate in an exit interview with representatives of the Company to discuss the Employee’s continuing obligations under this Agreement.
(c) Employment At-Will. Nothing in this Agreement is intended to establish any minimum period of the Employee’s continuing employment, and such employment continues to be on an “at-will” basis. The Employee acknowledges that his or her employment with the Company is terminable at will at any time by either party for any reason not prohibited by law.
(d) No Adequate Remedy. The Employee understands that if the Employee fails to fulfill the Employee’s obligations under Sections 1 or 2 of this Agreement the damages to the Company would be very difficult to determine. Therefore, in addition to any other rights or remedies available to the Company at law, in equity, or by statute, the Employee hereby consents to the specific enforcement of Sections 1 and 2 of this Agreement by the Company through an injunction or restraining order issued by an appropriate court, without the requirement of posting a bond in connection therewith.
(e) Successors and Assigns. This Agreement is binding on and inures to the benefit of the Company’s successors and assigns, (all of which are included in the term the “Company” as it is used in this Agreement); provided, however, that the Company may assign this Agreement only (i) to its affiliates or (ii) in connection with a merger, consolidation, assignment, sale or other disposition of substantially all of its assets, stock or business.
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(f) Modification. This Agreement may be modified or amended only by a written statement signed by both the Company and the Employee.
(g) Governing Law. This Agreement and the legal relations among the parties as to all matters, including, without limitation, matters of validity, interpretation, construction, performance and remedies, will be governed by and construed exclusively in accordance with the internal laws of the State of Minnesota (without regard to the conflict of laws principles of any jurisdiction). Any legal proceeding related to this Agreement will be brought in an appropriate Minnesota court, and both the Company and the Employee hereby consent to the exclusive jurisdiction of that court for this purpose.
(h) Construction. Wherever possible, each provision of this Agreement will be interpreted or construed (as applicable) so that it is valid under the applicable law. If any provision of this Agreement is to any extent invalid under the applicable law, that provision will still be effective to the extent it remains valid. The remainder of this Agreement also will continue to be valid, and the entire Agreement will continue to be valid in other jurisdictions.
(i) Waivers. No failure or delay by either the Company or the Employee in exercising any right or remedy under this Agreement will waive any provision of the Agreement. Nor will any single or partial exercise by either the Company or the Employee of any right or remedy under this Agreement preclude either of them from otherwise or further exercising these rights or remedies, or any other rights or remedies granted by any law or any related document.
(j) Captions. The headings in this Agreement are for convenience only and do not affect this Agreement’s interpretation.
(k) Entire Agreement. This Agreement supersedes all previous and contemporaneous oral negotiations, commitments, writings and understandings between the parties concerning the matters in this Agreement, including without limitation any policy or personnel manuals of the Company.
(l) Notices. All notices and other communications required or permitted under this Agreement will be in writing and will be (i) hand delivered or sent by registered or certified first class mail, postage prepaid, and will be effective upon delivery if hand delivered, or three (3) days after mailing if mailed to the address stated at the beginning of this Agreement or (ii) delivered electronically to the email addresses set forth on the signature pages hereto, and will be effective upon delivery. These addresses and email addresses may be changed at any time by like notice.
(m) Counterparts. This Agreement may be executed in several counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same instrument. Signature pages may be detached from the counterparts and attached to a single copy of this Agreement to physically form one document. Execution and delivery of this Agreement by facsimile and/or .pdf transmission by electronic mail will be legal, valid and binding execution and delivery for all purposes.
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IN WITNESS WHEREOF, the Company and the Employee have executed this Confidentiality and Assignment of Inventions Agreement as of the date first written above.
EMPLOYEE | BRIGHT HEALTH MANAGEMENT, INC. | ||
/s/ Cathy R Smith | |||
Cathy R Smith (Jan 7, 2020) | By: | /s/ Brian Beutner | |
Name: | Brian Beutner | ||
Title: | Corporate Secretary |
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Exhibit 10.19
EMPLOYEE
CONFIDENTIALITY, ASSIGNMENT OF INVENTIONS
AND NON-COMPETITION AGREEMENT
THIS AGREEMENT, effective as of 05/04/20, is between Bright Health Management, Inc. (together with any of its direct or indirect parent or subsidiary entities, the “Company”) and (Please Print your name) Keith Nelsen (the “Employee”), an employee of Bright Health Management, Inc.
A. The Company is in the business of developing and commercializing health insurance products and services.
B. The Company has expended considerable time, effort and resources in the development of its trade secrets and certain confidential information, which must be maintained as confidential in order to ensure the success of the Company’s business.
C. The Company has expended considerable funds, time, effort and resources in the recruiting and training its highly trained workforce, which must also be maintained in order to ensure the success of the Company’s business.
D. By virtue of the Employee’s employment with the Company, the Employee will be entrusted by the Company with its valuable assets, will be performing services in a confidential capacity and will be acquiring knowledge about the Company’s valuable trade secrets and confidential information.
E. The Company desires reasonable protection of its confidential business and technical information, its trade secrets, and its highly trained workforce and Employee recognizes the importance of protecting these Company assets.
F. The Company requires the Employee to agree and the Employee hereby does agree, in exchange for the promise of at-will employment with the Company, to reasonable restrictions on the Employee’s activities during and for a reasonable period of time after the Employee’s termination of employment, for the purpose of ensuring the preservation and protection of the Company’s assets, including its intellectual property, proprietary information, trade secrets, physical assets, and its highly trained workforce.
The Company and the Employee, each intending to be legally bound, agree as follows:
1. Confidential Information.
(a) “Confidential Information,” as used in this Section 1, means information that is not generally known and that is proprietary to the Company or that the Company is obligated to treat as proprietary, including, but not limited to Protected Health Information (“PHI”) as defined by the Health Insurance Portability and Accountability Act (HIPAA). Any information that the Employee reasonably considers Confidential Information, or that the Company treats as Confidential Information, will be presumed to be Confidential Information (whether the Employee or others originated it and regardless of how the Employee obtained it). Except as specifically authorized by an authorized officer of the Company or by written Company policies, the Employee will not, either during or after the term of this Agreement, use or disclose Confidential Information to any person who is not an employee of the Company, except as is necessary to perform his or her duties under this Agreement and consistent with the obligations of the Company under HIPAA. The Employee agrees that all Confidential Information will remain the sole property of the Company. The Employee also agrees to take all reasonable precautions to prevent any unauthorized disclosure of such Confidential Information.
