Change Healthcare Inc. (Form: S-1, Received: 03/15/2019 17:19:00)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

As filed with the Securities and Exchange Commission on March 15, 2019

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Change Healthcare Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware

7389

82-2152098

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification No.)

3055 Lebanon Pike, Suite 1000

Nashville, Tennessee 37214

Telephone: 615-932-3000

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Neil E. de Crescenzo

President and Chief Executive Officer

Change Healthcare Inc.

3055 Lebanon Pike, Suite 1000

Nashville, Tennessee 37214

Telephone: 615-932-3000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Joshua Ford Bonnie

William R. Golden III

Simpson Thacher & Bartlett LLP

900 G Street, N.W.

Washington, D.C. 20001

Telephone: (202) 636-5500

Craig E. Marcus

Tara Fisher

Ropes & Gray LLP

Prudential Tower

800 Boylston Street

Boston, Massachusetts 02199

Telephone: (617) 951-7000

Approximate date of commencement of the proposed sale of the securities to the public: As soon as practicable after the Registration Statement is declared effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

CALCULATION OF REGISTRATION FEE



Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee
Common Stock, par value $0.001 per share	$100,000,000	$12,120

(1)	Estimated solely for the purpose of determining the amount of the registration fee in accordance with Rule 457(o) under the Securities Act of 1933.

(2)	Includes shares of common stock that are subject to the underwriters’ option to purchase additional shares.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED MARCH 15, 2019

PRELIMINARY PROSPECTUS

Shares

LOGO

Change Healthcare Inc.

Common Stock

$ per share

This is the initial public offering of shares of common stock of Change Healthcare Inc. We are selling shares of our common stock. We currently expect the initial public offering price to be between $ and $ per share of common stock. We have applied to list our shares of common stock on the Nasdaq Global Select Market (“Nasdaq”) under the trading symbol “CHNG.”

We are an “emerging growth company” as defined under the federal securities laws. We have elected, however, to comply in the registration statement of which this prospectus forms a part with the disclosure requirements otherwise applicable generally to registrants that are not emerging growth companies.

Investing in shares of our common stock involves risks. See “ Risk Factors ” beginning on page 32.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.


	Per Share	Total
Initial public offering price	$	$
Underwriting discounts and commissions	$	$
Proceeds, before expenses, to Change Healthcare Inc.	$	$

Please see the section entitled “Underwriting” for a description of compensation payable to the underwriters.

To the extent that the underwriters sell more than shares of our common stock, the underwriters have the option to purchase up to an additional shares of our common stock from us at the initial public offering price less the underwriting discount, within 30 days from the date of this prospectus.

The underwriters expect to deliver the shares of our common stock against payment in New York, New York on or about , 2019.



Barclays	Goldman Sachs & Co. LLC	J.P. Morgan

The date of this prospectus is , 2019.

Table of Contents


	Page
Summary		1
Risk Factors		32
Forward-Looking Statements		83
Market and Industry Data		83
Trademarks, Service Marks and Trade Names		83
Organizational Structure		85
Use of Proceeds		89
Dividend Policy		90
Capitalization		91
Dilution		93
Unaudited Pro Forma Condensed Financial Information		95
Selected Historical Financial Data		105
Management’s Discussion and Analysis of Financial Condition and Results of Operations		110


	Page
Business		163
Management		181
Certain Relationships and Related Person Transactions		224
Principal Stockholders		234
Description of Certain Indebtedness		236
Description of Capital Stock		240
Certain United States Federal Income and Estate Tax Consequences to Non-U.S. Holders		248
Shares Eligible for Future Sale		252
Underwriting		256
Legal Matters		261
Experts		261
Where You Can Find More Information		261
Index to Financial Statements		F-1

Neither we nor the underwriters have authorized anyone to provide you with information different from that contained in this prospectus, any amendment or supplement to this prospectus or any free writing prospectus prepared by us or on our behalf. Neither we nor the underwriters take any responsibility for, or can provide any assurance as to the reliability of, any information other than the information in this prospectus, any amendment or supplement to this prospectus or any free writing prospectus prepared by us or on our behalf. We and the underwriters are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of shares of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

Through and including , 2019 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

About this Prospectus

Financial Statement Presentation

On March 1, 2017, McKesson Corporation (NYSE: MCK) (“McKesson”) and Change Healthcare Inc. (formerly HCIT Holdings, Inc.), a Delaware corporation, completed the Transactions (as defined below) whereby the majority of McKesson’s Technology Solutions segment (“Core MTS”) and substantially all of Change Healthcare Performance, Inc. (formerly Change Healthcare, Inc.)’s legacy business (“Legacy CHC”) were contributed pursuant to an Agreement of Contribution and Sale, resulting in the establishment of a joint venture, Change Healthcare LLC, a Delaware limited liability company (the “Joint Venture”). From the time of its formation on June 17, 2016 until March 1, 2017 (the closing date of the Transactions), the Joint Venture had no substantive assets or operations.

Change Healthcare Inc. is a holding company that was formed in connection with the Joint Venture and related transactions and does not own any material assets or have any operations other than through its interest in

the Joint Venture. Prior to and immediately following this offering, each of Change Healthcare Inc. and McKesson holds a 50% voting interest in the Joint Venture, with equal representation on the Joint Venture’s board of directors and with all major operating, investing and financial activities requiring the consent of both members. As a result, Change Healthcare Inc. does not consolidate the financial position and results of the Joint Venture. Instead, Change Healthcare Inc. accounts for its investment in the Joint Venture under the equity method of accounting.

For periods prior to March 1, 2017, this prospectus presents the financial position and results of Legacy CHC and Core MTS, the predecessors for accounting purposes to Change Healthcare Inc. In addition, this prospectus supplementally presents the consolidated financial position and results of the Joint Venture, the equity method investee of Change Healthcare Inc., in all periods since the Joint Venture’s inception.

Certain Definitions

As used in this prospectus, unless otherwise noted or the context requires otherwise:

•

“Blackstone” refers to investment funds associated with The Blackstone Group L.P.

•

“Change Healthcare,” the “Company,” “we,” “us” and “our” refer to Change Healthcare Inc., together with the Joint Venture, its equity method investee, and the Joint Venture’s consolidated subsidiaries.

•

“existing owners” or “pre-IPO owners” refer to our Sponsors, management and other equity holders who are the owners of Change Healthcare Inc. immediately prior to the Offering Transactions, together with McKesson, the holder of a 50% voting interest in the Joint Venture.

•

“Hellman & Friedman” refers to investment funds associated with the affiliated companies of Hellman & Friedman LLC.

•

“Legacy CHC Stockholders” refers to the equityholders of Legacy CHC (including our Sponsors) that contributed their interests in Legacy CHC to the Joint Venture as part of the Transactions.

•

“McKesson” refers to McKesson Corporation, a Delaware corporation.

•

“McK Members” refers to the subsidiaries of McKesson that serve as members of the Joint Venture.

•

“Sponsors” refers to Blackstone and Hellman & Friedman.

•

“Transactions” refers to the transactions consummated on March 1, 2017 whereby the Legacy CHC Stockholders and McKesson completed the establishment of the Joint Venture and related transactions. See “Summary—The Transactions.”

Method of Calculation

The “customer retention” figures in this prospectus represent the percentage of our top 50 provider and top 50 payer customers ranked by revenue generated during the most recently completed fiscal year from whom we continued to generate revenue during the most recently completed fiscal quarter. Customer retention does not measure whether the revenue from any particular customer has increased or decreased in a specified fiscal period compared to the prior year fiscal period.

The “Recurring Revenue” figures in this prospectus represent revenue attributable to the ongoing use of or subscription to a service or solution after an initial sale or renewal without additional selling efforts. Such revenue consists of transaction, subscription, volume-based and other revenue (including from “evergreen” or automatically renewing contracts) associated with our various solutions that is of a recurring nature as described above, and excludes revenue, such as one-time license fees, upfront implementation fees and other payments relating to singular projects and transactions of a non-recurring or episodic nature. A significant portion of our

Recurring Revenue is earned on a per transaction basis and, as a result, is tied to a customer’s transaction, payment and reimbursement volumes. Our Recurring Revenue is generally not subject to any required annual or other minimums under the agreements with our customers. With respect to volume-based fee arrangements, the level of recurrence in any period is reflected in the amount of Recurring Revenue presented for that period. In the event a customer with a volume-based fee arrangement were not to use the solution or service at all in a given period, Recurring Revenue would not reflect any revenue from such customer. As a result, our Recurring Revenue directly correlates with healthcare transaction, payment and reimbursement volumes in the United States. See “Risk Factors—Risks Related to Our Business and Industry—Our revenue is highly dependent on transaction volumes in the U.S. healthcare industry, particularly payment and reimbursement transaction volumes, and any temporary or sustained decrease in healthcare transaction, payment or reimbursement volumes in the United States could have a material adverse impact on our business, results of operations or financial condition.”

The sums or percentages, as applicable, of certain tables included in this prospectus may not foot due to rounding.

Unless indicated otherwise, the information included in this prospectus assumes no exercise by the underwriters of their option to purchase up to an additional shares of common stock from us and that the shares of common stock to be sold in this offering are sold at $ per share of common stock, which is the midpoint of the price range indicated on the front cover of this prospectus.

iii

SUMMARY

This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing in shares of our common stock. You should read this entire prospectus carefully, including the section entitled “Risk Factors” and the financial statements and the related notes thereto included elsewhere in this prospectus, before you decide to invest in shares of our common stock.

Change Healthcare

We are a leading independent healthcare technology platform that provides data and analytics-driven solutions to improve clinical, financial and patient engagement outcomes in the U.S. healthcare system. We offer a comprehensive suite of software, analytics, technology-enabled services and network solutions that drive improved results in the complex workflows of healthcare system payers and providers. Our solutions are designed to improve clinical decision making, simplify billing, collection and payment processes and enable a better patient experience.

We offer comprehensive, end-to-end solutions with modular capabilities to address our customers’ needs. Working with our customers to analyze workflows before, during and after care has been delivered to patients, we design and commercialize innovative solutions for various points in the healthcare delivery timeline. Our offerings range from discrete data and analytics solutions to broad enterprise-wide solutions, which include workflow software and technology-enabled services that help our customers achieve their operational objectives. As payers and providers become larger and more sophisticated and manage increasingly complex workflows, we believe they will increasingly seek strategic partners with scale and comprehensive, high value solutions.

Our Intelligent Healthcare Network was created to facilitate the transfer of data among participants and is one of the largest clinical and financial healthcare networks in the United States. In the fiscal year ended March 31, 2018, we facilitated nearly 14 billion healthcare transactions and approximately $1 trillion in adjudicated claims or approximately one-third of all U.S. healthcare expenditures. We serve the vast majority of U.S. payers and providers. Our customer base includes approximately 2,200 government and commercial payer connections, 900,000 physicians, 118,000 dentists, 33,000 pharmacies, 5,500 hospitals and 600 laboratories. This network transacts clinical records for over 112 million unique patients, more than one-third of the estimated total U.S. population. With insights gained from our pervasive network, extensive applications and analytics portfolio and our services operations, we have designed analytics solutions that include industry-leading and trusted franchises supported by extensive intellectual property and regularly updated content.

In addition to the advantages of scale, we believe we offer the collaborative benefits of a mission-critical partner. We seek enduring relationships with each customer through solutions embedded in their complex daily workflows that deliver measurable results. Our customer retention rate for our top 50 provider and top 50 payer customers for the fiscal year ended March 31, 2018 was 100% for the fiscal quarter ended December 31, 2018. We believe our size, scale, thought leadership and prevalence across the healthcare ecosystem help make us a preferred partner for innovative technology companies and industry associations focused on driving standardization and efficiencies in the healthcare industry.

We believe that our solutions play a mission-critical role in the following important areas of the healthcare system:

LOGO

We seek to help healthcare system constituents address fundamental operating needs.

LOGO

Our analytically-driven solutions are designed to improve delivery of care through better clinical decision making and enhance and simplify billing and payment functions by reducing administrative errors and improving documentation. In addition, we seek to improve payers’ and providers’ relationships with consumers by offering solutions that enhance transparency and empower their decision making. We believe that our solutions enable our customers to operate more efficiently and thereby improve their competitive positioning. Our solutions have generated measurable financial and operational return on investment and improved quality of care and patient experience.

•

A provider was able to decrease accounts receivable from a major payer by 50% from September 2012 to August 2013 as a result of on-site assessment, identification and prioritization of key reimbursement issues, and the implementation of revenue cycle management solutions.

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A regional medical center achieved a 62% increase in month-to-month collections in just six months beginning in 2011 using one of our technology-enabled service solutions to validate patient identity, verify insurance eligibility and estimate patient financial responsibility.

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A hospital customer achieved a 35% decrease in average turnaround times from 2014 to 2015 for CT, MRI and ultrasound readings using our imaging workflow and analytics solution.

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Our analytics, workflow and reimbursement optimization services have facilitated approximately $3.3 billion in incremental net revenue for over 60 payer customers in the market for patients with dual eligibility under Medicaid and Medicare (“Dual Eligibles”) (from 2002 to 2018) by identifying members eligible for both Medicare and Medicaid benefits.

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Since 2016, our clinically-based claims payment solution has supported over $4 billion in annual savings for payer customers, including leading health plans, through claims editing technology integrated with claims adjudication, which has improved payment accuracy while increasing provider satisfaction.

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A large national payer realized $10 million in annual savings in 2017 through a 20% increase in electronic payment adoption from traditional paper-based processes, using Change Healthcare’s virtual credit card solutions.

We have a track record of innovation. Our pervasive network connectivity combined with our use of artificial intelligence (“AI”) and machine learning (“ML”) enables us to regularly improve our solutions and uncover new insights as our customers’ needs evolve. During the first half of fiscal 2019, we have added a number of new solutions to our business platform through new product development. Our ability to innovate is supported by more than 1,800 technology professionals including PhDs, masters-level health policy experts, design professionals, data scientists, programmers and statisticians in our research & development centers located in key markets such as Silicon Valley, Seattle, Boston, Philadelphia, Nashville, Minneapolis and Tel Aviv. We believe that our deep reach across the healthcare ecosystem and our history of commercializing innovations position us to be a preferred partner for customers and leading healthcare and technology companies.

We believe we are well positioned for growth across the markets we serve. Our growth strategy is to increase the breadth and depth of our capabilities organically and through acquisitions. We continue to increase the business we do with our base of long-standing customers by expanding our enterprise relationships and positioning our customers for success in their markets. Our comprehensive end-to-end solutions can reduce the complexity of our customers’ environments, yet are modular to meet their specific needs. We seek to use our data products and analytics, pervasive connectivity and our position as a trusted partner to develop innovative ways to create high value clinical and administrative solutions. We believe we are in the early stages of growth related to these opportunities.

We believe our high customer retention and predictable revenue streams, together with a scalable and capital efficient operating model, provide visibility into our financial results. For the year ended March 31, 2018, the Joint Venture generated solutions revenue of $3.0 billion, of which 87% was Recurring Revenue, net income of $192.4 million, Adjusted EBITDA of $943.8 million and Adjusted Net Income of $449.7 million. For the nine months ended December 31, 2018, the Joint Venture generated solutions revenue of $2,264.7 million, net income of $139.0 million, Adjusted EBITDA of $677.8 million and Adjusted Net Income of $280.9 million. For a discussion of Recurring Revenue, see “Method of Calculation” and for the definitions of Adjusted EBITDA and Adjusted Net Income, which are measures not presented in accordance with generally accepted accounting principles in the United States (“GAAP”), and reconciliations to their most directly comparable financial measure calculated and presented in accordance with GAAP, please read “—Summary Historical Financial and Other Data.”

Our Solutions

Change Healthcare offers financial, clinical, and engagement solutions in three business segments—software and analytics, network solutions, and technology-enabled services—that help create a stronger, more collaborative healthcare system. Through our interconnected position at the center of healthcare, we utilize our broad portfolio of solutions to serve stakeholders across the healthcare system, including commercial and government payers, employers, hospitals and health systems, physicians and other providers, pharmacies, labs and consumers.

Software and Analytics

Our industry-leading software solutions seek to enable our customers to achieve financial performance, operational excellence, and payment and network optimization—ultimately helping them navigate the shift to value-based care. In the software and analytics segment, we provide solutions for revenue cycle management, provider network management, payment accuracy, value-based payments, clinical decision support, consumer engagement, risk adjustment and quality performance, and imaging and clinical workflow.

Network Solutions

We leverage our Intelligent Healthcare Network—with an industry-leading nearly 14 billion transactions and approximately $1 trillion in adjudicated claims—to enable and optimize connectivity and transactions among healthcare system participants and to generate insight using healthcare data to help meet their analytical needs. Through our network solutions segment, we provide solutions for financial, administrative and clinical transactions, electronic payments and aggregation and analytics of clinical and financial data.

Technology-enabled Services

We provide expertise, resources and scalability to allow our customers to streamline operations, optimize clinical and financial performance and focus on patient care. Through our technology-enabled services segment, we provide solutions for revenue cycle and practice management, value-based care enablement, communications and payments, pharmacy benefits administration and consulting.

Market Opportunity

We compete in the market for data and analytics-driven solutions that help ensure clinically appropriate care, increase efficiency and reduce waste in the healthcare industry. We believe the following trends impacting payers, providers and consumers represent a significant opportunity for us.

Wasteful spending amidst rising costs in U.S. healthcare system. Research cited by the National Academy of Medicine estimates that 30% of U.S. healthcare spending is wasteful, implying more than $1 trillion of wasteful healthcare spending in 2018. Examples of waste include failure to adhere to best care practices and lack of care coordination, which leads to unnecessary readmissions and inappropriate levels of care delivery. Wasteful spending includes significant variation among providers in the cost and quality of similar care from provider to provider and market to market that is not explained by geography alone and also includes overtreatment, which is testing and care that is not medically beneficial. Additionally, the healthcare system has many inefficient processes that are manual, complex, frequently changing and time consuming, are prone to error, costly and require undue amounts of clinicians’ and other professionals’ time. In addition, improper payments, according to the Office of Management and Budget, have represented approximately 10% of all Medicare and Medicaid payments since 2015. Such improper payments and fraudulent billing create costly and labor-intensive follow-up. According to the Center for Medicare & Medicaid Services (“CMS”), U.S. healthcare spending is expected to

grow from $3.6 trillion in 2018, or 18% of U.S. gross domestic product, to $6.0 trillion, or approximately 19% of U.S. gross domestic product, in 2027. This implies that healthcare spending is increasing at a 5.6% annual growth rate, or 3.2% higher than expected inflation over the same period. Given the significant and lasting financial burden of ongoing rising costs and wasteful spending on society, both governmental and commercial payers and providers are increasingly focused on reducing costs attributable to administrative complexity and errors, excessive manual labor, and uncoordinated, unproductive, ineffective care whose value is not well determined or communicated.

Healthcare system exposure to growing chronically ill and higher risk populations. While the overall U.S. population is expected to increase 7% from 2017 to 2027, the population of adults age 65 and older is expected to increase 34% over the same period, according to the U.S. Census Bureau. This part of the population has the highest prevalence of chronic conditions, with average annual healthcare spending approximately three times higher than working adults and approximately five times higher than the under 18 year old demographic, according to CMS. As those older than 65 years of age access complex care at growing rates, they are also increasingly enrolling in managed care plans that bear the risk of healthcare utilization. For example, enrollment in Medicare Advantage (“MA”) is expected to increase to 41% of eligible lives by 2027, according to the Congressional Budget Office. Additionally, most Dual Eligibles, who are typically among the most chronically ill and disproportionately expensive beneficiaries for both programs, are not benefiting from any form of integrated care. Governmental agencies are seeking ways to more effectively service this group and promote avenues to access care in a more efficient and effective way. As the U.S. healthcare system increasingly serves more chronically ill and higher risk populations as the country’s elderly population continues to grow, providers and payers will need tools to onboard and manage these populations, including the ability to deliver appropriate care for medically-complex patients, and the ability to document risk and outcomes to attain the appropriate reimbursement rates associated with these populations.

Increasing prevalence of value-based care and reimbursement models. Both public and private sectors are shifting towards alternative payment models that are designed to incentivize value and quality throughout an “episode of care.” These payment models require a high level of documentation, robust data, sophisticated payment attribution capabilities and advanced analytics that can adapt to new rules and goals to ensure compliance. Many payers and providers are still building the capabilities, expertise and administrative processes to manage these changes adequately. They are increasingly partnering with third parties to demonstrate the achievement of the outcomes required under these value-based payment models, which requires a fundamentally different skillset than what they have deployed historically.

Increasing patient financial responsibility and consumerism in healthcare. As healthcare expenditures have continued to rise, employers and health plans have shifted costs to patients through increased adoption of high-deductible health plans. Increases in patient financial responsibility require providers to obtain payment from the patient before and after the point of care. As providers become more consumer-oriented and retail in nature, they require increasingly sophisticated, dynamic and personalized solutions, which generally necessitate scale to be implemented efficiently and cost effectively. As patients are required to pay more out of their own pockets for healthcare, they are demanding price transparency and decision support from their health plans. Health plans are consequently partnering with third parties to provide their members with tools to enable them to assess quality and cost based on individual plan benefits. At the same time, providers seek to effectively communicate the quality and value of their services, determine patients’ upfront insurance eligibility, coverage and ability to pay their portion of their healthcare bills, and simplify the payment process to improve patient experience and satisfaction.

systems as of 2017, according to the Office of the National Coordinator for Health Information Technology. These EHRs, other digitized healthcare data and the increasing amount of personal health data from smartphones, wearable and other devices have created unprecedented amounts of healthcare data in the United States, which is expected to grow to more than 2,300 exabytes by 2020, according to the 2014 EMC Digital Universe Study by International Data Corporation. However, healthcare data is often siloed and unstructured and has historically been difficult to understand and use by all constituents on a timely basis. Advancements in ML and AI are making it easier to cost effectively utilize data at scale in real time to identify actionable insights that help improve outcomes and decrease cost for healthcare constituents. As healthcare data can be used more effectively, we expect that leading technology companies will increasingly seek scaled partners like us to effectively develop new software and analytics solutions that help payers and providers improve workflows to deliver higher quality care at lower cost to consumers.

Our Strengths

Embedded in our customers’ end-to-end, mission-critical, daily workflows. Our solutions are embedded in our customers’ core business functions, including member enrollment patient access, treatment, documentation, reimbursement and payment, claims and financial management, and post-payment and communication. We believe our collaborative and comprehensive approach, combined with our modular capabilities, is important to our customers’ ability to operate efficiently and cost-effectively. We seek to earn the loyalty of our customers with solutions that we believe help them meet financial and operational objectives and improve their recurring and evolving processes.

Leading healthcare-specific technology infrastructure. We have developed industry-leading data and analytics franchises that deliver value to our customers. Our Intelligent Healthcare Platform (“IHP”) provides a cloud-based, robust, and agile platform for our solutions. The IHP enables us to innovate with our customers and partners and to anticipate and meet customer needs. We continue to employ advanced technology to support our expansive network. We utilize efficient processes such as blockchain and an open application program interface (“API”)-driven functionability to enhance and expedite our processes. We collaborated with Amazon Web Services (“AWS”) for our cloud-based network, in order to increase our efficiency, transparency and security. Our commitment to industry-leading infrastructure creates significant leverage and speed for each of our businesses, and we believe helps our customers innovate faster and more effectively.

Scale and reach make us well positioned and a preferred technology partner. The pervasive nature of our solutions and network in the workflows of our more than 30,000 customers and our breadth of industry relationships position us to introduce best-in-class technologies to the healthcare industry at scale. We provide solutions supporting approximately 2,200 government and commercial payer connections, 900,000 physicians, 118,000 dentists, 33,000 pharmacies, 5,500 hospitals and 600 laboratories. This network transacts clinical records for over 112 million unique patients, more than one-third of the estimated total U.S. population. Our customers increasingly want to leverage our industry-leading data and analytics-driven solutions while taking advantage of our innovations in AI, ML and robotic process automation to improve clinical, financial and patient engagement outcomes. We are working with industry-leading technology companies, including AWS, Google, Adobe and Microsoft, to help further broaden our scale and reach with new, innovative solutions.

Modular and flexible solution design to serve our diverse, extensive customer base. We deploy our solutions through a complementary software and analytics, technology-enabled services and network delivery model with the power to target broad organizational needs of customers such as improved revenue opportunities or reduction in operational costs. At the same time, our solutions are modular and flexible providing us with the ability to address a customer’s needs whether that is a point solution or an end-to-end comprehensive set of products and

services. In addition, we have the ability to deliver integrated solutions throughout our business. For example, a medical network customer that utilizes our electronic data interchange (“EDI”) can also use our Coding Advisor solution that leverages medical network transactions to improve coding accuracy, or an electronic payment solution that leverages the customer’s medical network to deliver electronic remittance advice. For their MA members, a customer can use Dx Gap Advisor to improve the completeness of claims submissions and help ensure appropriate reimbursement. As the needs of our customers evolve, we believe the flexible architecture we have developed will enable us to offer scaled, comprehensive solutions and be a partner of choice.

Proven ability to serve the evolving needs of our customers with industry-leading solution franchises. During the first half of fiscal 2019, we have added a number of new solutions to our business platform through new product development. As of December 31, 2018, our payment accuracy solutions were embedded in the workflow of 19 of the 20 largest U.S. commercial payers based on covered lives, while our decision support solutions were used by over 4,600 hospitals and facilities, and used by health plans covering over 100 million members. As a long-time leader in healthcare data interoperability, we provide open APIs based on Fast Healthcare Interoperability Resources and other industry standards, which help us integrate and innovate with customers and partners across the industry.

Data stewardship and security. As the amount of data in healthcare grows and the ability to use that data becomes more essential to effective delivery, management and administration, we expect data security to become increasingly important for our customers. We believe our history of delivering solutions while prioritizing data security and fidelity enables us to be the platform of choice for large customers and partners. We have multiple certifications with respect to certain of our offerings, including HITRUST, HIPAA, PCI, FISMA, ISO 27001, SOC2, and EHNAC, and we implement security procedures and policies informed by applicable law and recommended practices. We also aim to drive industry maturity through appointed leadership roles with HITRUST Alliance and H-ISAC (Healthcare Information Security and Analysis Center). We believe our customers will increasingly consolidate solutions providers to a handful of entrusted parties that can address large-scale healthcare cost and quality issues securely. We believe our strong relationships with our existing customers position us to benefit from this expected trend.

Predictable revenue profile and attractive, scalable model. We believe we have an attractive operating profile given the predictable, recurring nature of a significant portion of our revenue combined with a scalable financial model. Our revenue is largely derived from recurring transactional, monthly-subscription and per-click formats, as well as contingency-based or long-term contracts. During the fiscal year ended March 31, 2018, 87% of the Joint Venture’s solutions revenue was Recurring Revenue. Our customer base is highly diversified as no customer represented more than 4% of the Joint Venture’s solutions revenue in the fiscal year ended March 31, 2018. Additionally, we benefit from high customer retention across a diversified customer base composed of approximately 61% providers and 39% payers based on solutions revenue for the fiscal year ended March 31, 2018. Our business model requires moderate capital spending to grow, with capital expenditures of 5.5% of the Joint Venture’s solutions revenue for the fiscal year ended March 31, 2018. We continue to streamline costs and have instituted cost improvement initiatives throughout the organization. We believe our Recurring Revenue, combined with the opportunities for continued operating improvement following the Transactions, will provide us with increasing flexibility to allocate and deploy our capital.

Growth Strategy

Develop, augment and commercialize capabilities at scale. We work closely with our customers to integrate our offerings into their workflows and business processes. We develop new products and services, partner with industry-leading companies and selectively acquire complementary technologies and businesses to enhance our

offerings. We introduce solutions through one of three methods: internal development, commercial partnerships and acquisitions.

•

Internal development —We leverage feedback from our customers, our partners and the analytical capabilities of our platform and suite of solutions to drive commercial innovations. We utilize our decades of industry experience, technology and services capabilities to identify new insights along the administrative and clinical care continuum. Through dialogue with our customers and our position as a scaled partner to payers, providers and others, we target commercial opportunities where these insights can be applied. We have developed new solutions in response to our partners’ requests to improve workflows and reduce barriers to collaboration. These responsive solutions are some of the fastest growing areas of our business.

•

Commercial partnership s —We had approximately 700 channel partners as of March 31, 2018, including the major EHR providers supporting workflow integration, as well as go-to-market channel partners who expand the sales and distribution reach of our software, data, network and payment solutions. We believe that our industry-leading customer base and platform allow us to collaborate with other software and technology leaders to develop and rapidly deploy complementary software and services. These partnerships are expansive and flexible ranging from limited scope sales relationships to arrangements where we are a significant customer.

•

Acquisitions —We have acquired and expect to continue to acquire assets and businesses that strengthen the value we deliver to our customers. Over the past six years we have completed and successfully integrated 14 acquisitions. We have a successful track record of identifying, integrating and scaling new and complementary capabilities. For example, our recent National Decision Support Company (“NDSC”) and HealthQX acquisitions resulted from long-term partnerships that we previously had with both organizations.

Maximize wallet share with customers through cross selling. We believe we have significant opportunities to expand the suite of services that our long tenured and highly loyal customer base purchases from us through focused cross selling. While we seek to continually improve our product and service offerings, our sales force is focused on expanding the scope and depth of our customer relationships. Our omni-channel sales force covers medium and larger customers with direct field sales teams and uses inside sales for direct coverage of smaller customers. In addition, our sales teams are focused on embedding our technology in our partners’ applications and solutions. We leverage our communication and feedback with our customers to identify and execute on opportunities to expand and deepen relationships while increasing the benefits for their organizations through our connectivity, software, analytics and services.

Deliver comprehensive, end-to-end and modular solutions to customers. Our solutions are comprehensive in that they meet a significant portion of our customers’ clinical and administrative needs and are integrated to improve functionality and usability, yet are modular to meet the specific needs of our customers. We believe the ability to be comprehensive and integrated, yet flexible, will be increasingly attractive as customers seek to consolidate outside vendor relationships and improve their return on investment. We believe that our ability to deliver technology-enabled services as part of our comprehensive offerings significantly increases growth opportunities with our software, analytics and network solutions customers. Our solutions also continue to evolve with new technologies. We aim to have our offerings be flexible enough to work with the legacy technologies still used by many of our customers, while also delivering more sophisticated and advanced solutions to customers as they upgrade their technology platforms.

independent, longitudinal perspective and integrated technology and service assets. Our position as a trusted partner before, during and after care enables us to view the healthcare system from a holistic standpoint and deliver solutions that we believe are difficult to replicate. We routinely take insights from our connectivity, software and services and integrate them into complementary products and workflows. Through our large and growing data assets and associated analytics, we have created personalized, episodic, and population-based solutions for our customers to deliver high quality, low cost solutions at scale. As payment and care models evolve, we believe scaled data assets and pervasive network connectivity across constituents will be essential to delivering meaningful and sustainable cost and care improvements.

Continue to capitalize on the benefits of our transformational joint venture. In March 2017, we completed the establishment of the Joint Venture by combining Core MTS and Legacy CHC. This transaction was a significant corporate milestone and positions us to capitalize on an expanded customer value proposition. We believe that the combination of industry-leading analytics franchises and a comprehensive suite of solutions continues to create significant new and expanded growth opportunities. Since creating the Joint Venture, we have identified and executed a number of initiatives to improve our operational efficiency and positively impact our operating margins while making significant investments to support our long-term growth. As part of our strategy, we are repositioning certain of our underperforming solutions to better address end market dynamics and to improve the long-term growth potential of these solutions. As we continue to orient our sales efforts to fully capitalize on our expanded customer value proposition and capture opportunities, we expect our revenue and earnings growth across our segments to accelerate.

McKesson

McKesson Corporation, currently ranked sixth on the Fortune 500, is a healthcare services and IT company dedicated to making the business of healthcare run better. McKesson partners with payers, hospitals, physician offices, pharmacies, pharmaceutical companies and others across the spectrum of care to build healthier organizations that deliver better care to patients in every setting. McKesson helps its customers improve their financial, operational and clinical performance with solutions that include pharmaceutical and medical-surgical supply management, healthcare IT and business and clinical services. McKesson’s common stock is publicly traded on the New York Stock Exchange under the symbol MCK.

Our Sponsors

Blackstone. Blackstone (NYSE: BX) is one of the world’s leading investment firms. Blackstone’s alternative asset management businesses include the management of corporate private equity funds, real estate funds, hedge fund solutions, credit-oriented funds and closed-end mutual funds. Through its different businesses, Blackstone had total assets under management over $472 billion as of December 31, 2018.

Hellman & Friedman. Hellman & Friedman is a leading private equity investment firm with offices in San Francisco, New York and London. Since its founding in 1984, Hellman & Friedman has raised over $50 billion of committed capital. The firm focuses on investing in outstanding business franchises and serving as a value-added partner to management in select industries including software, financial services, business & information services, healthcare, internet & media, retail & consumer, and industrials & energy.

Investment Risks

An investment in shares of our common stock involves substantial risks and uncertainties that may adversely affect our business, financial condition and results of operations and cash flows. Some of the more significant challenges and risks relating to an investment in our company include, among other things, the following:

•

Our business faces significant competition, which may harm our business, results of operations or financial condition.

•

Competition between us and some of our customers, or decisions by our customers to perform internally some of the same solutions or services that we offer, could harm our business, results of operations or financial condition.

•

If we are unable to retain our existing customers or attract new customers, our business, financial condition or results of operations could suffer.

•

If we are unable to connect to a large number of payers and providers, our solutions would be limited and less desirable to our customers.

•

Failure to maintain our relationships with our channel partners or significant changes in the terms of the agreements we have with them may have an adverse effect on our ability to successfully market our solutions.

•

We have faced and will continue to face pressure to reduce our prices, which may reduce our margins, profitability and competitive position.

•

Our revenue is highly dependent on transaction volumes in the U.S. healthcare industry, particularly payment and reimbursement transaction volumes, and any temporary or sustained decrease in healthcare transaction, payment or reimbursement volumes in the United States could have a material adverse impact on our business, results of operations or financial condition.

•

An economic downturn or volatility could have a material adverse impact on our business, results of operations or financial condition.

•

Our ability to generate revenue could suffer if we do not continue to update and improve our existing solutions and develop new ones.

•

The Joint Venture’s substantial indebtedness could adversely affect its financial condition, adversely affect its ability to operate its business, adversely affect its ability to react to changes in the economy or its industry, adversely affect its ability to meet its obligations under its outstanding indebtedness and divert its cash flow from operations for debt payments. As of December 31, 2018, the Joint Venture had approximately $5.8 billion of total debt.

•

Poor service, system errors or failures of our solutions to conform to specifications could cause unforeseen liabilities or injury, harm our reputation and have a material adverse impact on our business, results of operations or financial condition.

•

Disruptions in service or damages to our data or other operation centers, or other software or systems failures, could have a material adverse impact on our business, results of operations or financial condition.

•

Breaches and failures of our IT systems and the security measures protecting them and the sensitive information we transmit, use and store expose us to potential liability and reputational harm.

•

The protection of our intellectual property requires substantial resources and protections of our proprietary rights may not be adequate.

•

Government regulation, industry standards and other requirements create risks and challenges with respect to our compliance efforts and our business strategies.

•

We are unable to predict what changes to laws, regulations and other requirements, including related contractual obligations, might be made in the future or how those changes could affect our business or the costs of compliance.

•

Certain of the Joint Venture’s debt agreements impose significant operating and financial restrictions on it and its subsidiaries, which may prevent us from capitalizing on business opportunities.

•

Our pre-IPO owners will continue to control us and their interests may conflict with ours or yours in the future. Prior to this offering, McKesson directly holds approximately 70% of the outstanding LLC Units of the Joint Venture. Because it holds its ownership interest in our business directly in the Joint Venture, rather than through Change Healthcare Inc., McKesson may have conflicting interests with holders of shares of our common stock.

•

Please see “Risk Factors” for a discussion of these and other factors you should consider before making an investment in shares of our common stock.

The Transactions

In June 2016, the Legacy CHC Stockholders entered into an Agreement of Contribution and Sale (the “Contribution Agreement”) with McKesson and the other parties thereto. Under the terms of the Contribution Agreement, the parties completed the establishment of the Joint Venture, a joint venture that combined the McKesson Technology Solutions businesses, excluding McKesson’s Enterprise Information Solutions business and RelayHealth Pharmacy Network (such contributed businesses, “Core MTS”), with Legacy CHC’s businesses, including substantially all of the assets and operations of Legacy CHC, but excluding Legacy CHC’s pharmacy claims switching and prescription routing businesses (such excluded business, the “eRx Network” and the businesses contributed by Legacy CHC, together with Core MTS, the “Contributed Businesses”). We refer to the establishment of the Joint Venture, including the contribution of the Contributed Businesses and related transactions, collectively as the “Transactions.” The Transactions closed on March 1, 2017. From the time of its formation in June 2016 until the consummation of the Transactions, the Joint Venture had no substantive assets or operations.

Pursuant to the terms of the Contribution Agreement, (i) the Legacy CHC Stockholders, directly and indirectly, transferred ownership of substantially all of Legacy CHC to the Joint Venture in consideration of (a) the payment at the closing of the Transactions by the Joint Venture to the Legacy CHC Stockholders and certain participants in the Legacy CHC Amended and Restated 2009 Equity Incentive Plan of approximately (A) $1.8 billion, (B) stock in eRx Network Holdings, Inc., and (C) the 2017 Tax Receivable Agreement (defined below) and (b) the issuance to Change Healthcare Inc. of membership interests in the Joint Venture; and (ii) McKesson caused Core MTS to be transferred to the Joint Venture in consideration of (a) the assumption and subsequent payment at the closing of the Transactions by the Joint Venture to McKesson of a promissory note in the amount of approximately $1.3 billion, (b) the issuance of membership interests in the Joint Venture and (c) an interest in a tax receivable agreement from the Joint Venture.

Organizational Structure

Change Healthcare Inc. is a holding company that was formed in connection with the Transactions and does not own any material assets or have any operations other than through its interest in the Joint Venture. Prior to and immediately following this offering, each of Change Healthcare Inc. and McKesson holds a 50% voting interest in the Joint Venture, with equal representation on the Joint Venture’s board of directors and with all major operating, investing and financial activities requiring the consent of both members. As a result, Change Healthcare Inc. does not consolidate the financial position and results of the Joint Venture. Instead, Change Healthcare Inc. accounts for its investment in the Joint Venture under the equity method of accounting.

The limited liability company agreement of the Joint Venture (the “LLC Agreement”) provides for a single class of membership interests that we refer to as “LLC Units.” Prior to this offering, Change Healthcare Inc. holds approximately 30% of the issued and outstanding LLC Units and McKesson holds approximately 70% of the outstanding LLC Units.

Our post-offering organizational structure, as described above, is commonly referred to as an umbrella partnership-C-corporation (or UP-C) structure. This organizational structure will allow McKesson to retain its equity ownership in the Joint Venture, an entity that is classified as a partnership for U.S. federal income tax purposes, in the form of LLC Units. Investors in this offering, the Sponsors and management will, by contrast, hold their equity ownership in Change Healthcare Inc., a Delaware corporation that is a domestic corporation for U.S. federal income tax purposes, in the form of shares of common stock. We believe that McKesson generally finds it advantageous, in periods prior to the Qualified McKesson Exit, to continue to hold its equity interests in an entity that is not taxable as a corporation for U.S. federal income tax purposes. We do not believe that our UP-C organizational structure will give rise to any significant business or strategic benefit or detriment to us. See “Organizational Structure” and “Risk Factors—Risks Related to Our Organizational Structure” for additional information about our organizational structure, including our tax receivable agreements.

Following the expiration of the underwriter lock-up period in connection with this offering, subject to the terms and subject to the conditions provided in the LLC Agreement, McKesson may, at its election, initiate and complete a spin-off or split-off transaction (or a combination of the foregoing) that would result, among other things, in the acquisition by Change Healthcare Inc. of all of McKesson’s LLC Units and the issuance by Change Healthcare Inc. to McKesson and/or McKesson’s securityholders of an equal number of shares of its common stock (such transactions, a “Qualified McKesson Exit”). See “Certain Relationships and Related Person Transactions—LLC Agreement of the Joint Venture—Transfers of LLC Units.” In connection with a Qualified McKesson Exit, McKesson would contribute the stock of McKesson subsidiaries that own all of McKesson’s interests in the Joint Venture to a Delaware corporation that is McKesson’s direct or indirect wholly-owned subsidiary (“SpinCo”) and then would either distribute stock of SpinCo to the stockholders of McKesson as a dividend in a spin-off, commence one or more exchange offers pursuant to which McKesson will exchange stock of SpinCo for stock of McKesson held by the stockholders of McKesson or consummate one or more exchanges of stock of SpinCo for debt securities of McKesson (or a combination of the foregoing). Immediately thereafter, SpinCo would merge with and into Change Healthcare Inc. (the “Merger”), pursuant to which the stockholders of SpinCo will be entitled to receive a number of shares of common stock of Change Healthcare Inc. equal to the number of LLC Units held by SpinCo at the effective time of the Merger. Following a Qualified McKesson Exit, Change Healthcare LLC is expected to become a consolidated subsidiary of Change Healthcare Inc. Change Healthcare Inc.’s stockholders and board of directors have already approved the Merger and the related Merger Agreement described herein.

McKesson would also enter into a customary Separation and Distribution Agreement with SpinCo (the “Separation and Distribution Agreement”) and other ancillary agreements prior to, and in connection with, a Qualified McKesson Exit. McKesson, SpinCo and Change Healthcare Inc. would also enter into a Tax Matters Agreement, which would govern the rights, responsibilities and obligations of McKesson and SpinCo after the Qualified McKesson Exit with respect to tax liabilities and benefits (including indemnification provisions in favor of McKesson in the event certain transactions related to the Qualified McKesson Exit do not qualify for tax-free treatment), tax attributes, tax contests and other tax sharing regarding U.S. federal, state and local, and non-U.S., taxes, other tax matters and related tax returns.

The simplified diagram below depicts our organizational structure immediately following this offering. For additional detail, see “Organizational Structure.”

LOGO

(1)

Immediately following this offering, our Sponsors and management will own % of our outstanding common stock (or % if the underwriters exercise in full their option to purchase additional shares of common stock) and public stockholders will own % of our outstanding common stock (or % if the underwriters exercise in full their option to purchase additional shares of common stock).

(2)

Immediately following this offering, McKesson and Change Healthcare Inc. will hold % and %, respectively, of the outstanding LLC Units of the Joint Venture. Prior to and immediately following this offering, each of Change Healthcare Inc. and McKesson holds a 50% voting interest in the Joint Venture, with equal representation on the Joint Venture’s board of directors and with all major operating, investing and financial activities requiring the consent of both members.

(3)

Following the expiration of the underwriter lock-up period in connection with this offering, on the terms and subject to the conditions provided in the LLC Agreement, McKesson may, at its election, initiate and complete a Qualified McKesson Exit. In addition, following this offering, on the terms and subject to the conditions provided in the LLC Agreement, McKesson (or certain permitted transferees) will have the right from time to time to exchange its LLC Units for shares of our common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. For a description of the LLC Agreement of the Joint Venture, please read “Certain Relationships and Related Person Transactions.”

The simplified diagram below depicts what our organizational structure would be immediately following a Qualified McKesson Exit if McKesson were to conduct a spin-off or split-off transaction of all of McKesson’s LLC Units immediately following this offering. For additional detail, see “Organizational Structure—Qualified McKesson Exit & Exchanges.” There is no assurance that McKesson will pursue a Qualified McKesson Exit.

LOGO

(1)

In the event that a Qualified McKesson Exit were to occur immediately following this offering, our Sponsors and management would own % of our outstanding common stock (or % if the underwriters exercise in full their option to purchase additional shares of common stock) and public stockholders (including the securityholders of McKesson who receive shares of our common stock in connection with the Qualified McKesson Exit) will own % of our outstanding common stock (or % if the underwriters exercise in full their option to purchase additional shares of common stock).

Change Healthcare Inc. was incorporated in Delaware on June 22, 2016 under the name HCIT Holdings, Inc. On October 26, 2018, we changed our name to Change Healthcare Inc. Our principal executive offices are located at 3055 Lebanon Pike, Suite 1000, Nashville, Tennessee 37214 and our telephone number is 615-932-3000.

Recent Developments

Preliminary Estimated Unaudited Financial Results for the Three Months and Fiscal Year Ended March 31, 2019

The data presented below reflects the Joint Venture’s preliminary estimated unaudited financial results for the three months and year ended March 31, 2019 based upon information available to the Joint Venture as of the date of this prospectus. This data is not a comprehensive statement of the Joint Venture’s financial results for the three months and year ended March 31, 2019, and the Joint Venture’s actual results may differ materially from this preliminary estimated data. While we currently expect our results for the three months and fiscal year ended March 31, 2019 to be within the ranges set forth below, the audit of the Joint Venture’s financial statements for the year ended March 31, 2019 has not been completed. During the course of the preparation of the Joint Venture’s financial statements and related notes and the completion of the audit for the year ended March 31, 2019, additional adjustments to the preliminary estimated financial information presented below may be identified. Any such adjustments may be material. The Joint Venture’s independent registered public accounting firm, Deloitte & Touche LLP, has not audited, reviewed, compiled or performed any procedures with respect to this preliminary estimated financial data and, accordingly, Deloitte & Touche LLP does not express an opinion or any other form of assurance with respect thereto.

Based upon such preliminary estimated financial results, the Joint Venture expects solutions revenue, income (loss) before income tax provision (benefit) and Adjusted EBITDA for the three months and year ended March 31, 2019 to be between the ranges set out in the following table, as compared to the three months and year ended March 31, 2018:


	Three Months Ended March 31,				Year Ended March 31,
	2019 Low Estimate	2019 High Estimate	2018 Actual		2019 Low Estimate	2019 High Estimate	2018 Actual
	(in millions)
Solutions revenue	$	$	$	772.0	$	$	$	3,024.4
Income (loss) before income tax provision (benefit)	$	$	$	1.5	$	$	$	140.5
Adjusted EBITDA	$	$	$	249.9	$	$	$	943.8

The following table sets forth a reconciliation of our income (loss) before income tax provision (benefit) to Adjusted EBITDA for the periods indicated. Adjusted EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for our results as reported under GAAP. We believe income (loss) before income tax provision (benefit) is an appropriate measure for the reconciliation at this time given that our accounting for income taxes is not yet complete. Due to our complex capital and organizational structure as well as our need to prepare separate audited tax provisions for the Joint Venture and Change Healthcare Inc., the process to complete our accounting for income taxes is particularly complicated. We do not yet have the necessary information available, prepared, or analyzed to develop a reasonable estimate of our tax provision. Accordingly, we do not believe that a presentation or estimate based on currently available information would be meaningful to users of our financial statements or material to an understanding of our financial results. See “—Summary Historical Financial and Other Data” for a discussion on how we define and calculate Adjusted EBITDA and a discussion of why we believe this measure is important to an understanding of our business, financial condition and results of operations.


	Three Months Ended March 31,					Year Ended March 31,
	2019 Low Estimate	2019 High Estimate	2018 Actual			2019 Low Estimate	2019 High Estimate	2018 Actual
	(in millions)
Reconciliation of income (loss) before income tax provision (benefit) to Adjusted EBITDA:

Income (loss) before income tax provision (benefit)	$	$	$	1.5		$	$	$	140.5
Net interest expense				74.1					292.5
Depreciation and amortization				65.5					278.4
Amortization of software developed for sale				4.6					18.3

EBITDA				145.7					729.7
Adjustments to EBITDA:
Equity compensation ⁽¹⁾				5.2					24.7
Acquisition accounting adjustments ⁽²⁾				2.3					2.6
Acquisition and divestiture-related costs ⁽³⁾				1.0					1.8
Transactions-related costs ⁽⁴⁾				—					4.6
Integration and related costs ⁽⁵⁾				48.4					107.2
Management fees and related costs ⁽⁶⁾				2.6					11.5
Implementation costs related to recently issued accounting standards ⁽⁷⁾				6.1					26.6
Strategic initiatives, duplicative and transition costs ⁽⁸⁾				4.4					12.3
Severance costs ⁽⁹⁾				5.1					38.3
Accretion and changes in estimate, net ⁽¹⁰⁾				16.8					(50.0	)
Impairment of long-lived assets ⁽¹¹⁾				(1.8	)				0.8
Gain on sale of the Extended Care Business ⁽¹²⁾				—					—
Other non-routine, net ⁽¹³⁾				14.1					33.8

Total Adjustments to EBITDA				104.2					214.2

Adjusted EBITDA	$	$	$	249.9		$	$	$	943.8

(1)

Represents non-cash equity-based compensation of Change Healthcare Inc. to employees and directors of the Joint Venture. The Joint Venture believes this adjustment allows it to compare operating performance without regard to the impact of equity-based compensation expense, which varies from period to period based on the timing of grants and value of the options.

(2)

Represents adjustments that arose from acquisition method accounting following a business combination. These adjustments principally relate to the revaluation of deferred revenue to fair value and the subsequent reduction to recognized revenue. As the related revenue stream is an ongoing component of the Joint Venture’s business, the Joint Venture believes it is appropriate to consider these items in earnings in the period in which they would have been recognized absent the application of acquisition method accounting.

(3)	Represents acquisition, divestiture and related costs charged to operations.

(4)	Represents costs associated with the Transactions following the close of the Transactions and unrelated to integration efforts.

(5)	Represents incremental costs incurred in connection with the integration of Legacy CHC and Core MTS. Such costs include professional fees for consultants engaged in project management, process design, human resource policy harmonization, etc.

(6)	Represents management and advisory fees paid to McKesson and the Sponsors pursuant to a management services agreement. See “Certain Relationships and Related Person Transactions—Management Services Agreement.”

(7)	Represents external costs related to upcoming changes in accounting standards regarding the recognition of revenue and leases.

(8)	Represents adjustments for advisory and consulting fees incurred in connection with strategic initiatives and significant operations efficiency measures, including the rebranding of the Joint Venture and other costs.

(9)	Represents severance costs that primarily relate to operational efficiency measures.

(10)

Represents accretion of certain of the Joint Venture’s tax receivable agreement obligations from their initial fair value to the total expected payments due under such agreements as well as changes in estimate related to other tax receivable agreements. Because the amortized costs of these agreements are directly attributable to the Sponsors and their affiliates, the Joint Venture does not believe they represent a routine ongoing cost of operations of a typical business.

(11)	Represents impairment charges generally incurred in connection with the retirement of products or the abandonment of property and equipment or product development initiatives.

(12)	Represents the gain recognized from the sale of the extended care solutions business, which the Joint Venture divested in July 2018.

(13)	Represents other non-routine adjustments that management believes are not indicative of the Joint Venture’s ongoing operations. The following table shows a breakout of the components of Other non-routine, net:


	Three Months Ended March 31,				Year Ended March 31,
(in millions)	2019 Low Estimate	2019 High Estimate	2018 Actual		2019 Low Estimate	2019 High Estimate	2018 Actual
Other Adjustments to EBITDA:
Impairment of contract acquisition costs	$	$	$	—	$	$	$	5.2
Non-routine litigation related expenses				7.7				16.8
ASC 450 contingencies				—				2.7
Other (a)				6.4				9.1

Total Other non-routine, net:	$	$	$	14.1			$	33.8

(a)	Represents other miscellaneous adjustments to exclude the impact of non-routine and other items not reflective of the Joint Venture’s core operations.

The Offering

Common stock offered by Change Healthcare Inc.

shares (plus up to an additional shares at the option of the underwriters).

Common stock outstanding after giving effect to this offering

shares (or shares if the underwriters exercise in full their option to purchase additional shares of common stock).

Common stock outstanding after this offering assuming exchange of all LLC Units held by McKesson

shares (or shares if the underwriters exercise in full their option to purchase additional shares of common stock).

Use of proceeds

We estimate that the net proceeds to Change Healthcare Inc. from this offering, after deducting estimated underwriting discounts, will be approximately $ (or $ if the underwriters exercise in full their option to purchase additional shares of common stock). The Joint Venture will bear or reimburse Change Healthcare Inc. for all of the expenses payable by it in this offering (excluding underwriting discounts and commissions), which we estimate will be approximately $ .

The Joint Venture, in turn, expects to use these proceeds to repay outstanding indebtedness under our senior secured term loan facility totaling approximately $ million in aggregate principal amount (or $ million in aggregate principal amount if the underwriters exercise in full their option to purchase additional shares of common stock) at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and for general corporate purposes, including for working capital, capital expenditures, debt service and other general corporate purposes. See “Use of Proceeds.”

Voting rights

Each share of our common stock entitles its holder to one vote on all matters to be voted on by stockholders generally. See “Description of Capital Stock.” Prior to and immediately following this offering, each of Change Healthcare Inc. and McKesson holds a 50% voting interest in the Joint Venture, with equal representation on the Joint Venture’s board of directors and with all major operating, investing and financial activities requiring the consent of both members.

Dividend policy

The declaration, amount and payment of any future dividends will be at the sole discretion of our board of directors. Our board of directors

may take into account general economic and business conditions, our financial condition and operating results, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries (including the Joint Venture) to us, and such other factors as our board of directors may deem relevant.

Change Healthcare Inc. is a holding company and has no material assets other than its interest in the Joint Venture. As a result, Change Healthcare Inc. will not be able to pay any dividend unless the Joint Venture makes a distribution to its members in an amount sufficient to cover the dividend declared by Change Healthcare Inc. The ability of the Joint Venture to make distributions to us is restricted, among other things, by the terms of its debt agreements. If the Joint Venture makes such distributions to Change Healthcare Inc., McKesson will be entitled to participate ratably in such distributions for so long as it continues to hold LLC units.

Exchange rights of McKesson

Risk factors

See “Risk Factors” for a discussion of risks you should carefully consider before deciding to invest in our common stock.

Directed share program

At our request, the underwriters have reserved for sale, at the initial public offering price, up to % of the shares of common stock offered by this prospectus for sale to our directors, officers and certain of our employees and other persons associated with us. The sales will be made by J.P. Morgan Securities LLC, an underwriter of this offering, through a directed share program. If these persons purchase common stock it will reduce the number of shares of common stock available for sale to the general public. Any reserved shares of common stock that are not purchased will be offered by the underwriters to the general public on the same terms as the other shares of common stock offered by this prospectus.

Certain United States federal income and estate tax consequences to non-U.S. holders

For a discussion of certain United States federal income and estate tax consequences that may be relevant to non-U.S. stockholders, see “Certain United States Federal Income and Estate Tax Consequences to Non-U.S. Holders.”

Proposed trading symbol

“CHNG”

In this prospectus, unless otherwise indicated, the number of shares of common stock outstanding and the other information based thereon does not reflect:

•

shares of common stock issuable upon exercise of the underwriters’ option to purchase additional shares of common stock from us;

•

shares of common stock issuable upon exchange of LLC Units that will be held by McKesson immediately following this offering; or

•

shares of common stock that may be granted under the new or amended Change Healthcare Inc. Omnibus Incentive Plan (the “Omnibus Incentive Plan”). See “Management—Executive Compensation—Omnibus Incentive Plan.”

Summary Historical Financial and Other Data

Summary Historical Financial Data of Change Healthcare Inc.

The following table sets forth the summary historical financial data of Change Healthcare Inc. for the periods ended and at the dates indicated below. The summary historical statements of operations data and the summary statements of cash flows data for the year ended March 31, 2018 and the period from June 22, 2016 (inception) through March 31, 2017 and the summary balance sheet data as of March 31, 2018 and 2017 were derived from the audited financial statements of Change Healthcare Inc., included elsewhere in this prospectus. The summary historical statements of operations data and the summary statements of cash flows data for the nine months ended December 31, 2018 and 2017 and the summary balance sheet data as of December 31, 2018 were derived from the unaudited financial statements of Change Healthcare Inc., included elsewhere in this prospectus. The summary balance sheet data as of December 31, 2017 was derived from the unaudited financial statements of Change Healthcare Inc., not included in this prospectus. The unaudited financial statements of Change Healthcare Inc. have been prepared on the same basis as the audited financial statements and, in our opinion, have included all adjustments, which include only normal recurring adjustments, necessary to present fairly in all material respects our financial position and results of operations. The results for any interim period are not necessarily indicative of the results that may be expected for the full year.

Historical results are not necessarily indicative of the results expected for any future period. You should read the summary historical financial data below, together with the financial statements and related notes thereto appearing elsewhere in this prospectus, as well as “Organizational Structure,” “Selected Historical Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Certain Indebtedness,” and the other information included elsewhere in this prospectus.


	Change Healthcare Inc.
	Nine Months Ended						Year Ended March 31, 2018			Period from June 22, 2016 (inception) to March 31, 2017
	December 31, 2018			December 31, 2017			Year Ended March 31, 2018			Period from June 22, 2016 (inception) to March 31, 2017
	(In millions)
Summary Statement of Operations Data:
Revenue	$	—		$	—		$	—		$	—
Operating expenses:
General and administrative		0.2			0.1			0.2			0.8

Total operating expenses		0.2			0.1			0.2			0.8

Operating income (loss)		(0.2	)		(0.1	)		(0.2	)		(0.8	)
Loss from Equity Method Investment in Joint Venture		65.8			29.3			58.7			43.1
(Gain) Loss on Sale of Interests in Joint Venture		(0.7	)		—			—			—
Management fee income		(0.2	)		(0.1	)		(0.2	)		(0.8	)

Income (loss) before income tax provision (benefit)		(65.1	)		(29.3	)		(58.7	)		(43.1	)
Income tax provision (benefit)		(16.7	)		(111.7	)		(119.6	)		(16.8	)


	Change Healthcare Inc.
	Nine Months Ended						Year Ended March 31, 2018			Period from June 22, 2016 (inception) to March 31, 2017
	December 31, 2018			December 31, 2017			Year Ended March 31, 2018			Period from June 22, 2016 (inception) to March 31, 2017
	(In millions)
Net income (loss)	$	(48.4	)	$	82.4		$	61.0		$	(26.3	)


Summary Balance Sheet Data (at period end):
Cash and cash equivalents	$	3.6		$	—		$	—		$	—
Total assets	$	1,300.5		$	1,396.1		$	1,374.0		$	1,389.4
Total debt	$	—		$	—		$	—		$	—
Total stockholders’ equity	$	1,129.2		$	1,191.9		$	1,176.6		$	1,088.2

Summary Statement Statements of Cash Flows Data:
Net cash provided by (used in) operating activities	$	3.6		$	—		$	—		$	—
Net cash provided by (used in) investing activities	$	6.5		$	0.2		$	0.2		$	—
Net cash provided by (used in) financing activities	$	(6.5	)	$	(0.2	)	$	(0.2	)	$	—

Summary Historical Consolidated Financial Data of Change Healthcare LLC

The following table sets forth the summary historical consolidated financial and other data of Change Healthcare LLC, or the Joint Venture, for the periods ended and at the dates indicated below. The summary historical statements of operations data and the summary statements of cash flows data for the year ended March 31, 2018 and the period from June 17, 2016 (inception) through March 31, 2017 and the summary balance sheet data as of March 31, 2018 and 2017 were derived from the audited consolidated financial statements of Change Healthcare LLC, included elsewhere in this prospectus. The summary historical statements of operations data and the summary statements of cash flows data for the nine months ended December 31, 2018 and 2017 and the summary balance sheet data as of December 31, 2018 were derived from the unaudited condensed consolidated financial statements of Change Healthcare LLC, included elsewhere in this prospectus. The summary balance sheet data as of December 31, 2017 was derived from the unaudited condensed consolidated financial statements of Change Healthcare LLC, not included in this prospectus. The unaudited condensed consolidated financial statements of Change Healthcare LLC have been prepared on the same basis as the audited consolidated financial statements and, in our opinion, have included all adjustments, which include only normal recurring adjustments, necessary to present fairly in all material respects Change Healthcare LLC’s financial position and results of operations. The results for any interim period are not necessarily indicative of the results that may be expected for the full year.

Historical results are not necessarily indicative of the results expected for any future period. You should read the summary historical consolidated financial data below, together with the consolidated financial statements and related notes thereto appearing elsewhere in this prospectus, as well as “Organizational Structure,” “Selected Historical Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Certain Indebtedness,” and the other information included elsewhere in this prospectus.


	Change Healthcare LLC
	Nine Months Ended				Year Ended March 31, 2018		Period from June 17, 2016 (inception) to March 31, 2017
	December 31, 2018		December 31, 2017		Year Ended March 31, 2018
	(In millions)
Summary Statement of Operations Data:
Revenue:
Solutions revenue	$	2,264.7	$	2,252.5	$	3,024.4	$	283.5
Postage revenue		180.7		205.4		274.4		26.1

Total Revenue		2,445.4		2,457.9		3,298.8		309.6


	Change Healthcare LLC
	Nine Months Ended						Year Ended March 31, 2018			Period from June 17, 2016 (inception) to March 31, 2017
	December 31, 2018			December 31, 2017			Year Ended March 31, 2018
	(In millions)
Operating expenses:
Cost of operations (exclusive of depreciation and amortization below)		1,007.3			1,056.9			1,407.9			133.7
Research and development		159.6			171.4			221.7			22.6
Sales, marketing, general and administrative		620.6			534.4			749.9			109.9
Customer postage		180.7			205.4			274.4			26.1
Depreciation and amortization		208.1			212.9			278.4			26.5
Accretion and changes in estimate with related parties, net		13.3			(66.8	)		(50.0	)		(24.5	)
Impairment of long-lived assets and other exit related costs		—			—			0.8			48.7
Gain on Sale of the Extended Care Business		(111.4	)		—

Total operating expenses		2,078.2			2,114.2			2,883.0			343.0

Operating income (loss)		367.2			343.7			415.8			(33.4	)
Interest expense, net		241.8			218.4			292.5			22.4
Loss on extinguishment of debt		—			—			—			70.1
Contingent consideration		(0.9	)		—
Other, net		(13.8	)		(13.8	)		(17.2	)		(1.3	)

Income (loss) before income tax provision (benefit)		140.1			139.1			140.5			(124.6	)
Income tax provision (benefit)		1.0			(56.4	)		(51.9	)		(41.0	)

Net income (loss)	$	139.1		$	195.5		$	192.4		$	(83.6	)


Summary Balance Sheet Data (at period end):
Cash and cash equivalents	$	90.2		$	180.9		$	48.9		$	185.7
Total assets	$	6,241.9		$	6,195.9		$	6,200.9		$	6,283.5
Total debt	$	5,794.9		$	5,929.2		$	5,920.9		$	5,959.1
Tax receivable obligations to related parties	$	207.2		$	207.2		$	223.2		$	298.1
Members’ deficit	$	(945.4	)	$	(1,071.4	)	$	(1,066.2	)	$	(1,273.4	)

Summary Statement of Cash Flows Data:
Net cash provided by (used in) operating activities	$	248.8		$	292.2		$	324.8		$	(40.7	)
Net cash provided by (used in) investing activities	$	(33.4	)	$	(114.1)		$	(260.7	)	$	(11.2	)
Net cash provided by (used in) financing activities	$	(172.6	)	$	(179.8	)	$	(197.5	)	$	240.1

Summary Operational and Other Data(1):
Adjusted EBITDA(2)	$	677.8		$	694.1		$	943.8		$	82.1
Adjusted Net Income(2)	$	280.9		$	333.6		$	449.7		$	25.2

(1)

The Joint Venture uses a number of operational and other metrics in order to evaluate performance and make decisions about its business. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Change Healthcare LLC—Key Performance Measures” for additional information regarding its use of these metrics.

(2)

The Joint Venture defines Adjusted EBITDA as net income (loss) before net interest expense, income tax provision (benefit), depreciation and amortization, as adjusted to exclude the impact of certain items that are not reflective of its core operations. The Joint Venture defines Adjusted Net Income as net income (loss), as adjusted to exclude the impact of certain items that are not reflective of its core operations and further adjusted for the amortization expense resulting from adjustments of assets to fair value in connection with acquisition method accounting, and the tax effects of the foregoing adjustments.

Management uses Adjusted EBITDA and Adjusted Net Income to facilitate a comparison of the Joint Venture’s operating performance on a consistent basis from period to period that, when viewed in combination with the Joint Venture’s results according to GAAP, management believes provides a more complete understanding of the factors and trends affecting the Joint Venture’s business than GAAP measures alone. Management believes these non-GAAP measures assist the Joint Venture’s board of directors, management, lenders and investors in comparing the Joint Venture’s operating performance on a consistent basis because they remove, where applicable, the impact of the Joint Venture’s capital structure, asset base, acquisition accounting and other items that are not reflective of its core operations. Additionally, management uses Adjusted EBITDA and Adjusted Net Income to evaluate the Joint Venture’s operational performance, as a basis for strategic planning and as a performance evaluation metric in determining achievement of certain executive and management incentive compensation programs.

Despite the importance of these measures in analyzing the Joint Venture’s business, measuring and determining incentive compensation and evaluating the Joint Venture’s operating performance, as well as the use of Adjusted EBITDA and Adjusted Net Income measures by securities analysts, lenders and others in their evaluation of companies, Adjusted EBITDA and Adjusted Net Income have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for net income (loss), cash flow or other methods of analyzing the Joint Venture’s results as reported under GAAP. The Joint Venture does not use or present Adjusted EBITDA or Adjusted Net Income as a measure of liquidity or cash flow. Some of the limitations of these measures are:

•

they do not reflect the Joint Venture’s cash expenditures or future requirements for capital expenditures or contractual commitments;

•

they do not reflect changes in, or cash requirements for, the Joint Venture’s working capital needs;

•

Adjusted EBITDA does not reflect the interest expense or the cash requirements to service interest or principal payments on the Joint Venture’s debt;

•

Adjusted EBITDA does not reflect income tax payments the Joint Venture is required to make;

•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future and Adjusted EBITDA does not reflect any cash requirements for such replacements; and

•

other companies in the Joint Venture’s industry may calculate these measures differently, limiting their usefulness as comparative measures.

To properly and prudently evaluate the Joint Venture’s business, we encourage you to review the financial statements included elsewhere in this prospectus, and not rely on a single financial measure to evaluate the Joint Venture’s business. We also strongly urge you to review the reconciliation of net income (loss) to Adjusted EBITDA and Adjusted Net Income set forth below.

The following table sets forth a reconciliation of net income (loss) to Adjusted EBITDA and Adjusted Net Income:


	Nine Months Ended						Year Ended March 31, 2018			Period from June 17, 2016 (inception) to March 31, 2017
	December 31, 2018			December 31, 2017			Year Ended March 31, 2018			Period from June 17, 2016 (inception) to March 31, 2017
							(In millions)
Net income (loss)	$	139.1		$	195.5		$	192.4		$	(83.6	)
Interest expense, net		241.8			218.4			292.5			22.4
Income tax provision (benefit)		1.0			(56.4	)		(51.9	)		(41.0	)
Depreciation and amortization		208.1			212.9			278.4			26.5
Amortization of capitalized software developed for sale		10.9			13.7			18.3			1.5

EBITDA	$	600.9		$	584.1		$	729.7		$	(74.2	)
Adjustments to EBITDA:
Equity compensation(a)		16.4			19.5			24.7			0.7
Acquisition accounting adjustments(b)		3.2			0.2			2.6			0.1
Acquisition and divestiture-related costs(c)		11.5			0.8			1.8			—
Transaction-related costs(d)		—			4.6			4.6			43.3
Integration and related costs(e)		79.8			50.1			107.2			8.8
Management fees and related costs(f)		7.9			8.8			11.5			0.9
Implementation costs related to recently issued accounting standards(g)		7.2			20.5			26.6			1.6
Strategic initiative, duplicative and transition costs(h)		19.0			7.9			12.3			0.9
Severance costs(i)		14.3			33.2			38.3			2.2
Accretion and changes in estimate with related parties, net(j)		13.3			(66.8	)		(50.0	)		(24.5	)
Impairment of long-lived assets and other exit related costs(k)		3.7			2.6			0.8			48.7
Loss on extinguishment of debt(l)		—			—			—			70.1
Gain on Sale of the Extended Care Business(m)		(111.4	)		—			—			—
Contingent consideration(n)		(0.9	)		—			—			—
Other non-routine, net(o)		12.9			28.6			33.8			3.5

EBITDA Adjustments		76.9			110.0			214.2			156.3

Adjusted EBITDA(p)	$	677.8		$	694.1		$	943.8		$	82.1

Depreciation and amortization		(208.1	)		(212.9	)		(278.4	)		(26.5	)
Amortization of capitalized software developed for sale		(10.9	)		(13.7	)		(18.3	)		(1.5	)

Adjusted EBIT		458.8			467.5			647.1			54.1
Interest expense, net		(241.8	)		(218.4	)		(292.5	)		(22.4	)
Income tax provision (benefit)		(1.0	)		56.4			51.9			41.0
Amortization resulting from acquisition method adjustments(q)		110.3			135.7			174.1			16.6
Tax effect of EBITDA adjustments and amortization resulting from acquisition method adjustments(r)		(45.4	)		(107.6	)		(130.9	)		(64.1	)

Adjusted Net Income	$	280.9		$	333.6		$	449.7		$	25.2

(a)

Represents non-cash equity-based compensation of Change Healthcare Inc. to employees and directors of the Joint Venture. The Joint Venture believes this adjustment allows it to compare operating

performance without regard to the impact of equity-based compensation expense, which varies from period to period based on the timing of grants and value of the options.

(b)

(c)

Represents acquisition, divestiture and related costs charged to operations.

(d)

Represents costs associated with the Transactions following the close of the Transactions and unrelated to integration efforts.

(e)

Represents incremental costs incurred in connection with the integration of Legacy CHC and Core MTS. Such costs include professional fees for consultants engaged in project management, process design, human resource policy harmonization and other integration costs.

(f)

Represents management and advisory fees paid to McKesson and the Sponsors pursuant to a management services agreement. See “Certain Relationships and Related Person Transactions—Management Services Agreement.”

(g)

Represents external costs related to upcoming changes in accounting standards regarding the recognition of revenue and leases.

(h)

Represents adjustments for advisory and consulting fees incurred in connection with strategic initiatives and significant operations efficiency measures including the rebranding of the Joint Venture and other costs.

(i)

Represents severance costs that primarily relate to operational efficiency measures.

(j)

(k)

Represents impairment charges generally incurred in connection with the retirement of products or the abandonment of property and equipment, product development initiatives or executory contracts.

(l)

Represents the loss on extinguishment of debt that resulted from the Transactions.

(m)

Represents the gain recognized from the sale of the extended care solutions business, which the Joint Venture divested in July 2018.

(n)

Represents contingent consideration adjustments related to business combinations.

(o)

Represents other non-routine adjustments that management believes are not indicative of the Joint Venture’s ongoing operations. The following table shows a breakout of the components of Other non-routine, net:


	Nine Months Ended				Year Ended March 31, 2018		Period from June 17, 2016 (inception) to March 31, 2017
	December 31, 2018		December 31, 2017		Year Ended March 31, 2018		Period from June 17, 2016 (inception) to March 31, 2017
					(In millions)
Other Adjustments to EBITDA:
Impairment of contract acquisition costs	$	—	$	5.2	$	5.2	$	—
Non-routine litigation related expenses		7.8		9.4		16.8		—
ASC 450 contingencies		—		2.7		2.7		—
Other(i)		5.1		11.3		9.1		3.5

Total Other non-routine, net:	$	12.9	$	28.6	$	33.8	$	3.5

(i)

Represents other miscellaneous adjustments to exclude the impact of non-routine and other items not reflective of the Joint Venture’s core operations.

(p)

Includes approximately $1.1 million, $12.0 million, $15.7 million and $3.9 million of Adjusted EBITDA for the extended care solutions business, which the Joint Venture divested in July 2018 during the nine months ended December 31, 2018 and 2017, the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively.

(q)

Represents amortization of identifiable intangible assets that arose from the application of acquisition method accounting following a business combination. Such amounts exclude amortization of software developed following such business combinations. By excluding the impact of the increase in amortization expense due to fair value adjustments made as part of the acquisition accounting for such intangible assets, the Joint Venture believes that this adjustment and Adjusted Net Income, when considered together with its results of operations presented in accordance with GAAP, provide meaningful information about the performance of its core operations.

(r)

Represents the increase in the income tax provision resulting from the adjustments to EBITDA and Amortization resulting from acquisition method adjustments, taking into consideration the nature, affected consolidated subsidiary and relevant tax jurisdictions, incremental to the income tax provision (benefit) computed in accordance with GAAP. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Change Healthcare LLC—Qualified McKesson Exit” for information on how income taxes would be affected following a Qualified McKesson Exit.

Summary Historical Consolidated Financial Data of Legacy CHC

The following table sets forth the summary historical consolidated financial and other data of Legacy CHC as of and for the periods indicated. The summary historical consolidated statements of operations and consolidated statements of cash flows data for the fiscal years ended December 31, 2016 and 2015 and for the period from January 1, 2017 through February 28, 2017 and the summary historical consolidated balance sheet data as of February 28, 2017, December 31, 2016 and December 31, 2015 have been derived from Legacy CHC’s historical audited consolidated financial statements included elsewhere in this prospectus.

The summary historical financial data of Legacy CHC is qualified in its entirety by reference to, and should be read in conjunction with, the information contained in “Selected Historical Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as the historical consolidated financial statements and related notes of Legacy CHC included elsewhere in this prospectus.


	Legacy CHC
	Two Months Ended February 28, 2017		Year Ended
	Two Months Ended February 28, 2017		December 31, 2016		December 31, 2015
	(In millions)
Summary Statement of Operations Data:
Revenue:
Solutions revenue	$	204.4	$	1,252.2	$	1,124.2
Postage revenue		46.7		305.0		352.9

Total Revenue		251.1		1,557.2		1,477.1
Costs and expenses:
Cost of operations (exclusive of depreciation and amortization below)		98.3		561.1		507.4
Development and engineering		14.2		60.0		45.5
Sales, marketing, general and administrative		77.9		278.6		217.6
Customer postage		46.7		305.0		352.9
Depreciation and amortization		43.3		252.3		342.3
Accretion		2.7		8.1		10.5
Impairment of long-lived assets		—		0.7		8.6

Total costs and expenses		283.1		1,465.8		1,484.8


	Legacy CHC
	Two Months Ended February 28, 2017			Year Ended
	Two Months Ended February 28, 2017			December 31, 2016			December 31, 2015
	(In millions)
Operating income (loss)		(32.0	)		91.4			(7.7	)
Interest expense, net		30.0			185.9			168.3
Loss on extinguishment of debt		—			—			—
Contingent consideration		—			—			(4.8	)
Other		—			—			(0.8	)

Income (loss) before income taxes		(62.0	)		(94.5	)		(170.4	)
Income tax provision		(25.4	)		(19.1	)		(82.6	)

Net income (loss)	$	(36.6	)	$	(75.4	)	$	(87.8	)


Summary Balance Sheet Data (at period end):
Cash and cash equivalents	$	136.7		$	118.0		$	66.7
Total assets	$	4,378.0		$	4,502.5		$	4,557.2
Total debt(1)	$	2,762.9		$	2,761.0		$	2,774.0
Tax receivable obligations to related parties	$	183.3		$	180.6		$	173.5
Total equity	$	953.0		$	1,109.7		$	1,175.1

Summary Statement of Cash Flows Data:
Net cash provided by (used in) operating activities	$	31.1		$	211.8		$	166.8
Net cash provided by (used in) investing activities	$	(8.0	)	$	(123.0	)	$	(780.0	)
Net cash provided by (used in) financing activities	$	(4.5	)	$	(37.4	)	$	597.5

Summary Operational and Other Data:
Legacy CHC Adjusted EBITDA(2)	$	69.9		$	440.0		$	403.6

(1)

Total debt at February 28, 2017, December 31, 2016 and December 31, 2015 is reflected net of unamortized debt discount of approximately $32.7 million, $34.9 million and $47.8 million, respectively, related to original loan fees and original issue discount. Total debt at February 28, 2017, December 31, 2016 and December 31, 2015 also includes data sublicense and other financing arrangement obligations of $10.7 million, $10.9 million and $18.2 million, respectively.

(2)

The following table sets forth a reconciliation of net income (loss) to Legacy CHC Adjusted EBITDA. All of the items included in the reconciliation from net income (loss) to Legacy CHC Adjusted EBITDA are items that management believes were not reflective of Legacy CHC’s core operations. See “—Summary Historical Consolidated Financial Data of Change Healthcare LLC” above for a discussion regarding the use of Adjusted EBITDA.


	Two Months Ended February 28, 2017			Year Ended
	Two Months Ended February 28, 2017			December 31, 2016			December 31, 2015
	(In millions)
Net income (loss)	$	(36.6	)	$	(75.3	)	$	(87.8	)
Interest expense, net		30.0			185.9			168.3
Income tax provision		(25.4	)		(19.1	)		(82.6	)
Depreciation and amortization		43.3			252.2			342.3

Legacy CHC EBITDA	$	11.3		$	343.7		$	340.2


	Two Months Ended February 28, 2017		Year Ended
	Two Months Ended February 28, 2017		December 31, 2016		December 31, 2015
	(In millions)

Adjustments to EBITDA:
Equity compensation(a)		26.4		10.1		9.3
Acquisition accounting adjustments(b)		0.1		1.1		1.8
Acquisition-related cost(c)		0.8		6.8		8.4
Core MTS transaction-related costs(d)		21.7		28.4		—
Monitoring fees and related costs(e)		1.0		6.4		6.7
Strategic initiatives, duplicative and transition costs(f)		2.9		19.1		10.9
Severance costs(g)		0.5		12.7		7.0
Accretion and changes in estimate, net(h)		2.7		8.1		10.5
Impairment of long-lived assets(i)		—		0.7		8.6
Contingent Consideration(j)		—		—		(4.8	)
Other non-routine, net(k)		2.5		2.9		5.0

EBITDA Adjustments		58.6		96.3		63.4

Legacy CHC Adjusted EBITDA	$	69.9	$	440.0	$	403.6

(a)

Represents non-cash equity-based compensation of Legacy CHC to its employees and directors. We believe excluding this adjustment allows us to compare operating performance without regard to the impact of equity-based compensation expense, which varies from period to period based on the timing of grants and value of the options.

(b)

Represents adjustments that arose from acquisition method accounting following a business combination. These adjustments principally relate to the revaluation of deferred revenue to fair value and the subsequent reduction to recognized revenue. As the related revenue stream is ongoing, we believe it is appropriate to consider these items in earnings in the period in which they would have been recognized absent the application of acquisition method accounting.

(c)

Represents acquisition, divestiture and related costs charged to operations (excluding costs included in the adjustment discussed in (d) directly below).

(d)

Represents costs associated with the Transactions following the close of the Transactions and unrelated to integration efforts.

(e)

Represents management and advisory fees paid to the Sponsors.

(f)

(g)

Represents severance costs which primarily relate to changes in executive leadership and operational efficiency measures.

(h)

Represents accretion of certain tax receivable agreement obligations from their initial fair value to the total expected payments due under the agreement. Because the amortized costs of these agreements are directly attributable to the Sponsors and their affiliates, we do not believe they represent a routine ongoing cost of operations of a typical business.

(i)

Represents impairment charges generally incurred in connection with the retirement of products or the abandonment of property and equipment or product development initiatives.

(j)

Represents changes in the fair value of contingent consideration (i.e. earn-out) obligations associated with prior acquisitions.

(k)

Represents other non-routine adjustments that management believes are not indicative of ongoing operations.

Summary Historical Combined Financial Data of Core MTS

The following table sets forth the summary historical combined financial and other data of Core MTS as of and for the periods indicated. The summary historical combined balance sheet data as of February 28, 2017 and March 31, 2016 and the combined statements of operations and combined statements of cash flows data for the fiscal year ended March 31, 2016 and the period from April 1, 2016 to February 28, 2017 have been derived from Core MTS’ historical audited combined financial statements included elsewhere in this prospectus.

The summary historical combined financial data of Core MTS is qualified in its entirety by reference to, and should be read in conjunction with, the information contained in “Selected Historical Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as the historical combined financial statements and related notes of Core MTS included elsewhere in this prospectus.


	Core MTS
	Eleven Months Ended February 28, 2017			Year Ended March 31, 2016
	(In millions)
Summary Statement of Operations Data:
Revenue	$	1,712		$	1,909
Cost of Sales		(848	)		(951	)

Gross Profit		864			958
Operating Expenses
Selling, distribution and administrative expenses		(457	)		(448	)
Research and development		(159	)		(197	)

Total operating expenses		(616	)		(645	)

Operating income		248			313
Other income, net		2			3

Income before income taxes		250			316
Income tax expense		(14	)		(26	)

Net income		236			290
Net income attributable to noncontrolling interests		(1	)		(1	)

Net income attributable to Core MTS	$	235		$	289


Summary Balance Sheet Data (at period end):
Cash and cash equivalents	$	31		$	46
Total assets	$	2,002		$	1,966
Total equity	$	1,144		$	1,029

Summary Statement of Cash Flows Data:
Net cash provided by (used in) operating activities	$	180		$	375
Net cash provided by (used in) investing activities	$	(80	)	$	48
Net cash provided by (used in) financing activities	$	(116	)	$	(429	)

Summary Operational and Other Data:
Core MTS Adjusted EBITDA(1)	$	367		$	374

(1)

The following table sets forth a reconciliation of net income to Core MTS Adjusted EBITDA. All of the items included in the reconciliation from net income to Core MTS Adjusted EBITDA are items that management believes were not reflective of Core MTS’s core operations. See “—Summary Historical Consolidated Financial Data of Change Healthcare LLC” above for a discussion regarding the use of Adjusted EBITDA.


	Eleven Months Ended February 28, 2017			Year Ended March 31, 2016
	(In millions)
Net income attributable to Core MTS	$	235		$	289
Income tax expense		14			26
Depreciation and amortization		51			60

Core MTS EBITDA	$	300		$	375

Adjustments to EBITDA:
Equity compensation(a)		24			27
Severance and other restructuring costs(b)		(3	)		28
Implementation costs related to recently issued accounting standards(c)		2			4
Fixed asset (gain)/losses and gain on business sale(d)		(0	)		(58	)
Asset impairments(e)		15			11
Other income(f)		(2	)		(3	)
Foreign currency (gain)/loss(g)		(0	)		(3	)
Transaction, integration and exit costs(h)		52			—
Noncontrolling interest(i)		1			1
Amortization of deferred costs(j)		(1	)		(0	)
Strategic initiatives(k)		0			2
Divested and disposed businesses(l)		(21	)		(10	)

EBITDA Adjustments		67			(1	)

Core MTS Adjusted EBITDA	$	367		$	374

(a)

Represents non-cash expense related to stock options and restricted stock unit awards allocated from McKesson.

(b)

Represents severance and other restructuring expenses.

(c)

Represents external costs related to upcoming changes in accounting standards regarding the recognition of revenue.

(d)

Represents gains on sale of the nurse triage business within Connected Care and Analytics (“CCA”) and a portion of the ambulatory business within Business Performance Services (“BPS”).

(e)

Represents the non-cash impact of asset impairments of capitalized assets on the balance sheet.

(f)

Represents non-cash rental income from non-core assets that offsets depreciation expense and a portion of the gain on sale of the nurse triage business within CCA.

(g)

Represents non-cash foreign currency translation income and gain on foreign currency hedge.

(h)

Represents transaction costs related to the Transactions (including legal and consulting costs), in addition to integration costs.

(i)

Represents income attributed to a non-controlling interest at BPS and a smaller amount related to a divested business.

(j)

Represents amortization of set-up and implementation costs that are cash costs related to cost of operations and deducted in amortization above.

(k)

Represents costs associated with a one-time IT project and non-recurring strategic initiatives.

(l)

Deducts Adjusted EBITDA for divested businesses and certain discontinued services.

RISK FACTORS

An investment in shares of our common stock involves risks. You should carefully consider the following information about these risks, together with the other information contained in this prospectus, before investing in shares of our common stock.

Risks Related to Our Business and Industry

Our business faces significant competition, which may harm our business, results of operations or financial condition.

We face substantial competition from many healthcare information systems companies and other information technology (“IT”) and other technology companies within the healthcare IT and services markets. We also compete with certain of our customers that provide internally some of the same solutions that we offer. The vigorous competition we face requires us to provide high quality, innovative products at a competitive price. These competitive threats will likely remain or expand in the future. Our key competitors include:

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healthcare transaction processing companies, including those providing EDI services and/or internet-based services and those providing services through other means, such as paper and fax;

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healthcare information system vendors that support providers or payers with their revenue and payment cycle management, imaging usage, retrieval and management, capacity and resource management, and clinical information exchange processes, including physician and dental practice management, hospital information, imaging and workflow solutions and EHR vendors;

•

IT and healthcare consulting service providers;

•

healthcare insurance companies, pharmacy benefit management and pharmacy benefit administrator companies, hospital management companies and pharmacies that provide or are developing electronic transaction and payment distribution services for use by providers and/or by their members and customers;

•

healthcare payments and communication solutions providers, including financial institutions and payment processors that have invested in healthcare data management assets, and print and mail vendors;

•

healthcare eligibility and enrollment services companies;

•

healthcare payment accuracy companies;

•

healthcare engagement and transparency companies;

•

healthcare billing and coding services companies;

•

providers of other data products and data analytics solutions, including healthcare risk adjustment, quality, economic statistics and other data; and

•

licensors of de-identified healthcare information.

In addition, the increasing standardization of certain healthcare IT products and services has made it easier for companies to enter these markets with competitive products and services. Many software, hardware, information systems and business process outsourcing companies, both with and without healthcare companies as their partners, offer or have announced their intention to offer products or services that are competitive with solutions that we offer. There have been a number of recent entrants that have successfully marketed competitive solutions and they may expand these offerings in the future. We cannot fully anticipate whether or when companies in adjacent or other product, service or technology areas may launch competitive products, and any such entry may lead to obsolescence of our products or loss of market share or erosion of the prices for our solutions, or both. The extent of this competition varies by the size of companies, geographical coverage and

scope and breadth of products and services offered. Within certain of the markets in which we operate, our competitors are significantly larger and have greater financial or other resources than we do and have established reputations for success.

Additionally, the pace of change in the healthcare information systems market is rapid, and there are frequent new solution introductions, solution enhancements and evolving industry standards and requirements. We cannot guarantee that we will be able to upgrade our existing solutions or services, or introduce new solutions or services at the same rate as our competitors, or at all, nor can we guarantee that such upgrades or new solutions or services will achieve market acceptance over or among competitive offerings, or at all. Our competitors may also commercialize products, services or technologies that render our solutions obsolete or less marketable.

These competitive pressures could have a material adverse impact on our business, results of operations or financial condition.

Some of our existing customers compete with us, or may do so in the future, and some of our existing customers belong to alliances that compete with us, or may do so in the future, either with respect to the solutions or services we provide to them or with respect to some of our other lines of business. For example, some of our payer customers currently offer—through affiliated clearinghouses, web portals and other means—electronic data transmission services to providers that allow the provider to bypass third-party EDI service providers such as us, and additional payers may do so in the future. The ability of payers to replicate our solutions and the ability of providers to connect directly with payers may adversely affect the terms and conditions we are able to negotiate in our agreements with payers and our transaction volume with them, which directly relates to our revenue. In addition, to the extent that our customers elect to perform internally any of the business processes our solutions address, either because they believe they can provide such processes more efficiently internally or otherwise, we may lose such customers, or the volume of our business with such customers may be reduced, which could harm our business, results of operations or financial condition.

In recent years, the healthcare industry has been subject to increasing consolidation. Many healthcare organizations, including a number of our customers, have consolidated to create larger enterprises with greater market power. This consolidation trend could give the resulting enterprises greater bargaining power, which may lead to downward price pressure on our solutions or services, or less demand for them, or both. In addition, when our customers combine, they often consolidate infrastructure including IT systems, which in turn may erode the diversity of our customer and revenue base. Any of these effects could harm our business, results of operations or financial condition.

If we are unable to retain our existing customers or attract new customers, our business, financial condition or results of operations could suffer.

Our success depends substantially upon the retention of our existing customers and attracting new customers. We may not be able to retain our existing customers or attract new customers if we are unable to provide solutions or services that our existing or prospective payer customers believe enable them to achieve improved efficiencies and cost-effectiveness, and that our existing or prospective provider customers believe allow them to more effectively manage their revenue cycle, increase reimbursement rates and improve cash flows.

Our success in retaining and attracting customers will also depend, in part, on our ability to innovate successfully and be responsive to technological developments, pricing pressures and changing business models.

To remain competitive in the evolving healthcare IT markets, we must continuously upgrade our existing solutions, and develop and introduce new solutions on a timely basis. Future advances in healthcare IT could lead to new technologies, products or services that are competitive with our solutions, resulting in pricing pressure or rendering our solutions obsolete or not competitive. In addition, because we deliver enterprise-wide and single entity clinical, patient care, financial, imaging, supply chain and strategic management software solutions to payers, hospitals, physicians and other providers, our ability to integrate these software solutions could be challenged, which may impair our ability to retain customers and harm our reputation with existing and prospective customers. We also may not be able to retain or attract customers if our solutions contain errors or otherwise fail to perform properly, if our pricing structure is not competitive or if we are unable to renegotiate our customer contracts upon expiration.

Our revenue depends in part upon maintaining high customer retention rates and our future growth depends on attracting new customers. If we are unable to maintain our customer retention rates, or if we are unable to attract new customers, our business, results of operations or financial condition could be adversely impacted.

If we are unable to connect to a large number of payers and providers, our solutions would be limited and less desirable to our customers.

Our business largely depends upon our ability to connect electronically to a substantial number of payers, such as insurance companies, Medicare and Medicaid agencies and pharmacy benefit managers and administrators, and providers, such as hospitals, physicians, clinics, dentists, laboratories and pharmacies. The attractiveness of some of the solutions we offer to providers, such as our claims management and submission services, depends in part on our ability to connect to a large number of payers, which allows us to streamline and simplify workflows for providers. These connections may be made either directly or through a clearinghouse. We may not be able to maintain our connections with a large number of payers on satisfactory terms and we may not be able to develop new connections, either directly or through other clearinghouses, on satisfactory terms. The failure to maintain these connections could cause our solutions to be less attractive to our provider customers. In addition, our payer customers view our relationships with providers as desirable in allowing them to receive a high volume of transactions electronically and realize the resulting cost efficiencies through the use of our solutions. Competing EDI service providers can easily establish connections with payers and providers and thereby may replicate the solutions we provide. Our failure to maintain existing connections with payers, providers and other clearinghouses or to develop new connections as circumstances warrant, or an increase in the utilization of direct links between payers and providers, could cause our electronic transaction processing systems to be less desirable to healthcare constituents, which would reduce the number of transactions that we process, which would reduce our revenue and could have a material adverse impact on our business, results of operations or financial condition.

If our solutions do not interoperate with our customers’ or their vendors’ networks and infrastructures, or if our customers or their vendors implement new system updates that are incompatible with our solutions, sales of our solutions could be adversely affected.

Our solutions must interoperate with our customers’ and their vendors’ existing infrastructures, which often have different specifications, rapidly evolve, utilize multiple protocol standards, deploy products and applications from multiple vendors, and contain multiple generations of products that have been added to that infrastructure over time. Some of the technologies supporting our customers and their vendors are changing rapidly and we must continue to adapt to these changes in a timely and effective manner at an acceptable cost. In addition, our customers and their vendors may implement new technologies into their existing networks and systems infrastructures that may not immediately interoperate with our solutions. Our continued success will depend on our ability to adapt to changing technologies, manage and process ever-increasing amounts of data and information and improve the performance, features and reliability of our services in response to changing customer and industry demands. If we encounter complications related to network configurations or settings, we may have to modify our solutions to enable them to interoperate with our customers’ and their vendors’ networks

and can manage our customers’ transactions in the manner intended. For example, if our customers or their vendors implement new encryption protocols, it may be necessary for us to obtain a license to implement or interoperate with such protocols, and there can be no assurance that we will be able to obtain such a license on acceptable terms, if at all. These difficulties, and other difficulties we may experience, could delay or prevent the successful design, development, testing, introduction or marketing of our solutions. As a consequence of any of the foregoing, our ability to sell our solutions may be impaired, which could have a material adverse impact on our business, results of operations or financial condition.

We have entered into contracts with our channel partners to market and sell some of our solutions. Most of these contracts are on a non-exclusive basis. However, under contracts with some of our channel partners, we may be bound by provisions that restrict our ability to market and sell our solutions to potential customers. Our arrangements with some of these channel partners involve negotiated payments to them based on percentages of revenue they generate. If the payments prove to be too high, we may be unable to realize acceptable margins, but if the payments prove to be too low, our channel partners may not be motivated to produce a sufficient volume of revenue. The success of these partnerships will depend in part upon the channel partners’ own competitive, marketing and strategic considerations, including the relative advantages of using alternative solutions being developed and marketed by them or our competitors. If any of these channel partners is unsuccessful in marketing our solutions or seeks to amend the financial or other terms of the contracts we have with them, we may need to broaden our marketing efforts to increase focus on the solutions they sell and alter our distribution strategy, which may divert our planned efforts and resources from other projects and increase our costs generally. In addition, as part of the packages these channel partners sell, they may offer a choice to their customers between solutions that we supply and similar solutions offered by our competitors or by the channel partners directly. If our solutions are not chosen for inclusion in these packages, the revenue we earn from our channel partner relationships will decrease. Lastly, we could be subject to claims and liability as a result of the activities, products or services of these channel partners or other resellers of our solutions. Even if these claims do not result in liability to us, investigating and defending these claims could be expensive, time-consuming and result in adverse publicity that could have a material adverse impact on our business, results of operations or financial condition.

Our business strategy and future success depend on our ability to cross-sell our solutions.

Our ability to generate revenue and growth partly depends on our ability to cross-sell our solutions to our existing customers and new customers. We have identified our ability to successfully cross-sell our solutions as a key part of our business strategy and therefore one of the most significant factors influencing our growth. We may not be successful in cross-selling our solutions because our customers may find our additional solutions unnecessary, unattractive or cost-ineffective. Our failure to sell additional solutions to our existing and new customers could negatively affect our ability to grow our business.

If we are unable to successfully expand our sales force productivity, sales of our solutions and the growth of our business and financial performance could be harmed.

We continue to invest significantly in our sales force to obtain new customers and increase sales to existing customers. There is significant competition for sales personnel with the skills and technical knowledge that we require. Our ability to achieve significant revenue growth and profitably will depend, in large part, on our success in recruiting, training and retaining sufficient numbers of sales personnel to support our sales efforts. A portion of our current sales personnel are new to our company. New hires require significant training and may require a lengthy onboarding process before they achieve full productivity. Our recent hires and planned hires may not

become productive as quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do business. If we are unable to recruit, train and retain a sufficient number of productive sales personnel, sales of our solutions and the growth of our business could be harmed. Additionally, if our efforts to improve sales force productivity do not result in increased revenue, our operating results could be negatively impacted due to increased operating expenses associated with these efforts.

We have faced and will continue to face pressure to reduce our prices, which may reduce our margins, profitability and competitive position.

As electronic transaction processing has further penetrated the healthcare market and has become highly standardized, competition among revenue cycle management software and EDI providers is increasingly focused on providing value added services and capabilities to customers. This competition has placed pressure, and could place further pressure, on us to add functionality and keep our prices competitive in order to retain market share. Likewise, as a result of Medicare or Medicaid payment reductions and other reimbursement changes, our provider customers have sought, and may attempt in the future to seek, price concessions from us. If we are unable to reduce our costs sufficiently to offset declines in our prices, or if we are unable to introduce new, innovative offerings with higher margins, it could have a material adverse impact on our business, results of operations or financial condition.

In addition, many healthcare industry constituents are consolidating to create integrated healthcare delivery systems with greater market power. As provider networks, such as hospitals, and payer organizations, such as private insurance companies, consolidate, competition to provide the types of solutions we provide may become more intense and the importance of establishing and maintaining relationships with key healthcare industry constituents could increase. These healthcare industry constituents have used in the past, and likely will try to use in the future, their market power—particularly where it has been increased following mergers and consolidations—to negotiate price reductions for our solutions. If we are forced to further reduce prices, our margins will decrease and our results of operations could deteriorate, unless we are able to achieve corresponding reductions in expenses.

While we characterized 87% of the Joint Venture’s solutions revenue for the fiscal year ended March 31, 2018 as Recurring Revenue, a significant portion of such Recurring Revenue was earned on a per transaction basis (or was derived from transaction-related services) and, as a result, even our Recurring Revenue is tied to our customer’s transaction, payment and reimbursement volumes (see “Method of Calculation” for our definition of Recurring Revenue) and generally is not contractually required to be paid in the absence of the occurrence of healthcare transactions, which themselves are not subject to any minimum or other similar volume requirements under contracts with our customers. In addition, some of our contracts with our customers generally can be terminated or not renewed without penalty and on little or no advance notice. As a result, our Recurring Revenue is highly dependent on maintaining our customer base as well as on the transaction volume generally in the U.S. healthcare industry since such revenue directly correlates with healthcare transaction, payment and reimbursement volumes in the United States. For example, in the United States our revenue can be adversely affected by the impact of lower healthcare utilization trends driven by higher unemployment or other economic factors. Further, weakened economic conditions or a recession could reduce the amounts that patients are willing or able to spend on healthcare services. As a result, patients may elect to delay or forgo seeking healthcare services and increases in unemployment rates could cause commercial payer membership to decline, which could further reduce healthcare utilization and our transaction volumes. In addition, such events could decrease payer or provider demand for our solutions, which could further adversely impact our revenue, including our Recurring Revenue.

Various factors may cause temporary or sustained disruption to U.S. healthcare transaction volumes. The impact such disruptions would have on our business will depend upon the magnitude and duration of any such disruption. These factors include, among others:

•

the financial stability of our customers and the U.S. healthcare industry generally, and the impact of any fundamental corporate changes to healthcare providers and payers, such as hospital and insurance consolidations, on the cost and availability of, and the rate of reimbursement for, healthcare services;

•

political, legislative, regulatory and other changes in how healthcare services are covered, delivered and reimbursed, including any future changes to the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”), Medicare, Medicaid and other federal, state and local healthcare regulations;

•

factors that may affect demand for healthcare services, such as rising healthcare costs, increased copayment requirements and unemployment; and

•

general economic conditions.

Any temporary or sustained decrease in healthcare transaction, payment or reimbursement volumes in the United States could have a material adverse impact on our business, results of operations or financial condition.

An economic downturn or volatility could have a material adverse impact on our business, results of operations or financial condition.

The United States and world economies have experienced significant economic uncertainty and volatility during recent years. A weakening of economic conditions could lead to reductions in demand for our solutions. As a result of volatile or uncertain economic conditions, we may experience the negative effects of increased financial pressures on our payer and provider customers. For instance, our business could be negatively impacted by increased competitive pricing pressure and a decline in our customers’ creditworthiness, which could result in us incurring increased bad debt expense. Additionally, volatile or uncertain economic conditions in the United States and other parts of world could lead our government customers to terminate, or elect not to renew, existing contracts with us, or not enter into new contracts with us. If we are not able to timely and appropriately adapt to changes resulting from a weak economic environment, it could have a material adverse impact on our business, results of operations or financial condition.

Our ability to generate revenue could suffer if we do not continue to update and improve our existing solutions and develop new ones.

We must continually improve the functionality of our existing solutions in a timely manner and introduce new and valuable healthcare IT and service solutions in order to respond to technological and regulatory developments and customer demands and, thereby, retain existing customers and attract new ones. For example, from time to time, government agencies may alter format and data code requirements applicable to electronic transactions. In addition, our customers may request that our solutions be customized to satisfy particular security protocols, modifications and other contractual terms in excess of industry norms and our standard configurations. We may not be successful in responding to technological and regulatory developments or changing customer needs. In addition, these regulatory or customer-imposed requirements may impact the profitability of particular solutions and customer engagements. The pace of change in the markets we serve is rapid, and there are frequent new product and service introductions by our competitors and channel partners who use our solutions in their offerings. If we do not respond successfully to technological and regulatory changes, as well as evolving industry standards and customer demands, our solutions may become obsolete. Technological changes also may result in the offering of competitive solutions at lower prices than we are charging for our solutions, which could result in our losing sales unless we lower the prices we charge or provide additional efficiencies or capabilities to the customer. If we lower our prices on some of our solutions, we will need to increase our margins on other solutions in order to maintain our overall profitability.

Achieving market acceptance of new or updated solutions is necessary in order for them to become profitable and will likely require significant efforts and expenditures.

Our future financial results will depend in part on whether our new or updated solutions receive sufficient customer acceptance. Achieving market acceptance for new or updated solutions is likely to require substantial marketing efforts and expenditure of significant funds to create awareness and demand by our existing or prospective customers. In addition, deployment of new or updated solutions may require the use of additional resources for training our existing sales force and customer service personnel and for hiring and training additional salespersons and customer service personnel. Failure to achieve broad penetration in target markets with respect to new or updated solutions could have a material adverse impact on our business, results of operations or financial condition.

There are increased risks of performance problems and breaches during times when we are making significant changes to our solutions or to systems we use to provide our solutions. In addition, changes to our solutions or systems, including cost savings initiatives, may cost more than anticipated, may not provide the benefits expected, may take longer than anticipated to develop and implement or may increase the risk of performance problems.

In order to respond to technological changes, such as continuing development in the areas of data analytics, ML, AI and blockchain, among others, as well as regulatory changes and evolving security risks and industry standards, our solutions and the software and systems we use to provide our solutions must be continually updated and enhanced. Because some of the software and systems that we use to provide solutions to customers are inherently complex, changing, updating, enhancing and creating new versions of our solutions or the software or systems we use to provide our solutions create a risk of errors or performance problems, despite testing and quality control. We cannot be certain that errors will not arise in connection with any such changes, updates, enhancements or new versions, especially when first introduced. Even if our new, updated or enhanced solutions do not have performance problems, our technical and customer service personnel may have difficulties installing them or providing any necessary training and support to customers, and our customers may not follow our guidance on appropriate training, support and implementation for such new, updated or enhanced solutions. In addition, changes in our technology and systems may not provide the additional functionality or other benefits that were expected.

Implementation of changes in our technology and systems may cost more or take longer than originally expected and may require more testing than initially anticipated. While new, updated or enhanced solutions will be tested before they are used in production, we cannot be sure that the testing will uncover all problems that may occur in actual use.

We also periodically implement efficiency measures and other cost-saving initiatives to improve our operating performance. These efficiency measures and other cost-saving initiatives may not provide the benefits anticipated or do so in the expected time frame. Implementation of these measures may also increase the risk of performance issues due to unforeseen impacts on our organization, systems and processes.

If significant problems occur as a result of these changes, we may fail to meet our contractual obligations to customers, which could result in claims being made against us or in the loss of customer relationships.

Our business will suffer if we fail to successfully integrate acquired businesses and technologies or to appropriately assess the risks in particular transactions.

We historically have acquired, and in the future may acquire, businesses, technologies, services, product lines and other assets. The successful integration of any businesses and assets we have acquired or may acquire can be critical to our future performance. The amount and timing of the expected benefits of any acquisition,

including potential synergies, are subject to risks and uncertainties. These risks and uncertainties include, but are not limited to, those relating to:

•

our ability to maintain relationships with the customers and suppliers of the acquired business;

•

our ability to cross-sell solutions to customers with which we have established relationships and those with which the acquired businesses have established relationships;

•

our ability to retain or replace key personnel of the acquired business;

•

potential conflicts in payer, provider, vendor or marketing relationships;

•

our ability to coordinate organizations that are geographically diverse and may have different business cultures;

•

the diversion of management’s attention to the integration of the operations of businesses or other assets we have acquired;

•

the continued coordination and cooperation with sellers pursuant to transition services agreements;

•

difficulties in the integration or migration of IT systems, including secure data sharing across networks securely and maintaining the security of the IT systems; and

•

compliance with regulatory, contracting and other requirements, including internal control over contracting and financial reporting.

We cannot guarantee that any acquired businesses, technologies, services, product lines or other assets will be successfully integrated with our operations in a timely or cost-effective manner, or at all. Failure to successfully integrate acquired businesses or to achieve anticipated operating synergies, revenue enhancements or cost savings could have a material adverse impact on our business, results of operations or financial condition.

Although our management attempts to evaluate the risks inherent in each transaction and to evaluate acquisition candidates appropriately, we may not properly ascertain all such risks and the acquired businesses or other assets may not perform as we expect or enhance the value of the Company as a whole. Acquired companies or businesses also may have larger than expected liabilities that are not covered by the indemnification, if any, that we are able to obtain from the sellers. Furthermore, the historical financial statements of the companies we have acquired or may acquire in the future are prepared by management of such companies and are not independently verified by our management. In addition, any pro forma financial statements prepared by us to give effect to such acquisitions may not accurately reflect the results of operations of such companies that would have been achieved had the acquisition of such entities been completed at the beginning of the applicable periods. There are also no assurances that we will continue to acquire businesses at valuations consistent with our prior acquisitions or that we will complete acquisitions at all. If we are unable to successfully complete and integrate strategic acquisitions in a timely manner, our business and growth strategies could be negatively affected.

We may not realize the anticipated benefits of divestitures.

From time to time we may divest assets or businesses. We may encounter difficulty in finding or completing divestiture opportunities or alternative exit strategies on acceptable terms or in a timely manner. These circumstances could delay the achievement of our strategic objectives or cause us to incur additional expenses with respect to assets or a business that we want to dispose of, or we may dispose of assets or a business at a price or on terms that are less favorable than we had anticipated. Additionally, such dispositions could result in disruption to other parts of our business, potential loss of employees or customers, exposure to unanticipated liabilities or result in ongoing obligations and liabilities to us following any such divestiture. For example, in connection with a disposition, we may be contractually obligated with respect to certain continuing obligations to customers, vendors, or other third parties and we may also have continuing indemnities and obligations for pre-existing liabilities related to the assets or businesses. Such obligations could have a material adverse impact on our business, results of operations or financial condition.

Our business would be adversely affected if we cannot obtain, process or distribute the highly regulated data we require to provide our solutions.

Our business relies on our ability to obtain, process, monetize and distribute highly regulated data in the healthcare industry and in other industries, in a manner that complies with applicable law, regulation and contractual and technological restrictions. The failure of either us or our data suppliers and processors to obtain such data in a compliant manner could have a harmful effect on our ability to use and disclose such data which in turn could impair our functions and operations, including our ability to share such data with third parties or incorporate it into our services and offerings. In addition to complying with requirements in obtaining the data, the use, processing and distribution of such data may require us or our data suppliers and processors to obtain consent from third parties or follow additional laws, regulations or contractual and technological restrictions that apply to the healthcare industry and other industries. These requirements could interfere with or prevent creation or use of rules and analyses or limit other data-driven activities that benefit us. Moreover, we may be subject to claims or liability for use or disclosure of information by reason of lack of valid notice, permission, or waiver. We have policies and procedures in place addressing the proper handling and use of data, but could face claims that our data practices may occur in a manner not permitted under applicable laws or the Company’s agreement with or obligations to data providers, individuals or other third parties, as more specifically described below. These claims or liabilities and other failures to comply with applicable requirements could subject us to unexpected costs and adversely affect our operating results.

We must meet our customers’ service level expectations and our contractual obligations with respect to our solutions. Failure to do so could subject us to liability or cause us to lose customers. In some cases, we rely upon third-party contractors (which, along with suppliers and other third-party vendors, we also refer to as “vendors”) to assist us in providing our solutions. Our ability to meet our contractual obligations and customer expectations thus may be impacted by the performance of our vendors and their ability to comply with applicable laws and regulations. For example, our electronic payment and remittance solutions depend in part on the ability of our vendors to comply with applicable banking, financial service and payment card industry requirements and their failure to do so could cause an interruption in the solutions we provide or require us to seek alternative solutions or relationships. We likely will incur increased development costs to upgrade our software to be in compliance with changing and evolving standards, and delays may result in connection therewith. If our solutions are not in compliance with these evolving standards, our market position and sales could be adversely affected and we may have to invest significantly in changes and updates to our solutions, which could materially and adversely impact our financial condition and operating results.

Some of our solutions are intended to provide information to healthcare professionals in the course of delivering patient care. Although our contracts disclaim liability for medical decisions and responsibility for patient care, if use of or inability to use our solutions leads to faulty clinical decisions or injury to patients, such disclaimers may be unenforceable and we could be subject to claims or litigation, including product liability and warranty claims, by healthcare professionals, their patients or our customers. Product liability and warranty claims often involve very large or indeterminate amounts, including punitive damages. The magnitude of potential losses from product liability lawsuits may remain unknown for substantial periods of time, and the related legal defense costs may be significant. We could experience material warranty or product liability losses in the future and incur significant costs to defend these claims. In addition, if any of our products or services are, or are alleged to be, defective, we may voluntarily participate, or be required by regulatory authorities to participate, in a recall of that product or service. In the event of a recall, we may lose sales and be exposed to individual or class-action litigation claims. Further, negative publicity regarding a quality or safety issue, whether accurate or inaccurate, could harm our reputation, decrease demand for our solutions, lead to withdrawals of our solutions or impair our ability to successfully launch and market our solutions in the future. Product liability,

warranty and recall costs may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Some of the software and systems that we use to provide our solutions are inherently complex. Errors or downtime in the software and systems we use to provide our solutions could negatively impact our customers. For example, because of the large amount of data we collect and manage, it is possible that hardware failures and errors in our systems could result in data loss or corruption or cause the information that we collect to be incomplete or contain inaccuracies that our customers could regard as significant. In addition, errors in our transaction processing systems could result in payers paying the wrong amount, making payments to the wrong payee or delayed payments. Although we seek to address any errors or downtime with updates to the software and systems, if we are unable to promptly remedy any errors or our customers do not implement system updates, the software and systems could be compromised or our customers could experience prolonged downtimes relating to the software and systems. If problems occur or persist, our customers may seek compensation from us, seek to terminate their contracts with us, withhold payments to us, seek refunds from us of part or all of the fees charged under our contracts, ask us to reconstruct lost or corrupted data at our expense, request a loan or advancement of funds or initiate litigation or other dispute resolution procedures. We also may be subject to claims against us by others affected by any such problems. Further, some of our existing and prospective customers may be reluctant or unwilling to use cloud-based services, because they have concerns regarding the risks associated with the security and reliability of the technology delivery model associated with these services. If our existing or prospective customers do not perceive the benefits of our services, then the market for these solutions may not expand as much or develop as quickly as we expect, either of which would adversely affect our business, financial condition, or operating results.

We attempt to limit, by contract, our liability for damages arising from our negligence, errors, mistakes or security breaches. However, contractual limitations on liability may not be accepted by our customers, may not be enforceable or may otherwise not provide sufficient protection to us from liability for damages. We maintain liability insurance coverage, including coverage for errors and omissions and cyber-liability. It is possible, however, that claims could be denied or exceed the amount of our applicable insurance coverage, if any, or that this coverage may not continue to be available on acceptable terms or in sufficient amounts. Even if these claims do not result in liability to us, investigating and defending against them could be expensive and time consuming and could divert management’s attention away from our operations. In addition, negative publicity caused by these events may negatively impact our customer relationships, market acceptance of our solutions, including unrelated solutions, or may harm our reputation and our business.

Our data and network operations centers are essential to our business. Our business operations depend on our ability to maintain and protect our network and computer systems, many of which are located in our primary data and operations centers that we own and operate and some of which are outsourced to certain third-party hosting providers. We have consolidated several satellite data centers and plan to continue such consolidation. We also provide remote and cloud hosting services that involve operating both our software and the software of vendors for our customers. The ability to access the systems, applications, and data that we host and support on demand is important to our customers.

Our operations and facilities are vulnerable to interruption and/or damage from a number of sources, many of which are beyond our control, including, without limitation: (1) power loss and telecommunications failures; (2) fire, flood, hurricane and other natural disasters; (3) software and hardware errors, failures or crashes; and (4) cyber and ransomware attacks, computer viruses, hacking, break-ins, sabotage, intentional acts of vandalism and other similar disruptive problems. The occurrence of any of these events could result in interruptions, delays or cessations in service to users of our solutions, which could impair or prohibit our ability to provide our solutions, reduce the attractiveness of our solutions to our customers and could have a material adverse impact on

our business, results of operations or financial condition. If customers’ access to our solutions is interrupted because of problems in the operation of our or their facilities, we could be in breach of our agreements with customers and/or exposed to significant claims, particularly if the access interruption is associated with problems in the timely delivery of medical care.

We attempt to mitigate these risks through various means including disaster recovery and business continuity plans, penetration testing, vulnerability scans, patching and other information security procedures and cybersecurity and ransomware measures, insurance against fires, floods, other natural disasters, cyber-liability and general business interruptions, and customer and employee training and awareness, but our precautions cannot protect against all risks. Any significant instances of system downtime could negatively affect our reputation and ability to provide our solutions or remote hosting services, which could have a material adverse impact on our business, results of operations or financial condition.

We also rely on a number of vendors, such as cloud service providers, to provide us with a variety of solutions and services, including cloud-based data hosting, telecommunications and data processing services necessary for our transaction services and processing functions and software developers for the development and maintenance of certain software products we use to provide our solutions. As a result, our disaster recovery and business continuity plans may rely, in part, upon vendors of related services. If these vendors do not fulfill their contractual obligations, have system failures or choose to discontinue their products or services, our business and operations could be disrupted, our brand and reputation could be harmed and our financial condition or operating results could be adversely affected.

Breaches and failures of our IT systems and the security measures protecting them, and the sensitive information we transmit, use and store, expose us to potential liability and reputational harm.

Our business relies on sophisticated information systems to obtain, rapidly process, analyze, and manage data, affecting our ability to manufacture, purchase, distribute, and process products and services. To the extent our IT systems are not successfully implemented or fail, our business and results of operations may be adversely affected. Our business and results of operations may also be adversely affected if a vendor servicing our IT systems does not perform satisfactorily, or if the IT systems are interrupted or damaged by unforeseen events, including the actions of third parties. Further, our business relies to a significant degree upon the secure transmission, use and storage of sensitive information, including protected health information and other personally identifiable information, financial information and other confidential information and data within these systems.

To protect this information, we seek to implement commercially reasonable security measures and maintain information security policies and procedures informed by requirements under applicable law and recommended practices, in each case, as applicable to the data collected, hosted and processed. Despite our security management efforts with respect to physical and technological infrastructure, employee training, vendor (and sub-vendor) controls and contractual relationships, our infrastructure, data or other operation centers and systems used in connection with our business operations, including the internet and related systems of our vendors (including vendors to which we outsource data hosting, storage and processing functions) are vulnerable to, and from time to time experience, unauthorized access to data and/or breaches of confidential information due to criminal conduct, physical break-ins, hackers, employee or insider malfeasance and/or improper employee or contractor access, computer viruses, programming errors, denial-of-service attacks, ransomware events, phishing schemes, fraud, terrorist attacks, human error or other breaches by insiders or third parties or similar disruptive problems. It is not possible to prevent all security threats to our systems and data. Techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and may be difficult to detect for long periods of time. Further, defects in the design or manufacture of the hardware, software or applications we develop or procure from third parties could compromise our IT systems. These events, including unauthorized access, misappropriation, disclosure or loss of sensitive information (including financial or personal health information) or a significant disruption of our network, expose us to risks including risks to our ability to provide our solutions

and fulfill contractual demands, management distraction and the obligation to devote significant financial and other resources to mitigate such problems and increases to our future information security costs, including through organizational changes, deploying additional personnel and protection technologies, further training of employees, changing vendor (and sub-vendor) control practices, and engaging third-party experts and consultants. Moreover, unauthorized access, use or disclosure of certain sensitive information in our possession or our failure to satisfy legal requirements, including requirements relating to safeguarding protected health information under the Health Insurance Portability and Accountability Act (“HIPAA”) and personal information under the European Union (“EU”)’s General Data Protection Regulations (“GDPR”) or state data privacy laws, as discussed further below, could result in civil and criminal liability and regulatory action, which could result in potential fines and penalties, as well as costs relating to investigation of an incident or breach, corrective actions, required notifications to regulatory agencies and customers, credit monitoring services and other necessary expenses. In addition, actual or perceived breaches of our security management efforts can cause existing customers to terminate their relationship with us and deter existing or prospective customers from using or purchasing our solutions in the future. These events can have a material adverse impact on our business, results of operations, financial condition and reputation.

Because our products and services involve the storage, use and transmission of personal information of consumers, we and other industry participants have been and expect to routinely be the target of attempted cyber and other security threats by outside third parties, including technically sophisticated and well-resourced bad actors attempting to access or steal the data we store. Vendor, insider or employee cyber and security threats also occur and are a significant concern for all companies, including ours. Recently, there have been a number of high profile security breaches involving the improper dissemination of personal information of individuals both within and outside of the healthcare industry. These breaches have resulted in lawsuits and governmental enforcement actions that have sought or obtained significant fines and penalties, and have required companies to enter into agreements with government regulators that impose ongoing obligations and requirements, including internal and external (third party) monitorships for five years or more. While we maintain liability insurance coverage including coverage for errors and omissions and cyber-liability, claims may not be covered or could exceed the amount of our applicable insurance coverage, if any, or such coverage may not continue to be available on acceptable terms or in sufficient amounts.

We rely on internet infrastructure, bandwidth providers, data center providers, other third parties and our own systems in providing certain of our solutions to our customers, and any failure or interruption in the services provided by these third parties or our own systems could expose us to litigation and negatively impact our relationships with customers, adversely affecting our brand and our business.

Our ability to deliver our solutions is dependent on the development and maintenance of the infrastructure of the Internet and other telecommunications services by third parties. This includes maintenance of a reliable network connection with the necessary speed, data capacity and security for providing reliable Internet access and services and reliable telephone and facsimile services. As a result, our information systems require an ongoing commitment of significant resources to maintain and enhance existing systems and develop new systems in order to keep pace with continuing changes in information technology, emerging cybersecurity risks and threats, evolving industry and regulatory standards and changing preferences of our customers.

Our solutions are designed to operate without interruption in accordance with our service level commitments. However, we have experienced limited interruptions in these systems in the past, including server failures that temporarily slow down the performance of our solutions, and we may experience more significant interruptions in the future. We rely on internal systems as well as vendors, including bandwidth and telecommunications equipment providers, to provide our solutions. We do not maintain redundant systems or facilities for some of these services. Interruptions in these systems, whether due to system failures, computer viruses, physical or electronic break-ins or other catastrophic events, could affect the security or availability of our solutions and prevent or inhibit the ability of our customers to access our solutions.

If a catastrophic event were to occur with respect to one or more of these systems or facilities, we may experience an extended period of system unavailability, which could result in substantial costs to remedy those problems or negatively impact our relationship with our partners, our business, results of operations and financial condition. To operate without interruption, both we and our vendors must guard against:

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damage from fire, power loss and other natural disasters;

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telecommunications failures;

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software and hardware errors, failures and crashes;

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security breaches, computer viruses and similar disruptive problems; and

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other potential interruptions.

Any disruption in the network access, telecommunications or co-location services provided by vendors, or any failure of or by vendors’ systems or our own systems to handle current or higher volume of use could significantly harm our business. We exercise limited control over these vendors, which increases our vulnerability to problems with services they provide. Any errors, failures, interruptions or delays experienced in connection with these vendor technologies and information services or our own systems could negatively impact our relationships with partners and adversely affect our business and could expose us to liabilities. Although we maintain insurance for our business, the coverage under our policies may not be adequate to compensate us for all losses that may occur. In addition, we cannot provide assurance that we will continue to be able to obtain adequate insurance coverage at an acceptable cost.

The reliability and performance of our internet connection may be harmed by increased usage or by denial-of-service attacks. The internet has experienced a variety of outages and other delays as a result of damages to portions of its infrastructure, and it could face outages and delays in the future. These outages and delays could reduce the level of Internet usage as well as the availability of the internet to us for delivery of our internet-based solutions.

As a result of the complexity of the issues facing healthcare providers and payers and the inherent complexity of our solutions to such issues, our customers depend on our support organization to resolve any technical issues relating to our offerings. In addition, our sales process is highly dependent on the quality of our offerings, our business reputation and on strong recommendations from our existing customers. Any failure to maintain high-quality and highly responsive technical support, or a market perception that we do not maintain high-quality and highly responsive support, could harm our reputation, adversely affect our ability to sell our offering to existing and prospective customers, and harm our business, operating results and financial condition.

We offer technical support services with our offerings and we may be unable to respond quickly enough to accommodate short-term increases in customer demand for support services, particularly as we increase the size of our customer base. We also may be unable to modify the format of our support services to compete with changes in support services provided by our competitors. It is difficult to predict customer demand for technical support services and if customer demand increases significantly, we may be unable to provide satisfactory support services to our customers and their constituents. Additionally, increased customer demand for these services, without corresponding revenue, could increase costs and adversely affect our operating results.

Recent and future developments in the healthcare industry could have a material adverse impact on our business, results of operations or financial condition.

Almost all of our revenue is derived from the healthcare industry, which is highly regulated and subject to changing political, legislative, regulatory and other influences. For example, the ACA, changes how healthcare services are covered, delivered and reimbursed. The ACA mandates that substantially all U.S. citizens maintain health insurance coverage, expands health insurance coverage through a combination of public program

expansion and private sector reforms, reduces Medicare program spending and promotes value-based purchasing. However, efforts by the current presidential administration and certain members of Congress to repeal or make significant changes to the ACA, its implementation and/or its interpretation have cast uncertainty onto the future of the law. For example, in December 2017, tax reform legislation was enacted that, effective January 2019, eliminates the financial penalty for individuals who fail to maintain health insurance coverage, a change that may result in fewer individuals electing to purchase health insurance. Further, the Centers for Medicare & Medicaid Services (“CMS”) has indicated that it intends to increase flexibility in state Medicaid programs, including by expanding the scope of waivers under which states may implement Medicaid expansion provisions, imposing different eligibility or enrollment restrictions, or otherwise implementing programs that vary from federal standards. At the same time, members of Congress have proposed measures that would expand the role of government-sponsored coverage, including single payer or so-called “Medicare-for-All” proposals, which could have far-reaching implications for the healthcare industry if enacted.