(b) Former Employer Confidential Information. The Employee agrees that the Employee will not, during the term of this Agreement, improperly use or disclose any proprietary information or trade secrets of any former employer of the Employee or other person or entity with which the Employee has an agreement or duty to keep in confidence information acquired by the Employee, if any. The Employee also agrees that the Employee will not bring onto the Company’s premises any unpublished document or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.
(c) Third Party Confidential Information. The Employee recognizes that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. The Employee agrees that, during the term of this Agreement and thereafter, the Employee owes the Company and such third parties a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person or entity or to use it except as necessary in carrying out the services for the Company consistent with the Company’s agreement with such third party.
(d) Return of Materials. Upon termination of this Agreement, the Employee will promptly deliver to the Company all records and any compositions, articles, devices, apparatus and other items that disclose, describe or embody Confidential Information or any Invention.
(e) Acknowledgement. By signing below, the Employee acknowledges that the Employee understands the obligation of the Employee to preserve the confidentiality of all Confidential Information, including treating PHI as required by HIPAA.
2. | Inventions. |
(a) “Inventions,” as used in this Section 2, means any inventions, discoveries, improvements and ideas (whether or not they are in writing or reduced to practice) or works of authorship (whether or not they can be patented or copyrighted) that the Employee makes, authors, or conceives (either alone or with others) and that both: (a) result from any work the Employee performs for the Company; and (b) relate in any way to the Company’s businesses, products or services, past, present, anticipated or under development.
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(b) Ownership of Inventions. The Employee agrees that all Inventions made by the Employee during or within six months after the term of this Agreement will be the Company’s sole and exclusive property. The Employee will assign (and the Employee hereby assigns) to the Company all of the Employee’s rights to the Invention, any applications the Employee makes for patents or copyrights in any country, and any patents or copyrights granted to the Employee in any country. The Employee represents that, except as previously disclosed to the Company in writing, as of the date of this Agreement, the Employee does not have any rights under, and will not make any claim against the Company with respect to, any inventions, discoveries, improvements, ideas or works of authorship which would be Inventions if made, conceived, authored or acquired by the Employee during the term of this Agreement.
(c) Notice to Employee. The requirements of Section 2(b) do not apply to any Invention (i) for which no equipment, supplies, facility or trade secret information of the Company was used, (ii) which was developed entirely on the Employee’s own time, (iii) which does not relate directly to the Company’s businesses or to the Company’s actual or demonstrably anticipated research or development, and (ii) which does not result from any work the Employee performed for the Company.
(d) Works Made for Hire. To the extent that any Invention qualifies as “work made for hire” as defined in 17 U.S.C. § 101 (1976), as amended, such Invention will constitute “work made for hire” and, as such, will be the exclusive property of the Company.
3. Competitive Activities.
(a) Non-Compete. The Employee agrees that, during the term of employment with the Company and for a period of one (1) year after employment with the Company ends, the Employee will not alone, or in any capacity with another firm:
(i) | directly or indirectly render services to, invest in or lend to any person, firm or corporation conducting business in North America in connection with the research, development, manufacture, marketing, sale or promotion of any products or services that are competitive with any products or services of the Company of which the Employee has direct knowledge or responsibilities (whether commercially available or under development); |
(ii) | (A) disrupt, damage, impair, or interfere with the business of the Company whether by way of interfering with or disrupting the relationship of the Company with its clients, customers, representatives, vendors or suppliers or (B) directly or indirectly call upon or solicit any customer or supplier of the Company or induce, encourage or influence any customer or supplier to terminate or otherwise modify adversely to the Company its business relationship with the Company other than as undertaken in the course of the Employee’s employment with the Company consistent with the terms of this Agreement; or |
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(iii) | employ, contract, affiliate, or create any relationship with (by soliciting or assisting anyone else in the solicitation of) any of the Company’s current employees or any other person who had been employed by the Company within the twelve (12) months prior to the Employee’s departure from the Company, on behalf of the Employee or any other entity, whether or not such entity competes with the Company. |
(b) Exceptions to Non-Compete. The restrictions contained in Section 3(a) of this Agreement will not prevent the Employee from accepting employment with a large diversified organization with separate and distinct divisions that do not compete, directly or indirectly, with the Company, as long as prior to accepting such employment the Company receives a written assurance from the Employee, satisfactory to the Company, to the effect that the Employee will not render any services to, or have any ability to provide strategic direction or oversight to, any division or business unit that competes, directly or indirectly, with the Company. During the restrictive period set forth in Section 3(a), the Employee will inform any new employer, prior to accepting employment, of the existence of this Agreement and provide such employer with a copy of this Agreement.
(c) Cessation of Business. Section 3(a) of this Agreement will cease to be applicable to any activity of the Employee from and after such time as the Company (i) has ceased all business activities for a period of six (6) months or (ii) has made a decision through its Board not to continue, or has ceased for a period of six (6) months, the business activities with which such activity of the Employee would be competitive.