We are unable to predict the full impact of the ACA and other health reform initiatives on our operations in light of the uncertainty regarding whether, when and how the ACA will be further changed, what alternative reforms (including single payer proposals), if any, may be enacted, the timing of enactment and implementation of alternative provisions and the impact of alternative provisions on various healthcare industry participants. In particular, because many of our solutions designed to assist customers in effectively navigating the shift to value-based healthcare, the elimination of, or significant revisions to, various value-based healthcare initiatives may adversely impact our business.

While many of the provisions of the ACA and other health reform initiatives may not be directly applicable to us, such initiatives affect the businesses of our customers and the Medicaid programs of the states with which we have contracts. For example, as a result of Medicare payment reductions and other reimbursement changes mandated under the ACA, our customers may attempt to seek price concessions from us or reduce their use of our solutions, especially if provisions expanding coverage are repealed without eliminating the payment reductions or other reimbursement changes. Thus, the ACA may result in a reduction of expenditures by customers or potential customers in the healthcare industry, which could have a material adverse impact on our business, results of operations or financial condition. In addition, certain government programs, such as the Bundled Payments for Care Improvement initiative and the Accountable Care Organization Shared Savings Program, may impact reimbursement to our customers, which could have a material adverse impact on our business, results of operations or financial condition. Further, the general uncertainty of healthcare reform efforts, particularly if Congress repeals provisions of the ACA but delays the implementation date of repeal or fails to enact replacement provisions at the time of repeal, may negatively impact purchase decisions or demand for our solutions.

Moreover, there are currently numerous federal, state and private initiatives seeking to increase the use of IT in healthcare as a means of improving care and reducing costs. For example, the Health Information Technology for Economic and Clinical Health (“HITECH”) Act, which was enacted in 2009, and the 21st Century Cures Act (the “Cures Act”), which was enacted in 2016, contain incentives and penalties to promote the use of Electronic Health Records (“EHR”) technology and the efficient exchange of health information electronically. Further, the Cures Act provides for penalties to be imposed on IT developers, health information exchanges or networks and health providers that are found to improperly block the exchange of health information. These and other initiatives may result in additional or costly legal or regulatory requirements that are applicable to us and our customers, may encourage more companies to enter our markets, may provide advantages to our competitors and may result in the development of technology solutions that compete with ours. Any such initiatives also may result in a reduction of expenditures by existing or potential customers, which could have a material adverse impact on our business, results of operations or financial condition.

In addition, other general reductions in expenditures by healthcare industry constituents could result from, among other things, government regulation or private initiatives that affect the manner in which providers interact with patients, payers or other healthcare industry constituents, including changes in pricing or means of delivery of healthcare solutions. In addition, cost containment efforts at the federal and state levels may affect

industry expenditures. For example, the Budget Control Act of 2011 requires automatic spending reductions to reduce the federal deficit. CMS began imposing a 2% reduction on payments of Medicare claims in 2013. These reductions have been extended through 2027.

Even if general expenditures by healthcare industry constituents remain the same or increase, other developments in the healthcare industry may result in reduced spending on healthcare IT and services or in some or all of the specific markets we serve or are planning to serve. In addition, our customers’ expectations regarding pending or potential healthcare industry developments also may affect their budgeting processes and spending plans with respect to the types of solutions we provide. For example, use of our solutions could be affected by:

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changes in the billing patterns of providers;

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changes in the design of health insurance plans;

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changes in the contracting methods payers use in their relationships with providers;

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decreases in marketing expenditures by pharmaceutical companies or medical device manufacturers, as a result of governmental regulation or private initiatives that discourage or prohibit promotional activities by pharmaceutical or medical device companies or other factors; and

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implementation of government programs that streamline and standardize eligibility enrollment processes, which could result in decreased pricing or demand for our eligibility and enrollment solutions.

The healthcare industry has changed significantly in recent years, and we expect that significant changes will continue to occur. The timing and impact of developments in the healthcare industry are difficult to predict. We cannot be sure that the markets for our solutions will continue to exist at their current levels, will not change in ways that adversely affect us or that we will have adequate technical, financial and marketing resources to react to changes in those markets.

Government regulation, industry standards and other requirements create risks and challenges with respect to our compliance efforts and our business strategies.

The healthcare industry is highly regulated and subject to frequently changing laws, regulations, industry standards and other requirements. Many healthcare laws and regulations are complex, and their application to specific solutions, services and relationships may not be clear. Because our customers are subject to various requirements, we may be impacted as a result of our contractual obligations even when we are not directly subject to such requirements. In particular, many existing healthcare laws and regulations, when enacted, did not anticipate the healthcare IT solutions and services that we provide, and these laws and regulations may be applied to our solutions in ways that we do not anticipate. The ACA, efforts to repeal or materially change the ACA, and other federal and state efforts to reform or revise aspects of the healthcare industry or to revise or create additional legal or and regulatory requirements could impact our operations, the use of our solutions and our ability to market new solutions, or could create unexpected liabilities for us.

We also may be impacted by non-healthcare laws, industry standards and other requirements. For example, laws, regulations and industry standards regulating the banking and financial services industry may impact our operations as a result of the payment and remittance services we offer directly or through vendors. Additionally, laws and regulations governing how we communicate with our customers and our customers’ patients may impact our operations and, if not followed, would result in fines, penalties and other liabilities and adverse publicity and injury to our reputation.

As noted above, the ACA, efforts to repeal or materially change the ACA, and other federal and state efforts to reform or revise aspects of the healthcare industry or to revise or create additional legal or regulatory requirements could impact our operations, the use of our solutions and our ability to market new solutions, or could create unexpected liabilities for us. We have attempted to structure our operations to comply with laws, regulations and other requirements applicable to us directly and to our customers and contractors, but there can be no assurance that our operations will not be challenged or impacted by enforcement initiatives. We have been, and in the future may become, involved in governmental investigations, audits, reviews and assessments. Certain of our businesses have been reviewed or are currently under review, including for compliance with various legal, regulatory or other requirements. Any determination by a court or agency that our solutions violate, or cause our customers to violate, applicable laws, regulations or other requirements could subject us or our customers to civil or criminal penalties. Such a determination also could require us to change or terminate portions of our business, disqualify us from serving customers that do business with government entities or cause us to refund some or all of our service fees or otherwise compensate our customers. In addition, failure to satisfy laws, regulations or other requirements could adversely affect demand for our solutions and could force us to expend significant capital, research and development and other resources to address the failure. Even an unsuccessful challenge by regulatory and other authorities or private whistleblowers could be expensive and time-consuming, could result in loss of business, exposure to adverse publicity and injury to our reputation and could adversely affect our ability to retain and attract customers. Laws, regulations and other requirements impacting our operations include the following:

HIPAA Privacy and Security Requirements. There are numerous federal and state laws and regulations related to the privacy and security of health information. In particular, regulations promulgated pursuant to HIPAA establish privacy and security standards that limit the use and disclosure of certain individually identifiable health information (known as “protected health information”) and require the implementation of administrative, physical and technological safeguards to protect the privacy of protected health information and ensure the confidentiality, integrity and availability of electronic protected health information. The privacy regulations established under HIPAA also provide patients with rights related to understanding and controlling how their protected health information is used and disclosed. As a provider of services to entities subject to HIPAA, we are directly subject to certain provisions of the regulations as a “Business Associate.” We are also directly subject to the HIPAA privacy and security regulations as a “Covered Entity” with respect to our operations as a healthcare clearinghouse and with respect to our clinical care visit services.

When acting as a Business Associate under HIPAA, to the extent permitted by applicable privacy regulations and contracts and associated Business Associate Agreements with our customers, we are permitted to use and disclose protected health information to perform our solutions and for other limited purposes, but other uses and disclosures, such as marketing communications, require written authorization from the patient or must meet an exception specified under the privacy regulations. To the extent we are permitted to de-identify protected health information and use de-identified information for our purposes, determining whether such protected health information has been sufficiently de-identified to comply with the HIPAA privacy standards and our contractual obligations may require complex factual and statistical analyses and may be subject to interpretation.

If we are unable to properly protect the privacy and security of protected health information entrusted to us, we could be found to have breached our contracts with our customers and be subject to investigation by the U.S. Department of Health and Human Services (“HHS”) Office for Civil Rights (“OCR”). In the event OCR finds that we have failed to comply with applicable HIPAA privacy and security standards, we could face civil and criminal penalties. In addition, OCR performs compliance audits of Covered Entities and Business Associates in order to proactively enforce the HIPAA privacy and security standards. OCR has become an increasingly active regulator and has signaled its intention to continue this trend. OCR has the discretion to impose penalties without being required to attempt to resolve violations through informal

means; further OCR may require companies to enter into resolution agreements and corrective action plans which impose ongoing compliance requirements. OCR enforcement activity can result in financial liability and reputational harm, and responses to such enforcement activity can consume significant internal resources. In addition to enforcement by OCR, state attorneys general are authorized to bring civil actions under either HIPAA or relevant state laws seeking either injunctions or damages in response to violations that threaten the privacy of state residents. Although we have implemented and maintain policies, processes and compliance program infrastructure ( e.g. , a Privacy Office) to assist us in complying with these laws and regulations and our contractual obligations, we cannot provide assurance regarding how these laws and regulations will be interpreted, enforced or applied to our operations. In addition to the risks associated with enforcement activities and potential contractual liabilities, our ongoing efforts to comply with evolving laws and regulations at the federal and state levels also might require us to make costly system purchases and/or modifications or otherwise divert significant resources to HIPAA compliance initiatives from time to time.

Other Privacy and Security Requirements. In addition to HIPAA, numerous other U.S. federal and state laws govern the collection, dissemination, use, access to and confidentiality of personal information. Certain federal and state laws protect types of personal information that may be viewed as particularly sensitive. For example, the Confidentiality of Substance Use Disorder Patient Records (42 C.F.R. Part 2) is a federal law that protects information that would reveal if an individual has or had a substance abuse disorder. Similarly, New York’s Public Health Law, Article 27-F protects information that could reveal confidential HIV-related information about an individual. Some states have enacted or are considering new laws and regulations that would further protect this information, such as the California Consumer Privacy Act of 2018, which builds upon and is more stringent in many respects than other state laws currently in effect in the United States. In many cases, state laws are more restrictive than, and not preempted by, HIPAA, and may allow personal rights of action with respect to privacy or security breaches, as well as fines. State laws are contributing to increased enforcement activity and may also be subject to interpretation by various courts and other governmental authorities. Further, Congress and a number of states have considered prohibitions or limitations on the disclosure of personal and other information to individuals or entities located outside of the United States. The U.S. Congress is also currently considering a generally applicable national privacy law that may supplant California’s and other states’ privacy laws.

There also are numerous international privacy and security laws that govern the collection, dissemination, use, access, retention, protection, transfer and confidentiality of personal information. For example, GDPR, which became effective on May 25, 2018 is more stringent than laws and regulations governing personal information in the United States. Certain of our solutions involve the transmission and storage of customer data in various jurisdictions, which subjects the operation of that service to privacy or data protection laws and regulations in those jurisdictions. While we believe these solutions comply with current regulatory and security requirements in the jurisdictions in which we provide these solutions, there can be no assurance that such requirements will not change or that we will not otherwise be subject to legal or regulatory actions. These laws and regulations are rapidly evolving and changing, and could have an adverse impact on our operations. These laws and regulations are subject to uncertainty in how they may be interpreted and enforced by government authorities and regulators. The costs of compliance with, and the other burdens imposed by, these and other laws or regulatory actions may increase our operational costs, prevent us from providing our solutions, and/or impact our ability to invest in or jointly develop our solutions. We also may face audits or investigations by one or more domestic or foreign government agencies relating to our compliance with these laws and regulations. An adverse outcome under any such investigation or audit could result in fines, penalties, other liability, or could result in adverse publicity or a loss of reputation, and adversely affect our business. Any failure or perceived failure by us or by our solutions to comply with these laws and regulations may subject us to legal or regulatory actions, damage our reputation or adversely affect our ability to provide our solutions in the jurisdiction that has enacted the applicable law or regulation. Moreover, if these laws and regulations change, or are interpreted and applied in a manner that is inconsistent with our policies and processes or the operation of our solutions, we may need to expend resources in order to change our business operations, policies and processes or the manner in which we provide our solutions. This could adversely affect our business, financial condition and results of operations.

Data Protection and Breaches. In recent years, there have been a number of well-publicized data breaches involving the improper dissemination of personal information of individuals both within and outside of the healthcare industry. Most states require holders of personal information to maintain safeguards and take certain actions in response to a data breach, such as providing prompt notification of the breach to affected individuals or the state’s attorney general. In some states, these laws are limited to electronic data, but states increasingly are enacting or considering stricter and broader requirements. Additionally, under HIPAA, Covered Entities must report breaches of unsecured protected health information to affected individuals without unreasonable delay, not to exceed 60 days following discovery of the breach by a Covered Entity or its agents. Notification also must be made to OCR and, in certain circumstances involving large breaches, to the media. Business Associates must report breaches of unsecured protected health information to Covered Entities within 60 days of discovery of the breach by the Business Associate or its agents. A non-permitted use or disclosure of protected health information is presumed to be a breach under HIPAA unless the Covered Entity or Business Associate establishes that there is a low probability the information has been compromised consistent with requirements enumerated in HIPAA.

Further, the FTC has prosecuted certain data breach cases as unfair and deceptive acts or practices under the Federal Trade Commission Act. In addition, by regulation, the FTC requires creditors, which may include some of our customers, to implement identity theft prevention programs to detect, prevent and mitigate identity theft in connection with customer accounts. Although Congress passed legislation that restricts the definition of “creditor” and exempts many healthcare providers from complying with this identity theft prevention rule, we may be required to apply additional resources to our existing processes to assist our affected customers in complying with this rule.

Despite our security management efforts with respect to physical and technological infrastructure, employee training, vendor (and sub-vendor) controls and contractual relationships, our infrastructure, data or other operation centers and systems used in our business operations, including the internet and related systems of our vendors (including vendors to whom we outsource data hosting, storage and processing functions) are vulnerable to, and from time to time experience, unauthorized access to data and/or breaches of confidential information due to criminal conduct, physical break-ins, hackers, employee or insider malfeasance and/or improper employee or contractor access, computer viruses, programming errors, denial-of-service attacks, ransomware events, phishing schemes, fraud, terrorist attacks, human error or other breaches by insiders or third parties or similar disruptive problems. It is not possible to prevent all security threats to our systems and data. See “—Breaches and failures of our IT systems and the security measures protecting them and the sensitive information we transmit, use and store expose us to potential liability and reputational harm.”

HIPAA Transaction and Identifier Standards. HIPAA and its implementing regulations mandate format and data content standards and provider identifier standards (known as the National Provider Identifier) that must be used in certain electronic transactions, such as claims, payment advice and eligibility inquiries. HHS has established standards that health plans must use for electronic fund transfers with providers, has established operating rules for certain transactions, and is in the process of establishing operating rules to promote uniformity in the implementation of the remaining types of covered transactions. The ACA also requires HHS to establish standards for health claims attachment transactions. HHS has modified the standards for electronic healthcare transactions (e.g., eligibility, claims submission and payment and electronic remittance) from Version 4010/4010A to Version 5010. Further, as of 2015, HHS requires the use of updated standard code sets for diagnoses and procedures known as the ICD-10 code sets. Enforcement of compliance with these standards falls under HHS and is carried out by CMS.

In the event new requirements are imposed, we will be required to modify our systems and processes to accommodate these changes. We will seek to modify our systems and processes as needed to prepare for and implement changes to the transaction standards, code sets operating rules and identifier requirements; however, we may not be successful in responding to these changes, and any responsive changes we make to our systems and processes may result in errors or otherwise negatively impact our service levels. In addition, the compliance dates for new or modified transaction standards, operating rules and identifiers may overlap, which may further burden our resources.

We also may experience complications related to supporting customers that are not fully compliant with the revised requirements as of the applicable compliance or enforcement date. Some payers and healthcare clearinghouses with which we conduct business interpret HIPAA transaction requirements differently than we do or may require us to use legacy formats or include legacy identifiers as they transition to full compliance with the revised requirements. For example, we continue to process transactions using legacy identifiers for non-Medicare claims that are sent to us to the extent that the intended recipients have not instructed us to suppress those legacy identifiers. Where payers or healthcare clearinghouses require conformity with their interpretations or require us to accommodate legacy transactions or identifiers as a condition of successful transactions, we seek to comply with their requirements. We continue to work with payers, providers, practice management system vendors and other healthcare industry constituents to implement the transaction standards and identifier standards. However, we cannot provide assurances regarding how CMS will enforce the transaction and identifier standards or how CMS will view our practice of accommodating requests to process transactions that include legacy formats or identifiers for non-Medicare claims. It is possible that we, or our customers, could be subject to enforcement actions as a result of these accommodations. Any regulatory change, clarification or enforcement action by CMS that prohibited the processing by healthcare clearinghouses or private payers of transactions containing legacy formats or identifiers could have a material adverse impact on our business, results of operations or financial condition.

Anti-Kickback Laws and Anti-Referral Laws. A number of federal and state laws govern patient referrals, financial relationships with physicians and other referral sources and inducements to providers and patients, including restrictions contained in amendments to the Social Security Act, commonly known as the “federal Anti-Kickback Statute (“AKS”).” The AKS prohibits any person or entity from offering, paying, soliciting or receiving, directly or indirectly, anything of value with the intent of generating referrals of patients covered by Medicare, Medicaid or other federal healthcare programs. Courts have interpreted the law to provide that a financial arrangement may violate this law if any one of the purposes of an arrangement is to encourage patient referrals or other federal healthcare program business, regardless of whether there are other legitimate purposes for the arrangement. Violation of the AKS is a felony, and penalties for AKS violations can be severe, and include imprisonment, criminal fines, civil penalties with treble damages (when the federal False Claims Act (“FCA”) is implicated) and exclusion from participation in federal healthcare programs. The ACA broadened the reach of the AKS by amending the intent requirement, such that a person or entity no longer needs to have actual knowledge of the AKS or specific intent to violate it in order to have committed a violation. In addition, as further discussed below, the ACA provided that the government may assert that a claim which includes items or services resulting from a violation of the AKS constitutes a false or fraudulent claim for purposes of the FCA, as well as restrictions contained in amendments to the Social Security Act, commonly known as the federal Civil Monetary Penalties Law (“CMP”). The AKS contains a limited number of exceptions, and the Office of the Inspector General (“OIG”) of HHS has created regulatory safe harbors to the AKS. Activities that comply with a safe harbor are deemed protected from prosecution under the AKS. Failure to meet a safe harbor does not automatically render an arrangement illegal under the AKS. The arrangement, however, does risk increased scrutiny by government enforcement authorities, based on its particular facts and circumstances. Our contracts and other arrangements may not meet an exception or a safe harbor. Additionally, many states have similar anti-kickback laws that are not necessarily limited to items or services for which payment is made by a federal healthcare program. In addition, federal laws restricting certain physician self-referrals (also known as the “Stark Law”), as well as state counterparts, may prohibit payment for patient referrals, patient brokering, remuneration of patients, or billing based on referrals between individuals or entities that have various financial, ownership, or other business relationships with physicians or other healthcare providers. The Stark Law is very complex, and state anti-referral laws vary widely. As noted below, to the extent we undertake billing and coding for designated health services, such activities may be subject to the Stark Law and may result in allegations that claims that we have processed or forwarded are improper.

The laws and regulations in this area are both broad and vague and judicial interpretation can also be inconsistent. We review our practices with regulatory experts in an effort to comply with all applicable laws

and regulatory requirements. However, we are unable to predict how these laws and regulations will be interpreted or the full extent of their application, particularly to services that are not directly reimbursed by federal healthcare programs, such as transaction processing services. Any determination by a federal or state regulatory authority that any of our activities or those of our customers or vendors violate any of these laws or regulations could: (i) subject us to civil or criminal penalties, (ii) require us to enter into corporate integrity agreements or similar agreements with government regulators to meet ongoing compliance obligations, (iii) require us to change or terminate some portions of our business, (iv) require us to refund a portion of our service fees, (v) disqualify us from providing services to customers that are, or do business with, government programs and/or (vi) have a material adverse impact on our business, results of operations or financial condition. Even an unsuccessful challenge by a regulatory authority of our activities could result in adverse publicity and could require a costly response from us.

False or Fraudulent Claim Laws; Medical Billing and Coding. Medical billing, coding and collection activities are governed by numerous federal and state civil and criminal laws, regulations, and sub-regulatory guidance. We provide billing and coding services, claims processing and other solutions to providers that relate to, or directly involve, the reimbursement of health services covered by Medicare, Medicaid, other federal and state healthcare programs and private payers. In addition, as part of our data transmission and claims submission services, we may employ certain edits, using logic, mapping and defaults, when submitting claims to third-party payers. Such edits are utilized when the information received from providers is insufficient to complete individual data elements requested by payers. We also provide solutions including risk analytics, chart reviews, clinical care visits, payment accuracy, audit functions and enrollment and eligibility, to Medicaid and Medicare managed care plans, commercial plans and other entities. These solutions, which include identifying diagnosis codes with respect to hierarchical condition categories, impact the amounts paid by Medicare and Medicaid to managed care plans. In addition, solutions we offer to customers that enable customers to certify to compliance with certain requirements and standards, such as EHR Meaningful Use requirements. We rely on our customers to provide us with accurate and complete information and to appropriately use analytics, codes, reports and other information in connection with the solutions we provide to them, but they may not always do so.

As a result of these aspects of our business, we may be subject to, or contractually required to comply with, numerous federal and state laws that prohibit false or fraudulent claims including but not limited to the FCA, the CMP, and state equivalents. For example, errors or the unintended consequences of data manipulations by us or our systems with respect to the entry, formatting, preparation or transmission of claims, coding, audit, eligibility and other information, may result in allegations of false or fraudulent claims. False or fraudulent claims under the FCA and other laws include, but are not limited to, billing for services not rendered, making or causing to be made or used a false record or statement that is material to a false claim, failing to refund known overpayments, misrepresenting actual services rendered, improper coding and billing for medically unnecessary items or services. Some of these laws, including CMP, require a lower burden of proof than other fraud, waste and abuse laws. Federal and state authorities increasingly assert liability under CMP, especially where they believe they cannot meet the higher burden of proof requirements under the various criminal healthcare fraud provisions. Current penalties under CMP are significant, up to $100,000 per prohibited kickback and assessments of up to three times the amount claimed or received. Further, violations of the FCA are punishable by treble damages and penalties of up to $22,363 per false claim, and whistleblowers may receive a share of amounts recovered. Civil monetary penalties, including those imposed under the AKS and the FCA, are updated annually based on changes to the consumer price index.

In addition, the FCA prohibits the knowing submission of false claims or statements to the federal government, including to the Medicare and Medicaid programs. The FCA also contains qui tam, or whistleblower provisions, which allow private individuals to sue on behalf of the federal government alleging that the defendant has defrauded the federal government. Although simple negligence will not give rise to liability under the FCA, “knowingly” is defined broadly by the FCA and submitting a claim with reckless disregard to its truth or falsity can constitute “knowingly” submitting a false claim and may result

in liability. Civil penalties also may be imposed for the failure to report and return an overpayment made by the federal government within 60 days of identifying the overpayment and also may result in liability under the FCA. The ACA provides that submission of a claim for an item or service generated in violation of the AKS constitutes a false or fraudulent claim under the FCA. Whistleblowers and federal authorities have taken the position, and some courts have held, that providers who allegedly violated other statutes, such as Stark Law, have thereby submitted false claims under the FCA. Several states, including states in which we operate, have adopted their own false claims provisions and their own whistleblower provisions whereby a private individual may file a civil lawsuit in state court. Although we believe our processes are consistent with applicable reimbursement rules and industry practice, a court, government authority or whistleblower could challenge these processes. In addition, we cannot guarantee that federal and state authorities will regard any billing and coding errors we process or make as inadvertent or will not hold us responsible for any compliance issues related to claims, reports and other information we handle on behalf of providers and payers. We cannot predict the impact of any enforcement actions under the various false claims and fraud, waste and abuse laws applicable to our operations. Even an unsuccessful challenge of our practices could cause us to incur adverse publicity and significant legal and related costs.

Exclusion from participation in government healthcare programs. We also are subject to the exclusion rules of the OIG of HHS whereby OIG may or must exclude individuals and entities convicted of program-related crimes from participation in the Medicare and Medicaid programs. A company that employs or contracts with an OIG-excluded individual and submits a claim for reimbursement to a federal healthcare program, or causes such a claim to be submitted, may itself be excluded or may be subject to significant penalties under the CMP, plus treble damages, for each item or service furnished during the period in which the individual or entity was excluded. A company contracting with providers has an affirmative duty to check the exclusion status of individuals and entities prior to entering into employment or contractual relationships and periodically re-check thereafter, or run the risk of liability under the CMP. We regularly screen for excluded individuals as part of our initial hiring and continued employment as well as excluded individuals and entities as part of our contractor practices, but we may not always identify all excluded individuals and entities.

FDA and International Regulation of Medical Software. Certain of our products are classified as medical devices and are subject to regulation by the Food and Drug Administration (the “FDA”) and numerous other federal, state and foreign governmental authorities. In the United States, the FDA permits commercial distribution of a new medical device after the device has received clearance under Section 510(k) of the Federal Food, Drug and Cosmetic Act (the “FDCA”), or is the subject of an approved premarket approval application, unless the device is specifically exempt from those requirements. Moreover, the FDA has increasingly focused on the regulation of medical software and health information technology products as medical devices under the FDCA. For example, in February 2015, the FDA issued guidance to inform manufacturers and distributors of medical device data systems that it did not intend to enforce compliance with regulatory controls that apply to medical device data systems, medical image storage devices, and medical image communication devices. The Cures Act, enacted in December 2016, builds on the FDA’s efforts to limit the regulation of low-risk medical devices by exempting certain categories of software functions from the definition of “medical device” under the FDCA, including software functions intended for administrative support of a healthcare facility and certain functions related to the exchange and use of electronic medical records. However, a software function may not be excluded from the device definition if the FDA determines that use of the software function would be reasonably likely to have serious adverse health consequences. If the FDA chooses to regulate more of our solutions as medical devices, or subsequently changes or reverses its guidance regarding not enforcing certain regulatory controls, we may be obligated to comply with extensive requirements. Any additional FDA regulations governing healthcare software products may increase the cost and time-to-market of new or existing solutions or may prevent us from marketing our solutions. If we fail to maintain regulatory approvals and clearances, or are unable to obtain, or experience significant delays in obtaining, FDA clearances or approvals for our future products or product enhancements, our ability to commercially distribute and market these products could suffer.

Modifications to our medical device products may require new regulatory approvals or clearances, including 510(k) or de novo clearances or premarket approvals, or require us to recall or cease marketing the modified devices until these clearances or approvals are obtained.

Once a device is on the market, we must comply with numerous additional regulations which may require us to file adverse event reports and recalls as well as manufacture the software in accordance with a quality management system. Compliance with applicable regulatory requirements is subject to continual review and is monitored through periodic inspections by the FDA. In addition, we must comply with requirements and restrictions related to advertising, marketing and promotion of FDA-approved medical devices, as well as more stringent requirements applicable to medical devices that are pending FDA approval. If we fail to comply with regulatory requirements in the United States or experience delays in obtaining necessary regulatory approvals or clearances, this could delay production of our medical device products and lead to fines, difficulties in obtaining regulatory approvals or clearances, recalls, enforcement actions, including injunctive relief or consent decrees, or other consequences, which could, in turn, have an adverse effect on our financial condition or results of operations.

Foreign governmental authorities that regulate the manufacture and sale of medical devices have become increasingly stringent and, where we sell our medical device solutions internationally, we are subject to international regulation regarding these medical device solutions. For example, in May 2017, the EU Medical Devices Regulation (“MDR”) (Regulation 2017/745) was adopted. The MDR repeals and replaces the EU Medical Devices Directive. Unlike directives, which must be implemented into the national laws of the EU Member States, the MDR will be directly applicable in the EU Member States and on the basis of the European Economic Area (“EEA”) agreement in Iceland, Lichtenstein and Norway. The MDR, among other things, is intended to establish a uniform, transparent, predictable and sustainable regulatory framework across the EEA for medical devices and ensure a high level of safety and health while supporting innovation. The MDR will apply from May 26, 2020. Once applicable, the MDR will among other things:

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Strengthen the clinical data requirements related to medical devices;

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Impose additional scrutiny during the conformity assessment procedure for high risk medical devices;

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Impose on manufacturers and authorized representative the obligation to have a person responsible for regulatory compliance continuously at their disposal;

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Require that authorized representatives be held legally responsible and liable for defective products placed on the EEA market jointly with the device manufacturers;

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Reinforce post market surveillance requirements applicable to CE marked medical devices;

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Improve the traceability of medical devices throughout the supply chain to the end-user or patient through a Unique Device Identification System;

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Increase transparency. Information from several databases concerning economic operators, CE Certificates of Conformity, conformity assessment, clinical investigations, the Unique Device Identification system, adverse event reporting and market surveillance will be available to the public.

Once applicable, the MDR will impose increased compliance obligations for us to access the EU market.

Interoperability Requirements. There is increasing demand among customers, industry groups and government authorities that healthcare IT products provided by various vendors be compatible with each other and allow for the efficient exchange of EHR information. In 2013, in order to address this demand for interoperability, a number of other healthcare IT companies co-founded the CommonWell Health Alliance with the aim of developing a standard for data sharing among physicians, hospitals, clinics and pharmacies. Certain federal and state agencies also are developing standards that could eventually become mandatory for software and systems purchased by these agencies, or used by our customers. For example, under the Cures

Act, the Office of the National Coordinator for Health Information Technology (“ONC”) within HHS is required to develop a “trusted exchange framework” and common agreement for the secure exchange of health information between networks. Although the Cures Act does not make implementation of the trusted exchange framework mandatory, the Cures Act encourages its adoption through the establishment of a publicly available directory of networks that are capable of trusted exchange and by permitting federal agencies to require implementation of the trusted exchange framework by network contractors as the contractors update their health IT or operational practices.

The Cures Act also encourages interoperability through changes to EHR certification standards implemented as part of HHS’s programs to promote interoperability. In particular, the amended EHR certification standards will require developers (i) to publish application programming interfaces that permit exchange of EHR and other health information among different health IT systems, (ii) to successfully test the “real world use” of interoperability technology, and (iii) to attest that they will not engage in “information blocking” or otherwise inhibit the appropriate exchange, access, and use of electronic health information. Health IT developers, exchanges, or networks that do engage in such information blocking by knowingly adopting practices that are likely to interfere with, prevent, or materially discourage the access, exchange, or use of electronic health information, may be subject to civil monetary penalties of up to $1 million per violation.

Although several of our healthcare IT solutions have received certification, rules regarding interoperability and certification standards are subject to regular revision and updates. The Office of Management and Budget is currently considering rules proposed by ONC and CMS concerning interoperability. The rule proposed by ONC would address, among other things, the kinds of industry behaviors that do and do not constitute information blocking under the Cures Act. The rule proposed by CMS may, among other things, effectively mandate interoperability as a condition for participating in Medicare. It is too early to tell in what form these rules may be adopted or the impact the final rules, if adopted, would have on our business. In October 2016, HHS published rules establishing processes to facilitate ONC’s direct review and evaluation of the performance of certified health IT in certain circumstances, including in response to problems or issues that could pose serious risks to public health or safety. As a result of changing requirements, we may incur increased development costs and delays in receiving certification for our solutions, and changing or supplementing rules also may lengthen our sales and implementation cycle. We also may incur costs in periods prior to the corresponding recognition of revenue. To the extent these requirements subsequently are changed or supplemented, or our prior certifications are no longer valid, or we are delayed in receiving new certifications for our solutions, customers may postpone or cancel their decisions to purchase or implement these solutions.

Restrictions on Communications. Communications with our customers and our customers’ patients increasingly are scrutinized under laws and regulations governing communications. For example, the Telephone Consumer Protection Act of 1991 (the “TCPA”) subjects us and our vendors to various rules regarding contacting our customers and our customers’ patients via telephone, fax or text message and may impact our operations. In the last few years, there has been a significant increase in class action lawsuits brought under the TCPA. This increase has been driven, in part, by more expansive interpretations of the activity subject to regulation under the TCPA by some courts and by the Federal Communications Commission (“FCC”), as well as by the significant statutory damages that are potentially available to successful plaintiffs. Because our solutions need and rely upon various messaging components to achieve successful outcomes for us and our customers, our ability to communicate with our customers and their patients may be affected by the TCPA, its implementing regulations and litigation pursuant to the TCPA. In addition, because of the scope and interpretation of the TCPA is continuing to evolve and develop, we inadvertently could fail to comply or be alleged to have failed to comply with the TCPA, and consequently be subject to significant statutory damages and negative publicity associated with class action litigation and/or costs associated with modifying our solutions and business strategies. Furthering the compliance challenges posed by the TCPA is the fact that the FCC continues to review dozens of petitions from parties in various industries that seek interpretation of the TCPA’s various regulations. To the extent the FCC issues

an order that alters current understanding and accepted interpretation of the TCPA’s regulations, we may be required to modify our solutions in ways that may make them less attractive to our customers and/or require us to alter our business strategies and incur increased costs. In addition, we also may be subject to claims alleging failure to comply with email and marketing regulations under the CAN-SPAM Act, and additional fax regulations under the Junk Fax Act and data privacy rules under the California Consumer Privacy Act of 2018, as well as potentially under non-U.S. laws that regulate communications and messaging and that affect our operations, such as Canada’s Anti-Spam Law (“CASL”), GDPR, and the European Union’s e-Privacy Directive and implementing member state laws (and any subsequent changes to such laws). We also use email and social medial platforms as marketing tools. For example, we maintain social media accounts and may occasionally email customers offers and promotions. As laws and regulations, including FTC enforcement, rapidly evolve to govern the use of these platforms and devices, the failure by us, our employees or third parties acting at our direction to abide by applicable laws and regulations in the use of these platforms and devices could adversely impact our business, financial condition and results of operations or subject us to fines or other penalties.

Financial Services Related Laws, Regulations and Industry Standards. Financial services and electronic payment processing services are subject to numerous laws, regulations and industry standards. These laws may subject us, our vendors and our customers to liability as a result of our communication and payment solutions. Although we do not act as a bank, we offer solutions that involve banks, or vendors who contract with banks and other regulated providers of financial services. We rely on relationships with such banks, vendors and providers. If we fail to maintain these relationships or if we maintain them under new terms that are less favorable to us, our business, results of operations or financial condition could suffer. The various payment modalities that we offer our customers directly and through banks, vendors, or other regulated providers may be deemed regulated activity at the federal or state level, and, as a result, we may be affected by banking and financial services industry laws, regulations and standards, such as licensing requirements, solvency standards, reporting and disclosure obligations and requirements to maintain the privacy and security of nonpublic personal financial information. In addition, our communication and payment solutions may be affected by payment card industry operating rules and security standards, certification requirements, state prompt payment laws and other rules governing electronic funds transfers. If we fail to comply with any applicable communication and payment rules or requirements, we may be subject to fines and changes in transaction fees and may lose our ability to process payment transactions or facilitate other types of billing and payment solutions. Moreover, in addition to regulatory requirements related to electronic funds transfers, payment transactions processed using the Automated Clearing House Network are subject to network operating rules promulgated by the National Automated Clearing House Association, and these rules may affect our payment practices. Certain payment transactions may be subject to card association and network rules and standards. Failure to comply with such rules or standards could subject us to fines or penalties imposed by such card associations and networks. If any changes in such rules or standards increase the cost of doing business or limit our ability to provide our solutions, our business, results of operations or financial condition could suffer. Further, our communication and payment solutions may impact the ability of our payer customers to comply with state prompt payment laws. These laws require payers to pay healthcare claims meeting the statutory or regulatory definition of a “clean claim” within a specified time frame. Finally, as we expand our financial services offerings we may be subject to additional laws and regulations, including certain consumer protection laws such as the Fair Debt Collections Practices Act (the “FDCPA”), the Fair Credit Reporting Act (the “FCRA”) and various other state laws implicated by such financial services.

Foreign Corrupt Practices Act and Bribery Laws. The U.S. Foreign Corrupt Practices Act (“FCPA”) and similar international bribery laws make it unlawful for entities to make payments to foreign government officials to assist in obtaining and maintaining business. Specifically, the anti-bribery provisions of the FCPA prohibit any offer, payment, promise to pay, or authorizing the payment of money or anything of value to any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to a foreign official to do or omit to do an act in violation of his or her duty, or to secure any improper advantage in order to assist in obtaining or retaining business for or

with, or directing business, to any person. In addition to the anti-bribery provisions of the FCPA, the statute also contains accounting requirements designed to operate in tandem with the anti-bribery provisions. Covered companies are required to make and keep books and records that accurately and fairly reflect the transactions of the company and devise and maintain an adequate system of internal accounting controls. With our international businesses, we could incur significant fines and penalties, as well as criminal liability, if we fail to comply with either the anti-bribery or accounting requirements of the FCPA, or similar international bribery laws. Even an unsuccessful challenge of our compliance with these laws could cause us to incur adverse publicity and significant legal and related costs.

Physician Payments Sunshine Act. The Physician Payments Sunshine Act of 2010 (the “Sunshine Act”) requires manufacturers of medical devices covered by Medicare, Medicaid, and the Children’s Health Insurance Program to collect and track all financial relationships with physicians and teaching hospitals and to report annually such data to CMS. Medical device manufacturers must report to CMS payments or “transfers of value” made to physicians, including meals, travel reimbursement, consulting fees and research payments. In addition, several states and the District of Columbia have passed laws requiring that medical device manufacturers report various details of their financial relationships with physicians. The Sunshine Act authorizes significant civil monetary penalties for each payment or transfer of value not accurately or completely reported. Although we have processes in place to track and timely report such financial relationships, we inadvertently may fail to track and report all such financial relationships and thus may be subject to penalties for such non-compliance.

United States Postal Service Laws and Regulations. Our communication and payment solutions provide mailing services primarily delivered by the United States Postal Service (“USPS” or the “Postal Service”). Postage is the most significant cost incurred in the delivery of our communication and payment solutions. Although we generally pass increases in postage costs through to our customers, in some circumstances we may be unable to do so, or the resulting increases in our charges could cause our customers to reduce the volume of our services. While we cannot predict the magnitude of these effects, they could have a material effect on our business, operating results or financial condition if large enough.

First, the Postal Service could increase the rates of postage that we must pay. Most of the mail that we send uses market-dominant mail products, whose postal rates are subject to maximum rate regulation. Current regulatory rules generally limit the average rate increase for each class of market-dominant mail to the rate of increase of the Consumer Price Index (“CPI”). The Postal Service, however, has argued for eliminating or loosening this restriction, and the Postal Regulatory Commission is now considering proposed rule changes that would have this effect. It is also possible that Congress could eliminate or loosen the restriction on postal rate increases through legislation, particularly if the Postal Service continues to report financial losses.

Second, even under current regulatory standards, the Postal Service has broad flexibility to raise rates on individual rate categories within a class of mail faster than the CPI, as long as the average rates for the affected mail class as a whole do not increase than the CPI-based rate cap.

Third, most of the postal rates that we pay reflect significant discounts from the basic USPS postage rate structure. These discounts could be changed or discontinued at any time on short notice. The Postal Service also could require more costly or difficult mail preparation ( e.g ., presorting, barcoding, bundling or destination entry) requirements as a condition for continuing to use the discounted rates. More onerous preparation requirements could force us to incur substantial additional mail preparation costs or pay higher rates of postage.

Fourth, it is possible that the Postal Service, the Postal Inspection Service, or other law enforcement officials could allege that we did not prepare past mailings as required to qualify for the discounted rates at which the mailings were mailed, and that we now owe additional postage. Further, if the government concludes that the noncompliance was intentional or reckless, the government could seek to recover treble damages and civil penalties of up to $22,363 per false claim (adjusted annually to reflect changes in the

Consumer Price Index). If the volume of mail subject to these allegations is large enough, the recovery sought could have a material effect on our business, operating results, or financial condition.

Payment Card Industry Standards. We accept credit card, eCheck, ACH Payments, and payments via online portal, phone/ Interactive Voice Response system or by mail. We also enable payers to collect member premium payments. These transactions are regulated at the federal, state and international levels as well as by certain industry groups, such as the Payment Card Industry Security Standards Council, the National Automated Clearing House Association and individual credit card issuers. Federal, state, international and industry groups also may consider and implement from time to time new privacy and security requirements that apply to our business. Compliance with contractual obligations and evolving privacy and security laws, requirements and regulations may result in cost increases due to necessary systems changes, new limitations or constraints on our business and the development of new administrative processes. If we fail to adequately control fraudulent ACH, credit card and debit card transactions, we may face civil liability, diminished public perception of our security measures and significantly higher ACH, credit card and debit card related costs, each of which could adversely affect our business, financial condition and results of operations. The termination of our ability to process payments through ACH transactions or on any major credit or debit card would adversely affect our ability to operate its business.

Other State Healthcare Laws. Most states have a variety of laws that potentially impact our operations and business practices. For example, many states in which we provide clinical care in-home assessment services prohibit corporations and other non-licensed entities from practicing medicine, nursing and other licensed professions by employing physicians and certain non-physician practitioners. These prohibitions on the corporate practice of medicine, nursing and other licensed professions impact how we structure our relationships with physicians and other affected non-physician practitioners. In addition, some states have restrictions on physicians and other healthcare practitioners splitting fees with non-practitioners or restrict the ability of practitioners to assign claims for reimbursement from government healthcare programs. Some states have interpreted these laws to prevent business service providers from charging their physician clients on the basis of a percentage of collections or charges. If our arrangements with physicians or other practitioners were found to violate a corporate practice of medicine, nursing and other licensed professions prohibition or fee-splitting prohibition, we may be subject to civil or criminal penalties, be required to terminate or make changes to our contractual arrangements with practitioners in such states or to our business generally, or be required to remit portions of our services fees to practitioners, which, in turn, may adversely affect both our operations and profitability. Further, we could face sanctions for aiding and abetting the violation of the state’s professional licensure statutes. In addition, we hold certain state licenses and enrollments in government healthcare programs which subject us to additional requirements and scrutiny by government regulators. Failure to comply with requirements and obligations imposed by such licensure and enrollments may result in civil and criminal penalties and may otherwise adversely affect our business. We continually monitor legislative, regulatory and judicial developments related to licensure and engagement arrangements with professionals; however, new agency interpretations, federal or state legislation or regulations, or judicial decisions could require us to change how we operate, may increase our costs of services and could have a material adverse impact on our business, results of operations or financial condition.

Legislative changes and contractual limitations may impede our ability to utilize our offshore service capabilities.

In our operations, we have contractors and employees located outside of the United States who may have access to personal information, including protected health information in order to assist us in performing services for our customers. From time to time, Congress considers legislation that would restrict the transmission of personal information regarding a United States resident to any foreign affiliate, subcontractor or unaffiliated third party without adequate privacy protections or without providing notice to the identifiable individual of the transmission and an opportunity to opt out. Some of the proposals considered would have required patient consent and imposed liability on healthcare businesses arising from the improper sharing or other misuse of personal information. Congress also has considered creating a private civil cause of action that would allow an

injured party to recover damages sustained as a result of a violation of these proposed restrictions. Furthermore, a number of states have considered prohibitions or limitations on the disclosure of personal information to individuals or entities located outside of the United States. If legislation of this type is enacted, our ability to utilize offshore resources may be impeded, and we may be subject to sanctions for failure to comply with the new mandates of the legislation. In addition, the enactment of such legislation could result in such work being performed at a lower margin of profitability, or even at a loss. In addition, CMS requires that some of our customers, including Medicare Advantage organizations and Medicare Part D prescription drug plans and their subcontractors, submit certain information regarding their offshore subcontractors and attest that measures have been taken to mitigate risk associated with sharing personal information with such offshore subcontractors. As a result, we may be required to submit information or an attestation and may be impacted by our customer’s failure to submit accurate and complete information or attestations. Further, as a result of concerns regarding the possible misuse of personal information, some of our customers have contractually limited or may seek to limit our ability to use our offshore resources which may increase our costs. Use of offshore resources may increase our risk of violating our contractual obligations to our customers to protect the privacy and security of personal information provided to us, which could adversely impact our reputation and our business. In addition, depending on the location of contractors and employees accessing personal information outside of the United States, we may have additional compliance obligations under non-U.S. laws applicable to accessing, using, or otherwise processing personal information and transmitting that information back to the U.S.

We are subject to risks associated with our international operations.

We market, sell and support our solutions internationally. We plan to continue to expand our non-U.S. operations and continue to focus on developing successful direct and indirect non-U.S. sales and support channels. Non-U.S. operations are subject to inherent risks, and our business, results of operations and financial condition, including our revenue growth and profitability, could be adversely affected by a variety of uncontrollable and changing factors. These include, but are not limited to:

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greater difficulty in collecting accounts receivable and longer collection periods;

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difficulties and costs of staffing and managing non-U.S. operations;

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the impact of global economic and political market conditions;

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effects of sovereign debt conditions, including budgetary constraints;

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unfavorable or volatile foreign currency exchange rates;

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legal compliance costs or business risks associated with our global operations where: i) local laws and customs differ from, or are more stringent than those in the United States, such as those relating to data privacy and data security, or ii) risk is heightened with the FCPA, the U.K. Anti-Bribery Act and similar laws and regulations in foreign jurisdictions;

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certification, licensing, or regulatory requirements, including obligations imposed on manufacturers and distributors of medical devices by non-U.S. regulatory agencies, and unexpected changes to those requirements;

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changes to or reduced protection of intellectual property rights in certain countries;

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greater difficulty in protecting, maintaining and obtaining registered intellectual property, such as patents and trademarks;

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potentially adverse tax consequences as a result of changes in tax laws or otherwise, and difficulties associated with repatriating cash generated or held abroad in a tax-efficient manner;

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different or additional functionality requirements or preferences;

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trade protection measures;

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economic sanctions;

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export control regulations;

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disruption of, or loss of access to, regional information technology or telecommunication networks;

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health service provider or government spending patterns or government-imposed austerity measures;

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natural disasters, war or terrorist acts; and

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labor disruptions that may occur in a country.

We rely on vendors and other third parties including vendors outside the U.S., for some of our information technology infrastructure, development and maintenance, quality assurance, operations, and customer support.

We currently depend on various vendors and other third parties for substantial business functions, including with respect to our IT systems (including infrastructure, application development, purchase and distribution, payment processing, manufacturing, and maintenance), business process outsourcing, call center services, customer support and similar services. Specifically, we outsource some of our software development and design, quality assurance, and operations activities to third-party vendors that have employees and consultants located outside the United States. In February 2018, the Joint Venture entered into a ten-year contract with Wipro in which it committed to purchase from Wipro at least $1.0 billion in outsourced professional services over the ten-year term of the contract. If the Joint Venture fails to meet this minimum commitment, it may be forced to pay to Wipro 25% of the shortfall relative to the minimum commitment at the end of the term, thus increasing its costs without a commensurate increase in services provided to its business. If the Joint Venture had terminated the Wipro contract on December 31, 2018, it estimates that the termination fee would have been approximately $245 million, which represents the greater of (i) a termination fee equal to 25% of the remaining unspent minimum commitment and (ii) the remaining unrecovered costs incurred by Wipro in connection with its performance under the agreement. In addition, the Joint Venture’s dependence on Wipro and our dependence on other third-party vendors creates a number of business risks—in particular, the risk that we may not maintain service quality, control or effective management with respect to these outsourcing arrangements of our business operations and that we cannot control the information systems, facilities or networks of such vendors.

Our results of operations could be adversely affected if the information systems, facilities or networks of a third party vendor are disrupted (including disruption of access), are damaged or fail, whether due to physical disruptions, such as fire, natural disaster, pandemic or power outage, or due to cyber-security incidents, ransomware or other actions of vendors, including labor strikes, political unrest and terrorist attacks. Moreover, because certain of our third-party vendors conduct operations for us outside the United States, the political and military events in foreign jurisdictions could have an adverse impact on our outsourced operations. If we experience problems with our third-party vendors, if the costs charged by our third-party vendors increase or if our agreements with our third-party vendors are terminated, we may not be able to develop new solutions, enhance or operate existing solutions, or provide customer support in an alternate manner that is equally or more efficient and cost-effective.

Failure by our customers to obtain proper permissions or provide us with accurate and appropriate information may result in claims against us or may limit or prevent our use of information, which could harm our business. Additionally, privacy concerns relating to our business could damage our reputation and deter current and potential customers from using our solutions.

To the extent we are not otherwise permitted to use and/or disclose customer information, we require our customers to provide necessary notices and obtain necessary permissions for the use and disclosure of the information that we receive from our member engagement, member eligibility, billing and coding and other solutions. If they do not provide necessary notices or obtain necessary permissions, then our use and disclosure of information that we receive from them or on their behalf may be limited or prohibited by federal or state privacy or other laws. Such failures by our customers could impair our functions, processes and databases that reflect, contain or are based upon such information. For example, as part of our claims submission services, we

rely on our customers to provide us with accurate and appropriate information and directives for our actions. While we have implemented features and safeguards relating to the accuracy and completeness of claims content, these features and safeguards may not be sufficient to prevent inaccurate claims data from being submitted to payers. In addition, such failures by our customers could interfere with or prevent creation or use of rules, analyses or other data-driven activities that benefit us, or make our solutions less useful. Accordingly, we may be subject to claims or liability for inaccurate claims data submitted to payers or for use or disclosure of information by reason of lack of valid notice or permission. As another example, we rely on our customers to provide us with accurate and appropriate billing and coding information, including provider enrollment information and medical necessity information. While we have implemented features and safeguards relating to provider enrollment and medical necessity requirements, these features and safeguards may not be sufficient to prevent inaccurate or incomplete billing and coding claims from being submitted to payers. Accordingly, we may be subject to claims or liability for inaccurate or incomplete billing and coding claims. These claims or liabilities could damage our reputation, subject us to unexpected costs and could have a material adverse impact on our business, results of operations or financial condition.

Additionally, in recent years, consumer advocates, media and elected officials increasingly and publicly have criticized companies in data focused industries regarding the collection, storage and use of personal data, including the licensing of de-identified data, by such companies. Concerns about our practices with regard to the collection, use, disclosure or security of personal information, the licensing of de-identified data, or other privacy related matters, even if unfounded, could damage our reputation and adversely affect our business, results of operations or financial condition.

Certain of our solutions present the potential for embezzlement, identity theft or other similar illegal behavior by our employees or vendors and a failure of our employees or vendors to observe quality standards or adhere to environmental, social and governance standards could damage our reputation.

Among other things, our solutions include printing and mailing checks and/or facilitating electronic funds transfers for our payer customers and handling mail and payments from payers and from patients for many of our provider customers. These services frequently include handling original checks, payment card information, banking account information and may include currency. Even in those cases in which we do not facilitate payments or handle original documents or mail, our services also involve the use and disclosure of personal and business information that could be used to impersonate third parties or otherwise gain access to their data or funds. If any of our employees or vendors or other bad actors takes, converts or misuses such funds, documents or information, or we experience a data breach creating a risk of identity theft, we could be liable for damages, and our reputation could be damaged or destroyed. In addition, we could be perceived to have facilitated or participated in illegal misappropriation of funds, documents or data and, therefore, be subject to civil or criminal liability. Federal and state regulators may take the position that a data breach or misdirection of data constitutes an unfair or deceptive act or trade practice. We also may be required to notify individuals affected by any data breaches. Further, a data breach or similar incident could impact the ability of our customers that are creditors to comply with the federal “red flags” rules, which require the implementation of identity theft prevention programs to detect, prevent and mitigate identity theft in connection with customer accounts.

Many of our licensees, as well as vendors are subject to specified product quality standards and other requirements pursuant to the related licensing or supply agreements. The non-compliance by these entities with the terms and conditions of their respective contracts that pertain to health and safety standards, quality control, product consistency, compliance with law, or proper marketing or other business practices, may adversely impact the goodwill of our business. We may not be able to adequately prevent such practices, which could harm the value of our business, result in the abandonment, dilution or invalidity of trademarks associated with our business and adversely affect our results of operations or financial condition. In addition, such licensees and suppliers could violate environmental, social and governance standards or engage in unethical conduct. Further, despite our policies to the contrary, we may not be able to control the conduct of every individual actor, and our employees and personnel may violate environmental, social or governance standards or engage in other unethical conduct. These acts could adversely impact the reputation of our business.

Contractual relationships with customers that are governmental agencies or are funded by government programs may impose special burdens on us and provide special benefits to those customers.

A portion of our revenue comes from customers that are governmental agencies or are funded by government programs. Our contracts and subcontracts may be subject to some or all of the following:

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termination when appropriated funding for the current fiscal year is exhausted;

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termination for the governmental customer’s convenience, subject to a negotiated settlement for costs incurred and profit on work completed, along with the right to place contracts out for bid before completion of the full contract term, as well as the right to make unilateral changes in contract requirements, subject to negotiated price adjustments;

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compliance and reporting requirements related to, among other things, agency-specific policies and regulations, information security, subcontracting requirements, equal employment opportunity, affirmative action for veterans and workers with disabilities and accessibility for the disabled;

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broad audit rights;

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ownership of inventions made with federal funding under the Bayh-Dole Act; and

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specialized remedies for breach and default, including setoff rights, risk allocation, retroactive price adjustments and civil or criminal fraud penalties, re-procurement expenses, as well as mandatory administrative dispute resolution procedures instead of state contract law remedies.

In addition, certain violations of federal and state law may result in termination of our contracts and subcontracts, and under certain circumstances, suspension and/or debarment from future government contracts. We also are subject to conflict-of-interest rules that may affect our eligibility for some federal, state and local government contracts and subcontracts, including rules applicable to all United States government contracts and subcontracts, as well as rules applicable to the specific agencies with which we have contracts or with which we may seek to enter into contracts.

The protection of our intellectual property requires substantial resources and protections of our proprietary rights may not be adequate.

We rely upon a combination of trade secret, copyright and trademark laws, patents, license agreements, confidentiality procedures, nondisclosure agreements and technical measures designed to protect the intellectual property used in our business. The steps we have taken to protect and enforce our proprietary rights and intellectual property may not be adequate. For instance, we may not be able to secure trademark or service mark registrations for marks in the United States or in foreign countries or take similar steps to secure patents for our proprietary processes, methods and technologies. Even if we are successful in obtaining patent and/or trademark registrations, these registrations may be opposed or invalidated by a third party. In addition, our agreements with employees, consultants and others who develop intellectual property for or on behalf of the Company could be breached and could result in our trade secrets and confidential information being publicly disclosed. We may not have adequate remedies for any such breach. Third parties also may infringe upon or misappropriate our copyrights, trademarks, service marks, patents and other intellectual property rights. If we believe a third party has misappropriated our intellectual property, litigation may be necessary to enforce and protect those rights, which would divert management resources, would be expensive and may not effectively protect our intellectual property. Even if we establish infringement, a court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of shares of our common stock. Moreover, there can be no assurance

that we will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are concluded. Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings. As a result, if we fail to maintain adequate intellectual property protection or if a third party infringes or misappropriates our intellectual property, it may have a material adverse impact on our business, results of operations or financial condition. Our currently pending or future patent applications may not result in issued patents, or be approved on a timely basis, if at all. Similarly, any term extensions that we seek may not be approved on a timely basis, if at all. In addition, our issued patents, or any patents that may issue in the future, may not contain claims sufficiently broad to protect us against third parties with similar technologies or products or provide us with any competitive advantage, including exclusivity in a particular product area. The validity and scope of our patent claims also may vary between countries, as individual countries have their own patent laws. The validity, enforceability, scope and effective term of patents can be highly uncertain and often involve complex legal and factual questions and proceedings that vary based on the local law of the relevant jurisdiction. Our ability to enforce our patents also depends on the laws of individual countries and each country’s practice with respect to enforcement of intellectual property rights. Patent protection must be obtained on a jurisdiction-by-jurisdiction basis, and we only pursue patent protection in countries where we think it makes commercial sense for the given product. In addition, if we are unable to maintain our existing license agreements or other agreements pursuant to which third parties grant us rights to intellectual property, including because such agreements terminate, our financial condition and results of operations could be materially adversely affected.

Patent law reform in the U.S. and other countries may also weaken our ability to enforce our patent rights, or make such enforcement financially unattractive. For instance, in September 2011, the U.S. enacted the America Invents Act, which permits enhanced third-party actions for challenging patents and implements a first-to-invent system. These reforms could result in increased costs to protect our intellectual property or limit our ability to obtain and maintain patent protection for our products in these jurisdictions. Additionally, certain foreign governments have indicated that compulsory licenses to patents may be granted in the case of national emergencies, which could diminish or eliminate sales and profits from those regions and materially adversely affect our financial condition and results of operations.

Our trademarks, logos, and brands may provide us with a competitive advantage in the market as they may be known or trusted by consumers. In order to maintain the value of such brands, we must be able to enforce and defend our trademarks. We have pursued and will pursue the registration of trademarks, logos and service marks in the U.S. and internationally; however, enforcing rights against those who knowingly or unknowingly dilute or infringe our brands can be difficult. Effective trademark, service mark, trade dress or related protections may not be available in every country in which our solutions are available. Enforcement is especially difficult in first-to-file countries where ‘‘trademark squatters’’ can prevent us from obtaining adequate protections for our brands. There can be no assurance that the steps we have taken and will take to protect our proprietary rights in our brands and trademarks will be adequate or that third parties will not infringe, dilute or misappropriate our brands, trademarks, trade dress or other similar proprietary rights.

Many of our products are based on or incorporate proprietary information. We actively seek to protect our proprietary information, including our trade secrets and proprietary know-how, by generally requiring our employees, consultants, other advisors and other third parties to execute proprietary information and confidentiality agreements upon the commencement of their employment, engagement or other relationship. Despite these efforts and precautions, we may be unable to prevent a third party from copying or otherwise obtaining and using our trade secrets or our other intellectual property without authorization and legal remedies may not adequately compensate us for the damages caused by such unauthorized use.

In addition, there can be no assurance that our competitors will not independently develop products or services that are equivalent or superior to our solutions.

We may not be able to protect our intellectual property rights throughout the world.

Third parties may attempt to commercialize competitive products or services in foreign countries where we do not have any patents or patent applications and where legal recourse may be limited. This may have a significant commercial impact on our foreign business operations.

Filing, prosecuting and defending patents on our solutions in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States may be less extensive than those in the United States. The requirements for patentability may differ in certain countries, particularly developing countries. For example, Europe has a heightened requirement for patentability of software inventions. Thus, even in countries where we do pursue patent protection, there can be no assurance that any patents will issue with claims that cover our solutions. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and services and further, may export otherwise infringing products and services to territories where we have patent protection, but enforcement on infringing activities is inadequate. These products or services may compete with ours, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. In addition, certain countries in Europe and certain developing countries, including India and China, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In those countries, we may have limited remedies if our patents are infringed or if we are compelled to grant a license to our patents to a third party, which could materially diminish the value of those patents. This could limit our potential revenue opportunities. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we own or license. Finally, our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property laws.

Third parties may claim that we or our distributors or licensors are infringing their intellectual property, and we could suffer significant litigation or licensing expenses or be prevented from selling certain solutions.

We or our distributors and licensors could be subject to claims that we are misappropriating or infringing intellectual property (including patents, trademarks, trade dress, copyrights, trade secrets, domain names) or other proprietary rights of others. We may become subject to preliminary or provisional rulings in the course of any such litigation, including potential preliminary injunctions requiring us to cease some or all of our operations. Similarly, if any litigation to which we are a party is resolved adversely, we may be subject to an unfavorable judgment that may not be reversed upon appeal. These claims, even if not meritorious, could be expensive to defend and divert management’s attention from our operations and even if we believe we do not infringe a validly existing third-party right we may choose to license such rights. If we or our distributors or licensors become liable to third parties for infringing these rights, we could be required to pay a substantial damage award, including treble damages in some cases, and to develop non-infringing technology, obtain a license, which may not be available on commercially reasonable terms, or stop activities or services that use or contain the infringing

intellectual property, which could include a recall or cessation of sales in the future. We may also decide to settle such matters on terms that are unfavorable to us. We may be unable to develop non-infringing solutions or obtain a license on commercially reasonable terms, or at all. We also may be required to indemnify our customers if they become subject to third party claims relating to intellectual property that we license or otherwise provide to them, which could be costly.

The intellectual property positions of pharmaceutical and health IT services frequently involve complex legal and factual questions. For example, while we generally enter into proprietary information agreements with our employees and third parties which assign intellectual property rights to us, these agreements may not be honored or may not effectively assign intellectual property rights to us under the local laws of some countries or jurisdictions. We cannot be certain that a competitor or other third party does not have or will not obtain rights to intellectual property that may prevent us from manufacturing, developing or marketing certain of our products, regardless of whether we believe such intellectual property rights are valid and enforceable or we believe we would otherwise be able to develop a more commercially successful product, which may materially adversely affect our business, financial condition and results of operations.

We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.

We have received confidential and proprietary information from third parties. In addition, we may employ individuals who were previously employed at other healthcare companies. We may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise improperly used or disclosed confidential information of these third parties or our employees’ former employers. Further, we may be subject to ownership disputes in the future arising, for example, from conflicting obligations of consultants or others who are involved in developing our solutions. We may also be subject to claims that former employees, consultants, independent contractors or other third parties have an ownership interest in our patents or other intellectual property. Litigation may be necessary to defend against these and other claims challenging our right to and use of confidential and proprietary information. In addition to paying monetary damages, if we fail in defending against any such claims we may lose our rights therein, which could have a material adverse effect on our business. Even if we are successful in defending against these claims, litigation could result in substantial cost and be a distraction to our management and employees.

Our solutions depend, in part, on intellectual property and technology licensed from third parties.

Much of our business and many of our solutions rely on key technologies or content developed or licensed by third parties. For example, many of our software offerings are developed using software components or other intellectual property licensed from third parties, including both proprietary and open source licenses. These third-party software components may become obsolete, defective or incompatible with future versions of our solutions, or our relationship with the third party licensor may deteriorate, or our contracts with the third party licensor may expire or be terminated. In addition, like most other service providers in the healthcare industry, many of our products rely on proprietary healthcare codes, descriptive terms and other content, such as Current Procedural Terminology codes (“CPT” codes), that third parties, such as the American Medical Association (“AMA”) develop and license for the purpose of maintaining standard language and coding throughout the healthcare industry. Because CPT codes are licensed by the AMA on reasonable and non-discriminatory terms, we anticipate the continued availability of such content; however, if we are unable to maintain an ongoing license for such content, certain of our products may become partially or entirely incompatible with the healthcare industry. We may also face legal or business disputes with licensors that may threaten or lead to the disruption of inbound licensing relationships. In order to remain in compliance with the terms of our licenses, we must carefully monitor and manage our use of third-party software components, including both proprietary and open source license terms that may require the licensing or public disclosure of our intellectual property without compensation or on undesirable terms. Because the availability and cost of licenses from third parties depends upon the willingness of third parties to deal with us on the terms we request, there is a risk that third parties who

license to our competitors either will refuse to license us at all, or refuse to license us on terms equally favorable to those granted to our competitors. Consequently, we may lose a competitive advantage with respect to these intellectual property rights or we may be required to enter into costly arrangements in order to terminate or limit these rights. Additionally, some of these licenses may not be available to us in the future on terms that are acceptable or that allow our solutions to remain competitive. Our inability to obtain licenses or rights on favorable terms could have a material effect on our business, including our financial condition and results of operations. In addition, it is possible that as a consequence of a merger or acquisition, third parties may obtain licenses to some of our intellectual property rights or our business may be subject to certain restrictions that were not in place prior to such transaction. Because the availability and cost of licenses from third parties depends upon the willingness of third parties to deal with us on the terms we request, there is a risk that third parties who license to our competitors either will refuse to license us at all, or refuse to license us on terms equally favorable to those granted to our competitors. Consequently, we may lose a competitive advantage with respect to these intellectual property rights or we may be required to enter into costly arrangements in order to terminate or limit these rights.

Our use of open source technology could impose limitations on our ability to commercialize our solutions.

Our solutions incorporate open source software components that are licensed to us under various public domain licenses. Some open source software licenses require users who distribute open source software as part of their software to publicly disclose all or part of the source code to such software or make available any derivative works of the open source code on unfavorable terms or at no cost. There is little or no legal precedent governing the interpretation of many of these licenses and therefore the potential impact of such licenses on our business is not fully known or predictable. There is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to market our solutions.

While we monitor our use of open source software and try to ensure that none is used in a manner that would require us to disclose our source code or that would otherwise breach the terms of an open source license, such use could inadvertently occur and we may be required to release our proprietary source code, pay damages for breach of contract, re-code or engineer one or more of our offerings, discontinue sales of one or more of our solutions in the event re-engineering cannot be accomplished on a timely basis or take other remedial action that may divert resources away from our development efforts, any of which could cause us to breach obligations to our customers, harm our reputation, result in customer losses or claims, increase our costs or otherwise adversely affect our business and operating results.

Recently enacted U.S. federal tax reform could adversely affect our results of operations.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law, which made significant changes to the U.S. Internal Revenue Code of 1986, as amended (the “Code”). Among other changes, Section 163(j) of the Code was amended to limit the deductibility of net interest expense paid or accrued on debt properly allocable to a trade or business to 30% of “adjusted taxable income,” subject to certain exceptions. Any deduction in excess of the limitation is carried forward and may be used in a subsequent year, subject to the 30% limitation. Adjusted taxable income is determined without regard to certain deductions, including those for net interest expense, net operating loss carryforwards and, for taxable years beginning before January 1, 2022, depreciation, amortization and depletion. While the impact of this rule is not completely clear and could change due to the issuance of additional interpretive guidance or changes in the Company’s level of indebtedness, the Company expects these rules will limit the amount of net interest expense that the Company, the Joint Venture and the subsidiaries of the Joint Venture can use as a deduction against taxable income and, as a result, may negatively impact the financial condition and results of operations of the Company.

A write-off or acceleration of amortization of all or a part of our long-lived assets (including identifiable intangible assets and goodwill) would adversely affect our operating results and reduce our net worth.

We have significant long-lived assets which include property and equipment, identifiable intangible assets, other noncurrent assets and goodwill. As of December 31, 2018, we had $183.2 million of property and equipment, $1,355.4 million of identifiable intangible assets, $388.2 million of other noncurrent assets and $3,279.9 million of goodwill on our balance sheet, which collectively represented in excess of 83% of our total assets. We amortize property and equipment, identifiable intangible assets and relevant other noncurrent assets over their estimated useful lives. Though we are not permitted to amortize goodwill under GAAP, we evaluate our goodwill for impairment at least annually. In the event of anticipated obsolescence or impairment of our long-lived assets, we may write-off all or part of the affected assets or accelerate the related amortization of these assets. A write-off or acceleration of amortization in the future would result in an immediate one-time charge to earnings in the event of an impairment of assets and, in the event of anticipated obsolescence of assets that do not reach the level of an impairment, regular reductions to earnings over the remaining lives of the affected assets. Although it would not affect our cash flow, a write-off or acceleration of amortization in future periods of all or a part of these long-lived assets would adversely affect our financial condition and operating results. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Change Healthcare LLC—Critical Accounting Estimates—Goodwill and Intangible Assets” of this prospectus.

Our success depends in part on our ability to identify, recruit and retain skilled management and technical personnel. If we fail to recruit and retain suitable candidates or if our relationship with our employees changes or deteriorates, there could be a material adverse impact on our business, results of operations or financial condition.

Our future success depends upon our continuing ability to identify, attract, hire and retain highly qualified personnel, including skilled management, product, technology, sales and marketing personnel, all of whom are in high demand and are often subject to competing offers. Competition for qualified personnel in the healthcare IT industry is intense, and we may not be able to hire or retain a sufficient number of qualified personnel to meet our requirements, or be able to do so at salary, benefit and other compensation costs that are acceptable to us. A loss of a substantial number of qualified employees, or an inability to attract, retain and motivate additional highly skilled employees required for expansion of our business, could have a material adverse impact on our business, results of operations or financial condition. In addition, while none of our employees currently are unionized, unionization of our employees is possible in the future. Such unionizing activities could be costly to address and, if successful, likely would adversely impact our operations.

Lengthy sales, installation and implementation cycles for some of our solutions may result in delays or an inability to generate revenue from these solutions.

Some of our solutions have long sales, installation and implementation cycles, which could range from a few months to years or more from initial contact with the customer to completion of implementation and generation of revenue. How and when to implement, replace, or expand an information system, or modify or add business processes, are important decisions for healthcare organizations, and some customers may be reluctant to change or modify existing systems or processes. Some of the solutions we provide require significant capital expenditures and time commitments by our customers. Sales may be subject to delays due to customers’ internal procedures for deploying new systems and processes, and implementation may be subject to delays based on the availability of the internal customer resources needed. We may be unable to control many of the factors that will influence the timing of the buying decisions of existing or prospective customers or the pace at which installation and training may occur, including decisions by our customers to delay or cancel implementations. If we experience longer sales, installation and implementation cycles for our solutions, we may experience delays in generating, or a decreased ability to generate, revenue from these solutions, which could have a material adverse impact on our business, results of operations or financial condition. Furthermore, significant delays or failures to meet milestones established in our customer contracts may result in breach of contract, termination of the

contract, damages and/or penalties as well as a reduction in our margins or a delay in our ability to recognize revenue.

We may be a party to legal, regulatory and other proceedings that could result in unexpected adverse outcomes.

From time to time, we have been, are and may in the future be, a party to legal and regulatory proceedings and investigations, including matters involving governmental agencies and entities with which we do business and other proceedings and investigations arising in the ordinary course of business, as described in more detail above. In addition, there are an increasing number of, and we may be subject to, investigations and proceedings in the healthcare industry generally that seek recovery under HIPAA, AKS, the FCA, the CMP, the Stark Law, the Sunshine Act, state laws and other statutes and regulations applicable to our business as described in more detail above. For example, we are currently subject to two overlapping putative class action complaints in Wisconsin federal court, alleging that we charged a fee to obtain certified healthcare bills for patients provided in the ordinary course of business in excess of Wisconsin state statutory limits. These and other similar statutory requirements impose statutory penalties for proven violations, which could become significant. While we intend to vigorously defend ourselves, the ultimate outcome and potential financial impact to us is not determinable at this time given the preliminary stage of these proceedings. We also may be subject to legal proceedings under non-healthcare federal, state and international laws affecting our business, such as the TCPA, FDCPA, FCRA, CAN-SPAM Act, Junk Fax Act, FCPA, the California Consumer Privacy Act of 2018, GDPR, employment, banking and financial services and USPS laws and regulations, as further detailed above. Such proceedings are inherently unpredictable, and the outcome can result in verdicts and/or injunctive relief that may affect how we operate our business or we may enter into settlements of claims for monetary payments. In some cases, substantial non-economic remedies or punitive damages may be sought. Governmental investigations, audits and other reviews could also result in criminal penalties or other sanctions, including restrictions, changes in the way we conduct business or exclusion from participation in government programs. We evaluate our exposure to these legal and regulatory proceedings and establish reserves for the estimated liabilities in accordance with GAAP. Assessing and predicting the outcome of these matters involves substantial uncertainties. Unexpected outcomes in these legal proceedings, or changes in management’s evaluations or predictions and accompanying changes in established reserves, could have a material adverse impact on our business, results of operations or financial condition.

Litigation is costly, time-consuming and disruptive to normal business operations. The defense of these matters could also result in continued diversion of our management’s time and attention away from business operations, which could also harm our business. Even if these matters are resolved in our favor, the uncertainty and expense associated with unresolved legal proceedings could harm our business and reputation.

The failure to successfully implement a new enterprise resource planning system could adversely impact our business and results of operations.

We are in a multi-year process of implementing a new Enterprise Resource Planning (“ERP”) business solution to create a system of integrated applications to manage our businesses and automate many functions related to financial reporting, human resources and other services. It is our intent through this ERP to integrate the major facets of our organization in order to improve planning, development, processes, sales, human resources management and other applications as they affect our evolving business model. ERP implementations are complex and time-consuming projects that require transformations of business and financial processes in order to reap the benefits of the ERP system; any such transformation involves risk inherent in the conversion to a new computer system, including loss of information and potential disruption to normal operations. Additionally, if the ERP system is not effectively implemented as planned, or the system does not operate as intended, the effectiveness of our internal controls over financial reporting could be adversely affected or our ability to assess those controls adequately could be delayed. Any failure(s) during this continued implementation process to develop, implement or maintain effective internal controls or to improve our internal controls could harm our operating results or cause us to fail to meet our reporting obligations. In addition, if we experience interruptions in service or operational difficulties and are unable to effectively manage our business during or following the implementation of the ERP, our business and results of operations could be harmed.

Changes in accounting standards issued by the Financial Accounting Standards Board (“FASB”) or other standard-setting bodies may adversely affect our financial statements.

Our financial statements are subject to the application of GAAP, which is periodically revised and/or expanded. From time to time, we are required to adopt new or revised accounting standards issued by recognized authoritative bodies. It is possible that future accounting standards we are required to adopt, such as the amended guidance for revenue recognition and leases, may require changes to the current accounting treatment that we apply to our consolidated financial statements and may require us to make significant changes to our systems. Such changes could result in a material adverse impact on our financial position and results of operations.

Risks Related to Our Indebtedness

The Joint Venture has a substantial amount of debt, which requires significant interest and principal payments. As of December 31, 2018, the Joint Venture had total indebtedness of approximately $5.8 billion. In addition, as of December 31, 2018, the Joint Venture had $495.1 million of availability to incur additional indebtedness under its senior secured revolving credit facility (the “Revolving Credit Facility”). Subject to the limits contained in the credit agreement (the “Credit Agreement”) that governs the Revolving Credit Facility and the Joint Venture’s senior secured term loan facility the (“Term Loan Facility” and, together with the Revolving Credit Facility, the “Senior Secured Credit Facilities”) and the indenture that governs the Joint Venture’s senior notes (the “Senior Notes”), the Joint Venture may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If the Joint Venture does so, the risks related to its high level of debt could increase. Specifically, the Joint Venture’s high level of debt could have important consequences, including the following:

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it may be difficult for the Joint Venture to satisfy its obligations, including debt service requirements under its outstanding debt;

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the Joint Venture’s ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions or other general corporate purposes may be impaired;

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a substantial portion of cash flow from operations are required to be dedicated to the payment of principal and interest on the Joint Venture’s indebtedness, therefore reducing its ability to use its cash flow to fund its operations, capital expenditures, future business opportunities and other purposes;

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the Joint Venture could be more vulnerable to economic downturns and adverse industry conditions and its flexibility to plan for, or react to, changes in its business or industry is more limited;

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the Joint Venture’s ability to capitalize on business opportunities and to react to competitive pressures, as compared to its competitors, may be compromised due to its high level of debt and the restrictive covenants in the Credit Agreement that governs its Senior Secured Credit Facilities and the indenture that governs its Senior Notes;

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the Joint Venture’s ability to borrow additional funds or to refinance debt may be limited; and

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the Joint Venture may cause potential or existing customers to not contract with it due to concerns over its ability to meet its financial obligations under such contracts.

The Joint Venture’s ability to make scheduled payments on and to refinance its indebtedness depends on and is subject to its financial and operating performance, which in turn is affected by general and regional economic, financial, competitive, business and other factors and reimbursement actions of governmental and commercial payers, all of which are beyond its control, including the availability of financing in the international

banking and capital markets. We cannot assure you that the Joint Venture’s business will generate sufficient cash flow from operations or that future borrowings will be available to it in an amount sufficient to enable it to service its debt, to refinance its debt or to fund its other liquidity needs. Any refinancing or restructuring of the Joint Venture’s indebtedness could be at higher interest rates and may require it to comply with more onerous covenants that could further restrict its business operations. Moreover, in the event of a default, the holders of the Joint Venture’s indebtedness could elect to declare such indebtedness be due and payable and/or elect to exercise other rights, such as the lenders under its Revolving Credit Facility terminating their commitments thereunder and ceasing to make further loans or the lenders under its Senior Secured Credit Facilities instituting foreclosure proceedings against their collateral, any of which could materially adversely affect our results of operations and financial condition.

Furthermore, all of the debt under the Joint Venture’s Senior Secured Credit Facilities bears interest at variable rates. If interest rates increase, its debt service obligations on its Senior Secured Credit Facilities would increase even though the amount borrowed remained the same, and its net income and cash flows, including cash available for servicing its indebtedness, would correspondingly decrease.

Certain of the Joint Venture’s debt agreements impose significant operating and financial restrictions on it and its subsidiaries, which may prevent us from capitalizing on business opportunities.

The Credit Agreement that governs the Joint Venture’s Senior Secured Credit Facilities and the indenture that governs its Senior Notes each impose significant operating and financial restrictions on it. These restrictions will limit the Joint Venture’s ability and/or the ability of its subsidiaries to, among other things:

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incur or guarantee additional debt or issue disqualified stock or preferred stock;

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pay dividends and make other distributions on, or redeem or repurchase, capital stock;

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make certain investments;

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incur certain liens;

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enter into transactions with affiliates;

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merge or consolidate;

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enter into agreements that restrict the ability of restricted subsidiaries to make dividends or other payments to Change Healthcare Inc., the Joint Venture or certain of its subsidiaries;

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designate restricted subsidiaries as unrestricted subsidiaries; and

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transfer or sell assets.

As a result of these restrictions, we will be limited as to how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness we may incur could include more restrictive covenants. We cannot assure you that the Joint Venture will be able to maintain compliance with these covenants in the future and, if it fails to do so, that it will be able to obtain waivers from the lenders and/or amend the covenants. The Joint Venture’s failure to comply with the restrictive covenants described above as well as the terms of any future indebtedness could result in an event of default, which, if not cured or waived, could result in it being required to repay these borrowings before their due date. If the Joint Venture is forced to refinance these borrowings on less favorable terms or cannot refinance these borrowings, our results of operations and financial condition could be adversely affected.

Risks Related to Our Organizational Structure

Change Healthcare Inc. is a holding company and its only material asset is its interest in the Joint Venture, and it is accordingly dependent upon distributions from the Joint Venture to pay taxes or pay dividends.

Change Healthcare Inc. is a holding company and has no material assets other than its ownership of LLC Units. Change Healthcare Inc. has no independent means of generating revenue. The Joint Venture intends to make distributions to its holders of LLC Units, including Change Healthcare Inc. and McKesson, in an amount sufficient to cover all applicable taxes at assumed tax rates and dividends, if any, declared by it. The LLC Agreement requires the Joint Venture to make quarterly distributions to each member of the Joint Venture, including Change Healthcare Inc., in amounts at least equal to the member’s tax liability in respect of the income of Change Healthcare Holdings, LLC, calculated using an assumed tax rate. Moreover, these tax distributions are required to be made pro rata to each equityholder’s percentage equity ownership interest in the Joint Venture, even though certain items of Change Healthcare LLC’s income, gain, deduction and loss will not be allocated to Joint Venture equityholders pro rata. The effect of this provision will be to “top up” tax distributions to any equityholder that receives disproportionately lower allocations of income and gain, so that the aggregate tax distributions payable by the Joint Venture to a particular member may significantly exceed the equityholder’s tax liability in respect of Change Healthcare Holdings, LLC’s income.

Deterioration in the financial condition, earnings or cash flow of the Joint Venture and its subsidiaries for any reason could limit or impair their ability to pay such distributions. Additionally, to the extent that Change Healthcare Inc. needs funds, and the Joint Venture is restricted from making such distributions under applicable law or regulation or under the terms of our financing arrangements, or is otherwise unable to provide such funds, it could materially adversely affect our liquidity and financial condition.

Payments of dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including our business, operating results and financial condition, current and anticipated cash needs, plans for expansion and any legal or contractual limitations on our ability to pay dividends. Our existing Senior Secured Credit Facilities and Senior Notes include and any financing arrangement that we enter into in the future may include restrictive covenants that limit our ability to pay dividends. In addition, the Joint Venture is generally prohibited under Delaware law from making a distribution to a member to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of the Joint Venture (with certain exceptions) exceed the fair value of its assets. Subsidiaries of the Joint Venture are generally subject to similar legal limitations on their ability to make distributions to the Joint Venture.

The amounts we or the Joint Venture will be required to pay under our tax receivable agreements could be significant and, in certain circumstances, could differ significantly (in both timing and amount) from the underlying tax benefits we actually realize.

Change Healthcare Inc., the Joint Venture and Change Healthcare Performance, Inc. (collectively, the “TRA Affiliates”), are or may become a party to certain tax receivable agreements (collectively, the “tax receivable agreements”) and other similar agreements with our current and former owners. One of the existing tax receivable agreements (the “McKesson Tax Receivable Agreement”) generally provides for the payment by the Joint Venture to affiliates of McKesson (the “McKesson TRA Parties”) of 85% of certain cash tax savings realized (or, in certain circumstances, deemed to be realized) by Change Healthcare Inc. and its subsidiaries in certain periods ending on or after the date on which McKesson ceases to own at least 20% of the Joint Venture as a result of (i) certain amortizable tax basis in assets transferred to the Joint Venture at the consummation of the Transactions and (ii) imputed interest deductions and certain other tax attributes arising from payments under the McKesson Tax Receivable Agreement. Change Healthcare Inc., the Joint Venture, McKesson and certain of McKesson’s affiliates have also entered into an amended and restated letter agreement (the “Letter Agreement”) pursuant to which McKesson may choose to allocate an amount of deductions related to certain amortizable tax basis in assets transferred to the Joint Venture at the consummation of the Transactions to Change Healthcare Inc. in excess of a specified minimum threshold, in which case Change Healthcare Inc. may be required to make

cash payments to McKesson equal to 100% of the tax savings of Change Healthcare Inc. attributable to such excess deductions for any tax period ending prior to the date on which McKesson ceases to own at least 20% of the Joint Venture.

Another existing tax receivable agreement (the “2017 Tax Receivable Agreement”) generally provides for the payment by Change Healthcare Performance, Inc. to affiliates of the Sponsors and certain other former stockholders of Change Healthcare Performance, Inc. (the “2017 TRA Parties”) of 85% of the net cash tax savings realized (or, in certain circumstances, deemed to be realized) by Change Healthcare Performance, Inc. and its subsidiaries in respect of periods ending on or after the Transactions as a result of certain net operating losses and certain other tax attributes of Change Healthcare Performance, Inc. as of the date of the Transactions.

A predecessor to Change Healthcare Performance, Inc. is party to certain tax receivable agreements (the “2009—2011 Tax Receivable Agreements,” and together with the 2017 Tax Receivable Agreement, the “Legacy CHC Tax Receivable Agreements”) which were assumed by the Joint Venture in connection with the Transactions and obligate the Joint Venture to make payments to certain of the former Legacy CHC Stockholders (the “2009—2011 CHC TRA Parties,” and collectively, with the McKesson TRA Parties and the 2017 TRA Parties, the “TRA Parties”), equal to 85% of the applicable cash savings that the Joint Venture realizes (or is deemed to realize) as a result of tax attributes arising from certain previous transactions. Because covered changes of control with respect to the 2009—2011 Tax Receivable Agreements previously occurred as a result of the Transactions and other previous reorganizations, payments the Joint Venture makes under the 2009—2011 Tax Receivable Agreements are calculated using certain valuation assumptions, including that the Joint Venture will have sufficient taxable income to use the applicable tax attributes and that certain of such tax attributes will be used by the Joint Venture on a pro rata basis from the date of the Transactions (or in certain cases from the date of certain previous transactions) through the expiration of the applicable tax attribute.

The payments the TRA Affiliates may be required to make under these tax receivable agreements could be substantial. The amount and timing of any payments under the tax receivable agreements will vary depending upon a number of factors, including the amount and timing of the taxable income we generate in the future, the tax rate then applicable and whether McKesson then owns at least 20% of the Joint Venture. We expect that, assuming no material changes in tax law and that the Joint Venture earns sufficient taxable income to realize the full potential tax benefit of the tax attributes in respect of which it is required to make payments under the Legacy CHC Tax Receivable Agreements, future payments under the Legacy CHC Tax Receivable Agreements will range from $13.5 million to $73.3 million per year over the next 11 years and from $0.0 million to $8.0 million per year over the following 10 years. As of December 31, 2018, we expect total remaining payments under the Legacy CHC Tax Receivable Agreements of approximately $331.4 million. See Note 19, Tax Receivable Agreement Obligations to Related Parties , within the Joint Venture’s consolidated financial statements appearing elsewhere in this prospectus for additional information about the obligations under the tax receivable agreements. Because payments under the Letter Agreement are contingent upon McKesson’s determination to allocate certain excess deductions to Change Healthcare Inc., and because the McKesson Tax Receivable Agreement will not begin until after McKesson ceases to own at least 20% of the Joint Venture, the amount of any payments under such agreements cannot be reliably estimated at this time.

Additionally, prior to the occurrence of the first exchange of LLC Units by McKesson (or its permitted transferees), if any, Change Healthcare Inc. has agreed to enter into an additional tax receivable agreement with the McK Members, pursuant to which Change Healthcare Inc. would be required to pay to the relevant McK Member 85% of the net cash tax savings, if any, arising from Change Healthcare Inc.’s utilization of (i) certain tax basis increases resulting from the relevant exchange of LLC Units by McKesson and payments under such additional tax receivable agreement and (ii) imputed interest deductions. Change Healthcare Inc. may also be required to enter into and make payments under an additional tax receivable agreement with McKesson in certain circumstances, as described below under “—If certain transactions in connection with a Qualified McKesson Exit do not qualify as tax-free transactions under Sections 368(a)(1)(D) and 355 of the U.S. Internal Revenue Code of 1986, as amended then McKesson may be required to pay substantial U.S. federal income taxes. We may be required to indemnify McKesson for all or part of any such tax liability in certain circumstances, which generally

relate to certain actions taken by us that cause the Distribution to become taxable, and may be obligated to make payments to McKesson in respect of certain tax savings resulting to us.”

There may be circumstances in which the payments under the tax receivable agreements differ significantly (in both timing and amount) from the underlying tax benefits the TRA Affiliates actually realize. Pursuant to the tax receivable agreements, upon a covered change of control, the TRA Affiliates could be required to make payments that significantly exceed the actual cash tax savings from the tax benefits giving rise to such payments. As noted above, with respect to the 2009—2011 Tax Receivable Agreements, covered changes of control previously occurred as a result of the Transactions and other previous reorganizations. Moreover, in certain circumstances, the TRA Affiliates will have the option to terminate the tax receivable agreements in exchange for a lump-sum payment (based on an assumption that all expected potential tax benefits actually will be realized). In addition, under the tax receivable agreements, none of the TRA Parties will reimburse the TRA Affiliates for any payments previously made if such tax benefits are subsequently disallowed, except that excess payments made to a TRA Party will be netted against payments otherwise to be made, if any, after the determination of such excess. As a result, in such circumstances, the TRA Affiliates could make payments under the tax receivable agreements that are greater than the actual cash tax savings and may not be able to recoup those payments. Any difference between the payments the TRA Affiliates are required to make under the tax receivable agreements and the underlying tax benefits actually realized could adversely affect our business or financial condition. Furthermore, because certain of the TRA Affiliates are holding companies with no operations of their own, their ability to make payments under each relevant tax receivable agreement is substantially dependent on the ability of their subsidiaries to make distributions to them. To the extent that the TRA Affiliates are unable to make payments under the tax receivable agreements for any reason, such payments will be deferred and will accrue interest until paid.

If Change Healthcare Inc. were deemed an “investment company” under the Investment Company Act of 1940 (the “1940 Act”), applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.

A person will generally be deemed to be an “investment company” for purposes of the 1940 Act if:

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it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or

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absent an applicable exemption, it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.

We believe that we are engaged primarily in the business of providing healthcare technology services and not in the business of investing, reinvesting or trading in securities. Accordingly, we do not believe that Change Healthcare Inc. is, or following this offering will be, an “orthodox” investment company as defined in section 3(a)(1)(A) of the 1940 Act and described in the first bullet point above.

Further, Change Healthcare Inc. is, and will continue to be following this offering, actively engaged in the business of providing healthcare technology services through its participation in the Joint Venture. Accordingly, we do not believe the interests in the Joint Venture held by Change Healthcare Inc. are securities under the test set forth in Securities and Exchange Commission v. W. J. Howey Co. , 328 U.S. 293 (1946) because its active and equal participation in the operation of the Joint Venture demonstrate that Change Healthcare Inc.’s interests in the Joint Venture are not held with the expectation of receiving profits derived solely from the efforts of others. Moreover, even if the interests in the Joint Venture held by Change Healthcare Inc. were deemed to be securities, we believe they would not be deemed to be investment securities for purposes of section 3(a)(1)(C) of the 1940 Act and as described in the second bullet point above. Each of McKesson and Change Healthcare Inc. holds a 50% voting interest in the Joint Venture and has the right to designate an equal number of directors to the board of directors of the Joint Venture. Additionally, the LLC Agreement provides that all major operating, investing and financial activities require the written consent of both McKesson and Change Healthcare Inc. For these

reasons, the Joint Venture should be considered a majority-owned subsidiary, as that term is defined in section 2(a)(24) of the 1940 Act. Given that securities issued by majority-owned subsidiaries are excluded from the definition of “investment securities” under section 3(a)(2) of the 1940 Act, Change Healthcare Inc.’s interests in the Joint Venture would not constitute investment securities. As Change Healthcare Inc. will have no material assets other than its interests in the Joint Venture, and those interests are not securities or investment securities, we do not believe Change Healthcare Inc. is, or will be following this offering, an “inadvertent” investment company under the 40% test described in the second bullet point above.

The 1940 Act and the rules thereunder contain detailed parameters for the organization and operation of investment companies. Among other things, the 1940 Act and the rules thereunder limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and equity securities, generally prohibit the issuance of options and impose certain governance requirements. We intend to conduct our operations so that Change Healthcare Inc. will not be deemed to be an investment company under the 1940 Act. If anything were to happen which would cause Change Healthcare Inc. to be deemed to be an investment company under the 1940 Act, requirements imposed by the 1940 Act, including limitations on our capital structure, ability to transact business with affiliates (including us) and ability to compensate key employees, could make it impractical for us to continue our business as currently conducted, impair the agreements and arrangements between and among Change Healthcare Inc., the Joint Venture and senior Change Healthcare professionals, or any combination thereof, and materially adversely affect our business, results of operations and financial condition.

Change Healthcare Inc. shares control of the Joint Venture, its primary operating subsidiary, with McKesson and disagreements may arise between McKesson and the Sponsors that could result in deadlocks and cause disruptions to the Joint Venture’s operations and the development or implementation of its strategies, any of which could have a material adverse impact on Change Healthcare Inc.’s or the Joint Venture’s business, results of operations or financial condition.

Change Healthcare Inc. is a holding company and does not own any material assets or have any operations other than through its interest in the Joint Venture. Prior to and immediately following this offering, each of Change Healthcare Inc. and McKesson holds a 50% voting interest in the Joint Venture, with equal representation on the Joint Venture’s board of directors and with all major operating, investing and financial activities requiring the consent of both members. Disagreements with respect to important strategic or operational decisions relating to our business may arise between McKesson and the Sponsors. Operating a business under the joint control of unaffiliated, controlling members could lead to conflicts of interest or deadlocks on important and time-sensitive operational, financial or strategic decisions, and requires additional organizational formalities as well as time-consuming procedures for sharing information and making decisions. This could have a negative impact on Change Healthcare Inc., given that its only material asset is its interest in the Joint Venture. Disagreements may also arise between the Joint Venture’s controlling members and management. Any disagreements between the Joint Venture’s controlling members, or between its controlling members and its management, could cause disruptions to our operations or the development or implementation of our strategies, and could result in significant distraction to our management, which could have a material adverse impact on the business, results of operations or financial condition of both Change Healthcare Inc. and the Joint Venture. For information concerning the arrangements with the Joint Venture’s controlling members, see “Management” and “Certain Relationships and Related Person Transactions.”

We may be unable to integrate the Contributed Businesses successfully or realize the anticipated synergies and other benefits of the Transactions within the anticipated time frame, or at all.

The Transactions involved the combination of the Contributed Businesses that previously operated independently. The Company’s future success continues to depend on successful execution of previous transactions, including separating, transitioning and integrating the Contributed Businesses. Integrating these businesses continues to require significant management time, attention and resources. The combined business may fail to realize some or all of the anticipated benefits of the Transactions, including anticipated synergies, if

the separation, transition and integration process is not successful, takes longer than expected or is more costly than expected. On a combined basis, we expect to benefit from operational synergies resulting from the consolidation of capabilities and elimination of redundancies, as well as greater efficiencies from our increased scale. However, this process may preclude or impede realization of the benefits expected from the Transactions and could adversely affect revenue and investments in future growth, which could have a material adverse impact on our business, results of operations or financial condition. We cannot be certain that we will not be required to implement further realignment activities, make additions or other changes to our workforce based on other cost reduction measures or changes in the markets and industry in which we compete. In addition, future business conditions and events may impact our ability to continue to realize any benefits of these initiatives. Moreover, disagreements could arise between our controlling members, or between our controlling members and our management, which could cause disruptions to our operations or the implementation of our strategies or result in significant distractions to our management. If we are not able to successfully achieve our objectives for one or more of these reasons, or for other reasons, the anticipated benefits of the Transactions may not be realized fully or at all or may take longer to realize than expected.

We rely on McKesson and its affiliates for certain transition services. The inability or unwillingness of McKesson or its affiliates to provide such services in a timely or effective manner could materially adversely affect our business, results of operations or financial condition.

We rely on McKesson and its affiliates to provide us with certain services for our business and customers pursuant to the terms of a transition services agreement (the “McKesson Transition Services Agreement”) for a specified transition period. Certain of these services are essential to the efficient operation of the Company. Once the transition period specified in the McKesson Transition Services Agreement has expired, we will be required to provide these services ourselves or to obtain substitute arrangements with third parties. After the transition period, we may be unable to provide these services internally because of financial or other constraints, and we may be unable to implement substitute arrangements on a timely and cost-effective basis on terms that are favorable to us, or at all. In addition, McKesson may fail to perform such transition services in a timely or effective manner, or at all, during the term of the McKesson Transition Services Agreement, either due to its inability or unwillingness to continue such services or for other reasons. If there is an interruption in such services prior to expiration of the McKesson Transition Services Agreement, or if such services are inadequate, we will be required to provide these services ourselves or to obtain substitute arrangements with third parties on a faster timeline than anticipated, which may be challenging without significant effort or expense. Any failure by McKesson to perform such transition services, or any failure by us to replace such transition services with acceptable arrangements when necessary, could have a material adverse impact on our business, results of operations or financial condition. See “Certain Relationships and Related Person Transactions—Transition Services Agreements.”

We are obligated to provide certain transition services to McKesson and its affiliates, and to the eRx Network. Our inability or unwillingness to provide such services in a timely or effective manner, including at a reasonable cost, could materially adversely impact our business, results of operations or financial condition.

We are obligated to provide certain services to (i) McKesson and its affiliates, pursuant to the McKesson Transition Services Agreement, and (ii) the eRx Network, pursuant to the terms of a separate transition services agreement (the “Legacy CHC Transition Services Agreement” and, collectively with the McKesson Transition Services Agreement, the “Transition Services Agreements”), for a specified transition period. Once the transition period specified in each of the Transition Services Agreements has expired, McKesson and its affiliates, and the eRx Network, as applicable, will be required to provide these services themselves or to obtain substitute arrangements with third parties. We may fail to perform such transition services in a timely or effective manner, or at all, during the term of each respective Transition Services Agreement, either due to our inability or unwillingness to continue such services, our inability to provide such services at reasonable costs or for other reasons. Any such inability or other reasons could lead to unforeseen liabilities under the terms of the Transition Services Agreements or otherwise, including liabilities resulting from the inability of McKesson or its affiliates

or the eRx Network to provide these services themselves or to obtain substitute arrangements with third parties. Any such financial consequences or liabilities could have a material adverse impact on our business, results of operations or financial condition. See “Certain Relationships and Related Person Transactions—Transition Services Agreements.”

If certain transactions in connection with a Qualified McKesson Exit do not qualify as tax-free transactions under Sections 368(a)(1)(D) and 355 of the U.S. Internal Revenue Code of 1986, as amended then McKesson may be required to pay substantial U.S. federal income taxes. We may be required to indemnify McKesson for all or part of any such tax liability in certain circumstances, which generally relate to certain actions taken by us that cause the Distribution to become taxable, and may be obligated to make payments to McKesson in respect of certain tax savings resulting to us.

It is intended that the distribution contemplated under the Separation and Distribution Agreement (the “Distribution”) will qualify as a tax-free transaction to McKesson under Sections 368(a)(1)(D) and 355 of the Code, but there can be no assurance that the Distribution will so qualify. Even if the Distribution were otherwise to qualify as a tax-free transaction under Sections 368(a)(1)(D) and 355 of the Code, it would be taxable to McKesson pursuant to Section 355(e) of the Code if there were a 50% or greater change in ownership of either McKesson or SpinCo (including stock of Change Healthcare Inc. after the Merger), directly or indirectly, as part of a plan or series of related transactions involving the Distribution. For this purpose, any acquisitions of McKesson, SpinCo or Change Healthcare Inc. stock within a certain period are presumed to be part of such a plan, although McKesson may be able to rebut that presumption in certain circumstances. If the Internal Revenue Service (the “IRS”) were to determine that other acquisitions of McKesson, SpinCo or Change Healthcare Inc. stock were part of a plan or series of related transactions, that determination could result in significant tax to McKesson. In certain circumstances (which generally relate to certain actions taken by us that cause the Distribution to become taxable, such as certain issuances and redemptions of common stock of Change Healthcare Inc., or entering into certain mergers or consolidations) and subject to certain limitations, under the Tax Matters Agreement, we will be required to indemnify McKesson for losses relating to the treatment of the Distribution as taxable. If we are required to indemnify McKesson, this indemnification obligation could be substantial and could have a material adverse effect on us, including with respect to our financial condition or results of operations. See “Certain Relationships and Related Person Transactions.” In addition, the Tax Matters Agreement could restrict our ability to enter into certain change of control or other transactions involving our equity if such transactions could implicate the tax-free status of the Distribution.

In addition, McKesson will have the option to make a protective election under Section 336(e) of the Code that would take effect if the Distribution does not qualify as a tax-free transaction and, upon taking effect, may result in tax savings to SpinCo and its subsidiaries. Pursuant to the Tax Matters Agreement that we will enter into with McKesson in connection with a Qualified McKesson Exit, if the election under Section 336(e) of the Code takes effect, in certain circumstances we will be required to enter into a new tax receivable agreement pursuant to which we will be required to pay to McKesson 85% of certain cash tax savings, if any, arising from the utilization of certain tax basis increases resulting from the Distribution, with terms substantially similar to the terms of the McKesson Tax Receivable Agreement, as discussed above under “—The amounts we or the Joint Venture will be required to pay under our tax receivable agreements could be significant and, in certain circumstances, could differ significantly (in both timing and amount) from the underlying tax benefits we actually realize.” The amount of such payments may be significant, and in certain circumstances could differ significantly (in both timing and amount) from the underlying tax benefits realized by us and our subsidiaries.

We are subject to certain restrictions in order to avoid significant tax-related liabilities.

The Contribution Agreement, the LLC Agreement and the Tax Matters Agreement prohibit us from taking certain actions that could cause the Distribution to fail to qualify for tax-free treatment. In particular, prior to the Distribution and for a two-year period thereafter, our ability to restructure or discontinue certain aspects of Core MTS will be subject to significant restrictions, which may adversely affect our ability to timely and efficiently

integrate the Contributed Businesses. In addition, these agreements impose significant restrictions during that two-year period on the issuance and redemption by Change Healthcare Inc. of its stock, as well as on our and Change Healthcare Inc.’s ability to engage in certain mergers, consolidations, or other strategic transactions, or to enter into agreements with respect to any of the foregoing matters. Furthermore, any failure to comply with any of these restrictions could require us and Change Healthcare Inc. to make substantial indemnification payments to McKesson for tax-related losses. Due to these restrictions and indemnification obligations, we may be limited in our ability to pursue strategic transactions, equity or convertible debt financings or other transactions that may otherwise be in our best interests.

Risks Related to this Offering and Ownership of our Common Stock

Immediately following this offering and the application of net proceeds therefrom, our Sponsors will beneficially own approximately % of the our common stock (or % if the underwriters exercise in full their option to purchase additional shares of common stock). Moreover, under our stockholders agreement with our Sponsors, McKesson and the Joint Venture, for so long as Blackstone and its affiliates retain significant ownership of us, we will agree to nominate to the board of directors of Change Healthcare Inc. individuals designated in accordance with our stockholders agreement. See “Certain Relationships and Related Person Transactions—Stockholders Agreement.” Even when our Sponsors cease to own shares of our stock representing a majority of the total voting power, for so long as our Sponsors continue to own a significant percentage of our stock, they will still be able to significantly influence the composition of our board of directors and the approval of actions requiring stockholder approval through their voting power. Accordingly, for such period of time, our Sponsors will have significant influence with respect to our management, business plans and policies, including the appointment and removal of our officers. In particular, for so long as our Sponsors continue to own a significant percentage of our stock, our Sponsors will be able to cause or prevent a change of control of our company or a change in the composition of our board of directors and could preclude any unsolicited acquisition of our company. The concentration of ownership could deprive you of an opportunity to receive a premium for your shares of common stock as part of a sale of our company and ultimately might affect the market price of our common stock.

In addition, prior to this offering, McKesson directly holds approximately 70% of the outstanding LLC units of the Joint Venture, and immediately following this offering and the application of the net proceeds therefrom, McKesson will own % of the LLC Units (or % if the underwriters exercise in full their option to purchase additional shares of common stock). The Joint Venture will continue to be controlled jointly as between us and McKesson. Because it holds its ownership interest in our business directly in the Joint Venture, rather than through Change Healthcare Inc., McKesson may have conflicting interests with holders of shares of our common stock. For example, if the Joint Venture makes distributions to Change Healthcare Inc., McKesson will also generally be entitled to receive such distributions pro rata in accordance with the percentage of its limited liability company interests in the Joint Venture and its preferences as to the timing and amount of any such distributions may differ from those of our public stockholders.

Our amended and restated certificate of incorporation will not limit the ability of our Sponsors and McKesson to compete with us.

Our Sponsors and McKesson and their respective affiliates engage in a broad spectrum of activities, including investments in businesses that may compete with us. In the ordinary course of their business activities, our Sponsors and McKesson and their respective affiliates may engage in activities where their interests conflict with our interests or those of our stockholders. Our amended and restated certificate of incorporation will provide

that none of our Sponsors or McKesson, or any of their respective affiliates or any of our directors who is not employed by us (including any non-employee director who serves as one of our officers in both his or her director and officer capacities) or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. Our Sponsors and McKesson and their respective affiliates also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. In addition, our Sponsors and McKesson may have an interest in our pursuing acquisitions, divestitures and other transactions that, in their judgment, could enhance their investment, even though such transactions might involve risks to you.

We are an “emerging growth company” under the federal securities laws. We may decide in the future to comply with certain reduced reporting and disclosure requirements applicable to emerging growth companies, which could make our common stock less attractive to investors.

We are an emerging growth company as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012. We have elected to comply in the registration statement of which this prospectus forms a part with the disclosure requirements otherwise applicable generally to registrants that are not emerging growth companies. In the future, however, we may take advantage of exemptions from various reporting requirements available to emerging growth companies including, but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our registration statements, periodic reports and proxy statements, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved and the ability to use an extended transition period for complying with new or revised accounting standards. We will cease to be an emerging growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of this offering; (ii) the last day of the first fiscal year during which the annual gross revenue of Change Healthcare Inc. is $1.07 billion or more; (iii) the date on which Change Healthcare Inc. or its consolidated subsidiaries have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act. We cannot predict if investors will find our common stock less attractive if we choose in the future to rely on exemptions from certain disclosure requirements. If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock and the price of our common stock may be more volatile.

We will incur increased costs and become subject to additional regulations and requirements as a result of becoming a public company, which could lower our profits or make it more difficult to run our business.

As a public company, we will incur significant legal, accounting and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements. We also will incur costs associated with the Sarbanes-Oxley Act and related rules implemented by the SEC and Nasdaq. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. These laws and regulations also could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation.

Our internal controls over financial reporting currently do not meet all of the standards contemplated by Section 404 of the Sarbanes-Oxley Act, and failure to achieve and maintain effective internal controls over

financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and common stock price.

Our internal controls over financial reporting currently do not meet all of the standards contemplated by Section 404 of the Sarbanes-Oxley Act that eventually we will be required to meet. Because currently we do not have comprehensive documentation of our internal controls and have not yet tested our internal controls in accordance with Section 404, we cannot conclude in accordance with Section 404 that we do not have a material weakness in our internal controls or a combination of significant deficiencies that could result in the conclusion that we have a material weakness in our internal controls. Once we are no longer an emerging growth company, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting on an annual basis. If we are not able to complete our initial assessment of our internal controls and otherwise implement the requirements of Section 404 in a timely manner or with adequate compliance, our independent registered public accounting firm may not be able to certify as to the adequacy of our internal controls over financial reporting. For example, management of Legacy CHC concluded that there was a material weakness in its internal control over financial reporting in connection with its deferred tax liability accounting for a change in the tax status of one of its wholly owned subsidiaries from a partnership to a corporation in 2014. This material weakness has been remediated but resulted in Legacy CHC restating its consolidated financial statements as of and for the year ended December 31, 2014 to reflect the removal of this deferred tax liability and restating its consolidated financial statements as of and for the year ended December 31, 2015 and as of and for the three and nine months ended September 30, 2016 and 2015 to adjust for the effect of this 2014 adjustment on the subsequent periods.

Matters impacting our internal controls may cause us to be unable to report our financial information on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions by the SEC or violations of applicable stock exchange listing rules, which may result in a breach of the covenants under existing or future financing arrangements. There also could be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements. Confidence in the reliability of our financial statements also could suffer if we or our independent registered public accounting firm were to report a material weakness in our internal controls over financial reporting. This could materially adversely affect us and lead to a decline in the price of our common stock.

If securities or industry analysts do not publish research or reports about our business, or if they downgrade their recommendations regarding our common stock, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If any of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, our common stock price may decline. If analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our common stock price or trading volume to decline and our common stock to be less liquid.

There may not be an active trading market for shares of our common stock, which may cause shares of our common stock to trade at a discount from their initial offering price and make it difficult to sell the shares of common stock you purchase.

Prior to this offering, there has not been a public trading market for shares of our common stock. It is possible that after this offering an active trading market will not develop or continue or, if developed, that any market will be sustained which would make it difficult for you to sell your shares of common stock at an attractive price or at all. The initial public offering price per share of common stock will be determined by agreement among us and the representatives of the underwriters, and may not be indicative of the price at which shares of our common stock will trade in the public market after this offering. Further, our directors, officers and certain employees and other persons associated with us have the opportunity to purchase up to % of the shares of common stock offered by this prospectus at the initial public offering price in a directed share program. To the extent these individuals purchase shares in this offering, fewer shares may be actively traded in the public market

because certain of these stockholders will be restricted from selling shares by a 180-day lock-up restriction, which would reduce the liquidity of the market for our common stock. Consequently, you may not be able to sell your common stock at or above the initial public offering price or at any other price or at the time that you would like to sell.

Any directors and officers that participate in our directed share program must hold their shares for a minimum of 180 days following the date of the final prospectus related to this offering and accordingly will be subject to market risks not imposed on other investors in the offering.

At our request, the underwriters have reserved up to shares of the common stock offered hereby for sale to our directors, officers and certain of our employees and other persons associated with us. Directors and officers that purchase these shares will be required to enter into a lockup agreement with the underwriters in connection with this offering pursuant to which such persons will be required to agree that they will not, subject to exceptions, offer, sell, contract to sell or otherwise dispose of or hedge any such shares for a period of 180 days after the date of the final prospectus relating to this offering, subject to certain specified extensions. As a result of such restriction, such purchasers may face risks not faced by other investors who have the right to sell their shares at any time following the offering. These risks include the market risk of holding our shares during the period that such restrictions are in effect. In addition, the price of our common stock may be adversely affected following expiration of the lockup period if there is an increase in the number of shares for sale in the market.

The market price of shares of our common stock may be volatile, which could cause the value of your investment to decline.

Even if a trading market develops, the market price of our common stock may be highly volatile and could be subject to wide fluctuations. Securities markets worldwide experience significant price and volume fluctuations. This market volatility, as well as general economic, market or political conditions, could reduce the market price of shares of our common stock regardless of our operating performance. In addition, our operating results could be below the expectations of public market analysts and investors due to a number of potential factors, including variations in our quarterly operating results or dividends, if any, to stockholders, additions or departures of key management personnel, failure to meet analysts’ earnings estimates, publication of research reports about our industry, litigation and government investigations, changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business, adverse market reaction to any indebtedness we may incur or securities we may issue in the future, changes in market valuations of similar companies or speculation in the press or investment community, announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments, adverse publicity about the industries we participate in or individual scandals, and in response the market price of shares of our common stock could decrease significantly. You may be unable to resell your shares of common stock at or above the initial public offering price.

Stock markets and the price of shares of our common stock may experience extreme price and volume fluctuations. In the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

Investors in this offering will suffer immediate and substantial dilution.

The initial public offering price per share of common stock will be substantially higher than our net tangible book value per share immediately after this offering. As a result, you will pay a price per share of common stock that substantially exceeds the per share book value of our tangible assets after subtracting our liabilities. In addition, you will pay more for your shares of common stock than the amounts paid for by our pre-IPO owners and the LLC Units paid for by McKesson. See “Dilution.”

You may be diluted by the future issuance of additional common stock or LLC Units in connection with our incentive plans, acquisitions or otherwise.

After this offering we will have approximately shares of common stock authorized but unissued, including approximately shares of common stock issuable upon exchange of LLC Units that will be held by McKesson. Our certificate of incorporation authorizes us to issue these shares of common stock and options, rights, warrants and appreciation rights relating to common stock for the consideration and on the terms and conditions established by our board of directors in its sole discretion, whether in connection with acquisitions or otherwise. Similarly, the LLC Agreement permits the Joint Venture, with the prior written consent of both the McK Members and Change Healthcare Inc., to issue an unlimited number of additional limited liability company interests of the Joint Venture with designations, preferences, rights, powers and duties that are different from, and may be senior to, those applicable to the LLC Units, and which may be exchangeable for shares of our common stock. Additionally, we have reserved an aggregate of shares of common stock for issuance under our Omnibus Incentive Plan. Any common stock that we issue, including under our Omnibus Incentive Plan or other equity incentive plans that we may adopt in the future, would dilute the percentage ownership held by the investors who purchase common stock in this offering.

We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock.

Our amended and restated certificate of incorporation will authorize us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designations, preferences, limitations and relative rights, including preferences over our common stock respecting dividends and distributions, as our board of directors may determine. The terms of one or more classes or series of preferred stock could adversely impact the voting power or value of our common stock. For example, we might grant holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock could affect the residual value of the common stock.

Sales of a substantial amount of shares of our common stock in the public market, particularly sales by our directors, executive officers and significant stockholders, including our pre-IPO owners, or the perception that these sales could occur, could cause the market price of our common stock to decline and may make it more difficult for investors to sell their common stock at a time and price that they deem appropriate.

The sale of substantial amounts of shares of our common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell shares of our common stock in the future at a time and at a price that we deem appropriate. Upon completion of this offering, we will have a total of shares of our common stock outstanding, or shares if the underwriters exercise in full their option to purchase additional shares of our common stock. All of the shares of our common stock sold in this offering will be freely tradable without restriction or further registration under the Securities Act, by persons other than our “affiliates,” as that term is defined under Rule 144 of the Securities Act. See “Shares Eligible for Future Sale.”

We anticipate that shares issued to McKesson’s stockholders in a Qualified McKesson Exit would generally be freely tradeable by non-affiliates. Any shares we issue upon exchange of LLC Units will be “restricted securities” as defined in Rule 144 and may not be sold in the absence of registration under the Securities Act unless an exemption from registration is available, including the exemptions contained in Rule 144. Under applicable SEC guidance, we believe that for purposes of Rule 144 the holding period in such shares will generally include the holding period in the corresponding LLC Units exchanged. We, our directors and executive officers, our Sponsors and McKesson have agreed, subject to certain exceptions, not to dispose of or hedge any shares of our common stock (including shares issued upon exchange of LLC Units) or securities convertible into or exchangeable for shares of our common stock for 180 days from the date of this prospectus, except with the prior written consent of Barclays Capital Inc.,

Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC. Barclays Capital Inc., Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC may, in their sole discretion, release all or a portion of the shares subject to the lock-up agreements at any time and for any reason. As a result of the registration rights agreement, however, all of these shares of our common stock (including shares issued upon exchange of LLC Units) may be eligible for future sale without restriction, subject to applicable lock-up arrangements. Additionally, our pre-IPO owners have agreed to transfer or sell shares of common stock only during certain specified time periods following this offering, as provided by the LLC Agreement of the Joint Venture. See “Shares Eligible for Future Sale—Registration Rights,” “Certain Relationships and Related Person Transactions—Registration Rights Agreement” and “Certain Relationships and Related Person Transactions—LLC Agreement of the Joint Venture—Transfers of LLC Units.”

Upon the expiration of the lock-up agreements described above, all of such shares will be eligible for resale in the public market, subject, in the case of shares held by our affiliates, to volume, manner of sale and other limitations under Rule 144. We expect that our Sponsors will continue to be considered affiliates following the expiration of the lock-up period based on their expected share ownership and board nomination rights. Certain other of our stockholders may also be considered affiliates at that time. However, subject to the expiration or waiver of the 180-day lock-up period, the holders of these shares of common stock will have the right, subject to certain exceptions and conditions, to require us to register their shares of common stock under the Securities Act, and they will have the right to participate in future registrations of securities by us. Registration of any of these outstanding shares of common stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement. See “Shares Eligible for Future Sale.”

We intend to file one or more registration statements on Form S-8 under the Securities Act to register shares of our common stock or securities convertible into or exchangeable for shares of our common stock issued pursuant to our Omnibus Incentive Plan. Any such Form S-8 registration statements will automatically become effective upon filing. Accordingly, shares registered under such registration statements will be available for sale in the open market. We expect that the initial registration statement on Form S-8 will cover shares of our common stock.

As restrictions on resale end, including as a result of any early release of any such restrictions, the market price of our shares of common stock could drop significantly if the holders of these restricted shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our common stock or other securities.

Change Healthcare Inc.’s pre-IPO stockholders and board of directors have already approved the Merger that would occur in connection with a Qualified McKesson Exit, and the related Merger Agreement, and the pre-IPO owners who will continue to control Change Healthcare Inc. following this offering have entered into a voting agreement with McKesson. Accordingly, investors in this offering will not have the ability to prevent a Qualified McKesson Exit (including the related Merger) from occurring.

Following this offering, on the terms and subject to the conditions provided in the LLC Agreement, McKesson may, at its election, initiate and complete a spin-off or split-off transaction that would result in the acquisition by Change Healthcare Inc. of all of McKesson’s LLC Units and the issuance by Change Healthcare Inc. to McKesson and/or McKesson’s securityholders of an equal number of shares of its common stock. Change Healthcare Inc.’s pre-IPO stockholders and board of directors have already approved the Merger that would occur in connection with a Qualified McKesson Exit, and the related Merger Agreement, and the pre-IPO owners who will continue to control Change Healthcare Inc. following this offering have entered into a voting agreement with McKesson which requires them to vote in favor of the Merger. Accordingly, investors in this offering will not have the ability to prevent a Qualified McKesson Exit (and the related Merger) from occurring.

Anti-takeover provisions in our organizational documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.

Our amended and restated certificate of incorporation and amended and restated bylaws that will become effective immediately prior to the consummation of this offering will contain provisions that may make the

merger or acquisition of our company more difficult without the approval of our board of directors. Among other things, these provisions:

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would allow us to authorize the issuance of shares of one or more series of preferred stock, including in connection with a stockholder rights plan, financing transactions or otherwise, the terms of which series may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of common stock;

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prohibit stockholder action by written consent from and after the date on which the parties to our stockholders agreement and their affiliates cease to beneficially own at least 30% of the total voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors unless such action is recommended by all directors then in office;

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provide for certain limitations on convening special stockholder meetings;

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provide (i) that the board of directors is expressly authorized to make, alter, or repeal our bylaws and (ii) that, at any time the Sponsors beneficially own, in the aggregate, less than 30% in voting power of the stock entitled to vote generally in the election of directors, our stockholders may only amend our bylaws with the approval of 80% or more of all of the outstanding shares of our capital stock entitled to vote; and

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establish advance notice requirements for nominations for elections to our board or for proposing matters that can be acted upon by stockholders at stockholder meetings.

Further, as a Delaware corporation, we are also subject to provisions of Delaware law, which may impede or discourage a takeover attempt that our stockholders may find beneficial. These anti-takeover provisions and other provisions under Delaware law could discourage, delay or prevent a transaction involving a change in control of our company, including actions that our stockholders may deem advantageous, or could negatively affect the trading price of our common stock. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire. For a further discussion of these and other such anti-takeover provisions, see “Description of Capital Stock—Anti-Takeover Effects of Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws and Certain Provisions of Delaware Law.”

Our amended and restated certificate of incorporation will designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with the Company or the Company’s directors, officers or other employees.

Our amended and restated certificate of incorporation will provide that, unless we consent in writing to the selection of an alternative forum, any (i) derivative action or proceeding brought on behalf of our Company, (ii) action asserting a claim of breach of a fiduciary duty owed by any director, officer, stockholder or employee of our Company to our Company or our Company’s stockholders, (iii) action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law (the “DGCL”) or our amended and restated certificate of incorporation or our amended and restated bylaws or (iv) action asserting a claim governed by the internal affairs doctrine, shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware. Any person or entity purchasing or otherwise acquiring any interest in any shares of our capital stock shall be deemed to have notice of and to have consented to the forum provisions in our amended and restated certificate of incorporation. These choice-of-forum provisions may limit a stockholder’s ability to bring a claim in a different judicial forum, including one that it may find favorable or convenient for specified class of disputes with the Company or the Company’s directors, officers, other stockholders or employees, which may discourage such lawsuits. Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.

FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that reflect our current views with respect to, among other things, our operations and financial performance. Forward-looking statements include all statements that are not historical facts. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “predicts,” “intends,” “trends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors include but are not limited to those described under “Risk Factors.” These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this prospectus. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

MARKET AND INDUSTRY DATA

This prospectus includes market and industry data and forecasts that we have derived from independent consultant reports, publicly available information, various industry publications, other published industry sources and our internal data and estimates. Independent consultant reports, industry publications and other published industry sources generally indicate that the information contained therein was obtained from sources believed to be reliable.

Although we believe that these third-party sources are reliable, we do not guarantee the accuracy or completeness of this information, and neither we nor the underwriters have independently verified this information. Some market data and statistical information are also based on our good faith estimates, which are derived from management’s knowledge of our industry and such independent sources referred to above. Certain market, ranking and industry data included elsewhere in this prospectus, including the size of certain markets and our size or position and the positions of our competitors within these markets, including our services relative to our competitors, are based on estimates of our management. These estimates have been derived from our management’s knowledge and experience in the markets in which we operate, as well as information obtained from surveys, reports by market research firms, our customers, distributors, suppliers, trade and business organizations and other contacts in the markets in which we operate and have not been verified by independent sources. Unless otherwise noted, all of our market share and market position information presented in this prospectus is an approximation. Our market share and market position in each of our lines of business, unless otherwise noted, is based on our sales relative to the estimated sales in the markets we served. References herein to our being a leader in a market or product category refer to our belief that we have a leading market share position in each specified market, unless the context otherwise requires. As there are no publicly available sources supporting this belief, it is based solely on our internal analysis of our sales as compared to our estimates of sales of our competitors. In addition, the discussion herein regarding our various end markets is based on how we define the end markets for our products, which products may be either part of larger overall end markets or end markets that include other types of products and services.

Our internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which we operate and our management’s understanding of industry conditions. Although we believe that such information is reliable, we have not had this information verified by any independent sources.

TRADEMARKS, SERVICE MARKS AND TRADE NAMES

We own or have rights to trademarks, service marks or trade names that we use in connection with the operation of our business. In addition, our names, logos and domain names are our service marks or trademarks,

for which we also own or have adequate rights to use. We do not intend our use or display of other companies’ trademarks, service marks or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus are used without the ^® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks, and trade names. All trademarks, service marks and trade names appearing in this prospectus are the property of their respective owners.

ORGANIZATIONAL STRUCTURE

Organizational Structure Following this Offering

Change Healthcare Inc. is a holding company that was formed in connection with the Transactions and does not own any material assets or have any operations other than through its interest in the Joint Venture. Prior to and immediately following this offering, each of Change Healthcare Inc. and McKesson holds a 50% voting interest in the Joint Venture, with equal representation on the Joint Venture’s board of directors and with all major operating, investing, and financial activities requiring the consent of both members. As a result, Change Healthcare Inc. does not consolidate the financial position and results of the Joint Venture. Instead, Change Healthcare Inc. accounts for its investment in the Joint Venture under the equity method of accounting.

Our post-offering organizational structure, as described above, is commonly referred to as an umbrella partnership-C-corporation (or UP-C) structure. This organizational structure will allow McKesson to retain its equity ownership in the Joint Venture, an entity that is classified as a partnership for U.S. federal income tax purposes, in the form of LLC Units. Investors in this offering, the Sponsors and management will, by contrast, hold their equity ownership in Change Healthcare Inc., a Delaware corporation that is a domestic corporation for U.S. federal income tax purposes, in the form of shares of common stock. We believe that McKesson generally finds it advantageous, in periods prior to the Qualified McKesson Exit, to continue to hold its equity interests in an entity that is not taxable as a corporation for U.S. federal income tax purposes. We do not believe that our UP-C organizational structure will give rise to any significant business or strategic benefit or detriment to us. See “Risk Factors—Risks Related to Our Organizational Structure” for additional information about our organizational structure, including our tax receivable agreements.

The diagram below depicts our organizational structure immediately following this offering.

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Immediately following this offering, McKesson and Change Healthcare Inc. will hold % and %, respectively, of the outstanding LLC Units of the Joint Venture. Prior to and immediately following this offering, each of Change Healthcare Inc. and McKesson holds a 50% voting interest in the Joint Venture, with equal representation on the Joint Venture’s board of directors and with all major operating, investing, and financial activities requiring the consent of both members.

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Following the expiration of the underwriter lock-up period in connection with this offering, on the terms and subject to the conditions provided in the LLC Agreement, McKesson may, at its election, initiate and complete a Qualified McKesson Exit. In addition, following this offering, on the terms and subject to the conditions provided in the LLC Agreement, McKesson (or certain permitted transferees) will have the right from time to time to exchange its LLC Units for shares of our common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. For a description of the LLC Agreement of the Joint Venture, please read “Certain Relationships and Related Person Transactions.”

Incorporation of Change Healthcare Inc.

Change Healthcare Inc. was incorporated in Delaware on June 22, 2016 under the name HCIT Holdings, Inc. On October 26, 2018, we changed our name to Change Healthcare Inc. Change Healthcare Inc. is a holding company that was formed in connection with the Joint Venture and related transactions and does not own any material assets or have any operations other than through its interest in the Joint Venture. The certificate of incorporation of Change Healthcare Inc. authorizes three classes of stock, having the terms described in “Description of Capital Stock.”

Qualified McKesson Exit & Exchanges

Following the expiration of the underwriter lock-up period in connection with this offering, on the terms and subject to the conditions provided in the LLC Agreement, McKesson may, at its election, initiate and complete a spin-off or split-off transaction (or a combination of the foregoing) that would result, among other things, in the acquisition by Change Healthcare Inc. of all of McKesson’s LLC Units and the issuance by Change Healthcare Inc. to McKesson and/or McKesson’s securityholders of an equal number of shares of its common stock (such transactions, a “Qualified McKesson Exit”). In connection with a Qualified McKesson Exit, McKesson would contribute the stock of McKesson subsidiaries that own all of McKesson’s interests in the Joint Venture to SpinCo, a Delaware corporation that is McKesson’s direct or indirect wholly-owned subsidiary, and then would either distribute stock of SpinCo to the stockholders of McKesson as a dividend in a spin-off, commence one or more exchange offers pursuant to which McKesson will exchange stock of SpinCo for stock of McKesson held by the stockholders of McKesson or consummate one or more exchanges of stock of SpinCo for debt securities of McKesson (or a combination of the foregoing). Immediately thereafter, SpinCo would merge with and into Change Healthcare Inc. (the “Merger”), pursuant to which the stockholders of SpinCo will be entitled to receive a number of shares of common stock of Change Healthcare Inc. equal to the number of LLC Units held by SpinCo at the effective time of the Merger. Following a Qualified McKesson Exit, Change Healthcare LLC is expected to become a consolidated subsidiary of Change Healthcare Inc. Change Healthcare Inc.’s stockholders and board of directors have already approved the Merger and the related Merger Agreement described herein.

LLC Units for shares of our common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. For a description of the LLC Agreement of the Joint Venture, please read “Certain Relationships and Related Person Transactions.”

The diagram below depicts what our organizational structure would be immediately following a Qualified McKesson Exit if McKesson were to conduct a spin-off or split-off transaction of all of McKesson’s LLC Units immediately following this offering. There is no assurance that McKesson will pursue a Qualified McKesson Exit.

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(1)

Offering Transactions

At the time of the consummation of this offering, Change Healthcare Inc. intends to consummate the purchase, for cash, of newly issued LLC Units from the Joint Venture at a purchase price per unit equal to the initial public offering price per share of common stock in this offering net of underwriting discounts. Assuming that the shares of common stock to be sold in this offering are sold at $ per share, which is the midpoint of the range on the front cover of this prospectus, at the time of this offering, Change Healthcare Inc. will purchase from the Joint Venture newly issued LLC Units for an aggregate of $ (or newly issued LLC Units for an aggregate of $ if the underwriters exercise in full their option to purchase additional shares of common stock). The issuance and sale of such newly issued LLC Units by the Joint Venture to Change Healthcare Inc. will correspondingly dilute the ownership interests of our pre-IPO owners in the Joint Venture. See “Principal Stockholders” for more information regarding the proceeds from this offering that will be paid to our directors and named executive officers. Accordingly, following this offering Change Healthcare Inc. will hold a number of LLC Units that is equal to the number of shares of common stock that it has issued, a relationship that we believe fosters transparency because it results in a single share of common

stock representing (albeit indirectly) the same percentage equity interest in the Joint Venture as a single LLC Unit.

We refer to the foregoing transactions as the “Offering Transactions.”

As a result of the transactions described above:

•

the investors in this offering will collectively own shares of our common stock (or shares of common stock if the underwriters exercise in full their option to purchase additional shares of common stock), our pre-IPO owners will own shares of our common stock (or shares of common stock if the underwriters exercise in full their option to purchase additional shares of common stock), and Change Healthcare Inc. will hold LLC Units (or LLC Units if the underwriters exercise in full their option to purchase additional shares of common stock);

•

McKesson will hold LLC Units ( % of the outstanding LLC Units (or % if the underwriters exercise in full their option to purchase additional shares of common stock)); and

•

the investors in this offering will collectively have % of the voting power in Change Healthcare Inc. (or % if the underwriters exercise in full their option to purchase additional shares of common stock).

USE OF PROCEEDS

We estimate that the net proceeds to Change Healthcare Inc. from this offering at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions, will be approximately $ million (or $ million if the underwriters exercise in full their option to purchase additional shares of common stock). A $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease, as applicable, the net proceeds to Change Healthcare Inc. from this offering by approximately $ million, assuming the number of shares offered by us remains the same as set forth on the cover page of this prospectus and after deducting the estimated underwriting discounts and commissions. The Joint Venture will bear or reimburse Change Healthcare Inc. for all of the expenses payable by it in this offering, which we estimate will be approximately $ million.

Change Healthcare Inc. intends to use all of the net proceeds from this offering (including from any exercise by the underwriters of their option to purchase additional shares of common stock) to purchase a number of newly issued LLC Units from the Joint Venture that is equivalent to the number of shares of common stock that we offer and sell in this offering, as described under “Organizational Structure—Offering Transactions.” The Joint Venture, in turn, expects to use these proceeds to repay outstanding indebtedness under the Term Loan Facility under our Senior Secured Credit Facilities totaling approximately $ million in aggregate principal amount (or $ million in aggregate principal amount if the underwriters exercise in full their option to purchase additional shares of common stock) at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and for general corporate purposes, including for working capital, capital expenditures, debt service and other general corporate purposes. The Term Loan Facility and Revolving Credit Facility provided for by the Senior Secured Credit Facilities mature on March 1, 2024 and March 1, 2022, respectively. Borrowings under the Senior Secured Credit Facilities bear interest at a rate equal to, at our option, either (i) LIBOR for the relevant interest period, adjusted for statutory reserve requirements (which may be subject, solely in the case of the Term Loan Facility, to a floor of 1.00% per annum and, solely in the case of the Revolving Credit Facility, to a floor of 0.00% per annum), plus an applicable margin or (ii) a base rate equal to the highest of (a) the rate of interest in effect as publicly announced by the administrative agent as its prime rate, (b) the federal funds effective rate plus 0.50% and (c) adjusted LIBOR for an interest period of one month plus 1.00% (which may be subject, solely in the case of the Term Loan Facility, to a floor of 2.00% per annum), in each case, plus an applicable margin. See “Description of Certain Indebtedness.” The net proceeds from borrowings under the Senior Secured Credit Facilities were used, together with the net proceeds of the Senior Notes, to refinance certain existing indebtedness of Legacy CHC and to pay fees and expenses incurred in connection with the Transactions.

DIVIDEND POLICY

The declaration, amount and payment of any future dividends on shares of common stock will be at the sole discretion of our board of directors and we may reduce or discontinue entirely the payment of such dividends at any time. Our board of directors may take into account general and economic conditions, our financial condition and operating results, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries (including the Joint Venture) to us, and such other factors as our board of directors may deem relevant.

Change Healthcare Inc. is a holding company and has no material assets other than its ownership of LLC Units in the Joint Venture. As a result, Change Healthcare Inc. will not be able to pay any dividend unless the Joint Venture makes a distribution to its members in an amount sufficient to cover the dividend declared by Change Healthcare Inc. If the Joint Venture makes such distributions to Change Healthcare Inc., McKesson will be entitled to participate ratably in such distributions.

The agreements governing our Senior Secured Credit Facilities and Senior Notes contain a number of covenants that restrict, subject to certain exceptions, the Joint Venture’s ability to pay dividends to us. See “Description of Certain Indebtedness.”

Any financing arrangements that we enter into in the future may include restrictive covenants that limit our ability to pay dividends. In addition, the Joint Venture is generally prohibited under Delaware law from making a distribution to a member to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of the Joint Venture (with certain exceptions) exceed the fair value of its assets. Subsidiaries of the Joint Venture are generally subject to similar legal limitations on their ability to make distributions to the Joint Venture.

In connection with the Transactions, the Joint Venture made distributions to our pre-IPO owners and certain participants in the Legacy CHC Amended and Restated 2009 Equity Incentive Plan totaling approximately $3.1 billion. For the nine months ended December 31, 2018, year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, the Joint Venture made no other distributions. Under the terms of the LLC Agreement, the Joint Venture is required to periodically advance to its members amounts necessary to fund their respective tax obligations on an interim basis. See “Certain Relationships and Related Person Transactions” for additional information.

CAPITALIZATION

The following table sets forth the consolidated cash and cash equivalents and capitalization of Change Healthcare Inc. and Change Healthcare LLC as of December 31, 2018:

•

on a historical basis; and

•

on an as adjusted basis giving effect to:

•

the sale by us of shares of common stock in this offering at an assumed public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus; and

•

the application of the net proceeds from this offering as described under “Use of Proceeds” as if this offering and the application of the net proceeds of this offering had occurred on December 31, 2018.

The information below is illustrative only and our capitalization following this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. Cash and cash equivalents are not components of our total capitalization. You should read these tables together with the other information contained in this prospectus, including “Organizational Structure,” “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical financial statements and related notes thereto included elsewhere in this prospectus.


Capitalization of Change Healthcare Inc.
	As of December 31, 2018
	Actual		As Adjusted(1)
	(In thousands)
	(unaudited)
Cash and cash equivalents	$	3,631	$

Total stockholders’ equity		1,129,240

Total capitalization	$	1,129,240	$


Capitalization of Change Healthcare LLC
	As of December 31, 2018
	Actual			As Adjusted(1)
	(In thousands)
	(unaudited)
Cash and cash equivalents	$	90,230		$

Term Loan Facility		4,812,942
Senior Notes		979,206
Other		2,776

Total debt		5,794,924

Members’ deficit		(945,396	)
Total capitalization	$	4,849,528		$

(1)

To the extent we change the number of shares of common stock sold by us in this offering from the shares we expect to sell or we change the initial public offering price from the $ per share assumed initial public offering price, representing the midpoint of the price range set forth on the cover page of this prospectus, or any combination of these events occurs, the net proceeds to us from this offering and each of total stockholders’ equity and total capitalization of Change Healthcare Inc. and total members’ equity and total capitalization of Change Healthcare LLC may increase or decrease. A $1.00 increase (decrease) in the assumed initial public offering price per share, assuming no change in the number of shares to be sold, would (i) increase (decrease) the net proceeds that we receive in this offering and each of total stockholders’

equity and total capitalization of Change Healthcare Inc. by approximately $ and (ii) increase (decrease) each of total members’ equity (deficit) and total capitalization of Change Healthcare LLC by approximately $ . An increase (decrease) of 1,000,000 shares in the expected number of shares to be sold in the offering, assuming no change in the assumed initial offering price per share, would (i) increase (decrease) our net proceeds from this offering and total stockholders’ equity and total capitalization of Change Healthcare Inc. by approximately $ and (ii) would increase (decrease) each of total members’ equity (deficit) and total capitalization of Change Healthcare LLC by approximately $ . If the underwriters exercise in full their option to purchase additional shares of common stock, (i) the as adjusted amount of each of total stockholders’ equity and total capitalization of Change Healthcare Inc. would increase by approximately $ , after deducting underwriting discounts, and Change Healthcare Inc. would have shares of common stock issued and outstanding, as adjusted and (ii) the as adjusted amount of each of cash and cash equivalents, total members’ equity and total capitalization of Change Healthcare LLC would increase by approximately $ .

DILUTION

If you invest in shares of our common stock in this offering, your investment will be immediately diluted to the extent of the difference between the initial public offering price per share of common stock and the pro forma net tangible book value per share of common stock after this offering. Dilution results from the fact that the per share offering price of the shares of common stock is substantially in excess of the pro forma net tangible book value per share attributable to the common stock held by our pre-IPO owners.

Our pro forma net tangible book value as of December 31, 2018 was approximately $ , or $ per share of common stock. Pro forma net tangible book value represents the amount of total tangible assets less total liabilities, and pro forma net tangible book value per share of common stock represents pro forma net tangible book value divided by the number of shares of common stock outstanding, after giving effect to the reclassification and assuming that McKesson exchanged its LLC Units for newly issued shares of common stock on a one-for-one basis.

After giving effect to the transactions described under “Unaudited Pro Forma Condensed Financial Information,” including the application of the proceeds from this offering as described in “Use of Proceeds,” our pro forma net tangible book value as of December 31, 2018 would have been $ , or $ per share of common stock. This represents an immediate increase in net tangible book value of $ per share of common stock to our pre-IPO owners and an immediate dilution in net tangible book value of $ per share of common stock to investors in this offering.

The following table illustrates this dilution on a per share of common stock basis assuming the underwriters do not exercise their option to purchase additional shares of common stock:


Assumed initial public offering price per share of common stock		$
Pro forma net tangible book value per share of common stock as of December 31, 2018	$
Increase in pro forma net tangible book value per share of common stock attributable to investors in this offering	$

Pro forma net tangible book value per share of common stock after the offering		$

Dilution in pro forma net tangible book value per share of common stock to investors in this offering		$

Because McKesson does not own any common stock or other economic interests in Change Healthcare Inc., we have presented dilution in pro forma net tangible book value per share of common stock to investors in this offering assuming that McKesson exchanged its LLC Units for newly issued shares of common stock on a one-for-one basis in order to more meaningfully present the dilutive impact on the investors in this offering.

A $1.00 increase in the assumed initial public offering price of $ per share of our common stock would increase our pro forma net tangible book value after giving effect to this offering by $ million, or by $ per share of our common stock, assuming the number of shares offered by us remains the same and after deducting estimated underwriting discounts and commissions. A $1.00 decrease in the assumed initial public offering price per share would result in equal changes in the opposite direction.

The following table summarizes, on the same pro forma basis as of December 31, 2018, the total number of shares of common stock purchased from us, the total cash consideration paid to us, and the average price per share of common stock paid by our pre-IPO owners and by new investors purchasing shares of common stock in

this offering, assuming that McKesson exchanged its LLC Units for newly issued shares of our common stock on a one-for-one basis.

Shares of common stock
Purchased

Total
Consideration

Average
Price Per
Share of
common stock

Number

Percent

Amount

Percent

(In thousands)

Pre-IPO owners

Investors in this offering

Total

Each $1.00 increase in the assumed offering price of $ per share of our common stock would increase total consideration paid by investors in this offering by $ million, assuming the number of shares offered by us remains the same and after deducting estimated underwriting discounts and commissions. A $1.00 decrease in the assumed initial public offering price per share of our common stock would result in equal changes in the opposite direction.

If the underwriters’ option to purchase additional shares is exercised in full, the number of shares held by new investors will be increased to , or approximately % of the total number of shares of common stock.

The dilution information above is for illustrative purposes only. Our net tangible book value following the consummation of this offering is subject to adjustment based on the actual initial public offering price of our shares of common stock and other terms of this offering determined at pricing.

UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION

The unaudited pro forma condensed balance sheet of Change Healthcare Inc. at December 31, 2018 gives effect to the Offering Transactions as if they had occurred on December 31, 2018 and the unaudited pro forma condensed statement of operations of Change Healthcare Inc. for the nine months ended December 31, 2018 and for the year ended March 31, 2018 gives effect to the Offering Transactions, the related effects on loss from equity method investment in the Joint Venture of resulting equity method basis differences and the repayment of outstanding indebtedness by the Joint Venture as if each had occurred on April 1, 2017.

The unaudited pro forma condensed balance sheet of Change Healthcare LLC at December 31, 2018 and the unaudited pro forma statement of operations of Change Healthcare LLC for the nine months ended December 31, 2018 and for the year ended March 31, 2018 give effect to the Offering Transactions and the subsequent repayment of a portion of Change Healthcare LLC’s outstanding indebtedness as if each had occurred on December 31, 2018 for purposes of the unaudited pro forma condensed balance sheet of Change Healthcare LLC and on April 1, 2017 for purposes of the unaudited pro forma condensed statement of operations of Change Healthcare LLC.

The unaudited pro forma financial information has been prepared by our management and is based on the historical financial statements of Change Healthcare Inc. and the Joint Venture and the assumptions and adjustments described herein and in the notes to the unaudited pro forma financial information. The presentation of the unaudited pro forma financial information is prepared in conformity with Article 11 of Regulation S-X.

The historical financial information of Change Healthcare Inc. and Change Healthcare LLC have each been derived from the Change Healthcare Inc. and Change Healthcare LLC audited financial statements and accompanying notes included elsewhere in this prospectus.

The pro forma adjustments are based on available information and certain assumptions that we believe are reasonable. The actual adjustments will be made as of the closing date of this offering and may differ from those reflected in the unaudited pro forma condensed financial information presented below. Such differences may be material. The unaudited pro forma condensed financial information is for illustrative purposes only and does not purport to represent what the results of operations or financial position would actually be if the relevant transactions had occurred at on the dates indicated, nor does such data purport to project the results of operations for any future period or as of any future date.

The information in the following tables should be read in conjunction with “Use of Proceeds,” “Capitalization,” Selected Historical Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical consolidated financial statements and related notes of Change Healthcare LLC and historical financial statements and related notes of Change Healthcare Inc. included elsewhere in this prospectus.

CHANGE HEALTHCARE INC.

UNAUDITED PRO FORMA BALANCE SHEET

AS OF DECEMBER 31, 2018

(amounts in thousands)



	Historical Change Healthcare Inc.			Pro Forma Adjustments		Notes(1)	Pro Forma Change Healthcare Inc.
Assets
Current assets:
Cash	$	3,631		$		(a) (b)	$
Due from the Joint Venture		489
Income tax receivable		2,536			—

Total current assets		6,656			—
Dividend receivable		74,197

Investment in the Joint Venture		1,219,681			—	(b)

Total assets	$	1,300,534		$	—		$


Liabilities and equity
Current liabilities:
Accrued expenses	$	489		$	—		$

Due to the Joint Venture		6,166

Total current liabilities		6,655			—
Deferred income tax liabilities		164,639
Commitments and contingencies
Equity:
Common stock		1			—	(a)
Class X common stock		—			—
Additional paid in capital		1,149,250				(a)
Accumulated other comprehensive income (loss)		(5,702	)
Retained earnings (deficit)		(14,309	)
Total stockholders’ equity		1,129,240

Total liabilities and stockholders’ equity	$	1,300,534		$	—		$

CHANGE HEALTHCARE LLC

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

AS OF DECEMBER 31, 2018

(amounts in thousands)



	Historical Change Healthcare LLC			Pro Forma Adjustments		Notes(2)	Pro Forma Change Healthcare LLC
Assets
Current assets:
Cash and cash equivalents	$	90,230		$	—	(a) (b)	$
Restricted cash		1,278			—
Accounts receivable, net of allowance for doubtful accounts		794,419			—
Prepaid expenses and other current assets		149,278			—

Total current assets		1,035,205			—
Property and equipment, net		183,225
Goodwill		3,279,948			—
Intangible assets, net		1,355,376			—
Other noncurrent assets, net		388,186			—	(c)

Total assets	$	6,241,940		$	—		$

Liabilities and members’ deficit
Current liabilities:
Drafts and accounts payable	$	96,430		$	—		$
Accrued expenses		399,985			—
Deferred revenues		452,376			—
Due to related party, net		14,062			—
Current portion of long-term debt		1,388			—

Total current liabilities		964,241			—
Long-term debt excluding current portion		5,793,537			—	(b)
Deferred income tax liabilities		112,718			—	(d)
Tax receivable agreement obligations due to related parties		207,246			—
Other long-term liabilities		109,594			—
Commitments and contingencies
Equity:
						(a)
Members’ deficit		(945,396	)		—	(c)(d)

Total liabilities and members’ deficit	$	6,241,940		$	—		$

CHANGE HEALTHCARE INC.

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2018

(amounts in thousands, except per share amounts)


	Historical Change Healthcare Inc.			Pro Forma Adjustments		Notes(3)			Pro Forma Change Healthcare Inc.
Total revenue		—			—					—
Operating expenses:
General and administrative		188			—					—

Total operating expenses		188			—					—

Operating income (loss)		(188	)		—					—
Non-operating (income) expense
Loss from Equity Method Investment in the Joint Venture		65,805					(a	)(b)		—
(Gain) Loss on Sale of Interests in the Joint Venture		(661	)		—					—
Management fee income		(188	)		—					—

Income (loss) before income tax provision		(65,144	)		—					—
Income tax provision (benefit)		(16,664	)				(c	)		—

Net income (loss)	$	(48,480	)	$	—				$	—

Net income (loss) per share:
Basic	$	(81.14	)						$
Diluted	$	(81.14	)						$
Weighted average common shares and equivalents:
Basic		597,513
Diluted		597,513

CHANGE HEALTHCARE INC.

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

FOR THE FISCAL YEAR ENDED MARCH 31, 2018

(amounts in thousands, except per share amounts)


	Historical Change Healthcare Inc.			Pro Forma Adjustments		Notes(3)			Pro Forma Change Healthcare Inc.
Total revenue	$	—		$	—				$	—
Operating expenses:
General and administrative		180			—

Total operating expenses		180			—

Operating income (loss)		(180	)		—
Non-operating (income) expense
Loss from Equity Method Investment in Change Healthcare LLC		58,680					(a	)(b)
(Gain) Loss on Sale of Interests in Change Healthcare LLC		(14	)		—
Management fee income		(180	)		—

Income (loss) before income tax provision (benefit)		(58,666	)
Income tax provision (benefit)		(119,621	)		—		(c	)

Net income (loss)	$	60,955		$					$


Net income (loss) per share:
Basic	$	101.93
Diluted	$	99.03

Weighted average common shares and equivalents:
Basic		598,027
Diluted		615,515

CHANGE HEALTHCARE LLC

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2018

(amounts in thousands)



	Historical Change Healthcare LLC			Pro Forma Adjustments		Notes(4)		Pro Forma Consolidated
Revenue
Solutions revenue	$	2,264,684		$	—			$	1,495,491
Postage revenue		180,706			—				127,962

Total revenue		2,445,390			—				1,623,453
Operating expenses:
Cost of operations (exclusive of depreciation and amortization below)		1,007,328			—				664,993
Research and development		159,604			—				106,567
Sales, marketing, general and administrative		620,612			—		(a)		414,019
Customer postage		180,706			—				127,962
Depreciation and amortization		208,103			—				137,785
Accretion and changes in estimate with related parties, net		13,290			—				9,756
Impairment of long-lived assets and other exit related costs		—			—				—
Gain on Sale of the Extended Care Business		(111,435	)

Total operating expenses		2,078,208			—				1,461,082

Operating income (loss)		367,182			—				162,371
Interest expense, net		241,840			—		(b)		159,226
Contingent consideration		(900	)		—				200
Other, net		(13,762	)		—				(9,381	)

Income (loss) before income tax provision (benefit)		140,004			—				12,326
Income tax provision (benefit)		1,049					(c)		(2,228	)

Net income (loss)	$	138,955		$	—			$	14,554

100

CHANGE HEALTHCARE LLC

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE FISCAL YEAR ENDED MARCH 31, 2018

(amounts in thousands)



	Historical Change Healthcare LLC			Pro Forma Adjustments		Notes(4)	Pro Forma Consolidated
Revenue
Solutions revenue	$	3,024,446		$	—		$
Postage revenue		274,397			—

Total revenue		3,298,843			—
Operating expenses:
Cost of operations (exclusive of depreciation and amortization below)		1,407,893			—
Research and development		221,662			—
Sales, marketing, general and administrative		749,871			—	(a)
Customer postage		274,397			—
Depreciation and amortization		278,363			—
Accretion and changes in estimate with related parties, net		(49,991	)		—
Impairment of long-lived assets and other exit related costs		839			—

Total operating expenses		2,883,034			—

Operating income (loss)		415,809			—
Interest expense, net		292,463			—	(b)
Contingent consideration		—			—
Other, net		(17,202	)		—

Income (loss) before income tax provision (benefit)		140,548			—
Income tax provision (benefit)		(51,894	)			(c)

Net income (loss)	$	192,442		$	—		$

101

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS

(In thousands)

Pro Forma Adjustments

(1)

Reflects the offering adjustments as follows:

Reflects the receipt of the net proceeds of this offering.

Reflects the contribution of the net proceeds of this offering to the Joint Venture in exchange for a number of newly issued LLC Units of the Joint Venture equal to the number of shares of common stock of Change Healthcare Inc. issued in this offering.

(2)

Reflects the offering adjustments as follows:

Reflects the receipt of the contribution of the net proceeds of this offering from Change Healthcare Inc.

Reflects the repayment of a portion of the Joint Venture’s Term Loan Facility.

Reflects the third-party costs that are directly attributable to the Offering Transactions.

Reflects transaction fees payable to McKesson and our Sponsors under the management services agreement as a result of this offering.

102

(3)

Reflects the offering adjustments as follows:

Reflects the effect on loss from equity method investment in Change Healthcare LLC of Change Healthcare Inc.’s purchase of additional LLC Units. This purchase of additional LLC Units results in an additional difference in the cost of Change Healthcare Inc.’s investment in Change Healthcare LLC and the amount of the underlying equity in Change Healthcare LLC (i.e., “basis difference”). In accordance with GAAP, such basis differences must be accounted for as if the investee were a consolidated subsidiary. As a result, Change Healthcare Inc. will be required to obtain a valuation of Change Healthcare LLC’s assets and liabilities as of the purchase date and perform an allocation of the purchase price among the underlying assets and liabilities of Change Healthcare LLC as if Change Healthcare Inc. had gained control of Change Healthcare LLC. The below table presents the pro forma effect on the loss from equity method investment in Change Healthcare LLC of such a hypothetical purchase price allocation, based on an assumed initial public offering price of $ per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, after deducting assumed underwriting discounts and commissions and estimated offering expenses. While management has reflected its best estimate of the fair value of the underlying assets and liabilities of Change Healthcare LLC, pending consummation of this offering and receipt of a formal valuation of such assets and liabilities, Change Healthcare Inc. can provide no assurance that the below hypothetical purchase price will not differ materially from the final valuation.

Pro Forma Basis
Amortization

Historical
Basis

Pro
Forma
Fair
Value

Change
in
Basis

Pro Forma
% Interest
Acquired

Pro Forma
Change
in Basis

Amortization
Period
(in months)

Nine Months
Ended
December 31,
2018

Year
Ended
March 31,
2018

Property and equipment

262,816

Capitalized software

(39,387

)

Customer relationships

4,259,106

Technology-based intangible assets

1,736,506

Tradename

174,631

Deferred revenue

277,379

Tax receivable agreement obligations

161,340

Long-term debt

4,950,553

Deferred income tax liabilities

133,709

Impact of Change in Ownership of Basis Differences

Effect of Sale of the Extended Care Business on Pro Forma Basis Differences

Pro Forma Adjustment

Reflects adjustments to the Loss from Equity Method Investment in the Joint Venture as a result of changes in ownership and Joint Venture Offering Adjustments as follows:


	Nine Months Ended December 31, 2018		Year Ended March 31, 2018
Historical Net Income (Loss) of the Joint Venture	$	138,955	$	192,442
Pro Forma Net Income (Loss) of the Joint Venture

Joint Venture Pro Forma Net Income (Loss) Adjustments
Pro Forma Percentage of Membership Units Held by Change Healthcare Inc.
Historical Percentage of Membership Units Held by Change Healthcare Inc.

Difference
Pro Forma Adjustment		—		—

Reflects an adjustment to income taxes due to the pro forma adjustments referred to in Note (a) above.

103

(c)

The following table sets forth a reconciliation of the numerators and denominators used to compute pro forma basic and diluted net income per share:


	Nine Months Ended December 31, 2018		Year Ended March 31, 2018
Basic net income per share:
Numerator:
Pro Forma Net income (loss)	$		$
Denominator:
Weighted average common shares outstanding		597,513		598,027
Shares of stock issued in this offering

Basic net income (loss) per share	$	—	$	—

Diluted net income per share:
Numerator:
Pro Forma Net income (loss)	$		$	—
Denominator:
Number of shares used in basic computation		597,513		598,027
Weighted average effect of dilutive securities
Add:
Replacement Time-Vesting Options				16,229
Replacement Restricted Share Units				225
RSUs				1,034

		597,513		615,515

Diluted net income (loss) per share	$	—	$	—

(4)

Reflects the offering adjustments as follows:

Reflects an adjustment to reverse historical management and advisory fees paid to McKesson and the Sponsors pursuant to a management services agreement that will terminate upon consummation of this offering. No adjustment has been made to reflect the final management fee, which will accrue and be payable with respect to the entire fiscal year in which the termination occurs, currently estimated to be $ million, as such amount will not have a continuing impact on the Joint Venture’s results of operations following the transactions.

Reflects the effect on interest expense of the repayment of a portion of Change Healthcare LLC’s Term Loan Facility.

Reflects an adjustment to income taxes due to the pro forma adjustment referred to in Note (a) above.

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SELECTED HISTORICAL FINANCIAL DATA

Selected Historical Financial Data of Change Healthcare Inc.

The following table sets forth the selected historical financial data of Change Healthcare Inc. for the periods ended and at the dates indicated below. The selected historical statements of operations data and the selected statements of cash flows data for the year ended March 31, 2018 and the period from June 22, 2016 (inception) through March 31, 2017 and the selected balance sheet data as of March 31, 2018 and 2017 were derived from the audited financial statements of Change Healthcare Inc., included elsewhere in this prospectus. The selected historical statements of operations data and the selected statements of cash flows data for the nine months ended December 31, 2018 and 2017 and the selected balance sheet data as of December 31, 2018 were derived from the unaudited financial statements of Change Healthcare Inc., included elsewhere in this prospectus. The selected balance sheet data as of December 31, 2017 was derived from the unaudited financial statements of Change Healthcare Inc., not included in this prospectus. The unaudited financial statements of Change Healthcare Inc. have been prepared on the same basis as the audited financial statements and, in our opinion, have included all adjustments, which include only normal recurring adjustments, necessary to present fairly in all material respects our financial position and results of operations. The results for any interim period are not necessarily indicative of the results that may be expected for the full year.

Historical results are not necessarily indicative of the results expected for any future period. You should read the selected historical financial data below, together with the financial statements and related notes thereto appearing elsewhere in this prospectus, as well as “Organizational Structure,” “Summary—Summary Historical Financial and Other Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Certain Indebtedness,” and the other information included elsewhere in this prospectus.

Change Healthcare Inc. is a holding company that was formed in connection with the Transactions and does not own any material assets or have any operations other than through its interest in the Joint Venture. Each of Change Healthcare Inc. and McKesson holds a 50% voting interest in the Joint Venture, with equal representation on the Joint Venture’s board of directors and with all major operating, investing and financial activities requiring the consent of both members. As a result, Change Healthcare Inc. does not consolidate the financial position and results of the Joint Venture. Instead, Change Healthcare Inc. accounts for its investment in the Joint Venture under the equity method of accounting.

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	Nine Months Ended						Year Ended March 31, 2018			Period from June 22, 2016 (inception) to March 31, 2017(1)
	December 31, 2018			December 31, 2017			Year Ended March 31, 2018			Period from June 22, 2016 (inception) to March 31, 2017(1)
	(In millions)
Statement of Operations Data:
Revenue	$	—		$	—		$	—		$	—
Operating expenses:
General and administrative		0.2			0.1			0.2			0.8

Total operating expenses		0.2			0.1			0.2			0.8

Operating income (loss)		(0.2	)		(0.1	)		(0.2	)		(0.8	)
Loss from Equity Method Investment in Change Healthcare LLC		65.8			29.3			58.7			43.1
(Gain) Loss on Sale of Interests in Change Healthcare LLC		(0.7	)		—			—			—
Management fee income		(0.2	)		(0.1	)		(0.2	)		(0.8	)

Income (loss) before income tax provision (benefit)		(65.1	)		(29.3	)		(58.7	)		(43.1	)
Income tax provision (benefit)		(16.7	)		(111.7	)		(119.6	)		(16.8	)

Net income (loss)	$	(48.4	)	$	82.4		$	61.0		$	(26.3	)

Net income (loss) per share:
Basic	$	(81.14)		$	137.95		$	101.93		$	(401.97	)

Diluted	$	(81.14)		$	134.18		$	99.03		$	(401.97	)


Balance Sheet Data (at period end):
Cash and cash equivalents	$	3.6		$	—		$	—		$	—
Total assets	$	1,300.5		$	1,396.1		$	1,374.0		$	1,389.4
Total debt	$	—		$	—		$	—		$	—
Total stockholders’ equity	$	1,129.2		$	1,191.9		$	1,176.6		$	1,088.2

(1)	From the time of its formation in June 2016 until March 1, 2017, Change Healthcare Inc. had no substantive assets or operations.

Selected Historical Consolidated Financial Data of Change Healthcare LLC

The following table sets forth the selected historical consolidated financial data of Change Healthcare LLC, or the Joint Venture, for the periods ended and at the dates indicated below. The selected historical statements of operations data and the selected statements of cash flows data for the year ended March 31, 2018 and the period from June 17, 2016 (inception) through March 31, 2017 and the selected balance sheet data as of March 31, 2018 and 2017 were derived from the audited consolidated financial statements of Change Healthcare LLC, included elsewhere in this prospectus. The selected historical statements of operations data and the selected statements of cash flows data for the nine months ended December 31, 2018 and 2017 and the selected balance sheet data as of December 31, 2018 were derived from the unaudited condensed consolidated financial statements of Change Healthcare LLC, included elsewhere in this prospectus. The selected balance sheet data as of December 31, 2017 was derived from the unaudited condensed consolidated financial statements of Change Healthcare LLC, not included in this prospectus. The unaudited condensed consolidated financial statements of Change Healthcare LLC have been prepared on the same basis as the audited consolidated financial statements and, in our opinion, have included all adjustments, which include only normal recurring adjustments, necessary to present fairly in all

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material respects Change Healthcare LLC’s financial position and results of operations. The results for any interim period are not necessarily indicative of the results that may be expected for the full year. Periods after March 1, 2017 reflect Change Healthcare LLC’s financial position, results of operations and changes in financial position after the Transactions.

Historical results are not necessarily indicative of the results expected for any future period. You should read the selected historical consolidated financial data below, together with the consolidated financial statements and related notes thereto appearing elsewhere in this prospectus, as well as “Organizational Structure,” “Summary—Summary Historical Financial and Other Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Certain Indebtedness,” and the other information included elsewhere in this prospectus.


	Nine Months Ended						Year Ended March 31, 2018			Period from June 17, 2016 (inception) to March 31, 2017(1)
	December 31, 2018			December 31, 2017			Year Ended March 31, 2018			Period from June 17, 2016 (inception) to March 31, 2017(1)
							(In millions)
Statement of Operations Data:
Revenue:
Solutions revenue	$	2,264.7		$	2,252.5		$	3,024.4		$	283.5
Postage revenue		180.7			205.4			274.4			26.1

Total Revenues		2,445.4			2,457.9			3,298.8			309.6
Operating expenses:
Cost of operations (exclusive of depreciation and amortization below)		1,007.3			1,056.9			1,407.9			133.7
Research and development		159.6			171.4			221.7			22.6
Sales, marketing, general and administrative		620.6			534.4			749.9			109.9
Customer postage		180.7			205.4			274.4			26.1
Depreciation and amortization		208.1			212.9			278.4			26.5
Accretion and changes in estimate with related parties, net		13.3			(66.8	)		(50.0	)		(24.5	)
Impairment of long-lived assets and other exit related costs		—			—			0.8			48.7
Gain on Sale of the Extended Care Business		(111.4	)		—

Total operating expenses		2,078.2			2,114.2			2,883.0			343.0

Operating income (loss)		367.2			343.7			415.8			(33.4	)
Interest expense, net		241.8			218.4			292.5			22.4
Loss on extinguishment of debt		—			—			—			70.1
Contingent consideration		(0.9	)		—
Other, net		(13.8	)		(13.8	)		(17.2	)		(1.3	)

Income (loss) before income tax provision (benefit)		140.1			139.1			140.5			(124.6	)
Income tax provision (benefit)		1.0			(56.4	)		(51.9	)		(41.0	)

Net income (loss)	$	139.1		$	195.5		$	192.4		$	(83.6	)


Balance Sheet Data (at period end):
Cash and cash equivalents	$	90.2		$	180.9		$	48.9		$	185.7
Total assets	$	6,241.9		$	6,195.9		$	6,200.9		$	6,283.5
Total debt(2)	$	5,794.9		$	5,929.2		$	5,920.9		$	5,959.1
Tax receivable obligations to related parties	$	207.2		$	207.2		$	223.2		$	298.1
Total members’ deficit	$	(945.4	)	$	(1,071.4	)	$	(1,066.2	)	$	(1,273.4	)

(1)	From the time of its formation in June 2016 until March 1, 2017, the Joint Venture had no substantive assets or operations.

(2)	Total debt at March 31, 2018 and 2017 is reflected net of unamortized debt discount of $130.5 million and $149.4 million, respectively, related to original loan fees and original issue discount.

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Selected Historical Consolidated Financial Data of Legacy CHC

The following table sets forth the selected historical consolidated financial data of Legacy CHC as of and for the periods indicated. The selected historical consolidated statements of operations and consolidated statements of cash flows data for the fiscal years ended December 31, 2016 and 2015 and for the period from January 1, 2017 through February 28, 2017 and the selected historical consolidated balance sheet data as of February 28, 2017, December 31, 2016 and December 31, 2015 have been derived from Legacy CHC’s historical audited consolidated financial statements included elsewhere in this prospectus. The selected historical consolidated financial data as of and for the years ended December 31, 2014 and 2013 was derived from audited consolidated financial statements not included in this prospectus.

The selected historical financial data of Legacy CHC is qualified in its entirety by reference to, and should be read in conjunction with, the information contained in “Summary—Summary Historical Financial and Other Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as the historical consolidated financial statements and related notes of Legacy CHC included elsewhere in this prospectus.


	Two Months Ended February 28, 2017			Year Ended
	Two Months Ended February 28, 2017			December 31, 2016			December 31, 2015			December 31, 2014			December 31, 2013
	(In millions)
Statement of Operations Data:( 1)
Revenue:
Solutions revenue	$	204.4		$	1,252.2		$	1,124.2		$	1,006.9		$	930.7
Postage revenue		46.7			305.0			352.9			343.5			311.9

Total Revenue		251.1			1,557.2			1,477.1			1,350.4			1,242.6
Costs and expenses:		—			—			—			—			—
Cost of operations		98.3			561.1			507.4			462.3			447.3
Development and engineering		14.2			60.0			45.5			33.0			31.4
Sales, marketing, general and administrative		77.9			278.6			217.6			198.4			170.1
Postage		46.7			305.0			352.9			343.5			311.9
Depreciation and amortization		43.3			252.3			342.3			189.2			183.8
Accretion		2.7			8.1			10.5			14.4			26.5
Impairment of long-lived assets		—			0.7			8.6			83.2			10.6
Transaction related costs		—			—			—			—			—

Total costs and expenses		283.1			1,465.8			1,484.8			1,324.0			1,181.6

Operating income (loss)		(32.0	)		91.4			(7.7	)		26.4			61.0
Interest expense, net		30.0			185.9			168.3			146.8			153.2
Loss on extinguishment of debt		—			—			—			—			23.2
Contingent consideration		—			—			(4.8	)		1.3			(0.1	)
Other		—			—			(0.8	)		(3.9	)		(4.1	)

Income (loss) before income taxes		(62.0	)		(94.5	)		(170.4	)		(117.8	)		(111.2	)
Income tax provision		(25.4	)		(19.1	)		(82.6	)		(232.6	)		(37.2	)

Net income (loss)	$	(36.6	)	$	(75.4	)	$	(87.8	)	$	114.8		$	(74.0	)


	As of February 28, 2017		As of December 31,
	As of February 28, 2017		2016		2015		2014		2013
	(In millions)
Balance Sheet Data:
Cash and cash equivalents	$	136.7	$	118.0	$	66.7	$	82.3	$	76.5
Total assets	$	4,378.0	$	4,502.5	$	4,557.2	$	3,824.3	$	3,714.2
Total debt(2)	$	2,762.9	$	2,761.0	$	2,774.0	$	2,162.8	$	2,019.3
Tax receivable obligations to related parties	$	183.3	$	180.6	$	173.5	$	164.0	$	150.5
Total equity	$	953.0	$	1,109.7	$	1,175.1	$	1,093.3	$	969.1

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(1)	As a result of Legacy CHC’s history of business combinations, its financial position and results of operations may not be comparable for each of the periods presented.

(2)

Legacy CHC’s debt at February 28, 2017 and at December 31, 2016, 2015, 2014 and 2013 is reflected net of unamortized debt discount of approximately $32.7 million, $34.9 million, $47.8 million, $41.6 million and $33.1 million, respectively, related to original loan fees and purchase accounting adjustments to discount the debt to fair value. Total debt as of February 28, 2017 and at December 31, 2016, 2015, 2014 and 2013 includes an obligation of approximately $10.7 million, $10.9 million, $18.2 million, $29.4 million and $35.1 million, respectively, related to its data sublicense agreement and other financing arrangements.

Selected Historical Combined Financial Data of Core MTS

The following table sets forth the selected historical combined financial data of Core MTS as of and for the periods indicated. The selected historical combined balance sheet data as of February 28, 2017 and March 31, 2016 and the combined statements of operations and combined statements of cash flows data for the fiscal year ended March 31, 2016 and the period from April 1, 2016 to February 28, 2017 have been derived from Core MTS’ historical audited combined financial statements included elsewhere in this prospectus. The selected historical combined financial data as of and for the fiscal year ended March 31, 2015 were derived from historical audited financial statements not included in this prospectus.

The selected historical combined financial data of Core MTS is qualified in its entirety by reference to, and should be read in conjunction with, the information contained in “Summary—Summary Historical Financial and Other Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as the historical combined financial statements and related notes of Core MTS included elsewhere in this prospectus.


	Eleven Months Ended February 28, 2017			Year Ended
	Eleven Months Ended February 28, 2017			March 31, 2016			March 31, 2015
	(In millions)
Statement of Operations Data:
Revenue	$	1,712		$	1,909		$	1,968
Cost of Sales		(848	)		(951	)		(986	)

Gross Profit		864			958			982
Operating Expenses
Selling, distribution and administrative		(457	)		(448	)		(516	)
Research and development		(159	)		(197	)		(220	)

Total operating expenses		(616	)		(645	)		(736	)

Operating income		248			313			246
Other income, net		2			3			3

Income (loss) before income taxes		250			316			249
Income tax provision		(14	)		(26	)		(37	)

Net income (loss)		236			290			212
Net income attributable to noncontrolling interests		(1	)		(1	)		(1	)

Net income attributable to Core MTS	$	235		$	289		$	211


Balance Sheet Data (at period end):
Cash and cash equivalents	$	31		$	46		$	52
Total assets	$	2,002		$	1,966		$	2,094
Total equity	$	1,144		$	1,029		$	1,168

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the financial condition and results of operations of Change Healthcare Inc., Change Healthcare LLC and Change Healthcare Inc.’s predecessors, Legacy CHC and Core MTS (each, as defined below), should be read in conjunction with the “Selected Historical Financial Data,” and the financial statements and related notes thereto included elsewhere in this prospectus. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed in “Forward-Looking Statements” and “Risk Factors.”

Change Healthcare Inc.

References in this discussion and analysis to “Change Healthcare Inc.” refer to Change Healthcare Inc. and not to any of its subsidiaries.

Overview

Change Healthcare Inc. (formerly HCIT Holdings, Inc.), a Delaware corporation, was formed on June 22, 2016 to hold an equity investment in Change Healthcare LLC, a joint venture between Change Healthcare Inc. and McKesson Corporation (“McKesson”), which we refer to as the Joint Venture. Prior to and immediately following this offering, each of Change Healthcare Inc. and McKesson holds a 50% voting interest in the Joint Venture, with equal representation on the Joint Venture’s board of directors and with all major operating, investing and financial activities requiring the consent of both members. As a result, Change Healthcare Inc. accounts for this investment using the equity method of accounting.

Change Healthcare Inc. has no substantive assets apart from its investment in the Joint Venture. As a result, Change Healthcare Inc. believes the financial statements of the Joint Venture are more relevant to an investor than Change Healthcare Inc.’s financial statements as they include greater detail regarding the financial condition and results of operations of the Change Healthcare business.

Key Components of Change Healthcare Inc.’s Results of Operations

Loss from Equity Method Investment in the Joint Venture

Loss from equity method investment in the Joint Venture generally represents Change Healthcare Inc.’s proportionate share of the income or loss from this investment, including basis adjustments related to amortization expense associated with equity method intangible assets, property and equipment, deferred revenue and other items.

Loss from equity method investment in the Joint Venture was $65.8 million and $29.3 million for the nine months ended December 31, 2018 and 2017, respectively. The results of operations of the Joint Venture and Change Healthcare Inc.’s proportionate interests in such operations for the nine months ended December 31, 2018 were positively affected by the reduction in the federal income tax rate following enactment of the Tax Cuts and Jobs Act of 2017 (the “Tax Legislation”) in December 2017. In addition, the Joint Venture recognized a gain of $111.4 million during the nine months ended December 31, 2018 related to the sale of its extended care business in July 2018. However, due to the effect of the required write-off of equity method intangible asset basis differences attributable to this business, Change Healthcare Inc.’s loss from equity method investment was only marginally impacted by this sale transaction.

Loss from equity method investment in the Joint Venture was $58.7 million and $43.1 million for the year ended March 31, 2018 and the period from June 22, 2016 (inception) to March 31, 2017, respectively. As with the interim period discussed above, the loss from equity method investment for the year ended March 31, 2018 was positively affected by the enactment of the Tax Legislation in December 2017.

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General and Administrative Expense and Management Fees

In addition to its income (loss) from its equity method investment in the Joint Venture, Change Healthcare Inc. may also periodically incur certain other operating expenses, including professional service fees, general liability insurance, and other fees associated with being an SEC registrant.

To the extent any such fees Change Healthcare Inc. incurs are required to facilitate this offering, however, the limited liability company agreement of the Joint Venture (the “LLC Agreement”) requires that Change Healthcare Inc. be reimbursed for such costs by the Joint Venture. Such reimbursements are classified as management fees within Change Healthcare Inc.’s statements of operations.

Gain (Loss) on Sale of Interests in the Joint Venture

Under the terms of the LLC Agreement, Change Healthcare Inc. and the Joint Venture agreed to cooperate to ensure a 1:1 ratio of outstanding shares of common stock of Change Healthcare Inc. to the units of the Joint Venture (“LLC Units”) held by Change Healthcare Inc. as long as the subsidiaries of McKesson that serve as members of the Joint Venture (the “McK Members”) hold LLC Units. This provision requires that Change Healthcare Inc. be issued an additional LLC Unit for each share of common stock that Change Healthcare Inc. issues. Similarly, for any share that Change Healthcare Inc. repurchases, the Joint Venture is likewise required to repurchase a respective LLC Unit from Change Healthcare Inc. In this latter case, the repurchase by the Joint Venture of LLC Unit(s) from Change Healthcare Inc. results in a gain or loss to Change Healthcare Inc. equal to the difference in the fair value of such LLC Units and the proportionate carrying value of Change Healthcare Inc.’s investment in the Joint Venture associated with such repurchased LLC Units.

Income Taxes

As the Joint Venture is treated as a partnership for income tax purposes, Change Healthcare Inc. is subject to income taxes for its allocable portion of the Joint Venture’s taxable income. The income tax benefit was $16.7 million and $111.7 million (which resulted in effective income tax rates of 25.5% and 381.5%) for the nine months ended December 31, 2018 and 2017, respectively. The income tax benefit was $119.6 million and $16.8 million (which resulted in effective income tax rates of 203.9% and 39.0%) for the year ended March 31, 2018 and the period from June 22, 2016 (inception) to March 31, 2017, respectively.

Income taxes for all periods following enactment of the Tax Legislation in December 2017 reflect reduced income tax rates as compared to those in prior periods. In addition to the continuing effect of reduced income tax rates following enactment of the Tax Legislation, Change Healthcare Inc. recognized an increase in the income tax benefit of $97.9 million and $100.8 million during the nine months ended December 31, 2017 and the year ended March 31, 2018, respectively, due to the revaluation of deferred tax assets using the lower enacted income tax rates and other effects of the Tax Legislation.

Liquidity and Capital Resources

Overview

Change Healthcare Inc.’s principal source of liquidity consists of distributions or advances from the Joint Venture. To the extent that Change Healthcare Inc. requires additional funds, Change Healthcare Inc. may need to raise funds through subsequent debt or equity financing.

Change Healthcare Inc. has not incurred, nor does it expect to incur, significant capital expenditures in the normal course of business or to pursue acquisition opportunities other than through the Joint Venture.

Effects of this Offering

The LLC Agreement requires that the proceeds of this offering be contributed to the Joint Venture in exchange for a number of newly issued LLC Units equal to the number of shares of common stock of Change

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Healthcare Inc. issued in this offering. This acquisition of additional LLC Units will be reflected in Change Healthcare Inc.’s financial statements at fair value. As a result, Change Healthcare Inc. expects additional differences to be created in the basis of Change Healthcare Inc.’s investment in the Joint Venture and the basis of the underlying assets and liabilities of the Joint Venture. These differences are expected to result in an increase to the loss from equity method investment in the Joint Venture as compared to amounts reflected in the historical periods.

See “Unaudited Pro Forma Condensed Financial Information” for more information about the possible effects of the acquisition of additional LLC Units on Change Healthcare Inc.’s financial statements.

Off-Balance Sheet Arrangements

As of December 31, 2018, Change Healthcare Inc. had no off-balance sheet arrangements.

Recent Accounting Pronouncements

See Note 2, Summary of Significant Accounting Policies , within Change Healthcare Inc.’s financial statements appearing elsewhere in this prospectus for information about recent accounting pronouncements and the potential impact on Change Healthcare Inc.’s financial statements.

Critical Accounting Estimates

The preparation of financial statements in accordance with United States generally accepted accounting principles (“GAAP”) requires Change Healthcare Inc. to make estimates and assumptions that affect reported amounts and related disclosures. Change Healthcare Inc. considers an accounting estimate to be critical if:

•

it requires assumptions to be made that were uncertain at the time the estimate was made; and

•

changes in the estimate or different estimates that could have been made could have a material impact on Change Healthcare Inc.’s results of operations and financial condition.

Change Healthcare Inc. believes the current assumptions and other considerations used to estimate amounts reflected in Change Healthcare Inc.’s financial statements are appropriate. However, if actual experience differs from the assumptions and other considerations used in estimating amounts reflected in Change Healthcare Inc.’s financial statements, the resulting changes could have a material adverse effect on Change Healthcare Inc.’s results of operations and financial condition.

See Note 2, Summary of Significant Accounting Policies , within Change Healthcare Inc.’s financial statements appearing elsewhere in this prospectus for information about Change Healthcare Inc.’s critical accounting policies.

Quantitative and Qualitative Disclosure of Market Risk

As Change Healthcare Inc. has no substantive assets or operations apart from its investment in the Joint Venture, Change Healthcare Inc. does not believe that it has significant market risk.

Summary Disclosures about Contractual Obligations and Commercial Commitments

Change Healthcare Inc. has no ongoing contractual obligations or commercial commitments as of March 31, 2018.

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Change Healthcare LLC

References in this discussion and analysis to the “Joint Venture” refer to Change Healthcare LLC and its consolidated subsidiaries.

Overview

The Joint Venture is a leading independent healthcare technology company, formed through the combination of substantially all of the businesses of Change Healthcare Performance, Inc. (formerly Change Healthcare, Inc.) (“Legacy CHC”) and a majority of the McKesson Technology Solutions business (“Core MTS”), which was completed on March 1, 2017. The Joint Venture offers a comprehensive suite of software, analytics, technology-enabled services and network solutions that drive improved results in the complex workflows of healthcare system payers and providers. The Joint Venture’s solutions are designed to improve clinical decision making, simplify billing, collection and payment processes and enable a better patient experience.

The Joint Venture offers comprehensive end-to-end solutions with modular capabilities to address its customers’ needs. Working with its customers to analyze workflows before, during and after care has been delivered to patients, the Joint Venture designs and commercializes innovative solutions for various points in the healthcare delivery timeline. The Joint Venture’s offerings range from discrete data and analytics solutions to broad enterprise-wide solutions, which include workflow software and technology-enabled services that help its customers achieve their operational objectives. As payers and providers become larger and more sophisticated and manage increasingly complex workflows, the Joint Venture believes it will increasingly seek strategic partners with scale and comprehensive, high value solutions.

The Joint Venture’s Intelligent Healthcare Network was created to facilitate the transfer of data among participants and is one of the largest clinical and financial healthcare networks in the United States. In the fiscal year ended March 31, 2018, the Joint Venture facilitated nearly 14 billion healthcare transactions and approximately $1 trillion in adjudicated claims or approximately one-third of all U.S. healthcare expenditures. The Joint Venture serves the vast majority of U.S. payers and providers. The Joint Venture’s customer based includes approximately 2,200 government and commercial payer connections, 900,000 physicians, 118,000 dentists, 33,000 pharmacies, 5,500 hospitals and 600 laboratories. This network transacts clinical records for over 112 million unique patients, more than one-third of the estimated total U.S. population. With insights gained from its pervasive network, extensive applications and analytics portfolio and its services operations, the Joint Venture has designed analytics solutions that include industry-leading and trusted franchises supported by extensive intellectual property and regularly updated content.

In addition to the advantages of scale, the Joint Venture believes it offers the collaborative benefits of a mission-critical partner. The Joint Venture seeks enduring relationships with each customer through solutions embedded in their complex daily workflows that deliver measurable results. The Joint Venture’s customer retention rate for its top 50 provider and top 50 payer customers for the fiscal year ended March 31, 2018 was 100% for the fiscal quarter ended December 31, 2018. The Joint Venture believes its size, scale, thought leadership and prevalence across the healthcare ecosystem help make it a preferred partner for innovative technology companies and industry associations focused on driving standardization and efficiencies in the healthcare industry.

Segments

The Joint Venture reports its financial results in the following three reportable segments: Software and Analytics, Network Solutions and Technology-Enabled Services.

•

Software and Analytics provides software and analytics solutions for financial performance, payment accuracy, clinical decision management, value-based payment, provider and consumer engagement and imaging and clinical workflow.

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•

Network Solutions enables financial, administrative and clinical transactions, electronic business-to-business and consumer-to-business payments and aggregation and analytics of clinical and financial data.

•

Technology-Enabled Services provides solutions for financial and administrative management, value-based care, communication and payment, pharmacy benefits administration and healthcare consulting.

During the nine months ended December 31, 2018, the Joint Venture made certain changes in the way that it manages its business and allocates costs. Specifically:

•

the Joint Venture moved its clinical network solution and certain of its institutional provider customers from the network solutions reportable segment to the software and analytics reportable segment;

•

its Network Solutions segment began charging the Software and Analytics segment for the use of its network; and

•

the Joint Venture made discrete changes in cost allocation among each of the segments.

The presentation of revenue and Adjusted EBITDA included within this management’s discussion and analysis of financial condition and results of operations has been retrospectively adjusted for all periods presented to reflect the above described changes.

Factors Affecting the Joint Venture’s Financial Condition and Results of Operations

The following are certain key factors that affect, will affect, or have recently affected, the Joint Venture’s financial condition and results of operations:

The Transactions

In June 2016, the equityholders of Legacy CHC (the “Legacy CHC Stockholders”) entered into an Agreement of Contribution and Sale (the “Contribution Agreement”) with McKesson and the other parties thereto. Under the terms of the Contribution Agreement, the parties agreed to form the Joint Venture, a joint venture that combined Core MTS with substantially all of Legacy CHC (together, the “Contributed Businesses”). The creation of the Joint Venture, including the contribution of the Contributed Businesses and related transactions, is collectively referred to as the “Transactions.” The Transactions closed on March 1, 2017. The pharmacy claims switching and prescription routing business of Legacy CHC was excluded from the Joint Venture and distributed to the Legacy CHC Stockholders (such excluded business, the “eRx Network”) immediately prior to the consummation of the Transactions. As a result, the financial position and results of the eRx Network business were included in the consolidated financial statements of Legacy CHC but are not reflected in the financial statements of the Joint Venture.

Pursuant to the terms of the Contribution Agreement, (i) the Legacy CHC Stockholders, directly and indirectly, transferred ownership of substantially all of Legacy CHC to the Joint Venture in consideration of (a) the payment at the closing of the Transactions by the Joint Venture to the Legacy CHC Stockholders and certain participants in the Legacy CHC Amended and Restated 2009 Equity Incentive Plan (the “Legacy CHC Equity Plan”) of (A) approximately $1.8 billion, (B) stock in eRx Network Holdings, Inc., and (C) the 2017 Tax Receivable Agreement (defined below), and (b) the issuance to Change Healthcare Inc. of membership interests in the Joint Venture; and (ii) McKesson caused Core MTS to be transferred to the Joint Venture in consideration of (a) the assumption and subsequent payment at the closing of the Transactions by the Joint Venture to McKesson of a promissory note in the amount of approximately $1.3 billion, (b) the issuance of membership interests in the Joint Venture and (c) an interest in a tax receivable agreement from the Joint Venture. These payments to McKesson and the Legacy CHC Stockholders have been reflected as distributions in the consolidated statement of members’ deficit.

In connection with the Transactions, the Joint Venture entered into new senior secured credit facilities, consisting of a term loan facility in the amount of $5.1 billion (the “Term Loan Facility”) and a revolving credit

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facility in an aggregate principal amount of $500 million (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Senior Secured Credit Facilities”), and issued $1.0 billion of 5.75% senior notes due 2025 (the “Senior Notes”). The proceeds were used to make all payments to the Legacy CHC Stockholders, certain participants in the Legacy CHC Equity Plan and McKesson described above, to refinance certain of Legacy CHC’s existing indebtedness and to pay fees and expenses incurred in connection with the Transactions. In connection with the Transactions, the Joint Venture recognized certain fees and expenses in fiscal 2017 that have been classified within sales, marketing, general and administrative on the consolidated statements of operations and during this same period, the Joint Venture recognized a loss on extinguishment of debt of approximately $70.1 million.

After the closing of the Transactions, the Joint Venture incurred significant incremental costs in connection with the integration of Legacy CHC and Core MTS, including professional fees for consultants engaged in project management, process design and human resource policy harmonization. Additionally, in connection with the consummation of the Transactions, the Joint Venture and certain of its subsidiaries, McKesson and the eRx Network entered into transition services agreements (“TSAs”) pursuant to which (i) the Joint Venture provides certain transition services to McKesson and to the eRx Network and (ii) McKesson provides certain transition services to the Joint Venture, in each case in exchange for specified fees and subject to the terms and conditions therein. The Joint Venture recognized transition service fee expense of $92.0 million and $8.7 million for services received from McKesson during the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. In addition, the Joint Venture recognized $11.8 million and $0.8 million in transition fee income from eRx Network in these same periods. The income and expenses recognized by the Joint Venture under these TSAs may not be comparable to those recognized by Core MTS and Legacy CHC for similar services prior to the Transactions or to the future ongoing operations of the Joint Venture after the expiration of the TSAs.

Post-Contribution Cost Synergies

In connection with the Transactions, the Joint Venture identified opportunities to implement certain cost synergies based on its analyses of existing operating structures, estimated spend by category, its resource requirements and industry benchmarks for similar activities. The Joint Venture expects such cost synergies to include, among others, (i) product integration, network efficiencies and combining common products; (ii) procurement savings from the elimination of duplicate orders, leveraging scale and optimization of providers; (iii) utilization of global talent; and (iv) reduction of management redundancies and duplicative roles.

By the end of the fourth year following the combination of Legacy CHC and Core MTS, the Joint Venture expects to have implemented operational initiatives to fully realize these synergies, which are expected to result in significant annual run-rate cost savings and efficiencies. The Joint Venture incurred significant non-recurring expenses and expects to continue to incur such expenses in order to achieve these cost synergies.

Macroeconomic and Industry Trends

The healthcare industry is highly regulated and subject to frequently changing complex regulatory and other requirements. For example, ongoing healthcare reform has significantly affected the healthcare regulatory environment by changing how healthcare services are covered, delivered and reimbursed through coverage expansion, reduced federal healthcare program spending, increased efforts to link federal healthcare program payments to quality and efficiency and insurance market reforms. The number of states that will ultimately participate in some form of Medicaid expansion and the future of mandated coverage for individuals is not yet clear. If the Patient Protection and Affordable Care Act (collectively, the “ACA”) is repealed or significantly modified, such repeal or modification, any alternative reforms adopted in its place or the failure to adopt alternative reforms may have a material impact on the Joint Venture’s business. For example, since many of the Joint Venture’s products and services include solutions designed to assist customers in effectively navigating the

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shift to value-based healthcare, the elimination of, or significant reductions to, the ACA’s various value-based healthcare initiatives may adversely impact the Joint Venture’s business. While the specific regulatory instruments and tactics used to implement reform may change in the future, the Joint Venture expects that the pervasive focus on improving coverage, efficiency and quality and related needs for payers and providers to optimize performance and reduce costs will continue.

Equity-based Compensation

Change Healthcare Inc. grants equity-based awards of Change Healthcare Inc. common stock to certain employees, officers and directors of Change Healthcare Inc., eRx Network and the Joint Venture. For grants to employees, equity-based awards are generally measured at the date of grant and recognized as expense over each employee’s service period. Because the Joint Venture’s employees are not considered employees of Change Healthcare Inc., however, the Joint Venture is generally required to re-measure these equity-based awards at fair value each quarter until the earlier of the completion of required service or the performance commitment date. As a result, management expects that the Joint Venture’s results of operations may reflect volatility from the periodic re-measurement of its equity based awards. Such volatility can result from changes in the fair value of the underlying stock of Change Healthcare Inc., stock price volatility among its peer companies, changes in interest rates and the passage of time.

Acquisitions and Divestitures

The Joint Venture actively evaluates opportunities to improve and expand its business through targeted acquisitions that are consistent with its strategy. On occasion, the Joint Venture also may dispose of certain components of its business that no longer fit within its overall strategy. Because of the Joint Venture’s acquisition and divestiture activity as well as the shifting revenue mix of its business due to this activity, the Joint Venture’s results of operations may not be directly comparable among periods.

In January 2018, the Joint Venture acquired National Decision Support Company, LLC (“NDSC”), which is a provider of cloud-based solutions that deliver medical guidelines to the point-of-care through bi-directional integrations with the electronic medical records. This acquisition affected the Joint Venture’s Software and Analytics segment.

In certain cases, including with NDSC, the Joint Venture agrees to transfer additional consideration to the sellers of the acquired businesses in the event that specified performance measures are achieved. GAAP requires the Joint Venture to recognize the initial fair value of the expected amount to be paid under such contingent consideration arrangements as a component of the total consideration transferred. Subsequent changes in the fair value of the amounts expected to be paid, however, are generally required to be recognized as a component of net income. Such changes in fair value may occur based on changes in the expected timing or amount of payments or the effect of discounting the liability for the time value of money.

In July 2018, certain of the Joint Venture’s affiliates sold all of the membership interests in the Joint Venture’s extended care business (a component of the software and analytics reportable segment) for net cash proceeds of $159.9 million, subject to certain post-closing adjustments including for working capital.

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Income Taxes

The Joint Venture’s effective income tax rate is affected by several factors. The following table and subsequent commentary reconciles the Joint Venture’s federal statutory rate to its effective income tax rate and the subsequent commentary describes the more significant of the reconciling factors:


	Nine Months Ended						Year Ended March 31, 2018			Period from June 17, 2016 (inception) through March 31, 2017
	December 31, 2018			December 31, 2017			Year Ended March 31, 2018
Statutory U.S. federal tax rate(1)		21.00	%		31.51	%		31.50	%		35.00	%
State income taxes (net of federal benefit)		0.47			(3.51	)		(1.32	)		3.49
Income passed through to Members		(18.46	)		(12.60	)		(8.78	)		(10.64	)
Remeasurement of deferred tax assets and liabilities arising from the Tax Legislation					(45.29	)		(42.95	)		—
Transition tax arising from the Tax Legislation		(0.79	)		1.3			1.68			—
Fees and expenses related to the Transactions		—			—			—			1.97
Change in valuation allowance		0.05			(12.40	)		(11.97	)		(2.38	)
Accretion and changes in estimate with related parties, net		0.36			0.42			(5.47	)		5.01
Other		(1.88	)		0.47			0.39			0.46

Effective income tax rate		0.75	%		(40.57	)%		(36.92	)%		32.91	%

(1)

Calculated using the statutory U.S. corporate federal income tax rate of 35.00% in the period from April 1, 2017 to December 31, 2017 and 21.00% in the period from January 1, 2018 to March 31, 2018.

State Income Taxes— The Joint Venture’s effective tax rate for state income taxes is generally impacted by changes in its apportionment.

Income Passed through to Members —Certain of the Joint Venture’s subsidiaries are organized as limited liability companies and allocate taxable income to their respective members.

Remeasurement of deferred tax assets and liabilities— As a result of the lowering of enacted tax rates under the Tax Legislation, the Joint Venture was required to revalue its deferred tax assets and liabilities using the tax rates in effect at the time the temporary differences are expected to reverse.

Transition tax arising from the Tax Legislation —Following the enactment of the Tax Legislation, companies must now pay a transition tax on deemed repatriated earnings of foreign subsidiaries.

Fees and expenses related to the Transactions —In connection with the Transactions, the Joint Venture incurred certain fees and expenses that are not considered deductible for tax purposes.

Change in Valuation Allowance —The Joint Venture records valuation allowances or reverses existing valuation allowances related to assumed future income tax benefits depending on circumstances and factors related to its business. During the year ended March 31, 2018, the Joint Venture released a valuation allowance related to prior deferred tax assets as a result of its change in judgment resulting from transactions and tax planning strategies that provide for future taxable income in the relevant jurisdictions.

Accretion and changes in estimate with related parties, net —As a result of a prior business combination, the Joint Venture was required to record tax receivable agreements it assumed in connection with the Transactions

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under which the Joint Venture is obligated to make payments to certain of the Legacy CHC stockholders (the “2009-2011 Tax Receivable Agreements”) at their then fair value, which results in subsequent periodic accretion to adjust this initial fair value to the gross amount of payments due under such agreements. The Joint Venture is generally unable to deduct such accretion when determining its taxable income.

Impairment of Long-lived Assets and Other Exit Related Costs

In connection with the combining of the businesses as a result of the Transactions, the Joint Venture identified certain redundancies among the combined software and analytics segment product portfolio. In one such instance, one of the Contributed Businesses’ software products had been fully developed and in the other further development would be required. As a result, the Joint Venture determined to cease future development of this redundant internal use software product and recognized an impairment charge of $26.0 million to reduce the carrying value of the asset to zero in March 2017. Additionally, because this abandoned software project included a license that required annual maintenance expenditures for future years for which the Joint Venture does not expect to derive any economic benefit, it recognized a liability for this exit cost with a fair value of $19.1 million at March 1, 2017 (total expected remaining payments of $22.9 million). The related losses have been included with the Impairment of long-lived assets and other exit related costs caption within the consolidated statement of operations.

Enterprise Resource Planning (“ERP”) Implementation

The Joint Venture is in a multi-year process of implementing a new ERP business solution to create a system of integrated applications to manage its businesses and automate many functions related to financial reporting, human resources and other services. ERP implementations are complex and time-consuming projects that require transformations of business and financial processes in order to reap the benefits of the ERP system. The Joint Venture has incurred significant capital expenditures in connection with the implementation process.

Public Company Costs

Following the completion of this offering, the Joint Venture expects to incur additional costs associated with Change Healthcare Inc.’s operating as a public company. The Joint Venture expects that these costs will include additional personnel, legal, consulting, regulatory, insurance, accounting, investor relations and other expenses that it did not incur as a private company. The Sarbanes-Oxley Act, as well as rules adopted by the SEC and national securities exchanges, requires public companies to implement specified corporate governance practices that are currently inapplicable to the Change Healthcare Inc. and the Joint Venture as private companies. These additional rules and regulations will increase the Joint Venture’s legal, regulatory and financial compliance costs and will make some activities more time-consuming and costly.

Qualified McKesson Exit

In connection with a Qualified McKesson Exit, as described in “Organizational Structure—Qualified McKesson Exit & Exchanges,” we anticipate that Change Healthcare Inc. will acquire the interest in the Joint Venture that it did not own prior to such transaction. As a result, in periods following the Qualified McKesson Exit, Change Healthcare LLC is expected to be a wholly owned subsidiary of Change Healthcare Inc. and Change Healthcare Inc. will consolidate the financial position and results of Change Healthcare LLC in its financial statements.

Change Healthcare Inc. expects to account for the Qualified McKesson Exit and related transactions as a business combination achieved in stages in accordance with the FASB Accounting Standards Codification Business Combinations Topic, resulting in a new basis of accounting. As a result, Change Healthcare Inc. will be required to remeasure its investment in the Joint Venture to fair value as of the date that control is obtained and will recognize a gain or loss in its statement of operations for the difference in the carrying value and fair value of this investment. Further, Change Healthcare Inc. expects to recognize the consideration transferred, as well as the acquired business’s identifiable assets, liabilities and noncontrolling interests at their acquisition date fair

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value. The excess of the consideration transferred over the fair value of the identifiable assets, liabilities and noncontrolling interest, if any, is anticipated to be recorded as goodwill. Any excess of the fair value of the identifiable assets acquired and liabilities assumed over the consideration transferred, if any, would generally recognized within earnings as of the acquisition date.

As a result of the accounting for these transactions and the anticipated change in basis of accounting, the consolidated results of Change Healthcare Inc. in periods following the Qualified McKesson Exit will not be comparable to the consolidated results of the Joint Venture in periods prior to the Qualified McKesson Exit.

The following are certain of the more significant changes resulting from the Qualified McKesson Exit that are expected to affect the comparability of financial results and operations:

•

Gain or loss upon remeasuring Change Healthcare Inc.’s investment in the Joint Venture at its fair value.

•

Increased tangible and intangible assets resulting from adjusting the basis of tangible and intangible assets to their fair value which is expected to result in increased depreciation and amortization expense.

•

Potential increase or decrease in long-term debt as a result of adjustments to state the long-term debt at its fair value. Resulting differences in the historical carrying value and fair value of the long-term debt are expected to result in either additional discount or premium which, in turn, may materially increase or decrease future interest expense.

•

Decreased deferred revenue as a result of recognizing deferred revenue in the business combination only to the extent that contractual obligations remain to be fulfilled at that time. Decreases in deferred revenue are expected to result in decreased solutions revenue in the near term.

•

Income currently attributable to the Joint Venture and not subject to U.S. federal income taxes and most state and local income taxes will become subject to such taxes, resulting in an expected increase in Change Healthcare Inc.’s effective tax rate compared with the historical effective tax rate of the Joint Venture.

Key Components of the Joint Venture’s Results of Operations

Revenue

The Joint Venture generates most of its solutions revenue by using technology solutions to provide services to its customers that automate and simplify business and administrative functions for payers, providers and pharmacies and through the licensing of software, software systems (consisting of software, hardware and maintenance support) and content.

Certain of the Joint Venture’s revenue cycle management service, payment integrity, eligibility and enrollment, and revenue optimization service offerings provide for contingent fee arrangements where the amount of revenue the Joint Venture earns is contingent upon the resolution of the identified contingencies. In the case of the revenue cycle management services, the Joint Venture provides a variety of services to hospitals, medical practices and other healthcare providers, which may include medical coding, billing, collection and other services on behalf of its customers. Customers sign multi-year contracts to receive these services, and the fee received by the Joint Venture is generally based on a percentage of actual net collections by the customer. In the case of its payment integrity and revenue optimization services, the Joint Venture is entitled to a specified percentage of the savings the customer realizes as a result of the Joint Venture’s services. In the case of the eligibility and enrollment services, the Joint Venture receives a fee from a hospital provider based on its success in qualifying the hospital provider’s customer for one of various forms of third-party insurance or other coverage. Regardless of whether revenue cycle management services, payment integrity or eligibility and enrollment services are involved, the amount of revenue the Joint Venture earns is contingent upon the resolution of the identified contingencies. In the case of the revenue cycle management services, the contingency is resolved upon successful collection of an outstanding billing by the

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customer. In the case of the payment integrity services, the contingency is resolved when the customer agrees to the amount of the identified saving. In the case of the eligibility and enrollment and revenue optimization services, the contingency is resolved upon collection by the customer of amounts due from the third-party payer.

Cost of Operations

Cost of operations consists primarily of compensation expense related to personnel providing services to the Joint Venture’s customers and costs associated with the maintenance of the Joint Venture’s business operations. These costs primarily include materials, hardware costs, and costs for software maintenance. Cost of operations also includes royalties, rebates paid to channel partners (net of rebates to certain customers that offset revenue), data communication costs, facility rent expenses as well as amortization costs associated with capitalized software developed for sale.

Research and Development

Research and development costs consist primarily of personnel costs and professional service fees for outside service providers that are not otherwise capitalized as software.

Sales, Marketing, General and Administrative Expense

Sales, marketing, general and administrative expense consists primarily of personnel costs associated with the Joint Venture’s sales, account management and marketing functions, as well as management, administrative and other shared corporate services related to the operations of the Joint Venture’s reportable segments and overall business operations.

Customer Postage

Customer postage, which is generally billed as a pass-through cost to the Joint Venture’s customers, is the most significant cost incurred in the delivery of the Joint Venture’s communication and payment solutions. The Joint Venture’s postage costs and related revenue increase as its communication and payment solutions volumes increase and are also impacted when the United States Postal Service (“USPS”) changes postage rates. Effective January 21, 2018, the USPS increased the cost of first-class postage by approximately 2%. Postage fees related to the Joint Venture’s payment and communication solutions volumes are recorded on a gross basis.

Depreciation and Amortization

Depreciation and amortization expense is related to depreciation of the Joint Venture’s property and equipment, acquired intangible assets, including technology assets, as well as the amortization of capitalized software developed for internal use.

Accretion and Changes in Estimate with Related Parties, Net

Accretion and changes in estimate with related parties, net reflects the accretion of the carrying value of the Joint Venture’s 2009-2011 Tax Receivable Agreements to the full amount of the expected payments using the interest method as well as the effects of periodic changes in estimate related to the 2009-2011 Tax Receivable Agreements, the tax receivable agreement entered into with Blackstone and Hellman & Friedman in connection with the Transactions (the “2017 Tax Receivable Agreement”) and the tax receivable agreement entered into with affiliates of McKesson in connection with the Transactions (the “McKesson Tax Receivable Agreement”).

Non-Operating Income and Expense

Non-operating income and expense includes loss on extinguishment of debt, interest expense, interest income, transition service agreement fee income and other non-operating income and expenses.

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Key Performance Measures

Management, including the Joint Venture’s chief operating decision maker, evaluates the financial performance of the Joint Venture’s businesses based on a variety of key indicators. These indicators include the non-GAAP measures Adjusted EBITDA and Adjusted Net Income and the GAAP measures revenue, cash provided by operating activities and cash paid for capital expenditures. For the nine months ended December 31, 2018 and 2017, the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, these key indicators were as follows:


	Nine Months Ended						Year Ended March 31, 2018			Period from June 17, 2016 (inception) to March 31, 2017
	December 31, 2018			December 31, 2017			Year Ended March 31, 2018			Period from June 17, 2016 (inception) to March 31, 2017
	(In millions)
Solutions revenue	$	2,264.7		$	2,252.5		$	3,024.4		$	283.5
Reconciliation of net income (loss) to Adjusted EBITDA and Adjusted Net Income(1):
Net income (loss)	$	139.1		$	195.5		$	192.4		$	(83.6	)
Interest expense, net		241.8			218.4			292.5			22.4
Income tax provision (benefit)		1.0			(56.4	)		(51.9	)		(41.0	)
Depreciation and amortization		208.1			212.9			278.4			26.5
Amortization of software developed for sale		10.9			13.7			18.3			1.5

EBITDA		600.9			584.1			729.7			(74.2	)
Adjustments to EBITDA:
Equity compensation(2)		16.4			19.5			24.7			0.7
Acquisition accounting adjustments(3)		3.2			0.2			2.6			0.1
Acquisition and divestiture-related costs(4)		11.5			0.8			1.8			—
Transactions-related costs(5)		—			4.6			4.6			43.3
Integration and related costs(6)		79.8			50.1			107.2			8.8
Management fees and related costs(7)		7.9			8.8			11.5			0.9
Implementation costs related to recently issued accounting standards(8)		7.2			20.5			26.6			1.6
Strategic initiatives, duplicative and transition costs(9)		19.0			7.9			12.3			0.9
Severance costs(10)		14.3			33.2			38.3			2.2
Accretion and changes in estimate with related parties, net(11)		13.3			(66.8	)		(50.0	)		(24.5	)
Impairment of long-lived assets and other exit related costs(12)		3.7			2.6			0.8			48.7
Loss on extinguishment of debt(13)		—			—			—			70.1
Gain on Sale of the Extended Care Business(14)		(111.4	)		—			—			—
Contingent consideration (15)		(0.9	)		—			—			—
Other non-routine, net(16)		12.9			28.6			33.8			3.5

EBITDA Adjustments		76.9			110.0			214.2			156.3

Adjusted EBITDA(17)	$	677.8		$	694.1		$	943.8		$	82.1

Depreciation and amortization	$	(208.1	)	$	(212.9	)	$	(278.4	)	$	(26.5	)
Amortization of capitalized software developed for sale		(10.9	)		(13.7	)		(18.3	)		(1.5	)

Adjusted EBIT		458.8			467.5			647.1			54.1
Interest expense, net		(241.8	)		(218.4	)		(292.5	)		(22.4	)
Income tax provision (benefit)		(1.0	)		56.4			51.9			41.0
Amortization resulting from acquisition method adjustments(18)		110.3			135.7			174.1			16.6
Tax effect of EBITDA adjustments and amortization resulting from acquisition method adjustments(19)		(45.4	)		(107.6	)		(130.9	)		(64.1	)

Adjusted Net Income	$	280.9		$	333.6		$	449.7		$	25.2

Other Metrics:
Cash provided by (used in) operating activities	$	248.8		$	292.2		$	324.8		$	(40.7	)

Capital expenditures	$	190.3		$	114.4		$	166.6		$	11.6

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As a result of displaying amounts in millions, rounding differences may exist in the table above.

(1)

Management uses Adjusted EBITDA and Adjusted Net Income to facilitate comparison of the Joint Venture’s operating performance on a consistent basis from period to period that, when viewed in combination with the Joint Venture’s results according to GAAP, management believes provides a more complete understanding of the factors and trends affecting the Joint Venture’s business than GAAP measures alone. Management believes these non-GAAP measures assist the Joint Venture’s board of directors, management, lenders and investors in comparing the Joint Venture’s operating performance on a consistent basis because they remove, where applicable, the impact of the Joint Venture’s capital structure, asset base, acquisition accounting, and other items that are not reflective of its core operations. Additionally, management uses Adjusted EBITDA and Adjusted Net Income to evaluate the Joint Venture’s operational performance, as a basis for strategic planning and as a performance evaluation metric in determining achievement of certain executive and management incentive compensation programs.

•

they do not reflect the Joint Venture’s cash expenditures or future requirements for capital expenditures or contractual commitments;

•

they do not reflect changes in, or cash requirements for, the Joint Venture’s working capital needs;

•

Adjusted EBITDA does not reflect the interest expense or the cash requirements to service interest or principal payments on the Joint Venture’s debt;

•

Adjusted EBITDA does not reflect income tax payments the Joint Venture is required to make;

•

other companies in the Joint Venture’s industry may calculate these measures differently, limiting their usefulness as comparative measures.

The most directly comparable GAAP measure to Adjusted EBITDA and Adjusted Net Income is net income. The table above provides a reconciliation from the Joint Venture’s net income (loss) to Adjusted EBITDA and Adjusted Net Income for the nine months ended December 31, 2018 and 2017, the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. To properly and prudently evaluate its business, the Joint Venture encourages you to review the financial statements included elsewhere in this prospectus, and not rely on a single financial measure to evaluate its business. The Joint Venture also strongly urges you to review the reconciliation of net income (loss) to Adjusted EBITDA and Adjusted Net Income set forth above.

(2)	Represents non-cash equity-based compensation of Change Healthcare Inc. to employees and directors of the Joint Venture. The Joint Venture believes this adjustment allows it to compare operating performance

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without regard to the impact of equity-based compensation expense, which varies from period to period based on the timing of grants and value of the options.

(3)

(4)	Represents acquisition, divestiture and related costs charged to operations.

(5)	Represents costs associated with the Transactions following the close of the Transactions and unrelated to integration efforts.

(6)	Represents incremental costs incurred in connection with the integration of Legacy CHC and Core MTS. Such costs include professional fees for consultants engaged in project management, process design, human resource policy harmonization, etc.

(7)	Represents management and advisory fees paid to McKesson and the Sponsors pursuant to a management services agreement. See “Certain Relationships and Related Person Transactions—Management Services Agreement.”

(8)	Represents external costs related to upcoming changes in accounting standards regarding the recognition of revenue and leases.

(9)	Represents adjustments for advisory and consulting fees incurred in connection with strategic initiatives and significant operations efficiency measures, including the rebranding of the Joint Venture and other costs.

(10)	Represents severance costs that primarily relate to operational efficiency measures.

(11)

(12)	Represents impairment charges generally incurred in connection with the retirement of products or the abandonment of property and equipment, product development initiatives, or executory contracts.

(13)	Represents the loss on extinguishment of debt that resulted from the Transactions.

(14)	Represents the gain recognized from the sale of the extended care solutions business, which the Joint Venture divested in July 2018.

(15)	Represents contingent consideration adjustments related to business combinations.

(16)	Represents other non-routine adjustments that management believes are not indicative of the Joint Venture’s ongoing operations. The following table shows a breakout of the components of Other non-routine, net:


	Nine Months Ended				Year Ended March 31, 2018		Period from June 17, 2016 (inception) to March 31, 2017
	December 31, 2018		December 31, 2017		Year Ended March 31, 2018		Period from June 17, 2016 (inception) to March 31, 2017
					(In millions)
Other Adjustments to EBITDA:
Impairment of contract acquisition costs		—		5.2		5.2		—
Non-routine litigation related expenses		7.8		9.4		16.8		—
ASC 450 contingencies		—		2.7		2.7		—
Other(a)		5.1		11.3		9.1		3.5

Total Other non-routine, net:	$	12.9	$	28.6	$	33.8	$	3.5

(a)

Represents other miscellaneous adjustments to exclude the impact of non-routine and other items not reflective of the Joint Venture’s core operations.

(17)

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(18)

Represents amortization of identifiable intangible assets that arose from the application of acquisition method accounting following a business combination. Such amounts exclude amortization of software developed following such business combination. By excluding the impact of the increase in amortization expense due to fair value adjustments made as part of the acquisition accounting for such intangible assets, the Joint Venture believes that this adjustment and Adjusted Net Income, when considered together with its results of operations presented in accordance with GAAP, provide meaningful information about the performance of its core operations.

(19)

Represents the increase in the income tax provision resulting from the Adjustments to EBITDA and Amortization resulting from acquisition method adjustments, taking into consideration the nature, affected consolidated subsidiary and relevant tax jurisdictions, incremental to the income tax provision (benefit) computed in accordance with GAAP. Please see “—Qualified McKesson Exit” for information on how income taxes would be affected following a Qualified McKesson Exit.

Results of Operations

The following table summarizes the Joint Venture’s consolidated results of operations for nine months ended December 31, 2018 and 2017, respectively:


	Nine Months Ended December 31,
							$			%
(in millions)	2018			2017			Change			Change
Revenue
Solutions revenue	$	2,264.7		$	2,252.5		$	12.2			0.5	%
Postage revenue		180.7			205.4			(24.7	)		(12.0	)

Total revenue		2,445.4			2,457.9			(12.5	)		(0.5	)
Operating expenses
Costs of operations (exclusive of depreciation and amortization below)	$	1,007.3		$	1,056.9		$	(49.6	)		(4.7	)
Research and development		159.6			171.4			(11.8	)		(6.9	)
Sales, marketing, general and administrative		620.6			534.3			86.3			16.2
Customer postage		180.7			205.4			(24.7	)		(12.0	)
Depreciation and amortization		208.1			212.9			(4.8	)		(2.3	)
Accretion and changes in estimate with related parties, net		13.3			(66.8	)		80.1			(119.9	)
Gain on sale of the Extended Care Business		(111.4	)		—			(111.4	)

Total operating expenses	$	2,078.2		$	2,114.1			(35.9	)		(1.7	)
Operating income		367.2			343.8			23.4			6.8
Non-operating (income) and expense
Interest expense		241.8			218.4			23.4			10.7
Contingent consideration		(0.9	)		—			(0.9	)		N/M	⁽¹⁾
Other, net		(13.8	)		(13.8	)		—			—

Non-operating (income) and expense		227.1			204.6			22.5			11.0

Income (loss) before income tax provision (benefit)		140.1			139.2			0.9			0.6
Income tax provision (benefit)		1.0			(56.4	)		57.4			(101.8	)

Net income (loss)	$	139.1		$	195.6		$	(56.5	)		(28.9	)%

As a result of displaying amounts in millions, rounding differences may exist in the table above.

(1)	Not Meaningful

Nine Months Ended December 31, 2018 Compared to Nine Months Ended December 31, 2017

Solutions Revenue

Solutions revenue increased $12.2 million for the nine months ended December 31, 2018, compared with the same period in the prior year. Factors affecting the Joint Venture’s solutions revenue are described in the various segment discussions below.

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Expenses

Costs of Operations

Costs of operations decreased $49.6 million for the nine months ended December 31, 2018, compared with the same period in the prior year. The decrease in the Joint Venture’s costs of operations is primarily attributable to cost synergies associated with network efficiencies and reduction or elimination of duplicative roles, among other factors.

Research and Development

Research and development expenses decreased $11.8 million for the nine months ended December 31, 2018, compared with the same period in the prior year. As with cost of operations, the reduction in research and development expense reflects continued synergies associated with reduction or elimination of duplicative roles.

Selling, General and Administrative Expense

Selling, general and administrative expenses increased $86.3 million for the nine months ended December 31, 2018, compared with the same period in the prior year. Selling, general and administrative expense reflects significant integration related costs, including professional and consulting fees related to rationalizations of information technology, business process re-engineering, implementation of human resource and finance information technology systems, severance and other costs. The growth in such costs in the nine months ended December 31, 2018, however, reflects the greater maturity of the integration efforts compared to the nine months ended December 31, 2017 when such efforts had recently commenced.

Customer Postage

Customer postage decreased $24.7 million for the nine months ended December 31, 2018, compared with the same period in the prior year. Customer postage is affected by the declines in the communication and payment solutions, which were partially offset by the effect of a USPS postage rate increase in January 2018 (e.g. an increase in first-class postage rate of 2%). Because customer postage is a pass-through cost to the Joint Venture’s customers, however, changes in volume of customer postage generally have no effect on operating income.

Depreciation and Amortization

Depreciation and amortization decreased $4.8 million for the nine months ended December 31, 2018, compared with the same period in the prior year. Depreciation and amortization was generally affected by routine amortization of tangible and intangible assets existing at March 31, 2017 as well as the routine amortization and depreciation of additions to property, equipment, and software since that date. The decrease in depreciation and amortization expense for the nine months ended December 31, 2018 was primarily attributable to certain intangible assets becoming fully amortized ($9.4 million).

Accretion and changes in estimate with related parties, net

Accretion and changes in estimate with related parties, net increased $80.1 million for the nine months ended December 31, 2018, compared with the same period in the prior year. Accretion is routinely affected by changes in the expected timing or amount of cash flows which may result from various factors, including changes in tax rates. Accretion for the nine months ended December 31, 2017, however, was discretely affected by the one-time effect ($70.6 million) of lowered income tax rates associated with the Tax Legislation.

Interest expense

Interest expense increased $23.4 million for the nine months ended December 31, 2018, compared with the same period in the prior year. This increase is primarily attributable to the current rising interest rate

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environment. While the Joint Venture has interest rate cap agreements in place to limit its exposure to such rising interest rates, such agreements together with its fixed rate notes, effectively fix interest rates for approximately 49% of the Joint Venture’s total indebtedness at December 31, 2018.

Contingent consideration

Contingent consideration reflects changes in the fair value of the Joint Venture’s earnout obligation to the former owners of NDSC. Such amounts may increase or decrease in the future based on changes in the expected amount, timing, and probability of making such payments in the future.

Other, net

Other, net primarily represents income the Joint Venture receives from McKesson and eRx Network related to transitional and other services that it provides them following the closing of the Transactions in March 2017.

Income Tax Provision (Benefit)

The income tax provision was $1.0 million (effective tax rate of 0.7%) for the nine months ended December 31, 2018 as compared to an income tax benefit of $56.4 million (effective tax rate of (40.1)%) for the nine months ended December 31, 2017. The Joint Venture’s income taxes and related effective tax rate are routinely affected by the Joint Venture’s and its subsidiaries’ legal organization. Certain of the Joint Venture’s subsidiaries are organized as limited liability corporations and report income that is distributed to the Members where it is subject to income taxes. Other subsidiaries are organized as corporations, for which the tax effects are directly reflected in the Joint Venture’s financial statements. Refer to “—Factors Affecting the Joint Venture’s Financial Condition and Results of Operations—Income Taxes” for additional information about changes in the Joint Venture’s income taxes.

In addition to these routine factors, however, income taxes for the nine months ended December 31, 2018 were affected by the Tax Legislation, which was enacted in December 2017, and lowered the federal corporate tax rate from 35% to 21%. In addition to the ongoing effects of lowered rates in periods subsequent to its enactment, the Joint Venture recognized a one-time tax benefit of $33.0 million during the nine-months ended December 31, 2017 which was primarily related to revaluing deferred tax balances at the lower enacted tax rate.

Solutions Revenue and Adjusted EBITDA


	Nine Months Ended December 31,
					$			%
(in millions)	2018		2017		Change			Change
Solutions revenue
Software and Analytics	$	1,173.1	$	1,180.4	$	(7.3	)		(0.6	)%
Network Solutions	$	422.9	$	391.2	$	31.7			8.1	%
Technology-enabled Services	$	741.8	$	757.8	$	(16.0	)		(2.1	)%
Adjusted EBITDA
Software and Analytics	$	432.4	$	432.8	$	(0.4	)		(0.1	)%
Network Solutions	$	253.0	$	226.8	$	26.2			11.6	%
Technology-enabled Services	$	134.7	$	155.7	$	(21.0	)		(13.5	)%

Software and Analytics

Software and Analytics revenue decreased $7.3 million for the nine months ended December 31, 2018, compared with the same period in the prior year. This decrease reflects the net effect of recent acquisition and disposition activity. Specifically, the decrease reflects the sale of the Joint Venture’s extended care business in July 2018 which resulted in a $25.9 million reduction in solutions revenue compared to the prior year period and is net of $12.7 million of incremental revenue for the nine months ended December 31, 2018, related to the acquisition of NDSC in January 2018.

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Software and Analytics Adjusted EBITDA decreased $0.4 million for the nine months ended December 31, 2018, compared to the same period in the prior year. This decrease in Adjusted EBITDA was primarily attributable to the sale of the Joint Venture’s extended care business which included a contribution to Adjusted EBITDA of $1.1 million for the nine months ended December 31, 2018 as compared to $12.0 million for the nine months ended December 31, 2017. This decrease was partially offset by incremental Adjusted EBITDA of $4.3 million resulting from our acquisition of NDSC in January 2018 and the favorable impact of productivity improvements.

Network Solutions

Network Solutions revenue increased $31.7 million for the nine months ended December 31, 2018, compared with the same period in the prior year. Network solutions revenue for the nine months ended December 31, 2018 primarily reflects the implementation of new customers among the business to business payments solutions, MedRx and medical network solutions ($14 million) and increased revenues ($16 million) resulting from the expiration of a data solutions contract in the prior year which previously limited the Joint Venture’s ability to directly sell its data solutions services to customers.

Network Solutions Adjusted EBITDA increased by $26.2 million for the nine months ended December 31, 2018, compared to the same period in the prior year. As described above, Network Solutions revenue was positively affected by the implementation of new customers among the business to business payments solutions and increased revenues resulting from the expiration of a data solutions contract in the prior year which previously limited the Joint Venture’s ability to directly sell its data solutions services to customers and transaction volume growth in the Joint Ventures’ medical network solution. Adjusted EBITDA similarly increased as a result of these factors as well as cost savings associated with more efficient routing of the Joint Venture’s transaction volumes.

Technology-enabled Services

Technology-enabled Services revenue decreased $16.0 million for the nine months ended December 31, 2018, compared with the same period in the prior year. Technology-enabled Services revenue for the nine months ended December 31, 2018 reflects new sales and organic growth ($41.8 million), which was more than offset by customer attrition ($56.8 million). Customer attrition for the nine months ended December 31, 2018 reflects the full current period impact of customer attrition that occurred throughout Fiscal 2018 in the Joint Venture’s physician revenue cycle management and communication and payment services solutions, driven by industry consolidation and aggregation, resulting in a higher customer base for those businesses in the prior year period. While the Joint Venture expects that such consolidation and aggregation will continue in the future, as part of its strategy, the Joint Venture is repositioning certain of its solutions to better address end market dynamics, enhance efficiency and to improve the long-term growth potential of these solutions. Additionally, Technology-enabled Services revenue for the nine months ended December 31, 2017 reflects the one-time write-off of contract acquisition costs of $5.2 million following the early termination of a customer contract.

Technology-enabled Services Adjusted EBITDA decreased $21.0 million for the nine months ended December 31, 2018, compared to the same period in the prior year. Technology-enabled Services Adjusted EBITDA for the nine months ended December 31, 2018 reflects the decrease in Technology-enabled Services revenue and increased costs associated with repositioning certain of our physician revenue cycle management and communication and payment solutions, which were partially offset by cost savings from the Joint Venture’s post-contribution cost synergy initiatives.

Significant Changes in Assets and Liabilities

Within the Joint Venture’s network solutions business, the Joint Venture regularly receives funds from certain pharmaceutical industry participants in advance of its obligation to remit these funds to participating retail pharmacies. Such funds are not restricted; however, these funds are generally paid out in satisfaction of the

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processing obligations within three business days of their receipt. At the time of receipt, the Joint Venture records a corresponding liability within accrued expenses on its consolidated balance sheets. At December 31, 2018, the Joint Venture reported $41.5 million of such pass-through payment obligations which were subsequently paid in the first week of January 2019.

Further, as noted in Recent Developments above, in July 2018, certain of the Joint Venture’s affiliates sold all of the membership interests of the Joint Venture’s extended care business, (a component of the software and analytics reportable segment) for net cash proceeds of $159.9 million, subject to certain post-closing adjustments including for working capital. A portion of the proceeds from this disposal transaction were used to voluntarily prepay two years of annual debt principal amortization ($102.0 million) under the Joint Venture’s Term Loan Facility.

Year Ended March 31, 2018 Compared to Period from June 17, 2016 (inception) to March 31, 2017

The following table summarizes the Joint Venture’s consolidated results of operations for the year ended March 31, 2018 and for the period from June 17, 2016 (inception) to March 31, 2017, respectively:


				Period from
				June 17, 2016
	Year Ended			(inception) to			$			%
(in millions)	March 31, 2018			March 31, 2017			Change			Change
Revenue
Solutions revenue	$	3,024.4		$	283.5		$	2,740.9			966.8
Postage revenue		274.4			26.1			248.3			951.3

Total revenue		3,298.8			309.6			2,989.2			965.5
Operating expenses
Costs of operations (exclusive of depreciation and amortization below)		1,407.9			133.7			1,274.2			953.0
Research and development		221.7			22.6			199.1			881.0
Sales, marketing, general and administrative		749.9			109.9			640.0			582.3
Customer postage		274.4			26.1			248.3			951.3
Depreciation and amortization		278.4			26.5			251.9			950.6
Accretion and changes in estimate with related parties, net		(50.0	)		(24.5	)		(25.5	)		104.1
Impairment of long-lived assets and other exit related costs		0.8			48.7			(47.9	)		(98.4	)

Total operating expenses		2,883.0			343.0			2,540.0			740.5
Operating income		415.8			(33.4	)		449.2			1,344.9
Non-operating (income) and expense
Interest expense		292.5			22.4			270.1			1,205.8
Loss on extinguishment of debt		—			70.1			(70.1	)		(100.0	)
Other, net		(17.2	)		(1.3	)		(15.9	)		1,223.1

Non-operating (income) and expense		275.3			91.2			184.1			201.9
Income (loss) before income tax provision (benefit)		140.5			(124.6	)		265.1			212.8
Income tax provision (benefit)		(51.9	)		(41.0	)		(10.9	)		26.6

Net income (loss)	$	192.4			(83.6	)		276.0			330.1

As discussed in the accompanying notes to the condensed consolidated financial statements appearing elsewhere in this prospectus, no substantive assets or operations were contributed to the Joint Venture until March 2017. As a result, no comparative financial information is available for any periods prior to March 2017.

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Solutions Revenue

Factors affecting the Joint Venture’s solutions revenue are described in the various segment discussions below.

Expenses

Costs of Operations

Costs of operations were $1,407.9 million and $133.7 million, or 46.6% and 47.2% of solutions revenue for the twelve months ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. Cost of operations for the twelve months ended March 31, 2018 reflect severance costs associated with a May 2017 reduction in force. Cost of operations for the period from June 17, 2016 (inception) to March 31, 2017 reflects one month of routine operations.

Research and Development

Research and development expenses were $221.7 million and $22.6 million for the twelve months ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. Research and development expense for the twelve months ended March 31, 2018 reflects the absence of approximately $4.2 million of software maintenance costs associated with a software license that was abandoned in March 2017. Additionally, as with cost of operations, research and development expenses for the twelve months ended March 31, 2018 reflect severance costs associated with a May 2017 reduction in force, the benefit of which was reflected in the financial statements for the remainder of the twelve months ended March 31, 2018.

Selling, General and Administrative Expense

Selling, general and administrative expenses were $749.9 million and $109.9 million for the twelve months ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. Selling, general and administrative expense for the twelve months ended March 31, 2018 reflect significant integration related costs, including professional and consulting fees related to rationalizations of information technology, business process re-engineering, implementation of human resource and finance information technology systems, severance and other costs. In addition to these integration related costs, the Joint Venture is incurring significant costs ($26.6 million for the twelve months ended March 31, 2018) related to efforts to design, plan for and implement new business processes associated with the upcoming adoption of ASU 2014-09, which it expects to adopt effective April 1, 2019. Selling, general and administrative expenses for the period from June 17, 2016 (inception) to March 31, 2017 were affected by non-recurring costs related to the Transactions.

Customer Postage

Customer postage was $274.4 million and $26.1 million for the twelve months ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. Customer postage is affected by the changes in volume in the communication and payment solutions. Because customer postage is a pass-through cost to the Joint Venture’s customers, however, changes in volume of customer postage generally have no effect on operating income.

Depreciation and Amortization

Depreciation and amortization was $278.4 million and $26.5 million for the twelve months ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. Depreciation and amortization for the twelve months ended March 31, 2018 was generally affected by the effect of the NDSC acquisition, the routine amortization of tangible and intangible assets existing at March 31, 2017, as well as the routine amortization and depreciation of additions to property, equipment, and software since that date, partially

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offset by the effect of certain intangible assets becoming fully amortized during the period. Depreciation and amortization for the period from June 17, 2016 (inception) to March 31, 2017 reflects only routine depreciation and amortization.

Accretion and changes in estimate, net

Accretion and changes in estimate, net was a benefit of $50.0 million and $24.5 million for the twelve months ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. Accretion is routinely affected by changes in the expected timing or amount of cash flows which may result from various factors, including changes in tax rates.

Accretion and changes in estimate, net for the twelve months ended March 31, 2018 was affected by the Tax Legislation, the finalization of the valuation of the 2017 Tax Receivable Agreement and other matters. As a result of the Tax Legislation, the federal corporate income tax rate was reduced effective January 1, 2018. Because amounts due under the tax receivable agreements fluctuate with such changes in tax rates, among other factors, the decrease in the federal corporate income tax rate resulted in a corresponding decrease in the tax receivable agreements obligations. As a result, the Joint Venture recognized a change in estimate (increase to operating income) of $88.8 million as a result of this change in the federal corporate income tax rate.

With respect to the finalization of the valuation of the 2017 Tax Receivable Agreement and other matters, the Joint Venture recognized a change in estimate (decrease to operating income) of $19.9 million during the twelve months ended March 31, 2018.

Accretion and changes in estimate, net for the period from June 17, 2016 (inception) to March 31, 2017 was affected by the covered change in control provisions of the 2009-2011 Tax Receivable Agreements that were triggered by the Transactions. As a result of this covered change of control, payments the Joint Venture makes under the 2009-2011 Tax Receivable Agreements are required to be calculated using certain valuation assumptions, including that the Joint Venture will have sufficient taxable income to use the applicable tax attributes and that certain of such tax attributes will be used on a pro rata basis from the date of the Transactions (or in certain cases from the date of certain previous transactions) through the expiration of the applicable tax attribute. As a result of the change in assumed valuation assumptions, the Joint Venture recognized a change in estimate (decrease to the pretax loss) of $26.5 million for the period from June 17, 2016 (inception) to March 31, 2017.

Interest expense

Interest expense was $292.5 million and $22.4 million for the twelve months ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. Interest expense for the twelve months ended March 31, 2018 was primarily impacted by changes in LIBOR.

Other, net

Loss on extinguishment of debt

The loss on extinguishment of debt resulted from the refinancing of prior debt in connection with the Transactions.

Income Tax Provision (Benefit)

The income tax benefit was $51.9 million and $41.0 million (which resulted in effective income tax rates of (36.9)% and 32.9% for the twelve months ended March 31, 2018 and the period from June 17, 2016 (inception)

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to March 31, 2017, respectively. The Joint Venture’s income taxes and related effective tax rate are routinely affected by the Joint Venture’s and its subsidiaries’ legal organization. Certain of the Joint Venture’s subsidiaries are organized as limited liability corporations and report income that is distributed to the Members where it is subject to income taxes. Other subsidiaries are organized as corporations and report losses for which the tax effects are directly reflected in the Joint Venture’s financial statements.

In addition to these routine factors, however, income taxes for the twelve months ended March 31, 2018 were affected by the Tax Legislation, which was primarily associated with the re-measurement of deferred tax balances using the recently enacted tax rates. Income taxes for the twelve months ended March 31, 2018 were further affected by the finalization of a valuation of the 2017 Tax Receivable Agreement, changes in state apportionment and the release of state valuation allowances following implementation of certain tax planning strategies.

Solutions Revenue and Adjusted EBITDA


			Period from
	Year Ended		June 17, 2016 (inception) to		$		%
(in millions)	March 31, 2018		March 31, 2017		Change		Change
Solutions revenue
Software and Analytics	$	1,596.7	$	152.8	$	1,443.9		945.0	%
Network Solutions		528.4		47.9		480.5		1003.1	%
Technology-enabled Services		1,000.0		91.6		908.4		991.7	%
Adjusted EBITDA
Software and Analytics		592.7		49.2		543.5		1104.7	%
Network Solutions		308.6		24.9		283.7		1139.4	%
Technology-enabled Services		200.1		18.4		181.7		987.5	%

Software and Analytics

Software and Analytics revenue for the twelve months ended March 31, 2018 was driven by strong volumes among the network and financial management, chart retrieval and clinical review and member engagement solutions, partially offset by lengthened sales cycles in the imaging, workflow and care solutions business as customers awaited further clarity regarding reimbursement models under the Patient Protection and Affordable Care Act (“ACA”). Other solutions in this portfolio remained relatively stable.

Software and Analytics adjusted EBITDA reflects a combination of the impact of financial management solutions and organic revenue growth across other solutions as well as the impact of cost reduction initiatives.

Network Solutions

Network Solutions revenue for the twelve months ended March 31, 2018 reflects a shift from one-time perpetual analytics software to SaaS-based solutions and the sunset of certain products. These revenue challenges were partially offset by new sales and implementations among the data solutions business which were facilitated by the expiration of the HLTH data sublicense agreement during the twelve months ended March 31, 2018. Following the termination of this HLTH data sublicense agreement, customers that previously received the Joint Venture’s services indirectly through HLTH, and for which the Joint Venture was only entitled to a royalty from HLTH, are being transitioned to direct customer relationships with the Joint Venture for which the Joint Venture is entitled to the full amount of revenue.

Network Solutions revenue was affected by a shift from on-premise analytics software to SaaS-based solutions as well as the sunset of certain products within its clinical network solutions. The related effects on adjusted EBITDA, however, were largely mitigated by new revenue in the data solutions business as well as cost reductions resulting from headcount rationalization, rebate savings and other operational efficiency initiatives.

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Technology-enabled Services

Technology-enabled Services revenue reflects the one-time write-off of a contract asset of $5.2 million following a customer’s early termination of its contract. Apart from this one-time write-off, revenues reflect decreased volumes in the Joint Venture’s physician revenue cycle management and communication and payment services solutions which are each partially attributable to customer attrition resulting from industry consolidation.

Technology-enabled Services revenue was affected by decreased volumes in the physician revenue cycle management and communication and payment services solutions. Adjusted EBITDA was similarly affected by these factors and further impacted by costs incurred to modernize the Joint Venture’s technology, make processes more efficient, and improve the customer experience.

Significant Changes in Assets and Liabilities

In July 2017, the Joint Venture paid $126.0 million in settlement of its working capital and related obligations to McKesson in connection with the Transactions.

Selected Quarterly Segment Results

The following table sets forth selected unaudited quarterly segment statements of operations data of Change Healthcare LLC for each of the seven quarters beginning with the three months ended June 30, 2017. The information for each of these quarters has been prepared on the same basis as the audited consolidated financial statements included elsewhere in this prospectus and in the opinion of management, reflects all normal recurring adjustments necessary for the fair statement of the segment results for these periods. This data should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this prospectus. These quarterly results of operations are not necessarily indicative of the Joint Venture’s results of operations to be expected for any future period.


	Quarter Ended
	December 31, 2018			September 30, 2018			June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017
Segment revenue
Software and Analytics	$	390.4		$	384.9		$	397.8		$	416.2		$	395.7		$	385.2		$	399.5
Network Solutions		145.4			138.5			139.0			137.2			131.6			129.0			130.5
Technology-enabled Services		249.7			239.8			246.2			242.3			246.3			249.4			262.0
Postage Revenue		58.8			62.4			65.6			69			65.7			67.9			71.8
Corporate Eliminations ⁽¹⁾		(22.4	)		(25.5	)		(25.4	)		(23.6	)		(26.2	)		(25.3	)		(25.4	)

Net revenue ⁽²⁾	$	821.9		$	800.1		$	823.2		$	841.1		$	813.1		$	806.2		$	838.4

Segment Adjusted EBITDA ⁽³⁾ ⁽⁴⁾
Software and Analytics	$	150.7		$	139.4		$	142.3		$	159.8		$	152.2		$	139.9		$	140.8
Network Solutions	$	87.7		$	83.0		$	82.3		$	81.8		$	76.6		$	75.1		$	75.1
Technology-enabled Services	$	44.6		$	39.8		$	50.3		$	44.7		$	48.9		$	49.9		$	56.6

(1)	Corporate and eliminations includes customer postage consolidating adjustments and eliminations.

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(2)	Total revenue in the periods presented include revenue associated with the Joint Venture’s extended care business which was divested in July 2018, the inclusion of which we believe is not reflective of the Joint Venture’s ongoing operations. Such amounts are summarized in the table below:


	Quarter Ended
	December 31, 2018		September 30, 2018		June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017
Extended care business revenue	$	-	$	-	$	(9.2	)	$	(11.1	)	$	(11.5	)	$	(11.6	)	$	(12.1	)

Total revenue in the periods presented was also impacted in the periods presented by certain other items that we believe are not reflective of the Joint Venture’s ongoing operations. Examples of such items include the effect of acquisition method accounting adjustments and the impairment of contract acquisition costs following the early termination of a customer contract. The impact of these additional items was a net decrease (increase) to total revenue in each period as follows:


	Quarter Ended
	December 31, 2018		September 30, 2018		June 30, 2018		March 31, 2018		December 31, 2017		September 30, 2017		June 30, 2017
Other revenue adjustments	$	0.8	$	1.7	$	2.0	$	2.4	$	-	$	5.2	$	-

(3)

Segment Adjusted EBITDA does not reflect $48.9 million, $46.3 million, $47.1 million, $36.5 million, $41.7 million, $45.1 million, and $34.2 million of corporate and eliminations for the fiscal quarters ended December 31, 2018, September 30, 2018, June 30, 2018, March 31, 2018, December 31, 2017, September 30, 2017 and June 30, 2017, respectively, which are not directly applicable to any segment.

(4)

Includes approximately $0.0, $(0.4) million, $1.5 million, $3.7 million, $3.8 million and $3.8 million and $4.4 million of Adjusted EBITDA for the extended care solutions business, which the Joint Venture divested in July 2018, for the fiscal quarters ended December 31, 2018, September 30, 2018, June 30, 2018, March 31, 2018, December 31, 2017, September 30, 2017 and June 30, 2017, respectively.

Liquidity and Capital Resources

Overview

The Joint Venture’s principal sources of liquidity are cash flows provided by operating activities, cash and cash equivalents on hand, and its Revolving Credit Facility. The Joint Venture’s principal uses of liquidity are working capital, capital expenditures, debt service, business acquisitions and other general corporate purposes. The Joint Venture anticipates that its cash on hand, cash generated from operations and funds available under the Revolving Credit Facility will be sufficient to fund the Joint Venture’s planned capital expenditures, debt service obligations, business acquisitions and operating needs. The Joint Venture may, however, elect to raise funds through debt or equity financing in the future to fund significant investments or acquisitions that are consistent with its growth strategy.

Cash, cash equivalents and restricted cash totaled $50.0 million and $188.1 million at March 31, 2018 and 2017, respectively, of which $23.7 million and $28.9 million was held outside the United States. As of March 31, 2018, no amounts had been drawn under the Revolving Credit Facility and the Joint Venture could have borrowed up to the additional $494.8 million available. The Joint Venture also has the ability to borrow up to an additional $1,080.0 million, or such amount that the senior secured net leverage ratio does not exceed 4.9 to 1.0, whichever is greater, under the Senior Secured Credit Facilities, subject to certain additional conditions and commitments by existing or new lenders to fund any additional borrowings.

The balance retained in cash and cash equivalents is consistent with the Joint Venture’s short-term cash needs and investment objectives. The Joint Venture may be required to make additional principal payments on

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the Term Loan Facility based on excess cash flows of the prior year, as defined in the credit agreement governing the Term Loan Facility.


	Nine Months Ended December 31, 2018			Nine Months Ended December 31, 2017		Year Ended March 31, 2018			Period from June 17, 2016 to March 31, 2017
(in millions)	Nine Months Ended December 31, 2018			Nine Months Ended December 31, 2017		Year Ended March 31, 2018			Period from June 17, 2016 to March 31, 2017
Cash provided by (used in) operating activities	$	248.8		$	292.2	$	324.8		$	(40.7	)
Cash provided by (used in) investing activities		(33.4	)		(114.1)		(260.7	)		(11.2	)
Cash provided by (used in) financing activities		(172.6)			(179.8)		(197.5	)		240.1
Effects of exchange rate changes on cash, cash equivalents and restricted cash		(1.4)			(4.3)		(4.7	)		(0.2	)

Net change in cash, cash equivalents and restricted cash	$	41.4		$	(6.0)	$	(138.1	)	$	188.0

Operating Activities

Cash provided by operating activities is primarily affected by operating income, including the impact of debt service payments, integration related costs and the timing of collections and related disbursements. Cash provided by operating activities includes $37.1 million and $3.5 million of pass-through funds for the nine months ended December 31, 2018 and 2017, respectively.

Investing Activities

Cash used in investing activities reflects routine capital expenditures related to purchase of property and equipment and the development of software as well as the acquisition of NDSC in January 2018. For the nine months ended December 31, 2018, cash provided by investing activities also reflects proceeds from the sale of the Joint Venture’s extended care business and expenditures related to significant software development efforts necessary to integrate the contributed businesses.

Financing Activities

Cash used in financing activities reflects cash payments under the Term Loan Facility, advances to the Joint Venture’s members to fund their respective income tax obligations, payment of a working capital settlement to McKesson, payments under the Joint Venture’s interest rate cap agreements, and payments for deferred financing obligations.

Capital Expenditures

The Joint Venture incurs capital expenditures to grow its business by developing new and enhanced capabilities, to increase the effectiveness and efficiency of the organization and to reduce risks. The Joint Venture incurs capital expenditures for product development, disaster recovery, security enhancements, regulatory compliance and the replacement and upgrade of existing equipment at the end of its useful life.

Debt

Senior Secured Credit Facilities and Senior Notes

In March 2017, the Joint Venture entered into the $5,100.0 million Term Loan Facility, and the $500.0 million Revolving Credit Facility. Additionally, the Joint Venture issued $1,000.0 million of 5.75% Senior Notes due 2025. No amounts were drawn against the Revolving Credit Facility as of December 31, 2018.

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Hedge

From time to time, the Joint Venture executes interest rate cap agreements with various counterparties that effectively cap its LIBOR exposure on a portion of its existing Term Loan Facility or similar replacement debt. The following table summarizes the terms of the Joint Venture’s interest rate cap agreements at December 31, 2018 (in millions).


Effective Date	Expiration Date		Notional Amount		Receive LIBOR Exceeding ⁽¹⁾			Pay Fixed Rate
March 31, 2017		March 31, 2020	$	650.0		1.25	%		0.56	%
March 31, 2017		March 31, 2020	$	750.0		1.00	%		0.82	%
August 31, 2018		March 31, 2020	$	500.0		1.00	%		1.82	%
March 31, 2020		December 31, 2021	$	1,500.0		1.00	%		1.82	%

⁽¹⁾	All based on 1-month LIBOR, except the $650.0 million tranche which receives based on 3-month LIBOR.

In each case, the Joint Venture has designated these cap agreements as cash flow hedges.

The interest rate caps are recorded on the balance sheet at fair value. Changes in the fair value of the interest rate cap agreements are recorded in other comprehensive income.

In accordance with ASC 815, the fair value of the interest rate caps at inception is reclassified from other comprehensive income to interest expense in the same period the interest expense on the underlying hedged debt impacts earnings. Any payments the Joint Venture receives to the extent LIBOR exceeds the specified cap rate is also reclassified from other comprehensive income to interest expense in the period received.

Effect of Certain Debt Covenants

A breach of any of the covenants under the agreements governing the Joint Venture’s debt could limit its ability to borrow funds under the Term Loan Facility and could result in a default under the Term Loan Facility. Upon the occurrence of an event of default under the Term Loan Facility, the lenders could elect to declare all amounts then outstanding to be immediately due and payable, and the lenders could terminate all commitments to extend further credit. If the Joint Venture was unable to repay the amounts declared due, the lenders could proceed against any collateral granted to them to secure that indebtedness.

With certain exceptions, the Term Loan Facility obligations are secured by a first-priority security interest in substantially all of the assets of the Joint Venture, including its investment in subsidiaries. The Term Loan Facility contains various restrictions and nonfinancial covenants, along with a senior secured net leverage ratio test. The nonfinancial covenants include restrictions on dividends, investments, dispositions, future borrowings and other specified payments, as well as additional reporting and disclosure requirements. The senior secured net leverage ratio test must be met as a condition to incur additional indebtedness, but otherwise is applicable only to the extent that amounts drawn on the Revolving Credit Facility exceed $175.0 million at the end of the fiscal quarter. As of December 31, 2018, the Joint Venture was in compliance with all debt covenants.

The Joint Venture’s ability to meet its liquidity needs depends on its subsidiaries’ earnings and cash flows, the terms of the Joint Venture’s and its subsidiaries’ indebtedness, and other contractual restrictions. Except for certain permitted distributions, the Joint Venture is generally not permitted to make any distribution to its members.

See Note 10, Long-term Debt , and Note 11, Interest Rate Cap Agreements , within the Joint Venture’s consolidated financial statements appearing elsewhere in this prospectus for additional information about the Joint Venture’s debt and interest rate cap agreements.

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Recent Accounting Pronouncements

See Note 2, Summary of Significant Accounting Policies , within the Joint Venture’s consolidated financial statements appearing elsewhere in this prospectus for information about recent accounting pronouncements and the potential impact on the Joint Venture’s consolidated financial statements.

Critical Accounting Estimates

The preparation of financial statements in accordance with GAAP requires the Joint Venture to make estimates and assumptions that affect reported amounts and related disclosures. The Joint Venture considers an accounting estimate to be critical if:

•

it requires assumptions to be made that were uncertain at the time the estimate was made; and

•

changes in the estimate or different estimates that could have been made could have a material impact on the Joint Venture’s consolidated results of operations and financial condition.

The following discussion of critical accounting estimates is not intended to be a comprehensive list of all of the Joint Venture’s accounting policies that require estimates and highlights only those policies that involve estimates that it believes entail a higher degree of judgment and complexity. The Joint Venture believes the current assumptions and other considerations used to estimate amounts reflected in the Joint Venture’s consolidated financial statements are appropriate. However, if actual experience differs from the assumptions and other considerations used in estimating amounts reflected in the Joint Venture’s consolidated financial statements, the resulting changes could have a material adverse effect on the Joint Venture’s consolidated results of operations and financial condition.

The discussion that follows presents information about the Joint Venture’s critical accounting estimates, as well as the effects of hypothetical changes in the material assumptions used to develop each estimate:

Revenue Recognition

Revenue for the Joint Venture’s revenue cycle management outsourcing services is generally based on a percentage of collections by the Joint Venture’s customers, and recognized in the same period as the collections occur.

The Joint Venture records as revenue the gross amount it receives from customers for postage fees. Revenue is recorded on a gross basis because the Joint Venture is acting as a principal in the transaction as it establishes pricing for such services, is the primary obligor to its customers and assumes credit risk for amounts billed to its customers.

The Joint Venture excludes sales and use tax from revenue in the accompanying consolidated statements of operations of the Joint Venture.

The Joint Venture engages in multiple-element arrangements, which may contain any combination of software, hardware, implementation, SaaS-based offerings, consulting services or maintenance services. For multiple-element arrangements that do not include software, revenue is allocated to the separate elements based on their relative selling price and recognized in accordance with the revenue recognition criteria applicable to each element. Relative selling price is determined based on vendor specific objective evidence (“VSOE”) of selling price if available, third-party evidence (“TPE”), if VSOE of selling price is not available, or estimated selling price, if neither VSOE of selling price nor TPE is available. For multiple-element arrangements accounted for in accordance with specific

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software accounting guidance when some elements are delivered prior to others in an arrangement and VSOE of fair value exists for the undelivered elements, revenue for the delivered elements is recognized upon delivery of such items. The Joint Venture establishes VSOE for hardware and implementation and consulting services based on the price charged when sold separately, and for maintenance services based on substantive renewal rates offered to customers. Revenue for the software element is recognized under the residual method only when fair value has been established for all of the undelivered elements in an arrangement. If fair value cannot be established for any undelivered element, all of the arrangement’s revenue is deferred until the delivery of the last element commences or until the fair value of the undelivered element is determinable. For multiple-element arrangements with both software elements and non-software elements, arrangement consideration is allocated between the software elements as a whole and non-software elements. The Joint Venture then further allocates consideration to the individual elements within the software group, and revenue is recognized for all elements under the applicable accounting guidance and the Joint Venture’s policies described above.

Cash receipts or billings in advance of revenue recognition are recorded as deferred revenue in the accompanying consolidated balance sheets of the Joint Venture.

Business Combinations

The Joint Venture recognizes the consideration transferred (i.e. purchase price) in a business combination as well as the acquired business’ identifiable assets, liabilities and noncontrolling interests at their acquisition date fair value. The excess of the consideration transferred over the fair value of the identifiable assets, liabilities and noncontrolling interest, if any, is recorded as goodwill. Any excess of the fair value of the identifiable assets acquired and liabilities assumed over the consideration transferred, if any, is generally recognized within earnings as of the acquisition date. To the extent that the Joint Venture’s initial accounting for a business combination is incomplete at the end of a reporting period, provisional amounts are reported for those items which are incomplete. The Joint Venture adjusts such provisional amounts in the reporting period in which the adjustment amounts are determined.