(d) Additional Compensation. Should Employee be terminated other than for Cause:
(i) | The provisions of Section 3(a) shall be contingent upon the Company’s continuation of payment, following termination, of the Employee’s then annual salary paid for the first six (6) months of the one (1) year period specified in Section 3(a) (the “Additional Compensation”) and compliance with Sections 3(d)(ii) – (iv) below. |
(ii) | As a condition to Employee receiving the Additional Compensation, Employee shall execute, deliver to the Company, and not rescind a general release (the “Release”) in form and substance reasonably satisfactory to the Company releasing the Company and its officers, directors, employees and agents from all liabilities, claims and obligations of any nature whatsoever, excepting only the Company’s obligations under this Agreement and under any other employee benefit plans or programs in which Employee participates, subject to all terms and conditions of such plans or programs and this Agreement. Employee must execute and return the Release on or before the date specified by the Company in the prescribed form (the “Release Deadline”). If Employee fails to return the release on or before the Release Deadline, or if Employee revokes the release, then Employee will not be entitled to the benefits described in Section 3(d). |
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(iii) | For purposes hereof, the term “Cause” means (i) Employee’s conviction of or plea of guilty to any gross misdemeanor involving dishonesty, fraud or breach of trust, or a felony; (ii) Employee’s engagement in illegal or gross misconduct that materially injures the Company, monetarily or otherwise; or (iii) Employee’s gross neglect of his or her duties after written notice of such neglect and failure to cure within thirty (30) days of such written notice. |
(iv) | Subject to the terms and conditions of this Agreement, commencing within thirty (30) days after the Release the Company shall pay the Additional Compensation to Employee. Such payment shall be in accordance with the Company’s then existing human resources policies, and shall be reduced by all FICA and income taxes and other amounts required by law to be withheld. This Section 3(d) shall be the sole liability of the Company to the Employee upon the termination of Employee’s employment with the Company, and shall replace and be in lieu of any payments or benefits which otherwise might be owed the Employee under any other severance plan or program maintained by the Company. |
(e) Other Agreements. The Employee represents and warrants to the Company that he is not currently subject to a non-competition, confidentiality or other such agreement with a former employer that prohibits the Employee from working for the Company.
4. | Miscellaneous. |
(a) Survival. The obligations of Sections 1, 2 and 3 will survive the expiration or termination of this Agreement.
(b) Exit Interview. Upon termination of employment with the Company, the Employee agrees to participate in an exit interview with representatives of the Company to discuss the Employee’s continuing obligations under this Agreement.
(c) Employment At-Will. Nothing in this Agreement is intended to establish any minimum period of the Employee’s continuing employment, and such employment continues to be on an “at-will” basis. The Employee acknowledges that his or her employment with the Company is terminable at will at any time by either party for any reason not prohibited by law.
(d) No Adequate Remedy. The Employee understands that if the Employee fails to fulfill the Employee’s obligations under Sections 1, 2 or 3 of this Agreement the damages to the Company would be very difficult to determine. Therefore, in addition to any other rights or remedies available to the Company at law, in equity, or by statute, the Employee hereby consents to the specific enforcement of Sections 1, 2 and 3 of this Agreement by the Company through an injunction or restraining order issued by an appropriate court, without the requirement of posting a bond in connection therewith.
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(e) Successors and Assigns. This Agreement is binding on and inures to the benefit of the Company’s successors and assigns, (all of which are included in the term the “Company” as it is used in this Agreement); provided, however, that the Company may assign this Agreement only (i) to its affiliates or (ii) in connection with a merger, consolidation, assignment, sale or other disposition of substantially all of its assets, stock or business.
(f) Modification. This Agreement may be modified or amended only by a written statement signed by both the Company and the Employee.
(g) Governing Law. This Agreement and the legal relations among the parties as to all matters, including, without limitation, matters of validity, interpretation, construction, performance and remedies, will be governed by and construed exclusively in accordance with the internal laws of the State of Minnesota (without regard to the conflict of laws principles of any jurisdiction). Any legal proceeding related to this Agreement will be brought in an appropriate Minnesota court, and both the Company and the Employee hereby consent to the exclusive jurisdiction of that court for this purpose.
(h) Construction. Wherever possible, each provision of this Agreement will be interpreted or construed (as applicable) so that it is valid under the applicable law. If any provision of this Agreement is to any extent invalid under the applicable law, that provision will still be effective to the extent it remains valid. The remainder of this Agreement also will continue to be valid, and the entire Agreement will continue to be valid in other jurisdictions.
(i) Waivers. No failure or delay by either the Company or the Employee in exercising any right or remedy under this Agreement will waive any provision of the Agreement. Nor will any single or partial exercise by either the Company or the Employee of any right or remedy under this Agreement preclude either of them from otherwise or further exercising these rights or remedies, or any other rights or remedies granted by any law or any related document.
(j) Captions. The headings in this Agreement are for convenience only and do not affect this Agreement’s interpretation.
(k) Entire Agreement. This Agreement supersedes all previous and contemporaneous oral negotiations, commitments, writings and understandings between the parties concerning the matters in this Agreement, including without limitation any policy or personnel manuals of the Company.
(l) Notices. All notices and other communications required or permitted under this Agreement will be in writing and will be (i) hand delivered or sent by registered or certified first class mail, postage prepaid, and will be effective upon delivery if hand delivered, or three (3) days after mailing if mailed to the address stated at the beginning of this Agreement or (ii) delivered electronically to the email addresses set forth on the signature pages hereto, and will be effective upon delivery. These addresses and email addresses may be changed at any time by like notice.
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(m) Counterparts. This Agreement may be executed in several counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same instrument. Signature pages may be detached from the counterparts and attached to a single copy of this Agreement to physically form one document. Execution and delivery of this Agreement by facsimile and/or .pdf transmission by electronic mail will be legal, valid and binding execution and delivery for all purposes.
IN WITNESS WHEREOF, the Company and the Employee have executed this Confidentiality and Assignment of Inventions Agreement as of the date first written above.
EMPLOYEE | BRIGHT HEALTH MANAGEMENT, INC. | ||
/s/ Keith Nelsen | By: | /s/ CR Smith | |
Name: | CR Smith | ||
Title: | CFO/CAO |
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Exhibit 10.20
EMPLOYEE
CONFIDENTIALITY, ASSIGNMENT OF INVENTIONS
AND NON-COMPETITION AGREEMENT
THIS AGREEMENT, effective as of September 11, 2019, is between Bright Health Management, Inc. (together with any of its direct or indirect parent or subsidiary entities, the “Company”) and (Please Print your name) Simeon Schindelman (the “Employee”), an employee of Bright Health Management, Inc.
A. The Company is in the business of developing and commercializing health insurance products and services.
B. The Company has expended considerable time, effort and resources in the development of its trade secrets and certain confidential information, which must be maintained as confidential in order to ensure the success of the Company’s business.
C. The Company has expended considerable funds, time, effort and resources in the recruiting and training its highly trained workforce, which must also be maintained in order to ensure the success of the Company’s business.
D. By virtue of the Employee’s employment with the Company, the Employee will be entrusted by the Company with its valuable assets, will be performing services in a confidential capacity and will be acquiring knowledge about the Company’s valuable trade secrets and confidential information.
E. The Company desires reasonable protection of its confidential business and technical information, its trade secrets, and its highly trained workforce and Employee recognizes the importance of protecting these Company assets.
F. The Company requires the Employee to agree and the Employee hereby does agree, in exchange for the promise of at-will employment with the Company, to reasonable restrictions on the Employee’s activities during and for a reasonable period of time after the Employee’s termination of employment, for the purpose of ensuring the preservation and protection of the Company’s assets, including its intellectual property, proprietary information, trade secrets, physical assets, and its highly trained workforce.
The Company and the Employee, each intending to be legally bound, agree as follows:
1. | Confidential Information. |
(a) “Confidential Information,” as used in this Section 1, means information that is not generally known and that is proprietary to the Company or that the Company is obligated to treat as proprietary, including, but not limited to Protected Health Information (“PHI”) as defined by the Health Insurance Portability and Accountability Act (HIPAA). Any information that the Employee reasonably considers Confidential Information, or that the Company treats as Confidential Information, will be presumed to be Confidential Information (whether the Employee or others originated it and regardless of how the Employee obtained it). Except as specifically authorized by an authorized officer of the Company or by written Company policies, the Employee will not, either during or after the term of this Agreement, use or disclose Confidential Information to any person who is not an employee of the Company, except as is necessary to perform his or her duties under this Agreement and consistent with the obligations of the Company under HIPAA. The Employee agrees that all Confidential Information will remain the sole property of the Company. The Employee also agrees to take all reasonable precautions to prevent any unauthorized disclosure of such Confidential Information.
Updated: 04/20/18
(b) Former Employer Confidential Information. The Employee agrees that the Employee will not, during the term of this Agreement, improperly use or disclose any proprietary information or trade secrets of any former employer of the Employee or other person or entity with which the Employee has an agreement or duty to keep in confidence information acquired by the Employee, if any. The Employee also agrees that the Employee will not bring onto the Company’s premises any unpublished document or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.
(c) Third Party Confidential Information. The Employee recognizes that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. The Employee agrees that, during the term of this Agreement and thereafter, the Employee owes the Company and such third parties a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person or entity or to use it except as necessary in carrying out the services for the Company consistent with the Company’s agreement with such third party.
(d) Return of Materials. Upon termination of this Agreement, the Employee will promptly deliver to the Company all records and any compositions, articles, devices, apparatus and other items that disclose, describe or embody Confidential Information or any Invention.
(e) Acknowledgement. By signing below, the Employee acknowledges that the Employee understands the obligation of the Employee to preserve the confidentiality of all Confidential Information, including treating PHI as required by HIPAA.
2. | Inventions. |
(a) “Inventions,” as used in this Section 2, means any inventions, discoveries, improvements and ideas (whether or not they are in writing or reduced to practice) or works of authorship (whether or not they can be patented or copyrighted) that the Employee makes, authors, or conceives (either alone or with others) and that both: (a) result from any work the Employee performs for the Company; and (b) relate in any way to the Company’s businesses, products or services, past, present, anticipated or under development.
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(b) Ownership of Inventions. The Employee agrees that all Inventions made by the Employee during or within six months after the term of this Agreement will be the Company’s sole and exclusive property. The Employee will assign (and the Employee hereby assigns) to the Company all of the Employee’s rights to the Invention, any applications the Employee makes for patents or copyrights in any country, and any patents or copyrights granted to the Employee in any country. The Employee represents that, except as previously disclosed to the Company in writing, as of the date of this Agreement, the Employee does not have any rights under, and will not make any claim against the Company with respect to, any inventions, discoveries, improvements, ideas or works of authorship which would be Inventions if made, conceived, authored or acquired by the Employee during the term of this Agreement.
(c) Notice to Employee. The requirements of Section 2(b) do not apply to any Invention (i) for which no equipment, supplies, facility or trade secret information of the Company was used, (ii) which was developed entirely on the Employee’s own time, (iii) which does not relate directly to the Company’s businesses or to the Company’s actual or demonstrably anticipated research or development, and (ii) which does not result from any work the Employee performed for the Company.
(d) Works Made for Hire. To the extent that any Invention qualifies as “work made for hire” as defined in 17 U.S.C. § 101 (1976), as amended, such Invention will constitute “work made for hire” and, as such, will be the exclusive property of the Company.
3. | Competitive Activities. |
(a) Non-Compete. The Employee agrees that, during the term of employment with the Company and for a period of one (1) year after employment with the Company ends, the Employee will not alone, or in any capacity with another firm:
(i) | directly or indirectly render services to, invest in or lend to any person, firm or corporation conducting business in North America in connection with the research, development, manufacture, marketing, sale or promotion of any products or services that are competitive with any products or services of the Company of which the Employee has direct knowledge or responsibilities (whether commercially available or under development); |
(ii) | (A) disrupt, damage, impair, or interfere with the business of the Company whether by way of interfering with or disrupting the relationship of the Company with its clients, customers, representatives, vendors or suppliers or (B) directly or indirectly call upon or solicit any customer or supplier of the Company or induce, encourage or influence any customer or supplier to terminate or otherwise modify adversely to the Company its business relationship with the Company other than as undertaken in the course of the Employee’s employment with the Company consistent with the terms of this Agreement; or |
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(iii) | employ, contract, affiliate, or create any relationship with (by soliciting or assisting anyone else in the solicitation of) any of the Company’s current employees or any other person who had been employed by the Company within the twelve (12) months prior to the Employee’s departure from the Company, on behalf of the Employee or any other entity, whether or not such entity competes with the Company. |
(b) Exceptions to Non-Compete. The restrictions contained in Section 3(a) of this Agreement will not prevent the Employee from accepting employment with a large diversified organization with separate and distinct divisions that do not compete, directly or indirectly, with the Company, as long as prior to accepting such employment the Company receives a written assurance from the Employee, satisfactory to the Company, to the effect that the Employee will not render any services to, or have any ability to provide strategic direction or oversight to, any division or business unit that competes, directly or indirectly, with the Company. During the restrictive period set forth in Section 3(a), the Employee will inform any new employer, prior to accepting employment, of the existence of this Agreement and provide such employer with a copy of this Agreement.