The fair value of the consideration transferred, assets, liabilities and noncontrolling interests is estimated based on one or a combination of income, cost or market approaches as determined based on the nature of the asset or liability and the level of inputs available to the Joint Venture (i.e., quoted prices in an active market, other observable inputs or unobservable inputs). With respect to assets, liabilities and noncontrolling interest, the determination of fair value requires management to make subjective judgments as to projections of future operating performance, the appropriate discount rate to apply, long-term growth rates, etc. The effect of these judgments then impacts the amount of the goodwill that is recorded and the amount of depreciation and amortization expense to be recognized in future periods related to tangible and intangible assets acquired.

With respect to the consideration transferred, certain of the Joint Venture’s acquisitions may include contingent consideration, the fair value of which is generally required to be measured each quarter until resolution of the contingency. In addition to the judgments applicable to valuing tangible and intangible assets, the determination of the fair value of the attainment of certain specified financial performance measures requires management to make subjective judgments as to the probability and timing of the attainment of certain specified financial performance measures. The determination of the fair value of the contingent consideration is particularly sensitive to judgments relative to the probability of achieving the specified financial performance measures.

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Goodwill and Intangible Assets

Goodwill and intangible assets from the Joint Venture’s acquisitions are accounted for using the acquisition method of accounting. Intangible assets with definite lives are amortized on a straight-line basis over the estimated useful lives of the related assets generally as follows:


Customer relationships			3-20 years
Tradenames			5-20 years
Non-compete agreements			3-5 years
Technology-based intangible assets			5-10 years

With respect to intangible assets (excluding goodwill), the Joint Venture reviews for impairment whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. For those assets that are held and used, the Joint Venture recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measure the impairment loss based on the difference between the carrying amount and fair value. Assets held for sale are reported at the lower of cost or fair value less costs to sell.

The Joint Venture assesses its goodwill for impairment annually (as of January 1 of each year) or whenever significant indicators of impairment are present. The Joint Venture first assesses whether it can reach a more likely than not conclusion that goodwill is not impaired via qualitative analysis alone. To the extent such a conclusion cannot be reached based solely on a qualitative assessment, the Joint Venture (using the assistance of a valuation specialist as appropriate) compares the fair value of each reporting unit to its associated carrying value. The Joint Venture will generally recognize an impairment charge for the amount, if any, by which the carrying amount of the reporting unit exceeds its fair value.

The Joint Venture has identified software and analytics, imaging, workflow and care solutions, network solutions and technology-enabled services as its reporting units. For reporting purposes, software and analytics and imaging, workflow and care solutions are aggregated into a single reportable segment.

When necessary, the Joint Venture estimates the fair value of its reporting units using a methodology that considers both income and market approaches. Each approach requires the use of certain assumptions. The income approach requires management to exercise judgment in making assumptions regarding the reporting unit’s future income stream, a discount rate and a constant rate of growth after the initial forecast period utilized. These assumptions are subject to change based on business and economic conditions and could materially affect the indicated values of the Joint Venture’s reporting units.

The market approach requires management to exercise judgment in its selection of guideline companies, as well in its selection of the most relevant transaction multiple. Guideline companies selected are comparable to the Joint Venture in terms of product or service offerings, markets and/or customers, among other characteristics.

For fiscal 2018, the Joint Venture used a qualitative approach to conclude that there was no impairment of the goodwill of any of the Joint Venture’s reporting units.

Income Taxes

The Joint Venture records deferred income taxes for the tax effect of differences between book and tax bases of its assets and liabilities, as well as differences related to the timing of recognition of income and expenses.

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dependent on many factors, including the Joint Venture’s past earnings history, expected future earnings, the character and jurisdiction of such earnings, reversing taxable temporary differences, unsettled circumstances that, if unfavorably resolved would adversely affect utilization of the Joint Venture’s deferred tax assets, carryback and carryforward periods and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset.

The Joint Venture recognizes tax benefits for uncertain tax positions at the time that it concludes the tax position, based solely on its technical merits, is more likely than not to be sustained upon examination. The benefit, if any, is measured as the largest amount of benefit, determined on a cumulative probability basis that is more likely than not to be realized upon ultimate settlement. Tax positions failing to qualify for initial recognition are recognized in the first subsequent interim period that they meet the more likely than not standard, are resolved through negotiation or litigation with the taxing authority or on expiration of the statute of limitations.

Tax Receivable Agreement Obligations

The Joint Venture is a party to certain tax receivable agreements that generally obligate it to make payments to one or a combination of Blackstone, Hellman & Friedman, McKesson, and current or former members of management, equal to 85% of the applicable cash savings that the Joint Venture realizes as a result of tax attributes arising, in certain cases, from the Transactions, and in other cases, from prior transactions.

For the tax receivable agreements originally executed at or immediately prior to the Transactions, the Joint Venture’s balance sheet reflects these obligations at the amount that is both probable and reasonably estimable without discount for the time value of money. Such amounts are subject to change upon finalization of the Joint Venture’s 2017 tax return as well as upon future changes in tax rates.

For the 2009-2011 Tax Receivable Agreements, Legacy CHC’s balance sheet historically reflected these obligations at the amount that was both probable and reasonably estimable. In connection with a prior business combination, these prior tax receivable agreement obligations were adjusted to their fair value at that time. In March 2017, the Joint Venture assumed these obligations and initially recognized them at their historical carrying values, which the Joint Venture is accreting to the total value of expected payments over the terms of these agreements. As a result of the change in control that resulted from the Transactions, payments under these agreements are now required to be calculated using certain valuation assumptions, including that the Joint Venture will have sufficient taxable income to use the applicable tax attributes and that certain of such tax attributes will be used by the Joint Venture on a pro rata basis from the date of the Transactions (or in certain cases, from the date of certain previous transactions) through the expiration of the applicable tax attribute. The effect of this change in control is that future changes in estimate related to these obligations are expected to result only from changes in the underlying tax rates.

Accretion and changes in estimates with related parties related to these obligations are classified as a separate caption on the Joint Venture’s consolidated statement of operations.

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Summary Disclosure about Contractual Obligations and Commercial Commitments

Contractual Obligations

The following table presents certain minimum payments due under contractual obligations with minimum firm commitments as of March 31, 2018:


			Payments by Period
			Total		Less than 1 year		1-3 years		3-5 years		After 5 years
			(In millions)
Senior Secured Credit Facilities and other long-term obligations	(1	)	$	5,051.3	$	53.3	$	102.0	$	102.0	$	4,794.0
Senior Notes	(2	)		1,000.0		—		—		—		1,000.0
Expected interest	(3	)		1,505.6		246.1		486.5		478.9		294.1
2009-2011 Tax Receivable Agreements	(4	)		226.5		13.4		44.4		38.5		130.2
2017 Tax Receivable Agreement	(5	)		129.8		11.6		2.7		56.8		58.7
Operating lease obligations	(6	)		147.1		39.8		57.4		35.7		14.2
Contingent consideration obligation	(7	)		4.0		0.3		3.7		—		—
Purchase obligations and other	(8	)		1,199.0		235.0		244.0		228.0		492.0

Total contractual obligations	(9	)	$	9,263.3	$	599.5	$	940.7	$	939.9	$	6,783.2

(1)	Represents the principal amount of indebtedness under the Senior Secured Credit Facilities and the Joint Venture’s deferred financing obligations.

(2)	Represents the principal amount of indebtedness under the Senior Notes without reduction for any original issue discount.

(3)

Consists of interest payable under the Senior Secured Credit Facilities and Senior Notes. Interest related to the Senior Secured Credit Facilities is based on the Joint Venture’s interest rates in effect as of March 31, 2018 and assumes that the Joint Venture makes no optional or mandatory prepayments of principal prior to their maturity. Because the interest rates under the Senior Secured Credit Facilities are variable, actual payments may differ.

(4)	Represents expected amounts due without reduction for any fair value adjustments recognized in prior acquisition method accounting.

(5)

Represents expected amounts due. The timing and/or amount of the aggregate payments due, however, may vary based on a number of factors, including differences in the expected and actual utilization of prior net operating losses and changes in the tax rate then applicable, whether due to statutory changes or changes in apportionment.

(6)	Represents amounts due under existing operating leases related to the Joint Venture’s offices and other facilities.

(7)

Contingent consideration transferred in connection with acquisitions includes a contingent obligation to make additional payments based on the achievement of certain future performance objectives. Because the ultimate timing and amount of payments are dependent on the outcome of future events, the timing and/or amount of these additional payments may vary from this estimate.

(8)

Represents contractual commitments under the Wipro Agreement, the management services agreement the Joint Venture entered into with affiliates of McKesson and the Sponsors in connection with the Transactions, certain telecommunication and other supply contracts and certain other obligations. Where the Joint Venture’s purchase commitments are cumulative over a period of time (i.e., no specified annual commitment), the table above assumes such commitments will be fulfilled on a ratable basis over the commitment period. If the Joint Venture terminates the Wipro Agreement, it will be responsible for the greater of (i) a termination fee equal to 25% of the remaining unspent $1 billion minimum commitment and (ii) the remaining unrecovered costs incurred by Wipro in connection with its performance under the agreement. As of December 31, 2018, the Joint Venture estimates that the termination fee would have been approximately $247 million.

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(9)

Total contractual obligations exclude liabilities for the McKesson Tax Receivable Agreement due to the high degree of uncertainty regarding the ultimate amount, if any, and timing of future cash payments. Payments under this agreement will not begin unless or until McKesson ceases to own at least 20% of the Joint Venture.

See the notes to the Joint Venture consolidated financial statements included elsewhere in this prospectus for additional information related to the Joint Venture’s operating leases and other commitments and contingencies.

Off-Balance Sheet Arrangements

As of December 31, 2018, the Joint Venture had no off-balance sheet arrangements.

Quantitative and Qualitative Disclosures About Market Risk

The Joint Venture has interest rate risk primarily related to borrowings under the Senior Secured Credit Facilities. Borrowings under the Senior Secured Credit Facilities bear interest at a rate equal to, at the Company’s option, either (i) LIBOR for the relevant interest period, adjusted for statutory reserve requirements (which is subject, solely in the case of the Term Loan Facility, to a floor of 1.00% per annum and, solely in the case of the Revolving Credit Facility, to a floor of 0.00% per annum), plus an applicable margin or (ii) a base rate equal to the highest of (a) the rate of interest in effect as publicly announced by the administrative agent as its prime rate, (b) the federal funds effective rate plus 0.50% and (c) adjusted LIBOR for an interest period of one month plus 1.00% (which may be subject, solely in the case of the Term Loan Facility, to a floor of 2.00% per annum), in each case, plus an applicable margin. The applicable margin for loans under the Revolving Credit Facility is subject to reduction after the completion of the Company’s first full fiscal quarter after the closing of its Senior Secured Credit Facilities based upon its consolidated first lien net leverage ratio as well as following a Qualified IPO.

As of December 31, 2018, the Joint Venture had outstanding borrowings of $4,908.8 million (before unamortized debt discount) under the Senior Secured Credit Facilities. The LIBOR-based interest rate on the Term Loan Facility and the Revolving Credit Facility were each LIBOR plus 2.75%. The Term Loan Facility is subject to a LIBOR floor of 1.0% and there is no LIBOR floor on the Revolving Credit Facility.

The Joint Venture manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its debt funding and the use of derivative financial instruments. Specifically, the Joint Venture enters into interest rate cap agreements to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Joint Venture’s interest rate cap agreements are used to manage differences in the amount, timing and duration of its known or expected cash receipts and its known or expected cash payments principally related to its borrowings. As of December 31, 2018, the Joint Venture’s outstanding interest rate cap agreements were designated as cash flow hedges of interest rate risk and were determined to be highly effective.

A change in interest rates on variable rate debt may impact its pretax earnings and cash flows. Based on the Joint Venture’s outstanding debt as of December 31, 2018, and assuming that its mix of debt instruments, interest rate cap agreements and other variables remain the same, the annualized effect of a one percentage point change in variable interest rates would be an approximately $30.1 million impact on pretax net earnings.

In the future, in order to manage the Joint Venture’s interest rate risk, it may refinance its existing debt, enter into additional interest rate cap agreements, modify its existing interest rate cap agreements or make changes that may impact its ability to treat its interest rate cap agreements as a cash flow hedge. However, the Joint Venture does not intend or expect to enter into derivative or interest rate cap agreement transactions for speculative purposes.

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Legacy CHC

References in this discussion and analysis to Legacy CHC refer to Change Healthcare Performance, Inc. (formerly Change Healthcare, Inc.) and its consolidated subsidiaries.

Overview

Legacy CHC delivered its solutions and operated its business in three reportable segments: (i) software and analytics, which provided payment and reimbursement optimization and decision support solution for Legacy CHC’s customers; (ii) network solutions, which leveraged Legacy CHC’s healthcare information network to optimize information exchange and workflows among healthcare system participants; and (iii) technology-enabled services, which provided payment and communication, workflow, advisory and other administrative solutions to optimize payment and reimbursement efficiencies. Through Legacy CHC’s software and analytics segment, it provided revenue cycle technology, revenue optimization, payment integrity, electronic payment, risk adjustment, quality reporting, data and analytics and engagement solutions. Through Legacy CHC’s network solutions segment, it provided financial and administrative information exchange solutions for medical, pharmacy and dental claims management and other standardized healthcare transactions, including clinical information exchange capabilities. Through Legacy CHC’s technology-enabled services segment, it provided payment and communication, eligibility and enrollment, healthcare consulting, payment automation and pharmacy benefits administration solutions. Legacy CHC generally provided its solutions to payer, provider and pharmacy customers, including commercial insurance companies, third party administrators, governmental payers, self-insured employers, hospitals, physician practices, dentists, laboratories, pharmacies, pharmacy benefit management companies and government agencies.

Legacy CHC’s Revenue and Expenses

Legacy CHC generated virtually all of its revenue by using technology solutions to provide its customers services that automate and simplify business and administrative functions for payers, providers and pharmacies, generally on either a per transaction, per document, per communication, per member per month, per provider per month, monthly flat-fee, contingent fee or hourly basis.

Cost of operations consists primarily of costs related to services Legacy CHC provided to customers and costs associated with the operation and maintenance of Legacy CHC’s networks. These costs primarily include materials costs related to Legacy CHC’s payment and communication solutions, rebates paid to Legacy CHC’s channel partners (net of rebates to certain customers that offset revenue) and data communications costs, all of which generally varied with Legacy CHC’s revenue and/or volumes. Cost of operations also includes personnel costs associated with production, network operations, customer support and other personnel, facilities expenses and equipment maintenance, all of which varied less directly with Legacy CHC’s revenue and/or volumes due to the fixed or semi-fixed nature of these expenses.

Rebates were paid to channel partners for electronic and other volumes delivered through Legacy CHC’s network to certain payers and can be impacted by the number of comprehensive management services agreements Legacy CHC executed with payers, the associated rate structure with Legacy CHC’s payer customers, the success of Legacy CHC’s direct sales efforts to providers and the extent to which direct connections to payers are developed by Legacy CHC’s channel partners. While these rebates are generally a component of Legacy CHC’s cost of operations, in cases where the channel partners are also Legacy CHC’s customers, these rebates were generally recognized as an offset to revenue.

Legacy CHC’s data communication expense consisted of telecommunication and transaction processing charges.

Legacy CHC’s material costs related primarily to its payment and communication solutions volumes, and consist primarily of paper and printing costs.

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Development and engineering expense consisted primarily of personnel costs related to the development, management and maintenance of Legacy CHC’s current and future solutions.

Sales, marketing, general and administrative expense consisted primarily of personnel costs associated with Legacy CHC’s sales, account management and marketing functions, as well as management, administrative and other shared corporate services related to the operations of Legacy CHC’s operating segments and overall business operations.

Legacy CHC’s development and engineering expense, sales, marketing, general and administrative expense and corporate expense, while related to Legacy CHC’s operations, also were affected and influenced by Legacy CHC’s future plans, including the development of new solutions, business strategies and enhancement and maintenance of its infrastructure.

Postage, which was generally billed as a pass-through cost to Legacy CHC’s customers, was the most significant cost incurred in the delivery of Legacy CHC’s payment and communication solutions. Legacy CHC’s postage costs and related revenue increased as Legacy CHC’s payment and communication solutions volumes increased and also when the USPS increases postage rates. The USPS historically has increased postage rates annually, including in January 2014 and May 2015.

Legacy CHC’s depreciation and amortization expense was related to depreciation of Legacy CHC’s property and equipment, including technology assets, and amortization of intangible assets. The amount of depreciation and amortization expense was affected by the level of Legacy CHC’s recent investment in property and equipment, acquisition activity and asset impairments or certain changes in estimates.

Legacy CHC’s interest expense consisted principally of cash interest associated with its long-term debt obligations and non-cash interest associated with the amortization of borrowing costs and discounts related to debt issuance.

Legacy CHC’s income taxes consisted of federal and state income taxes. These amounts included current income taxes payable, as well as income taxes for which the payment is deferred to future periods and dependent on the occurrence of future events. Legacy CHC’s income taxes were affected by the recognition of valuation allowances, its tax status and other items. For additional information, see the discussion of income taxes in the section “—Significant Items Affecting Comparability—Income Taxes”.

Significant Items Affecting Comparability

Certain significant items or events should be considered to better understand differences in Legacy CHC’s results of operations from period to period. Legacy CHC believed that the following items or events have had a significant impact on Legacy CHC’s results of operations for the periods discussed below:

Legacy CHC incurred significant costs in relation to the Transactions. Such costs generally have consisted primarily of legal, tax and consulting related fees and have generally been reflected within sales, general, and administrative expense in the accompanying consolidated statements of operations.

Altegra Health Acquisition

In August 2015, Legacy CHC acquired all of the equity interests of Altegra Health, Inc. (“Altegra Health”), a technology-enabled provider that assists payers and risk bearing providers with analytics and reporting capabilities for risk adjustment, member engagement and quality analysis to achieve actionable insights and improved management for value-based healthcare.

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Efficiency Measures

Legacy CHC evaluated and implemented efficiency measures and other cost savings initiatives on an ongoing basis to improve its financial and operating performance through reorganization, cost savings, productivity improvements, product development and other process improvements. For instance, Legacy CHC evaluated measures to consolidate its data centers, operations and networks, to outsource certain information technology and operations functions and to streamline product development. The implementation of these measures often involved upfront cash costs related to severance, professional fees, contractor costs and/or capital expenditures, with the cost savings or other improvements not realized until the measures are successfully completed.

Income Taxes

Legacy CHC’s blended statutory federal and state income tax rate generally ranges from 37% to 40%. Legacy CHC’s effective income tax rate, however, was affected by several factors. The following table and subsequent commentary reconciles Legacy CHC’s federal statutory rate to its effective income tax rate and the subsequent commentary describes the more significant of the reconciling factors:


	January 1 Through February 28, 2017			Year Ended December 31,
	January 1 Through February 28, 2017			2016			2015
Statutory U.S. federal tax rate		35.00	%		35.00	%		35.00	%
State income taxes (net of federal benefit)		3.56			(9.40	)		13.11
Other		(0.56	)		0.50			0.96
Transaction costs		(7.55	)		(5.60	)		—
Stock Based Compensation		10.54			—			(0.20	)
Tax Receivable Agreements		0			—			(0.41	)

Effective income tax rate		40.99	%		20.50	%		48.46	%

State Income Taxes— Legacy CHC’s effective tax rate for state income taxes is generally impacted by changes in Legacy CHC’s apportionment. In addition, Legacy CHC’s effective rate for state income taxes was affected by the following discrete matters:

In May 2015, the state of Tennessee enacted the Tennessee Revenue Modernization Act, which changed the manner in which Legacy CHC’s Tennessee apportionment is determined. This change in Legacy CHC’s Tennessee apportionment, along with routine changes in apportionment that arose following the filing of Legacy CHC’s annual tax returns during 2015, resulted in an increase in Legacy CHC’s effective state income tax rate.

In December 2015, Legacy CHC simplified its legal organizational structure for which the primary economic effect was to enable Legacy CHC to realize deferred tax assets for state income tax purposes that Legacy CHC previously had concluded were not likely to be realized. In July 2016, Legacy CHC further simplified its legal organizational structure, which affected apportionment of state income taxes.

Transaction costs —During the year ended December 31, 2016, Legacy CHC incurred transaction costs in connection with the Transactions for which no income tax deduction was available.

Amendments of the Senior Credit Agreement and New Senior Notes

Legacy CHC’s interest expense primarily was affected by the amount of debt funding and the applicable variable interest rates, including a fixed spread, under Legacy CHC’s senior credit agreement. In August 2015, Legacy CHC borrowed an additional $395.0 million under incremental term loan facilities through amendments to Legacy CHC’s senior credit agreement and issued $250.0 million of senior notes.

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Impairment of Long-lived Assets

During the year ended December 31, 2015, Legacy CHC determined, as a result of technology challenges, slower than expected customer adoption, and management attrition, that one of Legacy CHC’s recently developed products in the network solutions segment was impaired. Legacy CHC recognized a $5.0 million impairment charge to adjust the carrying value of the asset group to its fair value. In addition, throughout 2015, Legacy CHC abandoned certain hardware and software in connection with the continued migration of software development to a cloud-based environment. Among this abandoned hardware and software was a complete redevelopment of an existing software and analytics’ solution in this cloud-based environment. Legacy CHC recognized impairment charges of $3.6 million related to this migration.

Critical Accounting Estimates

The preparation of financial statements in accordance with GAAP required Legacy CHC to make estimates and assumptions that affect reported amounts and related disclosures. Legacy CHC considered an accounting estimate to be critical if:

•

it requires assumptions to be made that were uncertain at the time the estimate was made; and

•

changes in the estimate or different estimates that could have been made could have a material impact on Legacy CHC’s consolidated results of operations and financial condition.

The following discussion of critical accounting estimates is not intended to be a comprehensive list of all of Legacy CHC’s accounting policies that required estimates and highlights only those policies that involve estimates that Legacy CHC believed entail a higher degree of judgment and complexity. Legacy CHC believes the current assumptions and other considerations used to estimate amounts reflected in Legacy CHC’s consolidated financial statements are appropriate. However, if actual experience differs from the assumptions and other considerations used in estimating amounts reflected in Legacy CHC’s consolidated financial statements, the resulting changes could have a material adverse effect on Legacy CHC’s consolidated results of operations and financial condition.

The discussion that follows presents information about Legacy CHC’s critical accounting estimates, as well as the effects of hypothetical changes in the material assumptions used to develop each estimate:

Revenue Recognition

Legacy CHC generated most of its revenue by using technology solutions to provide services to its customers that automate and simplify business and administrative functions for payers, providers and pharmacies, generally on either a per transaction, per document, per communication, per member per month, per provider per month, monthly flat-fee, contingent fee or hourly basis.

Revenue for financial and administrative information exchange, payment and communication, risk adjustment, quality reporting and healthcare consulting solutions was recognized as the services are provided. Postage fees related to Legacy CHC’s payment and communication solutions volumes were recorded on a gross basis. Revenue for Legacy CHC’s eligibility and enrollment and revenue optimization solutions was generally recognized at the time that Legacy CHC’s provider customer receives notice from the payer of a pending payment. Revenue for payment integrity solutions was recognized at the time that notice of customer acceptance was received.

Cash receipts or billings in advance of revenue recognition were recorded as deferred revenue in Legacy CHC’s consolidated balance sheets.

Legacy CHC excluded sales and use tax from revenue in its consolidated statements of operations.

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Business Combinations

Legacy CHC recognized the consideration transferred (i.e. purchase price) in a business combination as well as the acquired business’ identifiable assets, liabilities and noncontrolling interests at their acquisition date fair value. The excess of the consideration transferred over the fair value of the identifiable assets, liabilities and noncontrolling interest, if any, is recorded as goodwill. Any excess of the fair value of the identifiable assets acquired and liabilities assumed over the consideration transferred, if any, is generally recognized within earnings as of the acquisition date. To the extent that Legacy CHC’s initial accounting for a business combination is incomplete at the end of a reporting period, provisional amounts are reported for those items which are incomplete. Following the adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2015-16, Legacy CHC adjusted such provisional amounts in the reporting period in which the adjustment amounts are determined.

The fair value of the consideration transferred, assets, liabilities and noncontrolling interests is estimated based on one or a combination of income, cost or market approaches as determined based on the nature of the asset or liability and the level of inputs available to Legacy CHC (i.e., quoted prices in an active market, other observable inputs or unobservable inputs). With respect to assets, liabilities and noncontrolling interest, the determination of fair value requires management to make subjective judgments as to projections of future operating performance, the appropriate discount rate to apply, long-term growth rates, etc. The effect of these judgments then impacted the amount of the goodwill that was recorded and the amount of depreciation and amortization expense to be recognized in future periods related to tangible and intangible assets acquired.

With respect to the consideration transferred, certain of Legacy CHC’s acquisitions included contingent consideration, the fair value of which is generally required to be measured each quarter until resolution of the contingency. In addition to the judgments applicable to valuing tangible and intangible assets, the determination of the fair value of the attainment of certain specified financial performance measures requires management to make subjective judgments as to the probability and timing of the attainment of certain specified financial performance measures. The determination of the fair value of the contingent consideration is particularly sensitive to judgments relative to the probability of achieving the specified financial performance measures.

Goodwill and Intangible Assets

Goodwill and intangible assets from Legacy CHC’s acquisitions were accounted for using the acquisition method of accounting. Intangible assets with definite lives are amortized on a straight-line basis over the estimated useful lives of the related assets generally as follows:


Customer relationships			5-20 years
Tradenames			3-20 years
Data sublicense agreement			6 years
Non-compete agreements			2-5 years
Premise-based software			1-3 years

With respect to intangible assets (excluding goodwill), Legacy CHC reviewed for impairment whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. For those assets that were held and used, Legacy CHC recognized an impairment loss only if its carrying amount was not recoverable through its undiscounted cash flows and measure the impairment loss based on the difference between the carrying amount and fair value. Assets held for sale are reported at the lower of cost or fair value less costs to sell.

Legacy CHC assessed its goodwill for impairment annually (as of October 1 of each year) or whenever significant indicators of impairment are present. Legacy CHC first assessed whether it can reach a more likely than not conclusion that goodwill is not impaired via qualitative analysis alone. To the extent such a conclusion

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cannot be reached based solely on a qualitative assessment, Legacy CHC (using the assistance of a valuation specialist as appropriate) compared the fair value of each reporting unit to its associated carrying value. If the fair value of the reporting unit was less than the carrying value, then a hypothetical acquisition method allocation was performed to determine the amount of the goodwill impairment to recognize.

Legacy CHC identified software and analytics, network solutions and technology-enabled services as its operating segments (and reporting units).

Legacy CHC estimated the fair value of its reporting units using a methodology that considered both income and market approaches. Specifically, Legacy CHC estimated the fair value of its reporting units based on the weighted average of fair value measures estimated under the income and market approaches.

Each approach requires the use of certain assumptions. The income approach requires management to exercise judgment in making assumptions regarding the reporting unit’s future income stream, a discount rate and a constant rate of growth after the initial forecast period utilized. These assumptions are subject to change based on business and economic conditions and could materially affect the indicated values of Legacy CHC’s reporting units.

The market approach requires management to exercise judgment in its selection of guideline companies, as well in its selection of the most relevant transaction multiple. Guideline companies selected are comparable to Legacy CHC in terms of product or service offerings, markets and/or customers, among other characteristics.

Income Taxes

Legacy CHC recorded deferred income taxes for the tax effect of differences between book and tax bases of its assets and liabilities, as well as differences related to the timing of recognition of income and expenses.

Deferred income taxes reflect the available net operating losses and the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of the future tax benefits related to deferred tax assets is dependent on many factors, including Legacy CHC’s past earnings history, expected future earnings, the character and jurisdiction of such earnings, reversing taxable temporary differences, unsettled circumstances that, if unfavorably resolved would adversely affect utilization of Legacy CHC’s deferred tax assets, carryback and carryforward periods and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset.

Legacy CHC recognized tax benefits for uncertain tax positions at the time that it concluded the tax position, based solely on its technical merits, was more likely than not to be sustained upon examination. The benefit, if any, was measured as the largest amount of benefit, determined on a cumulative probability basis that was more likely than not to be realized upon ultimate settlement. Tax positions failing to qualify for initial recognition were recognized in the first subsequent interim period that they meet the more likely than not standard, are resolved through negotiation or litigation with the taxing authority or on expiration of the statute of limitations.

Tax Receivable Agreement Obligations

Legacy CHC was a party to tax receivable agreements which obligated it to make payments to the other parties to such tax receivable agreements equal to 85% of the applicable cash savings that Legacy CHC realized as a result of tax attributes arising from certain previous transactions, including a prior business combination transaction that occurred in 2011 (the “2011 Merger”).

Prior to the 2011 Merger, Legacy CHC’s balance sheet reflected these obligations at the amount that was both probable and reasonably estimable. In connection with the 2011 Merger, the tax receivable agreement

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obligations were adjusted to their fair value. The determination of the fair value required management to make assumptions as to the timing of the realization of net operating losses, the timing of payments to the TRA Members and the tax rates in effect during the life of the agreements. Changes in any of these or other factors are expected to impact the timing and amount of gross payments.

The fair value of these obligations at the time of the 2011 Merger was being accreted to the amount of the gross expected obligation using the interest method. Changes in the amount of these obligations resulting from changes to either the timing or amount of cash flows were recognized in the period of change and measured using the discount rate inherent in the initial fair value of the obligations. The accretion of these obligations was classified as a separate caption in Legacy CHC’s consolidated statements of operations.

Results of Operations

The following table summarizes Legacy CHC’s consolidated results of operations for the periods indicated (amounts in thousands).


	January 1 through February 28, 2017						Year Ended
	January 1 through February 28, 2017						December 31, 2016						December 31, 2015
	Amount			% of Revenue			Amount			% of Revenue			Amount			% of Revenue
Revenue:
Solutions revenue	$	204,427			81.4	%	$	1,252,219			80.4	%	$	1,124,188			76.1	%
Postage revenue		46,661			18.6			304,956			19.6			352,895			23.9

Total revenue		251,088			100.0			1,557,175			100.0			1,477,083			100.0
Cost and expenses:
Cost of operations (exclusive of depreciation and amortization below)		98,263			48.1			561,061			44.8			507,358			45.1
Development and engineering		14,203			6.9			60,048			4.8			45,489			4.0
Sales, marketing, general and administrative		77,946			38.1			278,591			22.2			217,716			19.4
Customer postage		46,661			18.6			304,956			19.6			352,895			23.9
Depreciation and amortization		43,315			17.3			252,285			16.2			342,303			23.2
Accretion		2,717			1.1			8,108			0.5			10,496			0.7
Impairment of long-lived assets		—			—			689			0.0			8,552			0.6

Operating income (loss)		(32,017	)		(12.8	)		91,437			5.9			(7,726	)		(0.5	)
Interest expense, net		30,012			12.0			185,890			11.9			168,252			11.4
Contingent consideration		—			—			—			—			(4,825	)		(0.3	)
Other		—			—			—			—			(741	)		(0.1	)

Income (loss) before income tax provision (benefit)		(62,029	)		(24.7	)		(94,453	)		(6.1	)		(170,412	)		(11.5	)
Income tax provision (benefit)		(25,426	)		(10.1	)		(19,091	)		(1.2	)		(82,579	)		(5.6	)

Net income (loss)	$	(36,603	)		(14.6	)%	$	(75,362	)		(4.8	)%	$	(87,833	)		(5.9	)%

Year Ended December 31, 2016 Compared to Year Ended December 31, 2015

Solutions Revenue

Legacy CHC’s solutions revenue was $1,252.2 million for the year ended December 31, 2016 as compared to $1,124.2 million for the year ended December 31, 2015, an increase of $128.0 million, or 11.4%. Factors affecting Legacy CHC’s solutions revenue are described in the various segment discussions below.

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Cost of Operations

Legacy CHC’s total cost of operations was $561.1 million for the year ended December 31, 2016 as compared to $507.4 million for the year ended December 31, 2015, an increase of $53.7 million, or 10.6%. The increase in Legacy CHC’s cost of operations is primarily due to business growth, the impact of acquired businesses. As a percentage of solutions revenue, Legacy CHC’s cost of operations was 44.8% for the year ended December 31, 2016 as compared to 45.1% for the year ended December 31, 2015. The decrease in Legacy CHC’s cost of operations as a percentage of revenue is primarily due to changes in revenue mix, the impact of acquired businesses and increased productivity.

Development and Engineering Expense

Legacy CHC’s total development and engineering expense was $60.0 million for the year ended December 31, 2016 as compared to $45.5 million for the year ended December 31, 2015, an increase of $14.6 million, or 32.0%. The increase in Legacy CHC’s development and engineering expense is primarily due to the impact of acquired businesses.

Sales, Marketing, General and Administrative Expense

Legacy CHC’s total sales, marketing, general and administrative expense was $278.6 million for the year ended December 31, 2016 as compared to $217.7 million for the year ended December 31, 2015, an increase of $60.9 million, or 28.0%. Sales, marketing, general and administrative expense for the year ended December 31, 2016 includes approximately $28.4 million of Transactions costs. Apart from these Transactions costs, the increase in Legacy CHC’s sales, marketing, general and administrative expense was primarily due to business growth, including the impact of acquired businesses ($34.4 million), partially offset by productivity improvements and efficiency measures.

Postage

Legacy CHC’s postage revenue and customer postage expense was $305.0 million for the year ended December 31, 2016 as compared to $352.9 million for the year ended December 31, 2015, a decrease of $47.9 million, or 13.6%. This decrease in postage revenue and corresponding expense was due to volume decreases in Legacy CHC’s technology-enabled services segments and the impact of the USPS rate decrease effective April 2016.

Depreciation and Amortization Expense

Legacy CHC’s depreciation and amortization expense was $252.3 million for the year ended December 31, 2016 as compared to $342.3 million for the year ended December 31, 2015, a decrease of $90.0 million, or 26.3%. This decrease was primarily due to the acceleration of amortization of Legacy CHC’s previous tradename in 2015 as a result of its rebranding to Change Healthcare.

Accretion Expense

Legacy CHC’s accretion expense was $8.1 million for the year ended December 31, 2016 as compared to $10.5 million for the year ended December 31, 2015. The amount recognized as accretion expense can vary significantly from period to period due to changes in estimates related to the amount or timing of Legacy CHC’s tax receivable agreement obligation payments. Such changes can result from a variety of factors, including changes in tax rates and the expected timing of prior net operating loss utilization, which can be affected by business combinations, changes in leverage, operations or other factors.

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Interest Expense

Legacy CHC’s interest expense was $185.9 million for the year ended December 31, 2016 as compared to $168.3 million for the year ended December 31, 2015, an increase of $17.6 million, or 10.5%. This increase was primarily due to the impact of the August 2015 incremental term loans and the 2021 senior notes.

Income Taxes

Legacy CHC’s income tax benefit was $19.1 million for the year ended December 31, 2016 as compared to $82.6 million for the year ended December 31, 2015. Legacy CHC’s effective tax rate was 20.2% for the year ended December 31, 2016 as compared to 48.5% for the year ended December 31, 2015. The effective tax rate for both periods was primarily affected by changes in state tax laws, rates, and apportionment.

Cash Flows


	January 1 through February 28, 2017			Year Ended
	January 1 through February 28, 2017			December 31, 2016			December 31, 2015
	(In thousands)
Net cash provided by operating activities	$	31,166		$	211,761		$	166,775
Net cash used in investing activities		(7,974	)		(122,972	)		(779,957	)
Net cash (used in) provided by financing activities		(4,542	)		(37,428	)		597,531

Net (decrease) increase in cash and cash equivalents	$	18,650		$	51,361		$	(15,651	)

Net Cash Provided by Operations

Cash provided by operating activities is primarily affected by operating income, including the effect of debt service payments and the timing of collections and related disbursements.

Net Cash Used in Investing Activities

Cash used in investing activities reflects routine capital expenditures related to the purchase of property and equipment and the development of software. In addition, for 2015, cash used in investing activities reflects the cash used to acquire Altegra Health.

Net Cash (Used in) Provided by Financing Activities

Cash used in financing activities primarily consists of principal payments under Legacy CHC’s senior credit facilities and deferred financing arrangements and repurchases of stock. In addition, for 2015, cash provided by financing activities includes this routine activity as well as capital contributions and new borrowings to partially fund the Altegra Health acquisition.

Segment Revenue and Adjusted EBITDA

Legacy CHC operated its business in three reportable segments: software and analytics, network solutions and technology-enabled services. Legacy CHC also maintained a corporate function that included pass-through postage costs, management, administrative and certain other shared corporate services functions such as legal, finance, human resources and marketing, as well as eliminations to remove inter-segment revenue and expenses.

The segment profit measure primarily utilized by management was adjusted EBITDA, which is defined as EBITDA (defined as net income (loss) before net interest expense, income tax provision (benefit) and

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depreciation and amortization), as adjusted to exclude the impact of certain items that were not reflective of Legacy CHC’s core operations. The items affecting the segment profit measure generally include equity compensation; acquisition accounting adjustments; acquisition-related costs; strategic initiatives, duplicative and transition costs; impairment of long lived assets; and contingent consideration adjustments. Adjusted EBITDA for the respective segments excludes all costs and adjustments associated with the above-referenced corporate functions. Financial information, including details of Legacy CHC’s adjustments to EBITDA, for each of Legacy CHC’s segments is set forth in Note 18 to the consolidated financial statements of Legacy CHC included elsewhere in this prospectus.

Software and Analytics

Legacy CHC’s software and analytics solutions segment revenue and adjusted EBITDA is summarized in the following table (in thousands):


	February 28, 2017		December 31, 2016		December 31, 2015		Annual $ Change
Solutions Revenue	$	86,220	$	513,642	$	353,526	$	160,116
Adjusted EBITDA	$	32,356	$	188,234	$	121,860	$	66,374

Software and analytics revenue for the year ended December 31, 2016 increased by $160.2 million, or 45.3%, as compared to the prior year period. This increase was primarily driven by the impact of August 2015 acquisition of Altegra Health ($124.5 million) and new sales and implementations.

Software and analytics adjusted EBITDA for the year ended December 31, 2016 increased by $66.4 million, or 54.5% as compared to the prior year period. As a percentage of solutions revenue, software and analytics adjusted EBITDA was 36.6% for the year ended December 31, 2016 as compared to 34.5% for the year ended December 31, 2015. The increase in Legacy CHC’s software and analytics Adjusted EBITDA and as a percentage of solutions revenue for the year ended December 31, 2016 is largely due to the Altegra Health acquisition ($31.7 million) and continued growth in the payment integrity and electronic payment solutions.

Network Solutions

Legacy CHC’s network solutions segment revenue and adjusted EBITDA is summarized in the following table (in thousands):


	February 28, 2017		December 31, 2016		December 31, 2015		Annual $ Change
Solutions Revenue	$	60,143	$	379,739	$	375,582	$	4,157
Adjusted EBITDA	$	33,643	$	211,139	$	203,737	$	7,402

Network solutions revenue for the year ended December 31, 2016 increased by $4.2 million, or 1.1%, as compared to the prior year period primarily due to increased volumes, new sales and implementations, partially offset by customer attrition. Network solutions adjusted EBITDA for the year ended December 31, 2016 increased by $7.4 million, or 3.6%, as compared to the prior year period. As a percentage of solutions revenue, network solutions adjusted EBITDA was 55.6% for the year ended December 31, 2016 as compared to 54.2% for the year ended December 31, 2015. The increase in network solutions adjusted EBITDA and as a percentage of solutions revenue was primarily due to the impact of the revenue items described above and other efficiency measures.

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Technology-enabled Services

Legacy CHC’s technology-enabled services segment revenue and adjusted EBITDA is summarized in the following table (in thousands):


	February 28, 2017		December 31, 2016		December 31, 2015		Annual $ Change
Solutions Revenue	$	61,596	$	390,181	$	421,455	$	(31,274	)
Adjusted EBITDA	$	19,578	$	130,961	$	152,770	$	(21,809	)

Technology-enabled services revenue for the year ended December 31, 2016 decreased by $31.3 million, or 7.4%, as compared to the prior year period. This decrease was primarily due to decreased volumes in Legacy CHC’s communication and payment solutions, customer attrition, and the effects of changing reimbursement patterns and rates of federal and state payers related to Legacy CHC’s eligibility and enrollment solutions, partially offset by new sales and implementations.

Technology-enabled services adjusted EBITDA for the year ended December 31, 2016 decreased by $21.8 million, or 14.3%, as compared to the prior year period. As a percentage of revenue, technology-enabled services adjusted EBITDA was 33.6% for the year ended December 31, 2016 as compared to 36.2% for the year ended December 31, 2015. The decrease in technology-enabled services adjusted EBITDA and as a percentage of revenue was primarily due to the impact of the revenue items described above and changes in revenue mix, partially offset by productivity improvements and other efficiency measures.

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Core MTS

References in this discussion and analysis to Core MTS refer to the combined subsidiaries comprising Core MTS.

Overview

Core MTS consisted of the following businesses: McKesson Health Solutions (“MHS”), Connected Care and Analytics (“CCA”), Imaging and Workflow Solutions and Business Performance Services (“BPS”).

This discussion and analysis of financial condition and results of operations is intended to assist the reader in the understanding and assessment of significant changes and trends related to the results of operations and financial position of Core MTS together with its subsidiaries. This discussion and analysis should be read in conjunction with the combined financial statements for the periods ended February 28, 2017 and March 31, 2016 and the accompanying financial notes included elsewhere in this prospectus. Core MTS’s fiscal year began on April 1 and ended on March 31; the financial statements for the period ended February 28, 2017 represent the eleven months from April 1, 2016 through February 28, 2017. Unless otherwise noted, all references to a particular year shall mean Core MTS’s fiscal year.

Core MTS provided a comprehensive portfolio of information technology and services to help healthcare organizations improve quality of care and ensure patient safety, reduce the cost and variability of care and better manage their resources and revenue streams. Core MTS marketed its products and services to integrated delivery networks, hospitals, physician practices, home healthcare providers, and payers.

The product portfolio for Core MTS was designed to address a wide array of healthcare clinical and business performance needs ranging from medication safety and information access to revenue cycle management, resource utilization and physician adoption of electronic health records. Analytics software provided by Core MTS enabled organizations to measure progress as they automated care processes for optimal clinical outcomes, business and operating results and regulatory compliance. To ensure that organizations achieved the maximum value for their information technology investment, Core MTS also offered a wide range of services to support the implementation and use of solutions as well as to assist with business and clinical redesign, process re-engineering and staffing.

McKesson Health Solutions : Core MTS offered a suite of services and software products designed to manage the cost and quality of care for payers, providers, hospitals and government organizations. Solutions included:

•

InterQual Criteria for clinical decision support and utilization management;

•

Clear Coverage for point-of-care utilization management, coverage determination and network compliance;

•

Claims payment solutions to facilitate accurate and efficient medical claim payments;

•

Business intelligence tools for measuring, reporting and improving clinical and financial performance;

•

Network management tools to enable health plans to transform the performance of their networks; and

•

RelayHealth financial solutions to facilitate communication between healthcare providers and patients, and to aggregate data for claims management and trend analysis, and optimize revenue cycle management processes.

Connected Care and Analytics : Core MTS provided health information exchange solutions that streamlined clinical and administrative communication among patients, providers, payers, pharmacies, manufacturers, government entities and financial institutions through its vendor-neutral RelayHealth and its intelligent network.

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Core MTS provided clinical and analytical software to support management workflows and analytics for optimization of hospital departments and a comprehensive solution for homecare. Core MTS also provided performance management solutions designed to enhance an organization’s ability to plan and optimize quality care delivery. Enterprise visibility and performance analytics provided business intelligence that enabled providers to manage capacity, outcomes, productivity and patient flow.

Imaging and Workflow Solutions : Core MTS offered medical imaging and information management systems for healthcare enterprises that included a picture archiving communications system, a radiology information system and a comprehensive cardiovascular information system. Core MTS’s enterprise-wide approach to medical imaging enabled organizations to take advantage of specialty-specific workstations while building an integrated image repository that managed all of the images and information captured throughout the care continuum.

Business Performance Services : Core MTS helped providers focus their resources on delivering healthcare while managing their revenue cycle operations and information technology through a comprehensive suite of managed services. Services included full and partial revenue cycle outsourcing, remote hosting and business office administration. Core MTS also provided a complete solution for physician practices of all sizes, whether they were independent or employed, that included software, revenue cycle outsourcing and connectivity services. Core MTS’s physician practice offering included outsourced billing, collection, data input, medical coding, billing, contract management, cash collections, accounts receivable management and extensive reporting of metrics related to the physician practice. Core MTS also offered a full suite of physician and hospital consulting services that included financial management, coding and compliance services, revenue cycle services and strategic services.

Basis of Presentation

Throughout the periods included in the combined financial statements, Core MTS operated as part of McKesson and consisted of several legal entities and acquired businesses, as well as businesses with no separate legal status. Separate financial statements were not historically prepared for Core MTS. The combined financial statements have been derived from McKesson’s historical accounting records as if Core MTS’s operations had been conducted independently from McKesson and were prepared on a stand-alone basis in accordance with GAAP.

The historical results of operations, financial position and cash flows of Core MTS presented in the combined financial statements may not be indicative of what they would have been had Core MTS actually been an independent stand-alone entity, nor are they necessarily indicative of Core MTS’s future results of operations, financial position and cash flows. The combined financial statements also include the results of operations and cash flows of various businesses that have been divested but were historically managed by management of Core MTS.

The combined financial statements include all revenue and costs that were directly attributable to Core MTS and an allocation of expenses related to certain McKesson corporate functions. These expenses were allocated to Core MTS based on direct usage or benefit where specifically identifiable, with the remainder allocated primarily on a pro rata basis of operating profit, revenue, headcount, or other measures. Core MTS considered these allocations to be a reasonable reflection of the utilization of services or the benefit received. However, the allocations may not be indicative of the actual expense that would have been incurred had Core MTS operated as an independent, stand-alone entity, nor are they indicative of Core MTS’s future expenses. Please reference the accompanying notes to the combined financial statements included elsewhere in this prospectus.

The combined financial statements include assets and liabilities that were specifically attributable to Core MTS and certain liabilities that were held by McKesson that were specifically identifiable or otherwise attributable to Core MTS. McKesson used a centralized approach for managing cash and financing operations

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with its segments and subsidiaries. Accordingly, a substantial portion of Core MTS’s bank cash balances were transferred to McKesson’s cash management accounts regularly by McKesson at its discretion and therefore are not included in the combined financial statements. Only cash balances that were legally owned by Core MTS are reflected in the combined balance sheets. Transfers of cash between Core MTS and McKesson are included within net transfers to parent in the combined statements of cash flows and the combined statements of equity. McKesson’s long-term debt and related interest expense were not attributed to Core MTS for any of the periods presented because McKesson’s borrowings were neither directly attributable to Core MTS nor was Core MTS the legal obligor of such borrowings.

All intercompany transactions and balances within Core MTS were eliminated. Transactions between Core MTS and McKesson have been included in the combined financial statements and substantially all were settled for cash at the time the transaction was recorded through McKesson’s centralized cash management system. Transactions between Core MTS and other businesses of McKesson were considered related party transactions. Please reference the accompanying notes to the combined financial statements included elsewhere in this prospectus.

The combined financial statements include subsidiaries over which Core MTS had a controlling financial interest. The combined financial statements include the financial statements of all wholly-owned subsidiaries and majority-owned or controlled companies. For those consolidated subsidiaries where Core MTS’s ownership was less than 100%, the portion of the net income or loss allocable to the noncontrolling interests is reported as “Net income attributable to noncontrolling interests” on the combined statements of operations.

Core MTS’s operations were included in the consolidated US federal and certain state and local income tax returns filed by McKesson. Core MTS also filed certain separate state and local and foreign income tax returns. Income tax expense and other income tax related information contained in the combined financial statements is presented on a separate return basis as if Core MTS had filed its own tax returns. Core MTS’s tax results as presented in the combined financial statements may not be indicative of the tax results that Core MTS will generate in the future. In jurisdictions where Core MTS had been included in the tax returns filed by McKesson, any income taxes payable that resulted from the related income tax provisions have been reflected in the combined balance sheets within net parent investment.

Core MTS’s Revenue and Expenses

Core MTS’s revenue was generated primarily by licensing software and software systems (consisting of software, hardware and maintenance support), providing software as a service (“SaaS”) or SaaS-based solutions and providing claims processing, outsourcing and professional services.

Cost of sales consisted primarily of compensation expense related to personnel providing services to Core MTS customers and costs associated with the maintenance of Core MTS’s business operations. These costs primarily included manufacturing materials, hardware expense and costs for software maintenance. Costs of sales also included royalty, processing and facility rent expenses as well as amortization costs for capitalized software classified as developed for sale.

Selling, distribution and administrative expenses consisted primarily of compensation costs, including stock-based compensation. These costs consisted of sales commissions and incentives, benefits for corporate, financial and administrative staffs, utilities and other indirect costs (including internal IT support). Selling, distribution and administrative expenses also included the amortization expense for acquired intangible assets.

Research and development costs incurred consisted primarily of personnel costs and professional service fees for outside service providers.

Other income consisted primarily of rent income from third-party tenants.

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Significant Items Affecting Comparability

Acquisitions and Divestitures

On July 1, 2016, Core MTS entered into an agreement to acquire assets and assume liabilities of HealthQx, a leader in value-based payment analytic software solutions for health plans and health systems, for approximately $28 million. The purchase price was primarily related to goodwill and developed technology, and the purchase price allocation was subject to change as the measurement period was considered to be open as of the date of the financial statements pending the finalization and review of Core MTS’s fair value measurements, including the intangible assets.

During the fourth quarter of 2016, Core MTS sold a portion of its ambulatory business within BPS for net proceeds of $5 million. The decision to dispose of this business was driven by the direction of Core MTS. Core MTS recorded a pre-tax gain of approximately $3 million. In 2016, this business contributed approximately $27 million of net sales.

During the first quarter of 2016, Core MTS sold the nurse triage business within CCA for net proceeds of $85 million and recorded a pre-tax gain of $51 million from the sale. In 2016, the nurse triage business contributed approximately $16 million of net sales.

These divestitures did not meet the criteria to qualify as discontinued operations. Accordingly, the pre-tax gains were recorded in operating expenses within continuing operations of Core MTS’s Combined Financial Statements. Pre- and after-tax income of these businesses were not material for 2017 or 2016.

Cost Alignment Plan

On March 14, 2016, McKesson committed to a restructuring plan to lower operating costs (the “Cost Alignment Plan”). The Cost Alignment Plan primarily consisted of a reduction in workforce, and business process initiatives that included plans to reduce operating costs as well as the disposal and abandonment of certain non-core businesses. As a result of the Cost Alignment Plan, $29 million of pre-tax charges were recorded during the fourth quarter of 2016. During the period ended February 28, 2017, a pre-tax credit of $7 million was recorded as part of the Cost Alignment Plan, and $14 million of cash payments were made, primarily related to severance. At February 28, 2017, the restructuring liabilities of $2 million were recorded in other accrued liabilities in Core MTS’s combined balance sheets.

Transaction Costs

During the period ended February 28, 2017, Core MTS recorded $52 million of transaction-related costs primarily associated with formation of the Joint Venture within the combined statement of operations as a component of selling, distribution and administrative expenses. These costs primarily consisted of accounting and legal fees, other outside service fees and employee retention and severance costs.

Fiscal Period Presentation

As noted in the Overview section above, the Core MTS financial statements were for the eleven month period ended February 28, 2017 since the Transactions closed on March 1, 2017. Therefore, the results for the period ended February 28, 2017 were materially different than the results for the period ended March 31, 2016 due to the difference in the number of months in the comparative periods.

Critical Accounting Policies and Estimates

Core MTS considered an accounting estimate to be critical if the estimate required it to make assumptions about matters that were uncertain at the time the accounting estimate was made and if different estimates that

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Core MTS reasonably could have used in the current period, or changes in the accounting estimate that were reasonably likely to occur from period to period, could have had a material impact on its financial condition or results from operations. Below are the estimates that Core MTS believed were critical to the understanding of its operating results and financial condition. Other accounting policies are described in Financial Note 2, “ Significant Accounting Policies ,” to the combined financial statements appearing elsewhere in this prospectus. Because of the uncertainty inherent in such estimates, actual results may differ from these estimates.

Goodwill

Goodwill was tested for impairment on an annual basis in the fourth quarter or more frequently if indicators for potential impairment existed. Impairment testing was conducted at the reporting unit level.

The first step in goodwill testing required Core MTS to compare the estimated fair value of a reporting unit to its carrying value. This step may be performed utilizing either a qualitative or quantitative assessment. If the carrying value of the reporting unit was lower than its estimated fair value, no further evaluation was necessary. If the carrying value of the reporting unit was higher than its estimated fair value, the second step must be performed to measure the amount of impairment loss. Under the second step, the implied fair value of goodwill was calculated in a hypothetical analysis by subtracting the fair value of all assets and liabilities of the reporting unit, including any unrecognized intangible assets, from the fair value of the reporting unit calculated in the first step of the impairment test. If the carrying value of goodwill for the reporting unit exceeded the implied fair value of goodwill, an impairment charge was recorded for that excess.

To estimate the fair value of its reporting units, Core MTS considered a combination of the market approach and the income approach. Under the market approach, Core MTS estimated fair value by comparing the business to similar businesses or guideline companies whose securities are actively traded in public markets. Under the income approach, Core MTS used a discounted cash flow model in which cash flows anticipated over several periods, plus a terminal value at the end of that time horizon, were discounted to their present value using an appropriate expected rate of return. The discount rate used for cash flows reflected capital market conditions and the specific risks associated with the business. The testing required a complex series of assumptions and judgment by management in projecting future operating results, selecting guideline companies for comparisons and assessing risks. The use of alternative assumptions and estimates could have affected the fair values and changed the impairment determinations.

Intangible Assets

All of Core MTS’s intangible assets were subject to amortization and were amortized based on the pattern of their economic consumption or on a straight-line basis over their estimated useful lives, ranging from one to twenty years. Core MTS reviewed intangible assets for impairment whenever events or changes in circumstances indicated that the carrying value of the assets may not be recoverable. Determination of recoverability was based on the lowest level of identifiable estimated future undiscounted cash flows resulting from use of the asset and its eventual disposition. Measurement of any impairment loss was based on the excess of the carrying value of the asset over its fair market value.

Revenue Recognition

Revenue was generated primarily by licensing software and software systems (consisting of software, hardware and maintenance support), licensing content, providing SaaS or SaaS-based solutions and providing claims processing, outsourcing and professional services. Revenue was recognized as follows:

Software systems were marketed under information systems agreements as well as service agreements. Perpetual software arrangements were recognized at the time of delivery, under the percentage-of-completion method if the arrangements required significant production, modification or customization of the software, or in

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certain instances under the completed contract method if reasonable estimates could not have been made. Contracts accounted for under the percentage-of-completion method were generally measured based on the ratio of labor hours incurred to date to total estimated labor hours to be incurred. Changes in estimates to complete and revisions in overall profit estimates on these contracts were charged to earnings in the period in which they were determined. Core MTS accrued for contract losses if and when the current estimate of total contract costs exceeded total contract revenue. Software implementation fees were recognized as the work was performed or under the percentage-of-completion method for perpetual software.

Revenue from time-based software license agreements was recognized ratably over the term of the agreement. Software implementation fees for time-based software licenses were recognized ratably over the software license term. Maintenance and support agreements were marketed under annual or multi-year agreements and were recognized ratably over the period covered by the agreements. Hardware revenue was generally recognized upon delivery.

SaaS-based subscription, content licenses and transaction processing fees were generally marketed under annual and multi-year agreements and were recognized ratably over the contracted terms. Revenue recognition began on the service start date for fixed fee arrangements, on delivery for content licenses, and was recognized as transactions were performed beginning on the service start date for per-transaction fee arrangements. Remote processing service fees were recognized monthly as the service was performed. Outsourcing service revenue was recognized as the service was performed.

Core MTS also offered certain products on an application service provider basis, making its software functionality available on a remote hosting basis from Core MTS’s data centers. The data centers provided system and administrative support, as well as hosting services. Revenue on products sold on an application service provider basis was recognized on a monthly basis over the term of the contract beginning on the service start date of products hosted.

Core MTS engaged in multiple-element arrangements, which may have contained any combination of software, hardware, implementation, SaaS-based offerings, consulting services or maintenance services. For multiple-element arrangements that did not include software, revenue was allocated to the separate elements based on their relative selling price and recognized in accordance with the revenue recognition criteria that was applicable to each element. Relative selling price was determined based on vendor specific objective evidence (“VSOE”) of selling price if available, third-party evidence (“TPE”), if VSOE of selling price was not available, or estimated selling price if neither VSOE of selling price nor TPE was available. For multiple-element arrangements accounted for in accordance with specific software accounting guidance when some elements were delivered prior to others in an arrangement and VSOE of fair value existed for the undelivered elements, revenue for the delivered elements was recognized upon delivery of such items. Core MTS established VSOE for hardware and implementation and consulting services based on the price charged when sold separately, and for maintenance services based on substantive renewal rates that were offered to customers. Revenue for the software element was recognized under the residual method only when fair value had been established for all of the undelivered elements in an arrangement. If fair value could not have been established for any undelivered element, all of the arrangement’s revenue was deferred until the delivery of the last element commenced or until the fair value of the undelivered element was determinable. For multiple-element arrangements with both software elements and nonsoftware elements, arrangement consideration was allocated between the software elements as a whole and nonsoftware elements. Core MTS then further allocated consideration to the individual elements within the software group, and revenue was recognized for all elements under the applicable accounting guidance and Core MTS’s policies described above.

Income Taxes

Income taxes as presented attributed deferred income taxes of McKesson to Core MTS’s stand-alone combined financial statements in a manner that was systematic, rational and consistent with the asset and liability

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method. Accordingly, Core MTS’s income tax provision was prepared following the separate return method, which calculated income taxes for the stand-alone financial statements of each member of the combined group as if the group member were a separate taxpayer and a stand-alone enterprise. As a result, actual tax transactions that were included in the consolidated financial statements of McKesson may not be included in Core MTS’s separate combined financial statements. Similarly, the tax treatment of certain items reflected in Core MTS’s combined financial statements may not be reflected in the consolidated financial statements and tax returns of McKesson.

Core MTS accounted for income taxes under the asset and liability method, which required the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities were determined based on the difference between the financial statements and the tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences were expected to reverse. Tax benefits from uncertain tax positions were recognized when it was more likely than not that the position would have been sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. The amount recognized was measured as the largest amount of tax benefit that was greater than 50 percent likely of being realized upon effective settlement. Deferred taxes were not provided on undistributed earnings of Core MTS’s foreign operations that were considered to be permanently reinvested.

Loss Contingencies

Core MTS was subject to various claims, including claims with customers and vendors, pending and potential legal actions for damages, investigations relating to governmental laws and regulations and other matters arising out of the normal conduct of its business. When a loss was considered probable and reasonably estimable, Core MTS recorded a liability in the amount of its best estimate for the ultimate loss. However, the likelihood of a loss with respect to a particular contingency was often difficult to predict and determining a meaningful estimate of the loss or a range of loss may not have been practicable based on the information that was available and the potential effect of future events and decisions by third parties that will determine the ultimate resolution of the contingency. Moreover, it is not uncommon for such matters to be resolved over many years, during which time relevant developments and new information must be reevaluated at least quarterly to determine both the likelihood of potential loss and whether it is possible to reasonably estimate a range of possible loss. When a loss was probable but a reasonable estimate could not have been made, disclosure of the proceeding was provided.

Disclosure was also provided when it was reasonably possible that a loss would have been incurred or when it was reasonably possible that the amount of a loss would have exceeded the recorded provision. Core MTS reviewed all contingencies at least quarterly to determine whether the likelihood of loss had changed and to assess whether a reasonable estimate of the loss or range of the loss could have been made. As discussed above, development of a meaningful estimate of loss or a range of potential loss was complex when the outcome was directly dependent on negotiations with or decisions by third parties, such as regulatory agencies, the court system and other interested parties. Such factors bear directly on whether it was possible to reasonably estimate a range of potential loss and boundaries of high and low estimate.

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Results of Operations—Periods Ended February 28, 2017 and March 31, 2016

The following table summarizes Core MTS’s combined results of operations for the period ended February 28, 2017 and the year ended March 31, 2016, respectively.


	Eleven Months Ended February 28, 2017			% of Revenue			Year Ended March 31, 2016			% of Revenue
	(In millions)
Revenue	$	1,712			100	%	$	1,909			100	%
Cost of sales		(848	)		50			(951	)		50

Gross profit		864			50			958			50
Operating expenses
Selling, distribution and administrative expenses		(457	)		27			(448	)		23
Research and development		(159	)		9			(197	)		11

Total operating expenses		(616	)		36			(645	)		34

Operating income		248			14			313			16
Other income, net		2			—			3			—

Income before income taxes		250			15			316			17
Income tax expense		(14	)		1			(26	)		2

Net income		236			14			290			15

Net income attributable to noncontrolling interests		(1	)		—			(1	)		—

Net income attributable to Core MTS	$	235			14	%	$	289			15	%

Revenue

Core MTS’s revenue was $1,712 million for the period ended February 28, 2017 as compared to $1,909 million for the period ended March 31, 2016, a decrease of $197 million, or 10%, primarily driven by the divestitures of its nurse triage ($16 million) and ambulatory technology businesses ($27 million) within CCA and BPS, respectively, partially offset by higher revenue in Core MTS’s MHS business.

Cost of Sales

Core MTS’s total cost of sales was $848 million for the period ended February 28, 2017 as compared to $951 million for the period ended March 31, 2016, a decrease of $103 million, or 11%. The decrease in Core MTS’s cost of sales was primarily driven by the divestitures of its nurse triage and ambulatory technology businesses within CCA and BPS, respectively. Core MTS’s cost of sales also decreased due to the reduction in workforce as part of the Cost Alignment Plan, which is discussed in more detail under “—Significant Items Affecting Comparability” or in Financial Note 4, “ Restructuring ,” to the combined financial statements included in this prospectus.

Selling, Distribution and Administrative Expenses

Core MTS’s total selling, distribution and administrative expense was $457 million for the period ended February 28, 2017 as compared to $448 million for the period ended March 31, 2016, an increase of $9 million, or 2%. The increase in Core MTS’s selling, distribution and administrative expense was primarily related to $52 million of transaction-related costs primarily associated with formation of the Joint Venture.

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Research and Development

Core MTS’s research and development expense was $159 million for the period ended February 28, 2017 as compared to $197 million for period ended March 31, 2016, a decrease of $38 million, or 19%. The decrease in Core MTS’s research and development expense was primarily driven by the divestitures of its nurse triage and ambulatory technology businesses within CCA and BPS, respectively. Research and development expense also decreased due to the reduction in workforce as part of the Cost Alignment Plan.

Other Income, Net

Core MTS’s other income, net was $2 million for the period ended February 28, 2017 as compared to $3 million for the period ended March 31, 2016, a decrease of $1 million, or 33%. This decline was primarily due to changes in miscellaneous non-operating income.

Income Tax Expense

Core MTS’s income tax expense and effective tax rate was $14 million and 6% for the period ended February 28, 2017 as compared to $26 million and 8% for the period ended March 31, 2016. The change in Core MTS’s effective tax rates was primarily due to changes within its business mix, including varying proportions of income attributable to foreign countries that have lower income tax rates and discrete items.

Significant judgments and estimates were required in determining the income tax provision and evaluating income tax uncertainties. Although Core MTS’s major taxing jurisdictions included the U.S. and Canada, it was subject to income taxes in numerous foreign jurisdictions. Core MTS’s income tax expense, deferred tax assets and liabilities and uncertain tax liabilities reflected management’s best assessment of estimated current and future taxes to be paid. Core MTS believed that it had made adequate provision for all income tax uncertainties.

Cash Flows


	Periods Ended
	February 28, 2017			March 31, 2016
	(In millions)
Net cash provided by operating activities	$	180		$	375
Net cash (used in) provided by investing activities		(80	)		48
Net cash used in financing activities		(116	)		(429	)

Net (decrease) increase in cash and cash equivalents	$	(15	)	$	(6	)

Net Cash Provided by Operations

The decrease in cash provided by operations during the period ended February 28, 2017 as compared to the period ended March 31, 2016 was driven primarily by an increase in receivables and a decrease in accrued taxes. Net cash provided by operations was also significantly impacted by non-cash income and expense adjustments, including the gain recognized on the disposal of the nurse triage business.

Cash flows from operations were significantly impacted by factors such as timing of contract payments from customers and non-cash working capital adjustments.

Net Cash (Used in) Provided by Investing Activities

Net cash used in investing activities increased during the period ended February 28, 2017 as compared to the period ended March 31, 2016 primarily due to divestiture activity during 2016. Proceeds from the sale of Core MTS’s nurse triage business within CCA provided $85 million during 2016 while there were no divestitures during 2017.

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Net Cash Used in Financing Activities

McKesson has historically used a centralized approach to cash management and financing of its operations. As a result, the net cash used in financing activities in all periods presented primarily reflected net transactions with McKesson.

Recent Accounting Pronouncements

New accounting pronouncements that Core MTS adopted are included in Financial Note 2, “ Significant Accounting Policies ,” to the combined financial statements included in this prospectus.

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BUSINESS

We believe that our solutions play a mission-critical role in the following important areas of the healthcare system:

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We seek to help healthcare system constituents address fundamental operating needs.

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A regional medical center achieved a 62% increase in month-to-month collections in just six months beginning in 2011 using Clearance, our technology-enabled service solution, to validate patient identity, verify insurance eligibility and estimate patient financial responsibility.

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A hospital customer achieved a 35% decrease in average turnaround times from 2014 to 2015 for CT, MRI and ultrasound readings using Workflow Intelligence, our imaging workflow and analytics solution.

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Our analytics, workflow and reimbursement optimization services have facilitated approximately $3.3 billion in incremental net revenue for over 60 payer customers in the market for Dual Eligibles (from 2002 to 2018) by identifying members eligible for both Medicare and Medicaid benefits.

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Since 2016, our ClaimsXten solution has supported over $4 billion in annual savings for payer customers, including leading health plans, through claims editing technology integrated with claims adjudication, which has improved payment accuracy while increasing provider satisfaction.

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We have a track record of innovation. Our pervasive network connectivity combined with our use of AI and ML enables us to regularly improve our solutions and uncover new insights as our customers’ needs evolve. During the first nine months of fiscal 2019, we added a number of new solutions to our business platform through new product development:

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We launched Dual Enrollment Advocate, which utilizes AI to pinpoint Dual Eligibles, improving the ability of MA plans to identify, engage and enroll this population faster and at a lower cost. We currently serve 9 of the top 10 MA plans.

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We launched Assurance Attach Assist, a modular solution that helps reduce the denial of claims by anticipating the documentation a payer may require for reimbursement.

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We launched a blockchain solution that supports approximately 20 million transactions per day. By leveraging blockchain technology, a client can query the status and full event history of a claim in real-time, accurately tracking the status of claims submission and remittance across the complete claim lifecycle and creating data records to track a patient’s episodes of care. In addition to improving transparency and efficiency, the incorporation of blockchain technology enables greater auditability, traceability, and trust – all for better revenue cycle management.

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We launched a new “Bring Your Own Key” solution as part of our cloud based analytics suite, HealthQx, which is designed to enable payers and providers to have immediate, granular control over their cybersecurity profile without involvement by our personnel and to enable their cloud-based systems to be re-encrypted and operational without service interruptions.

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We introduced Member Healthcare Payments, a consumer payment solution that enables health plans to display consolidated patient financial information in a single destination, and empower consumers to better understand and manage their healthcare finances.

Our ability to innovate is supported by more than 1,800 technology professionals including PhDs, masters-level health policy experts, design professionals, data scientists, programmers and statisticians in our research & development centers located in key markets such as Silicon Valley, Seattle, Boston, Philadelphia, Nashville, Minneapolis and Tel Aviv. We believe that our deep reach across the healthcare ecosystem and our history of commercializing innovations position us to be a preferred partner for customers and leading healthcare and technology companies.

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Market Opportunity

Wasteful spending amidst rising costs in U.S. healthcare system.

LOGO

Note: Dollars in billions

Sources: Wasteful spending amount implied by research cited by National Academy of Medicine; Wasteful spending categories based upon Journal of American Medical Association (“JAMA”) “Eliminating Waste in Healthcare”; and Dollar amounts of wasteful spending calculated based on JAMA categories and percentages applied to the implied 2017 wasteful spending amount.

Research cited by the National Academy of Medicine estimates that 30% of U.S. healthcare spending is wasteful, implying more than $1 trillion of wasteful healthcare spending in 2018. Examples of waste include failure to adhere to best care practices and lack of care coordination, which leads to unnecessary readmissions and inappropriate levels of care delivery. Wasteful spending includes significant variation among providers in the cost and quality of similar care from provider to provider and market to market that is not explained by geography alone and also includes overtreatment, which is testing and care that is not medically beneficial. Additionally, the healthcare system has many inefficient processes that are manual, complex, frequently changing and time consuming, are prone to error, costly and require undue amounts of clinicians’ and other professionals’ time. In addition, improper payments, according to the Office of Management and Budget, have represented approximately 10% of all Medicare and Medicaid payments since 2015. Such improper payments and fraudulent billing create costly and labor-intensive follow-up. According to CMS, U.S. healthcare spending is expected to grow from $3.6 trillion in 2018, or 18% of U.S. gross domestic product, to $6.0 trillion, or approximately 19% of U.S. gross domestic product, in 2027. This implies that healthcare spending is increasing at a 5.6% annual growth rate, or 3.2% higher than expected inflation over the same period. Given the significant and lasting financial burden of ongoing rising costs and wasteful spending on society, both governmental and commercial payers and providers are increasingly focused on reducing costs attributable to administrative complexity and errors, excessive manual labor, and uncoordinated, unproductive or ineffective care whose value is not well determined or communicated. As a result, we expect continued strong demand for solutions that can aid in reducing waste, improve efficiency and help ensure delivery of clinically appropriate, value-based care.

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expected to increase to 41% of eligible lives by 2027, according to the Congressional Budget Office. Additionally, according to CMS, while health plans administering Medicaid covered 81% of eligible lives as of 2016, only half of total Medicaid spending was managed, primarily because most Dual Eligibles, who are typically among the most chronically ill and disproportionately expensive beneficiaries for both programs, are not benefiting from any form of integrated care. Federal and state governmental agencies, Congress and CMS are seeking ways to more effectively service this group and promote avenues to access care in a more efficient and effective way. As the U.S. healthcare system increasingly serves more chronically ill and higher risk populations as the country’s elderly population continues to grow, providers and payers will need tools to onboard and manage these populations, including the ability to deliver appropriate care for medically-complex patients, and the ability to document risk and outcomes to attain the appropriate reimbursement rates associated with these populations.

Increasing prevalence of value-based care and reimbursement models. The traditional fee-for-service reimbursement model is viewed as having facilitated growth in healthcare spending beyond the value provided from additional services. In response, both public and private sectors are shifting towards alternative payment models that are designed to incentivize value and quality throughout an “episode of care,” which encompasses most or all of the services provided to a patient to diagnose, treat and manage a clinical condition before, during and after care is delivered. In recent years, HHS has set quality and value targets for certain Medicare alternative payment models and private payers are accelerating their focus in a similar fashion. These payment models require a high level of documentation, robust data, sophisticated payment attribution capabilities and advanced analytics that can adapt to new rules and goals to ensure compliance. Further, solutions seek to optimize the design, implementation and monitoring of care delivery throughout an episode of care. Many payers and providers are still building the capabilities, expertise and administrative processes to manage these changes adequately. They are increasingly partnering with third parties to demonstrate the achievement of the outcomes required under these value-based payment models, which requires a fundamentally different skillset than what they have deployed historically.

Increasing patient financial responsibility and consumerism in healthcare. As healthcare expenditures have continued to rise, employers and health plans have shifted costs to patients through increased adoption of high-deductible health plans, which grew 12% annually from 10 million people in 2010 to 22 million people in 2017, according to America’s Health Insurance Plans. This trend is expected to continue. Increases in patient financial responsibility require providers to obtain payment from the patient before and after the point of care, which in turn requires more advanced billing and collection workflows. As providers become more consumer-oriented and retail in nature, they require increasingly sophisticated, dynamic and personalized solutions, which generally necessitate scale to be implemented efficiently and cost effectively. As patients are required to pay more out of their own pockets for healthcare, they are increasingly more quality and cost-conscious consumers, and make more calculated decisions regarding their healthcare consumption. These empowered “healthcare consumers” are demanding price transparency and decision support from their health plans to help them select caregivers who deliver the highest value of care at the lowest price. Health plans are consequently partnering with third parties to provide their members with tools to enable them to assess quality and cost based on individual plan benefits. At the same time, providers seek to effectively communicate the quality and value of their services, determine patients’ upfront insurance eligibility, coverage and ability to pay their portion of their healthcare bills, and simplify the payment process to improve patient experience and satisfaction.

Proliferation of healthcare data. The U.S. government funded almost $40 billion of incentive payments to healthcare providers between 2011 and 2017 to adopt electronic health record technology, which has resulted in 80% of physicians and 96% of hospitals in the United States having certified EHR systems as of 2017, according to the Office of the National Coordinator for Health Information Technology. These EHRs, other digitized healthcare data and the increasing amount of personal health data from smartphones, wearable and other devices have created unprecedented amounts of healthcare data in the United States, which is expected to grow to more than 2,300 exabytes by 2020, according to the 2014 EMC Digital Universe Study by International Data Corporation. However, healthcare data is often siloed and unstructured and has historically been difficult to

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understand and use by all constituents on a timely basis. Both healthcare professionals and consumers increasingly demand tools and solutions that standardize the transfer and collection of data and the ability to mine and analyze it for actionable insights. Advancements in ML and AI are making it easier to cost effectively utilize data at scale in real time to identify actionable insights that help improve outcomes and decrease cost for healthcare constituents. As healthcare data can be used more effectively, we expect that leading technology companies will increasingly seek scaled partners like us to effectively develop new software and analytics solutions that help payers and providers improve workflows to deliver higher quality care at lower cost to consumers.

Our Strengths

Leading healthcare-specific technology infrastructure. We have developed industry-leading data and analytics franchises that deliver value to our customers. Our IHP provides a cloud-based, robust, and agile platform for our solutions. The IHP enables us to innovate with our customers and partners and to anticipate and meet customer needs. We continue to employ advanced technology to support our expansive network. We utilize efficient processes such as blockchain and an open API-driven functionability to enhance and expedite our processes. We collaborated with AWS for our cloud-based network, in order to increase our efficiency, transparency and security. Our commitment to industry-leading infrastructure creates significant leverage and speed for each of our businesses, and we believe helps our customers innovate faster and more effectively.

Scale and reach make us well positioned and a preferred technology partner. The pervasive nature of our solutions and network in the workflows of our more than 30,000 customers and our breadth of industry relationships position us to introduce best-in-class technologies to the healthcare industry at scale. We provide solutions supporting approximately 2,200 government and commercial payer connections, 900,000 physicians, 118,000 dentists, 33,000 pharmacies, 5,500 hospitals and 600 laboratories. This network transacts clinical records for over 112 million unique patients, more than one-third of the estimated total U.S. population. Our customers increasingly want to leverage our industry-leading data and analytics-driven solutions while taking advantage of our innovations in AI, ML and robotic process automation to improve clinical, financial and patient engagement outcomes. Our collaboration with industry-leading technology companies helps further broaden our scale and reach with new, innovative solutions.

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AWS: We are establishing a new cloud-based network infrastructure to promote more efficient, transparent and secure administrative and financial transactions by shifting our solutions to AWS.

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Google: We provide a pervasive, scalable and cost-effective infrastructure, collaboration and AI platform for medical imaging specialists with the Google Cloud Platform.

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Adobe and Microsoft: We leverage the Change Healthcare Intelligent Healthcare Network, Adobe Experience Cloud, and Microsoft Azure to collect, aggregate and utilize consumer data from disparate healthcare IT sources, then employ behavioral science, personalization and engagement tools, to enable a more secure method for providing customers with improved healthcare experiences designed to protect their privacy.

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the power to target broad organizational needs of customers such as improved revenue opportunities or reduction in operational costs. At the same time, our solutions are modular and flexible, providing us with the ability to address a customer’s trajectory of needs whether that is a point solution or an end-to-end comprehensive set of products and services. In addition, we have the ability to deliver integrated solutions throughout our business.

For example, a medical network customer that utilizes our EDI can also use our Coding Advisor solution that leverages medical network transactions to improve coding accuracy, or an electronic payment solution that leverages the customer’s medical network to deliver electronic remittance advice. For their MA members, a customer can use Dx Gap Advisor to improve the completeness of claims submissions and help ensure appropriate reimbursement. As the needs of our customers evolve, we believe the flexible architecture we have developed will enable us to offer scaled, comprehensive solutions and be a partner of choice.

Proven ability to serve the evolving needs of our customers with industry-leading solution franchises. During the first half of fiscal 2019, we have added a number of new solutions to our business platform through new product development. As of December 31, 2018, our payment accuracy solutions were embedded in the workflow of 19 of the 20 largest U.S. commercial payers based on covered lives, while our InterQual solutions were used by over 4,600 hospitals and facilities and used by health plans covering over 100 million members. As a long-time leader in healthcare data interoperability, we provide open APIs based on Fast Healthcare Interoperability Resources and other industry standards, which help us integrate and innovate with customers and partners across the industry. Examples of some of our innovative and growing solutions include:

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Clearance Estimator: Solution for hospitals and health systems to create better patient estimates at or before service to help improve patient satisfaction and increase provider collections.

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InterQual AutoReview: Automates completion of InterQual medical reviews through integration with leading industry EHR to offer real-time advice regarding health plan medical necessity standards to providers and care managers to inform better clinical decisions at the point of care.

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InterQual Connect: Integrated medical review and connectivity solution for payers and providers that enables automation of authorizations requiring a medical review.

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Dx Gap Advisor: Helps expedite MA risk-adjusted payments by identifying gaps earlier in the reimbursement process in a cost-effective way.

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Coding Advisor: Helps payers identify billing outliers, change provider behavior and reduce overpayments of low-dollar, high-volume claims.

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ClaimsXten: A clinically-based claims payment solution for payers that want to create and deploy flexible, automated rules to improve payment accuracy, reduce appeals, and realize medical and administrative savings.

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HealthQx: An episode analytics suite that helps payers and providers accelerate value-based payment innovation. Built on Microsoft Azure, HealthQx collects, analyzes, and reports claims and other information to help healthcare stakeholders design, develop, scale, and improve their value-based care programs.

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TruView: A member engagement solution for payers who want to allow members to view costs of medical procedures to assist them in making informed decisions.

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HITRUST Alliance and H-ISAC (Healthcare Information Security and Analysis Center). We believe our customers will increasingly consolidate solutions providers to a handful of entrusted parties that can address large-scale healthcare cost and quality issues securely. We believe our strong relationships with our existing customers position us to benefit from this expected trend.

Growth Strategy

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Internal development —We leverage feedback from our customers, our partners and the analytical capabilities of our platform and suite of solutions to drive commercial innovations. We utilize our decades of industry experience, technology and services capabilities to identify new insights along the administrative and clinical care continuum. Through dialogue with our customers and our position as a scaled partner to payers, providers and others, we target commercial opportunities where these insights can be applied. We have developed new solutions such as InterQual Connect, Coding Advisor and Dx Gap Advisor in response to our partners’ requests to improve workflows and reduce barriers to collaboration. These responsive solutions are some of the fastest growing areas of our business.

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Commercial partnerships —We had approximately 700 channel partners as of March 31, 2018, including the major EHR providers supporting workflow integration, as well as go-to-market channel partners who expand the sales and distribution reach of our software, data, network and payment solutions. We believe that our industry-leading customer base and platform allow us to collaborate with other software and technology leaders to develop and rapidly deploy complementary software and services. These partnerships are expansive and flexible ranging from limited scope sales relationships to arrangements where we are a significant customer.

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Acquisitions —We have acquired and expect to continue to acquire assets and businesses that strengthen the value we deliver to our customers. Over the past six years we have completed and successfully integrated 14 acquisitions. We have a successful track record of identifying, integrating and scaling new and complementary capabilities. For example, our recent NDSC and HealthQX acquisitions resulted from long-term partnerships that we previously had with both organizations.

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focused on expanding the scope and depth of our customer relationships. Our omni-channel sales force covers medium and larger customers with direct field sales teams and uses inside sales for direct coverage of smaller customers. In addition, our sales teams are focused on embedding our technology in our partners’ applications and solutions. We leverage our communication and feedback with our customers to identify and execute on opportunities to expand and deepen relationships while increasing the benefits for their organizations through our connectivity, software, analytics and services.

Use our large and growing data assets to deliver tangible value to customers. We continue to develop data-driven solutions that can drive tangible returns for our customers. We use our pervasive network connectivity and position as a trusted partner to create clinical and administrative solutions that leverage a multiparty, independent, longitudinal perspective and integrated technology and service assets. Our position as a trusted partner before, during and after care enables us to view the healthcare system from a holistic standpoint and deliver solutions that we believe are difficult to replicate. We routinely take insights from our connectivity, software and services and integrate them into complementary products and workflows. Through our large and growing data assets and associated analytics, we have created personalized, episodic, and population-based solutions for our customers to deliver high quality, low cost solutions at scale. As payment and care models evolve, we believe scaled data assets and pervasive network connectivity across constituents will be essential to delivering meaningful and sustainable cost and care improvements.

Our Solutions

We offer clinical, financial and patient engagement solutions in three business segments—software and analytics, network solutions, and technology-enabled services—that help create a stronger, more collaborative healthcare system. Through our interconnected position at the center of healthcare, we utilize our broad portfolio of solutions to serve stakeholders across the healthcare system, including commercial and government payers, employers, hospitals and health systems, physicians and other providers, pharmacies, labs and consumers. A summary of our various products and solutions is included below.

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Software and Analytics

Network Solutions

Technology-enabled Services

LOGO

Software and Analytics

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Network & Financial Management: We help commercial and government payers improve claims operations performance, payment model innovation and provider network management through a comprehensive solution supporting payers across the entire payment continuum in the transition to value-based care and alternative payment models.

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Value-Based Payment Analytics : We combine an advanced, cloud-based analytics platform and over 90 clinically validated episode of care definitions with visibility into over 200 million

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unique, de-identified consumers, to simplify the design, implementation and monitoring of alternative payment models such as bundled payments.

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Payment Accuracy Analytics & Services: Our comprehensive suite of solutions is designed to help payers combat risk for fraud, waste and abuse at every stage of the claim, from pre-submission to post-payment. Health plans covering over 175 million members, including all of the top ten U.S. health plans based on covered lives, used these products in 2018.

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Provider Network Management Analytics: We help payers streamline management of provider networks, implement new network strategies and successfully deliver new insurance products. Developed with over 30 payers covering more than 50 million lives, our solutions enable a policy-driven environment in which the complex and dynamic interactions between networks, contracts and reimbursement are efficiently synchronized.

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Risk Adjustment & Quality Performance: We help payers and risk-bearing providers improve financial performance by supporting reimbursement for government-sponsored health plans—including risk adjustment and quality measures, such as the National Committee for Quality Assurance’s Healthcare Effectiveness Data and Information Set (“HEDIS”)—for the Medicare, Medicaid, and the Commercial Affordable Care Act markets.

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Decision Analytics: We provide a comprehensive set of analytics-driven solutions for risk adjustment and quality performance that aligns with how government-sponsored plans are reimbursed.

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Clinical Review Services: We provide a comprehensive suite of services for medical records retrieval, coding, and abstraction for payers that want to increase incremental revenue and quality ratings for HEDIS and Stars (a CMS system to help beneficiaries compare performance and quality). With over 20 years of experience, our team retrieves 2 million charts and codes 2.3 million charts annually to support our payer customers with risk adjustment and quality programs compliance.

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Consumer Engagement: We help commercial and government payers adapt to evolving needs of a more value-based, consumer-driven environment with consumer-facing tools that support consumers from enrollment to ongoing health management. Our consumer engagement solutions help payers respond to many of the industry’s most pressing consumer engagement challenges, from addressing social determinants of health to engaging high need populations, such as Dual Eligibles.

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Member Enrollment & Outreach: We provide member-centric solutions for payers—focusing on Medicare and Medicaid programs—to improve revenue, increase member satisfaction, and improve engagement in maintaining or improving their health. We have helped Medicaid managed care payers add $3.3 billion in net revenue through dual enrollment and our enrollment AI services pinpoint with up to 93% accuracy those individuals with the highest likelihood to qualify for full or partial Medicare and Medicaid dual eligibility.

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Transparency & Provider Search: We provide a consumer engagement platform that allows health plan sponsors to help control healthcare costs by supporting consumers in making smart choices about health services and prescriptions. Our platform integrates with other wellness tools and incentive programs in a single connected hub that simplified the customer and consumer experience for more than 16 million Americans in 2018.

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Clinical Decision Support : Our industry-leading clinical criteria, InterQual, assists payers, providers and government organizations in making clinically appropriate medical utilization decisions to help determine the right care, at the right time, and at the right cost. Our InterQual solutions were used by over 4,600 hospitals and facilities as of October 2018, and health plans covering over 100 million lives as of April 2018.

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Revenue Cycle Management : We provide end-to-end revenue cycle management workflow and analytics to streamline reimbursement and time to revenue for hospitals, physician offices, laboratories and other ancillary care providers by providing timely insights that reduce denials.

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Imaging and Clinical Workflow Solutions : We help providers improve clinical, operational and financial performance through enterprise imaging, care delivery and capacity planning solutions for acute and post-acute care settings.

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Imaging and Workflow Solutions: Deployed in more than 3,300 facilities in the United States and internationally, our imaging solutions help customers improve productivity, improve performance and enable collaboration across the care continuum.

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Health System Connectivity & Analytics : We help Hospital, Health Systems, Integrated Delivery Networks, Accountable Care Organizations and other provider networks manage the transition to value-based care through solutions that acquire and analyze clinical, financial and operational data from across the care continuum.

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Data Platform: We enable our customers to acquire and aggregate clinical, financial and operational data from across the care continuum, analyze the data and make it available through applications, such as quality measure insights for value-based care reporting, or via direct feeds to a customer’s existing enterprise data warehouse and other analytics systems.

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Connectivity: Leveraging our skill and expertise in acquiring clinical data at-scale, our connectivity frameworks power Health Information Exchange capabilities across the health system and healthcare regions.

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Analytics: Our healthcare analytic solutions provide the ability to identity opportunities for financial, clinical and operational improvement across fee-for-service and at-risk models.

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Capacity Planning: We help providers achieve sustainable operating margins by reducing labor costs, optimizing patient flow and avoiding quality risks.

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Advisory Services: We provide competencies to center around leveraging data as a strategic asset, as well as healthcare strategy, custom analytics design, operational excellence, leadership, governance, and transformation in value-based care.

Network Solutions

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Intelligent Healthcare Network: Over the past three decades, we have built one of the largest financial and administrative healthcare networks in the United States. Our Intelligent Healthcare Network provides pervasive connectivity that benefits all major healthcare stakeholders, including commercial and governmental payers, employers, hospitals, physicians, laboratories, pharmacies and consumers.

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Medical Network: Our network provides support for healthcare financial and administrative transactions, including eligibility, claims, durable medical equipment, electronic remittance advice, claim status, pre-authorization and medical attachments. Our medical network is integrated with our payments network, which allows payers and providers to reconcile consumer out-of-pocket cash and credit card payments with payer electronic funds transfer and check payments to settle bills and claims.

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Dental Network: We provide eligibility, claims, electronic remittance advice and payment solutions to dental practices primarily through software channel partners. Our solutions further simplify claims through our attachments technology, which tightly integrates claims processing workflows to ensure only essential attachments required by a payer are connected to claim and delivered according to payer preferences.

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Clinical Exchange Network: Our Clinical Exchange Network provides an efficient mechanism for EHRs and laboratories to connect with each other and maintain regulatory certifications without the cost of expensive and redundant direct connections.

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MedRx Network: Our medical pharmacy network provides pharmacies with connectivity to commercial and government payers, supporting billing medical claims, such as durable medical equipment and immunizations, directly from the pharmacy management system.

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CommonWell Health Alliance: As the national service provider for CommonWell Health Alliance, we support an industry-wide interoperability effort to make available silos of data that reside within care settings and disparate health IT systems. Our services for CommonWell members include: (i) registration and unique identification of each individual enrolled; (ii) record locator services; (iii) linking of each individual’s clinical records across the care continuum; and (iv) data query and retrieval to enable caregivers to search, select and receive data.

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Electronic Payments: Our electronic payment solutions support both business-to-business (“B2B”) and consumer-to-business (“C2B”) payments. We believe we are well positioned to further drive the healthcare industry’s adoption of convenient and cost-saving payment processes through our comprehensive network of payers and providers.

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B2B Payment Solutions: We offer payers and providers the ability to distribute and receive payments in the most efficient manner—via electronic funds transfer, direct payment, card-based or check. We also assist our customers in automating these processes.

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C2B Payment Solutions: We help providers efficiently bill consumers and offer consumer-friendly options to help reduce bad debt while enhancing the consumer billing and payment experience.

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Data Solutions: We help payers, providers, life sciences companies and commercial data providers address increasing demands for data to support analytical needs related to performance improvement, consumer engagement and value-based care.

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Data Platform: We enable our customers to acquire and aggregate clinical, financial and operational data from across the care continuum, analyze the data and make it available through applications or via direct feeds to a customer’s existing enterprise data warehouse and other analytics systems.

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Data Commercialization: We provide de-identified data feeds informed by regulatory compliant formats and create applications and tools directly for customers or via third party channel partners. We believe that the scale, diversity and timeliness of our data provide differentiated value.

Technology-enabled Services

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Revenue Cycle Management: We are a leader in revenue cycle management with demonstrated ability to help improve collections, optimize operational efficiency and enhance patient experience. We believe we are well positioned to grow as industry-wide margin pressure, coupled with increasing complexity of compliance and reimbursement, drive a robust demand for outsourcing.

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Patient Access Services: We enable health systems and physician practices to provide a broad range of patient access services to their patients. We leverage call center technology with the flexibility to utilize EHR and practice management capabilities, providing a single source of accountability with reporting and continuous quality monitoring.

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Revenue Integrity Services and Consulting: Our Revenue Integrity services help providers mitigate risk, and include charge audit services, coding augmentation, coding quality audit, clinical documentation improvement staffing, and compliance review.

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Business Office Services: We deliver billing and accounts receivable management to address government, commercial and self-pay payments for hospitals, health systems, independent and hospital-employed physician practices, fire and emergency medical service agencies and other healthcare organizations such as independent and hospital-employed laboratories.

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Practice Management: We provide turnkey oversight and operations services for hospital-employed physicians and independent group practices handling a broad scope of administrative tasks including accounting, billing, collections, human resources, scheduling, finance and managed care contracting.

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Value-Based Care Enablement Services: We provide a broad scope of technologies, tools and services ranging from consulting and project support to full turn-key operations to enable providers, payers, Accountable Care Organizations, and government agencies to succeed in the transition from fee-for-service reimbursement to payment models that reward high-quality and cost-effective care.

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Network Development and Physician Recruiting: We help commercial payers and managed care organizations successfully develop, manage and scale clinically integrated networks.

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Risk Management and Population Health Services: We enable providers to drive growth and improve margin performance under all value-based payment models, ranging from capitation to shared savings programs.

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Third-Party Administration: We provide fully delegated, licensed third-party administration services that enable risk-bearing providers and payers to reduce the burden of foundational health plan administration, allowing for greater focus on strategic activities such as new product development and member engagement.

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Communications and Payment Services: We provide communication and payment solutions for payers, providers, channel partners and other stakeholders in the healthcare system.

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Communications and Payments: We help payers manage explanation of benefits, explanation of payments, checks, claims and correspondence. For providers and channel partners, we manage patient statements and related correspondence.

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Payment and Claims Automation: We provide payment and claims automation solutions that facilitate, expedite and automate payment processing and posting activities.

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Pharmacy Benefits Administration (“PBA”): Our PBA solutions provide healthcare management and other administrative services for pharmacy payers and state Medicaid programs. Our solutions provide claims processing and other administrative solutions in real-time, according to customer benefit plan designs, and present a cost-effective alternative to an in-house pharmacy claims adjudication system.

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Consulting: Our healthcare consulting solutions help healthcare customers analyze, develop and implement business and technology strategies that are designed to align with healthcare trends and overall business goals.

Our Customers

We generally provide solutions to our payer and provider customers on a per transaction, per document, per communication, per member per month, per provider per month, monthly flat-fee, contingent fee, or hourly fee and software license, with recurring maintenance fee, basis. Our customer contracts are generally one to three years in term and automatically renew for successive annual terms unless terminated.

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Payers: The payer market primarily consists of national commercial insurers, regional private insurers, BlueCross Blue Shield plans, Medicare/Medicaid plans, provider-sponsored payers, third party administrators, emerging technology and data-driven health plans and other specialty health benefits insurers. We are directly connected to their workflows and administrative and clinical systems, and provide products and services to nearly all payers. The average tenure for our top ten payer customers is 23 years. We also have low payer customer concentration, with the top ten payers representing approximately 14% of the Joint Venture’s total revenue for the fiscal year ended March 31, 2018.

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Providers: The provider market is comprised of hospitals/health systems, physician practices, dentists, pharmacies, skilled nursing facilities, home health agencies, telehealth providers, senior care facilities,

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laboratories and other healthcare providers. We currently have contractual or submitter relationships, directly or through channel partners, with approximately 900,000 physicians, 118,000 dentists, 33,000 pharmacies, 5,500 hospitals, approximately 700 channel partners and 600 laboratories. The average tenure for our top ten provider customers is 25 years. We have low provider customer concentration, with the top ten providers representing approximately 7% of the Joint Venture’s total solutions revenue for the fiscal year ended March 31, 2018.

Marketing and Sales

Marketing activities for our solutions include direct sales, inside sales, targeted direct marketing, advertising, tradeshow exhibits and events, customer workshops, digital marketing activities, e-newsletters and conference sponsorships. We have a dedicated sales force that supports each of the payer and provider markets, including in-market sales representatives and an inside sales team. We also deliver certain of our solutions through approximately 700 channel partner relationships, which further extends the reach of our network and leverages our extensive solutions portfolio. Our channel partners include physician and dental practice management system and EHR vendors, hospital information system vendors, pharmacy system vendors and other vendors that provide software and services to providers and payers. We integrate our solutions into these channel partners’ software solutions for distribution to their provider customers.

Our Technology

Our technology platform is designed to enable enterprise scalability and access to cutting-edge capabilities for our solutions—including harnessing common technology components in key areas, such as AI and ML, blockchain and user interface/user experience as well as common connectivity to our Intelligent Healthcare Network. This enterprise technology approach—our Intelligent Healthcare Platform—enables our solutions to leverage our position at the center of healthcare—the connectivity, data assets, insights, analytics and scale of Change Healthcare.

Our technology platform is a hybrid cloud-based, user-centric, API-based, partner-friendly network and analytics platform that collects, synthesizes and analyzes our real-time, near real-time and batch transactions for medical, pharmacy, dental, laboratory and other financial and administrative data to generate timely and relevant insights in an effort to enable our customers to achieve their financial and operational goals.

We believe that we benefit from decades of experience developing, implementing and optimizing interfaces that are embedded in the core workflows of healthcare stakeholders and allow our solutions to be deployed by our customers to improve their operations and their end-to-end services. We have extensive expertise working with constantly evolving customer interfaces, which often include diverse legacy applications and technologies. We believe the timeliness, depth and breadth of our data allows us to generate broad sets of healthcare analytics, supporting applications and services for financial performance, payment accuracy, consumer engagement and value-based payments. We store data sets in scalable and accessible transaction data stores in the cloud with modern, substantial data warehousing capabilities. This data feeds our analytics engine for data product and analytics creation. The analytics data environments enable online analytics processing front-ended by our analytics data application programming interface cluster, with data persisted in a scalable, open standards-based infrastructure, incorporating performance with high availability.

Our technology architecture is based on technologies and practices that leverage agility and cost-effectiveness to provide scalability and reliability. We use both proprietary technology and open source technology with commercially standard legal and security considerations. We build our technology platform with a broad set of enterprise standards and governing principles resulting in a consistent architecture for customer-side user interfaces, middleware, database and storage, which provide advanced orchestration, interoperability and process control. Our platform is deployed over hybrid public and private cloud infrastructures. Our technology platform is designed and built to help the healthcare industry improve the technology gap that exists today and be responsive to our customers’ future needs relating to capabilities, performance and scalability.

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For the nine months ended December 31, 2018, the year ended March 31, 2018 and the period from June 17, 2016 (inception) through March 31, 2017, the Joint Venture incurred approximately $160 million, $222 million and $23 million in research and development expenses, respectively. For the two months ended February 28, 2017 and the years ended December 31, 2016 and December 31, 2015, Legacy CHC incurred approximately $14 million, $60 million and $45 million in development and engineering expenses, respectively. For the eleven months ended February 28, 2017 and the years ended March 31, 2016 and March 31, 2015, Core MTS incurred approximately $159 million, $197 million and $220 million in research and development expenses, respectively.

Regulatory Matters

Substantially all of our business is directly or indirectly related to the healthcare industry and is affected by changes in the healthcare industry, including regulatory changes and fluctuations in healthcare spending. In the United States and other countries, the healthcare industry is highly regulated and subject to frequently changing political, legislative, regulatory and other influences. Although some regulatory requirements do not directly apply to our operations, these requirements affect the business of our payer and provider customers and the demand for our solutions. We also may be impacted by non-healthcare laws, requirements and industry standards. For example, banking and financial services industry regulations and privacy and data security regulations may impact our operations as a result of the electronic payment and remittance services we offer directly or through third-party vendors. For a discussion of the risks and uncertainties affecting our business related to compliance with federal, state and other laws and regulations and other requirements, please see “Risk Factors—Risks Related to Our Business and Industry—Recent and future developments in the healthcare industry could have a material adverse impact on our business, results of operation or financial condition,” “Risk Factors—Risks Related to our Business and Industry—Government regulation, industry standards and other requirements create risks and challenges with respect to our compliance efforts and our business strategies,” and “Risk Factors—Risks Related to our Business and Industry—We are unable to predict what changes to laws, regulations and other requirements, including related contractual obligations, might be made in the future or how those changes could affect our business or the costs of compliance.”

Competition

We compete on the basis of the breadth and functionality of the solutions we offer on an integrated as well as modular basis, the return on investment realized by our customers from our solutions, the alignment we have with our customers due to not being owned by a payer or provider organization, the size and reach of our network, our value proposition and our pricing models. While we do not believe any single competitor offers a similarly expansive set of solutions, our solutions compete with:

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healthcare transaction processing companies, including those providing EDI services and/or internet-based services and those providing services through other means, such as paper and fax;

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IT and healthcare consulting service providers;

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healthcare payments and communication solutions providers, including financial institutions and payment processors that have invested in healthcare data management assets, and print and mail vendors;

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healthcare eligibility and enrollment services companies;

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healthcare payment accuracy companies;

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healthcare engagement and transparency companies;

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healthcare billing and coding services companies;

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providers of other data products and data analytics solutions, including healthcare risk adjustment, quality, economic statistics and other data; and other data and analytics solutions; and

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licensors of de-identified healthcare information.

We also compete in some cases with certain of our customers who themselves provide some of the same solutions that we offer, as well as with alliances formed by our competitors. In addition, certain major software, hardware, information systems and business process outsourcing companies, both with and without healthcare companies as their partners, offer or have announced their intention to offer competitive products or services.

Intellectual Property

We rely upon a combination of trade secrets, copyrights, trademarks, patents, license agreements, confidentiality policies and procedures, nondisclosure agreements and technical measures designed to protect the intellectual property and commercially valuable confidential information and data used in our business. We generally enter into nondisclosure agreements with our employees, consultants, vendors and customers. We also seek to control access to and distribution of our technology, documentation and other proprietary information.

We use numerous trademarks, trade names and service marks for our solutions. We also have a number of patents and patent applications covering solutions we provide, including software applications. However, we do not believe our solutions are dependent upon any one patent or patent application, or family or families of the same. We also license from third parties a variety of content, data and other intellectual property. Although we believe that alternative technologies and work-arounds are likely to be available should these agreements terminate or expire, there is no guarantee that third-party technologies will continue to be available to us on commercially reasonable terms or that work-arounds would be readily available for deployment in a commercially reasonable time-frame.

The steps we have taken to protect our trade secrets, copyrights, trademarks, service marks, patents and other intellectual property may not be adequate, and third parties could infringe, misappropriate or misuse our intellectual property. If this were to occur, it could harm our reputation and adversely affect our competitive position or results of operations.

Employees

As of December 31, 2018, we had approximately 14,000 employees. None of these employees are represented by a labor union. We consider our relationships with our employees to be good.

Properties

Our corporate headquarters is located in leased office space in Nashville, Tennessee, and consists of approximately 178,000 square feet. The lease expires on October 31, 2022. We also own 407,000 square feet of office space in Alpharetta, Georgia.

We also lease a number of operations, business and sales offices and other facilities in several states and in international locations. We believe that our facilities are generally adequate for our current anticipated and future use, although we may from time to time lease additional facilities or vacate existing facilities as our operations require.

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Seasonality

The nature of our customers’ end-market results in moderate seasonality reflected in revenue differences during the year with a slightly greater positive variance in our fiscal fourth quarter related to the regulatory impact of data submission deadlines due to HEDIS, which may drive timing of analytics activity. Following our planned adoption of new revenue recognition guidance on April 1, 2019, we believe that the moderate seasonality will continue to be reflected in our financial results but with potentially differing patterns than under today’s recognition method. Finally, quarter to quarter financial performance may vary from historical seasonal trends as we further expand and diversify our business and increase the portion of our revenue generated from new offerings.

Legal Proceedings

In April 2018, we responded to a notice and data request from OCR, the enforcement agency of HHS charged with investigating healthcare related privacy complaints and other potential HIPAA violations, alleging that a former employee’s protected health information had been improperly accessed. We have been responsive to OCR requests for information regarding this matter. While we believe we have meritorious arguments, the outcome of the investigation is still uncertain and it is not possible at this time for us to estimate potential liability. We intend to continue defending ourselves vigorously in this matter.

In May 2016, our Miamisburg, Ohio office was served a subpoena by the OIG of HHS requesting documents related to our billing and coding of advanced life support and basic life support ambulance transport services. In December 2017, we entered into a Tolling Agreement with the U.S. Department of Justice in connection with the subpoena, which the parties have extended in furtherance of continued settlement negotiations. We intend to continue to assert a vigorous defense and do not expect any ultimate outcome of this matter to result in a material liability.

We are subject to claims, lawsuits and legal proceedings in the ordinary course of business. While it is not possible to ascertain the ultimate outcome of such matters, in management’s opinion, the liabilities, if any, in excess of amounts provided or covered by insurance for these matters are not expected to have a material adverse effect on our financial condition, results of operations or liquidity.

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MANAGEMENT

Directors and Executive Officers of Change Healthcare Inc.

The following table sets forth the names, ages and positions of the directors, director nominees and executive officers of Change Healthcare Inc.:


Name	Age		Position
Neil E. de Crescenzo		57	President and Chief Executive Officer, Director
Fredrik Eliasson		48	Executive Vice President and Chief Financial Officer
Loretta A. Cecil		61	Executive Vice President, General Counsel
Alex P. Choy		56	Executive Vice President—Research and Development and Information Technology, and Chief Information Officer
Kriten Joshi		47	Executive Vice President, and President, Network Solutions
Thomas Laur		43	Executive Vice President, and President, Technology Enabled Services
Roderick H. O’Reilly		57	Executive Vice President, and President, Software and Analytics
August Calhoun		47	Executive Vice President, and President, Sales and Operations
W. Thomas McEnery		56	Executive Vice President and Chief Marketing Officer
Linda K. Whitley-Taylor		55	Executive Vice President and Chief People Officer
John H. Hammergren		60	Director Nominee
Howard L. Lance		63	Director Nominee
Bansi Nagji		53	Director Nominee
Philip M. Pead		66	Director Nominee
Phillip W. Roe		58	Director Nominee
Neil P. Simpkins		52	Director
Justin L. Sunshine		36	Director
Britt Vitalone		49	Director Nominee
Robert J. Zollars		61	Director Nominee

Neil E. de Crescenzo. Mr. de Crescenzo is Change Healthcare’s President and Chief Executive Officer and a member of its board of directors. Prior to joining Change Healthcare, Mr. de Crescenzo served as Chief Executive Officer and a member of the board of directors of Legacy CHC from September 2013 to the closing of the Transactions in March 2017. Prior to that, Mr. de Crescenzo served as the Senior Vice President and General Manager of the Global Health Sciences business of Oracle Corporation from June 2008 to September 2013. Prior to joining Oracle in 2006, Mr. de Crescenzo spent 10 years at IBM Corporation, including his last role as senior executive for Global Healthcare Business Consulting Services. Mr. de Crescenzo received a B.A. in Political Science from Yale University and an M.B.A. from Northeastern University.

Fredrik Eliasson. Mr. Eliasson is Change Healthcare’s Executive Vice President and Chief Financial Officer. Prior to joining Change Healthcare, Mr. Eliasson served as Executive Vice President and Chief Sales and Marketing Officer of CSX Corporation (“CSX”), a premier transportation company that provides rail, intermodal and rail-to-truck transload services and solutions to customers across a broad array of markets, from September 2015 to November 2017. From 2012 through August 2015, he served as CSX’s Executive Vice President and Chief Financial Officer. Prior to that, Mr. Eliasson led the development of two of CSX’s major markets as Vice President of Chemicals and Fertilizer and Vice President of Emerging Markets. He also supported Sales and Marketing in a previous position as Vice President of Commercial Finance. Mr. Eliasson received a B.A. and an M.B.A. from Virginia Commonwealth University.

Loretta A. Cecil. Ms. Cecil is Change Healthcare’s Executive Vice President and General Counsel. Prior to joining Change Healthcare, Ms. Cecil served as Senior Vice President, Governance Relations at McKesson and General Counsel at MTS from July 2006 to the closing of the Transactions in March 2017. Prior to that,

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Ms. Cecil worked as General Counsel and Chief Compliance Officer for NCR Corporation’s Retail Division from 2003 to 2006. Prior to that she was a member of Womble Carlyle Sandridge & Rice, LLP, where she led the law firm’s national Telecommunications Practice Group and Georgia Government Relations Practice Group. Prior to that, Ms. Cecil was at AT&T and held several senior positions. Ms. Cecil received a B.A. from The University of North Carolina at Greensboro and a J.D. from The University of North Carolina at Chapel Hill.

Alex P. Choy. Mr. Choy is Change Healthcare’s Executive Vice President—Research and Development and Information Technology and Chief Information Officer. Prior to joining Change Healthcare, Mr. Choy served as Executive Vice President—Research and Development and Chief Information Officer of Legacy CHC from January 2014 to the closing of the Transactions in March 2017. Prior to that, Mr. Choy served as the Global Vice President, Product Development at Oracle Corporation from January 2013 to December 2013. Prior to that, Mr. Choy served as the Vice President Engineering for enterprise software products for Adobe Systems from May 2006 to December 2012. Prior to joining Adobe, Mr. Choy held senior level engineering and development positions at Interwoven, Veritas Software, Tandem, Sun Microsystems and Hewlett-Packard. Mr. Choy received a B.S. in Computer Science from the University of California, Berkeley and a Masters Degree in Computer Science from Stanford University.

Kriten Joshi. Mr. Joshi is Change Healthcare’s Executive Vice President and President, Network Solutions. Prior to joining Change Healthcare, Mr. Joshi served as Executive Vice President—Products of Legacy CHC from December 2013 to the closing of the Transactions in March 2017. Prior to joining Legacy CHC, Mr. Joshi was Global Vice President of Healthcare Product Strategy for Oracle Corporation’s Health Sciences Global Business Unit from December 2006 to December 2013. Prior to joining Oracle, Mr. Joshi served in senior strategy roles in IBM’s Global Sales and Distribution organization from 2003 to 2006. Prior to that, Mr. Joshi was with McKinsey and Co. Mr. Joshi received a B.S. in Mathematics from the California Institute of Technology and a Ph.D. in Physics from the Massachusetts Institute of Technology.

Thomas Laur. Mr. Laur is Change Healthcare’s Executive Vice President and President, Technology Enabled Solutions. Prior to joining Change Healthcare, Mr. Laur was President of the SAP Health division from August 2016 to January 2018, with responsibility over strategy, innovation, sales, marketing and operations for SAP’s global healthcare business. Before joining SAP, Mr. Laur was Chief Executive Officer of Sutherland Healthcare Solutions, a global services and analytics company, from July 2014 to July 2016. Earlier in his career, Mr. Laur worked at Cognizant as the Managing Director of the Healthcare Digital Ventures and Global Director of Strategy. Before this, he served nearly ten years as an Associate Partner in the strategy practice of Deloitte Consulting in New York City, Brussels and Boston. Mr. Laur received a B.S. in Economics and a MBA from the ICHEC Brussels School of Management.

Roderick H. O’Reilly. Mr. O’Reilly is Change Healthcare’s Executive Vice President and President, Software and Analytics. Prior to joining Change Healthcare, Mr. O’Reilly served as President of MHS from October 2014 to the closing of the Transactions in March 2017. Prior to that position Mr. O’Reilly led portfolio management, mergers and acquisitions and integrated planning as the Senior Vice President of Strategy and Business Development for MTS from March 2013 to October 2014. Mr. O’Reilly also served as President of McKesson’s Health Systems Enterprise Solutions from 2010 to 2013. Prior to that, Mr. O’Reilly was President of the Enterprise Medical Imaging Group from 2008 to 2010. Mr. O’Reilly joined McKesson in 2002 through the acquisition of A.L.I. Technologies, where he had served as Vice President of Operations since 1998. Mr. O’Reilly earned his B.A. in Business Administration from Simon Fraser University and his M.B.A. from the University of British Columbia.

August Calhoun. Mr. Calhoun is Change Healthcare’s Executive Vice President and President, Sales and Operations. Prior to joining Change Healthcare, Mr. Calhoun served as SVP and general manager (GM) of Services at Siemens from April 2016 to March 2018. Prior to Siemens, Mr. Calhoun held increasingly senior leadership positions in several dynamic organizations. He progressed from sales roles at IBM to national sales roles at Dell, then led one of Dell’s largest industry verticals. He later served as SVP and GM for the $250M

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Provider Solutions business at Truven Health Analytics prior to joining Siemens. Mr. Calhoun received a B.S. in Chemistry from the University of Delaware, and a Ph.D. in Physical Chemistry from the University of Pennsylvania.

W. Thomas McEnery . Mr. McEnery is Change Healthcare’s Executive Vice President and Chief Marketing Officer. Prior to joining Change Healthcare in 2014, Mr. McEnery served as the Chief Marketing Officer of Optum (a part of UnitedHealth Group) from September 2007 to May 2013. Throughout his career, he has served in many leadership positions, including Managing Partner of Green Point Partners, Vice President of Global Marketing at Fair Isaac Corporation, and several roles at Fallon Worldwide. Mr. McEnery received a B.A. in Communication from the University of Minnesota-Duluth and has completed executive level coursework at Thunderbird, the Garvin School of International Management.

Linda Whitley-Taylor . Ms. Whitley-Taylor is Change Healthcare’s Executive Vice President and Chief People Officer. Prior to joining Change Healthcare, Ms. Whitley-Taylor was executive vice president and chief human resources officer at Amerigroup Corporation from January 2008 to December 2012. Prior to Amerigroup, Ms. Whitley-Taylor was senior vice president of Human Resources Operations for Genworth Financial (formerly GE Financial Assurance), where she helped take the company public in 2004. Prior to that, Ms. Whitley-Taylor spent 15 years with GE in a variety of roles and locations, comprising operations, quality, training, talent management, and human resources. Ms. Whitley-Taylor received a B.A. in Psychology from Radford University.

John H. Hammergren . Mr. Hammergren is expected to join the board of directors of Change Healthcare Inc. prior to the completion of this offering. Mr. Hammergren has been a director of McKesson since July 1999, has served as chairman of the board of McKesson since July 2002, and President and Chief Executive Officer of McKesson since April 2001. Mr. Hammergren joined McKesson in 1996 and held a number of management positions before becoming President and Chief Executive Officer. He was a director of the Hewlett-Packard Company from 2005 through April 2013. Mr. Hammergren is the Chairman of the Supervisory Board of Celesio AG. Additionally, he is currently a member of the Business Council, the Business Roundtable and the Healthcare Leadership Council, as well as the Board of Trustees for the Center for Strategic & International Studies. Mr. Hammergren received his B.A. in Business Administration from the University of Minnesota and an M.B.A. from William College of Business at Xavier University.

Howard L. Lance. Mr. Lance is expected to join the board of directors of Change Healthcare Inc. prior to the completion of this offering. Mr. Lance currently serves as chairman of the board of directors of Summit Materials, Inc. He served as the president and Chief Executive Officer of Maxar Technologies Inc. from May 2016 to January 2019. Mr. Lance was an independent director of Ferrovial S.A. from 2014 until 2016. Mr. Lance also served on Legacy CHC’s board of directors from November 2012 to February 2013 and became the chairman of Legacy CHC’s board of directors from February 2013 to February 2017. Prior to that, Mr. Lance served as the Chairman, President and Chief Executive Officer of Harris Corporation from January 2003 until December 2011. Mr. Lance also served as a director of Eastman Chemical Company from 2005 to 2014, Stryker Corporation from 2009 to 2014 and Aviat Networks, Inc. from 2007 to 2009. Mr. Lance received a B.S. in Industrial Engineering from Bradley University and an M.S. in Management from Purdue University.

Bansi Nagji . Mr. Nagji is expected to join the board of directors of Change Healthcare Inc. prior to the completion of this offering. Mr. Nagji currently serves as Executive Vice President of Corporate Strategy and Business Development for McKesson, a position he has held since February 2015. Prior to joining McKesson, Mr. Nagji served as a principal of Deloitte Consulting, LLP and Global Leader, Monitor Deloitte from January 2013 to February 2015. Mr. Nagji also served on the Board of Directors of Deloitte LLP between December 2013 and February 2015. Prior to that, Mr. Nagji was with Monitor Group, a global strategy consulting firm, for 20 years where he was a senior partner and its President when the firm merged with Deloitte. Mr. Nagji received his B.A. and M.A. from Cambridge University and an M.B.A. with Distinction from INSEAD.

Philip M. Pead. Mr. Pead is expected to join the board of directors of Change Healthcare Inc. prior to the completion of this offering. Mr. Pead served on Legacy CHC’s board from November 2012 to February 2017,

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having previously served on Legacy CHC’s board from February 2009 through August 2011. He also served as President and Chief Executive Officer of Progress Software Corp. from December 2012 until his retirement in October 2016. Prior to that, Mr. Pead served as Executive Chairman and Interim Chief Executive Officer of Progress Software Corp. from November 2012 to December 2012 and as Non-Executive Chairman beginning in July 2012, having joined the Progress Software Corp. board of directors in July 2011. Prior to that, Mr. Pead served as Chairman of the board of directors of Allscripts Healthcare Solutions, Inc. from August 2010 through April 2012 following Allscripts’s acquisition of Eclipsys Corporation where he had served as President and Chief Executive Officer since May 2009. Mr. Pead also served as a director of Eclipsys from February 2009 until its acquisition by Allscripts. Mr. Pead received a B.S. in Economics from the University of London and a Business Administration Diploma from Harrow College of Technology.

Phillip W. Roe. Mr. Roe is expected to join the board of directors of Change Healthcare Inc. prior to the completion of this offering. Mr. Roe served on Legacy CHC’s board of directors from November 2015 to February 2017. He has served as a Senior Advisor to Martin Ventures, a private family-owned venture company, since April 2018. Mr. Roe served as CEO of Martin Ventures from June 2015 to March 2018. Mr. Roe previously served as Senior Vice President, Finance of Tenet Healthcare from October 2013 to May 2015 following Tenet’s acquisition of Vanguard Health Systems where he served as the Executive Vice President, Chief Financial Officer and Treasurer since November 2007. Prior to that, he served as Senior Vice President, Controller and Chief Accounting Officer of Vanguard Health Systems. Mr. Roe received a B.S. in Accounting from Oklahoma Christian University and is a certified public accountant.

Neil P. Simpkins. Mr. Simpkins is a member of Change Healthcare Inc.’s board of directors. Prior to joining the board of Change Healthcare, Mr. Simpkins served on Legacy CHC’s board of directors from November 2011 to February 2017 and served as the chairman of Legacy CHC’s board of directors from November 2011 through February 2013. Mr. Simpkins has also served as a Senior Managing Director in the Private Equity Group of Blackstone since December 1999. Mr. Simpkins was a Principal at Bain Capital from 1993 to 1999. Prior to joining Bain Capital, Mr. Simpkins was a consultant at Bain & Company in London and in the Asia Pacific region. Mr. Simpkins currently serves as a director of Gates Corporation, Apria Healthcare Group, Team Health and Summit Materials. Mr. Simpkins graduated with honors from Oxford University and received an M.B.A. from Harvard Business School.

Justin L. Sunshine. Mr. Sunshine is a member of Change Healthcare Inc.’s board of directors. Prior to joining the board of Change Healthcare, Mr. Sunshine served on Legacy CHC’s board of directors from March 2014 to February 2017. Mr. Sunshine is a managing director with a focus in the healthcare sector in the Private Equity Group at Blackstone, where he has been from October 2011 to February 2017. Prior to joining the Private Equity Group, Mr. Sunshine was an Associate within Blackstone Advisory Partners from August 2009 to September 2011. Prior to Blackstone, Mr. Sunshine worked as a consultant in the strategy practice at Accenture from September 2004 to June 2007. He has served as a member of the board of directors of Apria Healthcare Group since March 2014, on the board of Team Health since February 2017 and is currently a member of the board of directors of the Center for Autism and Related Disorders (CARD). Mr. Sunshine received a B.B.A. in Finance from the University of Texas at Austin and an M.B.A. from the University of Chicago Booth School of Business.

Britt Vitalone . Mr. Vitalone is expected to join the board of directors of Change Healthcare Inc. prior to the completion of this offering. Mr. Vitalone currently serves as Executive Vice President and Chief Financial Officer for McKesson, a position he has held since January 2018. Mr. Vitalone serves as a member of McKesson’s executive committee and chairman of the board for ClarusONE Sourcing Services. Mr. Vitalone joined McKesson in 2006 and served in various leadership positions prior to becoming Executive Vice President and Chief Financial Officer, including as senior vice president and chief financial officer, McKesson U.S. Pharmaceutical and Specialty Health, senior vice president of Corporate Finance and M&A Finance, and senior vice president and chief financial officer, McKesson Medical-Surgical. Prior to joining McKesson, Mr. Vitalone held a variety of financial leadership positions with GE Financial Assurance, CarMax and Bausch & Lomb. Mr. Vitalone received his B.S. in Accounting from St. John Fisher College and is a certified public accountant.

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Robert J. Zollars . Mr. Zollars is expected to join the board of directors of Change Healthcare Inc. prior to the completion of this offering. Mr. Zollars has been a director at Five9, Inc. since 2013 and Kate Farms, Inc. since 2015 and has been Executive Chairman at AppianRx since 2017 and a director at TCGRx since 2017. Prior to that, Mr. Zollars was Chairman and Chief Executive Officer of Vocera Communications, Inc. from 2007 to 2013. Prior to that, Mr. Zollars spent one year as President and Chief Executive Officer at Wound Care Solutions, LLC. from 2006 to 2007. Prior to that position, Mr. Zollars was Chairman and CEO of Neoforma, Inc, from 1999 to 2006, having arrived after a long career in healthcare technology and services. Mr. Zollars received his B.S. in Marketing from Arizona State University where he is now Co-Chair of the Trustees, and his M.B.A. from John F. Kennedy University.

Directors and Executive Officers of the Joint Venture

The directors and executive officers the Joint Venture as of the date of this prospectus are identical to the directors and director nominees and officers of Change Healthcare Inc. Mr. Hammergren is chairman of the Joint Venture’s board of directors.

Composition of the Board of Directors After this Offering

Our business and affairs are managed under the direction of our board of directors. In addition, we entered into a stockholders agreement with certain affiliates of our Sponsors, McKesson and the Joint Venture in connection with the Transactions. This agreement grants Blackstone the right to designate nominees to Change Healthcare Inc.’s board of directors subject to the maintenance of certain ownership requirements in us. See “Certain Relationships and Related Person Transactions—Stockholders Agreement.”

Additionally, the LLC Agreement grants each of the McK Members and Change Healthcare Inc. the right to designate directors to the Joint Venture’s board of directors subject to the maintenance of certain ownership requirements in LLC Units. See “Certain Relationships and Related Person Transactions—LLC Agreement of the Joint Venture.”

Background and Experience of Directors

When considering whether directors and director nominees have the experience, qualifications, attributes or skills, taken as a whole, to enable our board of directors to satisfy its oversight responsibilities effectively in light of our business and structure, the board of directors focuses primarily on each person’s background and experience as reflected in the information discussed in each of the directors and director nominees’ individual biographies set forth above. We believe that our directors and director nominees provide an appropriate mix of experience and skills relevant to the size and nature of our business. In particular, the members of our board of directors considered the following important characteristics, among others:

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Mr. de Crescenzo—our board of directors considered Mr. de Crescenzo’s significant management and leadership experience as a member of our senior management team and from his service in multiple management and leadership positions within large providers of software and technology products and services and Mr. de Crescenzo’s many years of experience in the healthcare software and information technology industries.

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Mr. Hammergren—our board of directors considered Mr. Hammergren’s experience of more than 30 years in the healthcare industry and his extensive leadership and management skills developed through his role as President and Chief Executive Officer of McKesson.

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Mr. Lance—our board of directors considered Mr. Lance’s extensive leadership and management skills developed through his prior service as a senior executive officer and director of large, public companies.

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Mr. Nagji—our board of directors considered Mr. Nagji’s significant management and strategic skills gained through more than 25 years of experience as a global strategy consultant and senior executive of

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McKesson and Mr. Nagji’s deep experience in the healthcare industry and in executing large scale, complex transformation programs.

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Mr. Pead—our board of directors considered Mr. Pead’s leadership skills and intimate knowledge of the industry as the former chairman of the board of directors and executive officer of publicly-traded healthcare technology companies and Mr. Pead’s significant and varied management expertise, developed in roles of increasing responsibility throughout his career, including the integration of acquired companies, improving operating efficiencies and margins, managing complex regulatory compliance matters and growing the business.

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Mr. Roe—our board of directors considered Mr. Roe’s experience of more than 20 years in the healthcare industry and significant financial experience as a former chief financial officer of a public company.

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Mr. Simpkins—our board of directors considered Mr. Simpkins’s significant financial and investment experience and executive management and strategic skills gained through his experience with other Blackstone portfolio companies and his additional board experience with several public and private companies.

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Mr. Sunshine—our board of directors considered Mr. Sunshine’s engagement in the private equity industry and his financial and investment experience gained while working on complex transactions related to other Blackstone portfolio companies.

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Mr. Vitalone—our board of directors considered Mr. Vitalone’s experience in the healthcare industry and his extensive financial and management experience gained while serving in a variety of financial leadership positions within several public and private companies, including most recently as the Chief Financial Officer of McKesson.

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Mr. Zollars—our board of directors considered Mr. Zollar’s significant management experience, having run a number of healthcare technology companies, and also his significant governance experience as a NACD Board Leadership Fellow.

Board Committees

We anticipate that, prior to the completion of this offering, our board of directors will establish the following committees: an audit committee; a compensation committee; and a nominating and corporate governance committee. The composition and responsibilities of each committee are described below. Our board of directors may also establish from time to time any other committees that it deems necessary or desirable. Members serve on these committees until their resignation or until otherwise determined by our board of directors.

Audit Committee

Upon completion of this offering, we expect our audit committee will consist of , and , with serving as chair. Our audit committee will be responsible for, among other things:

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selecting and hiring our independent auditors, and approving the audit and non-audit services to be performed by our independent auditors;

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assisting the board of directors in evaluating the qualifications, performance and independence of our independent auditors;

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assisting the board of directors in monitoring the quality and integrity of our financial statements and our accounting and financial reporting;

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assisting the board of directors in monitoring our compliance with legal and regulatory requirements;

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reviewing the adequacy and effectiveness of our internal control over financial reporting processes;

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•

assisting the board of directors in monitoring the performance of our internal audit function;

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monitoring the performance of our internal audit function;

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reviewing with management and our independent auditors our annual and quarterly financial statements;

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establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; and

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preparing the audit committee report that the rules and regulations of the SEC require to be included in our annual proxy statement.

The SEC rules and Nasdaq rules require us to have one independent audit committee member upon the listing of our common stock on Nasdaq, a majority of independent directors within 90 days of the effective date of the registration statement and all independent audit committee members within one year of the effective date of the registration statement. and qualify as independent directors under the listing standards and the independence standards of Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Compensation Committee

Upon completion of this offering, we expect our compensation committee will consist of , and , with serving as chair. Our compensation committee will be responsible for, among other things:

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reviewing and approving corporate goals and objectives relevant to the compensation of our CEO, evaluating our CEO’s performance in light of those goals and objectives, and, either as a committee or together with the other independent directors (as directed by the board of directors), determining and approving, or making recommendations to the board of directors with respect to, our CEO’s compensation level based on such evaluation;

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reviewing and approving, or making recommendations to the board of directors with respect to, the compensation of our other executive officers, including annual base salary, bonus and equity-based incentives and other benefits;

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reviewing and recommending the compensation of our directors;

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reviewing and discussing annually with management our “Compensation Discussion and Analysis” disclosure required by SEC rules;

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preparing the compensation committee report required by the SEC to be included in our annual proxy statement; and

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reviewing and making recommendations with respect to our equity compensation plans.

Nominating and Corporate Governance Committee

Upon completion of this offering, we expect our nominating and corporate governance committee will consist of , and , with serving as chair. The nominating and corporate governance committee is responsible for, among other things:

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assisting our board of directors in identifying prospective director nominees and recommending nominees to the board of directors;

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overseeing the evaluation of the board of directors and management;

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•

reviewing developments in corporate governance practices and developing and recommending a set of corporate governance guidelines; and

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recommending members for each committee of our board of directors.

Governance Matters

Approval Rights of the Members

Pursuant to the LLC Agreement, certain actions by the Joint Venture would require the prior written consent of both McKesson and Change Healthcare Inc. These matters include, without limitation: (i) materially changing the line of business of the Joint Venture and its subsidiaries; (ii) the appointment, removal or replacement of the Joint Venture’s chief executive officer or chairman of the the Joint Venture’s board of directors; (iii) approving the Joint Venture’s annual operating plan and budget; (iv) entering into certain material agreements, including affiliate transactions; (v) declaring or paying any dividend, redeeming or repurchasing equity securities or issuing or authorizing the issuance of equity securities of the Joint Venture or its subsidiaries; (vi) incurring indebtedness (subject to certain exceptions); (vii) a change of control of Change Healthcare, or the sale, lease or disposal of assets of the Joint Venture or its subsidiaries outside the ordinary course of business; (viii) any initial public offering, other than a Qualified IPO (as defined under “Certain Relationships and Related Person Transactions—LLC Agreement of the Joint Venture—Transfers of LLC Units”); (ix) terminating, liquidating or dissolving the Joint Venture or any of its material subsidiaries; and (x) any amendment to, modification of, or waiver under the Contribution Agreement or the ancillary transaction documents by the Joint Venture. The foregoing approval rights of the members of Change Healthcare would terminate, as to each of McKesson and Change Healthcare Inc., at such time as McKesson (together with its permitted transferees) no longer own directly or indirectly 10% or more of the Joint Venture equity interests initially held by McKesson.

Compensation Committee Interlocks and Insider Participation

None of our executive officers currently serves, or has served during the last completed fiscal year as a member of the board of directors or compensation committee (or other committee performing equivalent functions) of any entity that has one or more executive officers serving on our board of directors or compensation committee. We are party to certain transactions with affiliates of our Sponsors described in “Certain Relationships and Related Person Transactions.”

Code of Ethics

We will adopt a new Code of Business Conduct and Ethics that applies to all of our officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions, which will be posted on our website. Our Code of Business Conduct and Ethics is a “code of ethics,” as defined in Item 406(b) of Regulation S-K. We will make any legally required disclosures regarding amendments to, or waivers of, provisions of our code of ethics on our website. The information contained on, or accessible from, our website is not part of this prospectus by reference or otherwise.

Executive Compensation

Compensation Discussion and Analysis

Overview

The following discussion analyzes our executive compensation program with respect to our named executive officers for the year ended March 31, 2018 and the material elements of the compensation packages awarded to such officers. The individuals whose compensation is discussed below are:

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Neil E. de Crescenzo, our Chief Executive Officer;

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•

Fredrik Eliasson, our Executive Vice President and current Chief Financial Officer;

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Randy Giles, Samuel Hamood and Howard Yntema, each of whom served as our Chief Financial Officer during a portion of fiscal 2018;

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Roderick O’Reilly, our Executive Vice President and President, Software and Analytics;

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Mark Vachon, our former Executive Vice President, Sales and Operations, who left the Company after the end of fiscal 2018;

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Alex Choy, our Executive Vice President—Research and Development / Information Technology and Chief Information Officer; and

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Patrick Leonard, our former President, Technology Enabled Services (“TES”), who terminated employment with the Company in October 2017.

We collectively refer to these individuals as our “named executive officers.”

Appointment of New Chief Financial Officer

Mr. Eliasson was appointed as our Chief Financial Officer on March 19, 2018, and, therefore, only served in such capacity for less than two weeks of fiscal 2018. Accordingly, the compensation received by Mr. Eliasson as disclosed below is not reflective of the compensation that he will receive in fiscal 2019. For details regarding Mr. Eliasson’s offer letter with the Company, see “—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table—Mr. Eliasson’s Offer Letter” below.

Compensation Philosophy and Objectives

Our compensation program is centered around a pay-for-performance philosophy and is designed to reward our named executive officers for their abilities, experience and efforts. The compensation programs we offer directly influence our ability to attract, retain and motivate the highly-qualified and experienced professionals who are vital to our success as a company.

We believe that having compensation programs designed to align executive officers’ interests with those of Change Healthcare and its stockholders in achieving positive business results and to reinforce accountability is the cornerstone to successfully implementing and achieving our strategic plans. In determining the compensation of our named executive officers, we are guided by the following key principles:

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Attract, Retain, Motivate and Reward. Attract, retain, motivate and reward highly qualified and talented executives who possess the skills to achieve innovation and growth objectives in a competitive technology industry.

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Pay for Performance. Align executive’s compensation with performance against our short-term and long-term company performance objectives by rewarding results that meet or exceed our growth and profitability goals.

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Competitive Compensation. Executive total target direct compensation levels are targeted to be competitive with peer companies and market practice.

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Stockholder Alignment. Align executive interests with those of our stockholders to create long-term value by rewarding our executives for their contributions to the Company.

We seek to maintain a performance-oriented culture and a compensation approach that rewards our named executive officers when we achieve our goals and objectives, while putting at risk an appropriate portion of their compensation if our goals and objectives are not achieved. Consistent with this philosophy, we have sought to create an executive compensation package that balances short-term versus long-term components, cash versus equity elements and fixed versus contingent payments in ways that we believe are most appropriate to motivate our named executive officers.

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The Role of the Compensation Committee and Management

Prior to this offering, executive compensation and related decisions were made by the compensation committee of the Joint Venture and the board of directors of Change Healthcare Inc. In connection with this offering, the compensation committee of Change Healthcare Inc. will assume responsibility for the strategic oversight of our compensation and benefit programs. Except where the context requires otherwise, references to the “compensation committee” shall refer to the compensation committee of the Joint Venture.

The compensation committee works directly with our Chief Executive Officer to set annual compensation of each of our named executive officers other than our Chief Executive Officer. To this end, our Chief Executive Officer completes an evaluation of each such named executive officer, makes recommendations regarding the compensation of such officer and presents his evaluations and compensation recommendations to the compensation committee.

After considering our Chief Executive Officer’s evaluations and recommendations and such other factors as the nature and responsibilities of each named executive officer’s position, the named executive officer’s experience, Change Healthcare’s achievement of corporate goals, the named executive officer’s achievement of individual goals and the other considerations described below, together with consideration of the executive compensation philosophy described above, the compensation committee sets the annual compensation of our named executive officers. The compensation committee then sets the compensation of our Chief Executive Officer in a meeting at which the Chief Executive Officer is not present. The compensation for each of our named executive officers is set and recommended for adoption at meetings of the compensation committee generally held in the first quarter of each year.

Role of the Compensation Consultant

We have engaged Aon Radford, a compensation consulting firm (the “Consultant”), to provide executive compensation consulting services to help align executive pay with market practices for 2018 executive pay decisions and to advise on executive and director compensation in connection with this offering.

In fiscal 2018 and in connection with this offering, the Consultant performed a variety of work, including but not limited to: assisting in the development of a market-based executive compensation program, conducting a review of the competitiveness of our executive compensation program and re-evaluating our executive severance and change-in-control benefit programs. To assist the compensation committee in its review and evaluation of each of these areas in connection with this offering, in fiscal 2019, the Consultant established a new peer group composed of 22 companies described below. The new peer group, which has been reviewed and approved by the compensation committee, was selected based on weighted parameters and financial information and is intended to ensure that the Company remains within a reasonable range of the peer median in terms of revenue, headcount, and market value.


	Fiscal 2019 Peer Group
Alliance Data Systems Corp.	Cerner Corp.	Leidos Holdings Inc.*
Allscripts Healthcare Solutions Inc.	Citrix Systems, Inc.	Nuance Communications Inc.
athenahealth, Inc.	CoreLogic, Inc.*	PTC Inc.
Broadridge Financial Solutions, Inc.*	Fiserv Inc.*	Science Applications International Corp.*
CA, Inc.	Gartner Inc.	Symantec Corp.
Cadence Design Systems	Global Payments Inc.*	Synopsys, Inc.
CDK Global Inc.	Jack Henry & Associates, Inc.*	Teradata Corp.*
		Unisys Corp.*

*	Added to peer group in fiscal 2019.

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For fiscal 2018, the compensation committee also used a peer group composed of 22 companies as a reference point when evaluating the compensation for new executive hires and when evaluating the annual incentive target opportunities of the named executive officers. The fiscal 2018 peer group excluded the nine companies noted above and included the following in their place: ACI Worldwide, Inc., Autodesk, Inc., First Data Corp., NetApp, Inc., Quintiles IMS Holdings, Inc., Red Hat, Inc. ServiceNow, Inc., Square, Inc., and Workday Inc.

Overview of Components of Compensation

Compensation for our named executive officers consists of the following key components:

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base salary;

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annual cash incentive compensation; and

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equity-based awards.

The first component of named executive officer compensation is base salary, which is intended to secure the services of the executive and compensate him for his functional roles and responsibilities.

The second component is an annual cash incentive opportunity, which is based upon a combination of Company and individual performance. These annual cash incentive opportunities are intended to link executive pay directly to achievement of annual Company operating and/or other performance objectives. We believe this compensation component aligns the interests of our named executive officers with the interests of our stockholders in the pursuit of short- to medium-term performance that should create value for our stockholders.

The third component is equity-based awards which provide a long-term incentive component to named executive officer compensation packages. Equity-based awards granted to our named executive officers align a portion of our named executive officers’ compensation to the interests of our investors and to each other, further reinforcing collaborative efforts for their mutual success. Equity-based compensation also fosters a long-term commitment from our named executive officers to the Company and balances the shorter-term cash components of compensation that we provide.

Our named executive officers are also eligible to receive the same benefits that we provide and to participate in all plans that we offer to other full-time employees, including health and welfare benefits and participation in our 401(k) Savings Plan. In addition, in fiscal 2018, certain of our named executive officers were also entitled to participate in our supplemental non-qualified deferred compensation plans. Beginning in fiscal 2019, named executive officers will be entitled to annual executive physicals.

We also provide our named executive officers with severance payments and benefits in the event of an involuntary or, in certain cases, constructive termination of employment without cause and accelerated equity award vesting in connection with a change in control of the Company.

Base Salary

We provide each named executive officer with a base salary for the services that the executive officer performs for us. This compensation component constitutes a stable element of compensation while other compensation elements are variable. Base salaries are reviewed annually and may be increased in light of the individual performance of the named executive officer, company performance, any change in the executive’s position within our business, the scope of his responsibilities and any changes thereto and his tenure with the Company.

In July 2017, in recognition of their performance, the compensation committee determined to increase the base salaries of Messrs. de Crescenzo, Yntema and Choy as follows: Mr. de Crescenzo (from $721,000 to

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$750,000); Mr. Yntema (from $234,740 to $250,233); and Mr. Choy (from $437,750 to $450,883). The Summary Compensation Table below shows the base salary earned by each named executive officer during fiscal 2018.

Annual Cash Incentive Program

We provide our named executive officers with the opportunity to share in our success through annual cash incentive awards under our annual cash incentive program (the “AIP”). The AIP provides Change Healthcare’s senior management and certain other key employees the opportunity to earn annual cash compensation in addition to their base salaries. The compensation committee has general authority for oversight and interpretation of the AIP. The compensation committee, with the recommendations of our Chief Executive Officer (other than with respect to himself), is responsible for (i) setting annual objective performance targets, (ii) reviewing actual performance and (iii) determining the amount of the compensation payable to each named executive officer.

Under the AIP, a participant’s annual target incentive opportunity is calculated as a percentage of the participant’s eligible base salary, with the target percentages generally being aligned with the participant’s level and role at the Company. The funding of annual cash incentive awards under the AIP is dependent on achievement of annual objective performance targets by the Company as a whole and of the operating division or divisions to which a participant provides services, if applicable. The amount of compensation a participant is eligible to be paid under the AIP is determined primarily on the basis of objective Company performance measures determined by the compensation committee each year, such as Adjusted EBITDA and revenue.

After reviewing the actual performance of the Company, the compensation committee, with recommendations of our Chief Executive Officer (other than with respect to himself), then undertakes an evaluation of each named executive officer’s performance. The compensation committee does not rely on preset formulas, thresholds or multiples in its evaluation but rather relies upon its and our Chief Executive Officer’s judgment after careful consideration of an executive’s performance during the year against pre-established goals, leadership qualities, operational performance, business responsibilities, long-term potential to enhance stockholder value, current compensation arrangements and tenure with the Company.

Fiscal 2018

The compensation committee determined that for fiscal 2018 company-wide or corporate level financial performance would account for 100% of the annual cash incentive opportunity for Mr. de Crescenzo, Mr. Yntema, Mr. Choy and Mr. Vachon and, for Mr. O’Reilly, the financial performance of the named executive officer’s business unit would account for 75% of the executive’s annual cash incentive opportunity with company-wide performance as a whole accounting for the remaining 25%. In each case, 50% of the fiscal 2018 financial performance measures for both the Company as a whole and the executive’s business unit, as applicable, were based on Adjusted EBITDA targets (calculated as set forth in the section entitled “Summary—Summary Historical Consolidated Financial Data of Change Healthcare Inc.”) and 50% were based on revenue targets under the AIP. We believe the combination of these performance factors and the proportionate weighting assigned to each reflected our overall Company goals for 2018, which balanced the achievement of revenue growth with improving our operating efficiency. The compensation committee has reserved the ability to adjust the actual financial performance results to exclude the effects of extraordinary, unusual or infrequently occurring events. For fiscal 2018, the compensation committee adjusted the actual revenue and Adjusted EBITDA results to take into account certain discrete events not contemplated in the target amounts, including the one-time impact of a terminated customer agreement and the impact of the NDSC acquisition.

The weighted achievement factor for each of the financial performance measures is determined by multiplying the weight attributed to each performance measure by the applicable achievement factor for each

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measure. For each of the performance measures, the achievement factor is determined by calculating the payout percentage against the target goal based on the following pre-established scale:


	Threshold 25% Achievement Tier		Target 100% Achievement Tier		Maximum 200% Achievement Tier
Business Unit	Revenue	Adjusted EBITDA	Revenue	Adjusted EBITDA	Revenue	Adjusted EBITDA
Corporate	92.0%	92.0%	100.0%	100.0%	110.0%	110.0%
Network Solutions	92.0%	92.0%	100.0%	100.0%	110.0%	120.0%
Software and Analytics	92.0%	92.0%	100.0%	100.0%	110.0%	115.0%

If achievement with respect to any performance measure falls between the threshold and target payout percentages, or between the target and maximum payout percentages, the achievement factor for that particular performance measure will be interpolated on a straight-line mathematical basis (and rounded to the nearest whole number). If achievement with respect to any performance measure does not reach threshold payout percentage, then that measure will be deemed to have 0% attainment.

The following tables outline the calculation of the funding attainment based on the pre-established scale associated with our actual results against the targets and the resulting weighted and combined achievement factors.


Mr. de Crescenzo, Mr. Choy and Mr. Vachon

Measure	Weighting			Target ($ in millions)		Actual ($ in millions)(1)		2018 Payout Percentage (% of Target)			2018 Achievement Factor (%)			2018 Weighted Achievement Factor (%)
Corporate Adjusted EBITDA		50	%	$	1,008.0	$	942.3		93.48	%		38.8	%		19.4	%
Corporate Revenue		50	%	$	3,137.6	$	3,029.9		96.57	%		67.8	%		33.9	%
Attainment															53.3	%


Mr. Yntema

Measure	Weighting			Target ($ in millions)		Actual ($ in millions)(1)		2018 Payout Percentage (% of Target)			2018 Achievement Factor (%)			2018 Weighted Achievement Factor (%)
Corporate Adjusted EBITDA		50	%	$	978.0	$	942.3		96.35	%		65.78	%		32.9	%
Corporate Revenue		50	%	$	3,137.6	$	3,029.9		96.57	%		67.8	%		33.9	%
Attainment															66.8	%


Mr. O’Reilly

Measure	Weighting			Target ($ in millions)		Actual ($ in millions)(1)			2018 Payout Percentage (% of Target)			2018 Achievement Factor (%)			2018 Weighted Achievement Factor (%)
Corporate Adjusted EBITDA		12.5	%	$	1,008.0	$	942.3			93.48	%		38.8	%		4.9	%
Corporate Revenue		12.5	%	$	3,137.6	$	3,029.9			96.57	%		67.8	%		8.5	%
Software and Analytics Adjusted EBITDA		37.5	%	$	445.9	$	444.6	(2)		99.71	%		97.3	%		36.5	%
Software and Analytics Revenue		37.5	%	$	1,028.2	$	1,030.5	(2)		100.22	%		102.2	%		38.3	%
Attainment																88.2	%

(1)	As discussed above, revenue and Adjusted EBITDA results exclude the one-time impact of a terminated customer agreement and the impact of the NDSC acquisition.

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(2)	Reflects actual results of the Software and Analytics business unit and not the Software and Analytics reportable segment, which segment includes results of the Imaging, Workflow & Care Solutions business unit.

Notwithstanding the establishment of the performance components and the formula for determining the AIP award payment amounts as described above, the compensation committee has the ability to exercise positive or negative discretion and award a greater or lesser amount to our named the AIP than the amount determined by the above formula if, in the exercise of its business judgment, the compensation committee determines that a greater or lesser amount is warranted under the circumstances. For fiscal 2018, the compensation committee granted Mr. de Crescenzo the discretion to increase the corporate-level financial performance weighted achievement factor for senior leadership team members, which included Mr. Yntema, up to 100%. In consultation with Mr. Eliasson, Mr. de Crescenzo determined it was appropriate to increase the final corporate-level financial performance weighted achievement factor to 80%.

After determining the financial performance attainment levels, the compensation committee with the input of the CEO for all named executive officers participating in the AIP except for himself, then determined each named executive officer’s individual performance attainment based on an assessment of the named executive officer’s achievement of previously communicated individual performance goals. For fiscal 2018, the individual performance goals included:

•

For Mr. de Crescenzo : (i) meeting corporate sales, revenue, EBITDA and cash flow objectives; (ii) executing the Company’s growth initiatives; (iii) achieving revenue synergies from our merger (the “MTS Merger”) with McKesson Technology Solutions (“MTS”); (iv) improving the competitive positioning of our key offerings; (v) effectively implementing our Innovation Framework and Portfolio Management; and (vi) inspiring our customers, partners and team members.

•

For Mr. Yntema, in his capacity as Chief Financial Officer: (i) achieving revenue and Adjusted EBITDA growth targets; (ii) implementing new structures, plans and processes to support successful financial operations and strategic priorities; (iii) effectively integrating MTS and Legacy CHC people, processes and systems to achieve cost synergy objectives; (iv) creating a high performing combined finance organization through engagement and development aligned with our vision and values; and prior to assuming the Chief Financial Officer role: (i) leading Financial Planning & Analysis through all planning cycles; (ii) supporting financial migration required from reorganization of business/functions; (iii) support Functional Leadership through all financial seasons, analysis & reporting; (iv) standardize planning/reporting through implementation of best practices; (v) provide finance guidance for new or complex processes; (vi) participate in Financial Planning & Analysis impacted projects system implementations and process updates; and (vii) deliver efficiency gains in planning, allocations, analysis & reporting/modeling through integration of disparate systems.

•

For Mr. O’Reilly: (i) realizing cross-sell opportunities from the MTS Merger; (ii) meeting above-market growth for all key product groups; (iii) accelerating our growth initiatives; (iv) achieving cost synergy targets; (v) meeting revenue, EBITDA and cash flow objectives; (vi) effectively implementing our Innovation Framework and Portfolio Management; and (v) inspiring our customers, partners and team members.

•

For Mr. Choy: (i) developing and implementing our network convergence strategy that leverages and builds upon strengths of both Legacy CHC and MTS network capabilities; (ii) driving cloud strategy, platform selection and application migration roadmap; (iii) creating an improved user experience platform; (iv) leveraging artificial intelligence and data-driven processes to fuel EBITDA growth; (v) driving integration strategy on data platforms; (vi) developing a product rationalization strategy with network and financial businesses and executing on product migration roadmap; (vii) developing and enhancing our payment platform; (viii) successfully delivering on infrastructure integration; (ix) implementing or integrating Enterprise Resource Planning software and Human Resources Information System platforms and formulating a strategy for integrating other corporate applications; (x) achieving

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global stability in internal and external systems; (xi) positioning security practices as foundational to our products and processes; and (xii) building strong team member engagement to attract and grow the R&D organization.

•

For Mr. Vachon: (i) meeting sales targets; (ii) identifying, quantifying and launching revenue synergy targets; (iii) achieving cost synergy targets; (iv) making significant progress to separate from McKesson; (v) optimizing the newly functionalized sales operations; (vi) developing strategy with respect to functionalization of operations; (vii) establishing a customer experience process and metrics; and (viii) establishing engagement process and systems to communication and align with board and peers.

•

For Mr. Leonard: (i) achieving TES service line bookings targets; (ii) expanding Business Performance Services customer base via additional strategic partnerships and relationships; (iii) securing contracts for comprehensive health system Revenue Cycle Management (RCM) services; (iv) establishing and executing on certain cross-selling opportunities; (v) enhancing the efficiency and effectiveness of TES RCM service delivery through the use of automation tools; (vi) expanding Communication and Payment Services payer value to drive additional sales; (vii) achieving TES revenue and Adjusted EBITDA targets; and (viii) identifying and leveraging key customer promoters to grow business.

We did not use a formula or assign any particular relative weighting to any individual performance measure. The individual performance attainment percentage can range from 0% to 140%, subject to any overall maximum AIP opportunity set forth in a named executive officer’s offer letter or employment agreement.

For 2018, our named executive officers’ target annual cash incentive award as a percentage of eligible base salary were 125% for Mr. de Crescenzo; 30% for Mr. Yntema; and 85% for Messrs. Choy, O’Reilly and Vachon.

Actual amounts paid under the AIP were calculated by multiplying each named executive officer’s base salary earned and paid in fiscal 2018 by (i) his or her AIP target annual cash incentive opportunity (which is reflected as a percentage of eligible base salary), (ii) the executive’s weighted financial performance achievement factor and (iii) the individual performance attainment percentage. Generally, AIP awards, if earned, are contingent upon the participant remaining in continuous employment through the payment date. The following table illustrates the calculation of the annual cash incentive awards payable to each of our named executive officers under the 2018 AIP based on 2018 financial performance and individual performance.


Name	Eligible Base Salary ($)		Target AIP Award (% of Base Salary)			Target AIP Opportunity ($)		Combined Performance Factor (%)			Actual Payout ($)*
Mr. de Crescenzo	$	742,750		125	%	$	928,438		60.76	%	$	564,138
Mr. Yntema(1)	$	246,359		30	%	$	73,908		84.00	%	$	62,082
Mr. O’Reilly(2)	$	408,935		85	%	$	347,595		105.84	%	$	367,895
Mr. Vachon(3)	$	500,000		85	%	$	425,000		53.30	%	$	226,525
Mr. Choy	$	447,600		85	%	$	380,460		85.28	%	$	324,456

*	Amounts may not total due to rounding.

(1)	Pursuant to the terms of Mr. Yntema’s severance and release agreement, he was eligible for a full year AIP award based on actual performance. The discretionary portion of Mr. Yntema’s AIP award is reported in the Bonus column of the Summary Compensation Table below.

(2)	Amounts shown were converted from Canadian to U.S. dollars using an exchange rate of 0.75850.

(3)	Although Mr. Vachon terminated employment prior to the AIP award payment date, the terms of his separation and release agreement provided that he was eligible to receive a full year AIP award based on actual performance.

Mr. Eliasson commenced employment with the Company in March 2018 and as a result was not eligible to receive a fiscal 2018 AIP award. Mr. Giles terminated employment with the Company in October 2017 and

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pursuant to the terms of his retirement agreement was entitled to a payment in the amount of $219,717, reflecting a pro-rated portion of his target fiscal 2018 AIP award. Mr. Hamood terminated employment with the Company in January 2018 and pursuant to the terms of his transition agreement was entitled to a pro-rated fiscal 2018 AIP award in the amount of $557,000. Mr. Leonard resigned from the Company in October 2017 and therefore forfeited his right to a fiscal 2018 AIP award.

The design of the fiscal 2019 AIP substantially follows the 2018 AIP design.

Equity-Based Awards

In connection with the Transactions, we assumed the Amended and Restated 2009 Equity Incentive Plan of Change Healthcare, Inc. (the “2009 Plan”) and certain outstanding awards thereunder, as adjusted in connection with the Transactions. The 2009 Plan was amended and restated as the HCIT Holdings, Inc. Amended and Restated 2009 Equity Incentive Plan (the “Equity Plan”).

Following the Transactions, certain directors and key executives, including each of the named executive officers, were granted long-term equity incentive awards under the Equity Plan that are designed to align a portion of our named executive officers’ compensation with the interests of our existing owners and to incentivize them to remain in our service. Options to purchase common stock of Change Healthcare Inc. have been our preferred form of equity award following the Transactions because they do not have any value unless the underlying shares of common stock appreciate in value following the grant date. Accordingly, awarding stock options causes a portion of our executives’ compensation to be “at risk” and further aligns our executive compensation with our long-term profitability and the creation of stockholder value.

The stock options granted under the Equity Plan following the Transactions are divided equally into a time-vesting portion and an exit-vesting portion. The time-vesting options were granted with an exercise price equal to the fair value of Change Healthcare Inc. common stock on the date of the grant and generally vest in equal 25% installments on the first through fourth anniversaries of the designated vesting start date, subject to continued employment through such vesting date. The exit-vesting options granted in fiscal 2018 were granted with an exercise price equal to the fair value of Change Healthcare Inc. common stock on the date of grant and generally vest, subject to the award holder’s continued employment through the vesting date, on the earlier to occur of the date that (i) affiliates of Blackstone sell 25% of the equity interests of the Joint Venture held by such affiliates on the date of the Transactions at a specified weighted average price per share and McKesson distributes more than 50% of the equity interests of the Joint Venture held by it on the date of the Transactions or (ii) McKesson and affiliates of Blackstone collectively sell more than 25% of the aggregate equity interests held by McKesson and Blackstone on the date of the Transactions at a specified weighted average price per share. The size of each named executive officer’s stock option grant was determined in light of the executive’s position and level of responsibility and was designed to ensure that the executive was provided with appropriate and competitive long-term equity incentive compensation. In fiscal 2018, our named executive officers were granted options to purchase the following number of shares of Change Healthcare Inc. common stock: Mr. de Crescenzo (5,000 time-vesting options and 5,000 exit-vesting options), Mr. Giles (375 time-vesting options and 375 exit-vesting options), Mr. Hamood (4,897.5 time-vesting options and 4,897.5 exit-vesting options), Mr. Yntema (297.5 time-vesting options and 297.5 exit-vesting options), Mr. O’Reilly (2,550 time-vesting options and 2,550 exit-vesting options), Mr. Vachon (4,250 time-vesting options and 4,250 exit-vesting options), Mr. Choy (1,500 time-vesting options and 1,500 exit-vesting options) and Mr. Leonard (2,000 time-vesting options and 2,000 exit-vesting options).

In fiscal 2019, in order to enhance retention incentives, the compensation committee determined it was appropriate to amend the outstanding exit-vesting options to provide for an additional vesting opportunity if one of the exit-vesting criteria events described above occurs but at an average price per share less than the specified weighted average price per share. In addition, all new exit-vesting options granted in fiscal 2019, including the grant awarded to Mr. Eliasson was awarded in connection with his commencement of employment, no longer

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contain any of the specified weighted average price per share hurdles and are subject only to the additional vesting opportunity added to the outstanding exit-vesting options.

In fiscal 2018, in order to attract Mr. Hamood to join the Company as Executive Vice President, Finance and Chief Financial Officer, he was awarded a full value stock award in the form of 2,500 time-vesting restricted stock units in addition to his stock option awards.

For more information regarding the equity awards, including the specific vesting terms, see “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table—Terms of Equity Awards.”

Compensation Related to the Transactions

Legacy CHC Replacement Awards. In connection with the Transactions, a portion of the vested or deemed vested Legacy CHC stock option and restricted stock unit awards was cashed out and the remaining portion was replaced with vested stock option and restricted stock unit awards of Change Healthcare Inc. Unvested exit-vesting Legacy CHC stock option awards were replaced with 2.5x and 3.0x exit-vesting restricted stock of Change Healthcare Inc. with vesting conditions substantially similar to the original awards. Unvested time-vesting restricted stock units were replaced with unvested restricted stock units of Change Healthcare Inc. with vesting conditions identical to the original awards. Because the stock of eRx Network and the 2017 Tax Receivable Agreement were distributed to Legacy CHC Stockholders immediately prior to the Transactions, certain Legacy CHC award recipients, including Messrs. de Crescenzo, Giles and Choy, also received equity awards in eRx Network and the right to receive a cash payment related to a proportionate value of the 2017 Tax Receivable Agreement in connection with the Transactions. For a discussion of the vesting and other terms of the outstanding Legacy CHC replacement awards, see “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table—Terms of Equity Awards—Legacy CHC Awards.”

Legacy CHC Retention and Transaction Bonuses. In connection with the Transactions, Messrs. de Crescenzo, Giles and Choy, entered into retention letter agreements in order to incentivize them to remain employed through, and for a specified period of time following, the date of the Transactions. The retention letter agreements provided for a cash retention bonus which became earned as long as the executive remained employed by the Company through one-year anniversary of the announcement of the Transactions. Accordingly, on July 2017, the following named executive officers were paid retention bonuses in the following amounts: Mr. de Crescenzo ($360,500) and Choy ($218,875). Pursuant to the terms of Mr. Giles’s retirement agreement, in lieu of the retention bonus originally communicated to him, he was awarded a retention bonus in the amount of $231,750, which was paid to him on June 28, 2017. In addition, in recognition of the effort and leadership displayed in connection with the Transactions and the establishment of the Joint Venture, certain of the named executive officers received one-time transaction bonuses, which were paid in March 2017 and therefore are not reported in the Summary Compensation below .

McKesson Replacement Awards. In connection with the Transactions, certain employees of McKesson that held McKesson equity awards, including Messrs. Yntema, O’Reilly and Leonard, became employees of the Joint Venture. Under the terms of the original awards, the awards would expire following the affected employees’ termination from McKesson. Accordingly, in order to compensate such employees for their outstanding McKesson equity awards that would have otherwise been forfeited upon the closing of the Transactions, time-vesting restricted stock unit awards scheduled to vest through May 31, 2017, were modified by McKesson to permit continued vesting through their original vesting date. All other McKesson equity awards were cancelled and, for Messrs. Yntema, O’Reilly and Leonard, replaced with a grant of new Change Healthcare Inc. stock options with the same vesting terms as the Change Healthcare Inc. stock options granted under the Equity Plan following the Transactions as described above. In addition, certain employees of McKesson, including Messrs. O’Reilly and Leonard, held McKesson long-term cash incentive awards that were cancelled in connection with the Transactions and replaced with cash retention bonuses payable by the Company in June 2018 and June 2019,

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subject to continued employment through such dates. Accordingly, in fiscal 2019, we paid Mr. O’Reilly the first installment of the retention bonus in the amount of C$237,173. In fiscal 2020, Mr. O’Reilly is eligible to be paid the second installment of the retention bonus in the amount of C$126,005. Mr. Leonard forfeited his retention bonus in connection with the termination of his employment in fiscal 2019.

McKesson Retention Bonuses. In connection with the Transactions, certain employees of McKesson, including Messrs. Yntema, O’Reilly and Leonard, entered into retention letter agreements in order to incentivize them to remain employed through, and for a specified period of time following, the date of the Transactions. The retention letter agreements provided for a cash retention bonus that became earned as long as the executive remained employed through the one-year anniversary of the date of the agreement. Accordingly, in fiscal 2018, the following named executive officers were paid retention bonuses in the following amounts: Mr. Yntema ($234,740); Mr. O’Reilly ($392,955); and Mr. Leonard ($403,508).

Retirement and Other Benefits

Our named executive officers are eligible to receive the same benefits we provide, and to participate in all plans we offer, to other full-time employees, including health and dental insurance, group term life insurance, short- and long-term disability insurance, other health and welfare benefits, our 401(k) Savings Plan or, in the case of Mr. O’Reilly, our Group Registered Retirement Plan (including, in each case, Change Healthcare’s matching contribution) and other voluntary benefits.

In addition, in fiscal 2018, certain of our named executive officers received additional benefits in the form of financial planning services and housing and other benefits provided in connection with international assignments (including related tax gross-ups thereon).

In fiscal 2018, we also offered voluntary participation in two unfunded, nonqualified deferred compensation retirement plans, the McKesson Technologies Inc. Deferred Compensation Administration Plan (the “DCAP”) and the McKesson Technologies Inc. Supplemental 401(k) Plan, to select executives who were previously employed by McKesson, including Messrs. Yntema and Leonard. Additional details about the nonqualified deferred compensation plans are included in the “Nonqualified Deferred Compensation for Fiscal 2018” section of this prospectus.

Severance Arrangements

In connection with this offering, we have developed a new market-competitive executive severance plan (the “Executive Severance Guidelines”). All of our current executive officers, other than Mr. de Crescenzo, have agreed or are expected to agree to be subject to the Executive Severance Guidelines, superseding any severance provisions contained in their employment agreements, which have been or are expected to be terminated in connection with this offering. See “—Actions Taken in Connection with This Offering—Employment Agreements” below for additional information. The Executive Severance Guidelines generally provide for severance payments for a period of twelve months should the named executive officer’s employment be terminated either by us without cause or by the executive due to constructive termination. The Executive Severance Guidelines also provide for reimbursement for health benefit continuation. The benefits provided under both the Executive Severance Guidelines are contingent upon the affected named executive officer’s execution and non-revocation of a general release of claims and compliance with specified restrictive covenants. See “Potential Payments upon a Termination or Change in Control,” which describes the payments to which the participating named executive officers may be entitled under the Executive Severance Guidelines.

Mr. de Crescenzo is party to an employment agreement with us governing the terms of his employment with us and any future separation. Pursuant to his employment agreement, we provide salary continuation and other benefits in the event of involuntary or, in certain cases, constructive termination of employment without cause. Pursuant to Mr. de Crescenzo’s employment agreement, he is subject to restrictive covenants, including confidentiality, non-competition and non-solicitation obligations.

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In addition to any existing severance arrangements, any compensation and benefits ultimately awarded in connection with a separation are determined at the discretion of the compensation committee and may be based on the executive, his or her position, nature of the potential separation and such executive’s compliance with specified post-termination restrictive covenants. In connection with their terminations of employment with the Company, the compensation committee determined that, in recognition of the executive’s service to the Company and/or in consideration for entering into a general release of claims, it was appropriate to enter into separation, transition or retirement agreements with each of Messrs. Giles, Hamood, Yntema and Vachon, which agreements are described under “Potential Payments Upon Termination or Change in Control” below.

Actions Taken in Connection with This Offering

Omnibus Incentive Plan . In connection with this offering, our board of directors expects to adopt, and we expect our stockholders to approve, our Omnibus Incentive Plan, which will allow us to implement a new market-based long-term incentive program to align our executive compensation package with similarly situated public companies. See “—Equity Compensation and Stock Purchase Plans—Omnibus Incentive Plan” below for additional details.

Employee Stock Purchase Plan . In connection with this offering, our board of directors expects to adopt, and we expect our stockholders to approve, our Employee Stock Purchase Plan, or ESPP. We believe that allowing our employees to participate in the ESPP will provide them with a further incentive towards ensuring our success and accomplishing our corporate goals. See “—Equity Compensation and Stock Purchase Plans—Employee Stock Purchase Plan” below for additional details.

Employment Agreements . We previously entered into employment agreements with certain of our current executive officers to attract and retain these executives. These agreements generally had similar provisions that defined the nature of each executive’s employment, compensation and benefits provided in connection with his or her employment (such as base salary and/or other personal benefits or perquisites), compensation and benefits upon termination and certain restrictive covenants. With the exception of Mr. de Crescenzo, who remains a party to an employment agreement with us, each of our executive officers subject to an employment agreement have agreed, or are expected to agree, to terminate their employment agreement in connection with this offering. The compensation committee believes that employment agreements will generally no longer be necessary to attract members of our executive team following the offering, and, going forward, entering into employment agreements with executives will be done on an exception only basis as recommended by the compensation committee and approved by the board of directors. Due to the changing marketplace in which we compete for talent, the compensation committee intends to regularly review this practice to help ensure that we remain competitive in our industry.

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Summary Compensation Table

The following table summarizes the compensation earned by each of our named executive officers for the fiscal year ended March 31, 2018.


Name and Principal Position(1)	Year		Salary ($)		Bonus ($)(2)		Stock Awards ($)(3)		Option Awards ($)(3)		Non-Equity Incentive Plan Compensation ($)(4)		All Other Compensation ($)		Total ($)
Neil E. de Crescenzo Chief Executive Officer		2018		742,750		360,500		—		6,612,050		564,138		6,071		8,285,509

Fredrik J. Eliasson Executive Vice President and Chief Financial Officer		2018		25,000		—		—		—		—		—		25,000

Randy P. Giles Former Chief Financial Officer		2018		286,563		451,467		—		495,904		—		396,485		1,630,419

Samuel Hamood Former Chief Financial Officer		2018		306,529		557,000		6,000,000		6,476,503		—		5,644		13,345,676

Howard R. Yntema Former Interim Chief Financial Officer		2018		246,360		244,984		—		393,417		53,887		14,385		953,033

Roderick O’Reilly Executive Vice President and President, Software and Analytics		2018		420,521		392,955		—		3,372,146		367,895		1,011,439		5,564,956

Mark L. Vachon Former Executive Vice President, Sales and Operations		2018		500,000		—		—		5,620,242		226,525		6,750		6,353,517

Alex P. Choy Executive Vice President—Research and Development / Information Technology and Chief Information Officer		2018		447,600		218,875		—		1,983,615		324,456		6,826		2,981,372

Patrick J. Leonard Former President, Technology Enabled Services		2018		234,612		403,508		—		2,644,820		—		23,808		3,306,748

(1)

Mr. Eliasson was appointed Executive Vice President and Chief Financial Officer on March 19, 2018 and the amounts earned in fiscal 2018 reflect only that portion of his annual base salary earned from March 19, 2018 to March 31, 2018. Mr. Giles retired as Chief Financial Officer on October 20, 2017. Mr. Hamood served as Chief Financial Officer following Mr. Giles’s retirement until Mr. Hamood’s termination of employment on January 19, 2018. Mr. Yntema served as Interim Chief Financial Officer following Mr. Hamood’s departure until the appointment of Mr. Eliasson on March 19, 2018, and Mr. Yntema’s

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employment terminated on June 7, 2018. Mr. Vachon’s employment terminated on April 6, 2018, after the end of our fiscal year. Mr. Leonard terminated employment on October 13, 2017. The Company paid the salary of Mr. O’Reilly in Canadian dollars. Except as otherwise noted, the U.S. dollar amounts in the table above were converted from Canadian to U.S. dollars using the average of fiscal 2018 monthly exchange rates, which was $0.77999.

(2)

The amounts in this column represent the retention bonuses paid to certain of the named executive officers in connection with the Transactions. The amount reported for Mr. Giles also reflects a bonus payment pursuant to the terms of his retirement agreement in the amount of $219,717, reflecting a pro-rated portion of his target AIP award. Mr. Hamood terminated employment with the Company in January 2018 and the amount reported for Mr. Hamood reflects a payment pursuant to the terms of his transition agreement in the amount of $557,000, reflecting a pro-rated fiscal 2018 AIP award. The amount reported does not reflect the $500,000 sign-on bonus Mr. Hamood received in connection with the commencement of his employment that he was required to repay in connection with his termination of employment. Amount reported for Mr. Yntema also includes the discretionary portion of his AIP award in the amount of $10,244. The Company paid the amount to Mr. O’Reilly in Canadian dollars. The U.S. dollar amount for Mr. O’Reilly was converted from Canadian dollars to U.S. dollars using an exchange rate for the date on which the amount was paid, which was $0.72886.

(3)

The amounts reported in these columns reflect the fair value of restricted stock units and time-vesting options granted in fiscal 2018. These restricted stock units and stock options were deemed granted to non-employees of the issuing entity and are subject to FASB ASC 505, Equity (“Topic 505”). Under Topic 505, companies must generally recognize compensation expense equal to the fair value of the grant on the date that the award vests. Until the awards vest, expense is recorded based on an estimate of fair value measured at the end of each accounting period. Accordingly, the amounts reported in this column reflect the fair value of the restricted stock units and time-vesting options on the first measurement date following the date of grant calculated in accordance with the FASB Topic 718, Compensation—Stock Compensation (“Topic 718”). For information regarding the assumptions used in determining the fair value of these awards, please refer to Note 16, “Incentive Compensation Plans” of the audited consolidated financial statements included elsewhere in this prospectus. The fair value of the exit-vesting options granted in fiscal 2018 was computed based on the probable outcome of the performance conditions on the first measurement date following the date of grant. Achievement of the performance condition was not deemed probable on such date and, accordingly, no value is included in the table for these awards. Assuming achievement of the performance condition, the fair values of the exit-vesting options granted in fiscal 2018 were as follows: Mr. de Crescenzo ($4,782,550), Mr. Giles ($358,691), Mr. Hamood ($4,684,508), Mr. Yntema ($284,562), Mr. O’Reilly ($2,439,101), Mr. Vachon ($4,065,168), Mr. Choy ($1,434,765) and Mr. Leonard ($1,913,020).

For details regarding the treatment of the equity awards reported in these columns following the departures of Messrs. Giles, Hamood, Yntema, Vachon and Leonard, see “—Potential Payments Upon Termination or Change in Control—Severance Benefits—Separation Agreements.”

(4)

The amounts reported in this column for 2018 include amounts earned by named executive officers (as applicable) under the AIP. The terms of the AIP are described more fully above under “—Compensation Discussion and Analysis —Annual Cash Incentive Program—Fiscal 2018” above. Mr. Leonard resigned from the Company in October 2017 and therefore forfeited his right to a fiscal 2018 AIP award. The U.S. dollar amount paid to Mr. O’Reilly was converted from Canadian dollars to U.S. dollars using an exchange rate of $0.75850, the exchange rate on the date on which the amount was paid.

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(5)

The amounts reported in the “All Other Compensation” column reflect the sum of: (1) the amounts contributed by the Company to the 401(k) Plan, the Supplemental 401(k) Plan, the DCAP, or other applicable retirement savings plan; (2) amounts paid for financial planning services for certain named executive officers; (3) housing and other benefits provided in connection with international assignments (and related tax gross-ups thereon); and (4) severance payments for Mr. Giles. The narrative following the table below describes these components of All Other Compensation.


Name	Defined Contribution Plan Matching Contribution ($)(a)		Supplemental 401(k) Plan and DCAP Contributions ($)(b)		Housing and Other International Assignment Expenses and Allowances ($)(c)		International Assignment Tax Gross-Ups and Tax Equalization Benefits ($)(d)		Severance Payments ($)(e)		Total ($)
N. de Crescenzo		6,071		—		—		—		—		6,071
F. Eliasson		—		—		—		—		—		—
R. Giles		4,076		—		—		—		392,409		396,485
S. Hamood		5,644		—		—		—		—		5,644
H. Yntema		—		14,385		—		—		—		14,385
R. O’Reilly		4,314		—		110,317		896,808		—		1,011,439
M. Vachon		6,750		—		—		—		—		6,750
A. Choy		6,826		—		—		—		—		6,826
P. Leonard		—		23,808		—		—		—		23,808

Amounts shown in the table reflect the components of All Other Compensation, including perquisites and personal benefits received by named executive officers in fiscal 2018 to the extent that the total value of such perquisites and personal benefits was equal to or exceeded $10,000. Items deemed perquisites are valued on the basis of their aggregate incremental cost to the Company.

(a)	Amounts disclosed in this column reflect Company contributions to our 401(k) Plan or, in the case of Mr. O’Reilly, our Group Registered Retirement Plan.

(b)	Amounts disclosed in this column reflect Company contributions to the Supplemental 401(k) Plan and/or DCAP, as applicable.

(c)

In connection with international assignments, the Company offers certain expatriate and tax equalization benefits. Mr. O’Reilly is serving on such an assignment, and as such, he is receiving benefits intended to place expatriate employees in a similar net tax position to similarly-compensated employees in Canada. Amounts disclosed in this column reflect housing costs ($87,351), home leave travel ($13,685) and other benefits in connection with his assignment.

(d)

Amount disclosed in this column reflects Mr. O’Reilly’s tax equalization benefits and the tax gross-ups related to Mr. O’Reilly’s expatriate and tax equalization benefits. The amount reflects the final tax equalization adjustment for 2017, as it pertains to the calendar year ending within fiscal 2018.

(e)

Amounts disclosed in this column reflect severance payments to Mr. Giles following termination of his employment. Pursuant to the terms of his retirement agreement, Mr. Giles received the following: $377,289 representing severance paid in fiscal 2018 and a payment of $15,120 representing the cost of obtaining post-separation medical, dental and vision coverage under COBRA for twelve months. Details regarding Mr. Giles’s retirement agreement are further described in the “Potential Payments Upon Termination or Change in Control” section of this prospectus.

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Grants of Plan-Based Awards in Fiscal 2018

The following table provides information relating to (i) awards granted under our AIP, (ii) options to purchase shares of Change Healthcare Inc. common stock and (iii) grants of restricted stock units of Change Healthcare Inc., granted during fiscal 2018.


			Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)						Estimated Future Payouts Under Equity Incentive Plan Awards						All Other Stock Awards: Number of Shares or Units (#)		All Other Option Awards: Number of Securities Underlying Options (#)		Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Option Awards ($)
Name	Grant Date		Threshold ($)		Target ($)		Maximum ($)		Threshold (#)		Target (#)		Maximum (#)		All Other Stock Awards: Number of Shares or Units (#)				Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Option Awards ($)
N. de Crescenzo
AIP				0		928,438		1,500,000
Time-Vesting Options(2)		8/8/2017																5,000	$	2,400		6,612,050
Exit-Vesting Options(3)		8/8/2017										5,000							$	2,400		—
F. Eliasson		—		—		—		—		—		—		—				—		—		—
R. Giles(5)				—		—		—
Time-Vesting Options(2)		8/8/2017																375	$	2,400		495,904
Exit-Vesting Options(3)		8/8/2017										375							$	2,400		—
S. Hamood(5)
AIP				0		875,000		1,400,000
Time-Vesting Options(2)		8/21/2017																4,897.5	$	2,400	$	6,476,503
Exit-Vesting Options(3)		8/21/2017																4,897.5	$	2,400		—
Time-Vesting Restricted Stock Units(4)		8/21/2017														2,500						6,000,000
H. Yntema(5)
AIP				0		73,908		206,942
Time-Vesting Options(2)		8/8/2017																46	$	2,400		60,831
Exit-Vesting Options(3)		8/8/2017										46							$	2,400		—
Time-Vesting Options(2)		8/8/2017																251.5	$	2,400		332,586
Exit-Vesting Options(3)		8/8/2017										251.5							$	2,400		—
R. O’Reilly
AIP				0		347,595		973,266
Time-Vesting Options(2)		8/8/2017																2,550	$	2,400		3,372,146
Exit-Vesting Options(3)		8/8/2017										2,550							$	2,400		—
M. Vachon(5)
AIP				0		425,000		850,000
Time-Vesting Options(2)		8/8/2017																2,125	$	2,400		2,810,121
Exit-Vesting Options(3)		8/8/2017										2,125							$	2,400		—
Time-Vesting Options(2)		8/8/2017																2,125	$	2,400		2,810,121
Exit-Vesting Options(3)		8/8/2017										2,125							$	2,400		—
A. Choy
AIP				0		380,460		676,325
Time-Vesting Options(2)		8/8/2017																1,500	$	2,400		1,983,615
Exit-Vesting Options(3)		8/8/2017										1,500							$	2,400		—
P. Leonard(5)
AIP				0		234,612		656,914
Time-Vesting Options(2)		8/8/2017																2,000	$	2,400		2,644,820
Exit-Vesting Options(3)		8/8/2017										2,000							$	2,400		—

(1)

The amounts reported in these columns reflect the full year annual cash incentive award opportunity range under our AIP for fiscal 2018, the terms of which are summarized under “—Compensation Discussion and Analysis—Annual Cash Incentive Program—Fiscal 2018” above. For purposes of this table, the “Threshold” amount shown represents an assumption that that the Company achieves only the threshold level of Adjusted EBITDA and the individual performance multiplier is slightly greater than 0%, which would result in a de minimis AIP payout. Mr. Giles terminated employment with the Company in October 2017 and, pursuant to the terms of his retirement agreement entered into in April 2017, was not granted a fiscal 2018 AIP award opportunity and instead was entitled to a payment in the amount of $219,717, reflecting a pro-rated portion of his target AIP award. Mr. Hamood terminated employment with the Company in January 2018 and pursuant to the terms of his transition agreement was entitled to payment in the amount of $557,000, reflecting a pro-rated fiscal 2018 AIP award. Mr. Leonard resigned from the Company in October 2017 and therefore forfeited his right to a fiscal 2018 AIP award. Amounts shown for Mr. O’Reilly were converted from Canadian dollars to U.S. dollars using an exchange rate of 0.75850, the exchange rate on the date on which the amount was paid.

(2)

Amounts reported in the second row for each named executive officer (other than Mr. Eliasson) reflect the time-vesting options granted to the named executive officers in fiscal 2018. The fair value of these awards is calculated in accordance with Topic 505 and Topic 718. See footnote (3) to the Summary Compensation Table.

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(3)

The amounts reported in the third row for each named executive officer (other than Mr. Eliasson) reflect the exit-vesting options granted to the named executive officer in fiscal 2018. The fair value of the exit-vesting options is based on the probable outcome of the performance conditions. See footnote (3) to the Summary Compensation Table.

(4)	The amount reported in the fourth row for Mr. Hamood reflects time-vesting restricted stock units granted to Mr. Hamood in fiscal 2018. The fair value of these awards is calculated in accordance with Topic 505 and Topic 718. See footnote (3) to the Summary Compensation Table.

(5)	For details regarding the treatment of the equity awards reported above following the departures of Messrs. Giles, Hamood, Yntema, Vachon and Leonard, see “—Potential Payments Upon Termination or Change in Control— Severance Benefits – Separation Agreements.”

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

Employment Arrangements

As discussed above, in connection with this offering, each of our named executive officers that has or had an employment agreement, other than Mr. de Crescenzo, has agreed or is expected to agree to terminate such employment agreement. See “Compensation Discussion and Analysis—Actions Taken in Connection with This Offering—Employment Agreements” above for additional information. The following are the material individual provisions of Mr. de Crescenzo’s employment agreement and Mr. Eliasson’s Offer Letter.

Mr. de Crescenzo’s Employment Agreement

Mr. de Crescenzo’s amended and restated employment agreement, entered into in April 2017, provides that he is to serve as our Chief Executive Officer on at-will basis. The employment agreement does not contain a specified term and will continue until terminated by either party, provided that Mr. de Crescenzo is required to provide 30 days’ advance written notice prior to his resignation. Mr. de Crescenzo’s employment agreement provides for: (i) a minimum base salary of $721,000, (ii) eligibility to receive an annual cash incentive award under the AIP with a target of 100% of base salary and a maximum of 200% of base salary and (iii) a grant of 5,000 time-vesting and 5,000 exit-vesting options. Mr. de Crescenzo is also entitled to participate in all employee benefit plans, programs and arrangements made available to other executive officers generally. The severance provisions contained in Mr. de Crescenzo’s employment agreement are described below under “—Potential Payments Upon Termination or Change in Control—Severance Benefits—Employment Arrangements.”

Mr. Eliasson’s Offer Letter

Mr. Eliasson’s offer letter, entered into in March 2018, provides that he is to serve as our Executive Vice President and Chief Financial Officer on at-will basis. Mr. Eliasson’s offer letter provides for: (i) an initial base salary of $650,000, (ii) eligibility to receive an annual cash incentive award under the AIP with a target of 85% of base salary under the AIP and (iii) an initial grant of 5,500 time-vesting and 5,500 exit-vesting options. Mr. Eliasson was also eligible for relocation benefits and is entitled to participate in all employee benefit plans, programs and arrangements made available to other executive officers generally. Mr. Eliasson’s severance rights are described below under “—Potential Payments Upon Termination or Change in Control—Severance Benefits—Employment Arrangements.”

Terms of Equity Awards

Time-Vesting and Exit-Vesting Options

The Change Healthcare Inc. stock options granted to our named executive officers following the Transactions are divided equally into a time-vesting portion and an exit-vesting portion. The time-vesting options were granted with an exercise price equal to the fair value of Change Healthcare Inc. common stock on the date of the grant and generally vest in equal 25% installments on the first through fourth anniversaries of the designated vesting start date, subject to continued employment through such vesting date.

The exit-vesting options were granted with an exercise price equal to the fair value of Change Healthcare Inc. common stock on the date of grant and generally vest, subject to the award holder’s continued employment

204

through the vesting date, on the earlier to occur of the date (the “Exit Event Date”) on which either (i) affiliates of Blackstone sell 25% of the equity interests of the Joint Venture held by such affiliates on the date of the Transactions at a weighted average price in excess of the equivalent of $4,200 per share, and McKesson distributes more than 50% of the equity interests of the Joint Venture held by it on the date of the Transactions or (ii) McKesson and affiliates of Blackstone collectively sell more than 25% of the aggregate equity interests held by McKesson and Blackstone on the date of the Transactions at a weighted average price in excess of the equivalent of $4,200 per share. No portion of the exit-vesting options will vest solely as a result of any transaction in which McKesson disposes of or distributes equity owned by it in the Joint Venture to its shareholders.

In fiscal 2019, the outstanding exit-vesting options were amended to provide for an additional vesting opportunity if the Exit Event Date occurs but at an average price per share less than the originally specified weighted average price per share. In such case, one-third of the options will vest on the Exit Event Date and the remaining options will vest in two equal installments on the first and second anniversaries of the Exit Event Date.

The exit-vesting options granted to Mr. Eliasson in fiscal 2019 do not contain any specified weighted average price per share hurdles and are subject only to the additional vesting opportunity added to the outstanding exit-vesting options. Accordingly, Mr. Eliasson’s exit-vesting options will vest one-third on the Exit Event Date and in two equal installments on the first and second anniversaries of the Exit Event Date.

Other than with respect to the Change Healthcare Inc. stock options held by Mr. de Crescenzo, Mr. Eliasson, Mr. Giles and Mr. Hamood, any time-vesting and exit-vesting options that are not vested as of the date of the named executive officer’s termination of employment will be forfeited for no consideration. Upon termination of employment by us without “cause” or by the named executive officer for “good reason” (as such terms are defined in the Equity Plan), any vested time-vesting and exit-vesting options will generally remain outstanding and exercisable for 120 days following the termination of employment. This period is shortened to 30 days if the named executive resigns without good reason and no grounds for a termination by us for cause exists, and is extended to one year if employment is terminated due to a qualifying retirement, death or disability. In each case, the exercise period will be shortened to the expiration date of the stock option, if earlier. Any vested options will immediately terminate if the named executive officer’s employment is terminated by us for cause or if there is a restrictive covenant violation by such named executive officer. Any vested options that are not exercised within the applicable post-termination exercise window will terminate. With respect to Mr. de Crescenzo and Mr. Eliasson, any part of their respective time-vesting and exit-vesting options that vest following a termination without cause, for good reason or due to qualifying retirement, death or disability, will generally remain outstanding and exercisable for 60 days following the date such option vested. In each case, the exercise period will be shortened to the expiration date of the stock option, if earlier. See “Potential Payments upon a Termination or Change in Control—Equity Awards” below for a description of the potential vesting that the named executive officers may be entitled to in connection with a change in control or, with respect to Mr. de Crescenzo and Mr. Eliasson, certain terminations of employment. Pursuant to the terms of Mr. Giles’s retirement agreement, the time-vesting options granted to him in fiscal 2018 fully vested following his execution of a release of claims and the expiration of the applicable revocation period and his exit-vesting options will remain outstanding and eligible to vest until the fourth anniversary of his October 20, 2017 departure date. Following certain terminations of employment, Mr. Hamood was eligible for accelerated vesting of a portion of his time-vesting options and his exit-vesting would remain outstanding and eligible to vest for a period of six months. However, Mr. Hamood’s departure in January 2018 did not qualify as an eligible termination and therefore all of his outstanding time-vesting and exit-vesting options were forfeited. Pursuant to the separation and release agreement entered into with Mr. Vachon in April 2018, we agreed to certain modifications to his unvested and vested options. See “Potential Payments upon a Termination or Change in Control— Severance Benefits—Separation Agreements—Departure of Mr. Vachon” below for additional details regarding these modifications.

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Time-Vesting Restricted Stock Units

In addition to receiving a grant of time-vesting and exit-vesting stock options in connection with his commencement of employment in August 2017, Mr. Hamood was also granted 2,500 time-vesting restricted stock units. The restricted stock units were eligible for full accelerated vesting following certain terminations of employment. However, Mr. Hamood’s departure in January 2018 did not qualify as an eligible termination and therefore all 2,500 restricted stock units were forfeited.

Legacy CHC Awards

Vested Replacement Stock Options. Stock options granted in connection with the Transactions as replacement awards for vested Legacy CHC stock options were granted in three tranches with each tranche fully vested at the date of grant.

Upon termination of employment by us without “cause” or by the named executive officer for “good reason” (as such terms are defined in the Equity Plan), the vested replacement stock options will generally remain outstanding and exercisable for 120 days (or three months in the case of the third tranche) following the termination of employment. This period is shortened to 30 days (or remains three months in the case of the third tranche) if the named executive resigns without good reason and no grounds for a termination by us for cause exists, and is extended to one year if employment is terminated due to a qualifying retirement, death or disability. In each case, the exercise period will be shortened to the expiration date of the stock option, if earlier. The vested replacement options will immediately terminate if the named executive officer’s employment is terminated by us for cause or if there is a restrictive covenant violation. Any vested options that are not exercised within the applicable post-termination exercise window will terminate.

Unvested Replacement 2.5x and 3.0x Exit-Vesting Restricted Stock. Shares of 2.5x and 3.0x exit-vesting restricted stock that were granted in connection with the Transactions as replacement awards for unvested exit-vesting Legacy CHC stock options vest during a participant’s employment when Blackstone has sold at least 25% of the maximum number of shares of capital stock in the Company and eRx (measured together on a weighted average shares basis) held by it from time to time and received cash proceeds from this equity investment at a weighted average price per share that is (A) equal to at least 2.5 or 3.0 times, respectively, the amount of Blackstone’s weighted average price per share for its equity investment (the “MOIC Hurdle”) or (B) sufficient to result in an annual internal rate of return of at least 25% or 30%, respectively, on such shares sold assuming that Blackstone’s original purchase price for such shares sold was the weighted average price per share for all such shares acquired by Blackstone from time to time (the “IRR Hurdle”).

Other than the potential vesting that may occur in connection with certain termination or change in control events as described under “—Potential Payments upon a Termination or Change in Control—Long-Term Incentive Awards,” all unvested 2.5x and 3.0x shares of exit-vesting restricted stock will be forfeited upon the named executive officer’s termination of employment.

Pursuant to the terms of the retirement agreement entered into with Mr. Giles in April 2017, we agreed to certain modifications to his vested replacement stock options and unvested replacement exit-vesting restricted stock. See “Potential Payments upon a Termination or Change in Control— Severance Benefits—Separation Agreements—Departure of Mr. Giles” below for additional details regarding these modifications.

Restrictive Covenants and Clawback

By accepting an equity award, our named executive officers agreed to certain restrictive covenants, including an indefinite covenant not to disclose confidential information and not to disparage us, and, during each of the executive’s employment and for the one-year period following any termination of employment (or such longer period as the named executive officer is eligible to receive severance payments from us), covenants related to non-competition and non-solicitation of employees, customers or suppliers, which were incorporated into their respective award agreements.

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Following this offering, if a named executive officer materially breaches any of these restrictive covenants, is terminated for cause or after termination it is discovered that grounds for termination for cause existed, then we have the right to “claw back” and recover any gains the named executive may have realized with respect to his or her shares acquired under the terms of the equity award agreement.

Outstanding Equity Awards at 2018 Fiscal Year-End

The following table provides information regarding outstanding equity awards held by each of our named executive officers as of March 31, 2018.


	Option Awards															Stock Awards
Name	Option Grant Date		Number of Securities Underlying Unexercised Options Exercisable (#)			Number of Securities Underlying Unexercised Options Unexercisable (#)			Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)			Option Exercise Price ($)		Option Expiration Date		Equity Incentive Plan Awards; Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4)		Equity Incentive Plan Awards; Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(5)
N. de Crescenzo		3/1/2017		6,272.03	(1)							$	1,020		9/30/2023
		3/1/2017		2,500	(1)							$	2,473.99		9/30/2023
		8/8/2017		1,250	(2)		3,750	(2)				$	2,400		8/8/2027
		8/8/2017								5,000	(3)	$	2,400		8/8/2027
																	2,156.25		5,175,000
F. Eliasson		—		—			—			—			—		—		—		—
R. Giles(6)		3/1/2017		1,881.61	(1)							$	1,020		2/4/2024
		3/1/2017		1,500	(1)							$	2,473.99		2/4/2024
																	790.63		1,897,512
		8/8/2017		375	(2)							$	2,400		8/8/2027
		8/8/2017								375	(3)	$	2,400		8/8/2027
S. Hamood(6)		—		—			—			—			—		—		—		—
H. Yntema(6)		8/8/2017		11.5	(2)		34.5	(2)				$	2,400		8/8/2027
		8/8/2017								46	(3)	$	2,400		8/8/2027
		8/8/2017		62.88	(2)		188.63	(2)				$	2,400		8/8/2027
		8/8/2017								251.5	(3)	$	2,400		8/8/2027
R. O’Reilly		8/8/2017		637.5	(2)		1,912.52	(2)				$	2,400		8/8/2027
R. O’Reilly		8/8/2017								2,550	(3)	$	2,400		8/8/2027
M. Vachon(6)		8/8/2017		531.25	(2)		1,593.75	(2)				$	2,400		10/27/2026
		8/8/2017								2,125	(3)	$	2,400		10/27/2026
		8/8/2017		531.25	(2)		1,593.75	(2)				$	2,400		8/8/2027
		8/8/2017								2,125	(3)	$	2,400		8/8/2027
A. Choy		3/1/2017		1,881.61	(1)							$	1,020		1/20/2024
		3/1/2017		1,350	(1)							$	2,473.99		1/20/2024
																	646.88		1,552,512
		8/8/2017		375	(2)		1,125	(2)				$	2,400		8/8/2027
		8/8/2017								1,500	(3)	$	2,400		8/8/2027
P. Leonard(6)		—		—			—			—			—		—		—		—

(1)	Reflects stock options that were fully vested on the date of grant. These stock options were granted in connection with the Transactions as replacement awards for vested or deemed vested Legacy CHC stock options.

(2)

Reflects time-vesting stock options that vest in equal 25% installments on the first through fourth anniversaries of (i) the March 1, 2017 vesting start date for the options that expire on August 8, 2027, subject to continued employment through such vesting date and (ii) the October 27, 2016 vesting start date for Mr. Vachon’s time-vesting options that expire on October 27, 2026.

(3)	Reflects exit-vesting options. The vesting terms of these exit-vesting are described above under “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table.”

(4)

Reflects shares of 2.5x and 3.0x exit-vesting restricted stock that were granted in connection with the Transactions as replacement awards for unvested exit-vesting Legacy CHC stock options. The shares of exit-vesting restricted stock will vest, if at all, to the extent specified internal rate of return or multiple of investment targets are achieved by Blackstone as described under the “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table” section above.

(5)	Amounts reported reflect the fair value of Change Healthcare Inc. common stock as of the date of the most recent valuation prior to March 31, 2018, multiplied by the number of reported shares.

(6)	For details regarding the treatment of the equity awards granted to Messrs. Giles, Hamood, Yntema, Vachon and Leonard in connection with their departures, see “—Potential Payments Upon Termination or Change in Control— Severance Benefits – Separation Agreements.”

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Option Exercises and Stock Vested in Fiscal 2018

The following table provides information regarding the number of shares acquired and the value realized upon the vesting of restricted stock units during fiscal 2018. There were no stock options exercised by the named executive officers in fiscal 2018.


	Stock Awards
Name	Number of Shares Acquired on Vesting (#)(1)		Value Realized on Vesting ($)(2)
Randy Giles		600		1,440,000

(1)	Amount reported reflects time-vesting restricted stock units that vested pursuant to their terms in connection with Mr. Giles’s termination of employment.

(2)	Amount reported reflects the value of Change Healthcare Inc. common stock on the applicable vesting date multiplied by the number of reported shares.

Pension Benefits in Fiscal 2018

None of our named executive officers participate in or have accrued benefits under qualified or non-qualified defined benefit plans sponsored by us.

Nonqualified Deferred Compensation for Fiscal 2018

The following table provides information regarding those named executive officers who were previously employed by McKesson and participated in the Supplemental 401(k) Plan and/or the DCAP in fiscal 2018.


Name	Executive Contributions in Last FY ($)(1)		Registrant Contributions in Last FY ($)(2)		Aggregate Earnings (Loss) in Last FY ($)(3)		Aggregate Withdrawals/ Distributions ($)(4)		Aggregate Balance at Last Fiscal Year End ($)(5)
H. Yntema
Supplemental 401(k) Plan		17,982		14,385		3,430		—		46,879
P. Leonard
DCAP		28,405		437		15,926		—		242,097
Supplemental 401(k) Plan		29,213		23,371		36,072		400,352		—
Total		57,618		23,808		51,998		400,352		242,097

(1)

Amounts reported in this column reflect contributions made by the named executive officer into the Supplemental 401(k) and/or DCAP, as applicable. The amounts reported under “DCAP” and “Supplemental 401(k) Plan” are reported as compensation for fiscal 2018 under “Salary” in the Summary Compensation Table above.

(2)	Amounts reported in this column reflect contributions by the Company with respect to fiscal 2018. The amounts reported are reported as compensation for fiscal 2018 under “All Other Compensation” in the Summary Compensation Table above.

(3)	Because amounts included in this column do not reflect above-market or preferential earnings, none of these amounts are reported as compensation for fiscal 2018 in the Summary Compensation Table above.

(4)	The amount reported for Mr. Leonard reflects the distribution of his aggregate balance in the Supplemental 401(k) in connection with his termination of employment in October 2017.

(5)	None of the amounts reported in this column were reported as compensation in the Summary Compensation Table for prior years because this offering is the first time we have been required to provide this disclosure under SEC rules.

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Narrative to Nonqualified Deferred Compensation for Fiscal 2018 Table

In fiscal 2018, we offered voluntary participation in two unfunded, nonqualified deferred compensation retirement plans, the DCAP and Supplemental 401(k) Plan, to selected executives who were previously employed by McKesson, including Messrs. Yntema and Leonard.

DCAP

The Company in its sole discretion may also may credit a discretionary employer contribution to each participant’s account equal to the employer contribution percentage that would have been credited to the participant’s 401(k) Plan account if 5% of the participant’s base salary and annual bonus award deferrals to the DCAP had been made under the 401(k) Plan instead. We may also provide participants with a discretionary contribution in an amount and subject to vesting terms specified by our Compensation Committee. DCAP participants must defer a minimum of $5,000 of (1) base salary, (2) any annual Incentive Plan award, or (3) any long-term Incentive Plan award, up to (i) 75% of base salary, and (ii) 90% of any annual bonus award and/or other eligible Incentive Plan award payable that year.

The amounts deferred by the participants and employer discretionary contributions are credited to separate bookkeeping accounts for each participant. Participants select from investment options, and each account is adjusted for the earnings or losses of the performance of the selected options, but the accounts are not actually invested in these selected investment options. The account is merely a device for measurement and determination of amounts owed to the participant. The Company does not currently set aside funds in a rabbi trust for this plan, but may do so in the future at its election.

Each participant elects to defer the compensation for a minimum of five years and a maximum period of deferral ending January following the year in which the participant reaches age 72. A participant may elect to receive the amounts credited to his or her account in a single lump-sum or in any specified number of annual installments not to exceed 10. A participant’s vested account shall be paid in a lump-sum or with the first installment commencing: (1) in the earlier of the first January or July that is at least six months following, and in the year after, the participant’s retirement, disability, or death; (2) in January of the year designated by the participant, provided that it is no later than the end of the maximum period of deferral; (3) in two or more Januarys designated by the participant following the year that the participant’s retirement, disability or death occurs. The participant may elect a different time and/or form of distribution for retirement, disability or death. If no valid election is made (or if the participant separates from service for any reason other than retirement, disability or death), then payment will be made in a single lump-sum paid in the earlier of the first January or July that is at least six months following, and in the year after, the year in which the earliest of the participant’s retirement, disability or death (or separation from service if not for one of these three reasons) occurs. Any participant who separates from service and is designated a Specified Employee (as defined in the DCAP) will have his or her payment delayed until the seventh month following the separation from service.

Supplemental 401(k) Plan

The Supplemental 401(k) Plan allows participants to elect to defer current compensation which exceeds the limitations of tax laws for the Company’s qualified 401(k) Plan and to provide a safe harbor matching contributions credited at a rate equivalent to the 401(k) Plan’s “Matching Employer Contribution” (up to 4% of pay when a participant defers 5% of pay), and participants may receive “Additional Matching Employer Contributions” credited to their Account following the end of any fiscal year in which the participant defers compensation under the Plan. Participants may defer the difference between the maximum rate of deferral under the 401(k) Plan multiplied by the participant’s compensation and the amount the participant can defer under the 401(k) Plan with the limits imposed by Section 401(a)(17) of the Code, and they are always 100% vested in their contributions. Participants receive both a semi-monthly Company match in the same percentage as the “Matching Employer Contribution” (as defined in the 401(k) Plan) and may also receive an additional Company match in

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the same percentage as the “Additional Matching Employer Contribution” (as defined in the 401(k) Plan) percentage that would have been credited to the participant’s account if the deferrals were made under the 401(k) Plan. The applicable vesting rules are the same as would apply under the 401(k) Plan. The Compensation Committee (or the Administrator, if it delegates its authority) may also make an additional discretionary contribution, which shall be forfeited if a participant separates from service without vesting.

The amounts deferred by the participants and vested employer contributions are credited to separate bookkeeping accounts for each participant. Participants select from investment options, and each account is adjusted for the earnings or losses of the performance of the selected options, but the accounts are not actually invested in these selected investment options. The account is merely a device for measurement and determination of amounts owed to the participant. The Company does not currently set aside funds in a rabbi trust for this plan but may do so in the future at its election.

A participant may elect to receive the amounts credited to his or her account in a single lump-sum or in any specified number of annual installments not to exceed ten upon retirement, death or disability. If a participant separates from service for any other reason, the vested amounts in participant’s account will be paid in a single-lump sum at the time of separation. Any employer matching contributions may be paid at a later date, but no later than the end of the calendar year. Any participant who separates from service and is designated a Specified Employee (as defined in the plan) will have his or her payment delayed until the seventh month following the separation from service.

Potential Payments Upon Termination or Change in Control

The following summaries and table describe and quantify the potential payments and benefits that we would provide to our named executive officers in connection with their termination of employment and/or change in control. In determining amounts payable, we have assumed in all cases that the terms of the executive’s current employment and equity award agreements with us were in effect on, and the termination of employment and/or change in control occurred on, March 30, 2018, the last business day of fiscal 2018.

Severance Benefits—Employment Arrangements

Mr. de Crescenzo

If Mr. de Crescenzo’s employment is terminated without cause by the Company, by him for good reason, or in the event of death or disability, in addition to certain accrued amounts, Mr. de Crescenzo will be entitled to receive (i) continuation of his base salary for a period of two years, (ii) two times his annual target bonus and (iii) a lump sum amount equal to the portion of health insurance premium that the Company would have paid for active employees with similar coverage for a period of 18 months. The amounts payable to Mr. de Crescenzo upon a termination of employment described above are subject to Mr. de Crescenzo providing a release of all claims to the Company. Furthermore, the payment of any severance amounts under his agreement is contingent upon Mr. de Crescenzo’s continued compliance with his non-competition, non-solicitation, non-disparagement and confidentiality covenants.

Mr. Eliasson

Mr. Eliasson’s offer letter provides that he will receive severance benefits in accordance with the executive severance guidelines in place at the Company at the time of his separation of employment. However, if his employment is terminated by the Company without “cause” (as such term is defined in the applicable severance guidelines), his offer letter provides that he will be entitled to no less than a lump sum payment equal to (i) one-times his base salary plus target AIP award plus (ii) an amount equal to the total amount of the monthly COBRA health insurance premiums that the Company and the executive would pay for employees with similar coverage during the 12-month period following the termination.

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Severance Benefits—Executive Severance Guidelines

In connection with this offering, we have developed a new market-competitive executive severance plan (the “Executive Severance Guidelines”). In connection with this offering, each of our named executive officers that has or had an employment agreement, other than Mr. de Crescenzo, has agreed, or is expected to agree, to terminate such employment agreement and to be subject to the Executive Severance Guidelines, superseding any severance provisions contained in their employment agreements. All of our currently employed named executive officers, excluding Mr. de Crescenzo, would be eligible to receive amounts under the Executive Severance Guidelines unless: (i) the executive voluntarily terminates employment, such as through resignation or retirement; (ii) the executive rejects an offer of “comparable employment” with the Company; or (iii) in connection with a “change in control” between the Company and another entity, the surviving entity employs executive for twelve months after the change in control in the same position he or she held immediately prior or offers comparable employment to the executive.

If none of these exceptions apply, the Executive Severance Guidelines provide that, if an executive’s employment is terminated without “cause” or the executive experiences a constructive termination that the executive and the Company agree is a qualifying termination, then the executive will be entitled to receive:

•

a lump sum payment in an amount equal to twelve months of the executive’s base salary in effect on the date of termination;

•

if the termination occurs within twelve months after a “change in control,” an amount equal to the bonus the executive would have received under the AIP at one times the executive’s full target payout rate for the year in which the termination occurs; and

•

a lump sum payment in an amount equal to the total amount of the monthly COBRA health insurance premiums that the Company and the executive would pay for employees with similar coverage during the 12-month period following the termination.

For these purposes, “cause,” “change in control,” “comparable employment” and “qualifying termination” have the meanings ascribed to such terms in the Executive Severance Guidelines.

Our Executive Severance Guidelines contains a “best-of-net” provision. With a “best-of-net” provision, if any of the participants is subject to an excise tax under Code Section 280G and Code Section 4999, then the amount of severance the participant receives may be reduced so that the excise tax does not apply; however, such reduction will only occur if it results in the receipt of a greater after-tax severance than would otherwise be provided.

In order to receive payments under the Executive Severance Guidelines, the executive must execute and not revoke a release of claims against us and continue to comply with any applicable confidentiality, non-compete, non-solicitation and non-disparagement covenants.

Severance Benefits—Separation Agreements

Departure of Mr. Giles

In connection with Mr. Giles’s termination of employment with us, he entered into a retirement agreement dated April 3, 2017 with the Company. In lieu of the payments and benefits described in his employment agreement, Mr. Giles received: (i) $463,500, payable in equal installments over 12 months; (ii) $393,975 in respect of an amount equal to his annual bonus calculated at target levels payable in equal installments over 12 months; and (iii) a payment of $15,120 for the cost of obtaining medical, dental and vision insurance under COBRA for 12 months. He also received a retention bonus of $231,750 and a grant of 375 time-vesting and 375 exit-vesting stock options.

The retirement agreement modified outstanding equity awards subject to Giles’s compliance with his restrictive covenants: (i) the option exercise period was extended so that the relevant options remain outstanding

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until six months following this offering (or, if later, 12 months following the date the options become vested and exercisable); (ii) his restricted shares would remain outstanding and eligible to vest upon the satisfaction of the applicable performance hurdles at any time prior to the fourth anniversary of Giles’s separation date; (iii) all shares acquired under equity awards would not be subject to repurchase call rights by the Company.

In addition, Mr. Giles’s 600 unvested time-vesting restricted stock units were accelerated pursuant to their terms with a fair value of $1,440,000 on the applicable vesting date. Furthermore, pursuant to the terms of Mr. Giles’s retirement agreement, the time-vesting options granted to him in fiscal 2018 fully vested following his execution of a release of claims and the expiration of the applicable revocation period and his exit-vesting options will remain outstanding and eligible to vest until the fourth anniversary of his October 20, 2017 departure date.

All of these payments and equity modifications were contingent upon Giles’s execution of a release of claims in our favor and his continued compliance with non-competition, non-solicitation, non-disparagement and confidentiality covenants.

Departure of Mr. Hamood

In connection with Samuel Hamood’s termination of employment with us, he entered into a transition agreement dated December 14, 2017 with the Company. Under the agreement, Hamood received a pro-rated cash bonus for the fiscal 2018 of $557,000. The agreement also required Hamood to repay the previously received $500,000 sign-on bonus to the Company.

These payments were contingent upon Hamood’s execution of a release of claims in our favor and his continued compliance with restrictive covenants in his employment agreement with the Company dated July 20, 2017.

With respect to Mr. Hamood’s equity awards, his departure in January 2018 did not qualify as an eligible termination and therefore all of his outstanding equity awards were forfeited.

Departure of Mr. Vachon

In connection with Mr. Vachon’s termination of employment with us, he entered into a separation and release agreement dated March 30, 2018 with the Company. Mr. Vachon received the following benefits: (i) a payment of his annual bonus as though he remained employed through the payment date of the annual bonus ($226,525); and (ii) an additional 265.625 of his time-vesting stock options were vested upon termination, and the exercise periods for all of his vested time-vesting stock options were extended such that they remain outstanding until their original expiration dates under the respective award agreements instead of expiring in connection with his separation. As of March 31, 2018, there was no “spread” value with respect to the 265.625 time-vesting options that were accelerated in connection with his termination. Any unvested stock options were forfeited on his termination date.

These payments and equity modifications were contingent upon Mr. Vachon’s execution of a release of claims in our favor and his continued compliance with non-competition, non-solicitation, non-disparagement and confidentiality covenants.

Departure of Mr. Yntema

In connection with Howard Yntema’s termination of employment with us, he entered into the severance and release agreement dated May 24, 2018 with the Company. Yntema became entitled to the following severance benefits: (i) a severance payment of $250,233; (ii) an annual bonus payment of $62,082.40; (iii) payment of $250,000 pursuant to his retention award agreement dated November 7, 2017; (iv) reimbursement of 100% of his COBRA premiums for one month; (v) outplacement counseling and services for 12 months ($8,000); and (vi) payments for a three-month extension of employee assistance program benefits.

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These benefits were contingent upon his execution and non-revocation of a release of claims in our favor) and his continued compliance with non-disparagement and confidentiality covenants.

With respect to Mr. Yntema’s equity awards, all of his unvested options were forfeited pursuant to their terms upon his departure and he had the right to exercise his vested time-vesting options for the applicable post-termination exercise period.

Departure of Mr. Leonard

Mr. Leonard did not receive any severance or additional benefits in connection with his resignation. In addition, upon his resignation, all of his unvested stock options and restricted stock was forfeited and his vested options expired unexercised.

Equity Awards

Fiscal 2018 Time-Vested and Exit-Vesting Options

Time-Vesting Options. In the event of a change in control during the named executive officer’s continued employment, all unvested time-vesting stock options will become fully vested on an accelerated basis, provided that no portion will vest solely as a result of any transaction in which McKesson disposes of or distributes equity owned by it in the Joint Venture to its shareholders.

In addition, if Mr. de Crescenzo’s or Mr. Eliasson’s employment is terminated without cause, by them for good reason or by Mr. de Crescenzo due to a qualifying retirement, death or disability, the next installment of their respective time-vesting options will become vested and fully exercisable.

Exit-Vesting Options . In the event of a change in control during the named executive officer’s continued employment, the exit-vesting options will vest to the extent that the applicable vesting criteria discussed above under “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table—Equity Awards—Fiscal 2018 Time-Vested and Exit-Vesting Options” is satisfied in connection with the change in control.

In addition, if Mr. de Crescenzo’s employment is terminated without cause, by him for good reason or due to a qualifying retirement, death or disability, his exit-vesting options will remain outstanding and be eligible to vest for six months following the date of termination.

Unvested Replacement 2.5x and 3.0x Exit-Vesting Restricted Stock

In the event of a change in control during the named executive officer’s continued employment, the 2.5x and 3.0x exit-vesting restricted stock will vest to the extent that the applicable vesting criteria discussed above under “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table—Equity Awards—Unvested Replacement 2.5x and 3.0x Exit-Vesting Restricted Stock” are satisfied in connection with the change in control.

In addition, if the named executive officer’s employment is terminated without cause, by him or her for good reason or due to a qualifying retirement, death or disability, the 2.5x and 3.0x exit-vesting restricted stock will remain outstanding and be eligible to vest for six months following the date of termination.

Estimated Payments and Benefits Upon Termination

The following table describes the potential benefits that would have been payable to our currently employed named executive officers under existing plans and contractual arrangements assuming a termination occurred on

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March 30, 2018, the last business day of fiscal 2018. The amounts shown in the table do not include payments and benefits to the extent they are provided generally to all salaried employees upon termination of employment and do not discriminate in scope, terms or operation in favor of the named executive officers. The amounts shown in the table also do not include any distributions of previously vested plan balances under our 401(k) Savings Plan and our nonqualified deferred compensation retirement plans. See “Nonqualified Deferred Compensation for Fiscal 2018” above for information about our nonqualified deferred compensation retirement plans. Furthermore, the amounts shown in the table do not include amounts that may have been payable to a named executive officer upon the sale or purchase of his or her vested equity pursuant to the exercise of put or call rights, which rights expire in connection with this offering.


Name	Payment Element	Termination by us Without “Cause” or Qualifying Termination(c)		Resignation for “Good Reason” or Upon Death Or Disability(d)
Neil E. de Crescenzo	Salary Continuation	$	1,500,000	$	1,500,000
	Bonus Payment		928,438		928,438
	COBRA Payments		28,804		25,973
	Equity Award Acceleration(a)		—		—

Fredrik Eliasson	Salary Continuation	$	650,000	$	650,000
	Bonus Payment		552,500		552,500
	COBRA Payments		—		—
	Equity Award Acceleration(a)		—		—

Roderick O’Reilly	Salary Continuation(b)	$	419,529		—
	Bonus Payment(b)		356,599		—
	COBRA Payments(b)		45,114		—
	Equity Award Acceleration(a)		—		—

Alex P. Choy	Salary Continuation	$	450,833		—
	Bonus Payment		380,460		—
	COBRA Payments		16,275		—
	Equity Award Acceleration(a)		—		—

(a)

No amounts have been reported with respect to a change in control as we have assumed that the exit-vesting options and exit-vesting restricted stock would not have vested upon a change in control because the performance condition was not satisfied. In addition, no amounts are reported with respect to the time-vesting options that would accelerate if Mr. de Crescenzo’s or Mr. Eliasson’s employment is terminated without cause, by them for good reason or by Mr. de Crescenzo due to death or disability, since as of March 30, 2018, there was no “spread” value with respect to any of their unvested time-vesting options.

(b)	Converted from U.S. dollars to Canadian dollars using the exchange rate as of March 30, 2018 (0.77815).

(c)	For all individuals except Mr. de Crescenzo and Mr. Eliasson, the bonus payment is made only if termination occurs within 12 months following a change in control.

(d)	Only Mr. de Crescenzo and Mr. Eliasson are eligible for special termination benefits upon resignation for good reason, and only Mr. Crescenzo is eligible for these amounts upon death or disability.

Director Compensation

This section describes the compensation we provided to our non-employee directors in 2018 for service as members of the board of directors of the Joint Venture. Directors who are employed by us and Sponsor-affiliated directors are not compensated by us for their services as directors. The table below shows amounts paid to our non-employee directors for the year ended March 31, 2018.

In fiscal 2018, Messrs. Lance, Pead, Roe and Zollars each received an annual cash retainer of $120,000 and were granted 210 stock options under the Equity Plan. In addition, Mr. Lance received an additional $30,000 and

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an additional 110 stock options for serving as vice chair and chair of the compensation committee, and Mr. Roe received an additional $30,000 for serving as chair of the audit committee. These stock options vest in equal 25% installments on the first through fourth anniversaries of the designated March 1, 2017 vesting start date, subject to continued service through such vesting.

In connection with the Transactions, a portion of the vested or deemed vested Legacy CHC stock options awarded to Messrs. Lance, Pead and Roe was cashed out and the remaining portion was replaced with 228 vested stock options of Change Healthcare Inc.

Similarly, a portion of Mr. Lance’s vested or deemed vested Legacy CHC stock appreciation rights were cashed out and a portion were replaced with vested stock appreciation rights of Change Healthcare Inc. Unvested exit-vesting Legacy CHC stock appreciation rights held by Mr. Lance were replaced with 2.5x exit-vesting stock appreciation rights of Change Healthcare Inc. with vesting conditions substantially similar to the original awards. The vesting conditions and other material terms are substantially similar to the vested replacement stock options and unvested replacement 2.5x exit-vesting restricted stock awards described above under “—Narrative Disclosure to the Summary Compensation Table and Grants of Plan-Based Awards Table—Terms of Equity Awards—Legacy CHC Awards” and “—Potential Payments Upon Termination or Change of Control—Equity Awards—Unvested Replacement 2.5x and 3.0x Exit-Vesting Restricted Stock.”

Beginning in fiscal 2019, Mr. Zollars receives an additional $15,000 for serving as chair of the nominating and corporate governance committee and Mr. Pead receives an additional $15,000 for serving as chair of the compliance committee. In addition, Mr. Lance was granted an additional 50 stock options and Messrs. Pead, Roe and Zollars were each granted an additional 40 stock options under the Equity Plan. Similar to their fiscal 2018 option grants, these stock options vest in equal 25% installments on the first through fourth anniversaries of the grant date, subject to continued service through such date.

We anticipate that we will review our director compensation program in connection with this offering and make such changes as we determine are necessary or appropriate for our status as a public company.

Director Compensation for Fiscal 2018

The following table provides summary information concerning the compensation we provided to our non-employee directors, other than our employee director, in fiscal 2018 for service as members of the board of directors of the Joint Venture.


Name	Fees Earned or Paid in Cash ($)		Option Awards ($)(1)		Total ($)
Howard L. Lance	$	150,000	$	423,040	$	573,040
Neil Simpkins		—		—		—
Justin Sunshine		—		—		—
Philip M. Pead		120,000		277,620		397,620
Phillip W. Roe		150,000		277,620		427,620
Robert J. Zollars		120,000		277,620		397,620

(1)

The amounts reported in this column reflect the fair value of stock options granted in fiscal 2018. These stock options were deemed granted to non-employees of the issuing entity and are subject to Topic 505. Under Topic 505, companies must generally recognize compensation expense equal to the fair value of the grant on the date that the award vests. Until the awards vest, expense is recorded based on an estimate of fair value measured at the end of each accounting period. Accordingly, the amounts reported in this column reflect the fair value of the stock options on the first measurement date following the date of grant calculated in accordance with Topic 718. For information regarding the assumptions used determining the fair value of

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these awards, please refer to Note 16, “Incentive Compensation Plans” of the audited consolidated financial statements included elsewhere in this prospectus. As of March 31, 2018, the aggregate number of outstanding option awards held by each non-employee director was as follows: Mr. Lance: 1,184 stock appreciation rights and 548 options; Mr. Pead: 438 options; Mr. Roe: 438 options and Mr. Zollars: 210 options.

Equity Compensation and Stock Purchase Plans

Omnibus Incentive Plan

In connection with this offering, our Board of Directors expects to adopt, and we expect our stockholders to approve, our Omnibus Incentive Plan prior to the completion of the offering. The term “Board of Directors” as used in this “Omnibus Incentive Plan” section refers to the Board of Directors of Change Healthcare Inc.

Purpose. The purpose of our Omnibus Incentive Plan is to provide a means through which to attract and retain key personnel and to provide a means whereby our directors, officers, employees, consultants and advisors (and those of the Joint Venture and its subsidiaries) can acquire and maintain an equity interest in us, or be paid incentive compensation, including incentive compensation measured by reference to the value of our shares of common stock, thereby strengthening their commitment to our welfare and aligning their interests with those of our stockholders.

Administration. Our Omnibus Incentive Plan will be administered by the compensation committee of our Board of Directors, or such other committee of our Board of Directors to which it has properly delegated power, or if no such committee or subcommittee exists, our Board of Directors (such administering body referred to herein, for purposes of this description of the Omnibus Incentive Plan, as the “Committee”). Except to the extent prohibited by applicable law or the applicable rules and regulations of any securities exchange or interdealer quotation system on which our securities are listed or traded, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it in accordance with the terms of our Omnibus Incentive Plan. The Committee is authorized to: (i) designate participants; (ii) determine the type or types of awards to be granted to a participant; (iii) determine the number of shares of our common stock to be covered by, or with respect to which payments, rights or other matters are to be calculated in connection with, awards; (iv) determine the terms and conditions of any award; (v) determine whether, to what extent and under what circumstances awards may be settled in, or exercised for, cash, shares of our common stock, other securities, other awards or other property, or canceled, forfeited or suspended and the method or methods by which awards may be settled, exercised, canceled, forfeited or suspended; (vi) determine whether, to what extent, and under what circumstances the delivery of cash, shares of our common stock, other securities, other awards, or other property and other amounts payable with respect to an award will be deferred either automatically or at the election of the participant or of the Committee; (vii) interpret, administer, reconcile any inconsistency in, correct any defect in, and/or supply any omission in our Omnibus Incentive Plan and any instrument or agreement relating to, or award granted under, our Omnibus Incentive Plan; (viii) establish, amend, suspend, or waive any rules and regulations and appoint such agents as the Committee may deem appropriate for the proper administration of our Omnibus Incentive Plan; (ix) adopt sub-plans; and (x) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of our Omnibus Incentive Plan. Unless otherwise expressly provided in our Omnibus Incentive Plan, all designations, determinations, interpretations and other decisions under or with respect to our Omnibus Incentive Plan or any award or any documents evidencing awards granted pursuant to our Omnibus Incentive Plan are within the sole discretion of the Committee, may be made at any time, and are final, conclusive and binding upon all persons or entities, including, without limitation, us, any participant, any holder or beneficiary of any award and any of our stockholders.

Awards Subject to our Omnibus Incentive Plan. Our Omnibus Incentive Plan provides that the total number of shares of our common stock that may be issued under our Omnibus Incentive Plan is , or the “Absolute Share Limit”; provided, however, that the Absolute Share Limit shall be increased on the first day of

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each fiscal year beginning with the fiscal year in an amount equal to the least of (x) shares of our common stock, (y) of the total number of shares of our common stock outstanding on the last day of the immediately preceding fiscal year, and (z) a lower number of shares of our common stock as determined by our Board of Directors. Of this amount, the maximum number of shares of our common stock for which incentive stock options may be granted is ; and during a single fiscal year, each non-employee director shall be granted a number of shares of our common stock subject to awards, taken together with any cash fees paid to such non-employee director during the fiscal year, equal to a total value of $ or such lower amount as determined by our Board of Directors. Except for “substitute awards” (as described below), to the extent that an award expires or is canceled, forfeited, terminated, settled in cash, or otherwise is settled without issuance to the participant of the full number of shares our common stock to which the award related, the unissued shares will again be available for grant under our Omnibus Incentive Plan. Shares of our common stock withheld in payment of the exercise price, or taxes relating to an award, and shares equal to the number of shares surrendered in payment of any exercise price, or taxes relating to an award, shall be deemed to constitute shares not issued; provided, however, that such shares shall not become available for issuance if either: (i) the applicable shares are withheld or surrendered following the termination of our Omnibus Incentive Plan or (ii) at the time the applicable shares are withheld or surrendered, it would constitute a material revision of our Omnibus Incentive Plan subject to stockholder approval under any then-applicable rules of the national securities exchange on which our common stock is listed. No award may be granted under our Omnibus Incentive Plan after the tenth anniversary of the Effective Date (as defined in our Omnibus Incentive Plan), but awards granted before then may extend beyond that date. Awards may, in the sole discretion of the Committee, be granted in assumption of, or in substitution for, outstanding awards previously granted by an entity directly or indirectly acquired by us or with which we combine, or substitute awards, and such substitute awards will not be counted against the Absolute Share Limit, except that substitute awards intended to qualify as “incentive stock options” will count against the limit on incentive stock options described above.

Options. Under our Omnibus Incentive Plan, the Committee may grant nonqualified stock options and incentive stock options with terms and conditions determined by the Committee that are not inconsistent with our Omnibus Incentive Plan; provided, that all stock options granted under our Omnibus Incentive Plan are required to have a per share exercise price that is not less than 100% of the fair market value of our shares of common stock underlying such stock options on the date such stock options are granted (other than in the case of stock options that are substitute awards), and all stock options that are intended to qualify as incentive stock options must be granted pursuant to an award agreement expressly stating that the options are intended to qualify as incentive stock options, and will be subject to the terms and conditions that comply with the rules as may be prescribed by Section 422 of the Code. The maximum term for stock options granted under our Omnibus Incentive Plan will be ten years from the initial date of grant, or with respect to any stock options intended to qualify as incentive stock options, such shorter period as prescribed by Section 422 of the Code. However, if a nonqualified stock option would expire at a time when trading of shares of our common stock is prohibited by our insider trading policy (or “blackout period” imposed by us), the term will automatically be extended to the 30th day following the end of such period. The purchase price for the shares of our common stock as to which a stock option is exercised may be paid to us, to the extent permitted by law (i) in cash, check, cash equivalent and/or shares of our common stock valued at the fair market value at the time the option is exercised; provided, that such shares of our common stock are not subject to any pledge or other security interest and have been held by the participant for at least six months (or such other period as established from time to time by the Committee in order to avoid adverse accounting treatment applying generally accepted accounting principles (“GAAP”)) or (ii) by such other method as the Committee may permit in its sole discretion, including, without limitation: (a) in other property having a fair market value on the date of exercise equal to the exercise price, (b) if there is a public market for the shares of our common stock at such time, by means of a broker-assisted “cashless exercise” pursuant to which we are delivered (including telephonically to the extent permitted by the Committee) a copy of irrevocable instructions to a stockbroker to sell the shares of our common stock otherwise issuable upon the

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exercise of the option and to deliver promptly to us an amount equal to the exercise price or (c) a “net exercise” procedure effected by withholding the minimum number of shares of our common stock otherwise issuable in respect of an option that is needed to pay the exercise price. Any fractional shares of our common stock shall be settled in cash.

Stock Appreciation Rights. The Committee may grant stock appreciation rights (“SARs”) under our Omnibus Incentive Plan, with terms and conditions determined by the Committee that are not inconsistent with our Omnibus Incentive Plan. The Committee may grant SARs in tandem with a stock option, but the Committee may also award SARs independent of any option. Generally, each SAR will entitle the participant upon exercise to an amount (in cash, shares of our common stock or a combination of cash and shares, as determined by the Committee) equal to the product of (i) the excess of (a) the fair market value on the exercise date of one share of our common stock over (b) the strike price per share of our common stock covered by the SAR, times (ii) the number of shares of our common stock covered by the SAR, less any taxes required to be withheld. The strike price per share of our common stock covered by a SAR will be determined by the Committee at the time of grant but in no event may such amount be less than 100% of the fair market value of a share of our common stock on the date the SAR is granted (other than in the case of SARs that are substitute awards).

Restricted Stock and Restricted Stock Units. The Committee may grant restricted shares of our common stock or may grant restricted stock units (“RSUs”), representing the right to receive, upon vesting and the expiration of any applicable restricted period, one share of our common stock for each RSU, or, in the sole discretion of the Committee, the cash value thereof (or any combination thereof). As to restricted shares of our common stock, subject to the other provisions of our Omnibus Incentive Plan, the holder will generally have the rights and privileges of a stockholder as to such restricted shares of our common stock, including, without limitation, the right to vote such restricted shares of our common stock.

Other Equity-Based Awards and Other Cash-Based Awards. The Committee may grant other equity-based or cash-based awards under our Omnibus Incentive Plan, with terms and conditions determined by the Committee that are not inconsistent with our Omnibus Incentive Plan.

Effect of Certain Events on Our Omnibus Incentive Plan and Awards. In the event of (i) any dividend (other than regular cash dividends) or other distribution (whether in the form of cash, shares of our common stock, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase or exchange of shares of our common stock or other securities, issuance of warrants or other rights to acquire shares of our common stock or other securities, or other similar corporate transaction or event that affects the shares of our common stock (including a “Change in Control,” as defined in our Omnibus Incentive Plan); or (ii) unusual or nonrecurring events affecting us, including changes in applicable rules, rulings, regulations, or other requirements, that the Committee determines, in its sole discretion, could result in substantial dilution or enlargement of the rights intended to be granted to, or available for, participants (any event in (i) or (ii), an “Adjustment Event”), the Committee will, in respect of any such Adjustment Event, make such proportionate substitution or adjustment, if any, as it deems equitable, to any or all of (a) the Absolute Share Limit, or any other limit applicable under our Omnibus Incentive Plan with respect to the number of awards which may be granted thereunder; (b) the number of shares of our common stock or other of our securities (or number and kind of other securities or other property) which may be issued in respect of awards or with respect to which awards may be granted under our Omnibus Incentive Plan or any sub-plan; and (c) the terms of any outstanding award, including, without limitation, (x) the number of shares of our common stock or other of our securities (or number and kind of other securities or other property) subject to outstanding awards or to which outstanding awards relate; (y) the exercise price or strike price with respect to any award; or (z) any applicable performance measures; provided, that in the case of any “equity restructuring,” (within the meaning of the FASB ASC Topic 718 (or any successor pronouncement thereto)) the Committee will make an equitable or proportionate adjustment to outstanding awards to reflect such equity restructuring. In connection with any Adjustment Event, the Committee may, in its sole discretion, provide for any one or more of the following: (i) substitution or assumption of awards, acceleration of the exercisability of, lapse of restrictions

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on, or termination of, awards or a period of time for participants to exercise outstanding awards prior to the occurrence of such event; and (ii) subject to any limitations or reductions as may be necessary to comply with Section 409A of the Code, cancellation of any one or more outstanding awards and payment to the holders of such awards that are vested as of such cancellation (including, without limitation, any awards that would vest as a result of the occurrence of such event but for such cancellation or for which vesting is accelerated by the Committee in connection with such event) the value of such awards, if any, as determined by the Committee (which value, if applicable, may be based upon the price per share of our common stock received or to be received by other holders of shares of our common stock in such event), including, without limitation, in the case of stock options and SARs, a cash payment equal to the excess, if any, of the fair market value of the shares of our common stock subject to the option or SAR over the aggregate exercise price or strike price thereof, or, in the case of restricted stock, RSUs, or other equity-based awards that are not vested as of such cancellation, a cash payment or equity subject to deferred vesting and delivery consistent with the vesting restrictions applicable to such award prior to cancellation of the underlying shares in respect thereof.

Nontransferability of Awards. No award will be permitted to be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a participant (unless such transfer is specifically required pursuant to a domestic relations order by applicable law) other than by will or by the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance will be void and unenforceable against us or any of our subsidiaries. However, the Committee may, in its sole discretion, permit awards (other than incentive stock options) to be transferred, including transfers to a participant’s family members, any trust established solely for the benefit of a participant or such participant’s family members, any partnership or limited liability company of which a participant, or such participant and such participant’s family members, are the sole member(s), and a beneficiary to whom donations are eligible to be treated as “charitable contributions” for tax purposes.

Amendment and Termination. Our Board of Directors may amend, alter, suspend, discontinue or terminate our Omnibus Incentive Plan or any portion thereof at any time; provided, that no such amendment, alteration, suspension, discontinuance or termination may be made without stockholder approval if (i) such approval is necessary to comply with any regulatory requirement applicable to our Omnibus Incentive Plan or for changes in GAAP to new accounting standards; (ii) it would materially increase the number of securities which may be issued under our Omnibus Incentive Plan (except for adjustments in connection with certain corporate events); or (iii) it would materially modify the requirements for participation in our Omnibus Incentive Plan; provided, further, that any such amendment, alteration, suspension, discontinuance or termination that would materially and adversely affect the rights of any participant or any holder or beneficiary of any award will not to that extent be effective without such individual’s consent.

The Committee may, to the extent consistent with the terms of any applicable award agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any award granted or the associated award agreement, prospectively or retroactively (including after a termination of employment or services, as applicable); provided, that, except as otherwise permitted in our Omnibus Incentive Plan, any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of any participant with respect to such award will not to that extent be effective without such individual’s consent; provided, further, that without stockholder approval, except as otherwise permitted in our Omnibus Incentive Plan, (i) no amendment or modification may reduce the exercise price of any option or the strike price of any SAR; (ii) the Committee may not cancel any outstanding option or SAR and replace it with a new option or SAR (with a lower exercise price or strike price, as the case may be) or other award or cash payment that is greater than the value of the cancelled option or SAR; and (iii) the Committee may not take any other action which is considered a “repricing” for purposes of the stockholder approval rules of any securities exchange or inter-dealer quotation system on which our securities are listed or quoted.

Dividends and Dividend Equivalents. The Committee in its sole discretion may provide as part of an award dividends or dividend equivalents, on such terms and conditions as may be determined by the Committee in its

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sole discretion. Any dividends payable in respect of restricted stock awards that remain subject to vesting conditions shall be retained by the Company and delivered to the participant within 15 days following the date on which such restrictions on such restricted stock awards lapse and, if such restricted stock is forfeited, the participant shall have no right to such dividends. Dividend equivalent payments attributable to RSUs shall be distributed to the participant in cash or, in the sole discretion of the Committee, in shares of our common stock having a fair market value equal to the amount of dividends paid on shares of our common stock, upon the settlement of the RSUs and, if such RSUs are forfeited, the participant shall have no right to such dividend equivalent payments (or interest thereon, if applicable).

Clawback/Repayment. All awards are subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i) any clawback, forfeiture or other similar policy adopted by our Board of Directors or the Committee and as in effect from time to time and (ii) applicable law. To the extent that a participant receives any amount in excess of the amount that the participant should otherwise have received under the terms of the award for any reason (including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative error), the participant will be required to repay us any such excess amount.

Detrimental Activity. If a participant has engaged in any detrimental activity, as defined in our Omnibus Incentive Plan, as determined by the Committee, the Committee may, in its sole discretion, provide for one or more of the following: (i) cancellation of any or all of such participant’s outstanding awards or (ii) forfeiture and repayment to us on any gain realized on the vesting, exercise or settlement of any awards previously granted to such participant.

Employee Stock Purchase Plan

Prior to the effectiveness of this offering, our Board of Directors expects to adopt, and we expect our stockholders to approve, our Employee Stock Purchase Plan (the “ESPP”). The ESPP is intended to give eligible employees an opportunity to acquire shares of our common stock and promote our best interests and enhance our long-term performance.

Purpose. The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code. We may also authorize offerings under the ESPP that are not intended to comply with the requirements of Section 423 of the Code, which may, but are not required to, be made pursuant to any rules, procedures or sub-plans adopted by the Compensation Committee for such purpose.

Shares Reserved for the ESPP . The aggregate number of shares of our common stock that may be issued under the ESPP may not exceed shares. If a purchase right expires or is terminated without being exercised, in whole or in part, the number of shares subject to the purchase right will again be available for grant and will not reduce the aggregate number of shares available under the ESPP.

Administration. The ESPP will be administered by the Compensation Committee of the Board unless the Board elects to administer the ESPP. For the purposes of this summary, references to the “Committee” include the Compensation Committee and the Board. The Committee may appoint one or more agents to assist in the administration of the ESPP and may delegate certain responsibilities or powers subject to ESPP terms and applicable law. Subject to ESPP terms and applicable law, the Committee will have full and final authority to take any action with respect to the ESPP, including, without limitation, the authority to: (a) establish, amend and rescind rules and regulations for administration of the ESPP; (b) prescribe the form(s) of any agreements or other instruments used in connection with the ESPP; (c) determine the terms and provisions of the purchase rights granted under the ESPP; (d) determine eligibility and adjudicate all disputed claims filed under the ESPP; and (e) construe and interpret the ESPP, purchase rights, the rules and regulations, and the agreements or other written instruments, and to make all other determinations deemed necessary or advisable for the administration of the ESPP. The Committee may also adopt sub-plans relating to the operation and administration of the ESPP to

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accommodate the specific requirements of local laws and procedures for jurisdictions outside the United States, the terms of which sub-plans may take precedence over the terms of the ESPP, to the extent provided in the ESPP. To the extent inconsistent with the requirements of Section 423 of the Code, purchase rights offered under any such sub-plan will not be required by the terms of the ESPP to comply with Section 423 of the Code.

Effective Date . The ESPP will become effective on , 2019. The term of the ESPP will continue until terminated by the Board or until the date on which all shares available for issuance under the ESPP have been issued.

Eligible Participants . Subject to the Committee’s ability to exclude certain groups of employees on a uniform and nondiscriminatory basis, including Section 16 officers, generally, all of our employees will be eligible to participate in the ESPP if they are employed by us or by a designated company (as defined below) except for (a) any employee who has been employed for less than 90 days, (b) any employee whose customary employment is 20 hours or less per week or (c) any employee whose customary employment is for not more than five months in any calendar year; provided that the Committee may determine prior to any purchase period start date that employees outside of the United States who are participating in a separate offering will be “eligible employees” even if they do not meet the requirements of (b) or (c) above if and to the extent required by applicable law. No employee will be eligible to participate if, immediately after the purchase right grant, the employee would own stock (including any stock the employee may purchase under outstanding purchase rights) representing 5% or more of the total combined voting power or value of our common stock. A “designated company” is any subsidiary or affiliate of Change Healthcare Inc., whether now existing or existing in the future, that has been designated by the Committee from time to time in its sole discretion as eligible to participate in the ESPP. The Committee may designate subsidiaries or affiliates of Change Healthcare Inc. as designated companies in an offering that does not satisfy the requirements of Section 423 of the Code. For offerings that, when taken together with the ESPP, comply with Section 423 of the Code and the regulations thereunder, only Change Healthcare Inc. and its subsidiaries may be designated companies; provided , however , that at any given time, a subsidiary that is a designated company under a Section 423 Code-compliant offering will not be a designated company under an offering that does not comply with Section 423 of the Code.

Offering Periods and Purchase Price . A participant may acquire common stock under the ESPP by authorizing the use of contributions to purchase shares of common stock. Contributions must be at a rate of not less than 1% nor more than 15% (in whole percentages only) of the participant’s total compensation (with certain exclusions as set forth in the ESPP or as otherwise determined by the Committee). All contributions made by a participant will be credited (without interest) to his or her account. A participant may discontinue plan participation as provided in the ESPP, but a participant may not alter the amount of his or her contributions during a purchase period. However, a participant’s contribution election may be decreased to 0% at any time during a purchase period to the extent necessary to comply with Section 423 of the Code or the terms of the ESPP. A participant may not make separate cash payments into his or her account except in limited circumstances when the participant is on leave of absence or unless otherwise required by applicable law. A participant may withdraw contributions credited to his or her account during a purchase period at any time before the applicable purchase period end date.

The ESPP provides for two six-month purchase periods in each calendar year. The first purchase period during a calendar year will generally begin on and end on of that year. The second purchase period in a calendar year will generally begin on and end on of that year of that year. The Committee has the authority to change the duration of a purchase period; provided that the change is announced a reasonable period of time prior to its effective date and the purchase period is not greater than 27 months.

On the first day of a purchase period, a participant will be granted a purchase right to purchase on the purchase period end date, at the applicable purchase price, the number of shares of common stock as is determined by dividing the amount of the participant’s contributions accumulated as of the last day of the purchase period by the applicable purchase price; provided that (a) no participant may purchase shares of

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common stock with a fair market value (as of the date of purchase right grant) in excess of $25,000 per calendar year; and (b) in no event will the aggregate number of shares subject to purchase rights during a purchase period exceed the number of shares then available under the ESPP or the maximum number of shares available for any single purchase period (as described below). In addition, the number of shares of our common stock that may be purchased by all participants in any particular purchase period is limited to shares (subject to adjustment as provided in the ESPP), and the maximum number of shares of our common stock that may be purchased by any participant during any purchase period is limited to $ divided by the fair market value per share of our common stock on the purchase period start date. The Committee may modify this limit from time to time by resolution or otherwise.

The purchase price will be 85% (or such greater percentage as may be determined by the Committee prior to the start of any purchase period) of the lesser of (i) the fair market value per share of our common stock as determined on the applicable purchase period end date or (ii) the fair market value per share of our common stock as determined on the applicable purchase period start date (provided that, in no event may the purchase price be less than the par value per share of our common stock). The Committee may determine prior to a purchase period to calculate the purchase price for such period solely by reference to the fair market value of a share on the applicable purchase period end date or purchase period start date, or based on the greater (rather than the lesser) of such values.

A participant’s purchase right to purchase shares of common stock during a purchase period will be exercised automatically on the purchase period end date for that purchase period unless the participant withdraws at least thirty days prior to the end of the purchase period or his or her participation is terminated. On the purchase period end date, a participant’s purchase right will be exercised to purchase that number of shares which the accumulated contributions in his or her account at that time will purchase at the applicable purchase price, but not in excess of the number of shares subject to the purchase right or other ESPP terms. Subject to the terms of the ESPP, a purchase right will generally terminate on the earlier of the date of the participant’s termination of employment or the last day of the applicable purchase period.

Rights as Stockholder . A participant will have no rights as a stockholder with respect to our shares that the participant has a purchase right to purchase in any offering until those shares are issued to the participant.

Rights Not Transferable . A participant’s rights under the ESPP will be exercisable only by the participant and are not transferable other than by will or the laws of descent or distribution.

Effect of a Change in Control; Adjustments . If there is any change in the outstanding shares of our common stock because of a merger, change in control (as defined in our 2019 Omnibus Incentive Plan), consolidation, recapitalization or reorganization involving Change Healthcare Inc., or if the Board declares a stock dividend, stock split distributable in shares of common stock or reverse stock split, other distribution or combination or reclassification of our common stock, or if there is a similar change in the capital stock structure of Change Healthcare Inc. affecting our common stock, then the number and type of shares of our common stock reserved for issuance under the ESPP will be correspondingly adjusted and, subject to applicable law, the Committee will make such adjustments to purchase rights or to any ESPP provision as the Committee deems equitable to prevent dilution or enlargement of purchase rights or as may otherwise be advisable. In addition, in the event of a change in control, the Committee’s discretion includes, but is not limited to, the authority to provide for any of, or a combination of any of, the following:

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assumption or substitution of purchase rights by a successor entity (or parent or subsidiary of such successor);

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selection of a date on which all outstanding purchase rights will be exercised on or before the consummation date of the change in control;

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termination of outstanding purchase rights and refund of accumulated contributions to each participant prior to the change in control; or

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•

continuation of outstanding purchase rights unchanged.

Amendment; Termination . The ESPP may be amended, altered, suspended and/or terminated at any time by the Board; provided , that approval of an amendment to the ESPP by our stockholders will be required to the extent, if any, that stockholder approval of such amendment is required by applicable law. The Committee may (subject to the provisions of Section 423 of the Code and the ESPP) amend, alter, suspend and/or terminate any purchase right granted under the ESPP, prospectively or retroactively, but (except as otherwise provided in the ESPP) such amendment, alteration, suspension or termination of a purchase right may not, without the written consent of a participant with respect to an outstanding purchase right, materially adversely affect the rights of the participant with respect to the purchase right. In addition, the Committee has unilateral authority to (a) subject to the provisions of Section 423 of the Code, amend the ESPP and any purchase right (without participant consent) to the extent necessary to comply with applicable law or changes in applicable law and (b) make adjustments to the terms and conditions of purchase rights in recognition of unusual or nonrecurring events affecting us or any parent or subsidiary corporation (each as defined under Section 424 of the Code), or our financial statements (or those of any parent or subsidiary corporation), or of changes in applicable law, or accounting principles, if the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of benefits intended to be made available under the ESPP or necessary or appropriate to comply with applicable accounting principles or applicable law.

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CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

The agreements described in this section, or forms of such agreements as they will be in effect at the time of this offering, are filed as exhibits to the registration statement of which this prospectus forms a part, and the following descriptions are qualified by reference thereto.

Stockholders Agreement

In connection with the Transactions, we entered into a stockholders agreement with our Sponsors, McKesson and the Joint Venture. The stockholders agreement requires us to nominate a number of individuals designated by Blackstone for election as our directors at any meeting of our stockholders (each, a “Blackstone Director”) such that, following the election of any directors and taking into account any director continuing to serve as such without the need for re-election, (i) prior to a Qualified McKesson Exit, the number of Blackstone Directors serving as directors of our company will be equal to a majority of the total number of directors comprising our board of directors, for so long as Blackstone and its affiliates together continue to beneficially own at least 50% of the shares of our common stock entitled to vote generally in the election of our directors as of the record date for such meeting and (ii) following a Qualified McKesson Exit, the number of Blackstone Directors serving as directors of our company will be equal to a majority of the total number of directors comprising our board of directors minus one director, for so long as Blackstone and its affiliates together continue to beneficially own at least 50% of the shares of our common stock issued to Blackstone in connection with the Transactions (as appropriately adjusted for any stock split, stock dividend, combination, recapitalization or the like). Upon completion of this offering, , and will serve as Blackstone Directors. See “Management.”

In addition, the stockholders agreement provides that in the event we breach the terms of, or otherwise fail to take any action then required to be taken pursuant to the terms of, the Merger Agreement, as amended, replaced or supplemented from time to time, including for the avoidance of doubt, the failure to obtain any necessary approval of our board of directors or stockholders required in connection with the Merger, then following the delivery to us by McKesson of a written notice of such breach or failure, the Sponsors and the other parties to the stockholders agreement shall take all necessary action to promptly issue to McKesson (or one of its designated affiliates) one share of Class X Stock (as defined below) for the legal minimum consideration for such share which, when issued in accordance with the terms hereof, shall be duly authorized and validly issued, fully paid and non-assessable, and have the rights set forth in our certificate of incorporation, including the right to designate the Class X Director (as defined below). See “Description of Capital Stock—Class X Stock.”

See also “—LLC Agreement of the Joint Venture—Certain Covenants by Change Healthcare Inc.; Other Provisions.”

In the case of a vacancy on our board created by the removal or resignation of a Blackstone Director, the stockholders agreement requires us to nominate an individual designated by Blackstone for election to fill the vacancy.

Registration Rights Agreement

In connection with the Transactions, we entered into a registration rights agreement with our Sponsors and McKesson. This agreement provides to each of McKesson and our Sponsors customary “demand” and “piggyback” registration rights with respect to our common stock, subject to the transfer restrictions set forth in the LLC Agreement. The registration rights agreement also provides that we will pay certain expenses relating to such registrations and indemnify the registration rights holders against (or make contributions in respect of) certain liabilities which may arise under the Securities Act. For additional information regarding the registration rights provided to McKesson and our Sponsors, see “—LLC Agreement of the Joint Venture—Transfers of LLC Units.”

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Contribution Agreement

In June 2016, the Legacy CHC Stockholders entered into the Contribution Agreement with McKesson and the other parties thereto. Under the terms of the Contribution Agreement, the parties agreed to form the Joint Venture through a joint venture that combined Core MTS with Legacy CHC. The Transactions closed on March 1, 2017. From the time of its formation in June 2016 until the consummation of the Transactions, the Joint Venture had no substantive assets or operations.

Pursuant to the terms of the Contribution Agreement, (i) the Legacy CHC Stockholders, directly and indirectly, transferred ownership of substantially all of Legacy CHC to the Joint Venture in consideration of (a) the payment at the closing of the Transactions by the Joint Venture to the Legacy CHC Stockholders and certain participants in the Legacy CHC Amended and Restated 2009 Equity Incentive Plan of (A) approximately $1.8 billion, (B) stock in eRx Network Holdings, Inc., and (C) the 2017 Tax Receivable Agreement, and (b) the issuance to Change Healthcare Inc. of membership interests in the Joint Venture; and (ii) McKesson caused Core MTS to be transferred to the Joint Venture in consideration of (a) the assumption and subsequent payment at the closing of the Transactions by the Joint Venture to McKesson of a promissory note in the amount of approximately $1.3 billion, (b) the issuance of membership interests in the Joint Venture and (c) an interest in a tax receivable agreement from the Joint Venture.

The Contribution Agreement includes customary representations, warranties, covenants and indemnification arrangements by the parties thereto, including representations and warranties by McKesson and Legacy CHC regarding the Contributed Businesses.

LLC Agreement of the Joint Venture

Change Healthcare Inc. holds LLC Units in the Joint Venture. The limited liability company agreement of the Joint Venture (the “LLC Agreement”) governs the rights and obligations of McKesson and Change Healthcare Inc. in their roles as members of the Joint Venture and owners of the LLC Units.