(c) Cessation of Business. Section 3(a) of this Agreement will cease to be applicable to any activity of the Employee from and after such time as the Company (i) has ceased all business activities for a period of six (6) months or (ii) has made a decision through its Board not to continue, or has ceased for a period of six (6) months, the business activities with which such activity of the Employee would be competitive.
(d) Additional Compensation. Should Employee be terminated other than for Cause:
(i) | The provisions of Section 3(a) shall be contingent upon the Company’s payment, following termination, of an amount equal to the Employee’s then annual salary plus the bonus paid Employee in the prior year, together, in equal installments over the first twelve (12) months of the one (1) year period specified in Section 3(a) (the “Additional Compensation”) and compliance with Sections 3(d)(ii) – (iv) below. |
(ii) | As a condition to Employee receiving the Additional Compensation, Employee shall execute, deliver to the Company, and not rescind a general release (the “Release”) in form and substance reasonably satisfactory to the Company releasing the Company and its officers, directors, employees and agents from all liabilities, claims and obligations of any nature whatsoever, excepting only the Company’s obligations under this Agreement and under any other employee benefit plans or programs in which Employee participates, subject to all terms and conditions of such plans or programs and this Agreement. Employee must execute and return the Release on or before the date specified by the Company in the prescribed form (the “Release Deadline”). If Employee fails to return the release on or before the Release Deadline, or if Employee revokes the release, then Employee will not be entitled to the benefits described in Section 3(d). |
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(iii) | For purposes hereof, the term “Cause” means (i) Employee’s conviction of or plea of guilty to any gross misdemeanor involving dishonesty, fraud or breach of trust, or a felony; (ii) Employee’s engagement in illegal or gross misconduct that materially injures the Company, monetarily or otherwise after written notice of such injury and failure to cure within thirty (30) days of such written notice; or (iii) Employee’s gross neglect of his or her duties after written notice of such neglect and failure to cure within thirty (30) days of such written notice. |
(iv) | Subject to the terms and conditions of this Agreement, commencing within thirty (30) days after the Release the Company shall pay the Additional Compensation to Employee. Such payment shall be in accordance with the Company’s then existing human resources policies, and shall be reduced by all FICA and income taxes and other amounts required by law to be withheld. This Section 3(d) shall be the sole liability of the Company to the Employee upon the termination of Employee’s employment with the Company, and shall replace and be in lieu of any payments or benefits which otherwise might be owed the Employee under any other severance plan or program maintained by the Company (other than benefits which may accrue to the Employee as a shareholder of the Company). |
(e) Other Agreements. The Employee represents and warrants to the Company that he is not currently subject to a non-competition, confidentiality or other such agreement with a former employer that prohibits the Employee from working for the Company.
4. | Miscellaneous. |
(a) Survival. The obligations of Sections 1, 2 and 3 will survive the expiration or termination of this Agreement.
(b) Exit Interview. Upon termination of employment with the Company, the Employee agrees to participate in an exit interview with representatives of the Company to discuss the Employee’s continuing obligations under this Agreement.
(c) Employment At-Will. Nothing in this Agreement is intended to establish any minimum period of the Employee’s continuing employment, and such employment continues to be on an “at-will” basis. The Employee acknowledges that his or her employment with the Company is terminable at will at any time by either party for any reason not prohibited by law.
(d) No Adequate Remedy. The Employee understands that if the Employee fails to fulfill the Employee’s obligations under Sections 1, 2 or 3 of this Agreement the damages to the Company would be very difficult to determine. Therefore, in addition to any other rights or remedies available to the Company at law, in equity, or by statute, the Employee hereby consents to the specific enforcement of Sections 1, 2 and 3 of this Agreement by the Company through an injunction or restraining order issued by an appropriate court, without the requirement of posting a bond in connection therewith.
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(e) Successors and Assigns. This Agreement is binding on and inures to the benefit of the Company’s successors and assigns, (all of which are included in the term the “Company” as it is used in this Agreement); provided, however, that the Company may assign this Agreement only (i) to its affiliates or (ii) in connection with a merger, consolidation, assignment, sale or other disposition of substantially all of its assets, stock or business.
(f) Modification. This Agreement may be modified or amended only by a written statement signed by both the Company and the Employee.
(g) Governing Law. This Agreement and the legal relations among the parties as to all matters, including, without limitation, matters of validity, interpretation, construction, performance and remedies, will be governed by and construed exclusively in accordance with the internal laws of the State of Minnesota (without regard to the conflict of laws principles of any jurisdiction). Any legal proceeding related to this Agreement will be brought in an appropriate Minnesota court, and both the Company and the Employee hereby consent to the exclusive jurisdiction of that court for this purpose.
(h) Construction. Wherever possible, each provision of this Agreement will be interpreted or construed (as applicable) so that it is valid under the applicable law. If any provision of this Agreement is to any extent invalid under the applicable law, that provision will still be effective to the extent it remains valid. The remainder of this Agreement also will continue to be valid, and the entire Agreement will continue to be valid in other jurisdictions.
(i) Waivers. No failure or delay by either the Company or the Employee in exercising any right or remedy under this Agreement will waive any provision of the Agreement. Nor will any single or partial exercise by either the Company or the Employee of any right or remedy under this Agreement preclude either of them from otherwise or further exercising these rights or remedies, or any other rights or remedies granted by any law or any related document.
(j) Captions. The headings in this Agreement are for convenience only and do not affect this Agreement’s interpretation.