Board of the Joint Venture

The LLC Agreement provides that the Joint Venture will initially be governed by a board of directors (the “Joint Venture Board”) comprised of not more than ten members. Each of the McK Members, on the one hand, and Change Healthcare Inc., on the other hand, are entitled to designate up to four directors of the Joint Venture Board, of whom three directors may be employees or affiliates of the designating member, and one director may not be an employee or affiliate of the designating member and must otherwise be independent of the Joint Venture. The ninth director on the Joint Venture Board is the Joint Venture’s chief executive officer ( currently Neil de Crescenzo) and the tenth director on the Joint Venture Board is an independent director that is mutually designated by the McK Members and Change Healthcare Inc. John H. Hammergren, McKesson’s chief executive officer, initially was one of the directors designated by the McK Members and acts as the Joint Venture Board’s chairman. The number of the Joint Venture Board designees of the McK Members and Change Healthcare Inc. is subject to reduction based on the LLC Units ownership level of the corresponding the Joint Venture member.

Approval Rights of the Members

Pursuant to the LLC Agreement, certain actions by the Joint Venture require the prior written consent of both the McK Members and Change Healthcare Inc. These matters include, without limitation: (i) materially changing the line of business of the Joint Venture; (ii) the appointment, removal or replacement of the Joint Venture’s chief executive officer or chairman of the Joint Venture Board; (iii) approving the Joint Venture’s annual operating plan and budget; (iv) entering into certain material agreements, including affiliate transactions (subject to certain exceptions); (v) declaring or paying any dividend, redeeming or repurchasing equity securities or issuing or authorizing the issuance of equity securities of the Joint Venture; (vi) incurring indebtedness (subject to certain exceptions); (vii) a change of control of the Joint Venture, or the sale, lease or disposal of assets of Change Healthcare outside the ordinary course of business (other than expressly permitted by the LLC

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Agreement including pursuant to drag along rights set forth herein); (viii) any initial public offering, other than a Qualified IPO (as defined below); (ix) terminating, liquidating or dissolving the Joint Venture; and (x) any amendment to, modification of, or waiver under the Contribution Agreement or the Transaction Documents (as defined in the LLC Agreement) by the Joint Venture. The foregoing approval rights of the members of the Joint Venture will terminate, as to each of the McK Members and Change Healthcare Inc., at such time as the McK Members (together with their permitted transferees) no longer own, directly or indirectly, 10% or more of the LLC Units initially held by the McK Members (directly or indirectly through ownership of common stock of Change Healthcare Inc.).

Special Allocations

Generally, pursuant to the LLC Agreement, the profits and losses of the Joint Venture will be allocated among the members of the Joint Venture in proportion to the number of LLC Units held by them. However, amortization expenses related to certain assets to be transferred to the Joint Venture by one of the McK Members at the time of the Transactions, as well as associated income tax deductions, generally have been and may continue to be allocated solely to the McK Member that transferred the applicable asset to the Joint Venture at the time of the Transactions.

Transfers of LLC Units

Pursuant to the LLC Agreement, no member is permitted to transfer LLC Units (including any transfer of beneficial ownership therein), other than to a member’s affiliates or with the consent of the other members, except as described below.

Following the consummation of a firm commitment initial public offering of Change Healthcare Inc. (a “Qualified IPO”) occurring at any time prior to 30 months following the closing of the Transactions, transfers would be permitted in accordance with the following transfer provisions:

•

for a period of up to three months following expiration of the underwriter lock-up period relating to a Qualified IPO (the “First Change Healthcare Inc. Sale Window”), the Legacy CHC Stockholders may transfer shares of Change Healthcare Inc. in a firm commitment public offering of Change Healthcare Inc.’s common stock (a “Qualified Change Healthcare Inc. Sale”);

•

for a period (the “McKesson Exit Window”) of up to 12 months (subject to certain extensions) following the expiration of any lock-up period relating to a Qualified Change Healthcare Inc. Sale during the First Change Healthcare Inc. Sale Window (or following the lockup period relating to a Qualified IPO, if the applicable Change Healthcare Inc. stockholders determine not to conduct a Qualified Change Healthcare Inc. Sale during the First Change Healthcare Inc. Sale Window), McKesson may conduct a spin-off or split-off (or a combination of the foregoing) of a Delaware corporation (“SpinCo”) holding McKesson’s interest in Change Healthcare, followed immediately by the merger (the “Merger”) of SpinCo with and into Change Healthcare Inc., which would result in the acquisition by Change Healthcare Inc. of all of McKesson’s LLC Units in exchange for the issuance by Change Healthcare Inc. to McKesson and/or McKesson’s securityholders of an equal number of shares of its common stock (such transactions, a “Qualified McKesson Exit”). The McK Members may also exercise certain registration rights during this window;

•

for a period of up to six months following the expiration or termination of the McKesson Exit Window, where a Qualified McKesson Exit did not occur (the “Second Change Healthcare Inc. Sale Window”), the Legacy CHC Stockholders may transfer or sell shares of Change Healthcare Inc. in a Qualified Change Healthcare Inc. Sale;

•

during both the First Change Healthcare Inc. Sale Window and the Second Change Healthcare Inc. Sale Window, the McK Members may transfer LLC Units pursuant to the exercise of tag-along registration rights pursuant to the Registration Rights Agreement, subject to the Legacy CHC Stockholders having

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priority in such Qualified Change Healthcare Inc. Sale in the event of any cut-backs of shares offered pursuant to such offerings;

•

during the McKesson Exit Window, in the event the McK Members exercise registration rights, the Legacy CHC Stockholders may transfer shares of Change Healthcare Inc. pursuant to the exercise of tag-along registration rights pursuant to the Registration Rights Agreement, subject to the McK Members having priority in the first such offering in the event of any cut-backs of shares offered pursuant to such offering;

•

following expiration or termination of the Second Change Healthcare Inc. Sale Window (or, if applicable, any underwriter lock-up period applicable thereto), the McK Members and the Legacy CHC Stockholders may transfer their beneficial interests in Change Healthcare in any manner permitted by applicable law, and each of the McK Members and the Legacy CHC Stockholders will have unlimited demand and piggyback registration rights pursuant to the Registration Rights Agreement, subject to customary limitations, and the McK Members would be able to exchange all or any portion of their LLC Units for shares of common stock of Change Healthcare Inc. on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends; and

•

if a Qualified McKesson Exit is consummated, then following the 90-day period after such Qualified McKesson Exit, transfers may be conducted in any manner provided by applicable law, including pursuant to the exercise of registration rights pursuant to the Registration Rights Agreement.

We expect that this offering will qualify as a Qualified IPO under the LLC Agreement.

The McKesson Exit Window would automatically terminate or be deemed to terminate no later than the date that is four years following the closing of the Transactions. However, the First Change Healthcare Inc. Sale Window would be shortened (or deemed terminated) to the extent that it would otherwise be open during the third year after the closing of the Transactions, so that the McKesson Exit Window lasts a full 12 months following the expiration of the underwriter lock-up period for any Qualified IPO occurring within the two-year period following the closing of the Transactions.

In addition, following this offering, on the terms and subject to the conditions provided in the LLC Agreement, McKesson (or certain permitted transferees) will have the right from time to time to exchange its LLC Units for shares of our common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. Prior to the occurrence of the first exchange of LLC Units by McKesson (or its permitted transferees), if any, Change Healthcare Inc. has agreed to enter into an additional tax receivable agreement with the McK Members, pursuant to which Change Healthcare Inc. would be required to pay to the relevant McK Member 85% of the net cash tax savings, if any, arising from Change Healthcare Inc.’s utilization of (i) certain tax basis increases resulting from the relevant exchange and payments under such additional tax receivable agreement and (ii) imputed interest deductions.

Merger Agreement and Separation and Distribution Agreement; Tax Matters Agreement

SpinCo, a subsidiary of McKesson organized as a Delaware limited liability company, has entered into an agreement and plan of merger (the “Merger Agreement”) with Change Healthcare Inc. that provides, among other things, that SpinCo will convert to a corporation and merge with and into Change Healthcare Inc. immediately following a Qualified McKesson Exit, pursuant to which the stockholders of SpinCo will be entitled to receive a number of shares of common stock of Change Healthcare Inc. equal to the number of LLC Units held by SpinCo at the effective time of the Merger. McKesson will also enter into a customary Separation and Distribution Agreement with SpinCo (the “Separation and Distribution Agreement”) prior to, and in connection with, a Qualified McKesson Exit.

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In connection with a Qualified McKesson Exit, McKesson, SpinCo and Change Healthcare Inc. will also enter into a Tax Matters Agreement, which will govern the rights, responsibilities and obligations of McKesson and SpinCo after the Qualified McKesson Exit with respect to tax liabilities and benefits, tax attributes, tax contests and other tax sharing regarding U.S. federal, state and local, and non-U.S., taxes, other tax matters and related tax returns. In addition, the Tax Matters Agreement could restrict our ability to enter into certain change of control or other transactions involving our equity if such transactions could implicate the tax-free status of the Distribution. To the extent the Distribution does not qualify as a tax-free transaction as a result of our failure to comply with the Tax Matters Agreement, we will be required to indemnify McKesson, and in certain circumstances the Tax Matters Agreement may require that Change Healthcare, Inc. enter into a new tax receivable agreement pursuant to which it will be required to pay to McKesson 85% of the certain cash tax savings, if any, arising from the utilization of certain tax basis increases resulting from the Distribution.

Certain Covenants by Change Healthcare Inc.; Other Provisions

Pursuant to the LLC Agreement, Change Healthcare Inc. has made certain covenants to the Joint Venture that are designed, among other things, to help preserve the availability of a Qualified McKesson Exit. These covenants require, among other things, that Change Healthcare Inc. remains solely a holding company of its ownership of the Joint Venture.

The LLC Agreement also provides that the McK Members will have a “top-up” right to acquire additional LLC Units at fair market value (determined in accordance with the LLC Agreement) during a McKesson Exit Window, such that following the exercise of such top-up option, the stockholders of SpinCo will be entitled to hold a majority of the number of shares of Change Healthcare Inc. common stock at the effective time of the Merger.

In addition, pursuant to the LLC Agreement and the Stockholders Agreement, Change Healthcare Inc. and the Legacy CHC Stockholders covenant to maintain certain minimum ownership levels in the Joint Venture and in Change Healthcare Inc., and the Legacy CHC Stockholders covenant to vote in favor of any stockholder proposals required to be made (or deemed advisable to obtain) in connection with the Merger or any other transactions or agreements in respect of any Qualified McKesson Exit. For additional information, please see “Risk Factors—Risks Related to Our Organizational Structure—If certain transactions in connection with a Qualified McKesson Exit do not qualify as tax-free transactions under Sections 368(a)(1)(D) and 355 of the U.S. Internal Revenue Code of 1986, as amended then McKesson may be required to pay substantial U.S. federal income taxes. We may be required to indemnify McKesson for all or part of any such tax liability in certain circumstances, which generally relate to certain actions taken by us that cause the Distribution to become taxable, and may be obligated to make payments to McKesson in respect of certain tax savings resulting to us” and “Risk Factors—Risks Related to Our Organizational Structure—We are subject to certain restrictions in order to avoid significant tax-related liabilities.”

eRx Network Option Agreement

In connection with the Transactions, the equity interests for entities representing the eRx Network were distributed to the Legacy CHC Stockholders, and in connection therewith a subsidiary of Legacy CHC and the Legacy CHC Stockholders entered into an option agreement for a subsidiary of the Joint Venture to acquire the eRx Network (the “Option Agreement”). Under the terms of the Option Agreement, the option to acquire the eRx Network will only become exercisable at any such time that McKesson owns (directly or indirectly), in the aggregate, less than 5% of the outstanding LLC Units of the Joint Venture. Such option will expire, if unexercised or unexercisable, on March 1, 2022. Under the Option Agreement, upon exercise of the option, a subsidiary of Legacy CHC will be required to pay an exercise price of $1.00 plus a fixed multiple of the incremental increase (if any) in the EBITDA (as defined in the Option Agreement) of the eRx Network for the trailing 12 months preceding the exercise of the option over a baseline level of such EBITDA.

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Management Services Agreement

The Joint Venture, certain subsidiaries of the Joint Venture, McKesson and the Sponsors have entered into an Management Services Agreement, whereby McKesson and the Sponsors have been retained to provide certain management, consulting, financial and other advisory services to the Joint Venture for certain periods following the consummation of the closing of the Transactions, for an annual fee not to exceed 1% of our EBITDA (as defined in the Credit Agreement) in the applicable fiscal year, subject to proration as applicable. The agreement will terminate automatically upon consummation of this offering. No transaction fee will be payable in connection with this offering.

The Joint Venture recognized $7.8 million ($1.7 million for Blackstone, $0.6 million for Hellman & Friedman and $5.5 million for McKesson), $10.5 million ($2.3 million for Blackstone, $865,000 for Hellman & Friedman and $7.3 million for McKesson) and $888,000 ($193,000 for Blackstone, $73,000 for Hellman & Friedman and $622,000 for McKesson) in management fees during the nine months ended December 31, 2018, the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. The agreement provides that the final management fee will accrue and be payable with respect to the entire fiscal year in which termination occurs. We currently estimate that this fee will be approximately $ million ($ payable to Blackstone, $ payable to Hellman & Friedman and $ payable to McKesson).

Tax Receivable Agreements

2009—2011 Tax Receivable Agreements

Under the 2009—2011 Tax Receivable Agreements assumed by the Joint Venture in connection with the Transactions, the Joint Venture is obligated to make payments to certain of the former Legacy CHC Stockholders, equal to 85% of the applicable cash savings that the Joint Venture expects to realize as a result of tax attributes arising from certain previous transactions. As a result of the covered change of control with respect to the 2009—2011 Tax Receivable Agreements that occurred in connection with the Transactions, payments the Joint Venture makes under the 2009—2011 Tax Receivable Agreements are required to be calculated using certain valuation assumptions, including that the Joint Venture will have sufficient taxable income to use the applicable tax attributes and that certain of such tax attributes will be used by the Joint Venture on a pro rata basis from the date of the Transactions (or in certain cases from the date of certain previous transactions) through the expiration of the applicable tax attribute. Because the 2009—2011 Tax Receivable Agreements were previously subject to fair value measurement in connection with a prior business combination transaction, it is recognized at its initial fair value plus recognized accretion to date. In connection with the covered change in control, the change in assumed valuation assumptions resulted in a change in estimate (decrease to the pretax loss) of $26.5 million for the period from June 17, 2016 (inception) to March 31, 2017.

2017 Tax Receivable Agreement

In connection with the closing of the Transactions, the Legacy CHC Stockholders, Change Healthcare Performance, Inc., Change Healthcare Inc., the Joint Venture and certain subsidiaries of the Joint Venture entered into the 2017 Tax Receivable Agreement. The 2017 Tax Receivable Agreement generally provides for the payment by Change Healthcare Performance, Inc. following the closing of the Transactions to the 2017 TRA Parties of 85% of the net cash tax savings realized (or, in certain circumstances, deemed to be realized) by Change Healthcare Performance, Inc. in periods after the closing of the Transactions as a result of certain net operating losses and certain other tax attributes of Change Healthcare Performance, Inc. as of the closing of the Transactions.

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McKesson Tax Receivable Agreement

In connection with the closing of the Transactions, the Joint Venture, the McK Members, McKesson and Change Healthcare Inc. entered into the McKesson Tax Receivable Agreement. The McKesson Tax Receivable Agreement generally provides for the payment by the Joint Venture to one of the McK Members and its permitted assigns of 85% of the net cash tax savings realized (or, in certain circumstances, deemed to be realized) by Change Healthcare Inc. in periods ending on or after the date on which McKesson ceases to own at least 20% of the outstanding LLC Units of the Joint Venture as a result of (i) certain amortizable tax basis in assets transferred to the Joint Venture at the closing of the Transactions and (ii) imputed interest deductions and certain other tax attributes arising from payments under the McKesson Tax Receivable Agreement.

Additionally, upon the occurrence of the first exchange of LLC Units by McKesson (or its permitted transferees), if any, Change Healthcare Inc. has agreed to enter into an additional tax receivable agreement with the McK Members, pursuant to which Change Healthcare Inc. would be required to pay to the relevant McK Member 85% of the net cash tax savings, if any, arising from Change Healthcare Inc.’s utilization of (i) certain tax basis increases resulting from the relevant exchange and payments under such additional tax receivable agreement and (ii) imputed interest deductions. We may also be required to enter into and make payments under an additional tax receivable agreement with McKesson in certain circumstances. Please see “Risk Factors—Risks Related to Our Organizational Structure—If certain transactions in connection with a Qualified McKesson Exit do not qualify as tax-free transactions under Sections 368(a)(1)(D) and 355 of the U.S. Internal Revenue Code of 1986, as amended, then McKesson may be required to pay substantial U.S. federal income taxes. We may be required to indemnify McKesson for all or part of any such tax liability in certain circumstances, which generally relate to certain actions taken by us that cause the Distribution to become taxable, and may be obligated to make payments to McKesson in respect of certain tax savings resulting to us.”

Letter Agreement

Change Healthcare Inc., the Joint Venture, McKesson and certain of McKesson’s affiliates have entered into the Letter Agreement relating to the Contribution Agreement. The Letter Agreement addresses miscellaneous tax-related matters, including (i) technical clarifications and modifications to the manner in which the Joint Venture allocates certain items of taxable income, loss and deduction among, and calculates and makes required tax distributions to, its members, (ii) the sharing of certain contingent tax benefits and expenses not addressed by the McKesson Tax Receivable Agreement or the Tax Matters Agreement and (iii) procedures applicable in the case of certain tax proceedings.

In particular, pursuant to the terms of the Letter Agreement, McKesson may adjust the manner in which depreciation or amortization deductions in respect of assets transferred to the Joint Venture at the closing of the Transactions are allocated among Change Healthcare Inc., McKesson and certain of McKesson’s affiliates. If McKesson chooses to allocate an amount of deductions to Change Healthcare Inc. in excess of a specified minimum threshold, Change Healthcare Inc. may be required to make cash payments to McKesson equal to 100% of the tax savings of Change Healthcare Inc. attributable to such excess deductions for any tax period ending prior to the date on which McKesson ceases to own at least 20% of the outstanding LLC Units of the Joint Venture, after which the terms of the McKesson Tax Receivable Agreement will control.

Transition Services Agreements

In connection with the consummation of the Transactions, the Joint Venture, certain subsidiaries of the Joint Venture, McKesson and the eRx Network entered into transition services agreements pursuant to which (i) Change Healthcare provides certain transition services to McKesson and to the eRx Network and (ii) McKesson provides certain transition services to Change Healthcare, in each case in exchange for specified fees and subject to the terms and conditions therein. The Joint Venture recognized transition service fee expense of $47.4 million, $92.0 million and $8.7 million for services received from McKesson during the nine months ended December 31, 2018, the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. In addition, the Joint Venture recognized $8.0 million, $11.8 million and $0.8 million in transition fee income from eRx Network in these same periods.

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Intellectual Property License Agreements

The Joint Venture, McKesson and the eRx Network have entered into intellectual property licensing agreements, pursuant to which (i) Change Healthcare licenses certain intellectual property to each of McKesson and the eRx Network and (ii) each of McKesson and the eRx Network licenses certain intellectual property to Change Healthcare. Subject to appropriate restrictions and agreements to maintain confidentiality and ensure compliance with applicable laws, the Joint Venture and Change Healthcare also share data regarding the operation of their business, and data acquired or arising from the operation of their businesses.

Other Commercial Arrangements

Following the closing of the Transactions, Change Healthcare, McKesson and the eRx Network each entered into customary ordinary-course commercial arrangements regarding their respective businesses. The Joint Venture recognized revenue of approximately $9.0 million, $13.4 million and $1.5 million and paid $0.1 million, $0.9 million and $0.1 million related to such commercial arrangements with McKesson during the nine months ended December 31, 2018, the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. The Joint Venture recognized revenue of approximately $6.1 million and $0.4 million related to such commercial arrangements with the eRx Network during the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively.

eRx Network Line of Credit

In addition, the Joint Venture provided eRx Network at the closing of the Transactions with a $3.0 million line of credit due November 30, 2017 of which $300,000 had been drawn at March 31, 2017. This amount was subsequently repaid during the twelve months ended March 31, 2018.

Services Provided to Change Healthcare Inc. by the Joint Venture

Change Healthcare Inc. generally has no substantive independent assets or operations apart from its investment in the Joint Venture. As a result, the Joint Venture provides certain services for which it is not reimbursed. These services include the utilization of office space and a portion of the salaries of Change Healthcare Inc.’s officers who are considered employees of the Joint Venture.

Employer Healthcare Program Agreement with Equity Healthcare

Effective as of January 1, 2014, Legacy CHC entered into an employer health program agreement with Equity Healthcare LLC (“Equity Healthcare”), an affiliate of Blackstone, pursuant to which Equity Healthcare provides to the Joint Venture certain negotiating, monitoring and other services in connection with the Joint Venture’s health benefit plans. In consideration for Equity Healthcare’s services, the Joint Venture paid Equity Healthcare a fee of $3.00 per participating employee per month for plans through December 31, 2017. Beginning January 1, 2018, the Joint Venture began paying Equity Healthcare a fee of $1.00 per participating employee per month.

Transactions with Sponsor Portfolio Companies

The Sponsors and their respective affiliates have ownership interests in a broad range of companies. We have entered and may enter into commercial transactions in the ordinary course of our business with some of these companies, including the sale of goods and services and the purchase of goods and services.

Transactions with Blackstone Portfolio Companies

The Joint Venture both provides various services to, and purchases services from, certain Blackstone portfolio companies under contracts that were executed in the normal course of business. The Joint Venture

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recognized revenue of approximately $3.4 million, $4.4 million and $400,000 related to services provided to Blackstone portfolio companies during the nine months ended December 31, 2018, the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. The Joint Venture paid Blackstone portfolio companies approximately $18.8 million, $16.3 million and $100,000 related to services provided to the Joint Venture during the nine months ended December 31, 2018, the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively.

Transactions with Hellman & Friedman Portfolio Companies

The Joint Venture both provides various services to, and purchases services from, certain Hellman & Friedman portfolio companies under contracts that were executed in the normal course of business. The Joint Venture recognized revenue of approximately $3.3 million, $5.0 million and $400,000 related to services provided to Hellman & Friedman portfolio companies during the nine months ended December 31, 2018, the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. The Joint Venture paid Hellman & Friedman portfolio companies approximately $1.6 million, $2.5 million and $10,000 related to services provided to the Joint Venture during the nine months ended December 31, 2018, the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively.

Other Transactions with McKesson

The Joint Venture recognized sublease income of $1.6 million, $3.8 million and $0.4 million from McKesson and its affiliates during the nine months ended December 31, 2018, the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively.

Potential Debt Repurchases

As market conditions warrant, we and our major equity holders, including the Sponsors, may from time to time, depending upon market conditions, seek to repurchase our debt securities or loans in privately negotiated or open market transactions, by tender offer or otherwise.

Senior Secured Credit Facilities Held by Related Parties

In connection with the financing for the Transactions, certain investment funds managed by GSO Capital Partners LP (the “GSO-managed funds”) held a portion of the term loans under the Senior Secured Credit Facilities. GSO Advisor Holdings LLC (“GSO Advisor”) is the general partner of GSO Capital Partners LP. Blackstone, indirectly through its subsidiaries, holds all of the issued and outstanding equity interests of GSO Advisor. As of December 31, 2018, March 31, 2018 and 2017, respectively, the GSO-managed funds held $163.5 million, $29.8 million and $200.0 million in principal amount of the Senior Secured Credit Facilities.

Other Transactions

The Joint Venture has an agreement with a customer in which a former officer of the Joint Venture is a member of the board of directors of the customer. Under this agreement, the Joint Venture recognized revenue of approximately $4.5 million, $7.5 million and $76,000 in the aggregate during the nine months ended December 31, 2018, the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively.

Directed Share Program

At our request, our directors, officers and certain employees and other persons associated with us have the opportunity to purchase up to % of the shares of common stock offered by this prospectus at the initial public offering price in a directed share program, to the extent permitted by local securities laws. To the extent directors and officers purchase shares in this offering, the shares will be subject to a 180-day lock-up restriction. See “Underwriting” for more information.

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Statement of Policy Regarding Transactions with Related Persons

At the time of this offering, our board of directors will adopt a written statement of policy regarding transactions with related persons, which we refer to as our “related person policy.” Our related person policy requires that a “related person” (as defined in paragraph (a) of Item 404 of Regulation S-K) must promptly disclose to our general counsel any “related person transaction” (defined as any transaction that is anticipated would be reportable by us under Item 404(a) of Regulation S-K in which we were or are to be a participant and the amount involved exceeds $120,000 and in which any related person had or will have a direct or indirect material interest) and all material facts with respect thereto. Our general counsel will then promptly communicate that information to our board of directors. No related person transaction entered into following this offering will be executed without the approval or ratification of our board of directors or a duly authorized committee of our board of directors. It is our policy that directors interested in a related person transaction will recuse themselves from any vote on a related person transaction in which they have an interest.

Indemnification of Directors and Officers

Our bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by the Delaware General Corporation Law (the “DGCL”). In addition, our certificate of incorporation will provide that our directors will not be liable for monetary damages for breach of fiduciary duty to the fullest extent permitted by the DGCL.

There is no pending litigation or proceeding naming any of our directors or officers to which indemnification is being sought, and we are not aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer.

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PRINCIPAL STOCKHOLDERS

The following tables set forth information regarding the beneficial ownership of shares of our common stock and of LLC Units by (1) each person known to us to beneficially own more than 5% of any class of the outstanding voting securities of Change Healthcare Inc., (2) each of our directors, director nominees and named executive officers and (3) all of our directors, director nominees and executive officers as a group.

The percentage of beneficial ownership of shares of our common stock outstanding before the offering set forth below is based on the number of shares of our common stock to be issued and outstanding immediately prior to the consummation of this offering. The percentage of beneficial ownership of our common stock after the offering set forth below is based on shares of our common stock to be issued and outstanding immediately after the offering. The table does not give effect to any shares that may be acquired by our directors or executive officers pursuant to the directed share program.

Common Stock Beneficially Owned

Number

Percentage

Name of Beneficial Owner

Prior to the
Offering
Transactions

After the
Offering
Transactions
Assuming
Underwriters’
Option is Not
Exercised

After the
Offering
Transactions
Assuming
Underwriters’
Option is
Exercised
in Full

McKesson(1)

—

Blackstone(2)

Hellman & Friedman(3)

Neil E. de Crescenzo

John H. Hammergren

Howard L. Lance

Bansi Nagji

Philip M. Pead

Phillip W. Roe

Neil P. Simpkins

Justin L. Sunshine

Britt Vitalone

Robert J. Zollars

Fredrik Eliasson

Randy Giles

Samuel Hamood

Howard Yntema

Roderick O’Reilly

Mark Vachon

Alex Choy

Patrick Leonard

Directors, director nominees and executive officers as a group (19 persons)

*	Represents less than 1%.

(1)

McKesson beneficially owns an aggregate of LLC Units, which includes LLC Units directly held by PF2 IP LLC and LLC Units directly held by PF2 PST Services Inc. The sole member of PF2 IP LLC is McKesson Corporation. The sole stockholder of PF2 PST Services Inc. is PF2 McKesson Technologies, Inc. The sole stockholder of PF2 McKesson Technologies, Inc. is McKesson Corporation. The address of the entities listed in this footnote is One Post Street, San Francisco, California 94104. Following the expiration of the underwriter lock-up period in connection with this offering, on the terms and subject to the conditions provided in the LLC Agreement, McKesson may, at its election, initiate and complete a Qualified McKesson Exit. Following this offering, on the terms and subject to the conditions provided in the LLC Agreement, McKesson will have the right from time to exchange its LLC Units for shares of our common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits,

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stock dividends and reclassifications. See “Certain Relationships and Related Person Transactions—LLC Agreement of the Joint Venture.”

(2)

Reflects shares directly held by Blackstone Capital Partners VI L.P., shares directly held by Blackstone Family Investment Partnership VI L.P., shares directly held by Blackstone Family Investment Partnership VI-ESC L.P., shares directly held by Blackstone Eagle Principal Transaction Partners L.P. and shares directly held by GSO COF Facility LLC (together, the “Blackstone Funds”).

The general partner of Blackstone Capital Partners VI L.P. and of Blackstone Eagle Principal Transaction Partners L.P. is Blackstone Management Associates VI L.L.C. The sole member of Blackstone Management Associates VI L.L.C. is BMA VI L.L.C. The managing member of BMA VI L.L.C. is Blackstone Holdings III L.P.

The general partner of Blackstone Family Investment Partnership VI L.P. and of Blackstone Family Investment Partnership VI-ESC L.P. is BCP VI Side-by-Side GP L.L.C. The sole member of BCP VI Side-by-Side GP L.L.C. is Blackstone Holdings III L.P.

The general partner of Blackstone Holdings III L.P. is Blackstone Holdings III GP L.P. The general partner of Blackstone Holdings III GP L.P. is Blackstone Holdings III GP Management L.L.C. The sole member of Blackstone Holdings III GP Management L.L.C. is The Blackstone Group L.P.

The collateral manager of GSO COF Facility LLC is GSO Capital Partners LP. GSO Advisor Holdings L.L.C. is the special limited partner of GSO Capital Partners LP with the investment and voting power over the securities beneficially owned by GSO Capital Partners LP. The sole member of GSO Advisor Holdings L.L.C. is Blackstone Holdings I L.P. The general partner of Blackstone Holdings I L.P. is Blackstone Holdings I/II GP Inc. The sole shareholder of Blackstone Holdings I/II GP Inc. is The Blackstone Group L.P.

The general partner of The Blackstone Group L.P. is Blackstone Group Management L.L.C. Blackstone Group Management L.L.C. is wholly-owned by Blackstone’s senior managing directors and controlled by its founder, Stephen A. Schwarzman. Each of the entities described in this footnote and Mr. Schwarzman may be deemed to beneficially own the shares beneficially owned by the Blackstone Funds directly or indirectly controlled by it or him, but each disclaims beneficial ownership of such shares (other than the Blackstone Funds to the extent of their direct holdings). The address of Mr. Schwarzman and each of the other entities listed in this footnote (other than GSO COF Facility LLC and GSO Capital Partners LP) is c/o The Blackstone Group L.P., 345 Park Avenue, New York, New York 10154. The address of GSO COF Facility LLC and GSO Capital Partners LP is c/o GSO Capital Partners LP , 345 Park Avenue, New York, New York 10154.

(3)

Reflects shares directly held by H&F Harrington AIV II, L.P., shares directly held by HFCP VI Domestic AIV, L.P., shares directly held by Hellman & Friedman Investors VI, L.P., shares directly held by Hellman & Friedman Capital Executives VI, L.P., shares directly held by Hellman & Friedman Capital Associates VI, L.P. (together, the “Hellman & Friedman Funds”). The general partner of each of H&F Harrington AIV II, L.P., HFCP VI Domestic AIV, L.P., Hellman & Friedman Capital Executives VI, L.P. and Hellman & Friedman Capital Associates VI, L.P. is Hellman & Friedman Investors VI, L.P. The general partner of Hellman & Friedman Investors VI, L.P. is Hellman & Friedman LLC. An investment committee of Hellman & Friedman LLC has sole voting and dispositive control over the shares. Each of the members of the investment committee disclaims beneficial ownership of such shares, except to the extent of their respective pecuniary interest therein. The address of the entities listed in this footnote is c/o Hellman & Friedman LLC, 415 Mission Street, Suite 5700, San Francisco, CA 94105.

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DESCRIPTION OF CERTAIN INDEBTEDNESS

The following section summarizes the terms of our material principal indebtedness.

Senior Secured Credit Facilities

Overview

Concurrently with the consummation of the Transactions, certain subsidiaries of the Joint Venture entered into a Credit Agreement governing the Senior Secured Credit Facilities, which are guaranteed by substantially all of its wholly owned domestic subsidiaries. The Senior Secured Credit Facilities consist of:

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a Term Loan Facility in an original principal amount of $5,100.0 million, and

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a Revolving Credit Facility in an aggregate principal amount of up to $500.0 million.

The borrowers under the Senior Secured Credit Facilities are Change Healthcare Holdings, LLC, Change Healthcare Performance, Inc. and/or certain of their U.S. subsidiaries. The Revolving Credit Facility includes capacity available for issuing letters of credit and for borrowings on same-day notice, referred to as swing line loans.

The Senior Secured Credit Facilities provide that the borrowers have the right at any time to request additional term loan tranches and/or term loan increases, increases in the revolving commitments and/or additional revolving credit facilities up to the sum of (i) (a) the greater of (I) $1,080.0 million and (II) an amount equal to 100.0% of pro forma consolidated EBITDA for the most recently ended four consecutive fiscal quarter period in respect of which financial statements are available, plus (b) certain voluntary prepayments, repurchases, redemptions and other retirements of indebtedness and commitments under the Senior Secured Credit Facilities, incremental equivalent debt and refinancings thereof, plus (ii) an additional aggregate amount such that, after giving pro forma effect to such incurrence, (x) if such additional amounts are secured on a pari passu basis with the first lien obligations under the Senior Secured Credit Facilities, the Joint Venture’s consolidated first lien net leverage ratio does not exceed 4.90 to 1.00, (y) if such additional amounts are secured on a junior lien basis to the first lien obligations under the Senior Secured Credit Facilities, the Joint Venture’s consolidated secured net leverage ratio does not exceed 5.75 to 1.00 and (z) if such additional amounts are unsecured, either (I) the Joint Venture’s consolidated total net leverage ratio does not exceed 6.00 to 1.00 or (II) the Joint Venture’s consolidated interest coverage ratio is not less than 2.00 to 1.00. The lenders under the Senior Secured Credit Facilities are not under any obligation to provide any such incremental commitments or loans, which are uncommitted, and any such addition of or increase in commitments or loans is subject to obtaining commitments and certain customary conditions precedent set forth in the Senior Secured Credit Facilities.

Interest Rate and Fees

Borrowings under the Senior Secured Credit Facilities bear interest at a rate equal to, at the borrowers’ option, either (i) LIBOR for the relevant interest period, adjusted for statutory reserve requirements (which may be subject, solely in the case of the Term Loan Facility, to a floor of 1.00% per annum and, solely in the case of the Revolving Credit Facility, to a floor of 0.00% per annum), plus an applicable margin or (ii) a base rate equal to the highest of (a) the rate of interest in effect as publicly announced by the administrative agent as its prime rate, (b) the federal funds effective rate plus 0.50% and (c) adjusted LIBOR for an interest period of one month plus 1.00% (which may be subject, solely in the case of the Term Loan Facility, to a floor of 2.00% per annum), in each case, plus an applicable margin. The applicable margin for loans under the Term Loan Facility is subject to reduction after the consummation of this offering. The applicable margin for loans under the Revolving Credit Facility is subject to adjustment based upon our consolidated first lien net leverage ratio.

In addition to paying interest on the outstanding principal under the Senior Secured Credit Facilities, the borrowers are required to pay a commitment fee of 0.50% per annum (which is subject to a decrease to 0.375%

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per annum based upon the Joint Venture’s consolidated first lien net leverage ratio) to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder. The borrowers must also pay customary letter of credit fees and an annual administrative agency fee.

Prepayments

The Senior Secured Credit Facilities require the borrowers to prepay outstanding term loans, subject to certain exceptions, with:

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50% of the Parent borrower’s annual excess cash flow (determined in accordance with the Credit Agreement) commencing with the first full fiscal year completed after the closing of the Senior Secured Credit Facilities (which percentage may be reduced to 25% and 0% if the Joint Venture achieves and maintains (as of the end of the applicable fiscal year) specified consolidated first lien net leverage ratios), subject to certain credits and exceptions;

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100% of the net cash proceeds of non-ordinary course asset sales or other dispositions of property, including insurance condemnation proceeds (which percentage may be reduced to 50%, 25% and 0% if the Joint Venture achieves and maintains specified consolidated first lien net leverage ratios), subject to certain exceptions, in excess of a minimum amount threshold set forth in the Credit Agreement and subject to our right to reinvest the proceeds within a time period set forth in the Credit Agreement; and

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100% of the net cash proceeds of any incurrence of debt by the borrowers or their restricted subsidiaries, other than proceeds from debt permitted to be incurred by the terms of the Senior Secured Credit Facilities.

The foregoing mandatory prepayments will be applied, subject to certain exceptions, to the term loans outstanding under the Senior Secured Credit Facilities then outstanding as directed by the borrowers.

The borrowers may voluntarily, in minimum amounts set forth in the Credit Agreement, repay outstanding loans or reduce outstanding commitments under the Senior Secured Credit Facilities at any time without premium or penalty, subject to reimbursements of the lenders’ redeployment costs actually incurred in the case of a prepayment of LIBOR borrowings prior to the last day of the relevant interest period. The foregoing voluntary prepayments may be applied to the scheduled installments of principal of the Term Loan Facility in such order as the borrowers shall direct and applied to any class of loans under the Senior Secured Credit Facilities as the borrowers shall direct.

Amortization and Maturity

The Term Loan Facility amortizes in equal quarterly installments in aggregate annual amounts equal to 1.00% of the principal amount of the Term Loan Facility outstanding as of the date of the closing of the Senior Secured Credit Facilities, with the balance being payable at maturity on March 1, 2024. Principal amounts outstanding under the Revolving Credit Facility are due and payable in full at maturity on March 1, 2022.

Guarantee and Security

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All obligations of the borrowers under the Senior Secured Credit Facilities and under any swap agreements and cash management arrangements that are entered into by the borrowers or any of their restricted subsidiaries and that, in either case, are provided by any lender or agent party to the Senior Secured Credit Facilities or any of their respective affiliates, and the guarantees of such obligations, are secured, subject to permitted liens and other exceptions, by substantially all of the assets of the borrowers and each guarantor, including but not limited to: (i) a perfected pledge of all of the capital stock issued by Change Healthcare Holdings, LLC and each direct wholly owned domestic restricted subsidiary of the borrowers or any subsidiary guarantor (subject to certain exceptions) and up to 65% of the capital stock issued and outstanding by each direct wholly owned foreign restricted subsidiary of the borrowers or any subsidiary guarantor (subject to certain exceptions) and (ii) perfected security interests in and mortgages on substantially all tangible and intangible personal property and material fee-owned real property of the borrowers and the subsidiary guarantors (subject to certain exceptions and exclusions).

Certain Covenants and Events of Default

The Senior Secured Credit Facilities contain a number of covenants that, among other things, restrict, subject to certain exceptions, the Joint Venture’s ability to:

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incur additional indebtedness and guarantee indebtedness;

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create or incur liens;

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engage in mergers or consolidations;

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sell, transfer or otherwise dispose of assets;

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make investments, acquisitions, loans or advances;

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pay dividends and distributions or repurchase its capital stock;

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prepay, redeem, or repurchase any subordinated indebtedness;

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enter into agreements which limit its ability to incur liens on its assets for the benefit of the Senior Secured Credit Facilities or that restrict the ability of non-guarantor restricted subsidiaries to pay dividends or make other payments to Change Healthcare Inc., the Joint Venture or certain of its subsidiaries;

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enter into certain transactions with its affiliates; and

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change the passive holding company status of the direct parent of Change Healthcare Holdings, LLC.

In addition, with respect to the Revolving Credit Facility, the Credit Agreement requires the Joint Venture to maintain, as of the last day of each four fiscal quarter period, a maximum consolidated first lien net leverage ratio only if, as of the last day of any fiscal quarter, revolving loans under the Revolving Credit Facility (including swing line loans, but excluding undrawn letters of credit up to $100.0 million and other letters of credit that have been cash-collateralized or otherwise backstopped) are outstanding in an aggregate amount greater than 35% of the total commitments under the Revolving Credit Facility at such time. The financial maintenance covenant is subject to customary equity cure rights and may be amended or waived with the consent of the lenders holding a majority of the commitments under the Revolving Credit Facility. The Senior Secured Credit Facilities also contain, in addition to the negative covenants described above, certain customary affirmative covenants and events of default, including upon a change of control.

The terms described above with respect to the Senior Secured Credit Facilities are subject to change and a number of customary conditions and exceptions for transactions of this type. To the extent that any of the conditions with respect to such indebtedness are not satisfied, such indebtedness may not be available on the terms described herein or at all.

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Senior Notes

In connection with the Transactions, on February 15, 2017, Change Healthcare Holdings, LLC and Change Healthcare Finance, Inc. (collectively, the “Issuers”) issued $1,000.0 million aggregate principal amount of Senior Notes due March 1, 2025.

The Senior Notes bear interest at a rate of 5.75% per year, payable semi-annually in arrears on March 1 and September 1. The Issuers’ obligations under the senior notes are guaranteed on a senior unsecured basis by all of the Issuers’ existing and future wholly-owned domestic restricted subsidiaries (other than Change Healthcare Finance, Inc. and certain excluded subsidiaries) that guarantee the Senior Secured Credit Facilities.

At any time prior to March 1, 2020, the Issuers may redeem some or all of the Senior Notes at a redemption price equal to 100.000% of the principal amount thereof, plus the applicable premium as of the redemption date under the terms of the indenture and accrued and unpaid interest. The redemption price during each of the twelve-month periods following March 1, 2020 and March 1, 2021 and at any time after March 1, 2022 is 102.835%, 101.438% and 100.000% of the principal amount plus accrued and unpaid interest thereon, respectively.

Upon the occurrence of a change of control or upon the sale of certain assets in which the Issuers do not apply the proceeds as required, the holders of the Senior Notes will have the right to require the Issuers to make an offer to repurchase each holder’s Senior Notes at a price equal to 101% (in the case of a change of control) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest.

The Senior Notes contain covenants limiting, among other things, Change Healthcare Holdings, LLC’s and its restricted subsidiaries’ (including Change Healthcare Finance, Inc.’s) ability to incur or guarantee additional indebtedness or issue disqualified stock or certain preferred stock, pay dividends and make other distributions or repurchase stock, make certain investments, create or incur liens, sell or transfer certain assets, enter into restrictions affecting the ability of restricted subsidiaries to make distributions, loans or advances or transfer assets to the Issuers or the guarantors, enter into certain transactions with the Issuers’ affiliates, designate subsidiaries as unrestricted subsidiaries and merge, consolidate or transfer or sell all or substantially all of the Issuers’ or the guarantors’ assets, enter into certain transactions with affiliates. These covenants are subject to a number of important limitations and exceptions. Most of the covenants will not apply to Change Healthcare Holdings, LLC and its restricted subsidiaries (including Change Healthcare Finance, Inc.) during any period in which the Senior Notes are rated investment grade by either Moody’s Investors Service, Inc. or Standard & Poor’s Ratings Services. In addition, the guarantees will be suspended during a covenant suspension. The Senior Notes also contain customary events of default.

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DESCRIPTION OF CAPITAL STOCK

In connection with this offering, we will amend and restate our certificate of incorporation and our bylaws. The following is a description of the material terms of, and is qualified in its entirety by, our amended and restated certificate of incorporation and amended and restated bylaws, each of which will be in effect upon the consummation of this offering, the forms of which are filed as exhibits to the registration statement of which this prospectus forms a part. Under “Description of Capital Stock,” “we,” “us,” “our,” the “Company” and “our company” refer to Change Healthcare Inc. and not to the Joint Venture or any of the Joint Venture’s or Change Healthcare Inc.’s subsidiaries.

Our purpose is to engage in any lawful act or activity for which corporations may be organized under the DGCL. Upon the consummation of this offering, our authorized capital stock will consist of shares of common stock, par value $0.001 per share, one share of Class X Stock, par value $0.001 per share (the “Class X Stock”), and shares of preferred stock, par value $0.001 per share. No shares of preferred stock or Class X Stock will be issued or outstanding immediately after the offering contemplated by this prospectus. Unless our board of directors determines otherwise, we will issue all shares of our capital stock in uncertificated form.

Common Stock

Holders of shares of our common stock are entitled to one vote for each share held of record on all matters on which stockholders are entitled to vote generally, including the election or removal of directors. The holders of our common stock do not have cumulative voting rights in the election of directors.

Holders of shares of our common stock are entitled to receive dividends when, as and if declared by our board of directors out of funds legally available therefor, subject to any statutory or contractual restrictions on the payment of dividends and to the rights of the holders of one or more outstanding series of our preferred stock.

Upon our liquidation, dissolution or winding up and after payment in full of all amounts required to be paid to creditors, and subject to the rights of the holder of the share of Class X Stock and the holders of one or more outstanding series of preferred stock having liquidation preferences, if any, the holders of shares of our common stock will be entitled to receive pro rata our remaining assets available for distribution.

All shares of our common stock that will be outstanding at the time of the completion of the offering will be fully paid and non-assessable. The common stock will not be subject to further calls or assessments by us. Holders of shares of our common stock do not have preemptive, subscription, redemption or conversion rights. There will be no redemption or sinking fund provisions applicable to the common stock. The rights, powers, preferences and privileges of holders of our common stock will be subject to those of the holder of Class X Stock or the holders of any shares of our preferred stock or any other series or class of stock we may authorize and issue in the future.

Class X Stock

If, following the consummation of this offering, and prior to the earlier to occur of (i) the consummation of a Qualified McKesson Exit or (ii) the expiration or termination of an MCK Exit Window, we breach the terms of, or otherwise fail to take any action then required to be taken pursuant to the terms of the Merger Agreement, the share of Class X Stock will be issued to McKesson (or one of its designated affiliates).

The share of Class X Stock will have no voting rights, except with respect to the limited matters described below or as required by applicable law. During any period of time that the share of Class X Stock is outstanding and prior to the Class X Termination Time (as defined below), we may not take any of the following actions without the prior approval of the holder of the share of Class X Stock: (i) any amendment, alteration or repeal of our certificate of incorporation, (ii) the authorization or issuance of any class or series of capital stock other than the common stock, (iii) any action or transaction (other than the election or removal of directors) that requires for its authorization the approval or adoption of our stockholders under the DGCL, or (iv) any action (including the adoption of any stockholder rights plan, poison pill or similar document or entry into any agreement of merger or consolidation) that could materially prevent, impede, hinder or delay the consummation of the Merger prior to the Class X Termination Time.

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The share of Class X Stock will not be entitled to receive dividends. Upon our liquidation, dissolution or winding up, the holder of the share of Class X Stock will be entitled to receive, ratably, on a per share basis, before any payment or distribution is made to the common stock or on any other class or series of stock ranking junior to the share of Class X Stock, the amount of $1.00.

Upon the earliest to occur of (x) the consummation of the Merger or (y) the expiration of the MCK Exit Window (such date, the “Class X Termination Time”), the share of Class X Stock, if outstanding, will be automatically redeemed for a cash amount equal to $1.00, but only to the extent redemption is permitted by applicable law. Upon such redemption the share of Class X Stock will be automatically retired and cancelled and may not be reissued.

At any time when the share of Class X Stock is outstanding and prior to the Class X Termination Time, the holder of the share of Class X Stock will be entitled to elect one director to our board of directors (the “Class X Director”). A Class X Director will serve for a term expiring upon the earlier of (x) the next annual meeting of stockholders following the Class X Director’s election or (y) the Class X Termination Time. The Class X Director may be removed without cause by (and only by), and any vacancy in the Class X Directorship (occurring for any reason) may be filled by (and only by), the holder of the share of Class X Stock. See “Certain Relationships and Related Person Transactions—Stockholders Agreement.”

Approval of Special Matters

During any period of time that the share of Class X Stock is outstanding and prior to the Class X Termination Time, our certificate of incorporation includes certain requirements that apply in connection with the approval of any Special Matter (as defined below). Specifically:

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on each Special Matter proposed to be approved, adopted or authorized by the board of directors, the Class X Director is entitled to cast a number of votes equal to the sum of the total number of authorized directorships then comprising the board of directors plus one vote; provided , that, with respect to any Special Matter, the Class X Director may elect to cast only one vote on such Special Matter (a “Low Vote Notice”);

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all of the directors other than the Class X Director will be entitled to cast one vote on each Special Matter;

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(i) the director or directors possessing a majority of the total voting power of the total number of authorized directorships then comprising the board of directors (taking into account whether the Class X Director has delivered a Low Vote Notice prior to such meeting) will be required for a quorum to be present in order for the board of directors to vote upon a Special Matter; (ii) the affirmative vote of directors possessing a majority of the total voting power of the directors present at a meeting at which a quorum is present will be the act of the board of directors with respect to any Special Matter; and (iii) no other quorum or voting requirement for action by the board of directors shall apply or have any effect with respect to the approval, adoption or authorization of a Special Matter;

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the board of directors may not delegate its authority to take action on a Special Matter to any committee of the board of directors except to the extent such delegation is approved by the Class X Director; and

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the Class X Director may call a special meeting of the board of directors on 24 hours’ notice to consider a Special Matter and any Special Matter proposed by the Class X Director shall be submitted for action by the board of directors.

A “Special Matter” means (i) any adoption, entry into or consummation of any agreement of merger or consolidation to which we and SpinCo (or any other subsidiary of McKesson) are parties or constituent entities (including the Merger Agreement), the terms and conditions of which are substantially the same as set forth in the Merger Agreement, (ii) any action to cause us to perform (or fail to perform) our obligations under the terms of any such agreement of merger or consolidation or to cause us to effect such merger or consolidation as described in clause (i) and (iii) any action including the adoption of any stockholder rights plan, poison pill or

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similar document or the entry into any other agreement of merger or consolidation to which we are a party or a constituent entity, proposed to be approved, adopted or authorized by one or more members of the board of directors other than the Class X Director and that could materially prevent, impede, hinder or delay the consummation of the Merger.

Preferred Stock

Our amended and restated certificate of incorporation authorizes our board of directors to establish one or more series of preferred stock (including convertible preferred stock). Unless required by law or by any stock exchange, and, subject to the terms of our amended and restated certificate of incorporation, the authorized shares of preferred stock will be available for issuance without further action by holders of our common stock. Our board of directors is able to determine, with respect to any series of preferred stock, the powers (including voting powers), preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, including, without limitation:

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the designation of the series;

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the number of shares of the series, which our board of directors may, except where otherwise provided in any preferred stock designation, increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares then outstanding);

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whether dividends, if any, will be cumulative or non-cumulative and the dividend rate of the series;

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the dates at which dividends, if any, will be payable on shares of such series;

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the redemption rights and price or prices, if any, for shares of the series;

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the terms and amounts of any sinking fund provided for the purchase or redemption of shares of the series;

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the amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding-up of our affairs or other event;

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whether the shares of the series will be convertible into shares of any other class or series, or any other security, of us or any other entity, and, if so, the specification of the other class or series or other security, the conversion price or prices or rate or rates, any rate adjustments, the date or dates as of which the shares will be convertible and all other terms and conditions upon which the conversion may be made;

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restrictions on the issuance of shares of the same series or of any other class or series of our capital stock; and

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the voting rights, if any, of the holders of the series.

We could issue a series of preferred stock that could, depending on the terms of the series, impede or discourage an acquisition attempt or other transaction that some, or a majority, of the holders of our common stock might believe to be in their best interests or in which the holders of our common stock might receive a premium over the market price of the shares of our common stock. Additionally, the issuance of preferred stock may adversely affect the rights of holders of our common stock by restricting dividends on the common stock, diluting the voting power of the common stock or subordinating the rights of the common stock to distributions upon a liquidation, dissolution or winding up or other event. As a result of these or other factors, the issuance of preferred stock could have an adverse impact on the market price of our common stock.

Dividends

The DGCL permits a corporation to declare and pay dividends out of “surplus” or, if there is no “surplus,” out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year.

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“Surplus” is defined as the excess of the net assets of the corporation over the amount determined to be the capital of the corporation by its board of directors. The capital of the corporation is typically calculated to be (and cannot be less than) the aggregate par value of all issued shares of capital stock. Net assets equals the fair value of the total assets minus total liabilities. The DGCL also provides that dividends may not be paid out of net profits if, after the payment of the dividend, the remaining capital would be less than the capital represented by the outstanding stock of all classes having a preference upon the distribution of assets. Declaration and payment of any dividend will be subject to the discretion of our board of directors.

Annual Stockholder Meetings

Our amended and restated bylaws provide that annual stockholder meetings will be held at a date, time and place, if any, as selected by our board of directors. To the extent permitted under applicable law, we may conduct meetings solely by means of remote communications, including by webcast.

Anti-Takeover Effects of Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws and Certain Provisions of Delaware Law

Our amended and restated certificate of incorporation, amended and restated bylaws, and the DGCL contain provisions that are summarized in the following paragraphs and that are intended to enhance the likelihood of continuity and stability in the composition of our board of directors. These provisions are intended to avoid costly takeover battles, reduce our vulnerability to a hostile or abusive change of control and enhance the ability of our board of directors to maximize stockholder value in connection with any unsolicited offer to acquire us. However, these provisions may have an anti-takeover effect and may delay, deter or prevent a merger or acquisition of the Company by means of a tender offer, a proxy contest or other takeover attempt that a stockholder might consider in its best interest, including those attempts that might result in a premium over the prevailing market price for the shares of common stock held by stockholders.

Authorized but Unissued Capital Stock

Delaware law does not require stockholder approval for any issuance of shares that are authorized and available for issuance. However, the listing requirements of Nasdaq, which would apply so long as the shares of common stock remain listed on Nasdaq, require stockholder approval of certain issuances equal to or exceeding 20% of then outstanding voting power or then outstanding number of shares of common stock (we believe the position of Nasdaq is that the calculation in this latter case treats as outstanding shares issuable upon exchange of outstanding LLC Units not held by Change Healthcare Inc.). These additional shares may be used for a variety of corporate purposes, including future public offerings, to raise additional capital or to facilitate acquisitions.

Our board of directors may generally issue shares of one or more series of preferred stock on terms designed to discourage, delay or prevent a change of control of the Company or the removal of our management. Moreover, our authorized but unissued shares of preferred stock will be available for future issuances in one or more series without stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, to facilitate acquisitions and employee benefit plans.

One of the effects of the existence of authorized and unissued and unreserved common stock or preferred stock may be to enable our board of directors to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of the Company by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive our stockholders of opportunities to sell their shares of common stock at prices higher than prevailing market prices.

Business Combinations

We have opted out of Section 203 of the DGCL; however, our amended and restated certificate of incorporation contains similar provisions providing that we may not engage in certain “business combinations”

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with any “interested stockholder” for a three-year period following the time that the stockholder became an interested stockholder, unless:

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prior to such time, our board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

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upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding certain shares; or

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at or subsequent to that time, the business combination is approved by our board of directors and by the affirmative vote of holders of at least 66 ² ⁄ ₃ % of our outstanding voting stock that is not owned by the interested stockholder.

Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an “interested stockholder” is a person who, together with that person’s affiliates and associates, owns, or within the previous three years owned, 15% or more of our outstanding voting stock. For purposes of this section only, “voting stock” has the meaning given to it in Section 203 of the DGCL.

Under certain circumstances, this provision will make it more difficult for a person who would be an “interested stockholder” to effect various business combinations with us for a three-year period. This provision may encourage companies interested in acquiring us to negotiate in advance with our board of directors because the stockholder approval requirement would be avoided if our board of directors approves either the business combination or the transaction that results in the stockholder becoming an interested stockholder. These provisions also may have the effect of preventing changes in our board of directors and may make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.

Our amended and restated certificate of incorporation provides that our Sponsors and their affiliates, and any of their respective direct or indirect transferees, and any group as to which such persons are a party, do not constitute “interested stockholders” for purposes of this provision.

No Cumulative Voting

Under Delaware law, the right to vote cumulatively does not exist unless the certificate of incorporation specifically authorizes cumulative voting. Our amended and restated certificate of incorporation does not authorize cumulative voting. Therefore, stockholders holding a majority in voting power of the shares of our stock entitled to vote generally in the election of directors will be able to elect all of our directors.

Special Stockholder Meetings

Our amended and restated certificate of incorporation provides that special meetings of our stockholders may be called at any time only by or at the direction of the board of directors, the Class X Director or the chairman of our board; provided, however, that at any time when our Sponsors and their affiliates beneficially own, in the aggregate, at least 30% in voting power of the stock entitled to vote generally in the election of directors, special meetings of our stockholders shall also be called by the board of directors or the chairman of the board of directors at the request of stockholders that beneficially own, in the aggregate, at least 25% in voting power of the stock entitled to vote generally in the election of directors, including Blackstone. Our amended and restated bylaws prohibit the conduct of any business at a special meeting other than as specified in the notice for such meeting. These provisions may have the effect of deterring, delaying or discouraging hostile takeovers, or changes in control or management of the Company.

Director Nominations and Stockholder Proposals

Our amended and restated bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board

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of directors or a committee of the board of directors. In order for any matter to be “properly brought” before a meeting, a stockholder will have to comply with advance notice requirements and provide us with certain information. Generally, to be timely, a stockholder’s notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of stockholders. Our amended and restated bylaws also specify requirements as to the form and content of a stockholder’s notice. These provisions will not apply to our Sponsors and their affiliates so long as the stockholders agreement remains in effect. Our amended and restated bylaws allow the chairman of the meeting at a meeting of the stockholders to adopt rules and regulations for the conduct of meetings which may have the effect of precluding the conduct of certain business at a meeting if the rules and regulations are not followed. These provisions may also defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to influence or obtain control of the Company.

Our certificate of incorporation provides that the board of directors is expressly authorized to make, alter, or repeal our bylaws and that, at any time the Sponsors beneficially own, in the aggregate, less than 30% in voting power of the stock entitled to vote generally in the election of directors, our stockholders may only amend our bylaws with the approval of 80% or more of all of the outstanding shares of our capital stock entitled to vote.

Stockholder Action by Written Consent

Pursuant to Section 228 of the DGCL, any action required to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice, and without a vote if a consent or consents in writing, setting forth the action so taken, is or are signed 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 of our stock entitled to vote thereon were present and voted, unless our amended and restated certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation does not permit our stockholders to act by consent in writing, unless such action is recommended by all directors then in office, at any time when our Sponsors and their affiliates own, in the aggregate, less than 30% in voting power of our stock entitled to vote generally in the election of directors.

Dissenters’ Rights of Appraisal and Payment

Under the DGCL, with certain exceptions, our stockholders will have appraisal rights in connection with a merger or consolidation in which we are a constituent entity. Pursuant to the DGCL, stockholders who properly demand and perfect appraisal rights in connection with such merger or consolidation will have the right to receive payment of the fair value of their shares as determined by the Delaware Court of Chancery, plus interest, if any, on the amount determined to be the fair value, from the effective time of the merger or consolidation through the date of payment of the judgment.

Stockholders’ Derivative Actions

Under the DGCL, any of our stockholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the stockholder bringing the action is a holder of our shares at the time of the transaction to which the action relates or such stockholder’s stock thereafter devolved by operation of law. To bring such an action, the stockholder must otherwise comply with Delaware law regarding derivative actions.

Exclusive Forum

Our amended and restated certificate of incorporation will provide that, unless we consent in writing to the selection of an alternative forum, any (1) derivative action or proceeding brought on behalf of our Company, (2) action asserting a claim of breach of a fiduciary duty owed by any director, officer, stockholder or employee of our Company to our Company or our Company’s stockholders, (3) action asserting a claim arising pursuant to

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any provision of the DGCL or our amended and restated certificate of incorporation or our amended and restated bylaws or (4) action asserting a claim governed by the internal affairs doctrine, shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware. To the fullest extent permitted by law, any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of our company shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation. However, it is possible that a court could find our forum selection provisions to be inapplicable or unenforceable.

Conflicts of Interest

Delaware law permits corporations to adopt provisions renouncing any interest or expectancy in certain opportunities that are presented to the corporation or its officers, directors or stockholders. Our amended and restated certificate of incorporation will, to the maximum extent permitted from time to time by Delaware law, renounce any interest or expectancy that we have in, or right to be offered an opportunity to participate in, specified business opportunities that are from time to time presented to our officers, directors or stockholders or their respective affiliates, other than those officers, directors, stockholders or affiliates who are our or our subsidiaries’ employees. Our amended and restated certificate of incorporation will provide that, to the fullest extent permitted by law, none of our Sponsors, McKesson or any of their affiliates or certain current or former directors, principals, officers, employees and/or other representatives of or consultants or advisors to the Sponsors or McKesson that may serve, whether during or after the period in which the Sponsors own our stock, as our directors, officers or agents (“Associated Directors”) will have any duty to refrain from (i) engaging in a corporate opportunity in the same or similar lines of business in which we or our affiliates now engage or propose to engage or (ii) otherwise competing with us or our affiliates. In addition, to the fullest extent permitted by law, in the event that our Sponsors or any Associated Director acquires knowledge of a potential transaction or other business opportunity which may be a corporate opportunity for itself, himself or herself or its, his or her affiliates or for us or our affiliates, such person will have no duty to communicate or offer such transaction or business opportunity to us or any of our affiliates and they may take any such opportunity for themselves or offer it to another person or entity. Our amended and restated certificate of incorporation will not renounce our interest in any business opportunity that is expressly offered to a Associated Director solely in his or her capacity as a director, officer or agent of the Company. To the fullest extent permitted by law, no business opportunity will be deemed to be a potential corporate opportunity for us unless we would be permitted to undertake the opportunity under our amended and restated certificate of incorporation, we have sufficient financial resources to undertake the opportunity and the opportunity would be in line with our business.

Limitations on Liability and Indemnification of Officers and Directors

The DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties, subject to certain exceptions. Our amended and restated certificate of incorporation includes a provision that eliminates the personal liability of directors for monetary damages to the corporation or its stockholders for any breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL. The effect of these provisions is to eliminate the rights of us and our stockholders, through stockholders’ derivative suits on our behalf, to recover monetary damages from a director for breach of fiduciary duty as a director, including breaches resulting from grossly negligent behavior. However, exculpation does not apply to any director if the director has breached such director’s duty of loyalty, acted in bad faith, knowingly or intentionally violated the law, authorized illegal dividends, redemptions or repurchases or derived an improper benefit from his or her actions as a director.

Our amended and restated bylaws generally provide that we must indemnify and advance expenses to our directors and officers to the fullest extent authorized by the DGCL. We also are expressly authorized to carry directors’ and officers’ liability insurance providing indemnification for our directors, officers and certain

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employees for some liabilities. We believe that these indemnification and advancement provisions and insurance are useful to attract and retain qualified directors and executive officers.

The limitation of liability, indemnification and advancement provisions in our amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. In addition, your investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.

Transfer Agent and Registrar

The transfer agent and registrar for shares of our common stock will be .

Listing

We have applied to list our common stock on Nasdaq under the symbol “CHNG.”

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CERTAIN UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO NON-U.S. HOLDERS

The following is a summary of certain United States federal income and estate tax consequences of the purchase, ownership and disposition of shares of our common stock as of the date hereof. Except where noted, this summary deals only with common stock that is held as a capital asset by a non-U.S. holder (as defined below).

A “non-U.S. holder” means a beneficial owner of shares of our common stock (other than an entity treated as a partnership for United States federal income tax purposes) that is not, for United States federal income tax purposes, any of the following:

•

an individual citizen or resident of the United States;

•

a corporation (or any other entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

•

an estate the income of which is subject to United States federal income taxation regardless of its source; or

•

a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person.

This summary is based upon provisions of the Code, the existing and proposed U.S. Treasury regulations promulgated thereunder, administrative pronouncements, and rulings and judicial decisions interpreting the foregoing, in each case as of the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in United States federal income and estate tax consequences different from those summarized below. This summary does not address all aspects of United States federal income and estate taxes and does not deal with the alternative minimum tax, the Medicare contribution tax, United States federal tax laws other than United States federal income or estate tax laws, or any foreign, state, local or other tax considerations that may be relevant to non-U.S. holders in light of their particular circumstances or status. In addition, it does not represent a detailed description of the United States federal income and estate tax consequences applicable to you if you are subject to special treatment under the United States federal income tax laws (including if you are a United States expatriate, foreign pension fund, “controlled foreign corporation,” “passive foreign investment company”, financial institution, broker-dealer, insurance company, tax-exempt entity, a corporation that accumulates earnings to avoid United States federal income tax, a person in a special situation such as those who have elected to mark securities to market or those who hold shares of common stock as part of a straddle, hedge, conversion transaction, or synthetic security, or a partnership or other pass-through entity (or beneficial owner thereof) for United States federal income tax purposes). We cannot assure you that a change in law will not alter significantly the tax considerations that we describe in this summary.

A modified definition of “non-U.S. holder” applies for U.S. federal estate tax purposes (as discussed below).

If a partnership (or other entity treated as a partnership for United States federal income tax purposes) holds shares of our common stock, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our common stock, you should consult your tax advisors.

If you are considering the purchase of our common stock, you should consult your own tax advisors concerning the particular United States federal income and estate tax consequences to you of the purchase, ownership and disposition of our common stock, as well as the consequences to you arising under other

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United States federal tax laws and the laws of any other taxing jurisdiction, and the application of any tax treaties.

Distributions on Common Stock

In the event that we make a distribution of cash or other property (other than certain pro rata distributions of our stock) in respect of shares of our common stock, the distribution generally will be treated as a dividend for United States federal income tax purposes to the extent it is paid from our current or accumulated earnings and profits, as determined under United States federal income tax principles. Any portion of a distribution that exceeds our current and accumulated earnings and profits generally will be treated first as a tax-free return of capital, causing a reduction in the adjusted tax basis of a non-U.S. holder’s shares of our common stock, and to the extent the amount of the distribution exceeds a non-U.S. holder’s adjusted tax basis in shares of our common stock, the excess will be treated as gain from the disposition of shares of our common stock (the tax treatment of which is discussed below under “—Gain on Disposition of Common Stock”).

Subject to the discussion below regarding effectively connected income, dividends paid to a non-U.S. holder generally will be subject to withholding of United States federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty, as discussed further below. Even if our current or accumulated earnings and profits are less than the amount of the distribution, the applicable withholding agent may elect to treat the entire distribution as a dividend for U.S. federal withholding tax purposes. Dividends that are effectively connected with the conduct of a trade or business by the non-U.S. holder within the United States (and, if required by an applicable income tax treaty, are attributable to a United States permanent establishment, or, in certain cases involving individual holders, a fixed base) are not subject to the withholding tax, provided certain certification and disclosure requirements are satisfied. Instead, such dividends are subject to United States federal income tax on a net income basis in the same manner as if the non-U.S. holder were a United States person as defined under the Code. To obtain this exemption, a non-U.S. holder must provide us with a valid IRS Form W-8ECI properly certifying such exemption. Any such effectively connected dividends received by a foreign corporation may be subject to an additional “branch profits tax” at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

A non-U.S. holder who wishes to claim the benefit of an applicable treaty rate and avoid backup withholding, as discussed below, for dividends will be required (a) to provide the applicable withholding agent with a properly executed, valid IRS Form W-8BEN or Form W-8BEN-E (or other applicable form) certifying under penalty of perjury that such holder is not a United States person as defined under the Code and is eligible for treaty benefits or (b) if our common stock is held through certain foreign intermediaries, to satisfy the relevant certification requirements of applicable United States Treasury regulations. Special certification and other requirements apply to certain non-U.S. holders that are pass-through entities rather than corporations or individuals. You are urged to consult your own tax advisors regarding your entitlement to benefits under a relevant income tax treaty.

A non-U.S. holder eligible for a reduced rate of United States federal withholding tax pursuant to an income tax treaty may be entitled to a refund of any excess amounts withheld if the non-U.S. holder timely files an appropriate claim for refund with the IRS.

The foregoing discussion is subject to the discussion below under “—Backup Withholding and Information Reporting” and “—Other Withholding Taxes.”

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Gain on Disposition of Common Stock

Subject to the discussion of backup withholding below, any gain realized by a non-U.S. holder on the sale or other disposition of shares of our common stock generally will not be subject to United States federal income tax unless:

•

the gain is effectively connected with a trade or business of the non-U.S. holder in the United States (and, if required by an applicable income tax treaty, is attributable to a United States permanent establishment of the non-U.S. holder or, in certain cases involving individual holders, a fixed base of the non-U.S. holder);

•

the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met; or

•

we are or have been a “United States real property holding corporation” for United States federal income tax purposes during the applicable period specified in the Code, and certain other conditions are met.

A non-U.S. holder described in the first bullet point immediately above will be subject to tax on the gain derived from the sale or other disposition in the same manner as if the non-U.S. holder were a United States person as defined under the Code. In addition, if any non-U.S. holder described in the first bullet point immediately above is a foreign corporation, the gain realized by such non-U.S. holder may be subject to an additional “branch profits tax” at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. An individual non-U.S. holder described in the second bullet point immediately above will be subject to a 30% (or such lower rate as may be specified by an applicable income tax treaty) tax on the gain derived from the sale or other disposition, which gain may be offset by United States source capital losses even though the individual is not considered a resident of the United States.

Generally, a corporation is a “United States real property holding corporation” if the fair market value of its United States real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business (all as determined for United States federal income tax purposes). We believe we are not and do not anticipate becoming a “United States real property holding corporation” for United States federal income tax purposes.

Federal Estate Tax

Common stock owned or treated as owned by an individual who is not a U.S. citizen or resident (as specifically determined for United States federal estate tax purposes) at the time of the individual’s death will be included in the individual’s gross estate for United States federal estate tax purposes, unless an applicable estate tax treaty provides otherwise.

Information Reporting and Backup Withholding

Distributions paid to a non-U.S. holder and the amount of any tax withheld with respect to such distributions generally will be reported to the IRS. Copies of the information returns reporting such distributions and any withholding may also be made available to the tax authorities in the country in which the non-U.S. holder resides under the provisions of an applicable income tax treaty or agreement for the exchange of information.

A non-U.S. holder will not be subject to backup withholding on dividends received if such holder certifies under penalty of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that such holder is a United States person as defined under the Code), or such holder otherwise establishes an exemption.

Information reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale or other disposition of shares of our common stock made within the United States or conducted through

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certain United States-related financial intermediaries, unless the beneficial owner certifies under penalty of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that the beneficial owner is a United States person as defined under the Code), or such owner otherwise establishes an exemption.

Provision of an IRS Form W-8 appropriate to the non-U.S. holder’s circumstances will generally satisfy the certification requirements necessary to avoid the additional information reporting and backup withholding.

Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against a non-U.S. holder’s United States federal income tax liability provided the required information is timely furnished to the IRS.

Additional Withholding Requirements

Under Sections 1471 through 1474 of the Code (such Sections commonly referred to as FATCA), a 30% United States federal withholding tax may apply to any dividends paid on shares of our common stock paid to (i) a “foreign financial institution” (as specifically defined in the Code) which does not provide sufficient documentation, typically on IRS Form W-8BEN-E, evidencing either (x) an exemption from FATCA or (y) its compliance (or deemed compliance) with FATCA (which may alternatively be in the form of compliance with an intergovernmental agreement with the United States) in a manner which avoids withholding, or (ii) a “non-financial foreign entity” (as specifically defined in the Code) which does not provide sufficient documentation, typically on IRS Form W-8BEN-E, evidencing either (x) an exemption from FATCA or (y) adequate information regarding certain substantial United States beneficial owners of such entity (if any). An intergovernmental agreement between the United States and the entity’s jurisdiction may modify these requirements. If a dividend payment is both subject to withholding under FATCA and subject to the withholding tax discussed above under “—Dividends,” the withholding under FATCA may be credited against, and therefore reduce, such other withholding tax upon filing a United States federal income tax return containing the required information (which may entail significant administrative burden). You should consult your own tax advisors regarding these requirements and whether they may be relevant to your ownership and disposition of shares of our common stock.

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for shares of our common stock. We cannot predict the effect, if any, future sales of shares of common stock, or the availability for future sale of shares of common stock, will have on the market price of shares of our common stock prevailing from time to time. The sale of substantial amounts of shares of our common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our common stock and could impair our future ability to raise capital through the sale of our equity or equity-related securities at a time and price that we deem appropriate. See “Risk Factors—Risks Related to this Offering and Ownership of our Common Stock—If we or our pre-IPO owners sell additional shares of our common stock after this offering, the market price of our common stock could decline.”

Upon completion of this offering we will have a total of shares of our common stock outstanding (or shares of common stock if the underwriters exercise in full their option to purchase additional shares of common stock). All of these shares of common stock will have been sold in this offering and will be freely tradable without restriction or further registration under the Securities Act by persons other than our “affiliates,” except for shares purchased in this offering by certain participants in our directed share program who are subject to lock-up restrictions. Under the Securities Act, an “affiliate” of an issuer is a person that directly or indirectly controls, is controlled by or is under common control with that issuer.

We anticipate that shares issued to McKesson’s stockholders in a Qualified McKesson Exit would generally be freely tradeable by non-affiliates. Any shares we issue upon exchange of LLC Units will be “restricted securities” as defined in Rule 144 and may not be sold in the absence of registration under the Securities Act unless an exemption from registration is available, including the exemptions contained in Rule 144. Under applicable SEC guidance, we believe that for purposes of Rule 144 the holding period in such shares will generally include the holding period in the corresponding LLC Units exchanged. Moreover, as a result of the registration rights agreement, all or a portion of these shares may be eligible for future sale without restriction, subject to the lock-up arrangements described below. See “—Registration Rights” and “Certain Relationships and Related Person Transactions—Registration Rights Agreement.”

In addition, shares of common stock may be granted under our Omnibus Incentive Plan. We intend to file one or more registration statements on Form S-8 under the Securities Act to register shares of common stock or securities convertible into or exchangeable for shares of common stock issued under or covered by our Omnibus Incentive Plan. Any such Form S-8 registration statements will automatically become effective upon filing. Accordingly, shares of common stock registered under such registration statements will be available for sale in the open market. We expect that the initial registration statement on Form S-8 will cover shares of common stock.

Our certificate of incorporation authorizes us to issue additional shares of common stock and options, rights, warrants and appreciation rights relating to common stock for the consideration and on the terms and conditions established by our board of directors in its sole discretion. In accordance with the DGCL and the provisions of our certificate of incorporation, we may also issue preferred stock that has designations, preferences, rights, powers and duties that are different from, and may be senior to, those applicable to shares of common stock.

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See “Description of Capital Stock.” Similarly, the LLC Agreement of the Joint Venture permits the Joint Venture, with the prior written consent of both the McK Members and Change Healthcare Inc., to issue an unlimited number of additional limited liability company interests of the Joint Venture with designations, preferences, rights, powers and duties that are different from, and may be senior to, those applicable to the LLC Units, and which may be exchangeable for shares of our common stock.

Registration Rights

In connection with the Transactions, we entered into a registration rights agreement with our Sponsors and McKesson. See “Certain Relationships and Related Person Transactions—Registration Rights Agreement.”

Lock-Up Agreements

We, our officers, directors, Sponsors, McKesson, and our other pre-IPO owners representing a substantial majority of our outstanding equity prior to this offering have agreed, subject to enumerated exceptions, that we and they will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, whether any of these transactions are to be settled by delivery of our common stock or other securities, in cash or otherwise, or publicly disclose the intention to make any such offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, without, in each case, the prior written consent of Barclays Capital Inc., Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC for a period of 180 days after the date of this prospectus.

With respect to the Company, the forgoing restrictions do not apply to:

•

shares of our common stock to be sold pursuant to this prospectus;

•

shares of our common stock or substantially similar securities of the Company issued pursuant to employee incentive plans existing on the date of this prospectus and any long-term incentive awards disclosed in this prospectus;

•

shares of our common stock in respect of tax withholding payments due upon the exercise of options at expiration or the vesting of restricted stock grants pursuant to any employee incentive plans existing on the date of this prospectus and any long-term incentive awards disclosed in this prospectus;

•

shares of our common stock or substantially similar securities of the Company to be issued upon the conversion or exchange of convertible or exchangeable securities of the Company or the Joint Venture outstanding as of the date of this prospectus; or

•

the issuance of up to 5% of the outstanding shares of our common stock or any such substantially similar securities of the Company in connection with the acquisition of, a joint venture with or a merger with, another company, and the filing of a registration statement with respect thereto; provided that prior to any such issuance each recipient of any such securities shall have executed and delivered a lock-up agreement to Barclays Capital Inc., Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC.

With respect to officers, directors, Sponsors, McKesson, and our other pre-IPO owners, the forgoing restrictions do not apply to transfers:

•

by will or intestacy;

•

as a bona fide gift or gifts;

•

to any trust, partnership, limited liability company or other entity for the direct or indirect benefit of the security holder or the immediate family of the security holder;

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•

to any immediate family member or other dependent of the security holder;

•

as a distribution to limited partners, members or stockholders of the security holder;

•

to the affiliates of the security holder or to any investment fund or other entity controlled or managed by the security holder;

•

to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible pursuant to the exceptions described in the foregoing bullets;

•

pursuant to an order of a court or regulatory agency;

•

from an executive officer to the Company or the Joint Venture upon death, disability or termination of employment, in each case, of such executive officer;

•

in connection with transactions by any person other than the Company relating to shares of our common stock acquired in open market transactions after the completion of this offering, provided that no public reports or filings (including filings under Section 16(a) Exchange Act) reporting a reduction in beneficial ownership of shares of our common stock shall be required or shall be voluntarily made during the 180-day restricted period or any extension thereof;

•

to the Company pursuant to the “cashless” exercise at expiration of options granted pursuant to any employee equity incentive plan of the Company in effect as of the date of this prospectus and described herein; provided that any shares of common stock or LLC Units received in connection therewith shall be subject to the terms of the lock-up agreement executed thereby;

•

in respect of tax withholding payments due upon the exercise at expiration of options or the vesting of restricted stock grants pursuant to any employee equity incentive plan of the Company in effect as of the date of this prospectus and described herein; provided that any filings required to be made with the Securities and Exchange Commission or other publicity made regarding the same will indicate that such transactions relate to such tax withholding payments;

•

with respect to our Sponsors and McKesson only, through the pledge, hypothecation or other granting of a security interest in shares of our common stock to one or more banks or financial institutions as collateral or security for any loan, advance or extension of credit and any transfer upon foreclosure upon such shares or thereafter, provided that prior written notice shall be delivered to Barclays Capital Inc., Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC informing them of any public filing, report or announcement made by or on behalf of the Company or our Sponsors or McKesson with respect to such transfer; or

•

with the prior written consent of Barclays Capital Inc., Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC;

provided that:

•

in the case of any transfer or distribution described in the second, third, fourth, fifth, sixth, seventh or ninth bullets above, (a) each donee, trustee, distributee or transferee, as the case may be, agrees to be bound in writing by the foregoing restrictions; and (b) any such transfer or distribution shall not involve a disposition for value, other than with respect to any such transfer or distribution for which the transferor or distributor receives (x) equity interests of such transferee or (y) such transferee’s interests in the transferor;

•

in the case of each transfer or distribution described in to the second, third, fourth, fifth, sixth or seventh bullets above, if any public reports or filings (including filings under Section 16(a) of the Exchange Act) reporting a reduction in beneficial ownership of Stock shall be required or shall be voluntarily made during the 180-day restricted period or any extension thereof (a) prior written notice shall be delivered to Barclays Capital Inc., Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC informing them of such report or filing and (b) such report or filing shall disclose that such donee, trustee, distributee or transferee, as the case may be, agrees to be bound in writing by the restrictions described above; and

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•

in the case of each transfer or distribution pursuant to eleventh or twelfth bullets above, if any public reports or filings (including filings under Section 16(a) of the Exchange Act) reporting a reduction in beneficial ownership of shares of our common stock shall be required or shall be voluntarily made during the 180-day restricted period or any extension thereof (a) prior written notice shall be delivered to Barclays Capital Inc., Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC informing them of such report or filing and (b) such report or filing shall disclose that such transfer or distributions was made under the circumstances described in bullets eleven or twelve, as applicable.

Rule 144

In general, under Rule 144, as currently in effect, a person who is not deemed to be our affiliate for purposes of Rule 144 or to have been one of our affiliates at any time during the three months preceding a sale and who has beneficially owned the shares of common stock proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those shares of common stock without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares of common stock proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person is entitled to sell those shares of common stock without complying with any of the requirements of Rule 144. In general, six months after the effective date of the registration statement of which this prospectus forms a part, under Rule 144, as currently in effect, our affiliates or persons selling shares of common stock on behalf of our affiliates are entitled to sell, within any three-month period, a number of shares of common stock that does not exceed the greater of (1) 1% of the number of shares of common stock then outstanding and (2) the average weekly trading volume of the shares of common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale. Sales under Rule 144 by our affiliates or persons selling shares of common stock on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.

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UNDERWRITING

The Company and the underwriters named below have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Barclays Capital Inc., Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC are the representatives of the underwriters.


Underwriters		Number of Shares
Barclays Capital Inc.
Goldman Sachs & Co. LLC
J.P. Morgan Securities LLC

Total

The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.

The underwriters have an option to buy up to an additional shares from the Company to cover sales by the underwriters of a greater number of shares than the total number set forth in the table above. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters by the Company. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares.


Paid by the Company	No Exercise	Full Exercise
Per Share	$	$
Total	$	$

Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $ per share from the initial public offering price. After the initial offering of the shares, the representatives may change the offering price and the other selling terms. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.

The Company and its officers, directors, and holders of substantially all of the Company’s common stock have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of Barclays Capital Inc., Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC. See “Shares Eligible for Future Sale” for a discussion of certain transfer restrictions.

The summaries of the underwriting agreement and the lock-up agreements included in this prospectus are qualified in their entirety by reference to the underwriting agreement and the form of lock-up agreement, which are attached as an exhibit to the registration statement of which this prospectus forms a part.

At our request, the underwriters have reserved for sale, at the initial public offering price, up to % of the shares of common stock offered by this prospectus for sale to our directors, officers and certain of our employees and other persons associated with us, to the extent permitted under applicable regulations in the United States and in various countries. The sales will be made by J.P. Morgan Securities LLC, an underwriter of this offering, through a directed share program. If these persons purchase common stock it will reduce the number of shares of common stock available for sale to the general public. Any reserved shares of common stock that are not purchased will be offered by the underwriters to the general public on the same terms as the other shares of common stock offered by this prospectus. We have agreed to indemnify J.P. Morgan Securities LLC in

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connection with the directed share program, including for the failure of any participant to pay for its shares. Other than the underwriting discount described on the front cover of this prospectus, the underwriters will not be entitled to any commission with respect to shares of common stock sold pursuant to the directed share program. Shares sold to our directors and officers pursuant to the directed share program will be subject to a 180-day lock-up restriction.

Prior to the offering, there has been no public market for the shares. The initial public offering price has been negotiated among the Company and the representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be the Company’s historical performance, estimates of the business potential and earnings prospects of the Company, an assessment of the Company’s management and the consideration of the above factors in relation to market valuation of companies in related businesses.

We have applied to list our common stock on Nasdaq under the symbol “CHNG”.

In connection with the offering, the underwriters may purchase and sell shares of common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering, and a short position represents the amount of such sales that have not been covered by subsequent purchases. A “covered short position” is a short position that is not greater than the amount of additional shares for which the underwriters’ option described above may be exercised. The underwriters may cover any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to cover the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option described above. “Naked” short sales are any short sales that create a short position greater than the amount of additional shares for which the option described above may be exercised. The underwriters must cover any such naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of common stock made by the underwriters in the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of the Company’s stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the common stock. As a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. The underwriters are not required to engage in these activities and may end any of these activities at any time. These transactions may be effected on or relevant exchange, in the over-the-counter market or otherwise.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) an offer to the public of our common shares may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of our common shares may be made at any time under the following exemptions under the Prospectus Directive:

(a)

to any legal entity which is a qualified investor as defined in the Prospectus Directive;

257

(b)

to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), subject to obtaining the prior consent of the Representatives for any such offer; or

(c)

in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of shares of our common stock shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer to the public” in relation to our common shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and our common shares to be offered so as to enable an investor to decide to purchase our common shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (as amended), including by Directive 2010/73/EU, and includes any relevant implementing measure in the Relevant Member State.

This European Economic Area selling restriction is in addition to any other selling restrictions set out below.

United Kingdom

In the United Kingdom, this prospectus is only addressed to and directed as qualified investors who are (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); or (ii) high net worth entities and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). Any investment or investment activity to which this prospectus relates is available only to relevant persons and will only be engaged with relevant persons. Any person who is not a relevant person should not act or relay on this prospectus or any of its contents.

Canada

The shares may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions, and Ongoing Registrant Obligations. Any resale of the securities must be made in accordance with an exemption form, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (“NI 33-105”), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

Hong Kong

The shares may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies (Winding Up

258

and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of Hong Kong) (“Companies (Winding Up and Miscellaneous Provisions) Ordinance”) or which do not constitute an invitation to the public within the meaning of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (“Securities and Futures Ordinance”), or (ii) to “professional investors” as defined in the Securities and Futures Ordinance and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance, and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” in Hong Kong as defined in the Securities and Futures Ordinance and any rules made thereunder.

Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor (as defined under Section 4A of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”)) under Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to conditions set forth in the SFA.

Where the shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor, the securities (as defined in Section 239(1) of the SFA) of that corporation shall not be transferable for 6 months after that corporation has acquired the shares under Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), (2) where such transfer arises from an offer in that corporation’s securities pursuant to Section 275(1A) of the SFA, (3) where no consideration is or will be given for the transfer, (4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore (“Regulation 32”)

Where the shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is a trust (where the trustee is not an accredited investor (as defined in Section 4A of the SFA)) whose sole purpose is to hold investments and each beneficiary of the trust is an accredited investor, the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferable for 6 months after that trust has acquired the shares under Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), (2) where such transfer arises from an offer that is made on terms that such rights or interest are acquired at a consideration of not less than S$200,000 (or its equivalent in a foreign currency) for each transaction (whether such amount is to be paid for in cash or by exchange of securities or other assets), (3) where no consideration is or will be given for the transfer, (4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in Regulation 32.

259

Japan

The securities have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended), or the FIEA. The securities may not be offered or sold, directly or indirectly, in Japan or to or for the benefit of any resident of Japan (including any person resident in Japan or any corporation or other entity organized under the laws of Japan) or to others for reoffering or resale, directly or indirectly, in Japan or to or for the benefit of any resident of Japan, except pursuant to an exemption from the registration requirements of the FIEA and otherwise in compliance with any relevant laws and regulations of Japan.

The Company estimates that its share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $ .

The Company has agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act of 1933.

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to the issuer and to persons and entities with relationships with the issuer, for which they received or will receive customary fees and expenses. In particular, certain of the underwriters acted as initial purchasers of the Senior Notes and are lenders under the Senior Secured Credit Facilities.

In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the issuer (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the issuer. The underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

260

LEGAL MATTERS

The validity of the shares of common stock will be passed upon for us by Simpson Thacher & Bartlett LLP, Washington, D.C. Certain legal matters in connection with this offering will be passed upon for the underwriters by Ropes & Gray LLP, Boston, Massachusetts. An investment vehicle comprised of selected partners of Simpson Thacher & Bartlett, LLP, members of their families, related persons and others owns an interest representing less than 1% of the capital commitments of funds affiliated with The Blackstone Group L.P. Ropes & Gray LLP and some of its attorneys are limited partners of RGIP, LP, which is an investor in certain investment funds associated with The Blackstone Group L.P. and often a co-investor with such funds. Upon the consummation of this offering, RGIP, LP will directly and indirectly own less than 1% of our outstanding common stock.

EXPERTS

The financial statements of Change Healthcare Inc. (formerly HCIT Holdings, Inc.) as of March 31, 2018 and 2017 and for the year ended March 31, 2018 and the period from June 22, 2016 (inception) to March 31, 2017 included in this prospectus have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such financial statements are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

The consolidated financial statements of Change Healthcare LLC as of March 31, 2018 and 2017 and for the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, included in this prospectus, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such consolidated financial statements are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

The consolidated financial statements of Change Healthcare Performance, Inc. (formerly Change Healthcare, Inc.) at February 28, 2017 and December 31, 2016 and 2015, and for the period January 1, 2017 to February 28, 2017 and each of the two years in the period ended December 31, 2016, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The combined financial statements of Core MTS as of February 28, 2017 and March 31, 2016, and for the eleven months ended February 28, 2017 and for the year ended March 31, 2016 included in this prospectus, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein which contains an emphasis-of-matter paragraph that describes the preparation of the combined financial statements from the separate records maintained by McKesson Corporation and that the combined financial statements may not necessarily be indicative of the conditions that would have existed or the results of operations or cash flows if Core MTS had been operated as an unaffiliated entity, discussed in Note 1 to the combined financial statements. Such combined financial statements are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock offered by this prospectus. This prospectus, filed as part of the registration statement, does not contain all of the information set forth in the registration statement and its exhibits and schedules, portions of which have been omitted as permitted by the rules and regulations of the SEC. For further information about us and shares of our common stock, we refer you to the registration statement and to its exhibits and schedules. Statements in this prospectus about the contents of any contract, agreement or other

261

document are not necessarily complete and in each instance we refer you to the copy of such contract, agreement or document filed as an exhibit to the registration statement. You may inspect these reports and other information without charge at a website maintained by the SEC. The address of this site is http://www.sec.gov.

We maintain an internet site at https://www.changehealthcare.com. The information on, or accessible from, our website is not part of this prospectus by reference or otherwise.

Upon completion of this offering, we will become subject to the informational requirements of the Exchange Act and will be required to file reports and other information with the SEC. You will be able to inspect and copy these reports and other information at the public reference facilities maintained by the SEC at the address noted above. You also will be able to obtain copies of this material from the Public Reference Room of the SEC as described above, or inspect them without charge at the SEC’s website. We intend to make available to our common stockholders annual reports containing consolidated financial statements audited by an independent registered public accounting firm.

262

INDEX TO FINANCIAL STATEMENTS


Change Healthcare Inc.
Report of Independent Registered Public Accounting Firm			F-3
Audited Financial Statements:
Statements of Operations for the Year Ended March 31, 2018 and for the Period from June 22, 2016 (inception) to March 31, 2017			F-4
Statements of Comprehensive Income (Loss) for the Year Ended March 31, 2018 and for the Period from June 22, 2016 (inception) to March 31, 2017			F-5
Balance Sheets as of March 31, 2018 and 2017			F-6
Statements of Stockholders’ Equity for the Year Ended March 31, 2018 and for the Period from June 22, 2016 (inception) to March 31, 2017			F-7
Statements of Cash Flow for the Year Ended March 31, 2018 and for the Period from June 22, 2016 (inception) to March 31, 2017			F-8
Notes to Financial Statements			F-9
Unaudited Financial Statements:
Condensed Statements of Operations for the Nine Months Ended December 31, 2018 and for the Nine Months Ended December 31, 2017			F-27
Condensed Statements of Comprehensive Income (Loss) for the Nine Months Ended December 31, 2018 and for the Nine Months Ended December 31, 2017			F-28
Condensed Balance Sheets as of December 31, 2018 and March 31, 2018			F-29
Condensed Statements of Stockholders’ Equity for the Nine Months Ended December 31, 2018 and for the Nine Months Ended December 31, 2017			F-30
Condensed Statements of Cash Flows for the Nine Months Ended December 31, 2018 and for the Nine Months Ended December 31, 2017			F-31
Notes to Condensed Financial Statements			F-32

Change Healthcare LLC (the Joint Venture)
Report of Independent Registered Public Accounting Firm			F-39
Audited Consolidated Financial Statements:
Consolidated Statements of Operations for the Year Ended March 31, 2018 and for the Period from June 17, 2016 (inception) to March 31, 2017			F-40
Consolidated Statements of Comprehensive Income (Loss) for the Year Ended March 31, 2018 and for the Period from June 17, 2016 (inception) to March 31, 2017			F-41
Consolidated Balance Sheets as of March 31, 2018 and 2017			F-42
Consolidated Statements of Members’ Deficit for the Year Ended March 31, 2018 and for the Period from June 17, 2016 (inception) to March 31, 2017			F-43
Consolidated Statements of Cash Flow for the Year Ended March 31, 2018 and for the Period from June 17, 2016 (inception) to March 31, 2017			F-44
Notes to Consolidated Financial Statements			F-46
Unaudited Condensed Consolidated Financial Statements:
Condensed Consolidated Statements of Operations for the Nine Months Ended December 31, 2018 and for the Nine Months Ended December 31, 2017			F-89
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Nine Months Ended December 31, 2018 and for the Nine Months Ended December 31, 2017			F-90
Condensed Consolidated Balance Sheets as of December 31, 2018 and March 31, 2018			F-91
Condensed Consolidated Statements of Members’ Deficit for the Nine Months Ended December 31, 2018 and for the Nine Months Ended December 31, 2017			F-92
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2018 and for the Nine Months Ended December 31, 2017			F-93
Notes to Condensed Consolidated Financial Statements			F-94

Change Healthcare Performance, Inc. (formerly Change Healthcare, Inc.) (Legacy CHC)
Report of Independent Registered Public Accounting Firm			F-111
Consolidated Financial Statements:
Consolidated Balance Sheets as of February 28, 2017, December 31, 2016 and 2015			F-112

F-1


Consolidated Statements of Operations for the Period from January 1, 2017 to February 28, 2017 and the Years Ended December 31, 2016 and 2015			F-113
Consolidated Statements of Comprehensive Income (Loss) for the Period from January 1, 2017 to February 28, 2017 and the Years Ended December 31, 2016 and 2015			F-114
Consolidated Statements of Equity for the Period from January 1, 2017 to February 28, 2017 and the Years Ended December 31, 2016 and 2015			F-115
Consolidated Statements of Cash Flows for the Period from January 1, 2017 to February 28, 2017 and the Years Ended December 31, 2016 and 2015			F-116
Notes to Consolidated Financial Statements			F-118

Core MTS
Report of Independent Registered Public Accounting Firm			F-166
Combined Financial Statements:
Combined Statements of Operations for the Period from April 1, 2016 to February 28, 2017 and for the Year Ended March 31, 2016			F-167
Combined Statements of Comprehensive Income for the Period from April 1, 2016 to February 28, 2017 and for the Year Ended March 31, 2016			F-168
Combined Balance Sheets as of February 28, 2017 and March 31, 2016			F-169
Combined Statements of Equity for the Period from April 1, 2016 to February 28, 2017 and for the Year Ended March 31, 2016			F-170
Combined Statements of Cash Flows for the Period from April 1, 2016 to February 28, 2017 and for the Year Ended March 31, 2016			F-171
Notes to Combined Financial Statements			F-172

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Change Healthcare Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Change Healthcare Inc. (formerly HCIT Holdings, Inc.) (the “Company”) as of March 31, 2018 and March 31, 2017, the related statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows, for the year ended March 31, 2018 and the period of June 22, 2016 (inception) to March 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2018 and 2017, and the results of its operations and its cash flows for the year ended March 31, 2018 and the period of June 22, 2016 (inception) to March 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Atlanta, Georgia

October 26, 2018

We have served as the Company’s auditor since 2017.

F-3

Change Healthcare Inc.

Statements of Operations

(amounts in thousands, except share and per share amounts)


	Year Ended March 31, 2018			Period of June 22, 2016 (inception) to March 31, 2017
Revenue	$	—		$	—
Operating expenses
General and administrative		180			825

Total operating expenses		180			825

Operating income (loss)		(180	)		(825	)
Non-operating (income) expense
Loss from Equity Method Investment in the Joint Venture		58,680			43,103
(Gain) Loss on Sale of Interests in the Joint Venture		(14	)		—
Management fee income		(180	)		(825	)

Total non-operating (income) expense		58,486			42,278

Income (loss) before income tax provision (benefit)		(58,666	)		(43,103	)
Income tax provision (benefit)		(119,621	)		(16,809	)

Net income (loss)	$	60,955		$	(26,294	)

Net income (loss) per share:
Basic	$	101.93		$	(401.97	)

Diluted	$	99.03		$	(401.97	)

Weighted average common shares outstanding:
Basic		598,027			65,412

Diluted		615,515			65,412

See accompanying notes to financial statements.

F-4

Change Healthcare Inc.

Statements of Comprehensive Income (Loss)

(amounts in thousands)


	Year Ended March 31, 2018		Period of June 22, 2016 (inception) to March 31, 2017
Net income (loss)	$	60,955	$	(26,294	)
Other comprehensive income (loss):
Changes in fair value of interest rate swap of the Joint Venture, net of taxes		1,606		(338	)
Foreign currency translation adjustment of the Joint Venture		1,242		26

Other comprehensive income (loss)		2,848		(312	)

Total comprehensive income (loss)	$	63,803	$	(26,606	)

See accompanying notes to financial statements.

F-5

Change Healthcare Inc.

Balance Sheets

(amounts in thousands, except share and per share amounts)


	March 31, 2018		March 31, 2017
Assets
Current assets:
Due from the Joint Venture	$	301	$	825
Income taxes receivable		15,828		—

Total current assets		16,129		825
Dividend receivable		59,116		39,724
Investment in the Joint Venture		1,298,759		1,348,817

Total assets	$	1,374,004	$	1,389,366

Liabilities and stockholders’ equity
Current liabilities:
Accrued expenses	$	301	$	825
Due to the Joint Venture		15,828		—

Total current liabilities		16,129		825
Deferred income tax liabilities		181,303		300,301
Commitments and contingencies
Stockholders’ Equity:
Common Stock (par value, $.001), 2,000,000 shares authorized; 599,281 and 597,139 shares issued and outstanding at March 31, 2018 and 2017, respectively		1		1
Class X common stock (par value, $.001), 1 share authorized; 0 and 0 shares issued and outstanding at March 31, 2018 and 2017, respectively		—		—
Additional paid-in capital		1,139,374		1,114,845
Accumulated other comprehensive income (loss)		2,536		(312	)
Retained earnings (deficit)		34,661		(26,294	)

Total stockholders’ equity		1,176,572		1,088,240

Total liabilities and stockholders’ equity	$	1,374,004	$	1,389,366

See accompanying notes to financial statements.

F-6

Change Healthcare Inc.

Statements of Stockholders’ Equity

(amounts in thousands, except share amounts)


	Common Stock Shares			Common Stock		Additional Paid-in Capital			Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
Balance at June 22, 2016 (inception)	$	—		$	—	$	—		$	—		$	—		$	—
Proceeds from issuance of Change Healthcare Inc. common stock		12			—		30			—			—			30
Exchange of Change Healthcare Inc. common stock for common stock of the Joint Venture		597,127			1		1,114,815			—			—			1,114,816
Net income (loss)		—			—		—			(26,294	)		—			(26,294	)
Foreign currency translation adjustment of the Joint Venture		—			—		—			—			26			26
Change in fair value of interest rate swap, net of taxes of the Joint Venture		—			—		—			—			(338	)		(338	)

Balance at March 31, 2017	$	597,139		$	1	$	1,114,845		$	(26,294	)	$	(312	)	$	1,088,240

Equity compensation		—			—		24,700			—			—			24,700
Repurchase of Change Healthcare Inc. common stock		(71	)		—		(171	)		—			—			(171	)
Issuance of Change Healthcare Inc. common stock upon exercise of equity awards		2,213			—		—			—			—			—
Net income (loss)		—			—		—			60,955			—			60,955
Foreign currency translation adjustment of the Joint Venture		—			—		—			—			1,242			1,242
Change in fair value of interest rate swap, net of taxes of the Joint Venture		—			—		—			—			1,606			1,606

Balance at March 31, 2018	$	599,281		$	1	$	1,139,374		$	34,661		$	2,536		$	1,176,572

See accompanying notes to financial statements.

F-7

Change Healthcare Inc.

Statements of Cash Flow

(amounts in thousands)


	Year Ended March 31, 2018			Period of June 22, 2016 (inception) to March 31, 2017
Cash flows from operating activities:
Net income (loss)	$	60,955		$	(26,294	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
(Income) Loss from Equity Method Investment in the Joint Venture		58,680			43,103
Deferred income tax expense (benefit)		(119,621	)		(16,809	)
(Gain) Loss on Sale of Interests in the Joint Venture		(14	)		—
Changes in operating assets and liabilities:
Due from the Joint Venture		524			(825	)
Income taxes receivable		(15,828	)		—
Accrued expenses		(524	)		825
Due to the Joint Venture		15,828			—

Net cash provided by (used in) operating activities		—			—

Cash flows from investing activities:
Proceeds from sale of interests in the Joint Venture		171			—
Contributions to the Joint Venture		—			(30	)

Net cash provided by (used in) investing activities		171			(30	)

Cash flows from financing activities:
Proceeds from issuance of common stock		—			30
Payments to acquire common stock		(171	)		—

Net cash provided by (used in) financing activities		(171	)		30

Net increase (decrease) in cash, cash equivalents and restricted cash		—			—
Cash, cash equivalents and restricted cash at beginning of period		—			—

Cash, cash equivalents and restricted cash at end of period	$	—		$	—

Supplemental disclosures of cash flow information
Cash paid for interest	$	—		$	—

Cash paid for income taxes	$	15,828		$	—

Supplemental disclosures of noncash transactions
Contributed assets and liabilities:
Dividend receivable	$	—		$	39,724

Investment in the Joint Venture	$	—		$	1,392,395

Additional paid in capital	$	—		$	(1,114,815	)

Deferred income taxes	$	—		$	(317,304	)

Issuance of common stock upon exercise of equity awards:
Investment in the Joint Venture	$	5,306		$	—

Dividend receivable	$	(5,306	)	$	—

Change Healthcare Inc. portion of the Joint Venture equity transactions:
Investment in the Joint Venture	$	10,898		$	(506	)

Additional paid in capital	$	(7,427	)	$	—

Accumulated other comprehensive income	$	(3,471	)	$	506

See accompanying notes to financial statements.

F-8

Change Healthcare Inc.

Notes to Financial Statements

(In Thousands, Except Share and Per Share Amounts)

1. Nature of Business and Organization

Organization

Change Healthcare Inc. (formerly HCIT Holdings, Inc.) (the “Company”), a Delaware corporation, was formed on June 22, 2016 to hold an equity investment in Change Healthcare LLC (the “Joint Venture”), a joint venture between the Company and McKesson Corporation (“McKesson”). The Company and McKesson each owns approximately 30% and 70%, respectively, of the membership interests of the Joint Venture, subject to adjustment based on exercise of equity-based awards or other changes in the number of the Joint Venture’s membership units outstanding.

The Transactions

In June 2016, the Company, the Joint Venture, Change Healthcare Holdings, LLC, Change Healthcare Intermediate Holdings, LLC, Change Healthcare Performance, Inc. (formerly Change Healthcare, Inc.) (“Legacy CHC”) and its stockholders—including affiliates of The Blackstone Group, L.P. (“Blackstone”) and Hellman & Friedman LLC (“Hellman & Friedman”)—entered into an Agreement of Contribution and Sale (the “Contribution Agreement”) with McKesson (together with the Company, the “Members”). Under the terms of the Contribution Agreement, the parties agreed to form the Joint Venture, a joint venture that combined the majority of the McKesson Technology Solutions businesses, excluding McKesson’s Enterprise Information Solutions business and RelayHealth Pharmacy Network (such contributed businesses, “Core MTS”), with substantially all of the assets and operations of Legacy CHC, but excluding Legacy CHC’s pharmacy claims switching and prescription routing businesses (such excluded business, the “eRx Network” and the businesses contributed by Legacy CHC, together with Core MTS, the “Contributed Businesses”). The creation of the Joint Venture, including the contribution of the Contributed Businesses and related transactions, is collectively referred to as the “Transactions.” The Transactions closed on March 1, 2017.

Pursuant to the terms of the Contribution Agreement, (i) the Legacy CHC stockholders, directly and indirectly, transferred ownership of substantially all of Legacy CHC to the Joint Venture in consideration of (a) the payment at the closing of the Transactions by the Joint Venture to Legacy CHC’s stockholders and certain participants in the Legacy CHC Amended and Restated 2009 Equity Incentive Plan (the “Legacy CHC Equity Plan”) of approximately (A) $1.8 billion, (B) stock in eRx Network Holdings, Inc., and (C) the 2017 Tax Receivable Agreement (as described in Note 19) and (b) the issuance to the Company of membership interests in the Joint Venture; and (ii) McKesson caused Core MTS to be transferred to the Joint Venture in consideration of (a) the assumption and subsequent payment at the closing of the Transactions by the Joint Venture to McKesson of a promissory note in the amount of approximately $1.3 billion, (b) the issuance of membership interests in the Joint Venture and (c) an interest in a tax receivable agreement from the Joint Venture (as described in Note 10).

In connection with the Transactions, the Joint Venture, through its subsidiaries, entered into new senior secured credit facilities, consisting of a term loan facility in the amount of $5.1 billion and a revolving credit facility in an aggregate principal amount of $500 million, and issued $1.0 billion of 5.75% senior notes due 2025. The proceeds were used to make all payments to the Legacy CHC stockholders, certain participants in the Legacy CHC Equity Plan and McKesson described above, to refinance certain of Legacy CHC’s existing indebtedness and to pay fees and expenses incurred in connection with the Transactions.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Because of the significance of the Joint Venture to the Company’s financial

F-9

Change Healthcare Inc.

Notes to Financial Statements

(In Thousands, Except Share and Per Share Amounts)

position and results of operations, the Company is required to provide consolidated financial statements of the Joint Venture pursuant to Rule 3-09 of Regulation S-X.

All intercompany accounts and transactions have been eliminated in the financial statements.

Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company bases its estimates on historical experience, current business factors and various other assumptions that the Company believes are necessary to consider in order to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of expenses and disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic, environmental and political factors and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in the reported results of operations; and if material, the effects of changes in estimates are disclosed in the notes to the financial statements. Estimates and assumptions by management affect: the carrying value of the Company’s investment; the provision and benefit for income taxes and related deferred tax accounts; contingencies; and the value attributed to equity awards.

Equity Method Investment in the Joint Venture

The Company accounts for its investment in the Joint Venture using the equity method. The Company evaluates its equity method investment for impairment whenever an event or change in circumstances occurs that may have a significant adverse impact on the carrying value of the investment. If a loss in value has occurred that is deemed to be other than temporary, an impairment loss is recorded.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity from the date of purchase of three months or less to be cash equivalents.

The Company’s cash and cash equivalents are deposited with several financial institutions. Deposits may exceed the amounts insured by the Federal Deposit Insurance Corporation in the U.S. and similar deposit insurance programs in other jurisdictions. The Company mitigates the risk of its short-term investment portfolio by depositing funds with reputable financial institutions and monitoring risk profiles.

Equity Compensation

The Company grants certain equity awards to employees of the Joint Venture under the Company’s 2009 Equity Incentive Plan (the “Equity Plan”). Because these equity awards have been granted to employees of the Company’s equity method investee, they are subject to the accounting framework for awards granted to non-employees. Under this framework, the Company ultimately measures the compensation for equity awards based on the fair value of such awards at the earlier of the performance commitment date or the date at which the employee’s performance is complete. Such awards are generally re-measured at fair value on a quarterly basis

F-10

Change Healthcare Inc.

Notes to Financial Statements

(In Thousands, Except Share and Per Share Amounts)

from the date of grant through the final measurement date. The recognized equity based compensation is classified within “Loss from Equity Method Investment in the Joint Venture” on the accompanying statement of operations. However, as a result of a requirement that the Joint Venture issue an additional unit to the Company upon the exercise of each Company equity award (as described in Note 10), the Company recognizes an offsetting amount (i.e. a deemed dividend) within the same caption of the accompanying statement of operations.

The Company recognizes this deemed dividend as a receivable equal to the cumulative amount of stock compensation expense recognized by the Joint Venture for any outstanding equity awards. The dividend receivable is relieved upon exercise of the respective underlying equity awards

Income Taxes

The Company records deferred income taxes for the tax effect of differences between book and tax bases of its assets and liabilities, as well as differences relating to the timing of recognition of income and expenses.

Deferred income taxes reflect the available net operating losses and the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of the future tax benefits related to deferred tax assets is dependent on many factors, including the Company’s past earnings history, expected future earnings, the character and jurisdiction of such earnings, reversing taxable temporary differences, unsettled circumstances that, if unfavorably resolved, would adversely affect utilization of its deferred tax assets, carryback and carryforward periods and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset.

The Company recognizes tax benefits for uncertain tax positions at the time the Company concludes that the tax position, based solely on its technical merits, is more likely than not to be sustained upon examination. The benefit, if any, is measured as the largest amount of benefit, determined on a cumulative probability basis that is more likely than not to be realized upon ultimate settlement. Tax positions failing to qualify for initial recognition are recognized in the first subsequent interim period that they meet the more likely than not standard, upon resolution through negotiation or litigation with the taxing authority or on expiration of the statute of limitations.

Classification of Distributions Received from the Joint Venture

The Company classifies distributions received from its equity method investee in the statement of cash flows according to the nature of the distribution.

Accounting Pronouncements Not Yet Adopted

In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-07, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. Among other provisions, the measurement date for awards to nonemployees will change from the earlier of the date at which a commitment for performance by the counterparty is reached or the date at which performance is complete under the existing guidance to the grant date under this update. The update is expected to be effective for the Company beginning April 1, 2019. The Company is currently assessing the potential effects this update may have on its financial statements.

Recently Adopted Accounting Pronouncements

In March 2017, the Company adopted FASB ASU 2016-15, which specifies the treatment within the statement of cash flows of eight specific matters including the classification of distributions from equity method

F-11

Change Healthcare Inc.

Notes to Financial Statements

(In Thousands, Except Share and Per Share Amounts)

investees, the treatment of debt prepayment or extinguishment costs and contingent consideration payments made after a business combination, among other matters. The adoption of this update had no material effect on the Company’s financial statements.

In December 2017, the Company adopted the provisions of Securities & Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) 118, which was subsequently codified as FASB ASU No. 2018-05. This update provides guidance on accounting for the effects of the Tax Cuts and Jobs Act of 2017 (the “Tax Legislation”) and provides a measurement period that should not extend beyond one year from the Tax Legislation enactment date for companies to complete the accounting under ASC 740. Under this update, a company must reflect the income tax effects of those aspects of the Tax Legislation for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Legislation is incomplete but the company is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Legislation. As of March 31, 2018, the Company has not completed the accounting for the tax effects of Tax Legislation; however, the Company estimates, based on currently available information, that the enactment of the Tax Legislation resulted in an increase in income tax benefit of approximately $97,924 ($159.09) per diluted share) for the year ended March 31, 2018. The effects of the Tax Legislation are the result of the change in the enacted rate causing a remeasurement of the U.S. federal deferred tax liabilities at the lower enacted corporate tax rate.

3. Concentration of Credit Risk

The Company maintains its cash and cash equivalent balances in either insured depository accounts or money market mutual funds. The money market mutual funds are limited to investments in low-risk securities such as United States or government agency obligations, or repurchase agreements secured by such securities.

4. Equity Method Investment in the Joint Venture

Exchange of Equity Method Investments

In connection with the Transactions, the Company exchanged its 45.615% investment in Legacy CHC for 30% of the membership units of the Joint Venture. The Joint Venture used proceeds from the issuance of debt referred to previously to acquire the remaining 54.385% of Legacy CHC. The Company has accounted for this exchange of investments as a non-monetary transaction at their respective carrying values. Prior to the Transactions, the investors of Legacy CHC accounted for their investments at fair value. As a result, the book basis and fair value of the Company’s investment in Legacy CHC were generally the same such that no gain was recognized as a result of the Transactions.

F-12

Change Healthcare Inc.

Notes to Financial Statements

(In Thousands, Except Share and Per Share Amounts)

for comparisons, determining appropriate market value multiples, selecting the discount rate to measure the risks inherent in the future cash flows and assessing the business’s life cycle and the competitive trends impacting the business, including considering technical, legal, regulatory, or economic barriers to entry. Any material changes in key assumptions, including failure to meet business plans, deterioration in the financial market, an increase in interest rate or an increase in the cost of equity financing by market participants within the industry or other unanticipated events and circumstances, may affect such estimates.

Equity Method Investment in the Joint Venture

The Company accounts for its investment in the Joint Venture using the equity method of accounting. During the year ended March 31, 2018 and the period from June 22, 2016 (inception) to March 31, 2017, the Company recorded a proportionate share of the loss from this investment of $58,680 and $43,103, which included transaction and integration related expenses incurred by the Joint Venture and basis adjustments including amortization expenses associated with equity method intangible assets. This amount is recorded under the caption, “Loss from Equity Method Investment in the Joint Venture” in the accompanying statements of operations.

At March 31, 2018 and 2017, the carrying value of the investment was $1,298,759 and $1,348,817, which exceeded the Company’s proportionate share of the Joint Venture’s book value of net assets by approximately $1,620,226 and $1,731,773, respectively, primarily reflecting equity method intangible assets, goodwill, and other basis adjustments, including incremental intangible amortization, removal of profits associated with the recognition of deferred revenue, as well as basis differences with respect to tax receivable agreements.

Summarized financial information of the Joint Venture is as follows:


	Year Ended March 31, 2018		Period from June 17, 2016 (inception) to March 31, 2017
Statement of Operations Data:
Net revenue	$	3,298,843	$	309,587
Cost of operations (exclusive of depreciation and amortization)	$	1,407,893	$	133,688
Customer postage	$	274,397	$	26,132
Net income (loss)	$	192,442	$	(83,592	)

	March 31, 2018		March 31, 2017
Balance Sheet Data (at period end):
Current assets	$	901,712	$	1,025,243
Long-term assets	$	5,299,215	$	5,258,211
Current liabilities	$	969,495	$	1,119,375
Long-term liabilities	$	6,297,612	$	6,437,438

5. Legal Proceedings

In the ordinary course of business, the Company may become subject to various claims and legal proceedings. The Company is not currently a defendant in any pending litigation.

F-13

Change Healthcare Inc.

Notes to Financial Statements

(In Thousands, Except Share and Per Share Amounts)

6. Stockholders’ Equity

Capital Stock

Under the certificate of incorporation, the Company is authorized to issue 2,000,001 shares of stock consisting of 2,000,000 shares of common stock (“Common Stock”) and one share of Class X stock (“Class X Stock”), each with a par value of $0.001 per share. Each holder of Common Stock is entitled to one vote for each share of Common Stock held with respect to matters on which stockholders are generally entitled to vote. The share of Class X Stock is issuable to McKesson only in the event that the Company breaches the terms of the Agreement and Plan of Merger between the Company and McKesson dated December 20, 2016 and only during the period following a qualified initial public offering and prior to a McKesson exit. In the event of issuance of Class X Stock, the holder receives the right to appoint an additional director to the Company’s board of directors and as it relates to “special matters” as defined by the Company’s charter, this Class X director may cast a number of votes equal to the sum of the total authorized directorships of the Company’s then existing board of directors plus one vote. Upon the earliest to occur of a McKesson exit or the expiration of the McKesson Exit Window, as defined in the stockholders’ agreement, the share of Class X Stock shall be redeemed for a cash amount equal to $1.00 and such share shall be automatically retired and cancelled.

As of March 31, 2018 and 2017, the Company has a total of 599,281 and 597,139 shares of Common Stock outstanding, respectively, and no Class X Stock outstanding.

Restricted Net Assets

The Company has no substantive independent assets or operations apart from its investment in the Joint Venture. Under the terms of the Third Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”) governing the Joint Venture, the Joint Venture is required to periodically distribute amounts sufficient to fund the Company’s and McKesson’s tax liabilities related to their investments in the Joint Venture. Other distributions require approval of the board of directors of the Joint Venture as well as the joint approval of both Blackstone and McKesson.

In addition, the Joint Venture’s senior secured credit facilities contain certain covenants which generally limit payments to the Company to include the following:

•

Payment of operating costs and expenses incurred in the ordinary course of business and other corporate overhead costs and expenses attributable to the ownership and operation of the Joint Venture.

•

Franchise, excise and similar taxes and other fees and expenses required to maintain the Company’s corporate existence.

•

Income tax distributions

•

Permitted investments as defined by the senior secured credit facilities of the Joint Venture

•

Payment of salary, bonus, severance and other benefits payable to or provided on behalf of officers, directors, managers, and employees of the Company and related payroll taxes

•

Fees and expenses of any unsuccessful debt or equity offering

•

Cash payments in lieu of issuing fractional shares in connection with the exercise of warrants, options, or other Company securities convertible or exchangeable into Company shares.

•

Payments incurred in connection with the Transactions.

F-14

Change Healthcare Inc.

Notes to Financial Statements

(In Thousands, Except Share and Per Share Amounts)

•

After a qualified initial public offering, payment of listing fees and other costs attributable to being a publicly traded company which are reasonable and customary

Approximately $34,661 and $(26,294) of retained earnings (accumulated deficit) at March 31, 2018 and 2017, respectively, represents undistributed earnings (losses) of the equity method investment.

7. Net Income (Loss) Per Share

The following table sets forth the computation of basic and diluted net income (loss) per share of common stock:


	Year Ended March 31, 2018		Period from June 22, 2016 (inception) to March 31, 2017
Basic net income per share:
Numerator:
Net income (loss)	$	60,955	$	(26,294	)
Denominator:
Weighted average common shares outstanding		598,027		65,412

Basic net income (loss) per share	$	101.93	$	(401.97	)

Diluted net income per share:
Numerator:
Net income (loss)	$	60,955	$	(26,294	)
Denominator:
Number of shares used in basic computation		598,027		65,412
Weighted average effect of dilutive securities
Add:
Replacement Time-Vesting Options		16,229		—
Replacement Restricted Share Units		225		—
RSUs		1,034		—

		615,515		65,412

Diluted net income (loss) per share	$	99.03	$	(401.97	)

F-15

Change Healthcare Inc.

Notes to Financial Statements

(In Thousands, Except Share and Per Share Amounts)

Due to their antidilutive effect or their status as contingently issuable shares, the following securities have been excluded from diluted net income (loss) per share:


	Year Ended March 31, 2018		Period from June 22, 2016 (inception) to March 31, 2017
Time-Vesting Options		36,160		—
Exit-Vesting Options		36,158		—
Replacement Exit-Vesting Restricted Stock		11,000		16,067
Replacement Time-Vesting Options		—		45,809
Replacement Restricted Share Units		—		600

8. Incentive Compensation Plans

Equity Compensation Plans

In connection with the Transactions, the Company assumed the Legacy CHC Equity Plan and amended it as the Equity Plan. Pursuant to the Equity Plan, 300,000 shares of the Company’s common stock have been reserved for the issuance of equity awards to employees, directors and consultants of the Joint Venture and its affiliates.

The Company grants equity-based awards of its common stock to certain employees, officers and directors of the Joint Venture under terms of awards that are described below. Grants under the Equity Plan consist of one or a combination of time-vested and/or performance-based awards. In most circumstances, the shares issued upon exercise of the equity awards are subject to certain call rights by the Company in the event of termination of service of an award holder and put rights by the award holder or his/her beneficiary, subject to Company approval, in the event of death or disability. The Company expects to repurchase shares of common stock held by former Joint Venture employees no earlier than six months following the issuance of such shares. As of March 31, 2018, the Company expects to repurchase approximately 1,900 such shares of its common stock.

Replacement Awards

In connection with the Transactions, the Company was obligated to either assume obligations under Legacy CHC’s prior equity award plans or to issue substantially equivalent equity awards. The Company elected to issue replacement awards with vesting and exercisability terms generally identical to the awards which were replaced. Because the stock of eRx Network and the 2017 Tax Receivable Agreement were distributed to Legacy CHC stockholders immediately prior to the Transactions, certain participants in the Legacy CHC Equity Plan also received equity awards in eRx Network and the right to receive a cash payment related to a proportionate value of the 2017 Tax Receivable Agreement in connection with the Transactions.

These replacement awards granted under the Equity Plan consisted of one, or a combination of, time-vested awards and/or performance-based awards.

Vested Awards : Vested awards consist of the following:

(i)

Tier I Time Awards became immediately vested in connection with the Transactions, 54.4% of which were liquidated for cash upon the closing of the Transactions. The remaining 45.6% of such options were exchanged for vested options of the Company with exercise prices and expiration terms that

F-16

Change Healthcare Inc.

Notes to Financial Statements

(In Thousands, Except Share and Per Share Amounts)

correspond with those of the original grant to Legacy CHC Equity Plan participants. These Legacy CHC Equity Plan participants also received vested options in eRx Network with exercise prices equal to 25% of the fair value of the eRx Network stock and a right to receive a future cash payment related to the proportionate value of the 2017 Tax Receivable Agreement at the time of the Transactions.

(ii)

Tier II Time Awards became immediately vested in connection with the Transactions but because the original exercise price of these awards was greater than the fair value of the stock at the time of the Transactions, none of the awards were liquidated and they were replaced with vested Company options with an exercise price equal to the original exercise price as reduced by the fair value of one share of eRx Network stock.

(iii)

2.0x Performance Awards became immediately vested in connection with the Transactions as a result of meeting the specified performance and market conditions outlined in the original award terms. As with the Tier I Time Awards, 54.4% were liquidated for cash upon the closing of the Transactions. The remaining 45.6% of such options were exchanged for vested options of the Company with exercise prices and expiration terms that correspond with those of the original grant to the Legacy CHC Equity Plan participants. The Legacy CHC Equity Plan participants also received vested options in eRx Network with exercise prices equal to 25% of the fair value of the eRx Network stock and a right to receive a cash payment related to the proportionate value of the 2017 Tax Receivable Agreement at the time of the Transactions.

Unvested Awards : Certain awards granted by Legacy CHC contained conditions that were not satisfied at the time of the Transactions. These awards generally consisted of awards that vest subject to the employee’s continued employment through the date when Blackstone has sold at least 25% of the maximum number of Legacy CHC’s shares held by it (i.e. a liquidity event) and achieved specified rates of return that vary by award. In connection with the Transactions, these unvested equity awards were replaced with unvested restricted stock of the Company with an aggregate intrinsic value and vesting conditions which were identical to the original Legacy CHC awards. Legacy CHC Equity Plan participants also received unvested restricted stock of eRx Network and a right, contingent upon vesting of the awards, to receive a future cash payment related to the proportionate value of the 2017 Tax Receivable Agreement at the time of the Transactions.