(k) Entire Agreement. This Agreement supersedes all previous and contemporaneous oral negotiations, commitments, writings and understandings between the parties concerning the matters in this Agreement, including without limitation any policy or personnel manuals of the Company.
(l) Notices. All notices and other communications required or permitted under this Agreement will be in writing and will be (i) hand delivered or sent by registered or certified first class mail, postage prepaid, and will be effective upon delivery if hand delivered, or three (3) days after mailing if mailed to the address stated at the beginning of this Agreement or (ii) delivered electronically to the email addresses set forth on the signature pages hereto, and will be effective upon delivery. These addresses and email addresses may be changed at any time by like notice.
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(m) Counterparts. This Agreement may be executed in several counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same instrument. Signature pages may be detached from the counterparts and attached to a single copy of this Agreement to physically form one document. Execution and delivery of this Agreement by facsimile and/or .pdf transmission by electronic mail will be legal, valid and binding execution and delivery for all purposes.
IN WITNESS WHEREOF, the Company and the Employee have executed this Confidentiality and Assignment of Inventions Agreement as of the date first written above.
EMPLOYEE | BRIGHT HEALTH MANAGEMENT, INC. | ||
/s/ Simeon Schindelman | By: | /s/ Brian Beutner | |
Name: | Brian Beutner | ||
Title: | CORPORATE SECRETARY |
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Exhibit 10.21
EMPLOYEE
CONFIDENTIALITY, ASSIGNMENT OF INVENTIONS
AND NON-COMPETITION AGREEMENT
THIS AGREEMENT, effective as of September 20, 2019, is between Bright Health Management, Inc. (together with any of its direct or indirect parent or subsidiary entities, the “Company”) and (Please Print your name) Sam Srivastava (the “Employee”), an employee of Bright Health Management, Inc.
A. The Company is in the business of developing and commercializing health insurance products and services.
B. The Company has expended considerable time, effort and resources in the development of its trade secrets and certain confidential information, which must be maintained as confidential in order to ensure the success of the Company’s business.
C. The Company has expended considerable funds, time, effort and resources in the recruiting and training its highly trained workforce, which must also be maintained in order to ensure the success of the Company’s business.
D. By virtue of the Employee’s employment with the Company, the Employee will be entrusted by the Company with its valuable assets, will be performing services in a confidential capacity and will be acquiring knowledge about the Company’s valuable trade secrets and confidential information.
E. The Company desires reasonable protection of its confidential business and technical information, its trade secrets, and its highly trained workforce and Employee recognizes the importance of protecting these Company assets.
F. The Company requires the Employee to agree and the Employee hereby does agree, in exchange for the promise of at-will employment with the Company, to reasonable restrictions on the Employee’s activities during and for a reasonable period of time after the Employee’s termination of employment, for the purpose of ensuring the preservation and protection of the Company’s assets, including its intellectual property, proprietary information, trade secrets, physical assets, and its highly trained workforce.
The Company and the Employee, each intending to be legally bound, agree as follows:
1. | Confidential Information. |
(a) “Confidential Information,” as used in this Section 1, means information that is not generally known and that is proprietary to the Company or that the Company is obligated to treat as proprietary, including, but not limited to Protected Health Information (“PHI”) as defined by the Health Insurance Portability and Accountability Act (HIPAA). Any information that the Employee reasonably considers Confidential Information, or that the Company treats as Confidential Information, will be presumed to be Confidential Information (whether the Employee or others originated it and regardless of how the Employee obtained it). Except as specifically authorized by an authorized officer of the Company or by written Company policies, the Employee will not, either during or after the term of this Agreement, use or disclose Confidential Information to any person who is not an employee of the Company, except as is necessary to perform his or her duties under this Agreement and consistent with the obligations of the Company under HIPAA. The Employee agrees that all Confidential Information will remain the sole property of the Company. The Employee also agrees to take all reasonable precautions to prevent any unauthorized disclosure of such Confidential Information.
(b) Former Employer Confidential Information. The Employee agrees that the Employee will not, during the term of this Agreement, improperly use or disclose any proprietary information or trade secrets of any former employer of the Employee or other person or entity with which the Employee has an agreement or duty to keep in confidence information acquired by the Employee, if any. The Employee also agrees that the Employee will not bring onto the Company’s premises any unpublished document or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.
(c) Third Party Confidential Information. The Employee recognizes that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. The Employee agrees that, during the term of this Agreement and thereafter, the Employee owes the Company and such third parties a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person or entity or to use it except as necessary in carrying out the services for the Company consistent with the Company’s agreement with such third party.
(d) Return of Materials. Upon termination of this Agreement, the Employee will promptly deliver to the Company all records and any compositions, articles, devices, apparatus and other items that disclose, describe or embody Confidential Information or any Invention.
(e) Acknowledgement. By signing below, the Employee acknowledges that the Employee understands the obligation of the Employee to preserve the confidentiality of all Confidential Information, including treating PHI as required by HIPAA.
2. | Inventions. |
(a) “Inventions,” as used in this Section 2, means any inventions, discoveries, improvements and ideas (whether or not they are in writing or reduced to practice) or works of authorship (whether or not they can be patented or copyrighted) that the Employee makes, authors, or conceives (either alone or with others) and that both: (a) result from any work the Employee performs for the Company; and (b) relate in any way to the Company’s businesses, products or services, past, present, anticipated or under development.
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(b) Ownership of Inventions. The Employee agrees that all Inventions made by the Employee during or within six months after the term of this Agreement will be the Company’s sole and exclusive property. The Employee will assign (and the Employee hereby assigns) to the Company all of the Employee’s rights to the Invention, any applications the Employee makes for patents or copyrights in any country, and any patents or copyrights granted to the Employee in any country. The Employee represents that, except as previously disclosed to the Company in writing, as of the date of this Agreement, the Employee does not have any rights under, and will not make any claim against the Company with respect to, any inventions, discoveries, improvements, ideas or works of authorship which would be Inventions if made, conceived, authored or acquired by the Employee during the term of this Agreement.