Restricted Stock Units : Vesting of Legacy CHC restricted share units was not affected by the Transactions. 54.4% of the vested portion of such restricted share units were liquidated in connection with the Transactions and the remainder of the vested and unvested restricted share units were replaced with vested and unvested Company restricted share units with terms identical to the original awards. Legacy CHC Equity Plan participants also received vested and unvested restricted share units of eRx Network and a right to receive a future cash payment upon vesting related to the proportionate value of the 2017 Tax Receivable Agreement at the time of the Transactions.

F-17

Change Healthcare Inc.

Notes to Financial Statements

(In Thousands, Except Share and Per Share Amounts)

The following table summarizes Replacement Award option activity for the year ended March 31, 2018:


	Replacement Time-Vesting Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at April 1, 2017		45,809		$	1,492		6.5	$	41,597
Granted		—			—		—		—
Exercised		(4,582	)		1,383		—		4,588
Expired		—			—		—		—
Forfeited		(2,720	)		1,739		—		1,873

Outstanding at March 31, 2018		38,507		$	1,488		5.4	$	35,137

Exercisable at March 31, 2018		38,507			1,488		5.4		35,137

Time-Vesting Options

Time-vesting options were granted with an exercise price equal to the fair value of the Company’s common stock on the date of grant and generally vest in equal 25% installments on the first through fourth anniversary of the designated vesting start date, subject to the award holders continued employment through such vesting date. The Company estimates the fair value of the time-vesting options using the Black-Scholes option pricing model. As of March 31, 2018, unrecognized expense of the Joint Venture related to the time-vesting options was $44,430. This expense is expected to be recognized over a weighted average period of 3.0 years.

Exit-Vesting Options

Exit-vesting options were granted with an exercise price equal to the fair value of the Company’s common stock on the date of grant and vest, subject to the award holder’s continued employment through the vesting date, on the earlier to occur of (i) the date that affiliates of Blackstone sell 25% of the equity interests of the Joint Venture held by it on March 1, 2017 (the “Transaction Date”) at a specified weighted average price per share and McKesson distributes more than 50% of the equity interests of the Joint Venture held by it on the Transaction Date or (2) McKesson and affiliates of Blackstone collectively sell more than 25% of the aggregate equity interests held by McKesson and Blackstone on the Transaction Date at a specified weighted average price per share.

The following table summarized time-vesting and exit-vesting option activity for the year ended March 31, 2018:


	Awards						Weighted Average Exercise Price				Weighted Average Remaining Contractual Term				Aggregate Intrinsic Value
	Time- Vesting Options			Exit- Vesting Options			Time- Vesting Options		Exit- Vesting Options		Time- Vesting Options		Exit- Vesting Options		Time- Vesting Options		Exit- Vesting Options
Outstanding at April 1, 2017		—			—		$	—	$	—		—		—	$	—	$	—
Granted		63,610			63,610			2,400		2,400		9.6		9.6		—		—
Exercised		—			—			—		—		—		—		—		—
Expired		—			—			—		—		—		—		—		—
Forfeited		(11,021	)		(11,084	)		2,400		2,400		—		—		—		—

Outstanding at March 31, 2018		52,589			52,526		$	2,400	$	2,400		8.9		8.9	$	—	$	—

Exercisable at March 31, 2018		12,765			—		$	2,400	$	—		8.9		—	$	—	$	—

F-18

Change Healthcare Inc.

Notes to Financial Statements

(In Thousands, Except Share and Per Share Amounts)

Restricted Share Units

During fiscal 2018, the Company granted 2,500 restricted share units (“RSUs”) which vest, subject to the recipient’s continued employment by the Joint Venture, on March 31, 2019. In the event the recipient was terminated by the Company without cause, by the recipient for good reason or on account of the recipient’s death or disability, the RSUs would immediately vest and become nonforfeitable. Settlement of these RSUs upon vesting could have occurred in the Company’s common stock, cash in an amount equal to the fair market value of the number of shares that would otherwise be delivered upon the vesting date or any combination of the Company’s common stock or cash. In the event the Company’s common stock was not publicly traded at the time of settlement, the employee could have elected to require the Company to settle such RSUs in cash. Because settlement of the RSUs in common stock was outside the control of the Company, the RSUs were historically classified as liabilities in the balance sheets. Such awards were cancelled during 2018 following the resignation of the employee without good reason.

The following table summarizes the restricted share unit activity for the year ended March 31, 2018:


	Replacement Exit-Vesting Restricted Stock			Replacement Restricted Share Units			Restricted Share Units
Unvested at April 1, 2017		16,067			600			—
Granted		—			—			2,500
Canceled		(5,364	)		—			(2,500	)
Vested		—			(600	)		—

Unvested at March 31, 2018		10,703			—			—

The total fair value of shares vested during the year ended March 31, 2018 and for the period from June 22, 2016 (inception) to March 31, 2017 was $1,440 and $0, respectively.

Valuation Assumptions

The following table summarizes the weighted average fair value of awards using the Black-Scholes and Monte Carlo Simulation option pricing models, as appropriate, and the weighted average assumptions used to develop the fair value estimates under each of the valuation models for the year ended March 31, 2018.


Year Ended March 31, 2018:	Time-Vesting Options			Exit-Vesting Options			Replacement Exit-Vesting Restricted Stock
Weighted average fair value	$	1,194		$	826		$	1,590
Expected dividend yield		—	%		—	%		—	%
Expected volatility		52.15	%		52.08	%		57.61	%
Risk-free interest rate		2.67	%		2.72	%		2.40	%
Expected term (years)		5.47			6.22			3.00

Expected dividend yield—The Company is subject to limitations on the payment of dividends under the LLC Agreement. An increase in the dividend yield will decrease compensation expense.

Expected volatility—This is a measure of the amount by which the price of the equity instrument has fluctuated or is expected to fluctuate. The expected volatility was based on the levered median historical volatility of a group of guideline companies. An increase in the expected volatility will increase compensation expense.

F-19

Change Healthcare Inc.

Notes to Financial Statements

(In Thousands, Except Share and Per Share Amounts)

Risk-free interest rate—This is the U.S. Treasury rate as of the measurement date having a term approximating the expected life of the award. An increase in the risk-free interest rate will increase compensation expense.

Expected term—This is the period of time over which the awards are expected to remain outstanding. The Company estimates the expected term as the mid-point between the actual or expected vesting date and the contractual term. An increase in the expected term will increase compensation expense.

Summary of Equity Compensation Expense on Loss from Equity Method Investment in the Joint Venture

Because the Company provides equity awards to employees of the Joint Venture, the Company recognizes stock compensation expense within the Loss from Equity Method Investment in the Joint Venture caption on the accompanying statements of operations for its proportionate amount of stock compensation expense included in the operating results of the Joint Venture as well as the amount funded for the benefit of the McKesson member. However, due to requirements of the LLC Agreement that the Company receive an additional unit of the Joint Venture upon any exercise of a Company equity award (as described in Note 10), the Company recognizes a dividend receivable equal to the cumulative amount of stock compensation expense recognized by the Joint Venture for any outstanding equity awards with an offset to the Loss from Equity Method Investment in the Joint Venture caption. The result is that no net equity compensation of the Joint Venture is recognized in the financial statements of the Company.

9. Income Taxes

The income tax provision (benefit) for the year ended March 31, 2018 and for the period from June 22, 2016 (inception) to March 31, 2017 was as follows:


	Year Ended March 31, 2018			June 22, 2016 (inception) through March 31, 2017
Current:
Federal	$	—		$	—
State		—			—

Current income tax provision (benefit)		—			—

Deferred:
Federal		(116,563	)		(14,420	)
State		(3,058	)		(2,389	)

Deferred income tax provision (benefit)		(119,621	)		(16,809	)

Total income tax provision (benefit)	$	(119,621	)	$	(16,809	)

F-20

Change Healthcare Inc.

Notes to Financial Statements

(In Thousands, Except Share and Per Share Amounts)

The reconciliation between the federal statutory rate and the effective income tax rate is as follows:


	Year Ended March 31, 2018			June 22, 2016 (inception) through March 31, 2017
Statutory U.S. federal tax rate		31.5	%		35.0	%
State income taxes (net of federal benefit)		3.6			3.6
Remeasurement of deferred tax assets and liabilities arising from the Tax Legislation		166.9			—
Research and development tax credit		2.4			0.5
Other		(0.5	)		(0.1	)

Effective income tax rate		203.9	%		39.0	%

On December 22, 2017, the Tax Legislation was signed into law. The Tax Legislation revised the U.S. corporate income tax by, among other things, lowering corporate income tax rates, placing limits on the utilization of net operating loss carryovers, implementing the territorial tax systems and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries.

The Company has recognized a tax benefit for the impact of the revaluation of U.S. deferred tax assets and liabilities due to the federal income tax rate reduction from 35% to 21%. In order to properly account for the blended tax rate in place for fiscal year 2018, the Company estimated the deferred tax assets and liabilities expected to reverse during the current fiscal year and applied a tax rate of 31.5%. All other deferred tax assets and liabilities are expected to reverse in fiscal year 2019 or later and were revalued at 21%.

The enactment of the Tax Legislation resulted in an increase in income tax benefit of approximately $97,924 for the year ended March 31, 2018. The tax effects are the result of the change in the enacted rate causing a remeasurement of the U.S. federal deferred tax liabilities at the lower enacted tax rate.

Tax benefits recognized during the year ended March 31, 2018 related to the Tax Legislation are considered provisional under SAB 118. The impact of the Tax Legislation may differ from this estimate, possibly materially, due to among other things, changes in interpretations and assumptions the Company has made, guidance that may be issued, and actions the Company may take as a result of the Tax Legislation.

The Company will update the impact of the Tax Legislation throughout the measurement period until the matters above are finalized.

F-21

Change Healthcare Inc.

Notes to Financial Statements

(In Thousands, Except Share and Per Share Amounts)

Significant components of the Company’s deferred tax assets (liabilities) as of March 31, 2018 and 2017 were as follows:


	March 31, 2018			March 31, 2017
Deferred tax assets and (liabilities):
Investment in the Joint Venture	$	(192,681	)	$	(306,231	)
Net operating loss carryover		9,757			5,727
Tax credits		1,621			203

Net deferred tax assets and (liabilities)	$	(181,303	)	$	(300,301	)

Reported as:
Non-current deferred tax assets		—			—
Non-current deferred tax liabilities		(181,303	)		(300,301	)

Net deferred tax assets and (liabilities)	$	(181,303	)	$	(300,301	)

The Company recognizes interest income and expense (if any) related to income taxes as a component of income tax expense. The Company recognized no interest and penalties for the year ended March 31, 2018 and for the period from June 22, 2016 (inception) to March 31, 2017.

As of March 31, 2018, the Company had net operating loss carryforwards (tax effected) for federal and state purposes of $7,613 and $2,144, respectively, which expire in 2037 and from 2022 through 2037, respectively. The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. With respect to state and local jurisdictions and countries outside of the United States, the Company and its subsidiaries are typically subject to examination for a number of years after the income tax returns have been filed. Although the outcome of tax audits is always uncertain, the Company believes that adequate amounts of tax, interest and penalties have been provided for in the accompanying financial statements for any adjustments that may be incurred due to such audits.

10. Related Party Transactions

Registration Rights Agreement

The Joint Venture, certain subsidiaries of the Joint Venture, McKesson and the Company are party to a registration rights agreement providing each of McKesson and the Legacy CHC Stockholders party thereto with customary demand and piggyback registration rights with respect to the Company’s common stock. These registration rights include the rights to register shares of the Company in an initial public offering, the rights to register shares of the Company during certain specified time windows and the rights to freely register shares of the Company after such specified time windows.

Separation and Distribution Agreement

Under the terms of the LLC Agreement, a subsidiary of McKesson organized as a limited liability company (“SpinCo”) entered into an agreement and plan of merger with the Company that provides, among other things, that SpinCo will convert to a corporation and merge with and into the Company immediately following a qualified McKesson exit, pursuant to which the stockholders of SpinCo will be entitled to receive a number of shares of Company common stock equal to the number of units held by SpinCo at the time of the merger. McKesson will also enter into a customary separation and distribution agreement with SpinCo prior to, and in connection with, a qualified McKesson exit.

F-22

Change Healthcare Inc.

Notes to Financial Statements

(In Thousands, Except Share and Per Share Amounts)

Advances Received from the Joint Venture

Under the terms of the LLC Agreement, the Joint Venture is required to periodically advance to its members amounts necessary to fund their respective tax obligations on an interim basis, subject to recoupment in the event that such advances exceed the final tax obligations of the respective Members for such year. Once the final tax obligations of each of the Members is determined for such year, the Joint Venture is obligated to formally distribute such amounts to the respective Members. To the extent that the amounts to be distributed were subject to interim advances, additional cash will be distributed only to the extent that the interim advances were insufficient to fund the respective Member’s final tax obligation. Distributions up to the amount of interim advances result in full settlement of any advances to the respective Member.

The Company received advances of $15,828 and $0 during the year ended March 31, 2018 and the period from June 22, 2016 (inception) to March 31, 2017, respectively. Such amounts are classified within Due to the Joint Venture on the accompanying balance sheets.

Dilution

Under the terms of the LLC Agreement, the Company and the Joint Venture agreed to cooperate to ensure a 1:1 ratio of Company shares outstanding to units of the Joint Venture held by the Company for as long as the McKesson members hold units of the Joint Venture. Specifically, the parties agreed that:

•

In the event that the Company issues additional shares, the Joint Venture is required to issue a corresponding number of units to the Company.

•

Any net proceeds received by the Company with respect to a Company share must be concurrently contributed to the Joint Venture.

•

Any stock split or combination of other equity restructuring involving Company shares must be concurrent with an equivalent unit split or other equity restructuring of the Joint Venture.

•

The Company may not redeem, repurchase or otherwise acquire any Company shares unless substantially simultaneously the Joint Venture redeems, repurchases, or otherwise acquires from the Company an equal number of units for the same price per security.

•

The Joint Venture may not redeem, repurchase or otherwise acquire any units held by the Company unless substantially simultaneously the Company redeems, repurchases, or otherwise acquires an equal number of Company shares for the same price per security.

Tax Receivable Agreement

In connection with the Contribution Agreement, the Joint Venture, McKesson members, McKesson, and the Company entered into the McKesson Tax Receivable Agreement. The McKesson Tax Receivable Agreement generally provides for the payment by the Joint Venture to one of the McKesson members and its permitted assigns of 85% of the net cash tax savings realized (or, in certain circumstances, deemed to be realized) by the Company in periods ending on or after the date at which McKesson ceases to own at least 20% of the outstanding units of the Joint Venture as a result of (i) certain amortizable tax basis in assets transferred to the Joint Venture and (ii) the imputed interest deductions and certain other tax attributes arising from payments under the McKesson Tax Receivable Agreement. The Company will retain the benefit of the remaining 15% of such net cash tax savings, if any.

Additionally, under the terms of the LLC Agreement, the Company has the right to receive payments from McKesson in reimbursement for increased income taxes that may arise as a result of certain tax positions taken

F-23

Change Healthcare Inc.

Notes to Financial Statements

(In Thousands, Except Share and Per Share Amounts)

by the Joint Venture associated with amortization of intangible assets contributed by McKesson. No such amounts were recognized during the year ended March 31, 2018 or the period from June 22, 2016 to March 31, 2017, respectively.

Services Provided to the Company by the Joint Venture

The Company generally has no substantive independent assets or operations apart from its investment in the Joint Venture. As a result, the Company receives certain services from the Joint Venture and its employees for which the Joint Venture is not reimbursed. These services include the utilization of office space and a portion of the salaries of the Company’s officers who are considered employees of the Joint Venture. Accordingly, the accompanying statements of operations reflect no expense related to these services for the year ended March 31, 2018 or the period from June 22, 2016 to March 31, 2017, respectively.

Management Fees

Under the terms of the LLC Agreement, the Joint Venture is required to fund the cost of preparing for and executing an initial registration statement. Such costs may include legal, accounting and other professional service fees. To the extent that these fees are incurred for the benefit of the Joint Venture and funded by the Joint Venture, they are excluded from the Company’s financial statements. For other costs that are incurred by the Company for its benefit but funded by the Joint Venture, the reimbursement of such costs has been presented in the accompanying statements of operations as Management fees.

11. Fair Value Measurements

As described in Note 10 above, under the terms of the LLC Agreement, the Company is entitled to receive an additional unit of the Joint Venture for each share of stock issued by the Company. In the case of equity-based awards, the requirement to receive an additional unit of the Joint Venture upon exercise of such awards represents a freestanding derivative. Because the fair value measurement of this derivative involves significant unobservable inputs, the most significant of which is the value of the Company’s stock, the Company has determined that it represents a Level 3 fair value measurement.

Because the freestanding derivative is directly related to the Company’s equity-based compensation awards, the valuation of the derivative is determined consistent with the valuation of the underlying equity-based awards as described in Note 8. As with the equity-based awards, changes in the value of the derivative are generally expected to fluctuate with changes in the value of the Company’s stock.

The following table summarizes the fair value of the freestanding derivative at March 31, 2018 and 2017:


	Fair Values of Derivative Financial Instruments Asset (Liability)
Derivative financial instruments not designated as hedging instruments:	Balance Sheet Location		March 31, 2018		March 31, 2017
Freestanding Option		Dividend receivable	$	59,116	$	39,724

			$	59,116	$	39,724

F-24

Change Healthcare Inc.

Notes to Financial Statements

(In Thousands, Except Share and Per Share Amounts)

The following table presents a reconciliation of the fair value of the derivative for which the Company uses significant unobservable inputs:


	Year Ended March 31, 2018			Period of June 22, 2016 (inception) to March 31, 2017
Balance at beginning of period	$	39,724		$	—
Receipt of derivative upon contribution of assets to the Joint Venture		—			39,724
Increase in fair value based on ASC 505 equity-based compensation		24,700			—
Settlements due to exercise of awards		(5,308	)		—

Balance at end of period	$	59,116		$	39,724

As the dividend receivable was initially received in connection with the contribution of assets to the Joint Venture, the initial fair value was treated as a component of the Company’s contribution of assets and receipt of its Investment in Change Healthcare. During 2018, the Company recognized an increase in the Dividend Receivable of $24,700, which was equal to the amount of equity-based compensation recognized and was recorded as a component of Loss from Equity Method Investment in the Joint Venture. The result is that no net equity-based compensation related to employees of the Joint Venture is recognized in the financial statements of the Company.

12. Accumulated Other Comprehensive Income (Loss)

The following is a summary of the Company’s proportionate share of the Joint Venture’s accumulated other comprehensive income (loss) balances, net of taxes, as of and for the year ended March 31, 2018 and the period from June 22, 2016 (inception) to March 31, 2017.


	Foreign Currency Translation Adjustment		Cash Flow Hedge			Accumulated Other Comprehensive Income (Loss)
Balance at June 22, 2016 (inception)	$	—	$	—		$	—
Change associated with foreign currency translation		26		—			26
Change associated with current period hedging (net of taxes of $194)		—		(337	)		(337	)
Reclassification into earnings		—		(1	)		(1	)

Balance at March 31, 2017	$	26	$	(338	)	$	(312	)

Change associated with foreign currency translation		1,242		—			1,242
Change associated with current period hedging (net of taxes of $623)		—		1,267			1,267
Reclassification into earnings		—		339			339

Balance at March 31, 2018	$	1,268	$	1,268		$	2,536

13. Subsequent Events

In May 2018, the Company modified its exit-vesting options to permit, in addition to existing provisions, vesting to occur in three equal annual installments commencing on the earlier to occur of the date that

F-25

Change Healthcare Inc.

Notes to Financial Statements

(In Thousands, Except Share and Per Share Amounts)

(i) affiliates of Blackstone sell 25% of the equity interests of the Joint Venture held by it on March 1, 2017 (the “Transaction Date”) and McKesson distributes more than 50% of the equity interests of the Joint Venture held by it on the Transaction Date or (ii) McKesson and affiliates of Blackstone collectively sell more than 25% of the aggregate equity interests held by McKesson and Blackstone on the Transaction Date.

The Company has evaluated subsequent events through October 26, 2018, the date the financial statements were available to be issued.

F-26

Change Healthcare Inc.

Condensed Statements of Operations

(unaudited and amounts in thousands, except share and per share amounts)


	Nine Months Ended December 31,
	2018			2017
Revenue	$	—		$	—
Operating expenses
General and administrative		188			135

Total operating expenses		188			135

Operating income (loss)		(188	)		(135	)
Non-operating (income) expense
Loss from Equity Method Investment in the Joint Venture		65,805			29,305
(Gain) Loss on Sale of Interests in the Joint Venture		(661	)		(15	)
Management fee income		(188	)		(135	)

Total non-operating (income) expense		64,956			29,155

Income (loss) before income tax provision (benefit)		(65,144	)		(29,290	)
Income tax provision (benefit)		(16,664	)		(111,742	)

Net income (loss)	$	(48,480	)	$	82,452

Net income (loss) per share:
Basic	$	(81.14	)	$	137.95

Diluted	$	(81.14	)	$	134.18

Weighted average common shares outstanding:
Basic		597,513			597,704

Diluted		597,513			614,491

See accompanying notes to condensed financial statements.

F-27

Change Healthcare Inc.

Condensed Statements of Comprehensive Income (Loss)

(unaudited and amounts in thousands)


	Nine Months Ended December 31,
	2018			2017
Net income (loss)	$	(48,480	)	$	82,452
Other comprehensive income (loss):
Changes in fair value of interest rate swap of the Joint Venture, net of taxes		(3,793	)		970
Foreign currency translation adjustment of the Joint Venture		(4,445	)		(513	)

Other comprehensive income (loss)		(8,238	)		457

Total comprehensive income (loss)	$	(56,718	)	$	82,909

See accompanying notes to condensed financial statements.

F-28

Change Healthcare Inc.

Condensed Balance Sheets

(unaudited and amounts in thousands, except share and per share amounts)


	December 31, 2018			March 31, 2018
Assets
Current Assets:
Cash	$	3,631		$	—
Due from the Joint Venture		489			301
Income taxes receivable		2,536			15,828

Total current assets		6,656			16,129
Dividend receivable		74,197			59,116
Investment in the Joint Venture		1,219,681			1,298,759

Total assets	$	1,300,534		$	1,374,004

Liabilities and stockholders’ equity
Current liabilities:
Accrued expenses	$	489		$	301
Due to the Joint Venture		6,166			15,828

Total current liabilities		6,655			16,129
Deferred income tax liabilities		164,639			181,303
Commitments and contingencies
Stockholders’ Equity:
Common Stock (par value, $.001), 2,000,000 shares authorized and 597,113 and 599,281 shares issued and outstanding at December 31, 2018 and March 31, 2018, respectively		1			1
Class X common stock (par value, $.001), 1 share authorized and 0 shares issued and outstanding at December 31, 2018 and March 31, 2018, respectively		—			—
Additional paid-in capital		1,149,250			1,139,374
Accumulated other comprehensive income (loss)		(5,702	)		2,536
Retained earnings (deficit)		(14,309	)		34,661

Total stockholders’ equity		1,129,240			1,176,572

Total liabilities and stockholders’ equity	$	1,300,534		$	1,374,004

See accompanying notes to condensed financial statements.

F-29

Change Healthcare Inc.

Condensed Statements of Stockholders’ Equity

(unaudited and amounts in thousands, except share and per share amounts)


						Additional Paid-in Capital			Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
	Common Stock
	Shares			Amount

Balance at March 31, 2017		597,139		$	1	$	1,114,845		$	(26,294	)		$ (312)		$	1,088,240
Equity compensation expense		—			—		779			—			—			779
Repurchase of common stock		—			—		—			—			—			—
Issuance of Change Healthcare Inc. common stock upon exercise of equity awards		—			—		—			—			—			—
Net income (loss)		—			—		—			(25,051	)		—			(25,051	)
Foreign currency translation adjustment of the Joint Venture		—			—		—			—			1,473			1,473
Change in fair value of interest rate cap, net of taxes of the Joint Venture		—			—		—			—			(1,300	)		(1,300	)

Balance at June 30, 2017		597,139			1		1,115,624			(51,345	)		(139	)		1,064,141
Equity compensation expense		—			—		12,429			—			—			12,429
Repurchase of common stock		(71	)		—		(171	)		—			—			(171	)
Issuance of Change Healthcare Inc. common stock upon exercise of equity awards		1,116			—		—			—			—			—
Net income (loss)		—			—		—			(21,123	)		—			(21,123	)
Foreign currency translation adjustment of the Joint Venture		—			—		—			—			607			607
Change in fair value of interest rate cap, net of taxes of the Joint Venture		—			—		—			—			93			93

Balance at September 30, 2017		598,184		$	1	$	1,127,882		$	(72,468	)	$	561		$	1,055,976
Equity compensation expense		—			—		5,058			—			—			5,058
Repurchase of common stock		—			—		—			—			—			—
Issuance of Change Healthcare Inc. common stock upon exercise of equity awards		547			—		—			—			—			—
Net income (loss)		—			—		—			128,626			—			128,626
Foreign currency translation adjustment of the Joint Venture		—			—		—			—			57			57
Change in fair value of interest rate cap, net of taxes of the Joint Venture		—			—		—			—			2,177			2,177

Balance at December 31, 2017		598,731			1		1,132,940			56,158			2,795			1,191,894

Balance at March 31, 2018		599,281		$	1	$	1,139,374		$	34,661		$	2,536		$	1,176,572
Cumulative effect of accounting change at Change Healthcare		—			—					(490	)		490			—
Equity compensation expense		—			—		5,300			—			—			5,300
Repurchase of Change Healthcare Inc. common stock		(1,992	)		—		(4,782	)		—			—			(4,782	)
Issuance of Change Healthcare Inc. common stock upon exercise of equity awards		32			—		—			—			—			—
Net income (loss)		—			—		—			(17,501	)		—			(17,501	)
Foreign currency translation adjustment of the Joint Venture		—			—		—			—			(2,593	)		(2,593	)
Change in fair value of interest rate cap, net of taxes of the Joint Venture		—			—		—			—			782			782

Balance at June 30, 2018		597,321			1		1,139,892			16,670			1,215			1,157,778
Equity compensation expense		—			—		2,969			—			—			2,969
Repurchase of Change Healthcare Inc. common stock		(717	)		—		(1,720	)		—			—			(1,720	)
Issuance of Change Healthcare Inc. common stock upon exercise of equity awards		278			—		—			—			—			—
Net income (loss)		—			—		—			(18,591	)		—			(18,591	)
Foreign currency translation adjustment of the Joint Venture		—			—		—			—			566			566
Change in fair value of interest rate cap, net of taxes of the Joint Venture		—			—		—			—			1,478			1,478

Balance at September 30, 2018		596,882		$	1	$	1,141,141		$	(1,921	)		$ 3,259		$	1,142,480
Equity compensation expense					—		8,109			—			—			8,109
Repurchase of Change Healthcare Inc. common stock					—		—			—			—			—
Issuance of Change Healthcare Inc. common stock upon exercise of equity awards		231			—		—			—			—			—
Proceeds from exercise of Change Healthcare Inc. equity based awards					—		—			—			—			—
Net income (loss)					—		—			(12,388	)		—			(12,388	)
Foreign currency translation adjustment of the Joint Venture					—		—			—			(2,418	)		(2,418	)
Change in fair value of interest rate cap, net of taxes of the Joint Venture					—		—			—			(6,543	)		(6,543	)

Balance at December 31, 2018		597,113			1		1,149,250			(14,309	)		(5,702	)		1,129,240

See accompanying notes to condensed financial statements.

F-30

Change Healthcare Inc.

Condensed Statements of Cash Flows

(unaudited and amounts in thousands)


	Nine Months Ended
	December 31,
	2018			2017
Cash flows from operating activities:
Net income (loss)	$	(48,480	)	$	82,452
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Loss from Equity Method Investment in the Joint Venture		65,805			29,305
Deferred income tax expense (benefit)		(16,664	)		(111,742	)
(Gain) Loss on Sale of Interests in the Joint Venture		(661	)		(15	)
Changes in operating assets and liabilities:
Due from the Joint Venture		(188	)		(135	)
Income taxes receivable		13,292			(14,654	)
Accrued expenses		189			135
Due to the Joint Venture		(9,662	)		14,654

Net cash provided by (used in) operating activities		3,631			—

Cash flows from investing activities:
Proceeds from sale of interests in Joint Venture		6,502			171

Net cash provided by (used in) investing activities		6,502			171

Cash flows from financing activities:
Payments to acquire common stock		(6,502	)		(171	)

Net cash provided by (used in) financing activities		(6,502	)		(171	)

Net increase (decrease) in cash, cash equivalents and restricted cash		3,631			—
Cash, cash equivalents and restricted cash at beginning of period		—			—

Cash, cash equivalents and restricted cash at end of period	$	3,631		$	—

See accompanying notes to condensed financial statements.

F-31

Change Healthcare Inc.

Notes to Condensed Financial Statements

(unaudited and amounts in thousands, except share and per share amounts)

1. Nature of Business and Organization

Organization

Change Healthcare Inc. (f/k/a HCIT Holdings, Inc.) (the “Company”), a Delaware corporation, was formed on June 22, 2016 to hold an equity investment in Change Healthcare LLC (the “Joint Venture”), a joint venture between the Company and McKesson Corporation (“McKesson”). The Company and McKesson each owns approximately 30% and 70%, respectively, of the membership interests in the Joint Venture (the “LLC Units”), subject to adjustment based on exercise of equity-based awards or other changes in the number of the Joint Venture’s LLC Units outstanding.

The Transactions

In June 2016, the Company, the Joint Venture, Change Healthcare Holdings, LLC, Change Healthcare Intermediate Holdings, LLC, Change Healthcare Performance, Inc. (formerly Change Healthcare, Inc.) (“Legacy CHC”) and its stockholders—including affiliates of The Blackstone Group, L.P. (“Blackstone”) and Hellman & Friedman LLC (“Hellman & Friedman”)—entered into an Agreement of Contribution and Sale (the “Contribution Agreement”) with McKesson Corporation (together with the Company, the “Members”). Under the terms of the Contribution Agreement, the parties agreed to form the Joint Venture, a joint venture that combined the majority of the McKesson Technology Solutions businesses, excluding McKesson’s Enterprise Information Solutions business and RelayHealth Pharmacy Network (such contributed businesses, “Core MTS”), with substantially all of the assets and operations of Legacy CHC, but excluding Legacy CHC’s pharmacy claims switching and prescription routing businesses (such excluded business, the “eRx Network” and the businesses contributed by Legacy CHC, together with Core MTS, the “Contributed Businesses”). The creation of the Joint Venture, including the contribution of the Contributed Businesses and related transactions, is collectively referred to as the “Transactions.” The Transactions closed on March 1, 2017.

2. Basis of Presentation

Principles of Consolidation

The accompanying unaudited condensed financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (“SEC”) Guidelines, Rules and Regulations (“Regulation S-X”) and, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of results for the unaudited interim periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. The results of operations for the interim period are not necessarily indicative of the results to be obtained for the full fiscal year. All intercompany accounts and transactions have been eliminated in the unaudited condensed financial statements.

Accounting Estimates

F-32

from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in the reported results of operations; and if material, the effects of changes in estimates are disclosed in the notes to the financial statements. Estimates and assumptions by management affect: the carrying value of the Company’s investment; the provision and benefit for income taxes and related deferred tax accounts; contingencies; and the value attributed to equity awards.

Accounting Pronouncements Not Yet Adopted

3. Equity Method Investment in Change Healthcare LLC

Exchange of Equity Method Investments

In connection with the Transactions, the Company exchanged its 45.615% investment in Legacy CHC for 30% of the LLC Units. The Joint Venture used proceeds from the issuance of debt to acquire the remaining 54.385% of Legacy CHC. The Company accounted for this exchange of investments as a non-monetary transaction at their respective carrying values. Prior to the Transactions, the investors of Legacy CHC accounted for their investments at fair value. As a result, the book basis and fair value of the Company’s investment in Legacy CHC were generally the same such that no gain was recognized as a result of the Transactions.

The fair value of the Joint Venture was determined at March 1, 2017 using a combination of the income and the market valuation approaches. Under the income approach, a discounted cash flow model (“DCF”) was used in which cash flows anticipated over several periods, plus a terminal value at the end of that time horizon, are discounted to their present value using an appropriate expected rate of return. The discount rate used for cash flows reflects capital market conditions and the specific risks associated with the business. Under the market approach, valuation multiples of reasonably similar publicly traded companies or guideline companies are applied to the operating data of the subject business to derive the estimated fair value. These valuation approaches are considered a Level 3 fair value measurement. Fair value determination requires complex assumptions and judgment by management in projecting future operating results, selecting guideline companies for comparisons, determining appropriate market value multiples, selecting the discount rate to measure the risks inherent in the future cash flows and assessing the business’s life cycle and the competitive trends impacting the business, including considering technical, legal, regulatory, or economic barriers to entry. Any material changes in key assumptions, including failure to meet business plans, deterioration in the financial market, an increase in interest rate or an increase in the cost of equity financing by market participants within the industry or other unanticipated events and circumstances, may affect such estimates.

Equity Method Investment in Change Healthcare LLC

The Company accounts for its investment in the Joint Venture using the equity method of accounting. During the nine months ended December 31, 2018 and 2017, the Company recorded a proportionate share of the earnings from this investment, which included transaction and integration related expenses incurred by the Joint Venture and the Company’s portion of basis adjustments including amortization expenses associated with equity method intangible assets. These amounts are aggregated and recorded under the caption, “Loss from Equity Method Investment in the Joint Venture” in the accompanying condensed statements of operations.

F-33

Summarized financial information of the Joint Venture is as follows:


	Nine Months Ended December 31,
	2018		2017
Statement of Operations Data:
Net revenue	$	2,445,390	$	2,457,830
Cost of operations (exclusive of depreciation and amortization)	$	1,007,328	$	1,056,939
Customer postage	$	180,706	$	205,373
Net income (loss)	$	138,955	$	195,462

4. Legal Proceedings

In the ordinary course of business, the Company may become subject to various claims and legal proceedings. The Company is not currently a defendant in any pending litigation.

5. Net Income (Loss) Per Share

The following table sets forth the computation of basic and diluted net income (loss) per share of common stock:


	Nine Months Ended December 31,
	2018			2017
Basic net income per share:
Numerator:
Net income (loss)	$	(48,480	)	$	82,452
Denominator:
Weighted average common shares outstanding		597,513			597,704

Basic net income (loss) per share	$	(81.14	)	$	137.95

Diluted net income per share:
Numerator:
Net income (loss)	$	(48,480	)	$	82,452
Denominator:
Number of shares used in basic computation		597,513			597,704
Weighted average effect of dilutive securities
Add:
Replacement Time-Vesting Options		—			16,618
Replacement Restricted Share Units		—			48
RSUs		—			121

		597,513			614,491

Diluted net income (loss) per share	$	(81.14	)	$	134.18

Due to their antidilutive effect, the following securities have been excluded from diluted net income (loss) per share:


	Nine Months Ended December 31,
	2018		2017
Replacement Time-Vesting Options		14,556		—

F-34

6. Incentive Compensation Plans

In connection with the Transactions, the Company assumed the Legacy CHC Amended and Restated 2009 Equity Incentive Plan and amended it as the Equity Plan. Pursuant to the Equity Plan, 300,000 shares of the Company’s common stock have been reserved for the issuance of equity awards to employees, directors and consultants of the Joint Venture and its affiliates.

Such awards consisted of one or a combination of time vesting options, exit-vesting options, restricted stock and restricted share units. As it relates to the exit-vesting options, the terms were modified in May 2018 to permit, in addition to existing provisions, vesting to occur in three equal annual installments commencing on the earlier to occur of the date that (i) affiliates of Blackstone sell more than 25% of the equity interests of the Joint Venture held by it on March 1, 2017 (the “Transaction Date”) and McKesson distributes more than 50% of the equity interests of the Joint Venture held by it on the Transaction Date or (ii) McKesson and affiliates of Blackstone collectively sell more than 25% of the aggregate equity interests held by McKesson and Blackstone on the Transaction Date.

Because the Company provides equity awards to employees of the Joint Venture, the Company recognizes stock compensation expense within the Loss from Equity Method Investment in Joint Venture caption on the accompanying condensed statements of operations for its proportionate amount of stock compensation expense included in the operating results of the Joint Venture as well as the amount funded for the benefit of the subsidiaries of McKesson that serve as members of the Joint Venture (the “McK Members”). However, due to requirements of the LLC Agreement that the Company receive an additional unit of the Joint Venture upon any exercise of a Company equity award, the Company recognizes a dividend receivable equal to the cumulative amount of stock compensation expense recognized by the Joint Venture for any outstanding equity awards with an offset to the Loss from Equity Method Investment in Joint Venture caption. The result is that no net equity compensation of the Joint Venture is recognized in the financial statements of the Company.

7. Income Taxes

The income tax benefit for the nine months ended December 31, 2018 and 2017 was $16,664 and $111,742, respectively, which represents an effective tax rate of 25.5% and 381.5%, respectively.

On December 22, 2017, H.R. 1, also known as the Tax Cuts and Jobs Act of 2017 (the “Tax Legislation”) was signed into law. The Tax Legislation revised the U.S. corporate income tax by, among other things, lowering corporate income tax rates, placing limits on the utilization of net operating loss carryovers, implementing territorial tax systems and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries.

The SEC staff issued Staff Accounting Bulletin (“SAB”) 118, which provides guidance on accounting for the tax effects of the Tax Legislation. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Legislation enactment date for companies to complete the accounting under Accounting Standards Codification (“ASC”) 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Legislation for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Legislation is incomplete but the company is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Legislation.

During the nine months ended December 31, 2017, in accordance with SAB 118, the Company recognized a provisional tax benefit due to the re-measurement of certain deferred tax assets and liabilities due to the federal income tax rate reduction from 35% to 21%. In order to properly account for the blended tax rate in place for fiscal 2018, the Company estimated the deferred tax assets expected to reverse during that year and applied a tax rate of 31.5%. All other deferred tax assets and liabilities were expected to reverse in fiscal year 2019 or later and were revalued at 21%. The Company recognized a provisional tax benefit of approximately $100,835 for the year ended March 31, 2018.

F-35

During the nine months ended December 31, 2018, the Company recognized no incremental adjustments to its provisional amounts. The accounting for the impact of the Tax Legislation is complete as of December 31, 2018, and the measurement period has been closed.

The Tax Legislation made broad and complex changes to the U.S. tax code that affect our fiscal year 2019 in multiple ways, including but not limited to reducing the U.S. federal corporate tax rate from 35% to 21%; creating the base erosion anti-abuse tax; creating a new provision designed to tax global intangible low-tax income; and generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries. We have estimated the impact of these changes in our income tax provision for the nine months ended December 31, 2018.

Fluctuations in our reported income tax rates from the statutory rate are primarily due to benefits recognized as a result of certain incentive tax credits resulting from research and experimental expenditures and discrete items recognized in the quarters.

McKesson Tax Receivable Agreement

In connection with the closing of the Transactions, the Joint Venture, the McK Members, McKesson and the Company entered into a tax receivable agreement (the “McKesson Tax Receivable Agreement”). The McKesson Tax Receivable Agreement generally provides for the payment by the Joint Venture to one of the McK Members and its permitted assigns of 85% of the net cash tax savings realized (or, in certain circumstances, deemed to be realized) by the Company in periods ending on or after the date on which McKesson ceases to own at least 20% of the LLC Units as a result of (i) certain amortizable tax basis in assets transferred to the Joint Venture at the closing of the Transactions and (ii) imputed interest deductions and certain other tax attributes arising from payments under the McKesson Tax Receivable Agreement. Additionally, upon the occurrence of the first exchange of LLC Units by McKesson (or its permitted transferees), if any, the Company has agreed to enter into an additional tax receivable agreement with the McK Members, pursuant to which the Company would be required to pay to the relevant McK Member 85% of the net cash tax savings, if any, arising from the Company’s utilization of (i) certain tax basis increases resulting from the relevant exchange and payments under such additional tax receivable agreement and (ii) imputed interest deductions. We may also be required to enter into and make payments under an additional tax receivable agreement with McKesson in certain circumstances.

Letter Agreement

The Company, the Joint Venture, McKesson and certain of McKesson’s affiliates have entered into a letter agreement relating to the Contribution Agreement (the “Letter Agreement”). The Letter Agreement addresses miscellaneous tax-related matters, including (i) technical clarifications and modifications to the manner in which the Joint Venture allocates certain items of taxable income, loss and deduction among, and calculates and makes required tax distributions to, its members, (ii) the sharing of certain contingent tax benefits and expenses not addressed by the McKesson Tax Receivable Agreement or the tax matters agreement that the Company will enter into with McKesson in connection with a spin-off or split-off transaction (or a combination of the foregoing) that McKesson may, at its election, initiate and complete that would result, among other things, in the acquisition by the Company of all of McKesson’s LLC Units and the issuance by the Company to McKesson and/or McKesson’s securityholders of an equal number of shares of its common stock and (iii) procedures applicable in the case of certain tax proceedings.

In particular, pursuant to the terms of the Letter Agreement, McKesson may adjust the manner in which depreciation or amortization deductions in respect of assets transferred to the Joint Venture at the closing of the Transactions are allocated among the Company, McKesson and certain of McKesson’s affiliates. If McKesson chooses to allocate an amount of deductions to the Company in excess of a specified minimum threshold, the Company will be required to make cash payments to McKesson equal to 100% of the tax savings of the Company attributable to such excess deductions for any tax period ending prior to the date on which McKesson ceases to own at least 20% of the outstanding LLC Units of the Joint Venture, after which the terms of the McKesson Tax Receivable Agreement will control.

F-36

8. Fair Value Measurements

The Company is entitled to receive an additional LLC Unit for each share of stock issued by the Company. In the case of equity-based awards, the requirement to receive an additional LLC Unit upon exercise of such awards represents a freestanding derivative. Because the fair value measurement of this derivative involves significant unobservable inputs, the most significant of which is the value of the Company’s stock, the Company has determined that it represents a Level 3 fair value measurement.

Because the freestanding derivative is directly related to the Company’s equity-based compensation awards, the valuation of the derivative is determined consistent with the valuation of the underlying equity-based awards. As with the equity-based awards, changes in the value of the derivative are generally expected to fluctuate with changes in the value of the Company’s stock.

The following table summarizes the fair value of the freestanding derivative at December 31, 2018 and March 31, 2018, respectively:


	Fair Values of Derivative Financial Instruments Asset (Liability)
Derivative financial instruments not designated as hedging instruments:	Balance Sheet Location		December 31, 2018		March 31, 2018
Freestanding Option		Dividend receivable	$	74,197	$	59,116

			$	74,197	$	59,116

The following table presents a reconciliation of the fair value of the derivative for which the Company uses significant unobservable inputs:


	Nine Months Ended December 31,
	2018			2017
Balance at beginning of period	$	59,116		$	39,724
Increase in fair value based on ASC 505 equity-based compensation		16,378			18,264
Settlements due to exercise of awards		(1,297	)		(3,991	)

Balance at end of period	$	74,197		$	53,997

During the nine months ended December 31, 2018 and 2017, the Company recognized an increase in the Dividend Receivable which was equal to the amount of equity-based compensation recognized and was recorded as a component of Loss from Equity Method Investment in the Joint Venture. The result is that no net equity-based compensation related to employees of the Joint Venture is recognized in the financial statements of the Company.

F-37

9. Accumulated Other Comprehensive Income (Loss)

The following is a summary of the Company’s proportionate share of the Joint Venture’s accumulated other comprehensive income (loss) balances, net of taxes, for each of the quarterly periods in the nine months ended December 31, 2018 and 2017.


	Foreign Currency Translation Adjustment			Cash Flow Hedge			Accumulated Other Comprehensive Income (Loss)
Balance at March 31, 2017	$	26		$	(338	)	$	(312	)
Change associated with foreign currency translation		1,473			—			1,473
Change associated with current period hedging		—			(1,410	)		(1,410	)
Reclassification into earnings		—			110			110

Balance at June 30, 2017		1,499			(1,638	)		(139	)
Change associated with foreign currency translation		608			—			608
Change associated with current period hedging		—			(16	)		(16	)
Reclassification into earnings		—			108			108

Balance at September 30, 2017		2,107			(1,546	)		561
Change associated with foreign currency translation		57			—			57
Change associated with current period hedging		—			2,011			2,011
Reclassification into earnings		—			166			166

Balance at December 31, 2017	$	2,164		$	631		$	2,795

Balance at March 31, 2018		1,268			1,268			2,536
Cumulative effect of accounting change at the Joint Venture		—			490			490
Change associated with foreign currency translation		(2,593	)		—			(2,593	)
Change associated with current period hedging		—			1,206			1,206
Reclassification into earnings		—			(424	)		(424	)

Balance at June 30, 2018		(1,325	)		2,540			1,215
Change associated with foreign currency translation		566			—			566
Change associated with current period hedging		—			1,866			1,866
Reclassification into earnings		—			(388	)		(388	)

Balance at September 30, 2018		(759	)		4,018			3,259
Change associated with foreign currency translation		(2,418	)		—			(2,418	)
Change associated with current period hedging					(6,168	)		(6,168	)
Reclassification into earnings		—			(375	)		(375	)

Balance at December 31, 2018	$	(3,177	)	$	(2,525	)	$	(5,702	)

Effective April 1, 2018, the Joint Venture adopted FASB ASU No. 2017-12, which significantly changed the framework by which hedge accounting is recognized, presented and disclosed in the Joint Venture’s financial statements. The adoption of this updated by the Joint Venture resulted in a reclassification between its accumulated other comprehensive income (loss) and accumulated earnings (deficit). As an investor in the Joint Venture, the Company has recognized its proportionate amount of this reclassification as presented in the table above.

10. Subsequent Events

The Company has evaluated subsequent events through February 14, 2019, the date the financial statements were available to be issued.

F-38

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Members of Change Healthcare LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Change Healthcare LLC and subsidiaries (the “Company”) as of March 31, 2018 and March 31, 2017, the related consolidated statements of operations, comprehensive income (loss), members’ deficit, and cash flows, for the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2018 and 2017, and the results of its operations and its cash flows for the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

/s/ Deloitte & Touche LLP

Atlanta, Georgia

July 27, 2018, except for Note 21, as to which the date is December 7, 2018.

We have served as the Company’s auditor since 2017.

F-39

Change Healthcare LLC

Consolidated Statements of Operations

(amounts in thousands)


	Year Ended March 31, 2018			Period from June 17, 2016 (inception) to March 31, 2017
Revenue:
Solutions revenue	$	3,024,446		$	283,455
Postage revenue		274,397			26,132

Total revenue		3,298,843			309,587
Operating expenses:
Cost of operations (exclusive of depreciation and amortization below)		1,407,893			133,688
Research and development		221,662			22,582
Sales, marketing, general and administrative		749,871			109,898
Customer postage		274,397			26,132
Depreciation and amortization		278,363			26,548
Accretion and changes in estimate with related parties, net		(49,991	)		(24,507	)
Impairment of long-lived assets and related costs		839			48,700

Total operating expenses		2,883,034			343,041

Operating income (loss)		415,809			(33,454	)
Non-operating (income) and expense
Interest expense, net		292,463			22,361
Loss on extinguishment of debt		—			70,122
Other, net		(17,202	)		(1,339	)

Total non-operating (income) and expense		275,261			91,144

Income (loss) before income tax provision (benefit)		140,548			(124,598	)
Income tax provision (benefit)		(51,894	)		(41,006	)

Net income (loss)	$	192,442		$	(83,592	)

See accompanying notes to consolidated financial statements.

F-40

Change Healthcare LLC

Consolidated Statements of Comprehensive Income (Loss)

(amounts in thousands)


	Year Ended March 31, 2018		Period from June 17, 2016 (inception) to March 31, 2017
Net income (loss)	$	192,442	$	(83,592	)
Other comprehensive income (loss):
Foreign currency translation adjustment		4,146		86
Changes in fair value of interest rate cap, net of taxes		7,398		(1,772	)

Other comprehensive income (loss)		11,544		(1,686	)

Total comprehensive income (loss)	$	203,986	$	(85,278	)

See accompanying notes to consolidated financial statements.

F-41

Change Healthcare LLC

Consolidated Balance Sheets

(amounts in thousands)


	March 31, 2018			March 31, 2017
Assets
Current assets:
Cash and cash equivalents	$	48,899		$	185,670
Restricted cash		1,112			2,443
Accounts receivable, net of allowance for doubtful accounts of $18,015 and $14,227 at March 31, 2018 and March 31, 2017, respectively		705,544			696,780
Prepaid expenses and other current assets		146,157			140,350

Total current assets		901,712			1,025,243
Property and equipment, net		167,500			179,044
Goodwill		3,344,833			3,248,719
Intangible assets, net		1,454,842			1,609,723
Other noncurrent assets, net		332,040			220,725

Total assets	$	6,200,927		$	6,283,454

Liabilities and members’ deficit
Current liabilities:
Drafts and accounts payable	$	84,128		$	93,462
Accrued expenses		329,332			296,055
Deferred revenue		493,947			516,065
Due to related party, net		8,695			156,644
Current portion of long-term debt		53,393			57,149

Total current liabilities		969,495			1,119,375
Long-term debt, excluding current portion		5,867,487			5,901,946
Deferred income tax liabilities		112,734			142,736
Tax receivable agreement obligations to related parties		223,163			298,149
Other long-term liabilities		94,228			94,607
Commitments and contingencies (see Note 13)
Members’ deficit		(1,066,180	)		(1,273,359	)

Total liabilities and members’ deficit	$	6,200,927		$	6,283,454

See accompanying notes to consolidated financial statements.

F-42

Change Healthcare LLC

Consolidated Statements of Members’ Deficit

(amounts in thousands)


	Members’ Deficit
Balance at June 17, 2016 (inception)	$	—
Capital contribution from Members		100
Contribution of net assets of Core MTS and Legacy CHC from Members		2,099,339
Distribution to Members		(3,099,376	)
Establishment of tax receivable obligation to related parties, net of taxes		(119,464	)
Settlement of Legacy CHC equity awards		(69,420	)
Equity compensation expense		715
Net income (loss)		(83,592	)
Foreign currency translation adjustment		86
Change in fair value of interest rate cap agreements, net of taxes		(1,772	)
Other		25

Balance at March 31, 2017	$	(1,273,359	)
Advances to Member		(15,828	)
Settlement of Legacy CHC equity awards		545
Repurchase of equity awards		(4,799	)
Capital contribution from Member from exercise of equity awards		346
Equity compensation expense		24,700
Net income (loss)		192,442
Foreign currency translation adjustment		4,146
Change in fair value of interest rate cap agreements, net of taxes		7,398
Other		(1,771	)

Balance at March 31, 2018	$	(1,066,180	)

See accompanying notes to consolidated financial statements.

F-43

Change Healthcare LLC

Consolidated Statements of Cash Flow

(amounts in thousands)


	Year Ended March 31, 2018			Period from June 17, 2016 (inception) to March 31, 2017
Cash flows from operating activities:
Net income (loss)	$	192,442		$	(83,592	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		278,363			26,548
Amortization of capitalized software developed for sale		18,303			1,505
Accretion and changes in estimate with related parties, net		(49,991	)		(24,507	)
Equity compensation		24,700			715
Deferred income tax expense (benefit)		(59,968	)		(42,033	)
Amortization of debt discount and issuance costs		21,434			1,734
Loss on extinguishment of debt		—			32,720
Impairment of long-lived assets and related costs		839			48,700
Other		2,723			87
Changes in operating assets and liabilities:
Accounts receivable		(4,526	)		(12,813	)
Prepaid expenses and other		(19,957	)		(11,508	)
Accounts payable		(9,105	)		10,250
Accrued expenses, deferred revenue and other liabilities		(16,806	)		(35,924	)
Due to related party, net		(52,654	)		47,468
Tax receivable agreement obligations to related parties		(971	)		—

Net cash provided by (used in) operating activities	$	324,826		$	(40,650	)

Cash flows from investing activities:
Purchases of property and equipment	$	(38,046	)	$	(6,425	)
Capitalized software expenditures		(128,547	)		(5,192	)
Payments for acquisitions, net of cash acquired		(94,520	)		—
Other		384			432

Net cash provided by (used in) investing activities	$	(260,729	)	$	(11,185	)

Cash flows from financing activities:
Proceeds from contributed businesses	$	—		$	169,361
Proceeds from Term Loan Facility and Senior Notes Due 2025		—			6,087,250
Payments on contributed Term Loan Facility and Senior Notes		—			(2,784,972	)
Payment of premium to extinguish Senior Notes		—			(37,402	)
Payment of loan costs		—			(138,222	)
Payments on Term Loan Facility		(51,000	)		—
Payments on derivative instruments		(6,799	)		—
Payment of data sublicense obligation		(3,074	)		—
Payments of deferred financing obligations		(3,147	)		(81	)
Settlement of Legacy CHC equity awards		(3,155	)		(65,720	)
Capital contribution from Members		346			100
Repurchase of equity awards		(4,799	)		—
Payment of working capital settlement to related party		(109,176	)		—
Distribution to Members		—			(2,990,200	)
Advances to Member and Other		(16,685	)		—

Net cash provided by (used in) financing activities	$	(197,489	)	$	240,114

F-44


	Year Ended March 31, 2018			Period from June 17, 2016 (inception) to March 31, 2017
Effect of exchange rate changes on cash and cash equivalents		(4,710	)		(166	)

Net increase (decrease) in cash, cash equivalents and restricted cash		(138,102	)		188,113
Cash, cash equivalents and restricted cash at beginning of period		188,113			—

Cash, cash equivalents and restricted cash at end of period	$	50,011		$	188,113

Supplemental disclosures of cash flow information
Cash paid for interest	$	267,604		$	15,936

Cash paid for income taxes	$	9,968		$	23

Supplemental disclosures of noncash transactions
Working capital settlement liability:
Due to related party, net	$	—			(109,176	)

Members’ deficit	$	—			109,176

Contributed assets and liabilities:
Current assets	$	—		$	822,400

Property and Equipment	$	—		$	177,998

Goodwill	$	—		$	3,248,719

Intangible assets, net	$	—		$	1,628,711

Other noncurrent assets, net	$	—		$	243,435

Current liabilities	$	—		$	(1,005,742	)

Long-term debt	$	—			(2,737,776	)

Deferred income tax liabilities	$	—		$	(213,239	)

Tax receivable agreement obligations to related parties	$	—		$	(183,342	)

Other long-term liabilities	$	—			(52,075	)

Business Combination:
Prepaid expenses and other current assets	$	226		$	—

Other assets	$	(6,000	)	$	—

Goodwill	$	9,774		$	—

Accrued expenses	$	(341	)	$	—

Other long-term liabilities	$	(3,659	)	$	—

See accompanying notes to consolidated financial statements.

F-45

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

1. Nature of Business and Organization

Nature of Business

Change Healthcare LLC (the “Company,” “we,” “our,” and “us”), is a leading independent healthcare technology platform that provides data and analytics-driven solutions to improve clinical, financial and patient engagement outcomes in the U.S. healthcare system. The Company offers a comprehensive suite of software, analytics, technology-enabled services and network solutions that drive process improvements and improved results in complex workflows for healthcare system payers and providers.

Organization

In June 2016, Change Healthcare Inc. (formerly HCIT Holdings, Inc.), the Company, Change Healthcare Holdings, LLC, Change Healthcare Intermediate Holdings, LLC, Change Healthcare Performance, Inc. (formerly Change Healthcare, Inc.) (“Legacy CHC”) and its stockholders—including affiliates of The Blackstone Group, L.P. (“Blackstone”) and Hellman & Friedman LLC (“Hellman & Friedman”)—entered into an Agreement of Contribution and Sale (the “Contribution Agreement”) with McKesson Corporation (“McKesson”, together with Change Healthcare Inc., the “Members”). Under the terms of the Contribution Agreement, the parties agreed to form the Company, a joint venture that combined the majority of the McKesson Technology Solutions businesses, excluding McKesson’s Enterprise Information Solutions business and RelayHealth Pharmacy Network (such contributed businesses, “Core MTS”), with substantially all of the assets and operations of Legacy CHC, but excluding Legacy CHC’s pharmacy claims switching and prescription routing businesses (such excluded business, the “eRx Network” and the businesses contributed by Legacy CHC, together with Core MTS, the “Contributed Businesses”). The creation of the joint venture, including the contribution of the Contributed Businesses and related transactions, is collectively referred to as the “Transactions.” The Transactions closed on March 1, 2017. From the time of its formation in June 2016 until the consummation of the Transactions, the Company had no substantive assets or operations.

The Transactions

Pursuant to the terms of the Contribution Agreement, (i) the Legacy CHC stockholders, directly and indirectly, transferred ownership of substantially all of Legacy CHC to the Company in consideration of (a) the payment at the closing of the Transactions by the Company to Legacy CHC’s stockholders and certain participants in the Legacy CHC Amended and Restated 2009 Equity Incentive Plan (the “Legacy CHC Equity Plan”) of approximately (A) $1.8 billion, (B) stock in eRx Network Holdings, Inc., and (C) the 2017 Tax Receivable Agreement (as described in Note 19) and (b) the issuance to Change Healthcare Inc. of membership interests in the Company; and (ii) McKesson caused Core MTS to be transferred to the Company in consideration of (a) the assumption and subsequent payment at the closing of the Transactions by the Company to McKesson of a promissory note in the amount of approximately $1.3 billion, (b) the issuance of membership interests in the Company and (c) an interest in a tax receivable agreement from the Company. These payments to McKesson and the Legacy CHC stockholders have been reflected as distributions in the accompanying consolidated statement of members’ deficit.

In connection with the Transactions, the Company, through its subsidiaries, entered into new senior secured credit facilities, consisting of a term loan facility in the amount of $5.1 billion and a revolving credit facility in an aggregate principal amount of $500 million, and issued $1.0 billion of 5.75% senior notes due 2025. The proceeds were used to make all payments to the Legacy CHC stockholders, certain participants in the Legacy CHC Equity Plan and McKesson described above, to refinance certain of Legacy CHC’s existing indebtedness and to pay fees and expenses incurred in connection with the Transactions.

F-46

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

The Company provides certain transition services to eRx Network, and McKesson provides certain transition services to the Company, in each case in exchange for specified fees. Fees received related to these agreements are reflected within “Other, net” in the accompanying consolidated statement of operations. The related balance sheet effect of these agreements are reflected within “Due to related party, net” on the accompanying consolidated balance sheets.

2. Summary of Significant Accounting Policies

Basis of Accounting

Due to the existence of shared control among the Members over all major financial and operating decisions of the Company and its consolidated subsidiaries, the assets and liabilities contributed to the Company were recognized in the accompanying consolidated financial statements at their historical carrying values (i.e. joint venture accounting). Adjustments to conform accounting policies of the contributed businesses have been reflected as adjustments to members’ deficit.

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and include all subsidiaries and entities that are controlled by the Company. The results of operations for companies acquired are included in the consolidated financial statements from the effective date of acquisition. All intercompany accounts and transactions have been eliminated in the consolidated financial statements.

Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company bases its estimates on historical experience, current business factors and various other assumptions that the Company believes are necessary to consider in order to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses and disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic, environmental and political factors and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in the reported results of operations; and if material, the effects of changes in estimates are disclosed in the notes to the consolidated financial statements. Estimates and assumptions by management affect: the allowance for doubtful accounts; the fair value assigned to assets acquired and liabilities assumed in business combinations; tax receivable agreement obligations; the fair value of interest rate cap agreement obligations; contingent consideration; loss accruals; the carrying value of long-lived assets (including goodwill and intangible assets); the amortization period of long-lived assets (excluding goodwill); the carrying value, capitalization and amortization of software development costs; the provision and benefit for income taxes and related deferred tax accounts; certain accrued expenses; revenue recognition; contingencies; and the value attributed to equity awards.

Business Combinations

F-47

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

fair value. The excess of the consideration transferred over the fair value of the identifiable assets, liabilities and noncontrolling interest, if any, is recorded as goodwill. Any excess of the fair value of the identifiable assets acquired and liabilities assumed over the consideration transferred, if any, is generally recognized within earnings as of the acquisition date.

The fair value of the consideration transferred, assets, liabilities and noncontrolling interests is estimated based on one or a combination of income, costs or market approaches as determined based on the nature of the asset or liability and the level of inputs available to the Company (i.e., quoted prices in an active market, other observable inputs or unobservable inputs). To the extent that the Company’s initial accounting for a business combination is incomplete at the end of a reporting period, provisional amounts are reported for those items which are incomplete.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity from the date of purchase of three months or less to be cash equivalents.

The Company’s cash and cash equivalents are deposited with several financial institutions. Deposits may exceed the amounts insured by the Federal Deposit Insurance Corporation in the U.S. and similar deposit insurance programs in other jurisdictions. The Company mitigates the risk of our short-term investment portfolio by depositing funds with reputable financial institutions and monitoring risk profiles.

Our cash balances from time to time include funds we manage for customers, the most significant of which relates to funds remitted to retail pharmacies. Such funds are not restricted; however, these funds are generally paid out in satisfaction of the processing obligations pursuant to the management contracts. At the time of receipt, we record a corresponding liability within accrued expenses on the accompanying consolidated balance sheets. Such liabilities are summarized as “Pass-through payments” within Note 9 to these consolidated financial statements.

Restricted Cash

Cash that is subject to legal restrictions or is unavailable for general operating purposes is classified as restricted cash in the accompanying consolidated balance sheets. At March 31, 2018 and 2017, our restricted cash balances represent cash received to support refund payments to patients of certain customers.

Allowance for Doubtful Accounts

The allowance for doubtful accounts reflects the Company’s best estimate of losses inherent in the Company’s receivables portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available evidence.

Capitalized Software Developed for Internal Use

The Company provides services to many of its customers using software developed for internal use. The costs that are incurred to develop such software are expensed as incurred during the preliminary project stage and classified within research and development on the accompanying consolidated statements of operations. Once certain criteria have been met, direct costs incurred in developing or obtaining computer software are capitalized. Training and maintenance costs are expensed as incurred. Capitalized software costs are included in Other noncurrent assets in the accompanying consolidated balance sheet and are generally amortized over the estimated useful life of three years.

F-48

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

Capitalized Software Developed for Sale

Development costs for software developed for sale to external customers are capitalized once a project has reached the point of technological feasibility. Completed projects are amortized after reaching the point of general availability using the straight-line method based on an estimated useful life of approximately three years. At each balance sheet date, or earlier if an indicator of an impairment exists, the Company evaluates the recoverability of unamortized capitalized software costs based on estimated future undiscounted revenue net of estimated related costs over the remaining amortization period.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation, including that related to assets under capital lease, is computed using the straight-line method over the estimated useful lives of the related assets. Expenditures for maintenance, repair and renewals of minor items are expensed as incurred. Expenditures for maintenance repair and renewals that extend the useful life of an asset are capitalized.

Goodwill and Intangible Assets

Goodwill and intangible assets resulting from the Company’s and its predecessors’ acquisitions are accounted for using the acquisition method of accounting. Intangible assets with finite lives are amortized on a straight-line basis, at their inception, over the estimated useful lives of the related assets generally as follows:


Customer relationships			3-20 years
Tradenames			5-20 years
Non-compete agreements			3-5 years
Technology-based intangible assets			5-10 years

The Company assesses its goodwill for impairment annually (as of January 1 of each year) or whenever significant indicators of impairment are present. The Company first assesses whether it can reach a more likely than not conclusion that goodwill is not impaired via qualitative analysis alone. To the extent such a conclusion cannot be reached based on a qualitative assessment alone, the Company, using the assistance of a valuation specialist as appropriate, compares the fair value of each reporting unit to its associated carrying value. The Company will generally recognize an impairment charge for the amount, if any, by which the carrying amount of the reporting unit exceeds its fair value. The Company recognized no impairment in conjunction with its most recent goodwill impairment analysis.

Long-Lived Assets

Long-lived assets used in operations are reviewed for impairment whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and fair value. Long-lived assets held for sale are reported at the lower of cost or fair value less costs to sell.

Derivatives

F-49

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

as a component of other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transaction in the same period or periods during which the hedged transaction affects earnings (for example, in “interest expense” when the hedged transactions are interest cash flows associated with floating-rate debt). The ineffective portion of the hedge attributed to the remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any, is recognized in interest expense in current earnings during the period of change.

Equity Compensation

Change Healthcare Inc. grants certain equity awards to employees and directors of the Company under the HCIT Holdings, Inc. 2009 Equity Incentive Plan (the “Equity Plan”). Because these equity awards have been granted to employees of Change Healthcare Inc.’s equity method investee, they are subject to the accounting framework for awards granted to non-employees. Under this framework, the Company ultimately measures the compensation for equity awards based on the fair value of such awards at the earlier of the performance commitment date or the date at which the Company employee’s performance is complete. Such awards are generally re-measured at fair value on a quarterly basis from the date of grant through the final measurement date. The fair value of such awards are recognized as assets or expense in the same period and in the same manner as if the Company had paid cash for the goods or services. The Company recognizes forfeitures as they occur.

Revenue Recognition

The Company generates most of its solutions revenue by using technology solutions (generally Software as a Service (“SaaS”)) to provide services to our customers that automate and simplify business and administrative functions for payers, providers and pharmacies and through the licensing of software, software systems (consisting of software, hardware and maintenance support) and content.

SaaS-based subscription, content licenses and transaction processing fees are generally marketed under annual and multi-year agreements and are recognized ratably over the contracted terms. Revenue recognition begins on the service start date for fixed fee arrangements, on delivery for content licenses, and recognized as transactions are performed beginning on the service start date for per-transaction fee arrangements. Remote processing service fees are recognized monthly as the service is performed. Revenue cycle management outsourcing service revenue is generally based on a percentage of collections by the Company’s customers and recognized in the same period as the collections occur. Revenue for certain services (including eligibility and enrollment services) are subject to customer acceptance or collection by the Company’s customer and revenue in such circumstances is recognized upon such customer acceptance or resolution of collection contingencies.

Software systems are marketed under information systems agreements as well as service agreements. Perpetual software arrangements are recognized at the time of delivery, under the percentage-of-completion method if the arrangements require significant production, modification or customization of the software, or in certain instances under the completed contract method if reasonable estimates cannot be made. Contracts accounted for under the percentage-of-completion method are generally measured based on the ratio of labor hours incurred to date to total estimated labor hours to be incurred. Changes in estimates to complete and revisions in overall profit estimates on these contracts are charged to earnings in the period in which they are determined. The Company accrues for contract losses if and when the current estimate of total contract costs exceeds total contract revenue. Software implementation fees are recognized as the work is performed or under the percentage-of-completion method for perpetual software. Hardware revenue is generally recognized upon delivery.

F-50

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

term. Maintenance and support agreements are marketed under annual or multi-year agreements and are recognized ratably over the period covered by the agreements.

The Joint Venture records as revenue the gross amount it receives from customers for postage fees. Revenue is recorded on a gross basis because the Joint Venture is acting as a principal in the transaction as they establish pricing for such services, are the primary obligor to its customers and assume credit risk for amounts billed to its customers.

The Company excludes sales and use tax from revenue in the accompanying consolidated statements of operations.

The Company engages in multiple-element arrangements, which may contain any combination of software, hardware, implementation, SaaS-based offerings, consulting services or maintenance services. For multiple-element arrangements that do not include software, revenue is allocated to the separate elements based on their relative selling price and recognized in accordance with the revenue recognition criteria applicable to each element. Relative selling price is determined based on vendor specific objective evidence (“VSOE”) of selling price if available, third-party evidence (“TPE”), if VSOE of selling price is not available, or estimated selling price, if neither VSOE of selling price nor TPE is available. For multiple-element arrangements accounted for in accordance with specific software accounting guidance when some elements are delivered prior to others in an arrangement and VSOE of fair value exists for the undelivered elements, revenue for the delivered elements is recognized upon delivery of such items. The Company establishes VSOE for hardware and implementation and consulting services based on the price charged when sold separately, and for maintenance services based on substantive renewal rates offered to customers. Revenue for the software element is recognized under the residual method only when fair value has been established for all of the undelivered elements in an arrangement. If fair value cannot be established for any undelivered element, all of the arrangement’s revenue is deferred until the delivery of the last element commences or until the fair value of the undelivered element is determinable. For multiple-element arrangements with both software elements and nonsoftware elements, arrangement consideration is allocated between the software elements as a whole and nonsoftware elements. The Company then further allocates consideration to the individual elements within the software group, and revenue is recognized for all elements under the applicable accounting guidance and our policies described above.

Cash receipts or billings in advance of revenue recognition are recorded as deferred revenue in the accompanying consolidated balance sheets.

Foreign Currency Translation

The reporting currency of the Company and its subsidiaries is the U.S. dollar. The Company’s foreign subsidiaries generally consider their local currency to be their functional currency. Foreign currency-denominated assets and liabilities of these foreign subsidiaries are translated into U.S. dollars at year-end exchange rates and revenue and expenses are translated at average exchange rates during the corresponding period, and equity accounts are primarily translated at historical exchange rates. Foreign currency translation adjustments are included in Other comprehensive income (loss) in the accompanying consolidated statements of comprehensive income (loss), and the cumulative effect is included within members’ deficit in the accompanying consolidated balance sheets. Realized gains and losses from currency exchange transactions are recorded in sales, marketing, general and administrative expenses in the accompanying consolidated statements of operations. The Company releases cumulative translation adjustment from equity into net income as a gain or loss only upon complete or substantially complete liquidation of a controlling interest in a subsidiary or a group of assets within a foreign entity.

F-51

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

Income Taxes

Deferred income taxes reflect the available net operating losses and the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of the future tax benefits related to deferred tax assets is dependent on many factors, including the Company’s past earnings history, expected future earnings, the character and jurisdiction of such earnings, reversing taxable temporary differences, unsettled circumstances that, if unfavorably resolved, would adversely affect utilization of its deferred tax assets, carryback and carryforward periods and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset.

Warranties

In the normal course of business, the Company provides warranties regarding the performance of software and products it sells. The Company’s liability under these warranties is to bring the product into compliance with previously agreed upon specifications. For software products, this may result in additional project costs, which are reflected in our estimates used for the percentage of completion method of accounting for software installations services within these contracts. In addition, most of the Company’s customers who purchase software and automation products also purchase annual maintenance agreements. Revenue from these maintenance agreements is recognized on a straight-line basis over the contract period and the cost of servicing product warranties is charged to expense when claims become estimable. Accrued warranty costs were not material to the accompanying consolidated balance sheets.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, which replaces most prior general and industry specific revenue recognition guidance with a principles-based comprehensive revenue recognition framework. Under this revised framework, a company will recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. This update is expected to be effective for the Company beginning April 1, 2019. Upon adoption, a company may elect to either retrospectively restate each prior reporting period or reflect the cumulative effect of initially applying the update with an adjustment to retained earnings at the date of adoption. While the Company cannot yet determine the effect the adoption of this update will have on its financial statements, the Company believes that significant changes to its accounting policies, disclosures, estimation processes, internal controls and information systems, as well as significant implementation costs prior to adoption, will be necessary to comply with this update. Such changes are expected to be necessary to accumulate information and data required to estimate the transaction prices in our contracts, and to allocate such transaction prices to the specific performance obligations in our contracts, as a result of variability from volume-based pricing, price increases,

F-52

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

contingent fees, service level agreements and other arrangements. Due to the extent of the expected data that will need to be accumulated, the Company expects to adopt using the modified retrospective transition method.

In February 2016, the FASB issued ASU No. 2016-02, which generally requires that all lease obligations be recognized on the balance sheet at the present value of the remaining lease payments with a corresponding lease asset. This update is scheduled to be effective for the Company beginning April 1, 2020, with early adoption permitted. The Company is currently assessing the potential effects this update may have on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, which requires that a financial asset (or group of financial assets) measured at amortized cost be presented at the net amount expected to be collected based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. This update is scheduled to be effective for the Company beginning April 1, 2021, with early adoption permitted beginning April 1, 2019. The Company is currently assessing the potential effects this update may have on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, which provides a screen to determine when an integrated set of assets and activities represents a business. Specifically, this update requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set of assets and activities is not a business. This update is scheduled to be effective for the Company beginning April 1, 2018. The Company is currently assessing the potential effects this update may have on its consolidated financial statements.

In August 2017, the FASB issued ASU No. 2017-12, which significantly changes the framework by which hedge accounting is recognized, presented, and disclosed in the financial statements. Specifically, this update aligns risk management with the related financial reporting by permitting hedging of the contractually specified component or interest rate in the arrangement and requiring that an entity present the earnings effect of the hedging instrument in the same income statement caption in which the earnings effect of the hedged item is reported. Additionally, this update includes other simplifications of the hedge accounting guidance. These additional simplifications include the ability to continually evaluate hedge effectiveness using a qualitative approach as well as permitting certain simplifying assumptions when evaluating a “critical terms match” method of effectiveness. This update is scheduled to be effective for the Company beginning April 1, 2020, with early application permitted. The Company adopted this update effective April 1, 2018 using the modified retrospective transition method. This transition method requires the Company to recognize the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the date of adoption. Upon adoption, this update had no material effect on the Company’s consolidated financial statements.

In February 2018, the FASB issued ASU No. 2018-02, which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (“Tax Legislation”). The update is scheduled to be effective for the Company beginning April 1, 2019, with early adoption permitted. The Company is currently assessing the potential effects this update may have on its consolidated financial statements.

In March 2017, the Company adopted FASB ASU No. 2017-04, which generally provided that an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value, subject to a restriction that the impairment charge cannot exceed the value of the total goodwill of the reporting unit. Upon adoption, this update had no effect on the Company’s consolidated financial statements.

F-53

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

In April 2017, the Company adopted FASB ASU No. 2016-18, which specifies that amounts generally described as restricted cash should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. As a result of the adoption of this update, the accompanying statement of cash flows has been adjusted to combine cash and cash equivalents and restricted cash when presenting both the beginning and ending balances. Additionally, restricted cash has been presented as a separate caption on the accompanying consolidated balance sheets.

In December 2017, the Company adopted the provisions of Securities & Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) 118, which was subsequently codified as FASB ASU No. 2018-05. This update provides guidance on accounting for the effects of the Tax Legislation and provides a measurement period that should not extend beyond one year from the Tax Legislation enactment date for companies to complete the accounting under ASC 740. Under this update, a company must reflect the income tax effects of those aspects of the Tax Legislation for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Legislation is incomplete but the company is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Legislation. The Company (together with its consolidated subsidiaries) estimates, based on currently available information, that the enactment of the Tax Legislation resulted in an increase in income tax benefit of approximately $33,024 and an increase to operating income of $88,741 for the year ended March 31, 2018. A majority of the effects of the Tax Legislation are the result of the change in the enacted rate causing a remeasurement of the U.S. federal deferred tax liabilities and tax receivable agreements at the lower enacted corporate tax rate.

3. Concentration of Credit Risk

The Company’s revenue and accounts receivable are primarily generated by customers in the healthcare provider sector in the United States. Changes in economic conditions, government regulations or demographic trends, among other matters, in the United States could adversely affect the Company’s revenue and results of operations.

4. Business Combinations

In January 2018, the Company acquired all of the equity interests of National Decision Support Company, LLC (“NDSC”), a provider of cloud-based solutions that deliver medical guidelines to the point-of-care directly through electronic health record systems.

Prior to the acquisition, the Company had prepaid royalties related to the use of an NDSC product. In connection with the acquisition, this pre-existing relationship was effectively settled by increasing the amount of the consideration transferred by the amount of the prepaid royalty asset.

The following table summarizes information related to this acquisition. The preliminary values of the consideration transferred, assets acquired and liabilities assumed in the NDSC acquisition, including the related

F-54

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

tax effects, are subject to change upon the receipt of a final valuation, resolution of any pre-acquisition contingencies and working capital settlement.


	NDSC
Total Consideration Fair Value at Acquisition Date:
Cash paid at closing	$	101,237
Settlement of preexisting relationship		6,000
Contingent consideration		4,000
Other		(226	)

	$	111,011

Allocation of the Consideration Transferred:
Cash	$	6,717
Accounts receivable		3,732
Prepaid expenses and other current assets		198
Property and equipment		166
Identifiable intangible assets:
Tradename		4,100
Non-compete agreements		2,200
Customer relationships		3,400
Technology		7,185
Other assets		568
Goodwill		88,924
Accounts payable		(298	)
Accrued expenses and other current liabilities		(5,881	)

Total consideration transferred	$	111,011

Acquisition costs in sales, marketing, general and administrative expense:
For the year ended March 31, 2018	$	731


		NDSC
Other Information:
Gross contractual accounts receivable		$3,732
Amount not expected to be collected		$—
Goodwill expected to be deductible for tax purposes		$88,924
Contingent Consideration Information:
Contingent consideration range		$0 to $20,000
Measurement period		January 1, 2018 to December 31, 2020
Basis of measurement		Revenue performance, subject to minimum margin
Type of measurement		Level 3
Key assumptions at the acquisition date:
Range of annual revenue performance		$22,500-$66,100
Expected payment date(s)		2018-2020
Discount rate(s)		10%
Increase (decrease) to net income (loss):
For the year ended March 31, 2018		$—

F-55

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

The Company generally recognizes goodwill attributable to the assembled workforce and expected synergies among the operations of the acquired entities and the Company’s existing operations. In the case of the Company’s acquisitions of operating companies, synergies generally have resulted from the elimination of duplicative facilities and personnel costs and cross selling opportunities among the Company’s existing customer base. Goodwill is generally deductible for federal income tax purposes when a business combination is treated as an asset purchase. Goodwill is generally not deductible for federal income tax purposes when the business combination is treated as a stock purchase.

5. Prepaid Expenses and Other

Prepaid expenses and other generally includes items for which the Company has paid the related vendor or supplier in advance of receiving the related service. Prepaid expenses and other at March 31, 2018 and 2017, consisted of the following:


	March 31, 2018		March 31, 2017
Prepaid expenses	$	108,519	$	112,667
Inventory		9,474		7,062
Notes and other receivables		13,219		12,762
Other current assets		14,945		7,859

Total prepaid expenses and other	$	146,157	$	140,350

6. Property and Equipment

Property and equipment as of March 31, 2018 and 2017, consisted of the following:


	March 31, 2018			March 31, 2017
Land	$	7,638			7,638
Buildings and leasehold improvements		138,005			142,147
Computer equipment		209,593			196,785
Production equipment		33,740			26,253
Office equipment, furniture and fixtures		59,923			57,244
Construction in process		26,474			16,992

		475,373			447,059
Less accumulated depreciation		(307,873	)		(268,015	)

Property and equipment, net	$	167,500			179,044

Depreciation expense was $39,855 and $4,280 for the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively.

F-56

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

7. Goodwill and Intangible Assets

The following table presents the changes in the carrying amount of goodwill for the indicated periods:


	Software and Analytics		Network Solutions		Technology-enabled Services		Total
Balance at June 17, 2016 (inception)	$	—	$	—	$	—	$	—
Carrying value of contributed goodwill		1,818,957		907,517		522,245		3,248,719

Balance at March 31, 2017	$	1,818,957	$	907,517	$	522,245	$	3,248,719
Acquisitions		88,924		—		—		88,924
Effects of foreign currency		6,515		—		—		6,515
Other		—		675		—		675

Balance at March 31, 2018	$	1,914,396	$	908,192	$	522,245	$	3,344,833

Intangible assets subject to amortization at March 31, 2018 consisted of the following:


	Weighted Average Remaining Life		Gross Carrying Amount		Accumulated Amortization			Net
Customer relationships		11.0	$	2,242,210	$	(861,017	)	$	1,381,193
Tradenames		4.2		34,998		(17,920	)		17,078
Non-compete agreements		0.6		24,190		(19,539	)		4,651
Data sublicense agreement		—		—		—			—
Technology-based intangible assets		4.4		344,660		(295,022	)		49,638
Other		0.3		6,413		(4,131	)		2,282

Total			$	2,652,471	$	(1,197,629	)	$	1,454,842

Intangible assets subject to amortization as of March 31, 2017 consisted of the following:


	Weighted Average Remaining Life		Gross Carrying Amount		Accumulated Amortization			Net
Customer relationships		12.9	$	2,240,943	$	(739,056	)	$	1,501,887
Tradenames		4.1		31,799		(14,738	)		17,061
Non-compete agreements		0.8		43,982		(30,167	)		13,815
Data sublicense agreement		0.5		31,000		(28,367	)		2,633
Technology-based intangible assets		3.9		340,170		(266,251	)		73,919
Other		3.0		841		(433	)		408

Total			$	2,688,735	$	(1,079,012	)	$	1,609,723

Amortization expense was $174,119 and $16,582 for the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively.

F-57

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

Aggregate future amortization expense for intangible assets is estimated to be:


2019	$	145,294
2020		135,268
2021		130,567
2022		120,288
2023		111,728
Thereafter		811,697

	$	1,454,842

8. Other Noncurrent Assets, Net

Other noncurrent assets as of March 31, 2018 and 2017 consisted of the following:


	March 31, 2018		March 31, 2017
Deferred tax asset- noncurrent	$	34,738	$	8,931
Capitalized software developed for sale, net		48,826		45,272
Capitalized software developed for internal use, net		166,616		104,325
Deferred loan costs		9,792		12,292
Interest rate cap agreements		11,127		5,291
Other noncurrent assets		60,941		44,614

Total other noncurrent assets	$	332,040	$	220,725

Amortization expense for capitalized software developed for internal use was $64,389 and $5,686 for the year ended March 31, 2018 and for the period from June 17, 2016 (inception) to March 31, 2017, respectively.

Changes in the carrying amount of capitalized software developed for sale, net, which is included in Other noncurrent assets in the accompanying consolidated balance sheet, were as follows:


	March 31, 2018			March 31, 2017
Balance at beginning of period	$	45,272		$	—
Amounts contributed		—			45,416
Amounts capitalized		21,096			1,330
Amortization expense		(18,303	)		(1,505	)
Other		761			31

Balance at end of year	$	48,826		$	45,272

F-58

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

9. Accrued Expenses

Accrued expenses generally represent items for which the Company has received a service from a vendor in advance of being invoiced for that service. Accrued expenses as of March 31, 2018 and 2017 consisted of the following:


	March 31, 2018		March 31, 2017
Customer deposits	$	35,911	$	27,986
Accrued compensation		113,903		134,770
Accrued outside services		28,614		25,848
Accrued insurance		12,688		13,616
Accrued income, sales and other taxes		13,936		10,751
Accrued interest		6,877		5,530
Interest rate cap agreements		—		6,520
Current portion of tax receivable agreement obligations to related parties		25,003		980
Pass-through payments		6,498		8,285
Other accrued liabilities		85,902		61,769

	$	329,332	$	296,055

10. Long-Term Debt

The Company’s long-term indebtedness is comprised of a senior secured term loan facility (the “Term Loan Facility”), a revolving credit facility (the “Revolving Facility”; together with the Term Loan Facility, the “Senior Credit Facilities”), and 5.75% senior notes due 2025 (the “Senior Notes”).

Long-term debt as of March 31, 2018 and 2017, consisted of the following:


	March 31, 2018			March 31, 2017
Senior Credit Facilities
$5,100 million Term Loan Facility, due March 1, 2024, net of unamortized discount of $107,670 and $124,047 at March 31, 2018 and March 31, 2017, respectively (effective interest rate of 4.16%)	$	4,941,330		$	4,975,953
$500 million Revolving Facility, expiring March 1, 2022, and bearing interest at a variable interest rate		—			—
Senior Notes
$1,000 million 5.75% Senior Notes due March 1, 2025, net of unamortized discount of $22,843 and $25,400 at March 31, 2018 and March 31, 2017, respectively (effective interest rate of 6.15%)		977,157			974,600
Obligation under data sublicense agreement		—			3,074
Other		2,393			5,468
Less current portion		(53,393	)		(57,149	)

Long-term debt	$	5,867,487		$	5,901,946

F-59

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

Senior Credit Facilities

The Senior Credit Facilities provide the Company, through certain of its subsidiaries, with the right at any time to request additional term loan tranches and/or term loan increases, increases in the revolving commitments and/or additional revolving credit facilities up to the sum of (i) (a) the greater of (I) $1,080.0 million and (II) an amount equal to 100.0% of EBITDA for the most recently ended four consecutive fiscal quarter period in respect of which financial statements are available, plus (b) certain voluntary prepayments, repurchases, redemptions and other retirements of indebtedness and commitments under our Senior Credit Facilities, incremental equivalent debt, and refinancings thereof, plus (ii) an additional aggregate amount such that, after giving pro forma effect to such incurrence, (x) if such additional amounts are secured on a pari passu basis with the first lien obligations under our Senior Credit Facilities, our consolidated first lien net leverage ratio does not exceed 4.90 to 1.00, (y) if such additional amounts are secured on a junior lien basis to the first lien obligations under our Senior Credit Facilities, our consolidated secured net leverage ratio does not exceed 5.75 to 1.00 and (z) if such additional amounts are unsecured, either (I) our consolidated total net leverage ratio does not exceed 6.00 to 1.00 or (II) the Company could incur at least $1.00 of additional indebtedness under a consolidated interest coverage ratio test under our Senior Credit Facilities of 2.00 to 1.00. The lenders under the Senior Credit Facilities will not be under any obligation to provide any such incremental commitments or loans, which are uncommitted, and any such addition of or increase in commitments or loans will be subject to obtaining commitments and certain customary conditions precedent set forth in the Company’s Senior Credit Facilities. The applicable margin for loans under the Term Loan Facility is subject to reduction from and after a Qualified IPO (as defined in the Senior Credit Facilities).

Borrowings under the Senior Credit Facilities bear interest at a rate equal to, at the Company’s option, either (i) LIBOR for the relevant interest period, adjusted for statutory reserve requirements (which is subject, solely in the case of the Term Loan Facility, to a floor of 1.00% per annum and, solely in the case of the Revolving Facility, to a floor of 0.00% per annum), plus an applicable margin or (ii) a base rate equal to the highest of (a) the rate of interest in effect as publicly announced by the administrative agent as its prime rate, (b) the federal funds effective rate plus 0.50% and (c) adjusted LIBOR for an interest period of one month plus 1.00% (which may be subject, solely in the case of the Term Loan Facility, to a floor of 2.00% per annum), in each case, plus an applicable margin. The applicable margin for loans under the Revolving Facility is subject to reduction after the completion of the Company’s first full fiscal quarter after the closing of its Senior Credit Facilities based upon its consolidated first lien net leverage ratio as well as following a Qualified IPO.

In addition to paying interest on outstanding principal under the Senior Credit Facilities, the Company will be required to pay a commitment fee of 0.50% per annum (which is subject to a decrease to 0.375% per annum after the completion of its first full fiscal quarter after the closing of its Senior Credit Facilities based upon its consolidated first lien net leverage ratio) to the lenders under the Revolving Facility in respect of the unutilized commitments thereunder. The Company must also pay customary letter of credit fees and an annual administrative agency fee.

The Senior Credit Facilities requires the Company to prepay outstanding term loans, subject to certain exceptions, with:

•

50% of the Parent Borrower’s (as defined in the Senior Credit Facilities) annual Excess Cash Flow (as defined in the Senior Credit Facilities) commencing with the first full fiscal year completed after the closing of the Senior Credit Facilities (which percentage will be reduced to 25% and 0% if the Company achieves and maintain (as of the end of the applicable fiscal year) specified consolidated first lien net leverage ratios), subject to certain credits and exceptions;

•

100% of the net cash proceeds of non-ordinary course asset sales or other dispositions of property, including insurance condemnation proceeds (which percentage will be reduced to 50%, 25% and 0% if

F-60

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

the Company achieves and maintain specified consolidated first lien net leverage ratios), subject to certain exceptions, in excess of a minimum amount threshold set forth in the Senior Credit Facilities and subject to our right to reinvest the proceeds within a time period set forth in the Senior Credit Facilities; and

•

The foregoing mandatory prepayments will be applied, subject to certain exceptions, to the term loans outstanding under the Senior Credit Facilities then outstanding as directed by the Parent Borrower.

The Company may voluntarily, in minimum amounts set forth in the Senior Credit Facilities, repay outstanding loans or reduce outstanding commitments under the Senior Credit Facilities at any time without premium or penalty (other than, subject to certain exceptions, a 1.00% premium payable on the amount of loans under the Term Loan Facility repaid or refinanced with the primary purpose of reducing the all-in yield of the Term Loan Facility (or any amendment with the same effect) on or prior to the six-month anniversary of closing of the Senior Credit Facilities), subject to reimbursements of the lenders’ redeployment costs actually incurred in the case of a prepayment of LIBOR borrowings prior to the last day of the relevant interest period. The foregoing voluntary prepayments may be applied to the scheduled installments of principal of the Term Loan Facility in such order as the Parent Borrower shall direct and applied to any class of loans under the Senior Credit Facilities as the Parent Borrower shall direct.

The Term Loan Facility amortizes in equal quarterly installments in aggregate annual amounts equal to 1.00% of the principal amount of the Term Loan Facility outstanding as of the date of the closing of the Senior Credit Facilities, with the balance being payable at maturity. Principal amounts outstanding under the Revolving Facility are due and payable in full at maturity.

All obligations of the borrowers under the Senior Credit Facilities and under any swap agreements and cash management arrangements that are entered into by the borrowers or any of their restricted subsidiaries and that, in either case, are provided by any lender or agent party to the Senior Credit Facilities or any of their respective affiliates, and the guarantees of such obligations, are secured, subject to permitted liens and other exceptions, by substantially all of the assets of the borrowers and each guarantor, including but not limited to: (i) a perfected pledge of all of the capital stock issued by the parent borrower and each direct wholly owned domestic restricted subsidiary of the borrowers or any subsidiary guarantor (subject to certain exceptions) and up to 65% of the capital stock issued and outstanding by each direct wholly owned foreign restricted subsidiary of the borrowers or any subsidiary guarantor (subject to certain exceptions) and (ii) perfected security interests in and mortgages on substantially all tangible and intangible personal property and material owned real property of the borrowers and the subsidiary guarantors (subject to certain exceptions and exclusions).

F-61

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

The Senior Credit Facilities contain a number of covenants that, among other things, restrict, subject to certain exceptions, the Company’s ability to:

•

incur additional indebtedness and guarantee indebtedness;

•

create or incur liens;

•

engage in mergers or consolidations;

•

sell, transfer or otherwise dispose of assets;

•

make investments, acquisitions, loans or advances;

•

pay dividends and distributions or repurchase our capital stock;

•

prepay redeem, or repurchase any subordinated indebtedness;

•

enter into agreements which limit the Company’s ability to incur liens on our assets for the benefit of the Senior Credit Facilities or that restrict the ability of non-guarantor restricted subsidiaries to pay dividends or make other payments to the Company;

•

enter into certain transactions with our affiliates; and

•

change the passive holding company status of the direct parent of the Parent Borrower.

In addition, with respect to the Revolving Facility, the documentation governing the Senior Credit Facilities requires the Company to maintain, as of the last day of each four fiscal quarter period, a maximum consolidated first lien net leverage ratio only if, as of the last day of any fiscal quarter, revolving loans under the Revolving Facility (including swing-line loans, but excluding undrawn letters of credit up to $100.0 million and other letters of credit that have been cash-collateralized or otherwise backstopped) are outstanding in an aggregate amount greater than 35% of the total commitments under the Revolving Facility at such time. The financial maintenance covenant is subject to customary equity cure rights and may be amended or waived with the consent of the lenders holding a majority of the commitments under the Revolving Facility. The Senior Credit Facilities will also contain, in addition to the negative covenants described above, certain customary affirmative covenants and events of default, including upon a change of control.

As of March 31, 2018, the Company was in compliance with all of the applicable covenants under the Senior Credit Facilities.

Senior Notes

The Senior Notes bear interest at an annual rate of 5.75% with interest payable semi-annually on March 1 and September 1 of each year and mature on March 1, 2025.

The Company may redeem the Senior Notes, in whole or in part, at any time on or after March 1, 2020 at the applicable redemption price, plus accrued and unpaid interest.

At any time prior to March 1, 2020, the Company may, at its option and on one or more occasions, redeem up to 40% of the aggregate principal amount of the Senior Notes at a redemption price equal to 105.75% of the aggregate principal amount, plus accrued and unpaid interest, with the net cash proceeds of certain equity offerings. At any time prior to March 1, 2020, the Company may redeem the Senior Notes, in whole or in part, at its option and on one or more occasions, at a redemption price equal to 100% of the principal amount, plus an “applicable premium”, as defined in the governing Senior Credit Facilities, and accrued and unpaid interest.

F-62

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

If the Company experiences specific kinds of changes in control, it must offer to purchase the Senior Notes at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest.

The Senior Notes are senior unsecured obligations and rank equally in right of payment with all of the Company’s existing and future indebtedness and senior in right of payment to all of its existing and future subordinated indebtedness. The Company’s obligations under the Senior Notes are guaranteed on a senior basis by all of its existing and subsequently acquired or organized wholly-owned United States restricted subsidiaries that guarantee the Senior Credit Facilities. The Senior Notes and the related guarantees are effectively subordinated to the Company’s existing and future secured obligations and that of its affiliate guarantors to the extent of the value of the collateral securing such obligations, and are structurally subordinated to all existing and future indebtedness and other liabilities of any of the Company’s subsidiaries that do not guarantee the Senior Notes.

The indenture governing the Senior Notes (the “Indenture”) contains customary covenants that restrict the ability of the Company and its restricted subsidiaries, subject to certain exceptions, to:

•

pay dividends on capital stock or redeem, repurchase or retire capital stock of the Company;

•

incur additional indebtedness or issue certain capital stock;

•

incur certain liens;

•

make investments, loans, advances and acquisitions;

•

consolidate, merge or transfer all or substantially all of their assets and the assets of their subsidiaries;

•

prepay subordinated debt;

•

engage in certain transactions with affiliates; and

•

enter into agreements restricting the subsidiaries’ ability to pay dividends.

The Indenture also contains certain customary affirmative covenants and events of default.

As of March 31, 2018, the Company was in compliance with all of the applicable covenants under the Senior Notes.

Obligation Under Data Sublicense Agreement

In 2009 and 2010, Legacy CHC acquired certain additional rights to specified uses of its data from the former owner of a portion of its business in order to broaden its ability to pursue business intelligence and data analytics solutions for payers and providers. Legacy CHC previously licensed exclusive rights to this data to the former owner of a portion of its business. In connection with these data rights acquisitions, Legacy CHC recorded amortizable intangible assets and corresponding obligations at inception based on the present value of the scheduled annual payments through 2018, which totaled $65,000 in the aggregate (approximately $3,500 remained payable at March 31, 2017). In connection with a prior business combination, Legacy CHC was required to adjust this obligation to its fair value. The Company assumed the obligation of this agreement in connection with the Transactions.

Other

From time to time, the Company enters into deferred financing arrangements with certain vendors. The obligations under such arrangements are recorded at the present value of the scheduled payments. Such future payments totaled approximately $2,393 at March 31, 2018.

F-63

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

Aggregate Future Maturities

The aggregate amounts of future maturities under long-term debt arrangements are as follows:


2019	$	53,393
2020		51,000
2021		51,000
2022		51,000
2023		51,000
Thereafter		5,794,000

	$	6,051,393

11. Interest Rate Cap Agreements

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate cap agreements as part of its interest rate risk management strategy.

In March 2016 and 2017, Legacy CHC and the Company, respectively, executed annuitized interest rate cap agreements with a combined notional amount of $650,000 and $750,000, respectively to limit the exposure of the variable component of interest rates under the then existing term loan facility or future variable rate indebtedness to a maximum of 1.25% and 1.0%, respectively, beginning in March 2017 and expiring in March 2020. As of March 31, 2018, the Company’s outstanding interest rate cap agreements were designated as cash flow hedges of interest rate risk and were determined to be highly effective.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the twelve months subsequent to March 31, 2018, the Company estimates that an additional $4,559 will be reclassified as a reduction to interest expense.

F-64

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

The following table summarizes the fair value of the Company’s derivative instruments at March 31, 2018 and 2017:


	Fair Values of Derivative Financial Instruments Asset (Liability)
Derivative financial instruments designated as hedging instruments:	Balance Sheet Location		March 31, 2018		March 31, 2017
Interest rate cap agreements		Prepaid and other current assets	$	6,062	$	—
Interest rate cap agreements		Other noncurrent assets, net	$	11,127	$	5,291
Interest rate cap agreements		Accrued expenses	$	—	$	(6,520	)

			$	17,189	$	(1,229	)

Tabular Disclosure of the Effect of Derivative Instruments on the Statement of Operations

The effect of the derivative instruments on the accompanying consolidated statements of operations for the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, is summarized in the following table:


	Year Ended March 31, 2018		Period from June 17, 2016 (inception) to March 31, 2017
Derivative financial instruments in cash flow hedging relationships:
Gain/ (loss) related to effective portion of derivative financial instruments recognized in other comprehensive loss	$	10,604	$	(3,015	)

Gain/ (loss) related to effective portion of derivative financial instruments reclassified from accumulated other comprehensive loss to interest expense	$	1,110	$	(3	)

Gain/ (loss) related to ineffective portion of derivative financial instruments recognized in interest expense	$	1,073	$	554

Credit Risk-related Contingent Features

The Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company also could be declared in default on its derivative obligations.

The Company does not offset any derivative financial instruments, and the derivative financial instruments are not subject to collateral posting requirements.

12. Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

F-65

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

summarize these items as of March 31, 2018 and 2017, aggregated by the level in the fair value hierarchy within which those measurements fall.


Description	Balance at March 31, 2018			Quoted in Markets Identical (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Interest rate cap agreements	$	17,189		$	—	$	17,189	$	—
Contingent consideration obligations		(4,000	)		—		—		(4,000	)

Total	$	13,189		$	—	$	17,189	$	(4,000	)


Description	Balance at March 31, 2017			Quoted in Markets Identical (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Interest rate cap agreements	$	(1,229	)	$	—	$	(1,229	)	$	—

Total	$	(1,229	)	$	—	$	(1,229	)	$	—

The valuation of the Company’s derivative financial instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair value of the interest rate cap agreements are determined using the market standard methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments) using the overnight index swap rate as the discount rate.

The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements and measures the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs to evaluate the likelihood of default by itself and by its counterparties. As of March 31, 2018, the Company determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The valuation of the Company’s contingent consideration obligations was provisionally (subject to receipt of a final valuation) determined using a probability weighted discounted cash flow method. This analysis reflects the contractual terms of the purchase agreements (e.g., minimum and maximum payments, length of earn-out periods, manner of calculating any amounts due, etc.) and utilizes assumptions with regard to future cash flows, probabilities of achieving such future cash flows and a discount rate. Significant increases with respect to assumptions as to future revenue and probabilities of achieving such future revenue would have resulted in a higher fair value measurement while an increase in the discount rate would have resulted in a lower fair value measurement.

F-66

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

The table below presents a reconciliation of the fair value of the liabilities that use significant unobservable inputs (Level 3):


	Year Ended March 31, 2018			Period from June 17, 2016 (inception) to March 31, 2017
Balance at beginning of period	$	—		$	—
Issuance of contingent consideration		(4,000	)		—

Balance at end of period	$	(4,000	)	$	—

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

In connection with the combining of the businesses in connection with the Transactions, the Company identified certain redundancies among the combined software and analytics segment product portfolio. In one such instance, one of the contributed businesses’ software products had been fully developed and in the other further development would be required. As a result, the Company determined to cease future development of this redundant internal use software product and recognized an impairment charge to reduce the carrying value of the asset, previously classified within Other noncurrent assets on the accompanying consolidated balance sheet, to zero in March 2017. Additionally, because this abandoned software project included a license that required annual maintenance expenditures for future years for which the Company does not expect to derive any economic benefit, the Company recognized a liability for this exit cost with a fair value of $19,137 at March 1, 2017 (total expected remaining payments of $22,913). This fair value (a Level 3 measurement) was determined by use of a discounted cash flow model and an assumed discount rate of 7.75% which was based upon a spread above the rate underlying the Company’s senior notes. The related losses have been included with the Impairment of long-lived assets and related costs caption within the accompanying consolidated statement of operations.

Assets and Liabilities Measured at Fair Value upon Initial Recognition

The carrying amount and the estimated fair value of financial instruments held by the Company as of March 31, 2018 and 2017, were:


	March 31, 2018				March 31, 2017
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents	$	48,899	$	48,899	$	185,670	$	185,670
Accounts receivable	$	705,544	$	705,544	$	696,780	$	696,780
Senior Credit Facilities (Level 2)	$	4,941,330	$	5,010,495	$	4,975,953	$	5,093,625
Senior Notes (Level 2)	$	977,157	$	985,000	$	974,600	$	1,008,750

The carrying amounts of cash equivalents and accounts receivable approximate fair value because of their short-term maturities. The fair value of long-term debt is based upon market quotes and trades by investors in partial interests of these instruments.

F-67

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

13. Commitments

Lease Commitments

The Company recognizes lease expense on a straight-line basis, including predetermined fixed escalations, over the initial lease term including reasonably assured renewal periods from the time that the Company controls the leased property.

The Company leases its offices and other facilities under operating lease agreements that expire at various dates through 2027. Future minimum lease commitments under these non-cancellable lease agreements as of March 31, 2018 were as follows:


2019	$	39,844
2020		32,681
2021		24,704
2022		21,559
2023		14,165
Thereafter		14,168

Total minimum lease payments	$	147,121

The Company expects to receive $5,600 of minimum rentals in the future under noncancelable subleases as of March 31, 2018. Total rent expense for all operating leases was $54,367 and $4,267 for the year ended March 31, 2018 and for the period from June 17, 2016 (inception) to March 31, 2017.

Other Commitments

In February 2018, the Company, through one of its wholly-owned subsidiaries, entered into an Amended and Restated Master Services Agreement (the “Agreement”) with Wipro, LLC and Wipro Limited (jointly, “Wipro”). The term of the Agreement is ten years, with the Company having three one-year renewal options. The Company has committed to purchase services from Wipro through the initial ten-year term of the Agreement (the “Minimum Commitment”) in an aggregate amount of $1 billion. Under the Agreement, Wipro will globally provide the Company with professional services for information technology (including infrastructure, application development and maintenance), business process outsourcing, call center services and similar services. As the Company orders specific services under the Agreement the parties will execute Statements of Work describing the specific scope of the services to be performed by Wipro. The amount of the Minimum Commitment may be reduced on the occurrence of certain events, some of which also provide the Company the right to terminate the Agreement. If the Company has not fully satisfied the Minimum Commitment (as reduced) by the end of the initial ten-year term, it is required to pay Wipro 25% of the shortfall.

In connection with the Agreement, the Company expects to incur significant severance costs related to the transition of services currently performed by the Company to Wipro. However, pending execution of future Statements of Work, the Company cannot reliably estimate the timing or amount of such future severance costs. Accordingly, the Company’s balance sheet reflects no accrual for such costs associated with the Agreement.

14. Legal Proceedings

In addition to commitments and obligations in the ordinary course of business, the Company is subject to various claims with customers and vendors, pending and potential legal actions for damages, investigations relating to governmental laws and regulations and other matters arising out of the normal conduct of its business.

F-68

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

Government Subpoenas and Investigations

From time to time, the Company receives subpoenas or requests for information from various government agencies. The Company generally responds to such subpoenas and requests in a cooperative, thorough and timely manner. These responses sometimes require time and effort and can result in considerable costs being incurred by the Company. Such subpoenas and requests also can lead to the assertion of claims or the commencement of civil or criminal legal proceedings against the Company and other members of the health care industry, as well as to settlements.

Other Matters

Additionally, in the normal course of business, the Company is involved in various claims and legal proceedings. While the ultimate resolution of these matters has yet to be determined, the Company does not believe that it is reasonably possible that their outcomes will have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

15. Members’ Deficit

The Third Amended and Restated Limited Liability Company Agreement of the Company entered into at the time of the Transactions among the McKesson Members (as defined in the LLC Agreement), the Company, certain subsidiaries of the Company and Change Healthcare Inc. (the “LLC Agreement”) governs the rights and obligations of the McKesson Members and Change Healthcare Inc. in their roles as members of the Company and owners of the Units (as defined in the LLC Agreement).

Board

Except as expressly provided in the LLC Agreement, the management of the business and affairs of the Company are vested in a board of directors (the “Board”) comprised of not more than ten members. Each of the McKesson Members, on the one hand, and Change Healthcare Inc., on the other hand, is entitled to designate up to four directors of the Board, of whom three directors may be employees or affiliates of the designating member, and one director may not be an employee or affiliate of the designating member and must otherwise be independent of the Company. The ninth director on the Board will be the Company’s chief executive officer and the tenth director on the Board will be an independent director that is mutually designated by the McKesson Members and Change Healthcare Inc. The number of Board designees of the McKesson Members and Change Healthcare Inc. is subject to reduction based on the Units ownership level of the corresponding Company member. Neither the McKesson Members nor Change Healthcare Inc. shall have the right to designate any directors to the Board once their respective ownership of Units drops below 10% of the Units then outstanding.

Approval Rights of the Members

Pursuant to the LLC Agreement, certain actions by the Company will require the prior written consent of both the McKesson Members and Change Healthcare Inc. These matters include, without limitation: (i) materially changing the line of business of the Company; (ii) the appointment, removal or replacement of the Company’s chief executive officer or chairman of the Board; (iii) approving the Company’s annual operating plan and budget; (iv) entering into certain material agreements, including affiliate transactions (subject to certain exceptions); (v) declaring or paying any dividend, redeeming or repurchasing equity securities or issuing or authorizing the issuance of equity securities of the Company; (vi) incurring indebtedness (subject to certain exceptions); (vii) a change of control of the Company, or the sale, lease or disposal of assets of the Company outside the ordinary course of business (other than expressly permitted by

F-69

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

the LLC Agreement including pursuant to drag along rights set forth therein); (viii) any initial public offering, other than a Qualified IPO (as defined below); (ix) terminating, liquidating or dissolving the Company; and (x) any amendment to, modification of, or waiver under the Contribution Agreement or the Transaction Documents (as defined in the LLC Agreement) by the Company. The foregoing approval rights of the members of the Company will terminate, as to each of the McKesson Members and Change Healthcare Inc., at such time as the McKesson Members (together with their permitted transferees) no longer own, directly or indirectly, 10% or more of the Units initially held by the McKesson Members (directly or indirectly through ownership of common stock of Change Healthcare Inc.).

Special Allocations

Generally, pursuant to the LLC Agreement, the profits and losses of the Company will be allocated among the members of the Company in proportion to the number of Units held by them. However, depreciation and amortization expenses related to certain assets transferred to the Company by one of the McKesson Members at the time of the Transactions, as well as associated income tax deductions, will be allocated solely to the McKesson Member that transferred the applicable asset to the Company at the time of the Transactions.

Qualified Initial Public Offering

Pursuant to the LLC Agreement, the parties agreed to cooperate in good faith and use their reasonable best efforts to consummate, as promptly as practicable following the Contribution Agreement closing, but in any event within 18 months of the Contribution Agreement closing (provided that the deadline may be extended by a committee of the Board to 24 months from the Contribution Agreement closing), (i) a firm commitment underwritten public offering registered under the Securities Act of 1933, as amended, of Change Healthcare Inc. common stock representing at least 10% of the beneficial ownership of the Company’s outstanding equity interests (after giving effect to such offering) and (ii) pursuant to which Change Healthcare Inc. would be listed for trading on The New York Stock Exchange, the Nasdaq Stock Market, or any other securities exchange or quotation system agreed to by the McKesson Members and Change Healthcare Inc. (a “Qualified IPO”) (Change Healthcare Inc., following such Qualified IPO, the “PubCo”). In March 2018, the parties agreed to extend the time period for consummating a Qualified IPO from 18 months to 24 months from the Contribution Agreement closing.

In addition, if a Qualified IPO has not been consummated within 24 months of the Contribution Agreement Closing (the “Initial Period”), then either the McKesson Members or Change Healthcare Inc. may cause the Company and the other members to consummate a Qualified IPO (an “IPO Demand”) within a period of up to six months following the expiration of the Initial Period (the “IPO Preference Period”).

Liability

Pursuant to the LLC Agreement, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member, director or Company officer shall be obligated personally for any such debt, obligation or liability of the Company or for any losses of the Company solely by reason of being a Member or acting as a director or Company officer.

16. Incentive Compensation Plans

Equity Compensation Plans

In connection with the Transactions, Change Healthcare Inc. assumed the Legacy CHC Equity Plan and amended it as the Equity Plan. Pursuant to the Equity Plan, 300,000 shares of Change Healthcare Inc.’s common

F-70

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

stock have been reserved for the issuance of equity awards to employees, directors and consultants of the Company (i.e., Change Healthcare Inc.’s equity method investee) and its affiliates.

Change Healthcare Inc. grants equity-based awards of Change Healthcare Inc. common stock to certain employees, officers and directors of Change Healthcare Inc., eRx Network and the Company (collectively, the “Company Group”) under terms of awards that are described below. Grants under the Equity Plan consist of one or a combination of time-vested and/or performance-based awards. In most circumstances, the shares issued upon exercise of the equity awards are subject to certain call rights by Change Healthcare Inc. in the event of termination of service of an award holder and put rights by the award holder or his/her beneficiary in the event of death or disability. Change Healthcare Inc., through the Company, expects to repurchase shares of common stock held by former employees no earlier than six months following the issuance of such shares of Change Healthcare Inc. common stock. As of March 31, 2018, Change Healthcare Inc. expects to repurchase approximately 1,900 such shares of Change Healthcare Inc. common stock.

Replacement Awards

In connection with the Transactions, Change Healthcare Inc. was obligated to either assume obligations under Legacy CHC’s prior equity award plans or to issue substantially equivalent equity awards. Change Healthcare Inc. elected to issue replacement awards with vesting and exercisability terms generally identical to the awards which were replaced. Because the stock of eRx Network and the 2017 Tax Receivable Agreement (as described in Note 19) were distributed to Legacy CHC stockholders immediately prior to the Transactions, certain participants in the Legacy CHC Equity Plan also received equity awards in eRx Network and the right to receive a cash payment related to a proportionate value of the 2017 Tax Receivable Agreement in connection with the Transactions.

These replacement awards granted under the Equity Plan consisted of one, or a combination of, the following time-vested awards and/or exit-vesting awards.

Vested Awards : Vested awards consist of the following:

(i)

Tier I Time-Vesting Awards became immediately vested in connection with the Transactions, 54.4% of which were liquidated for cash upon the closing of the Transactions. The remaining 45.6% of such options were exchanged for vested options of Change Healthcare Inc. with exercise prices and expiration terms that correspond with those of the original grant to Legacy CHC Equity Plan participants (“Replacement Time-Vesting Options”). These Legacy CHC Equity Plan participants also received vested options in eRx Network with exercise prices equal to 25% of the fair value of the eRx Network stock and a cash payment related to the proportionate value of the 2017 Tax Receivable Agreement at the time of the Transactions.

(ii)

Tier II Time-Vesting Awards became immediately vested in connection with the Transactions but because the original exercise price of these awards was greater than the fair value of the stock at the time of the Transactions, none of the awards were liquidated and they were replaced with vested Replacement Time-Vesting Options with an exercise price equal to the original exercise price as reduced by the fair value of one share of eRx Network stock.

(iii)

2.0x Exit-Vesting Awards became immediately vested in connection with the Transactions as a result of meeting the specified performance and market conditions outlined in the original award terms. As with the Tier I Time-Vesting Awards, 54.4% were liquidated for cash upon the closing of the Transactions. The remaining 45.6% of such options were exchanged for vested Replacement Time-Vesting Options with exercise prices and expiration terms that correspond with those of the

F-71

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

original grant to the Legacy CHC Equity Plan participants. The Legacy CHC Equity Plan participants also received vested options in eRx Network with exercise prices equal to 25% of the fair value of the eRx Network stock and a cash payment related to the proportionate value of the 2017 Tax Receivable Agreement at the time of the Transactions.

Unvested Awards : Certain awards granted by Legacy CHC contained conditions that were not satisfied at the time of the Transactions. These awards generally consisted of awards that vest subject to the employee’s continued employment through the date when Blackstone has sold at least 25% of the maximum number of Legacy CHC’s shares held by it (i.e., a liquidity event) and achieved specified rates of return that vary by award. In connection with the Transactions, these unvested equity awards were replaced with unvested restricted stock of Change Healthcare Inc. (“Replacement Exit-Vesting Restricted Stock”) with an aggregate intrinsic value and vesting conditions which were identical to the original Legacy CHC awards. Legacy CHC Equity Plan participants also received unvested restricted stock of eRx Network and a right, contingent upon vesting of the awards, to receive a future cash payment related to the proportionate value of the 2017 Tax Receivable Agreement at the time of the Transactions.

Restricted Share Units : Vesting of Legacy CHC restricted share units was not affected by the Transactions. 54.4% of the vested portion of such restricted share units were liquidated in connection with the Transactions and the remainder of the vested and unvested restricted share units were replaced with vested and unvested Change Healthcare Inc. restricted share units (“Replacement Restricted Share Units”) with terms identical to the original awards. Legacy CHC Equity Plan participants also received vested and unvested restricted share units of eRx Network and a right to receive a future cash payment upon vesting related to the proportionate value of the 2017 Tax Receivable Agreement at the time of the Transactions.

The following table summarized Replacement Award option activity for the year ended March 31, 2018:


	Replacement Time-Vesting Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at April 1, 2017		45,809		$	1,492		6.5	$	41,597
Granted		—			—		—		—
Exercised		(4,582	)		1,383		—		4,588
Expired		—			—		—		—
Forfeited		(2,720	)		1,739		—		1,873

Outstanding at March 31, 2018		38,507		$	1,488		5.4	$	35,137

Exercisable at March 31, 2018		38,507		$	1,488		5.4	$	35,137

McKesson Awards

McKesson has historically granted equity awards to its employees in the ordinary course of business. In connection with the Transactions, certain of these employees with McKesson equity awards became employees of the Company. Under the terms of the original awards, the awards would expire following the affected employees’ termination. In connection with the Transactions, McKesson modified certain of the awards to permit continued vesting of the current tranche of awards through May 2017 such that following the Transactions they are considered awards to non-employees. All other McKesson equity awards were immediately cancelled. Because these employees were required to render service to the Company in order to continue the vesting

F-72

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

through May 2017, the related compensation expense has been included in the accompanying condensed consolidated statement of operations. No incremental compensation was recognized in connection with the modification of the affected awards.

Time-Vesting Options

Time-vesting options were granted with an exercise price equal to the fair value of Change Healthcare Inc. common stock on the date of grant and generally vest in equal 25% installments on the first through fourth anniversary of the designated vesting start date, subject to the award holders continued employment through such vesting date. The Company estimates the fair value of the time-vesting options using the Black-Scholes option pricing model. As of March 31, 2018, unrecognized expense related to the time-vesting options was $44,330. This expense is expected to be recognized over a weighted average period of 3.0 years.

Exit-Vesting Options

Exit-vesting options were granted with an exercise price equal to the fair value of Change Healthcare Inc. common stock on the date of grant and vest, subject to the award holder’s continued employment through the vesting date, on the earlier to occur of the date that (i) affiliates of Blackstone sell 25% of the equity interests of the Company held by it on March 1, 2017 (the “Transaction Date”) at a specified weighted average price per share and McKesson distributes more than 50% of the equity interests of the Company held by it on the Transaction Date or (ii) McKesson and affiliates of Blackstone collectively sell more than 25% of the aggregate equity interests held by McKesson and Blackstone on the Transaction Date at a specified weighted average price per share.

The following table summarizes time-vesting and exit-vesting option activity for the year ended March 31, 2018:


	Awards						Weighted Average Exercise Price				Weighted Average Remaining Contractual Term				Aggregate Intrinsic Value
	Time- Vesting Options			Exit- Vesting Options			Time- Vesting Options		Exit- Vesting Options		Time- Vesting Options		Exit- Vesting Options		Time- Vesting Options		Exit- Vesting Options
Outstanding at April 1, 2017		—			—		$	—	$	—		—		—	$	—	$	—
Granted		63,610			63,610			2,400		2,400		9.6		9.6		—		—
Exercised		—			—			—		—		—		—		—		—
Expired		—			—			—		—		—		—		—		—
Forfeited		(11,021	)		(11,084	)		2,400		2,400		—		—		—		—

Outstanding at March 31, 2018		52,589			52,526			2,400		2,400		8.9		8.9		—		—

Exercisable at March 31, 2018		12,765			—		$	2,400	$	—		8.9		—	$	—	$	—

Restricted Share Units

During the year ended March 31, 2018, Change Healthcare Inc. granted 2,500 restricted share units (“RSUs”) which were scheduled to vest, subject to the employee’s continued employment, on March 31, 2019. In the event the employee was terminated by the Company without cause, by the employee for good reason or on account of the employee’s death or disability, the RSUs would immediately vest and become nonforfeitable. Settlement of these RSUs upon vesting could have occurred in Change Healthcare Inc. common stock, cash in an

F-73

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

amount equal to the fair market value of the number of shares that would otherwise be delivered upon the vesting date or any combination of Change Healthcare Inc. common stock or cash. In the event the Change Healthcare Inc. common stock were not publicly traded at the time of settlement, the employee could have elected to require Change Healthcare Inc. to settle such RSUs in cash. Because settlement of the RSUs in common stock was outside the control of Change Healthcare Inc., the RSUs were historically classified as liabilities in the consolidated balance sheets. Such awards were cancelled during 2018 following the resignation of the employee without good reason.

The following table summarizes the restricted share unit activity for the year ended March 31, 2018:


	Replacement Exit-Vesting Restricted Stock			Replacement Restricted Share Units			Restricted Share Units
Unvested at April 1, 2017		16,067			600			—
Granted		—			—			2,500
Canceled		(5,364	)		—			(2,500	)
Vested		—			(600	)		—

Unvested at March 31, 2018		10,703			—			—

The total fair value of shares vested during the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017 was $1,440 and $0, respectively.

Valuation Assumptions


Year Ended March 31, 2018:	Time-Vesting Options			Exit-Vesting Options			Replacement Exit-Vesting Restricted Stock
Weighted average fair value	$	1,194		$	826		$	1,509
Expected dividend yield		—	%		—	%		—	%
Expected volatility		52.15	%		52.08	%		57.61	%
Risk-free interest rate		2.67	%		2.72	%		2.40	%
Expected term (years)		5.47			6.22			3.00

Expected dividend yield—The Company is subject to limitations on the payment of dividends under its Senior Credit Facilities as further discussed in Note 10 to these consolidated financial statements. An increase in the dividend yield will decrease compensation expense.

F-74

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

Summary of Equity Compensation Expense

The Company recognized expense of $24,700 and $715 during the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. The Company recognized a deferred tax benefit of $5,520 for the year ended March 31, 2018. The Company recognized actual tax benefits of $2,174 from options exercised during the year ended March 31, 2018.

17. Retirement Plans and Other Postretirement Benefits

Defined Contribution Plans

Employees of the Company may participate in one of its 401k plans, which provide for matching contributions from the Company. Expenses related to these 401k plans were $16,828 and $1,379, for the year ended March 31, 2018 and for the period from June 17, 2016 (inception) to March 31, 2017.

Deferred Compensation Plans

Certain of the Company’s employees are eligible to participate in deferred compensation plans previously administered and sponsored by McKesson. Pursuant to these deferred compensation plans, certain executives and other highly compensated employees may defer a portion of their salaries and incentive compensation at their discretion.

The following table summarizes the liabilities related to this plan at March 31, 2018 and 2017:


Balance Sheet Location	March 31, 2018		March 31, 2017
Accrued expenses	$	707	$	998
Other long-term liabilities		13,790		11,129

	$	14,497	$	12,127

Post-employment Benefits

The Company generally offers post-employment benefits to its employees in the case of certain employee termination events consisting of severance and outplacement services. The extent of such benefits varies based on employee title and accumulates based on the respective employee’s years of service to the Company. Due to the episodic nature of the Company’s severance benefit history and the inability to reasonably predict future termination events, no accrual for accumulating severance benefits is accrued until the point that the payment of a severance benefit is probable and can be reasonably estimated. As of March 31, 2018 and 2017, the Company recognized liabilities related to these benefits in the amount of $9,336 and $8,553, respectively.

F-75

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

18. Income Taxes


	Year Ended March 31, 2018		Period from June 17, 2016 (inception) to March 31, 2017
Income (loss) before income tax provision (benefit)
Domestic	$	125,902	$	(125,884	)
Foreign		14,646		1,286

Total income (loss) before income tax provision (benefit)	$	140,548	$	(124,598	)

The Company is treated as a partnership for income tax purposes and is therefore not subject to U.S. federal income taxes and most state and local income taxes. Change Healthcare, Inc. and Change Healthcare Practice Management Solutions, Inc., both indirect wholly-owned subsidiaries of the Company, are subject to U.S. federal, state and local, and non-U.S. corporate income taxes.

The income tax provision (benefit) for the year ended March 31, 2018 and for the period from June 17, 2016 (inception) to March 31, 2017 was as follows:


	Year Ended March 31, 2018			Period from June 17, 2016 (inception) to March 31, 2017
Current:
Federal	$	4,617		$	537
State		1,178			296
Foreign		2,279			194

Current income tax provision (benefit)		8,074			1,027

Deferred:
Federal		(28,172	)		(35,674	)
State		(32,151	)		(6,259	)
Foreign		355			(100	)

Deferred income tax provision (benefit)		(59,968	)		(42,033	)

Total income tax provision (benefit)	$	(51,894	)	$	(41,006	)

F-76

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

The reconciliation between the federal statutory rate and the effective income tax rate is as follows:


	Year Ended March 31, 2018			Period from June 17, 2016 (inception) to March 31, 2017
Statutory U.S. federal tax rate		31.50	%		35.00	%
State income taxes (net of federal benefit)		(1.32	)		3.49
Income passed through to Members		(8.78	)		(10.64	)
Remeasurement of deferred tax assets and liabilities arising from the Tax Legislation		(42.95	)		—
Transition tax arising from the Tax Legislation		1.68			—
Fees and expenses related to the Transactions		—			1.97
Change in valuation allowance		(11.97	)		(2.38	)
Accretion and changes in estimate with related parties, net		(5.47	)		5.01
Other		0.39			0.46

Effective income tax rate		(36.92	)%		32.91	%

On December 22, 2017, H.R.1, also known as the Tax Legislation, was signed into law. The Tax Legislation significantly revises the U.S. corporate income tax by, among other things, lowering corporate income tax rates, placing limits on the utilization of net operating loss carryovers, implementing the territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries.