(c) Notice to Employee. The requirements of Section 2(b) do not apply to any Invention (i) for which no equipment, supplies, facility or trade secret information of the Company was used, (ii) which was developed entirely on the Employee’s own time, (iii) which does not relate directly to the Company’s businesses or to the Company’s actual or demonstrably anticipated research or development, and (ii) which does not result from any work the Employee performed for the Company.
(d) Works Made for Hire. To the extent that any Invention qualifies as “work made for hire” as defined in 17 U.S.C. § 101 (1976), as amended, such Invention will constitute “work made for hire” and, as such, will be the exclusive property of the Company.
3. | Competitive Activities. |
(a) Non-Compete. The Employee agrees that, during the term of employment with the Company and for a period of one (1) year after employment with the Company ends, the Employee will not alone, or in any capacity with another firm:
(i) | directly or indirectly render services to, invest in or lend to any person, firm or corporation conducting business in North America in connection with the research, development, manufacture, marketing, sale or promotion of any products or services that are competitive with any products or services of the Company of which the Employee has direct knowledge or responsibilities (whether commercially available or under development); |
(ii) | (A) disrupt, damage, impair, or interfere with the business of the Company whether by way of interfering with or disrupting the relationship of the Company with its clients, customers, representatives, vendors or suppliers or (B) directly or indirectly call upon or solicit any customer or supplier of the Company or induce, encourage or influence any customer or supplier to terminate or otherwise modify adversely to the Company its business relationship with the Company other than as undertaken in the course of the Employee’s employment with the Company consistent with the terms of this Agreement; or |
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(iii) | employ, contract, affiliate, or create any relationship with (by soliciting or assisting anyone else in the solicitation of) any of the Company’s current employees or any other person who had been employed by the Company within the twelve (12) months prior to the Employee’s departure from the Company, on behalf of the Employee or any other entity, whether or not such entity competes with the Company. |
(b) Exceptions to Non-Compete. The restrictions contained in Section 3(a) of this Agreement will not prevent the Employee from accepting employment with a large diversified organization with separate and distinct divisions that do not compete, directly or indirectly, with the Company, as long as prior to accepting such employment the Company receives a written assurance from the Employee, satisfactory to the Company, to the effect that the Employee will not render any services to, or have any ability to provide strategic direction or oversight to, any division or business unit that competes, directly or indirectly, with the Company. During the restrictive period set forth in Section 3(a), the Employee will inform any new employer, prior to accepting employment, of the existence of this Agreement and provide such employer with a copy of this Agreement.
(c) Cessation of Business. Section 3(a) of this Agreement will cease to be applicable to any activity of the Employee from and after such time as the Company (i) has ceased all business activities for a period of six (6) months or (ii) has made a decision through its Board not to continue, or has ceased for a period of six (6) months, the business activities with which such activity of the Employee would be competitive.
(d) Additional Compensation. Should Employee be terminated other than for Cause:
(i) | Consideration for the provisions of Section 3(a), whether or not the restrictions contained in Section 3(a) apply or are waived by the Company, shall be the Company’s continuation of payment, following termination, of the Employee’s then annual salary paid for the one (1) year period specified in Section 3(a) (the “Additional Compensation”) and compliance with Sections 3(d)(ii) – (iv) below. |
(ii) | As a condition to Employee receiving the Additional Compensation, Employee shall execute, deliver to the Company, and not rescind a general release (the “Release”) in form and substance reasonably satisfactory to the Company releasing the Company and its officers, directors, employees and agents from all liabilities, claims and obligations of any nature whatsoever, excepting only the Company’s obligations under this Agreement and under any other employee benefit plans or programs in which Employee participates, subject to all terms and conditions of such plans or programs and this Agreement. Employee must execute and return the Release on or before the date specified by the Company in the prescribed form (the “Release Deadline”). If Employee fails to return the release on or before the Release Deadline, or if Employee revokes the release, then Employee will not be entitled to the benefits described in Section 3(d). |
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(iii) | For purposes hereof, the term “Cause” means (i) Employee’s conviction of or plea of guilty to any gross misdemeanor involving dishonesty, fraud or breach of trust, or a felony; (ii) Employee’s engagement in illegal or gross misconduct that materially injures the Company, monetarily or otherwise; or (iii) Employee’s gross neglect of his or her duties after written notice of such neglect and failure to cure within thirty (30) days of such written notice. |
(iv) | Subject to the terms and conditions of this Agreement, commencing within thirty (30) days after the Release the Company shall pay the Additional Compensation to Employee. Such payment shall be in accordance with the Company’s then existing human resources policies, and shall be reduced by all FICA and income taxes and other amounts required by law to be withheld. This Section 3(d) shall be the sole liability of the Company to the Employee upon the termination of Employee’s employment with the Company, and shall replace and be in lieu of any payments or benefits which otherwise might be owed the Employee under any other severance plan or program maintained by the Company. |
(e) Other Agreements. The Employee represents and warrants to the Company that he is not currently subject to a non-competition, confidentiality or other such agreement with a former employer that prohibits the Employee from working for the Company.
4. | Miscellaneous. |
(a) Survival. The obligations of Sections 1, 2 and 3 will survive the expiration or termination of this Agreement.
(b) Exit Interview. Upon termination of employment with the Company, the Employee agrees to participate in an exit interview with representatives of the Company to discuss the Employee’s continuing obligations under this Agreement.
(c) Employment At-Will. Nothing in this Agreement is intended to establish any minimum period of the Employee’s continuing employment, and such employment continues to be on an “at-will” basis. The Employee acknowledges that his or her employment with the Company is terminable at will at any time by either party for any reason not prohibited by law.
(d) No Adequate Remedy. The Employee understands that if the Employee fails to fulfill the Employee’s obligations under Sections 1, 2 or 3 of this Agreement the damages to the Company would be very difficult to determine. Therefore, in addition to any other rights or remedies available to the Company at law, in equity, or by statute, the Employee hereby consents to the specific enforcement of Sections 1, 2 and 3 of this Agreement by the Company through an injunction or restraining order issued by an appropriate court, without the requirement of posting a bond in connection therewith.
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(e) Successors and Assigns. This Agreement is binding on and inures to the benefit of the Company’s successors and assigns, (all of which are included in the term the “Company” as it is used in this Agreement); provided, however, that the Company may assign this Agreement only (i) to its affiliates or (ii) in connection with a merger, consolidation, assignment, sale or other disposition of substantially all of its assets, stock or business.
(f) Modification. This Agreement may be modified or amended only by a written statement signed by both the Company and the Employee.
(g) Governing Law. This Agreement and the legal relations among the parties as to all matters, including, without limitation, matters of validity, interpretation, construction, performance and remedies, will be governed by and construed exclusively in accordance with the internal laws of the State of Minnesota (without regard to the conflict of laws principles of any jurisdiction). Any legal proceeding related to this Agreement will be brought in an appropriate Minnesota court, and both the Company and the Employee hereby consent to the exclusive jurisdiction of that court for this purpose.
(h) Construction. Wherever possible, each provision of this Agreement will be interpreted or construed (as applicable) so that it is valid under the applicable law. If any provision of this Agreement is to any extent invalid under the applicable law, that provision will still be effective to the extent it remains valid. The remainder of this Agreement also will continue to be valid, and the entire Agreement will continue to be valid in other jurisdictions.
(i) Waivers. No failure or delay by either the Company or the Employee in exercising any right or remedy under this Agreement will waive any provision of the Agreement. Nor will any single or partial exercise by either the Company or the Employee of any right or remedy under this Agreement preclude either of them from otherwise or further exercising these rights or remedies, or any other rights or remedies granted by any law or any related document.
(j) Captions. The headings in this Agreement are for convenience only and do not affect this Agreement’s interpretation.
(k) Entire Agreement. This Agreement supersedes all previous and contemporaneous oral negotiations, commitments, writings and understandings between the parties concerning the matters in this Agreement, including without limitation any policy or personnel manuals of the Company.
(l) Notices. All notices and other communications required or permitted under this Agreement will be in writing and will be (i) hand delivered or sent by registered or certified first class mail, postage prepaid, and will be effective upon delivery if hand delivered, or three (3) days after mailing if mailed to the address stated at the beginning of this Agreement or (ii) delivered electronically to the email addresses set forth on the signature pages hereto, and will be effective upon delivery. These addresses and email addresses may be changed at any time by like notice.
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(m) Counterparts. This Agreement may be executed in several counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same instrument. Signature pages may be detached from the counterparts and attached to a single copy of this Agreement to physically form one document. Execution and delivery of this Agreement by facsimile and/or .pdf transmission by electronic mail will be legal, valid and binding execution and delivery for all purposes.
IN WITNESS WHEREOF, the Company and the Employee have executed this Confidentiality and Assignment of Inventions Agreement as of the date first written above.
SAM SRIVASTAVA | BRIGHT HEALTH MANAGEMENT, INC. | ||
/s/ Sam K. Srivastava | By: | /s/ Brian Beutner | |
Name: | Brian Beutner | ||
Title: | CORPORATE SECRETARY |
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Exhibit 16.1
May 19, 2021
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Commissioners:
We have read Bright Health Group, Inc.’s statements pursuant to Item 304(a)(1) of Regulation S-K, filed with the Securities and Exchange Commission as part of the Registration Statement on Form S-1 of Bright Health Group, Inc. dated May 19, 2021 and we agree with such statements concerning our firm.
/s/ RSM US LLP
Exhibit 21.1
List of Subsidiaries
Name of Subsidiary | Jurisdiction of Incorporation or Organization |
Bright Health Company of Arizona | Arizona |
Bright Health Company of California, Inc. | California |
Central Health Plan of California, Inc. | California |
Universal Care, Inc. | California |
Bright Health Insurance Company | Colorado |
AssociatesMD Medical Group, Inc. | Delaware |
Bright Health Management, Inc. | Delaware |
Bright Health Networks, LLC | Delaware |
Bright Health Services, Inc. | Delaware |
DocSquad, LLC | Delaware |
Medical Practice Holding Company, LLC | Delaware |
NeueHealth LLC | Delaware |
Physicians Plus, LLC | Delaware |
Physicians Plus ACO, LLC | Delaware |
Physicians Plus of California, LLC | Delaware |
Physicians Plus of Florida, LLC | Delaware |
Pineapple ACO, LLC | Delaware |
Premier Medical Associates of Florida Healthcare, P.A. | Delaware |
Premier Medical Associates of Florida, LLC | Delaware |
Bright Health Insurance Company of Florida | Florida |
Bright Health Company of Georgia | Georgia |
Bright Health Insurance Company of Illinois | Illinois |
Bright Health Insurance Company of New York | New York |
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True Health New Mexico, Inc. | New Mexico |
Bright Health Company of North Carolina | North Carolina |
Bright Health Insurance Company of Ohio, Inc. | Ohio |
Bright Health Company of South Carolina, Inc. | South Carolina |
Bright Health Insurance Company of Tennessee | Tennessee |
Bright HealthCare Insurance Company of Texas | Texas |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use in this Registration Statement on Form S-1 of our report dated March 17, 2021 (April 21, 2021, as to the subsequent events described in Note 18), relating to the financial statements of Bright Health Group, Inc. We also consent to the reference to us under the heading "Experts" in such Registration Statement.
/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
May 19, 2021
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the use in this Registration Statement on Form S-1 of Bright Health Group, Inc. of our report dated March 17, 2021, relating to the consolidated financial statements of Bright Health Group, Inc., appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to our firm under the heading "Experts" in such Prospectus.
/s/ RSM US LLP
Chicago, Illinois
May 19, 2021
Exhibit 23.3
Consent of Independent Registered Public Accounting Firm
Universal Care, Inc.
Westminster, California
We hereby consent to the use in the Prospectus constituting a part of this Registration Statement of our report dated December 23, 2019, relating to the financial statements of Universal Care, Inc. dba Brand New Day, which is contained in that Prospectus.
We also consent to the reference to us under the caption “Experts” in the Prospectus.
/s/ BDO USA, LLP | |
Costa Mesa, California | |
May 19, 2021 |