The Company has recognized a tax benefit for the impact of the revaluation of U.S. deferred tax assets and liabilities due to the federal corporate income tax rate reduction from 35% to 21%. In order to properly account for the blended tax rate in place for fiscal year 2018, the Company estimated the deferred tax assets and liabilities expected to reverse during the current fiscal year and applied a tax rate of 31.5%. All other deferred tax assets and liabilities are expected to reverse in fiscal year 2019 or later and were revalued at 21%.

Additionally, the Company has estimated its liability and included provisional amounts for the one-time transition tax as tax expense.

The enactment of the Tax Legislation resulted in an increase in income tax benefit of approximately $33,024 for the year ended March 31, 2018. A majority of the tax effects are the result of the change in the enacted rate causing a remeasurement of the U.S. federal deferred tax liabilities at the lower enacted corporate tax rate.

Tax benefits recognized during the year ended March 31, 2018 primarily related to the transition tax and rate change on net deferred tax assets and liabilities are considered provisional under SAB 118. The impact of the Tax Legislation may differ from this estimate, possibly materially, due to, among other things, changes in interpretations and assumptions the Company has made, guidance that may be issued, and actions the Company may take as a result of the Tax Legislation.

The Company will continue to refine its accumulated earnings and profit pools and the allocation of cash and non-cash earnings for purposes of calculating the transition tax liability. Additionally, net deferred tax assets were reevaluated as of the enactment date using estimated fiscal year 2018 utilization amounts and blended tax rates. The Company has not accounted for the tax impacts related to the Global Intangible Low Tax Income, Base Erosion Anti Abuse Tax, or Foreign Derived Intangible Income regimes or any of the other provisions of the Tax Legislation that are not effective until fiscal year 2019.

F-77

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

The Company will update the impact of the Tax Legislation throughout the measurement period until the matters above are finalized.

In addition to the Tax Legislation, the Company recognized a change in estimate of deferred tax assets during the year ended March 31, 2018 as a result of the finalization of a valuation of the 2017 Tax Receivable Agreement and other matters. These changes in estimate resulted in an income tax benefit of $8,790, for the year ended March 31, 2018. In addition, the Company recognized changes in its valuation allowances related to prior deferred tax assets as a result of the Company’s change in judgment resulting from transactions and tax planning strategies that provide for future taxable income in the relevant jurisdictions. This resulted in an income tax benefit of $16,819 for the year ended March 31, 2018. Together, these changes in estimate resulted in an income tax benefit of $25,609 for the year ended March 31, 2018.

At March 31, 2018, the Company had net operating loss carryforwards (tax effected) for federal, state and foreign income tax purposes of $104,068, $81,618 and $4,905, respectively, which expire from 2026 through 2037, 2019 through 2038 and 2028 through 2038, respectively. A portion of net operating loss carryforwards may be subject to an annual limitation regarding their utilization against taxable income in future periods due to the “change of ownership related to a legal entity simplification” provisions of the Internal Revenue Code and similar state provisions.

The Company believes that it is more likely than not that the benefit from certain state and foreign net operating loss carryforwards will not be realized. In recognition of this risk, the Company has provided a valuation allowance of $21,365 on the deferred tax assets related to these state and foreign net operating loss carryforwards. If or when recognized, the tax benefits related to any reversal of the valuation allowance on deferred tax assets as of March 31, 2018, will be accounted for as a reduction of income tax expense of $18,825.

The federal, state and foreign net operating loss carryforwards within the income tax returns filed included unrecognized tax benefits. The deferred tax assets recognized for those net operating losses are presented net of these unrecognized tax benefits.

F-78

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

Significant components of the Company’s deferred tax assets (liabilities) as of March 31, 2018 and 2017 were as follows:


	March 31, 2018			March 31, 2017
Deferred tax assets and (liabilities):
Depreciation and amortization	$	(316,448	)	$	(483,159	)
Accounts receivable		1,460			1,236
Fair value of interest rate cap agreements		(3,207	)		531
Accruals and reserves		19,225			28,019
Capital and net operating losses		193,824			285,032
Debt discount and interest		242			51
Equity compensation		12,616			17,520
Valuation allowance		(21,365	)		(48,531	)
Tax receivable agreements obligations to related parties		32,864			60,780
Other		2,793			4,716

Net deferred tax assets and (liabilities)	$	(77,996	)	$	(133,805	)

Reported as:
Non-current deferred tax assets		34,738			8,931
Non-current deferred tax liabilities		(112,734	)		(142,736	)

Net deferred tax liabilities	$	(77,996	)	$	(133,805	)

A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:


	Year Ended March 31, 2018			Period from June 17, 2016 (inception) to March 31, 2017
Beginning unrecognized benefit	$	60,079		$	60,079
Decreases from prior period tax positions		(8,984	)		—
Increases from prior period tax positions		—			—
Increases from current period tax positions		—			—
Decreases from settlements with taxing authorities		—			—

Ending unrecognized benefit	$	51,095		$	60,079

The Company had unrecognized tax benefits of $51,095 and $60,079 as of March 31, 2018 and 2017, respectively, which if recognized, $41,347 would affect the effective income tax rate.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The U.S. federal and state income tax returns for certain subsidiaries of the Company remain subject to examination by the Internal Revenue Service for the tax years 2006 and beyond, i.e., periods

F-79

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

prior to their ownership by the Company. With respect to state and local jurisdictions and countries outside of the United States, the Company and its subsidiaries are typically subject to examination for a number of years after the income tax returns have been filed. Although the outcome of tax audits is always uncertain, the Company believes that adequate amounts of tax, interest and penalties have been provided for in the accompanying consolidated financial statements for any adjustments that may be incurred due to state, local or foreign audits.

19. Tax Receivable Agreement Obligations to Related Parties

Upon the consummation of the Transactions, the Company assumed obligations related to certain tax receivable agreements (collectively, the “tax receivable agreements”) with our current and former owners. Because the assets and obligations of the predecessor businesses were contributed to the Company at their historical carrying values, these tax receivable agreements are subject to differing accounting models as explained below.

2009-2011 Tax Receivable Agreements

Under the 2009-2011 Tax Receivable Agreements assumed by the Company in connection with the Transactions, the Company is obligated to make payments to certain of the former Legacy CHC stockholders, equal to 85% of the applicable cash savings that the Company expects to realize as a result of tax attributes arising from certain previous transactions. As a result of the covered change of control with respect to the tax receivable agreements that occurred in connection with the Transactions, payments the Company makes under the 2009-2011 Tax Receivable Agreements are required to be calculated using certain valuation assumptions, including that the Company will have sufficient taxable income to use the applicable tax attributes and that certain of such tax attributes will be used by the Company on a pro rata basis from the date of the Transactions (or in certain cases from the date of certain previous transactions) through the expiration of the applicable tax attribute. Because the 2009-2011 Tax Receivable Agreements were previously subject to fair value measurement in connection with a prior business combination transaction, it is recognized at its initial fair value plus recognized accretion to date. In connection with the covered change in control, the change in assumed valuation assumptions resulted in a change in estimate (decrease to the pretax loss) of $26,475 for the period from June 17, 2016 (inception) to March 31, 2017, which is included in the accretion and changes in estimate with related parties, net caption within the accompanying statement of operations.

2017 Tax Receivable Agreement

The 2017 Receivable Agreement generally provides for the payment by Change Healthcare, Inc. (a subsidiary of the Company) to affiliates of Blackstone and Hellman & Friedman of 85% of the net cash tax savings realized (or, in certain circumstances, deemed to be realized) in periods ending on or after the Transactions as a result of certain net operating losses and certain other tax attributes of Change Healthcare, Inc. as of the date of the Transactions. The 2017 Tax Receivable Agreement is considered a loss contingency under FASB ASC Topic 450 and is reflected on the accompanying consolidated balance sheet at the amount that is both probable and reasonably estimable with future changes in this value being reflected within pretax income or loss.

McKesson Tax Receivable Agreement

F-80

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

the Contribution Agreement Closing and (ii) imputed interest deductions and certain other tax attributes arising from payments under the McKesson Tax Receivable Agreement. Because payments under the McKesson Tax Receivable Agreement are contingent upon McKesson’s ceasing to own at least 20% of the Company and such an event was not probable at inception of the McKesson Tax Receivable Agreement or as of March 31, 2018, no related obligation has been reflected on the accompanying consolidated balance sheet.

Based on facts and circumstances at March 31, 2018, the Company estimates the aggregate payments due under these tax receivable agreements to be as follows:


	2009-2011 Tax Receivable Agreements			2017 Tax Receivable Agreement			Total
2019	$	13,400		$	11,603		$	25,003
2020		25,416			1,190			26,606
2021		18,989			1,477			20,466
2022		19,027			3,019			22,046
2023		19,505			53,761			73,266
Thereafter		130,221			58,753			188,974

Gross expected payments		226,558			129,803			356,361
Less: Amounts representing discount		(108,195	)		—			(108,195	)

Total tax receivable agreement obligations due to related parties		118,363			129,803			248,166
Less: Current portion due (included in accrued expenses)		(13,400	)		(11,603	)		(25,003	)

Tax receivable agreement obligations due to related parties	$	104,963		$	118,200		$	223,163

The timing and/or amount of aggregate payments due may vary based on a number of factors, including the amount of net operating losses and income tax rates.

As a result of the finalization of a valuation of the 2017 Tax Receivable Agreement and other matters, for federal and state income tax return purposes, the Company recognized a change in estimate of $19,928 (decrease to operating income) during the year ended March 31, 2018 ($11,138 decrease to net income).

In addition, as discussed in Note 18, as a result of the Tax Legislation, the federal corporate income tax rate was reduced effective January 1, 2018. Because amounts due under the tax receivable agreements fluctuate with changes in tax rates, among other factors, the decrease in the federal corporate income tax rate resulted in a corresponding decrease in the tax receivable agreements obligations. During the year ended March 31, 2018, the Company recognized a change in estimate (increase to operating income) of $88,741 as a result of this change in the federal corporate tax rate, which resulted in a $63,755 increase to net income. The change in estimate is a provisional estimate under SAB 118 due to the impact of the Tax Legislation.

20. Other Related Party Transactions

Advance to Change Healthcare Inc.

Under the terms of the LLC Agreement, Parent, using funds from the Company, is required to periodically advance to its members amounts necessary to fund their respective tax obligations on an interim basis, subject to

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Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

recoupment in the event that such advances exceed the final tax obligations of the respective Members for such year. Once the final tax obligations of each of the Members is determined for such year, Parent is obligated to formally distribute such amounts to the respective Members. To the extent that the amounts to be distributed were subject to interim advances, additional cash will be distributed only to the extent that the interim advances were insufficient to fund the respective Member’s final tax obligation. Distributions up to the amount of interim advances result in full settlement of any advances to the respective Member.

Advances to Members totaled $15,828 and $0 during the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. Such amounts are classified as a component of Members’ deficit in the accompanying consolidated balance sheets.

Dilution

Under the terms of the LLC Agreement, the Company and Change Healthcare Inc. agreed to cooperate to ensure a 1:1 ratio of Change Healthcare Inc. shares outstanding to units of the Company held by Change Healthcare Inc. for as long as the McKesson members hold units of the Company. Specifically, the parties agreed that:

•

In the event that Change Healthcare Inc. issues additional shares, the Company is required to issue a corresponding number of units to Change Healthcare Inc.

•

Any net proceeds received by Change Healthcare Inc. with respect to an Change Healthcare Inc. share must be concurrently contributed to the Company

•

Any stock split or combination of other equity restructuring involving Change Healthcare Inc. shares must be concurrent with an equivalent unit split or other equity restructuring of the Company.

•

Change Healthcare Inc. may not redeem, repurchase or otherwise acquire any Change Healthcare Inc. shares unless substantially simultaneously the Company redeems, repurchases, or otherwise acquires from Change Healthcare Inc. an equal number of units for the same price per security.

•

The Company may not redeem, repurchase or otherwise acquire any units held by Change Healthcare Inc. unless substantially simultaneously Change Healthcare Inc. redeems, repurchases, or otherwise acquires an equal number of Change Healthcare Inc. shares for the same price per security.

During the year ended March 31, 2018, the Company issued 2,200 units to Change Healthcare Inc. and repurchased 71 units from Change Healthcare Inc.

eRx Network Option Agreement

Prior to the Transactions, the equity interests for entities representing the eRx Network were distributed to the former Legacy CHC stockholders, and in connection therewith a Legacy CHC subsidiary and the Legacy CHC Stockholders entered into an option agreement for a subsidiary of the Company to acquire the eRx Network (the “Option Agreement”). Under the terms of the Option Agreement, the option to acquire the eRx Network will only become exercisable at any such time that McKesson owns (directly or indirectly), in the aggregate, less than 5% of the outstanding Units of the Company. Such option will expire, unexercised or unexercisable, on the fifth anniversary of the Transactions. Under the Option Agreement, upon exercise of the option, a Legacy CHC subsidiary will be required to pay an exercise price of $1.00 plus a fixed multiple of the incremental increase (if any) in the EBITDA (as defined in the Option Agreement) of the eRx Network for the trailing 12 months preceding the exercise of the option over a baseline level of such EBITDA.

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Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

Management Services Agreement

The Company, certain subsidiaries of the Company, McKesson and affiliates of Blackstone and Hellman & Friedman (such affiliates of Blackstone and Hellman & Friedman referred to herein collectively as “the Sponsors”), entered into a Management Services Agreement, whereby McKesson and the Sponsors will be retained to provide certain management, consulting, financial and other advisory services to the Company for certain periods following the consummation of the Transactions for an annual fee not to exceed 1% of our EBITDA (as defined in the Senior Credit Facilities) in the applicable fiscal year, subject to proration as applicable. Under the Management Services Agreement, McKesson and the Sponsors may also receive certain fees in connection with certain specific transactions involving the Company, including a Qualified IPO.

The Company recognized $10,488 ($2,281 for Blackstone, $865 for Hellman & Friedman and $7,342 for McKesson) and $888 ($193 for Blackstone, $73 for Hellman & Friedman and $622 for McKesson) in management fees during the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. The management fees are reflected within sales, marketing, general and administrative expense in the accompanying consolidated statements of operations.

Transition Services Agreements

In connection with the consummation of the Transactions, the Company, certain subsidiaries of the Company, McKesson and the eRx Network entered into transition services agreements pursuant to which (i) the Company will provide certain transition services to McKesson and to the eRx Network and (ii) McKesson will provide certain transition services to the Company, in each case in exchange for specified fees and subject to the terms and conditions therein.

The Company recognized transition service fee expense of $92,053 and $8,658 for services received from McKesson during the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. In addition, the Company recognized $11,834 and $817 in transition fee income from eRx Network in these same periods. The transition service fees paid or to be paid to McKesson are reflected net within sales, marketing, general and administrative expense in the accompanying consolidated statements of operations. The amounts received or to be received from eRx Network are reflected in other income in the accompanying statement of operations. The related balance sheet effect of these agreements is reflected within due to related party, net on the accompanying consolidated balance sheets. Cash flows related to these agreements are reflected in operating activities in the accompanying consolidated statements of cash flows.

eRx Network Line of Credit

In addition, the Company provided eRx Network at the closing of the Transactions with a $3,000 line of credit due November 30, 2017 of which $300 had been drawn at March 31, 2017. This amount was subsequently repaid during the twelve months ended March 31, 2018.

Services Provided to Change Healthcare Inc. by the Company

Change Healthcare Inc. generally has no substantive independent assets or operations apart from its investment in the Company. As a result, the Company provides certain services for which it is not reimbursed. These services include the utilization of office space and a portion of the salaries of Change Healthcare Inc.’s officers who are considered employees of the Company.

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Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

Employer Healthcare Program Agreement with Equity Healthcare

Effective as of January 1, 2014, Legacy CHC entered into an employer health program agreement with Equity Healthcare LLC (“Equity Healthcare”), an affiliate of Blackstone, pursuant to which Equity Healthcare provides to the Company certain negotiating, monitoring and other services in connection with the Company health benefit plans. In consideration for Equity Healthcare’s services, the Company paid Equity Healthcare a fee of $3.00 per participating employee per month for plans through December 31, 2017. Beginning January 1, 2018, the Company began paying Equity Healthcare a fee of $1.00 per participating employee per month.

Term Loans Held by Related Party

During the period from June 17, 2016 (inception) to March 31, 2017, certain investment funds managed by GSO Capital Partners LP (the “GSO-managed funds”) held a portion of the term loans under the Senior Credit Facilities. GSO Advisor Holdings LLC (“GSO Advisor”) is the general partner of GSO Capital Partners LP. Blackstone, indirectly through its subsidiaries, holds all of the issued and outstanding equity interests of GSO Advisor. As of March 31, 2018 and 2017, respectively, the GSO-managed funds held $29,838 and $200,000 in principal amount of the Senior Credit Facilities ($298 and $2,000 of which is classified within current portion of long-term debt at March 31, 2018 and 2017, respectively).

Transactions with Blackstone Portfolio Companies

The Company both provides various services to, and purchases services from, certain Blackstone portfolio companies under contracts that were executed in the normal course of business. The Company recognized revenue of approximately $4,366 and $400 related to services provided to Blackstone portfolio companies during the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. The Company paid Blackstone portfolio companies approximately $16,251 and $100 related to services provided to the Company during the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively.

Transactions with Hellman & Friedman Portfolio Companies

The Company both provides various services to, and purchases services from, certain Hellman & Friedman portfolio companies under contracts that were executed in the normal course of business. The Company recognized revenue of approximately $4,955 and $400 related to services provided to Hellman & Friedman portfolio companies during the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. The Company paid Hellman & Friedman portfolio companies approximately $2,509 and $10 related to services provided to the Company during the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively.

Other Transactions with McKesson

The Company both provides various services to, and purchases services from, McKesson, and its affiliates. Services are provided to McKesson and its affiliates through customer arrangements and through subleasing of certain office space. The Company recognized revenue of approximately $13,354 and $1,511 related to services provided to McKesson and its affiliates during the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively. The Company recognized sublease income of $3,806 and $394 from McKesson and its affiliates during the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively and the Company incurred rent and other expense of $918 and $102 with McKesson and affiliates during the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively.

F-84

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

Other

The Company has executed agreements with a vendor and its affiliate in which a director of the Company is the president and chief executive officer to provide certain software related services. Under these agreements, the Company paid the vendor approximately $30 in the aggregate during the period from June 17, 2016 (inception) to March 31, 2017.

Additionally, the Company has an agreement with a customer in which a former officer of the Company is a member of the board of directors of the customer. Under this agreement, the Company recognized revenue of approximately $7,482 and $76 in the aggregate during the year ended March 31, 2018 and the period from June 17, 2016 (inception) to March 31, 2017, respectively.

21. Segment Reporting

Management views the Company’s operating results based in three reportable segments: (a) software and analytics (which represents the aggregation of two operating segments), (b) network solutions and (c) technology-enabled services. Listed below are the revenue and Adjusted EBITDA for each of the reportable segments. This information is reflected in the manner utilized by management to make operating decisions, assess performance and allocate resources. Such amounts include allocations of corporate shared services functions that are essential to the core operations of the reportable segments such as information technology, operations and product development functions. Segment assets and related depreciation expenses are not presented to management for purposes of operational decision making, and therefore are not included in the accompanying tables. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in Note 2 to these consolidated financial statements.

During the six months ended September 30, 2018, the Company made certain changes in the way that it manages its business and allocates costs. Specifically, the Company made the following changes during the period:

•

Moved its clinical network solution and certain of its institutional provider customers from the network solutions reportable segment to the software and analytics reportable segment.

•

Network Solutions began charging the Software and Analytics segment for the use of its network.

•

Made discrete changes in cost allocation among each of the segments.

The presentation in the tables that follow has been retrospectively adjusted to reflect the above described changes.

Software and Analytics

The software and analytics segment provides software and analytics solutions for financial performance, payment accuracy, clinical decision management, value-based payment, provider and consumer engagement and imaging and clinical workflow.

Network Solutions

The network solutions segment enables financial, administrative and clinical transactions, electronic business to business and consumer to business payments and aggregation and analytics of clinical and financial data.

Technology-enabled Services

The technology-enabled services segment provides solutions for financial and administrative management, value-based care, communication and payment, pharmacy benefits administration and healthcare consulting.

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Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

Corporate and Eliminations

Inter-segment revenue and expenses primarily represent claims management and payment and communication solutions provided between segments.

Corporate and eliminations includes pass-through postage costs, management, administrative and certain other shared corporate services functions such as legal, finance, human resources and marketing, eliminations to remove inter-segment revenue and expenses, and consolidating adjustments to classify certain rebates paid to channel partners as a reduction of revenue. These administrative costs are excluded from the adjusted EBITDA measure for each respective operating segment.

The revenue and adjusted EBITDA for the operating segments are as follows:


	Year Ended March 31, 2018
	Software and Analytics		Network Solutions		Technology- enabled Services		Corporate and Eliminations			Consolidated
Revenue from external customers:
Solutions revenue	$	1,567,663	$	485,482	$	995,707	$	(24,406	)	$	3,024,446
Postage revenue		—		—		—		274,397			274,397
Inter-segment revenue		28,994		42,869		4,255		(76,118	)		—

Net revenue	$	1,596,657	$	528,351	$	999,962	$	173,873		$	3,298,843

Adjusted EBITDA	$	592,679	$	308,572	$	200,109	$	(157,522	)	$	943,838

Equity compensation											24,700
Acquisition accounting adjustments											2,581
Acquisition and divestiture-related costs											1,801
Transactions-related costs											4,626
Integration and related costs											107,194
Management fees and related costs											11,472
Implementation costs related to recently issued accounting standards											26,594
Strategic initiatives, duplicative and transition costs											12,313
Severance costs											38,277
Accretion and changes in estimate with related parties, net											(49,991	)
Impairment of long-lived assets											839
Loss on extinguishment of debt											—
Other non-routine, net											33,755

EBITDA Adjustments											214,161

Interest expense											292,463
Depreciation and amortization											278,363
Amortization of capitalized software developed for sale											18,303

Income (loss) before income tax provision (benefit)										$	140,548

F-86

Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)


	Period from June 17, 2016 to March 31, 2017
	Software and Analytics		Network Solutions		Technology- enabled Services		Corporate and Eliminations			Consolidated
Revenue from external customers:
Solutions revenue	$	150,445	$	44,404	$	91,462	$	(2,856	)	$	283,455
Postage revenue		—		—		—		26,132			26,132
Inter-segment revenue		2,322		3,539		1,136		(5,997	)		—

Net revenue	$	152,767	$	47,943	$	91,598	$	17,279		$	309,587

Adjusted EBITDA	$	49,219	$	24,928	$	18,377	$	(10,343	)	$	82,181

Equity compensation											715
Acquisition accounting adjustments											46
Acquisition and divestiture-related costs											25
Transactions-related costs											43,297
Integration and related costs											8,775
Management fees and related costs											893
Implementation costs related to recently issued accounting standards											1,611
Strategic initiatives, duplicative and transition costs											921
Severance costs											2,227
Accretion and changes in estimate with related parties, net											(24,507	)
Impairment of long-lived assets											48,700
Loss on extinguishment of debt											70,122
Other non-routine, net											3,540

EBITDA Adjustments											156,365

Interest expense											22,361
Depreciation and amortization											26,548
Amortization of capitalized software developed for sale											1,505

Income (loss) before income tax provision (benefit)										$	(124,598	)

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Change Healthcare LLC

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

22. Accumulated Other Comprehensive Income (Loss)

The following is a summary of the accumulated other comprehensive income (loss) balances, net of taxes, as of and for the year ended March 31, 2018 and for the period from June 17, 2016 (inception) to March 31, 2017.


	Foreign Currency Translation Adjustment			Cash Flow Hedge			Accumulated Other Comprehensive Income (Loss)
Balance at June 17, 2016 (inception)	$	—		$	—		$	—
Contribution of accumulated other comprehensive income (loss)		(19,055	)		592			(18,463	)
Change associated with foreign currency translation		86			—			86
Change associated with current period hedging (net of taxes of $1,246)		—			(1,769	)		(1,769	)
Reclassification into earnings		—			(3	)		(3	)

Balance at March 31, 2017	$	(18,969	)	$	(1,180	)	$	(20,149	)
Change associated with foreign currency translation		4,146			—			4,146
Change associated with current period hedging (net of taxes of $4,316)		—			6,288			6,288
Reclassification into earnings		—			1,110			1,110

Balance at March 31, 2018	$	(14,823	)	$	6,218		$	(8,605	)

23. Subsequent Events

Sale of Barista Operations, LLC

In July 2018, an affiliate of the Company sold all of the membership interests of Barista Operations, LLC, which was comprised of the Company’s extended care solutions business (a component of the software and analytics reportable segment) to ECS Acquisition Co. LLC,) for cash of $167,500, subject to certain post-closing adjustments.

The Company has evaluated subsequent events through July 27, 2018, the date the financial statements were originally issued, and December 7, 2018, the date on which the retrospectively revised March 31, 2018 financial statements were issued (as to the changes in segment presentation described in Note 21).

F-88

Change Healthcare LLC

Condensed Consolidated Statements of Operations

(unaudited and amounts in thousands)


	Nine Months Ended
	December 31, 2018			December 31, 2017
Revenue:
Solutions revenue	$	2,264,684		$	2,252,457
Postage revenue		180,706			205,373

Total revenue		2,445,390			2,457,830
Operating expenses:
Cost of operations (exclusive of depreciation and amortization below)		1,007,328			1,056,939
Research and development		159,604			171,365
Sales, marketing, general and administrative		620,612			534,364
Customer postage		180,706			205,373
Depreciation and amortization		208,103			212,897
Accretion and changes in estimate with related parties, net		13,290			(66,763	)
Gain on Sale of the Extended Care Business		(111,435	)		—

Total operating expenses		2,078,208			2,114,175

Operating income (loss)		367,182			343,655
Non-operating (income) and expense
Interest expense, net		241,840			218,407
Contingent consideration		(900	)		—
Other, net		(13,762	)		(13,804	)

Total non-operating (income) and expense		227,178			204,603

Income (loss) before income tax provision (benefit)		140,004			139,052
Income tax provision (benefit)		1,049			(56,410	)

Net income (loss)	$	138,955		$	195,462

See accompanying notes to condensed consolidated financial statements.

F-89

Change Healthcare LLC

Condensed Consolidated Statements of Comprehensive Income (Loss)

(unaudited and amounts in thousands)


	Nine Months Ended
	December 31, 2018			December 31, 2017
Net income (loss)	$	138,955		$	195,462
Other comprehensive income (loss):
Foreign currency translation adjustment		(14,809	)		7,122
Changes in fair value of interest rate cap, net of taxes		(14,275	)		3,211

Other comprehensive income (loss)		(29,084	)		10,333

Total comprehensive income (loss)	$	109,871		$	205,795

See accompanying notes to condensed consolidated financial statements.

F-90

Change Healthcare LLC

Condensed Consolidated Balance Sheets

(unaudited and amounts in thousands)


	December 31, 2018			March 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	90,230		$	48,899
Restricted cash		1,278			1,112
Accounts receivable, net of allowance for doubtful accounts of $20,819 and $18,015 at December 31, 2018 and March 31, 2018, respectively		794,419			705,544
Prepaid expenses and other current assets		149,278			146,157

Total current assets		1,035,205			901,712
Property and equipment, net		183,225			167,500
Goodwill		3,279,948			3,344,833
Intangible assets, net		1,355,376			1,454,842
Other noncurrent assets, net		388,186			332,040

Total assets	$	6,241,940		$	6,200,927

Liabilities and members’ deficit
Current liabilities:
Drafts and accounts payable	$	96,430		$	84,128
Accrued expenses		399,985			329,332
Deferred revenues		452,376			493,947
Due to related party, net		14,062			8,695
Current portion of long-term debt		1,388			53,393

Total current liabilities		964,241			969,495
Long-term debt, excluding current portion		5,793,537			5,867,487
Deferred income tax liabilities		112,718			112,734
Tax receivable agreement obligations to related parties		207,246			223,163
Other long-term liabilities		109,594			94,228
Commitments and contingencies (see Note 6)
Members’ deficit		(945,396	)		(1,066,180	)

Total liabilities and members’ deficit	$	6,241,940		$	6,200,927

See accompanying notes to condensed consolidated financial statements.

F-91

Change Healthcare LLC

Condensed Consolidated Statements of Members’ Deficit

(unaudited and amounts in thousands)


	Members’ Deficit
	Fiscal Year 2019			Fiscal Year 2018
Balance at March 31	$	(1,066,180	)	$	(1,273,359	)
Advances to Member		(208	)		—
Repurchase of equity awards		(4,838	)		(110	)
Capital contribution from Member from exercise of equity awards		205			—
Equity compensation expense		5,300			2,029
Net income (loss)		12,506			26,641
Foreign currency translation adjustment		(8,638	)		4,913
Change in fair value of interest rate cap agreements, net of taxes		2,604			(4,335	)
Other		456			(154	)

Balance at June 30		(1,058,793	)		(1,244,375	)
Advances to Members, net		2,844			(14,654	)
Repurchase of equity awards		(2,249	)		(3,095	)
Equity compensation expense		2,969			12,021
Net income (loss)		113,440			19,388
Foreign currency translation adjustment		1,886			2,021
Change in fair value of interest rate cap agreements, net of taxes		4,925			307
Other		(192	)		(310	)

Balance at September 30		(935,170	)		(1,228,697	)
Repurchase of equity awards		—			3,750
Capital contribution from Member from exercise of equity awards		—			(4,488	)
Exercise of equity awards		(338	)		346
Equity compensation expense		8,109			4,118
Net income (loss)		13,009			149,431
Foreign currency translation adjustment		(8,057	)		188
Change in fair value of interest rate cap agreements, net of taxes		(21,804	)		7,240
Other		(1,145	)		(563	)

Balance at December 31	$	(945,396	)	$	(1,068,675	)

See accompanying notes to condensed consolidated financial statements.

F-92

Change Healthcare LLC

Condensed Consolidated Statements of Cash Flows

(unaudited and amounts in thousands)


	Nine Months Ended
	December 31, 2018			December 31, 2017
Cash flows from operating activities:
Net income (loss)	$	138,955		$	195,462
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		208,103			212,897
Amortization of capitalized software developed for sale		10,880			13,739
Accretion and changes in estimate, net		13,290			(66,763	)
Equity compensation		16,378			19,517
Deferred income tax expense (benefit)		(17	)		(57,009	)
Amortization of debt discount and issuance costs		15,786			16,080
Contingent consideration		(900	)		—
Gain on Sale of the Extended Care Business		(111,435	)		—
Other		1,943			4,647
Changes in operating assets and liabilities:
Accounts receivable		(97,259	)		(3,822	)
Prepaid expenses and other		(10,302	)		(15,153	)
Accounts payable		5,190			(23,427	)
Accrued expenses, deferred revenue and other liabilities		52,853			40,185
Due to related party, net		5,367			(44,111	)

Net cash provided by (used in) operating activities		248,832			292,242

Cash flows from investing activities:
Capitalized expenditures		(190,264	)		(114,432	)
Proceeds from Sale of the Extended Care Business		159,871			—
Other		(2,985	)		354

Net cash provided by (used in) investing activities		(33,378	)		(114,078	)

Cash flows from financing activities:
Payments under tax receivable agreements with related parties		(25,096	)		—
Payments on Term Loan Facility		(140,250	)		(38,250	)
Receipts (Payments) on derivative instruments		3,321			(6,198	)
Payment of data sublicense obligation		—			(3,074	)
Payments of deferred financing obligations		(3,432	)		(1,712	)
Settlement of Legacy CHC equity awards		—			(3,155	)
Capital contribution from Members from exercise of equity awards		205			346
Repurchase of equity awards		(7,425	)		(3,820	)
Payment of working capital settlement to related party		—			(109,176	)
Advances to Member and Other		(7,233	)		(14,654	)
Refund of Advances to Member		9,869			—
Other		(2,548	)		(153	)

Net cash provided by (used in) financing activities		(172,589	)		(179,846	)

Effect of exchange rate changes on cash and cash equivalents		(1,368	)		(4,284	)

Net increase (decrease) in cash, cash equivalents and restricted cash		41,497			(5,966	)
Cash, cash equivalents and restricted cash at beginning of period		50,011			188,113

Cash, cash equivalents and restricted cash at end of period	$	91,508		$	182,147

See accompanying notes to condensed consolidated financial statements.

F-93

1. Nature of Business and Organization

Nature of Business

Change Healthcare LLC (the “Company”), is one of the largest independent healthcare technology companies in the United States. The Company provides software and analytics, network solutions and technology-enabled services that help our customers obtain actionable insights, exchange mission-critical information, control costs, optimize revenue opportunities, increase cash flow and effectively navigate the shift to value-based healthcare.

Organization

In June 2016, Change Healthcare Inc. (formerly HCIT Holdings, Inc.), the Company, Change Healthcare Holdings, LLC, Change Healthcare Intermediate Holdings, LLC, Change Healthcare Performance, Inc. (formerly Change Healthcare, Inc.) (“Legacy CHC”) and its stockholders—including affiliates of The Blackstone Group, L.P. (“Blackstone”) and Hellman & Friedman LLC (“Hellman & Friedman”)—entered into an Agreement of Contribution and Sale (the “Contribution Agreement”) with McKesson Corporation (“McKesson”, together with Change Healthcare Inc., the “Members”). Under the terms of the Contribution Agreement, the parties agreed to form the Company, a joint venture that combined the majority of the McKesson Technology Solutions businesses, excluding McKesson’s Enterprise Information Solutions business and RelayHealth Pharmacy Network (such contributed businesses, “Core MTS”) with substantially all of the assets and operations of Legacy CHC, but excluding Legacy CHC’s pharmacy claims switching and prescription routing businesses (such excluded businesses, the “eRx Network” and the businesses contributed by Legacy CHC, together with Core MTS, the “Contributed Businesses”). The creation of the joint venture, including the contribution of the Contributed Businesses and related transactions, is collectively referred to as the “Transactions”. The Transactions closed on March 1, 2017. From the time of its formation in June 2016 until the consummation of the Transactions, the Company had no substantive assets or operations.

The Transactions

Pursuant to the terms of the Contribution Agreement, (i) the Legacy CHC stockholders, directly and indirectly, transferred ownership of substantially all of Legacy CHC to the Company in consideration of (a) the payment at the closing of the Transactions by the Company to Legacy CHC’s stockholders and certain participants in the Legacy CHC Amended and Restated 2009 Equity Incentive Plan (the “Legacy CHC Equity Plan”) of approximately (A) $1.8 billion and (B) stock in eRx Network Holdings, Inc., and (C) the 2017 Tax Receivable Agreement (as described in Note 9) and (b) the issuance to Change Healthcare Inc. of membership interests in the Company; and (ii) McKesson caused Core MTS to be transferred to Company in consideration of (a) the assumption and subsequent payment at the closing of the Transactions by the Company to McKesson of a promissory note in the amount of approximately $1.3 billion, (b) the issuance of membership interests in the Company and (c) an interest in a tax receivable agreement from the Company.

In connection with the Transactions, the Company, through its subsidiaries, entered into a new senior secured credit facility, consisting of a term loan facility in the amount of $5.1 billion and a revolving credit facility in an aggregate principal amount of $500.0 million, and issued $1.0 billion of 5.75% senior notes due 2025. The proceeds were used to make all payments to the Legacy CHC stockholders, certain participants in the Legacy CHC Equity Plan and McKesson described above, to refinance certain of Legacy CHC’s existing indebtedness and to pay fees and expenses incurred in connection with the Transactions.

The Company provides certain transition services to eRx Network and McKesson provides certain transition services to the Company, in each case in exchange for specified fees. Fees received related to these agreements are reflected within “Other, net” in the accompanying condensed consolidated statement of operations. The related balance sheet effect of these agreements is reflected within “Due to related party, net” on the accompanying condensed consolidated balance sheets.

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Basis of Accounting

Due to the existence of shared control among the Members over all major financial and operating decisions of the Company and its consolidated subsidiaries, the assets and liabilities contributed to the Company were recognized in the accompanying condensed consolidated financial statements at their historical carrying values (i.e., joint venture accounting).

2. Basis of Presentation

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (“SEC”) Guidelines, Rules and Regulations (“Regulation S-X”) and, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of results for the unaudited interim periods presented. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted. The results of operations for the interim period are not necessarily indicative of the results to be obtained for the full fiscal year. All intercompany accounts and transactions have been eliminated in the unaudited condensed consolidated financial statements.

Reclassifications

Certain reclassifications have been made to the prior period financial statements to conform to the current period presentation.

Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The Company bases its estimates on historical experience, current business factors and various other assumptions that the Company believes are necessary to consider in order to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses and disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic, environmental and political factors and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Such changes in estimates and refinements in estimation methodologies are reflected in the reported results of operations, and, if material, the effects of changes in estimates are disclosed in the notes to the condensed consolidated financial statements. Estimates and assumptions by management affect: the allowance for doubtful accounts; the fair value assigned to assets acquired and liabilities assumed in business combinations; tax receivable agreement obligations; the fair value of interest rate cap agreement obligations; contingent consideration; loss accruals; the carrying value of long-lived assets (including goodwill and intangible assets); the amortization period of long-lived assets (excluding goodwill); the carrying value, capitalization and amortization of software development costs; the provision and benefit for income taxes and related deferred tax accounts; certain accrued expenses; revenue recognition; contingencies; and the value attributed to equity awards.

Accounting Pronouncements Not Yet Adopted

F-95

with a principles-based comprehensive revenue recognition framework. Under this revised framework, a company will recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. The Company expects to adopt this update effective April 1, 2019.

While the Company continues to assess all potential impacts of adopting this new revenue standard on its consolidated financial statements, related disclosures, and necessary control and process changes, the Company has reached the following preliminary conclusions:

•

The Company expects the new revenue standard will not have a significant impact on the accounting for the Company’s Software as a Service (“SaaS”) and transaction processing services revenue streams. Revenue for SaaS solutions is currently recognized ratably over the contracted terms beginning on service start date, and transaction services revenue is recognized as transactions are processed beginning on the service start date.

•

The Company expects that postage revenue will continue to be recognized on a gross basis as the postage is a component of the print and mail performance obligation for which performance is controlled by the Company.

•

Revenue from certain contingent fee service arrangements is currently recognized when fees to be charged to the customer (which are based on a percentage of the customer’s savings or collections) become determinable (i.e., as fees are invoiced to the customer). Upon adoption of the new guidance, the Company expects that revenue for these arrangements will be recognized as the services are performed (i.e., in advance of when the uncertainty surrounding the customer’s savings or collections amounts are resolved), resulting in revenue for certain contingent fee service arrangements being accelerated as compared to the Company’s current accounting practice.

•

Revenue from time-based software and content license agreements is currently recognized ratably over the term of the agreement (“over time”). Upon adoption of the new guidance, the Company expects that a license component for certain time-based software and content licenses agreements will be recognized upon delivery to the customer (“point in time”), or in the case of software that requires significant production, modification or customization, recognized as the implementation work is performed. A non-license component (e.g., technical support) will be recognized over the respective contract terms (“over time”). The overall result will be that revenue recognition for a portion of revenue from certain time-based licenses will be accelerated as compared to the Company’s current accounting practice.

•

Direct and incremental costs to obtain contracts and certain setup costs are currently capitalized and amortized over the contractual period. Upon adoption of the new guidance, the Company expects that incremental costs to obtain contracts and qualifying costs to fulfill will be capitalized and amortized over the period of benefit. We expect the net result of this change will be an increase to capitalized contract costs on the balance sheet; these capitalized costs will be amortized and recognized as expense over an incrementally longer period of time than the Company’s current accounting practice.

•

Other areas the Company currently expects will be impacted by the new revenue standard include changes to the practice of deferring revenue based on specific software accounting rules under ASC 985-605, as well as the compilation of expanded qualitative and quantitative disclosures required under the new standard.

Entities have the option of adopting this new guidance using either a full retrospective or a modified retrospective method with the cumulative effect of applying the guidance recognized at the date of initial application. The Company currently anticipates adopting the new standard using the modified retrospective transition approach, which will result in a cumulative effect adjustment to retained earnings as of April 1, 2019. The Company continues to perform analyses for the purpose of assessing a quantitative impact to the Company’s financial statements and disclosures.

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In February 2016, the FASB issued ASU No. 2016-02, which generally requires that all lease obligations be recognized on the balance sheet at the present value of the remaining lease payments with a corresponding lease asset. As originally issued, the standard required that companies adopt the standard using the modified retrospective transition method and report a cumulative effect adjustment to the opening balance of retained earnings in the earliest comparative period presented. In July 2018, the FASB issued ASU No. 2018-11 which provides companies with the option to apply this cumulative effect adjustment to the opening balance of retained earnings in the period of adoption instead of the earliest comparative period presented. This update is scheduled to be effective for the Company beginning April 1, 2020, with early adoption permitted. The Company is currently assessing both the method of adoption and the potential effects this update may have on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, as amended by ASU No. 2018-19, which requires that a financial asset (or group of financial assets) measured at amortized cost be presented at the net amount expected to be collected based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. This update is scheduled to be effective for the Company beginning April 1, 2021, with early adoption permitted beginning April 1, 2019. The Company is currently assessing the potential effects this update may have on its condensed consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-07, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. Among other provisions, the measurement date for awards to nonemployees will change from the earlier of the date at which a commitment for performance by the counterparty is reached or the date at which performance is complete under the existing guidance to the grant date under this update. The update is expected to be effective for the Company beginning April 1, 2019. The Company is currently assessing the potential effects this update may have on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, which modifies the disclosure requirements related to fair value measurements based on the FASB Concepts Statements. This update eliminates certain disclosures, modifies others and, in certain cases, requires additional disclosures. This update is effective for the Company beginning April 1, 2020, with earlier adoption permitted. The Company is currently assessing the potential effects this update may have on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This update also requires that the effects of such capitalized costs be classified in the same respective caption of the statement of operations, balance sheet and cash flows as the underlying hosting arrangement. Upon adoption, a company may elect to either retrospectively restate each prior reporting period or apply the update prospectively to all implementation costs incurred after the effective date. This update is scheduled to be effective for the Company beginning April 1, 2020, with early adoption permitted. The Company is currently assessing both the method of adoption and the potential effects this update may have on its condensed consolidated financial statements.

In August 2018, the SEC issued a final rule that amends certain of its disclosure requirements that have become redundant, duplicative, overlapping, outdated, or superseded, in light of other SEC disclosure requirements, or changes in the information environment. This rule is expected to reduce or eliminate disclosures

F-97

in most circumstances but, in one instance, requires the disclosure of changes in stockholders’ equity be presented for each interim period presented. This final rule became effective for fiscal periods beginning after November 5, 2018. While the Company is currently assessing the other potential affect this update may have on its condensed consolidated financial statements, pending formal adoption of this final rule, the Company has supplementally included the incremental disclosures of changes in stockholder’s equity that are required under the final rule.

In October 2018, the FASB issued ASU No. 2018-16, which adds the Overnight Index Swap rate based on the Secured Overnight Financing Rate as a benchmark interest rate for hedging purposes. This update is scheduled to be effective for the Company beginning April 1, 2019. The Company is currently assessing both the method of adoption and the potential effects this update may have on its condensed consolidated financial statements.

Recently Adopted Accounting Pronouncements

In April 2018, the Company adopted FASB ASU No. 2017-12, which significantly changed the framework by which hedge accounting is recognized, presented, and disclosed in the financial statements. Specifically, this update aligns risk management with the related financial reporting by permitting hedging of the contractually specified component or interest rate in the arrangement and requiring that an entity present the earnings effect of the hedging instrument in the same income statement caption in which the earnings effect of the hedged item is reported. Additionally, this update includes other simplifications of the hedge accounting guidance. These additional simplifications include the ability to continually evaluate hedge effectiveness using a qualitative approach as well as permitting certain simplifying assumptions when evaluating a “critical terms match” method of effectiveness. The Company adopted this update using the modified retrospective transition method, which in the Company’s circumstances, resulted in the elimination, through a cumulative effect adjustment of each affected component of members’ deficit, of all prior cumulative ineffectiveness in cash flow hedges existing at the adoption date. However, because the Company’s financial statements do not separately classify the components of members’ deficit, the effect of this cumulative effect adjustment is limited to the separate disclosure in Note 10 related to accumulated comprehensive income (loss).

In April 2018, the Company adopted FASB ASU No. 2016-01, which generally requires that equity investments (other than those that qualify for the equity method of accounting or require consolidation) be measured at fair value with changes in fair value recognized in net income. In addition, this update eliminates certain existing disclosure requirements and simplifies the impairment assessment of equity securities without readily determinable fair values. The adoption of this update had no effect on the Company’s condensed consolidated financial statements.

In April 2018, the Company adopted ASU No. 2017-01, which provides a screen to determine when an integrated set of assets and activities represents a business. Specifically, this update requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set of assets and activities is not a business. The adoption of this update had no effect on the Company’s condensed consolidated financial statements.

3. Business Combinations

NDSC Acquisition

F-98

The following table summarizes information related to this acquisition.


	NDSC
Total Consideration Fair Value at Acquisition Date:
Cash paid at closing	$	101,237
Settlement of preexisting relationship		6,000
Contingent consideration		3,900
Other		(226	)

	$	110,911

Allocation of the Consideration Transferred:
Cash	$	6,717
Accounts receivable		3,732
Prepaid expenses and other current assets		198
Property and equipment		166
Identifiable intangible assets:
Tradename		4,000
Customer relationships		9,300
Technology		10,800
Other assets		568
Goodwill		83,131
Accounts payable		(298	)
Accrued expenses and other current liabilities		(7,403	)

Total consideration transferred	$	110,911


	NDSC
Other Information:
Gross contractual accounts receivable	$	3,732
Amount not expected to be collected	$	—
Goodwill expected to be deductible for tax purposes	$	83,131
Contingent Consideration Information:
Contingent consideration range		$0 to $20,000
Measurement period		January 1, 2018 to December 31, 2020
Basis of measurement		Revenue performance, subject to minimum margin
Type of measurement		Level 3
Key assumptions at the acquisition date:
Range of annual revenue performance		$22,500-$66,100
Expected payment date(s)		2018-2020
Discount rate(s)		6.25%
Increase (decrease) to net income (loss):
For the nine months ended December 31, 2018		$900

As a result of the Company receiving new information during the nine months ended December 31, 2018, the Company updated the fair value of identifiable intangible assets and accrued expenses during the period which resulted in a decrease in goodwill of $5,793 from amounts provisionally reported at March 31, 2018.

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an asset purchase. Goodwill is generally not deductible for federal income tax purposes when the business combination is treated as a stock purchase.

Sale of Extended Care Business

In July 2018, certain affiliates of the Company sold all of the membership interests of Barista Operations, LLC (the “Extended Care Business”) (a component of the software and analytics reportable segment) for net cash proceeds of $159,871, subject to certain post-closing adjustments, including for working capital. At June 30, 2018, in connection with this transaction, the Company reclassified the assets and liabilities below as assets of business held for sale and liabilities of business held for sale, respectively.


	June 30, 2018
Assets
Accounts receivable, net of allowance for doubtful accounts	$	8,050
Prepaid expense and other current assets		587
Property and equipment, net		1,594
Goodwill		50,535
Other noncurrent assets, net		6,050

Assets of business held for sale	$	66,816

Liabilities
Drafts and accounts payable	$	1,072
Accrued expenses		716
Deferred revenues		15,226
Other long-term liabilities		739

Liabilities of business held for sale	$	17,753

The Company recognized a gain on this disposal transaction which has been separately classified on the face of the accompanying condensed consolidated statements of operations.

4. Interest Rate Cap Agreements

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate cap agreements as part of its interest rate risk management strategy.

F-100

In August 2018, the Company executed additional annuitized interest rate cap agreements with notional amounts of $500,000 and $1,500,000, respectively, to limit the exposure of the variable component of interest rates under the term loan facility or future variable rate indebtedness to a maximum of 1.0%. The $500,000 interest rate cap agreement began effective August 31, 2018 and expires March 31, 2020. The $1,500,000 interest rate cap agreement begins effective March 31, 2020 and expires December 31, 2021.

As of December 31, 2018, each of the Company’s outstanding interest rate cap agreements was designated as a cash flow hedge of interest rate risk and was determined to be highly effective.

Following the adoption of ASU 2017-12, all changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the twelve months subsequent to December 31, 2018, the Company estimates that $5,269 will be reclassified as a decrease to interest expense.

The following table summarizes the fair value of the Company’s derivative instruments at December 31, 2018 and March 31, 2018:


	Fair Values of Derivative Financial Instruments Asset (Liability)
Derivative financial instruments designated as hedging instruments:	Balance Sheet Location		December 31, 2018			March 31, 2018
Interest rate cap agreements		Prepaid and other current assets	$	11,225		$	6,062
Interest rate cap agreements		Other noncurrent assets, net		2,614			11,127
Interest rate cap agreements		Accrued expenses		(1,383	)		—
Interest rate cap agreements		Other long-term liabilities	$	(8,907	)	$	—

			$	3,549		$	17,189

Tabular Disclosure of the Effect of Derivative Instruments on the Statement of Operations

The effect of the derivative instruments on the accompanying condensed consolidated statements of operations for the nine months ended December 31, 2018 and 2017, is summarized in the following table:


	Nine Months Ended December 31, 2018			Nine Months Ended December 31, 2017
Derivative financial instruments in cash flow hedging relationships:
Gain/ (loss) related to effective portion of derivative financial instruments recognized in other comprehensive income (loss)	$	(8,685	)	$	1,934

Gain/ (loss) related to effective portion of derivative financial instruments reclassified from accumulated other comprehensive income (loss) to interest expense	$	(3,956	)	$	1,277

Gain/ (loss) related to ineffective portion of derivative financial instruments recognized in interest expense	$	—		$	(145	)

Credit Risk-related Contingent Features

The Company has agreements with each of its derivative counterparties providing that if the Company defaults on any of its indebtedness, including a default where repayment of the indebtedness has not been accelerated by the lender, then the Company also could be declared in default on its derivative obligations.

F-101

The Company does not offset any derivative financial instruments, and the derivative financial instruments are not subject to collateral posting requirements.

5. Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company’s assets and liabilities that are measured at fair value on a recurring basis consist of the Company’s derivative financial instruments and contingent consideration obligations. The tables below summarize these items as of December 31, 2018 and March 31, 2018, aggregated by the level in the fair value hierarchy within which those measurements fall.


Description	Balance at December 31, 2018			Quoted in Markets Identical (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Interest rate cap agreements	$	3,549		$	—	$	3,549	$	—
Contingent consideration obligations		(3,000	)		—		—		(3,000	)

Total	$	549		$	—	$	3,549	$	(3,000	)


Description	Balance at March 31, 2018			Quoted in Markets Identical (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Interest rate cap agreements	$	17,189		$	—	$	17,189	$	—
Contingent consideration obligations		(4,000	)		—		—		(4,000	)

Total	$	13,189		$	—	$	17,189	$	(4,000	)

The valuation of the Company’s derivative financial instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair value of the interest rate cap agreements is determined using the market standard methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments) using the overnight index swap rate as the discount rate.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs to evaluate the likelihood of default by itself and by its counterparties. As of December 31, 2018, the Company determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The valuation of the Company’s contingent consideration obligations was determined using a discounted cash flow method as applied to cash flows determined through a monte carlo simulation. This analysis reflects the contractual terms of the purchase agreements (e.g., minimum and maximum payments, length of earn-out

F-102

periods, manner of calculating any amounts due, etc.) and utilizes assumptions with regard to future cash flows, probabilities of achieving such future cash flows and a discount rate. Significant increases with respect to assumptions as to future revenue and probabilities of achieving such future revenue would have resulted in a higher fair value measurement while an increase in the discount rate would have resulted in a lower fair value measurement.

The table below presents a reconciliation of the fair value of the liabilities that use significant unobservable inputs (Level 3):


	Nine Months Ended December 31, 2018			Nine Months Ended December 31, 2017
Balance at beginning of period	$	(4,000	)	$	—
Adjustment of provisional amounts		100			—
Gain/ (loss) included in contingent consideration		900			—

Balance at end of period	$	(3,000	)	$

Assets and Liabilities Measured at Fair Value upon Initial Recognition

The carrying amount and the estimated fair value of financial instruments held by the Company at December 31, 2018 and March 31, 2018 were:


	December 31, 2018				March 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents	$	90,230	$	90,230	$	48,899	$	48,899
Accounts receivable	$	794,419	$	794,419	$	705,544	$	705,544
Senior Credit Facilities (Level 2)	$	4,812,942	$	4,847,391	$	4,941,330	$	5,010,495
Senior Notes (Level 2)	$	979,206	$	962,500	$	977,157	$	985,000

Equity Investments

In December 2018, the Company purchased $15,000 of preferred shares of a health care company which is classified within Other noncurrent assets, net on the accompanying condensed consolidated balance sheets. Because this investment has no readily determinable fair value, the Company measures this investment at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

6. Legal Proceedings

The Company is subject to various claims with customers and vendors, pending and potential legal actions for damages, investigations relating to governmental laws and regulations and other matters arising out of the normal conduct of its business.

Government Subpoenas and Investigations

F-103

manner. These responses sometimes require time and effort and can result in considerable costs being incurred by the Company. Such subpoenas and requests also can lead to the assertion of claims or the commencement of civil or criminal legal proceedings against the Company and other members of the health care industry, as well as to settlements.

Other Matters

Additionally, in the normal course of business, the Company is involved in various claims and legal proceedings. While the ultimate resolution of ongoing matters has yet to be determined, the Company does not believe that their outcomes will have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

7. Income Taxes

The Company is treated as a partnership for income tax purposes and is therefore not subject to U.S. federal income taxes and not subject to most state and local income taxes. Legacy CHC and Change Healthcare Practice Management Solutions, Inc., both wholly owned subsidiaries of the Company, are subject to U.S. federal, state and local, and non-U.S. corporate income taxes.

The income tax benefit for the nine months ended December 31, 2018 and 2017 was $1,049 and $56,410, respectively, which represents an effective tax rate of 0.7% and (40.1%), respectively

On December 22, 2017, H.R.1, also known as the Tax Cuts and Jobs Act of 2017 (“Tax Legislation”), was signed into law. The Tax Legislation significantly revises the U.S. corporate income tax by, among other things, lowering corporate income tax rates, placing limits on the utilization of net operating loss carryovers, implementing the territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries.

During 2018, in accordance with SAB 118, the Company recognized a provisional tax benefit due to the re-measurement of certain deferred tax amounts and the tax receivable agreements to the lower U.S. federal tax rate and a provisional tax expense for the one-time tax imposed on certain accumulated earnings and profits of our foreign subsidiaries. The Company (together with its consolidated subsidiaries) recognized a provisional tax benefit of approximately $33,024 and an increase to operating income of $88,741 for the year ended March 31, 2018. During the nine months ended December 31, 2018, we recognized a $1,100 incremental benefit to our provisional amounts related to the one-time tax imposed on certain accumulated earnings and profits (“E&P”) of our foreign subsidiaries. Our accounting for the impact of the Tax Legislation is complete as of December 31, 2018, and the measurement period has been closed.

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low-tax income; and generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries. We have estimated the impact of these changes in our income tax provision for the nine months ended December 31, 2018.

Fluctuations in our reported income tax rates are primarily due to the earnings from partnerships including the gain on the sale of the Extended Care Business that are passed through to the Members for which the Company is not subject to tax and benefits recognized as a result of certain incentive tax credits resulting from research and experimental expenditures in both the US and Canada.

8. Tax Receivable Agreement Obligations to Related Parties

Upon the consummation of the Transactions, the Company assumed obligations related to certain tax receivable agreements (collectively, the “Tax Receivable Agreements”) with our current and former owners. Because the assets and obligations of the predecessor businesses were contributed to the Company at their historical carrying values, these Tax Receivable Agreements are subject to differing accounting models as explained below.

2009—2011 Tax Receivable Agreements

Under the 2009—2011 Tax Receivable Agreements assumed by the Company in connection with the Transactions, the Company is obligated to make payments to certain of the former Legacy CHC stockholders, equal to 85% of the applicable cash savings that the Company expects to realize as a result of tax attributes arising from certain previous transactions. As a result of the covered change of control with respect to the Tax Receivable Agreements that occurred in connection with the Transactions, payments the Company makes under the 2009—2011 Tax Receivable Agreements are required to be calculated using certain valuation assumptions, including that the Company will have sufficient taxable income to use the applicable tax attributes and that certain of such tax attributes will be used by the Company on a pro rata basis from the date of the Transactions (or in certain cases from the date of certain previous transactions) through the expiration of the applicable tax attribute. Because the 2009—2011 Tax Receivable Agreements were previously subject to fair value measurement in connection with a prior business combination transaction, it is recognized at its initial fair value plus recognized accretion to date.

2017 Tax Receivable Agreement

The 2017 Tax Receivable Agreement generally provides for the payment by Change Healthcare Performance, Inc. (a subsidiary of the Company) to affiliates of Blackstone, Hellman & Friedman of 85% of the net cash tax savings realized (or, in certain circumstances, deemed to be realized) in periods ending on or after the Transactions as a result of certain net operating losses and certain other tax attributes of Change Healthcare Performance, Inc. as of the date of the Transactions. The 2017 Tax Receivable Agreement is considered a loss contingency under FASB ASC Topic 450 and is reflected on the accompanying condensed consolidated balance sheet at the amount that is both probable and reasonably estimable with future changes in this value being reflected within pretax income or loss.

McKesson Tax Receivable Agreement

The McKesson Tax Receivable Agreement generally requires payment to affiliates of McKesson (the “McKesson TRA Parties”) of 85% of certain cash tax savings realized (or, in certain circumstances, deemed to be realized) by Change Healthcare Inc. and its subsidiaries in periods ending on or after the date on which McKesson ceases to own at least 20% of the Company as a result of (i) certain amortizable tax basis in assets transferred to the Company at the closing of the Transactions and (ii) imputed interest deductions and certain other tax attributes arising from payments under the McKesson Tax Receivable Agreement. Because payments under the McKesson Tax Receivable Agreement are contingent upon McKesson’s ceasing to own at least 20% of

F-105

the Company and such an event was not probable at inception of the McKesson Tax Receivable Agreement or as of December 31, 2018, no related obligation has been reflected on the accompanying condensed consolidated balance sheet.

Based on facts and circumstances at December 31, 2018, the Company estimates the aggregate payments due under these Tax Receivable Agreements to be as follows:


	2009-2011 Tax Receivable Agreements			2017 Tax Receivable Agreement			Total
2019 (remainder)	$	—		$	—		$	—
2020		25,416			1,190			26,606
2021		18,989			1,477			20,466
2022		19,027			3,019			22,046
2023		19,505			53,761			73,266
Thereafter		130,216			58,753			188,969

Gross expected payments		213,153			118,200			331,353
Less: Amounts representing discount		(97,501	)		—			(97,501	)

Total tax receivable agreement obligations due to related parties		115,652			118,200			233,852
Less: Current portion due (included in accrued expenses)		(25,416	)		(1,190	)		(26,606	)

Tax receivable agreement obligations due to related parties	$	90,236		$	117,010		$	207,246

The timing and/or amount of aggregate payments due may vary based on a number of factors, including the amount of net operating losses and income tax rates.

9. Segment Reporting

Management views the Company’s operating results based on three reportable segments: (a) software and analytics (which represents the aggregation of two operating segments), (b) network solutions and (c) technology-enabled services. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in Note 2 to the Company’s audited consolidated financial statements for the year ended March 31, 2018.

During the nine months ended December 31, 2018, the Company made certain changes in the way that it manages its business and allocates costs. Specifically, the Company made the following changes during the period:

•

Moved its clinical network solution and certain of its institutional provider customers from the Network Solutions reportable segment to the Software and Analytics reportable segment.

•

Network Solutions began charging the Software and Analytics segment for the use of its network.

•

Made discrete changes in cost allocation among each of the segments.

The presentation in the tables that follow has been retrospectively adjusted to reflect the above described changes.

Software and Analytics

The software and analytics segment provides solutions for revenue cycle management, provider network management, payment accuracy, value-based payments, clinical decision support, consumer engagement, risk adjustment and quality performance, and imaging and clinical workflow.

F-106

Network Solutions

The network solutions segment provides solutions for financial, administrative and clinical transactions, electronic payments and aggregation and analytics of clinical and financial data.

Technology-enabled Services

The technology-enabled services segment provides solutions for revenue cycle and practice management, value-based care enablement, communications and payments, pharmacy benefits administration and consulting.

Corporate and Eliminations

Inter-segment revenue and expenses primarily represent claims management and payment and communication solutions provided between segments.

Corporate and eliminations includes pass-through postage costs, management, administrative and certain other shared corporate services costs that are not allocated to the respective reportable segments, as well as eliminations to remove inter-segment revenue and expenses and consolidating adjustments to classify certain rebates paid to channel partners as a reduction of revenue. These administrative costs are excluded from the adjusted EBITDA measure for each respective reportable segment.

F-107

Listed below are the revenue and adjusted EBITDA for each of the reportable segments for the nine months ended December 31, 2018 and 2017 This information is reflected in the manner utilized by management to make operating decisions, assess performance and allocate resources. Such amounts include allocations of corporate shared services functions that are essential to the core operations of the reportable segments such as information technology, operations and product development functions. Segment assets and related depreciation expenses are not presented to management for purposes of operational decision making, and therefore are not included in the accompanying tables.


	Nine Months Ended December 31, 2018
	Software and Analytics		Network Solutions		Technology- enabled Services		Corporate and Eliminations			Consolidated
Revenue from external customers:
Solutions revenue	$	1,162,593	$	376,111	$	738,421	$	(12,441	)	$	2,264,684
Postage revenue		—		—		—		180,706			180,706
Inter-segment revenue		10,492		46,755		3,340		(60,587	)		—

Net revenue	$	1,173,085	$	422,866	$	741,761	$	107,678		$	2,445,390

Adjusted EBITDA	$	432,360	$	252,987	$	134,691	$	(142,220	)	$	677,818

Equity compensation											16,378
Acquisition accounting adjustments											3,191
Acquisition and divestiture-related costs											11,517
Integration and related costs											79,805
Management fees and related costs											7,883
Costs related to recently issued accounting standards											7,243
Strategic initiatives, duplicative and transition costs											19,014
Severance costs											14,327
Accretion and changes in estimate with related parties, net											13,290
Impairment of long-lived assets and other exit related costs											3,742
Gain on sale of the Extended Care Business											(111,435	)
Contingent consideration											(900	)
Other non-routine, net											12,936

EBITDA Adjustments											76,991

Interest expense											241,840
Depreciation and amortization											208,103
Amortization of capitalized software developed for sale											10,880

Income (loss) before income tax provision (benefit)										$	140,004

F-108


	Nine Months Ended December 31, 2017
	Software and Analytics		Network Solutions		Technology- enabled Services		Corporate and Eliminations			Consolidated
Revenue from external customers:
Solutions revenue	$	1,158,966	$	358,721	$	754,613	$	(19,843	)	$	2,252,457
Postage revenue		—		—		—		205,373			205,373
Inter-segment revenue		21,456		32,465		3,169		(57,090	)		—

Net revenue	$	1,180,422	$	391,186	$	757,782	$	128,440		$	2,457,830

Adjusted EBITDA	$	432,792	$	226,786	$	155,727	$	(121,252	)	$	694,053

Equity compensation											19,517
Acquisition accounting adjustments											239
Acquisition and divestiture-related costs											790
Transactions-related costs											4,626
Integration and related costs											50,137
Management fees and related costs											8,835
Costs related to recently issued accounting standards											20,452
Strategic initiatives, duplicative and transition costs											7,924
Severance costs											33,197
Accretion and changes in estimate with related parties, net											(66,763	)
Impairment of long-lived assets and other exit related costs											2,639
Other non-routine, net											28,365

EBITDA Adjustments											110,240

Interest expense											218,407
Depreciation and amortization											212,897
Amortization of capitalized software developed for sale											13,739

Income (loss) before income tax provision (benefit)										$	139,052

F-109

10. Accumulated Other Comprehensive Income (Loss)

The following is a summary of the accumulated other comprehensive income (loss) balances, net of taxes, and related changes for each of the quarterly periods in the nine months ended December 31, 2018 and 2017.


	Foreign Currency Translation Adjustment			Cash Flow Hedge			Accumulated Other Comprehensive Income (Loss)
Balance at March 31, 2017	$	(18,969	)	$	(1,180	)	$	(20,149	)
Change associated with foreign currency translation		4,913			—			4,913
Change associated with current period hedging		—			(4,701	)		(4,701	)
Reclassification into earnings		—			366			366

Balance at June 30, 2017	$	(14,056	)	$	(5,515	)	$	(19,571	)
Cumulative effect of accounting change		—			—			—
Change associated with foreign currency translation		2,021			—			2,021
Change associated with current period hedging		—			(53	)		(53	)
Reclassification into earnings		—			360			360

Balance at September 30, 2017	$	(12,035	)	$	(5,208	)	$	(17,243	)
Cumulative effect of accounting change		—			—			—
Change associated with foreign currency translation		188			—			188
Change associated with current period hedging		—			6,688			6,688
Reclassification into earnings		—			551			551

Balance at December 31, 2017	$	(11,847	)	$	2,031		$	(9,816	)

Balance at March 31, 2018	$	(14,823	)	$	6,218		$	(8,605	)
Cumulative effect of accounting change		—			1,633			1,633
Change associated with foreign currency translation		(8,638	)		—			(8,638	)
Change associated with current period hedging		—			4,016			4,016
Reclassification into earnings		—			(1,412	)		(1,412	)

Balance at June 30, 2018	$	(23,461	)	$	10,455		$	(13,006	)
Change associated with foreign currency translation		1,886			—			1,886
Change associated with current period hedging		—			6,218			6,218
Reclassification into earnings		—			(1,293	)		(1,293	)

Balance at September 30, 2018	$	(21,575	)	$	15,380		$	(6,195	)
Change associated with foreign currency translation		(8,057	)		—			(8,057	)
Change associated with current period hedging		—			(20,553	)		(20,553	)
Reclassification into earnings		—			(1,251	)		(1,251	)

Balance at December 31, 2018	$	(29,632	)	$	(6,424	)	$	(36,056	)

11. Subsequent Events

The Company has evaluated subsequent events through February 14, 2019, the date the financial statements were available to be issued.

F-110

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder

Change Healthcare, Inc.

We have audited the accompanying consolidated balance sheets of Change Healthcare, Inc. as of February 28, 2017 and December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income (loss), equity and cash flows for the period January 1, 2017 to February 28, 2017, and each of the two years in the period ended December 31, 2016. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Change Healthcare, Inc. at February 28, 2017 and December 31, 2016 and 2015, and the consolidated results of its operations and its cash flows for the period January 1, 2017 to February 28, 2017, and each of the two years in the period ended December 31, 2016, in conformity with U.S. generally accepted accounting principles.



						/s/ ERNST & YOUNG LLP

We served as the Company’s auditor from 2006 to 2017.

Nashville, Tennessee

June 1, 2017

F-111

Change Healthcare, Inc.

Consolidated Balance Sheets

(amounts in thousands, except share and per share amounts)


	February 28, 2017			December 31, 2016			December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	136,666		$	118,016		$	66,655
Accounts receivable, net of allowance for doubtful accounts of $3,237, $3,315 and $3,379 at February 28, 2017, December 31, 2016 and December 31, 2015, respectively		275,041			279,712			280,858
Prepaid expenses and other current assets		46,679			44,689			35,413

Total current assets		458,386			442,417			382,926
Property and equipment, net		224,633			230,731			244,145
Goodwill		2,171,267			2,212,898			2,213,770
Intangible assets, net		1,512,111			1,605,669			1,707,863
Other assets, net		11,591			10,827			8,500

Total assets	$	4,377,988		$	4,502,542		$	4,557,204

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	41,851		$	30,552		$	27,950
Accrued expenses		207,013			190,454			167,169
Deferred revenue		23,818			22,757			12,943
Current portion of long-term debt		25,162			25,021			32,775

Total current liabilities		297,844			268,784			240,837
Long-term debt, excluding current portion		2,737,776			2,736,013			2,741,178
Deferred income tax liabilities		191,867			195,241			214,597
Tax receivable agreement obligations to related parties		183,342			180,625			173,493
Other long-term liabilities		14,138			12,164			11,954
Commitments and contingencies
Equity:
Common stock (par value, $.01), 1,500,000 shares authorized and 1,309,064, 1,309,907, and 1,309,858 shares issued and outstanding at February 28, 2017, December 31, 2016 and December 31, 2015, respectively		13			13			13
Additional paid-in capital		1,255,496			1,375,902			1,368,013
Accumulated other comprehensive income (loss)		(298	)		(613	)		(2,656	)
Accumulated deficit		(302,190	)		(265,587	)		(190,225	)

Total equity		953,021			1,109,715			1,175,145

Total liabilities and equity	$	4,377,988		$	4,502,542		$	4,557,204

F-112

Change Healthcare, Inc.

Consolidated Statements of Operations

(amounts in thousands)


	January 1 through February 28, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015
Revenue:
Solutions revenue	$	204,427		$	1,252,219		$	1,124,188
Postage revenue		46,661			304,956			352,895

Total revenue		251,088			1,557,175			1,477,083
Costs and expenses:
Cost of operations (exclusive of depreciation and amortization below)		98,263			561,061			507,358
Development and engineering		14,203			60,048			45,489
Sales, marketing, general and administrative		77,946			278,591			217,716
Customer postage		46,661			304,956			352,895
Depreciation and amortization		43,315			252,285			342,303
Accretion		2,717			8,108			10,496
Impairment of long-lived assets		—			689			8,552

Operating income (loss)		(32,017	)		91,437			(7,726	)
Interest expense, net		30,012			185,890			168,252
Contingent consideration		—			—			(4,825	)
Other		—			—			(741	)

Income (loss) before income tax provision (benefit)		(62,029	)		(94,453	)		(170,412	)
Income tax provision (benefit)		(25,426	)		(19,091	)		(82,579	)

Net income (loss)	$	(36,603	)	$	(75,362	)	$	(87,833	)

F-113

Change Healthcare, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(amounts in thousands)


	January 1 through February 28, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015
Net income (loss)	$	(36,603	)	$	(75,362	)	$	(87,833	)
Other comprehensive income (loss):
Changes in fair value of interest rate swap, net of taxes		218			1,896			(47	)
Foreign currency translation adjustment		97			147			(654	)

Other comprehensive income (loss)		315			2,043			(701	)

Total comprehensive income (loss)	$	(36,288	)	$	(73,319	)	$	(88,534	)

F-114

Change Healthcare, Inc.

Consolidated Statements of Equity

(amounts in thousands, except share amounts)


	Common Stock						Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)
	Shares			Amount			Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Equity
Balance at January 1, 2015		1,217,052		$	12		$	1,197,620		$	(102,392	)	$	(1,955	)	$	1,093,285
Equity compensation expense		—			—			9,285			—			—			9,285
Issuance of shares in connection with equity compensation plans, net of taxes		1,232			0			305			—			—			305
Issuance of shares		94,683			1			166,575			—			—			166,576
Repurchase of common stock		(3,109	)		(0	)		(5,772	)		—			—			(5,772	)
Net income (loss)		—			—			—			(87,833	)		—			(87,833	)
Foreign currency translation adjustment		—			—			—			—			(654	)		(654	)
Change in fair value of interest rate swap, net of taxes		—			—			—			—			(47	)		(47	)

Balance at December 31, 2015		1,309,858		$	13		$	1,368,013		$	(190,225	)	$	(2,656	)	$	1,175,145

Equity compensation expense		—			—			10,147			—			—			10,147
Repurchase of common stock		(820	)		(0	)		(2,258	)		—			—			(2,258	)
Issuance of shares in connection with equity compensation plans, net of taxes		869			0			—			—			—			—
Net income (loss)		—			—			—			(75,362	)		—			(75,362	)
Foreign currency translation adjustment		—			—			—			—			147			147
Change in fair value of interest rate swap, net of taxes		—			—			—			—			1,896			1,896

Balance at December 31, 2016		1,309,907		$	13		$	1,375,902		$	(265,587	)	$	(613	)	$	1,109,715

Equity compensation expense		—			—			26,424			—			—			26,424
Issuance of shares in connection with equity compensation plans, net of taxes		900			0			(0	)		—			—			—
Repurchase of common stock		(1,743	)		(0	)		(4,183	)		—			—			(4,183	)
Distribution of eRx Network		—			—			(142,647	)		—			—			(142,647	)
Net income (loss)		—			—			—			(36,603	)		—			(36,603	)
Foreign currency translation adjustment		—			—			—			—			97			97
Change in fair value of interest rate swap, net of taxes		—			—			—			—			218			218

Balance at February 28, 2017		1,309,064		$	13		$	1,255,496		$	(302,190	)	$	(298	)	$	953,021

F-115

Change Healthcare, Inc.

Consolidated Statements of Cash Flows

(amounts in thousands)


	January 1 through February 28, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015
Operating activities
Net income (loss)	$	(36,603	)	$	(75,362	)	$	(87,833	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		43,315			252,285			342,303
Accretion		2,717			8,108			10,496
Equity compensation		26,424			10,147			9,285
Deferred income tax expense (benefit)		(25,610	)		(20,146	)		(85,938	)
Amortization of debt discount and issuance costs		2,164			13,738			10,786
Contingent consideration		—			—			(4,825	)
Gain on sale of cost method investment		—			—			—
Impairment of long-lived assets		—			689			8,552
Other		(133	)		(1,504	)		(1,820	)
Changes in operating assets and liabilities:
Accounts receivable		(4,436	)		155			5,078
Prepaid expenses and other		(4,854	)		(10,395	)		1,210
Accounts payable		6,416			(3,075	)		11,391
Accrued expenses, deferred revenue and other liabilities		21,766			38,107			(50,966	)
Tax receivable agreement obligations to related parties		—			(986	)		(944	)

Net cash provided by (used in) operating activities		31,166			211,761			166,775

Investing activities
Purchases of property and equipment		(7,358	)		(75,342	)		(56,963	)
(Payments) proceeds for acquisitions, net of cash acquired		2,187			1,502			(717,669	)
Purchases of technology-based intangible assets		(2,803	)		(49,132	)		(5,325	)

Net cash provided by (used in) investing activities		(7,974	)		(122,972	)		(779,957	)

Financing activities
Proceeds from Term Loan Facility		—			—			385,411
Payments on Term Loan Facility		—			(18,520	)		(16,500	)
Proceeds from Senior Notes		—			—			243,453
Proceeds from Revolving Facility		—			—			60,000
Payments on Revolving Facility		—			—			(60,000	)
Payment of loan costs		—			—			(2,500	)
Payment of debt assumed from acquisition		—			—			(154,469	)
Payment of data sublicense obligation		—			(7,696	)		(6,433	)
Payments of deferred financing obligations		(359	)		(8,954	)		(6,987	)
Repurchase of common stock		(4,183	)		(2,258	)		(5,772	)
Proceeds from issuance of stock		—			—			166,881
Payment of contingent consideration		—			—			(5,553	)

Net cash provided by (used in) financing activities		(4,542	)		(37,428	)		597,531

Net increase (decrease) in cash and cash equivalents		18,650			51,361			(15,651	)
Cash and cash equivalents at beginning of period		118,016			66,655			82,306

Cash and cash equivalents at end of period	$	136,666		$	118,016		$	66,655

F-116


	January 1 through February 28, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015
Supplemental disclosures of cash flow information
Cash paid for interest	$	31,824		$	140,527		$	146,521

Cash paid for income taxes	$	9		$	1,079		$	3,789

Supplemental disclosures of noncash transactions
Deferred financing obligations:
Prepaid expenses and other current assets	$	—		$	2,070		$	332

Property and equipment	$	—		$	—		$	736

Intangible assets	$	—		$	5,336		$	1,100

Other assets	$	—		$	—		$	3,107

Accounts payable	$	—		$	(716	)	$	—

Current portion of long-term debt	$	—		$	(2,825	)	$	(3,982	)

Long-term debt	$	—		$	(3,865	)	$	(1,293	)

Business combinations:
Prepaid expenses and other current assets	$	—		$	—		$	4,000

Goodwill	$	—		$			$	(4,000	)

Accrued expenses	$	—		$	—		$	—

Additional paid-in capital	$	—		$	—		$	—

Distribution of eRx
Accounts receivable	$	9,107		$	—		$	—

Prepaid expenses and other current assets	$	90		$	—		$	—

Property and equipment	$	1,188		$	—		$	—

Goodwill	$	41,631		$	—		$	—

Intangible assets	$	68,970		$	—		$	—

Accrued expenses	$	(2,137	)	$	—		$	—

Deferred revenue	$	(130	)	$	—		$	—

Deferred income taxes	$	22,083		$	—		$	—

Other long term liabilities	$	1,845		$	—		$	—

Additional paid-in capital	$	(142,647	)	$	—		$	—

F-117

Change Healthcare, Inc.

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share, Unit and Per Unit Amounts)

1.	Nature of Business and Organization

Nature of Business

Change Healthcare, Inc. (the “Company”), through its subsidiaries, is a provider of software and analytics, network solutions and technology-enabled services that optimize communications, payments and actionable insights designed to enable smarter healthcare. The Company’s integrated capabilities enable its customers to exchange mission critical information, optimize revenue opportunities, control costs, increase cash flows and efficiently manage complex workflows.

Organization

The Company was formed as a Delaware corporation in July 2011 in anticipation of the Company’s 2011 Merger, as defined below. On November 2, 2011, pursuant to an Agreement and Plan of Merger among the Company and Beagle Acquisition Corp. (“Merger Sub”), Merger Sub merged with and into the Change Healthcare Holdings, Inc. (“CHH”) with the Company surviving the merger (the “2011 Merger”). Subsequent to the 2011 Merger, CHH became an indirect wholly-owned subsidiary of the Company, which is controlled by affiliates of The Blackstone Group L.P. (“Blackstone”).

MTS Transaction

On June 28, 2016, the Company and its stockholders—including affiliates of Blackstone and Hellman & Friedman LLC (“Hellman & Friedman”)—entered into an Agreement of Contribution and Sale (the “Contribution Agreement”) with McKesson Corporation (“McKesson”). Under the terms of the Contribution Agreement, the Company’s stockholders and McKesson agreed to form a joint venture (“NewCo”) that combined the majority of the McKesson Technology Solutions businesses (“MTS”) with the Company’s businesses (“the MTS Transaction”), including substantially all of the assets and operations of the Company, but excluding the Company’s pharmacy claims switching and prescription routing businesses (“eRx Network”). McKesson retained its Enterprise Information Solutions business and its RelayHealth Pharmacy Network and eRx Network was retained by the Company’s stockholders. The MTS Transaction was completed on March 1, 2017.

Pursuant to the terms of the Contribution Agreement, (i) the Company’s stockholders, directly and indirectly, transferred ownership of the Company to NewCo in consideration of (a) the payment at the closing of the MTS Transaction by NewCo to the Company’s stockholders and participants in the Change Healthcare, Inc. Amended and Restated 2009 Equity Incentive Plan (the “Equity Plan”) of approximately $1.75 billion and (b) the issuance to the Company’s stockholders of membership interests representing approximately 30% of NewCo’s equity interests with such interests being held by the Company’s stockholders indirectly through HCIT Holdings, Inc. (“HCIT”); and (ii) McKesson caused MTS to be transferred to NewCo in consideration of (a) NewCo’s assumption, and subsequent repayment to McKesson at the closing of the MTS Transaction, of a promissory note in the aggregate principal amount of approximately $1.25 billion, (b) the issuance of membership interests in NewCo representing approximately 70% of NewCo’s equity interests and (c) a tax receivable agreement from NewCo. Actual cash payment and equity amounts are subject to certain adjustments in accordance with the Contribution Agreement.

In connection with the MTS Transaction, NewCo entered into a new senior secured credit facility, consisting of a term loan facility in the amount of $5.1 billion and a revolving credit facility in an aggregate principal amount of $500 million, and issued $1.0 billion of 5.75% senior notes due 2025. The proceeds were used to make all payments to the Company’s stockholders and McKesson described above, to refinance certain of

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the Company’s existing indebtedness and to pay fees and expenses incurred in connection with the MTS Transaction. The revolving credit facility also will be available for ongoing working capital and other general corporate purposes of NewCo and its subsidiaries following completion of the MTS Transaction.

The Company incurred $28,355 of legal, accounting, consulting and other expenses related to the MTS Transaction during the year ended December 31, 2016, of which $11,352 was for the primary benefit of NewCo. Upon closing of the MTS Transaction, in accordance with the Contribution Agreement, NewCo became obligated to directly pay such expenses incurred for the benefit of NewCo to the extent they had not been previously paid by either the Company or McKesson and to reimburse the Company and McKesson for any such expenses that had been previously paid. As a result, the Company reduced its expenses by $11,352 during the two-month period ended February 28, 2017.

Upon closing of the MTS Transaction, the Company also incurred expense of approximately $24,611 related to the accelerated vesting of a portion of outstanding stock-based awards under the Equity Plan and $3,997 of expense related to other incentive awards. Additionally, because the MTS Transaction qualified as a covered change in control under certain of the Company’s tax receivable agreements, the Company could be required to make payments in the future that significantly exceed its actual cash tax savings from the tax benefits giving rise to such payments.

2.	Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and include all subsidiaries and entities that are controlled by the Company. The results of operations for companies acquired are included in the consolidated financial statements from the effective date of acquisition. All material intercompany accounts and transactions have been eliminated in the consolidated financial statements.

Reclassifications

Certain reclassifications have been made to prior period financial statements to conform to the current period presentation.

Accounting Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company bases its estimates on historical experience, current business factors and various other assumptions that the Company believes are necessary to consider in order to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses and disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic, environmental and political factors and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in the reported results of operations; and if material, the effects of changes in estimates are disclosed in the notes to the consolidated financial statements. Estimates and assumptions by management affect: the allowance for doubtful accounts; the fair value assigned to assets acquired and liabilities assumed in business combinations; tax receivable agreement obligations; the fair value of interest rate swap obligations; contingent consideration; loss accruals; the carrying value of long-lived assets (including goodwill and intangible assets); the amortization period of long-lived assets (excluding

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goodwill); the carrying value, capitalization and amortization of software development costs; the provision and benefit for income taxes and related deferred tax accounts; certain accrued expenses; revenue recognition; contingencies; and the value attributed to equity awards.

Business Combinations

The Company recognizes the consideration transferred (i.e., purchase price) in a business combination, as well as the acquired business’ identifiable assets, liabilities and noncontrolling interests at their acquisition date fair value. The excess of the consideration transferred over the fair value of the identifiable assets, liabilities and noncontrolling interest, if any, is recorded as goodwill. Any excess of the fair value of the identifiable assets acquired and liabilities assumed over the consideration transferred, if any, is generally recognized within earnings as of the acquisition date.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity from the date of purchase of three months or less to be cash equivalents.

Allowance for Doubtful Accounts

Software Development Costs

The Company generally provides services to its customers using software developed for internal use. The costs that are incurred to develop such software are expensed as incurred during the preliminary project stage. Once certain criteria have been met, direct costs incurred in developing or obtaining computer software are capitalized. Training and maintenance costs are expensed as incurred. Capitalized software costs are included in property and equipment in the accompanying consolidated balance sheets and are amortized over a three-year period.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation, including that related to assets under capital lease, is computed using the straight-line method over the estimated useful lives of the related assets. The useful lives for newly acquired assets are generally as follows:


Computer equipment			3-5 years
Production equipment			5-7 years
Office equipment, furniture and fixtures			3-7 years
Internally developed software			3 years
Technology			6-9 years
Leasehold improvements			Shorter of useful life or lease term

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Expenditures for maintenance, repair and renewals of minor items are expensed as incurred. Expenditures for maintenance repair and renewals that extend the useful life of an asset are capitalized.

Goodwill and Intangible Assets

Goodwill and intangible assets resulting from the Company’s acquisitions are accounted for using the acquisition method of accounting. Intangible assets with definite lives are amortized on a straight-line basis, at their inception, over the estimated useful lives of the related assets generally as follows:


Customer relationships			5-20 years
Tradenames			3-20 years
Data sublicense agreement			6 years
Non-compete agreements			2-5 years
Premise-based software			1-3 years

The Company assesses its goodwill for impairment annually (as of October 1 of each year) or whenever significant indicators of impairment are present. The Company first assesses whether it can reach a more likely than not conclusion that goodwill is not impaired via qualitative analysis alone. To the extent such a conclusion cannot be reached based on a qualitative assessment alone, the Company, using the assistance of a valuation specialist as appropriate, compares the fair value of each reporting unit to its associated carrying value. If the fair value of the reporting unit is less than the carrying value, then a hypothetical acquisition method allocation is performed to determine the amount of the goodwill impairment to recognize. The Company recognized no impairment in conjunction with its most recent goodwill impairment analysis.

Long-Lived Assets

Derivatives

Derivative financial instruments are used to manage the Company’s interest rate exposure. The Company does not enter into financial instruments for speculative purposes. Derivative financial instruments are accounted for and measured at fair value and recorded on the balance sheet. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transaction in the same period or periods during which the hedged transaction affects earnings (for example, in “interest expense” when the hedged transactions are interest cash flows associated with floating-rate debt). The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any, is recognized in interest expense in current earnings during the period of change.

Equity Compensation

Compensation expense related to the Company’s equity awards is generally recognized on a straight-line basis over the requisite service period. For awards subject to vesting based on market or performance conditions, however, compensation expense is recognized under the accelerated method. The fair value of the equity awards subject only to service conditions is determined by use of a Black-Scholes model. The fair value of the equity awards subject to market or performance conditions is determined by use of a Monte Carlo simulation.

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Revenue Recognition

The Company generates most of its revenue by using technology solutions to provide services to our customers that automate and simplify business and administrative functions for payers, providers and pharmacies, generally on either a per transaction, per document, per communication, per member per month, per provider per month, monthly flat fee, contingent fee or hourly basis.

Revenue for financial and administrative information exchange, payment and communication, risk adjustment, quality reporting and healthcare consulting solutions are recognized as the services are provided. Postage fees related to our payment and communication solutions volumes are recorded on a gross basis. Revenue for our eligibility and enrollment and revenue optimization solutions generally are recognized at the time that our provider customer receives notice from the payer of a pending payment. Revenue for payment integrity solutions are recognized at the time that notice of customer acceptance is received.

Cash receipts or billings in advance of revenue recognition are recorded as deferred revenue in the accompanying consolidated balance sheets.

The Company excludes sales and use tax from revenue in the accompanying consolidated statements of operations.

Income Taxes

Deferred income taxes reflect the available net operating losses and the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of the future tax benefits related to deferred tax assets is dependent on many factors, including the Company’s past earnings history, expected future earnings, the character and jurisdiction of such earnings, reversing taxable temporary differences, unsettled circumstances that, if unfavorably resolved, would adversely affect utilization of its deferred tax assets, carryback and carryforward periods and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset.

Tax Receivable Agreement Obligations

In connection with CHH’s August 2009 initial public offering, the Company entered into tax receivable agreements which obligated the Company to make payments to certain current and former owners of the Company, including affiliates of Hellman & Friedman LLC (“Hellman & Friedman”) and certain members of management, equal to 85% of the applicable cash savings that the Company realizes as a result of tax attributes arising from certain previous transactions, including the 2011 Merger. In connection with the 2011 Merger, the Company’s former majority owner assigned its rights under the tax receivable agreements to affiliates of Blackstone (Blackstone, together with Hellman & Friedman and certain current and former members of management, are hereinafter sometimes referred to collectively as the “TRA Members”).

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Prior to the 2011 Merger, the Company’s balance sheet reflected these obligations at the amount that was both probable and reasonably estimable. In connection with the 2011 Merger, the tax receivable agreement obligations were adjusted to their fair value. The fair value of the obligations at the time of the 2011 Merger is being accreted to the amount of the gross expected obligations using the interest method. Changes in the amount of these obligations resulting from changes to either the timing or amount of cash flows are recognized in the period of change and measured using the discount rate inherent in the initial fair value of the obligations. The accretion of these obligations is classified as a separate caption in the accompanying consolidated statements of operations.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, which replaces most prior general and industry specific revenue recognition guidance with a principles-based comprehensive revenue recognition framework. Under this revised framework, a company will recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. This update is effective for fiscal years and interim periods beginning in those years after December 15, 2017. Early adoption is permitted in years beginning after December 15, 2016. Upon adoption, a company may elect to either retrospectively restate each prior reporting period or reflect the cumulative effect of initially applying the update with an adjustment to retained earnings at the date of adoption. While the Company cannot yet determine the effect the adoption of this update will have on its financial statements, the Company believes that significant changes to its accounting policies, estimation processes, internal controls and information systems, as well as significant implementation costs prior to adoption, will be necessary to comply with this update. Such changes are expected to be necessary to accumulate information and data required to estimate the transaction prices in our contracts, and to allocate such transaction prices to the specific performance obligations in our contracts, as a result of variability from volume-based pricing, price increases, contingent fees, service level agreements and other arrangements. Due to the extent of the expected data that will need to be accumulated, the Company expects to adopt the modified retrospective transition method.

In February 2016, the FASB issued ASU No. 2016-02, which generally requires that all lease obligations be recognized on the balance sheet at the present value of the remaining lease payments with a corresponding lease asset. This update is scheduled to be effective for fiscal years and interim periods beginning in those years after December 15, 2018. The Company is currently assessing the potential effects this update may have on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, which requires that a financial asset (or group of financial assets) measured at amortized cost be presented at the net amount expected to be collected based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. This update is scheduled to be effective for fiscal years and interim periods beginning in those years after December 15, 2019, with early adoption permitted beginning with fiscal years beginning after December 15, 2018. The Company is currently assessing the potential effects this update may have on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, which provides a screen to determine when an integrated set of assets and activities represents a business. Specifically, this update requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set of assets and activities is not a business. This update is scheduled to be effective for fiscal years and interim periods beginning in those years after December 15, 2017. The Company is currently assessing the potential effects this update may have on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, which generally provides that an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair

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value, subject to a restriction that the impairment charge cannot exceed the value of the total goodwill of the reporting unit. This update is scheduled to be effective for fiscal years and interim periods beginning in those years after December 15, 2019, with early adoption permitted. The Company does not expect the adoption of this update to have a material effect on its consolidated financial statements.

In January 2015, the Company adopted FASB ASU No. 2014-08, which changes the requirements for reporting discontinued operations. Following adoption of this update, discontinued operations generally will be reported for the disposal, by sale or otherwise, of a component or a group of components that represents a strategic shift that has or will have a major effect on an entity’s operations and financial results. Upon adoption, this update had no effect on the Company’s consolidated financial statements.

In July 2015, the Company adopted FASB ASU No. 2015-05, which provides guidance to customers about whether a cloud computing arrangement includes a software license and requires that all software licenses utilized in internal use software arrangements be accounted for consistent with other licenses of intangible assets. As a result, following the adoption of this update, the Company began recognizing new or materially modified software licenses within intangible assets on its consolidated balance sheet and began recognizing the related amortization of these intangible assets within amortization expense. The adoption of this update had no material effect on the Company’s consolidated financial statements.

In October 2015, the Company adopted FASB ASU No. 2015-16, which simplifies the accounting for measurement period adjustments in connection with business combinations. Following the adoption of this update, the Company recognizes adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The adoption of this update had no material effect on the Company’s consolidated financial statements.

In January 2016, the Company adopted FASB ASU No. 2014-12, which clarifies, in the context of share-based payment awards, that a performance target that affects vesting and could be achieved after the requisite service period has been rendered should be treated as a performance condition. Prior to this update, because there was no explicit guidance, there was diversity in practice among companies. The adoption of this update had no material effect on the Company’s consolidated financial statements.

In August 2016, the Company adopted FASB ASU No. 2016-15, which specifies the treatment within the statement of cash flows of eight specific matters including the treatment of debt prepayment or debt extinguishment costs and contingent consideration payments made after a business combination, among other matters. The adoption of this update had no material effect on the Company’s consolidated financial statements.

In January 2017, the Company adopted FASB ASU No. 2016-09, which generally requires that all income tax effects of share-based payment awards be recognized in the statement of operations when the awards vest or are settled. It also allows an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. The adoption of this standard had no material effect on the Company’s consolidated financial statements.

3.	Concentration of Credit Risk

The Company’s revenue is primarily generated in the United States. Changes in economic conditions, government regulations or demographic trends, among other matters, in the United States could adversely affect the Company’s revenue and results of operations.

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4.	Business Combinations and Disposal Transaction

Business Combinations

In July 2014, the Company acquired all of the equity interests of Capario, Inc. (“Capario”), a technology-enabled provider of revenue cycle management solutions.

In November 2014, the Company acquired all of the equity interests of Change Healthcare Corporation (“Engagement Solutions”), a technology-enabled provider of healthcare consumer engagement and transparency solutions.

In December 2014, the Company acquired all of the equity interests of Adminisource Communications, Inc. (“Adminisource”), a technology-enabled provider of payment and communication solutions.

In August 2015, the Company acquired all of the equity interests of Altegra Health, Inc. (“Altegra Health”), a technology-enabled provider that assists payers and risk bearing providers with analytics and reporting capabilities for risk adjustment, member engagement and quality analysis to achieve actionable insights and improved management for value-based healthcare.

The following table summarizes certain information related to these acquisitions.


	Altegra Health			Adminisource			Engagement Solutions			Capario
Total Consideration Fair Value at Acquisition Date:
Cash paid at closing	$	735,669		$	34,825		$	138,329		$	89,423
Contingent consideration		—			—			4,730			—
Options fair value		—			—			650			—
Other		(4,000	)		(925	)		80			(219	)

	$	731,669		$	33,900		$	143,789		$	89,204

Allocation of the Consideration Transferred:
Cash	$	17,176		$	—		$	8,053		$	2,292
Accounts receivable		51,954			6,474			335			4,839
Prepaid expenses and other current assets		7,648			466			397			1,113
Deferred income tax assets		—			3,797			9,170			—
Property and equipment		40,521			874			7,953			9,580
Identifiable intangible assets:
Tradename		17,930			108			5,300			900
Noncompetition agreements		43,040			—			2,840			2,740
Customer relationships		351,290			21,230			4,430			38,510
Other		633			—			—			—
Goodwill		531,404			3,223			109,994			76,279
Accounts payable		(836	)		(279	)		(174	)		(2,270	)
Accrued sales taxes		(4,228	)		—			—			—
Other accrued expenses		(51,006	)		(1,993	)		(2,203	)		(8,818	)
Deferred revenue		(5,100	)					(306	)		(2	)
Current maturities of long-term debt		—			—			—			(2,600	)
Deferred income tax liabilities		(114,288	)		—			—			(14,367	)
Long-term debt		(154,469	)		—			(2,000	)		(18,785	)
Other long-term liabilities		—			—			—			(207	)

Total consideration transferred	$	731,669		$	33,900		$	143,789		$	89,204

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	Altegra Health		Adminisource		Engagement Solutions			Capario
Acquisition costs in sales, marketing, general and administrative expense:
For the period ended February 28, 2017	$	—	$	—	$	—		$	—
For the year ended December 31, 2016	$	—	$	—	$	—		$	—
For the year ended December 31, 2015	$	4,685	$	—	$	48		$	—
Other Information:
Gross contractual accounts receivable	$	54,608	$	7,521	$	335		$	5,112
Amount not expected to be collected	$	2,654	$	1,047	$	—		$	273
Goodwill expected to be deductible for tax purposes	$	—	$	—	$	—		$	—
Contingent Consideration Information:
Contingent consideration range		N/A		N/A		$0-$50,000			N/A
Measurement period		N/A		N/A		January 1, 2015 to December 31, 2017			N/A
Basis of measurement		N/A		N/A		Revenue performance			N/A
Type of measurement		N/A		N/A		Level 3			N/A
Key assumptions at the acquisition date:
Range of annual revenue performance		N/A		N/A		$5,516 - $51,376			N/A
Expected payment date(s)		N/A		N/A		2016-2018			N/A
Discount rate(s)		N/A		N/A		10.5% to 11.3%			N/A
Increase (decrease) to net loss:
For the period ended February 28, 2017		N/A		N/A	$	—			N/A
For the year ended December 31, 2016		N/A		N/A	$	—			N/A
For the year ended December 31, 2015		N/A		N/A	$	(4,730	)		N/A

In connection with the Altegra acquisition, the Company recognized pre-acquisition contingencies of $4,228 within goodwill which were resolved subsequent to the measurement period. The resolution of these pre-acquisition contingencies following the measurement period resulted in an increase to pretax income of $1,098 during the year ended December 31, 2016.

Disposal of eRx Network

In February 2017, the Company, distributed all of its interest in eRx Network to the stockholders of the Company, subject to an option purchase agreement whereby the Company retains the right to reacquire eRx Network in the event that McKesson ceases to own at least 5% of the membership units in NewCo. The option, with a term of five years, specifically provides the Company the right to purchase the stock of eRx Network for

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the sum of one dollar and the product of twelve and the increase in trailing twelve month EBITDA from closing of the transaction to the period immediately prior to the exercise of the purchase option.

No gain or loss was recognized upon the distribution. The difference in the eRx Network assets and liabilities at the distribution date has been reflected as a reduction of additional paid in capital of the Company during the two-month period ended February 28, 2017. The distributed assets and liabilities are disclosed separately in the supplemental information section of the consolidated statements of cash flows, included herein.

5.	Property and Equipment

Property and equipment as of February 28, 2017, December 31, 2016 and December 31, 2015, consisted of the following:


	February 28, 2017			December 31, 2016			December 31, 2015
Computer equipment	$	91,911		$	89,820		$	72,628
Production equipment		26,235			26,243			25,484
Office equipment, furniture and fixtures		16,529			15,070			12,766
Software		241,170			226,995			177,833
Technology		206,436			206,436			192,157
Leasehold improvements		44,731			44,101			36,745
Construction in process		17,674			26,163			42,774

		644,686			634,828			560,387
Less accumulated depreciation		(420,053	)		(404,097	)		(316,242	)

Property and equipment, net	$	224,633		$	230,731		$	244,145

Depreciation expense was $16,214, $96,008 and $90,294 for the period from January 1, 2017 to February 28, 2017 and the years ended December 31, 2016 and 2015, respectively.

6.	Goodwill and Intangible Assets

The following table presents the changes in the carrying amount of goodwill for the indicated periods.


	Software and Analytics			Network Solutions			Technology- enabled Services		Total
December 31, 2015		1,105,163			614,567			494,040		2,213,770
Other		(872	)		—			—		(872	)
December 31, 2016		1,104,291			614,567			494,040		2,212,898
eRx Network disposal		—			(41,631	)		—		(41,631	)

February 28, 2017	$	1,104,291		$	572,936		$	494,040	$	2,171,267

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Intangible assets subject to amortization as of February 28, 2017 consisted of the following:


	Weighted Average Remaining Life		Gross Carrying Amount		Accumulated Amortization			Net
Customer relationships		13.4	$	1,888,212	$	(455,983	)	$	1,432,229
Tradenames		4.1		24,138		(6,957	)		17,181
Non-compete agreements		0.8		43,472		(28,191	)		15,281
Data sublicense agreement		0.6		31,000		(27,931	)		3,069
Technology-based intangible assets		2.3		58,580		(17,016	)		41,564
Other		4.7		3,401		(614	)		2,787

Total			$	2,048,803	$	(536,692	)	$	1,512,111

Intangible assets subject to amortization as of December 31, 2016 consisted of the following:


	Weighted Average Remaining Life		Gross Carrying Amount		Accumulated Amortization			Net
Customer relationships		13.6	$	1,982,260	$	(462,440	)	$	1,519,820
Tradenames		4.3		24,138		(6,265	)		17,873
Non-compete agreements		1.0		43,472		(25,179	)		18,293
Data sublicense agreement		0.8		31,000		(27,058	)		3,942
Technology-based intangible assets		2.6		55,806		(13,110	)		42,696
Other		4.8		3,660		(615	)		3,045

Total			$	2,140,336	$	(534,667	)	$	1,605,669

Intangible assets subject to amortization as of December 31, 2015 consisted of the following:


	Weighted Average Remaining Life		Gross Carrying Amount		Accumulated Amortization			Net
Customer relationships		14.6	$	1,979,182	$	(350,846	)	$	1,628,336
Tradenames		5.2		24,775		(2,757	)		22,018
Non-compete agreements		1.7		61,852		(21,529	)		40,323
Data sublicense agreement		1.8		31,000		(21,821	)		9,179
Other		2.6		11,654		(3,647	)		8,007

Total			$	2,108,463	$	(400,600	)	$	1,707,863

Amortization expense was $27,100, $156,277 and $252,008 for the period from January 1, 2017 to February 28, 2017 and the years ended December 31, 2016 and 2015, respectively.

Aggregate future amortization expense for intangible assets is estimated to be:


2017 (remaining)	$	119,382
2018		144,150
2019		111,695
2020		109,113
2021		106,433
Thereafter		921,338

	$	1,512,111

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7.	Accrued Expenses

Accrued expenses as of February 28, 2017, December 31, 2016 and December 31, 2015 consisted of the following:


	February 28, 2017		December 31, 2016		December 31, 2015
Customer deposits	$	25,843	$	25,756	$	29,136
Accrued compensation		52,863		34,631		34,235
Accrued rebates		7,371		8,196		7,494
Accrued telecommunications		3,279		3,754		4,257
Accrued outside services		39,636		32,977		8,387
Accrued insurance		4,530		4,835		4,208
Accrued income, sales and other taxes		3,871		3,078		9,180
Accrued interest		31,319		35,642		7,376
Interest rate swap agreement		2,059		2,521		1,870
Accrued liabilities for purchases of property and equipment		3,979		5,208		2,883
Current portion of contingent consideration		—		—		4,650
Current portion of tax receivable agreement obligations to related parties		980		980		986
Pass-through payments		6,598		6,663		28,222
Other accrued liabilities		24,685		26,213		24,285

	$	207,013	$	190,454	$	167,169

8.	Long-Term Debt

The Company’s long-term indebtedness is comprised of a senior secured term loan facility (as amended, the “Term Loan Facility”), a revolving credit facility (the “Revolving Facility”; together with the Term Loan Facility, the “Senior Credit Facilities”), 11% senior notes due 2019 (the “2019 Notes”), 11.25% senior notes due 2020 (the “2020 Notes”) and 6% senior notes due 2021 (the “2021 Notes”; together with the 2019 Notes and 2020 Notes, the “Senior Notes”).

Long-term debt as of February 28, 2017, December 31, 2016 and December 31, 2015 consisted of the following:


	February 28, 2017		December 31, 2016		December 31, 2015
Senior Credit Facilities
$1,696 million Senior Secured Term Loan facility, due November 2, 2018, net of unamortized discount of $14,116, $15,441 and $23,511 at February 28, 2017, December 31, 2016 and December 31, 2015, respectively (effective interest rate of 4.29%)	$	1,614,455	$	1,613,131	$	1,621,981
$160 million Senior Secured Term Loan facility, due November 2, 2018, net of unamortized discount of $2,005, $2,193 and $3,334 at February 28, 2017, December 31, 2016 and December 31, 2015, respectively (effective interest rate of 4.54%)		154,395		154,207		154,666

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	February 28, 2017			December 31, 2016			December 31, 2015
$125 million Senior Secured Revolving Credit facility, $28.4 million expired on November 2, 2016 and $96.6 million expiring on August 3, 2018, and bearing interest at a variable base rate plus a spread rate		—			—			—
Senior Notes
$375 million 11% Senior Notes due December 31, 2019, net of unamortized discount of $4,750, $4,984 and $6,299 at February 28, 2017, December 31, 2016 and December 31, 2015, respectively (effective interest rate of 11.53%)		370,250			370,016			368,701
$375 million 11.25% Senior Notes due December 31, 2020, net of unamortized discount of $6,916, $7,151 and $8,471 at February 28, 2017, December 31, 2016 and December 31, 2015, respectively (effective interest rate of 11.85%)		368,084			367,849			366,529
$250 million 6% Senior Notes due February 15, 2021, net of unamortized discount of $4,932, $5,114 and $6,161 at February 28, 2017, December 31, 2016 and December 31, 2015, respectively (effective interest rate of 6.57%)		245,068			244,886			243,839
Obligation under data sublicense agreement		3,074			3,074			10,810
Other		7,612			7,871			7,427
Less current portion		(25,162	)		(25,021	)		(32,775	)

Long-term debt	$	2,737,776		$	2,736,013		$	2,741,178

Senior Credit Facilities

The credit agreement governing the Senior Credit Facilities (the “Senior Credit Agreement”) provides that, subject to certain conditions, the Company may request additional tranches of term loans, increase commitments under the Revolving Facility or the Term Loan Facility or add one or more incremental revolving credit facility tranches (provided that the revolving credit commitments outstanding at any time have no more than three different maturity dates) in an aggregate amount not to exceed (a) $300,000 plus (b) an unlimited amount at any time, subject to compliance on a pro forma basis with a first lien net leverage ratio of no greater than 4.00 to 1.00. Availability of such additional tranches of term loans or revolving credit facilities and/or increased commitments is subject to, among other conditions, the absence of any default under the Senior Credit Agreement and the receipt of commitments by existing or additional financial institutions. Proceeds of the Revolving Facility, including up to $30,000 in the form of borrowings on same-day notice, referred to as swingline loans, and up to $50,000 in the form of letters of credits ($6,051 outstanding as of February 28, 2017), are available to provide financing for working capital and general corporate purposes.

Borrowings under the Senior Credit Facilities bear interest at an annual rate equal to an applicable margin plus, at the Company’s option, either (a) a base rate determined by reference to the highest of (i) the applicable prime rate, (ii) the federal funds rate plus 0.50% and (iii) a LIBOR rate determined by reference to the costs of funds for United States dollar deposits for an interest period of one month, adjusted for certain additional costs, plus 1.00%, which base rate, in the case of the Term Loan Facility only, shall be no less than 2.25%, or (b) a LIBOR rate determined by reference to the costs of funds for United States dollar deposits for the interest period

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relevant to such borrowing, adjusted for certain additional costs, which, in the case of the Term Loan Facility only, shall be no less than 1.25%.

In April 2012, the Company amended the Senior Credit Agreement to reprice the Senior Credit Facilities and borrow $80,000 of additional term loans. In April 2013, the Company again amended the Senior Credit Agreement to further reprice, and also to modify certain financial covenants under the Senior Credit Facilities. Following the April 2013 amendment, the interest rate on both the Term Loan Facility and Revolving Facility is LIBOR plus 2.50%. The Term Loan Facility remains subject to a LIBOR floor of 1.25%, and there continues to be no LIBOR floor on the Revolving Facility. In connection with the April 2013 repricing, the Senior Credit Agreement also was amended to, among other things, eliminate the financial covenant related to the consolidated cash interest coverage ratio and modify the financial covenant related to the net leverage test by maintaining the required first lien net leverage ratio at 5.35 to 1.00 for the remaining term of the Senior Credit Facilities.

In December 2014 and August 2015, through further amendments to the Senior Credit Agreement, the Company borrowed an additional $160,000 and $395,000, respectively, under incremental term loan facilities on identical terms and having the same rights and obligations as the existing term loans under the Senior Credit Agreement.

In addition to paying interest on outstanding principal under the Senior Credit Facilities, the Company is required to pay customary agency fees, letter of credit fees and a 0.50% commitment fee in respect of the unutilized commitments under the Revolving Facility.

The Senior Credit Agreement requires that the Company prepay outstanding loans under the Term Loan Facility, subject to certain exceptions, with (a) 100% of the net cash proceeds of any incurrence of debt other than debt permitted under the Senior Credit Agreement, (b) 50% (which percentage will be reduced to 25% and 0% based on the Company’s first lien net leverage ratio) of the Company’s annual excess cash flow and (c) 100% of the net cash proceeds of certain asset sales and casualty and condemnation events, subject to reinvestment rights and certain other exceptions.

The Company generally may voluntarily prepay outstanding loans under the Senior Credit Facilities at any time without premium or penalty other than breakage costs with respect to LIBOR loans.

The Company is required to make quarterly payments equal to 0.25% of the aggregate principal amount of the loans under the Term Loan Facility, with the balance due and payable on November 2, 2018.

Certain of the Company’s United States wholly-owned restricted subsidiaries are co-borrowers and jointly and severally liable for all obligations under the Senior Credit Facilities. Such obligations of the co-borrowers are unconditionally guaranteed by Change Healthcare Intermediate Holdings, Inc. (a direct wholly-owned subsidiary of the Company) and each of its existing and future United States wholly-owned restricted subsidiaries (with certain exceptions including immaterial subsidiaries). These obligations are secured by a perfected security interest in substantially all of the assets of the co-borrowers and guarantors now owned or later acquired, including a pledge of all of the capital stock of the Company and its United States wholly-owned restricted subsidiaries and 65% of the capital stock of its foreign restricted subsidiaries, subject in each case to the exclusion of certain assets and additional exceptions.

The Senior Credit Agreement requires the Company to comply with a maximum first lien net leverage ratio financial maintenance covenant, to be tested on the last day of each fiscal quarter. A breach of the first lien net leverage ratio covenant is subject to certain equity cure rights. In addition, the Senior Credit Facilities contain a number of negative covenants that, among other things and subject to certain exceptions, restrict the Company’s ability and the ability of its subsidiaries to:

•

incur additional indebtedness or guarantees;

F-131

•

incur liens;

•

make investments, loans and acquisitions;

•

consolidate or merge;

•

sell assets, including capital stock of subsidiaries;

•

pay dividends on capital stock or redeem, repurchase or retire capital stock of the Company or any restricted subsidiary;

•

alter the business of the Company;

•

amend, prepay, redeem or purchase subordinated debt;

•

engage in transactions with affiliates; and

•

enter into agreements limiting dividends and distributions of certain subsidiaries.

The Senior Credit Agreement also contains certain customary representations and warranties, affirmative covenants and provisions relating to events of default (including upon change of control).

As of February 28, 2017 and December 31, 2016, the Company believes it was in compliance with all of the applicable debt covenants under the Senior Credit Agreement.

As further described in Note 1, upon the closing of the MTS Transaction, all outstanding indebtedness under Senior Credit Facilities was repaid using proceeds from new debt instruments entered into in connection with the MTS Transaction.

Senior Notes

The 2019 Notes bear interest at an annual rate of 11.00% with interest payable semi-annually on June 30 and December 31 of each year. The 2019 Notes mature on December 31, 2019. The 2020 Notes bear interest at an annual rate of 11.25% with interest payable quarterly on March 31, June 30, September 30 and December 31 of each year. The 2020 Notes mature on December 31, 2020. The 2021 Notes bear interest at an annual rate of 6.00% with interest payable semi-annually on April 15 and October 15 of each year, commencing on April 15, 2016. The 2021 Notes mature on February 15, 2021.

The Company may redeem the 2019 Notes, the 2020 Notes or both, in whole or in part, at any time on or after December 31, 2015 at the applicable redemption price, plus accrued and unpaid interest.

The Company may redeem the 2021 Notes, in whole or in part, at any time on or after August 15, 2017 at the applicable redemption price, plus accrued and unpaid interest. At any time prior to August 15, 2017, the Company may, at its option and on one or more occasions, redeem up to 40% of the aggregate principal amount of the 2021 Notes at a redemption price equal to 100% of the aggregate principal amount, plus a premium and accrued and unpaid interest with the net cash proceeds of certain equity offerings. At any time prior to August 15, 2017, the Company may redeem the 2021 Notes, in whole or in part, at its option and on one or more occasions, at a redemption price equal to 100% of the principal amount, plus a “make-whole premium” and accrued and unpaid interest.

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by all of its existing and subsequently acquired or organized wholly-owned United States restricted subsidiaries that guarantee the Senior Credit Facilities or its other indebtedness or indebtedness of any affiliate guarantor. The Senior Notes and the related guarantees are effectively subordinated to the Company’s existing and future secured obligations and that of its affiliate guarantors to the extent of the value of the collateral securing such obligations, and are structurally subordinated to all existing and future indebtedness and other liabilities of any of the Company’s subsidiaries that do not guarantee the Senior Notes.

The indentures governing the Senior Notes (the “Indentures”) contain customary covenants that restrict the ability of the Company and its restricted subsidiaries to:

•

pay dividends on capital stock or redeem, repurchase or retire capital stock of the Company, subject to customary exceptions, including compliance with a fixed charge coverage ratio and subject to limitation based on net income generated during the term of the Indentures;

•

incur additional indebtedness or issue certain capital stock;

•

incur certain liens;

•

make investments, loans, advances and acquisitions;

•

consolidate, merge or transfer all or substantially all of their assets and the assets of their subsidiaries;

•

prepay subordinated debt;

•

engage in certain transactions with affiliates; and

•

enter into agreements restricting the subsidiaries’ ability to pay dividends.

The Indentures also contain certain customary affirmative covenants and events of default.

As of February 28, 2017 and December 31, 2016, the Company believes it was in compliance with all of the applicable debt covenants under the Senior Notes.

As further described in Note 1, upon the closing of the MTS Transaction, all outstanding indebtedness under Senior Notes was repaid using proceeds from new debt instruments entered into in connection with the MTS Transaction.

Obligation Under Data Sublicense Agreement

In 2009 and 2010, the Company acquired certain additional rights to specified uses of its data from the former owner of the Company’s business in order to broaden the Company’s ability to pursue business intelligence and data analytics solutions for payers and providers. The Company previously licensed exclusive rights to this data to the former owner of the Company’s business. In connection with these data rights acquisitions, the Company recorded amortizable intangible assets and corresponding obligations at inception based on the present value of the scheduled annual payments through 2018, which totaled $65,000 in the aggregate (approximately $3,500 remained payable at February 28, 2017 and December 31, 2016). In connection with the 2011 Merger, the Company was required to adjust this obligation to its fair value.

Other

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Aggregate Future Maturities

The aggregate amounts of future maturities under long-term debt arrangements are as follows:


2017 (remaining)	$	25,162
2018		1,769,257
2019		375,413
2020		375,413
2021		250,413
Thereafter		—

	$	2,795,658

9.	Interest Rate Swap

Risk Management Objective of Using Derivatives

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swap and cap agreements as part of its interest rate risk management strategy.

In January 2012, the Company executed three interest rate swap agreements, which expired in February 2017, to hedge the variable cash flows associated with existing variable-rate debt pursuant to the Term Loan Facility. In March 2016, the Company executed two annuitized interest rate cap agreements with a combined notional amount of $650,000 to limit the exposure of the variable component of interest rates under the Term Loan Facility or future variable rate indebtedness to a maximum of 1.25%, beginning in March 2017 and expiring in March 2020. As of February 28, 2017 and December 31, 2016, the Company’s outstanding interest rate swap agreements and interest rate cap agreements were designated as cash flow hedges of interest rate risk and determined to be highly effective.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the twelve months subsequent to February 28, 2017, the Company estimates that an additional $970 will be reclassified as an increase to interest expense.

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The following table summarizes the fair value of the Company’s derivative instruments at February 28, 2017, December 31, 2016 and December 31, 2015, respectively:


	Fair Values of Derivative Financial Instruments Asset (Liability)
	Balance Sheet Location		February 28, 2017			December 31, 2016			December 31, 2015
Derivative financial instruments designated as hedging instruments:
Interest rate swap and cap agreements		Other assets	$	3,264		$	3,363		$	—
Interest rate swap and cap agreements		Accrued expenses		(2,059	)		(2,521	)		(1,870	)
Interest rate swap and cap agreements		Other long-term liabilities		—			—			(556	)

			$	1,205		$	842		$	(2,426	)

Tabular Disclosure of the Effect of Derivative Instruments on the Statement of Operations

The effect of the derivative instruments on the accompanying consolidated statements of operations for the two month ended February 28, 2017 and the years ended December 31, 2016 and 2015, respectively, is summarized in the following table:


	January 1 through February 28, 2017			Year Ended December 31,
	January 1 through February 28, 2017			2016			2015
Derivative financial instruments in cash flow hedging relationships:
Gain/ (loss) related to effective portion of derivative financial instruments recognized in other comprehensive loss	$	150		$	659		$	(2,668	)

Gain/ (loss) related to effective portion of derivative financial instruments reclassified from accumulated other comprehensive loss to interest expense	$	(220	)	$	(2,593	)	$	(2,587	)

Gain/ (loss) related to ineffective portion of derivative financial instruments recognized in interest expense	$	9		$	16		$	—

Credit Risk-related Contingent Features

As of February 28, 2017, the termination value of the Company’s derivative financial instruments in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $1,223. If the Company had breached any of these provisions at February 28, 2017, the Company could have been required to settle its obligations under the agreements at this termination value. The Company does not offset any derivative financial instruments, and the derivative financial instruments are not subject to collateral posting requirements.

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10.

Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company’s assets and liabilities that are measured at fair value on a recurring basis consist of the Company’s derivative financial instruments and contingent consideration associated with business combinations. The tables below summarize these items as of February 28, 2017 and December 31, 2016, respectively, aggregated by the level in the fair value hierarchy within which those measurements fall.


Description	Balance at February 28, 2017		Quoted in Markets Identical (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Interest rate swap and cap agreements	$	1,205	$	—	$	1,205	$	—

Total	$	1,205	$	—	$	1,205	$	—


Description	Balance at December 31, 2016		Quoted in Markets Identical (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Interest rate swap and cap agreements	$	842	$	—	$	842	$	—

Total	$	842	$	—	$	842	$	—


Description	Balance at December 31, 2015			Quoted in Markets Identical (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Interest rate swaps	$	(2,426	)	$	—	$	(2,426	)	$	—
Contingent consideration obligations		(4,650	)		—		—			(4,650	)

Total	$	(7,076	)	$	—	$	(2,426	)	$	(4,650	)

The valuation of the Company’s derivative financial instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair value of the interest rate swap and cap agreements are determined using the market standard methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments) using the overnight index swap rate as the discount rate.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs to evaluate the likelihood of default by itself and by its counterparties. As of February 28, 2017, the Company determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The valuation of the Company’s contingent consideration obligations was estimated as the present value of total expected contingent consideration payments which were determined using a Monte Carlo simulation. This

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analysis reflects the contractual terms of the purchase agreement and utilized assumptions with regard to future sales, probabilities of achieving such future sales, the timing of the expected payments and a discount rate. Significant increases with respect to assumptions as to future sales and probabilities of achieving such future sales would have resulted in a higher fair value measurement while an increase in the discount rate would have resulted in a lower fair value measurement.

The table below presents a reconciliation of the fair value of the liabilities that use significant unobservable inputs (Level 3).

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)


	January 1 through February 28, 2017		Fiscal Year Ended December 31,
	January 1 through February 28, 2017		2016			2015
Balance at beginning of period	$	—	$	(4,650	)	$	(17,486	)
Adjustment of provisional amounts		—		—			(50	)
Issuance of contingent consideration		—		—			—
Settlement of contingent consideration		—		—			8,061
Gain/ (loss) included in contingent consideration		—		—			4,825
Transfers out of Level 3 fair value measurements		—		4,650			—

Balance at end of period	$	—	$	—		$	(4,650	)

In January 2015, the Company paid approximately $8,057 to the former stockholders of Goold Health Systems in full satisfaction of its contingent consideration liability.

In April 2015, the Company exercised its option to terminate all future obligations under the Vieosoft Inc. (“Vieosoft”) stock purchase agreement in exchange for a future cash payment of $4,650 to the former stockholders of Vieosoft. This termination payment was not accepted and the former stockholders of Vieosoft filed a lawsuit against the Company. In December 2016, the Company received summary judgment in its favor, but final payment of the termination fee is pending further appeal by the former stockholders of Vieosoft.

In September 2015, the Company concluded that Engagement Solutions will not achieve the performance requirements necessary to earn future contingent consideration payments. As a result, the Company recognized a gain of $4,730 to eliminate the contingent consideration obligation.

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

During the year ended December 31, 2015, the Company determined, as a result of technology challenges, slower than expected customer adoption, and management attrition, that one of its recently developed products in the network solutions segment may be impaired. As a result, the Company was required to assess the recoverability of the net assets included in the relevant asset group. The Company recognized an impairment charge, measured as of December 31, 2015, to adjust the carrying value of the asset group to its fair value. This impairment charge was allocated to the affected-long-lived assets on a pro rata basis. In addition, throughout 2015 the Company abandoned certain hardware and software in connection with the continued migration of software development to a cloud-based environment. Among this abandoned hardware and software was a complete redevelopment of an existing software and analytics’ solution in this cloud-based environment.

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The following table summarizes the affected financial statement captions, the allocation of the impairment charges among those captions and provides certain quantitative information associated with the required fair value measurements.

Range of Inputs
2015

Fair Value
2015

Impairment
2015

Long-lived assets to be held and used (Level 3)

Relevant asset group

N/A

786

4,995

Balance sheet account:

Customer relationships

N/A

Non-compete agreements

N/A

672

Other intangible assets

N/A

1,464

Property and equipment

N/A

2,859

Unobservable inputs (discounted cash flow method):

Probability of contract extension

N/A

Probability of new contract execution

N/A

Expected annual revenue range

101-$5,443

N/A

Remaining life of the asset group

7 years

N/A

Discount rate

14.9

N/A

Risk free interest rate

N/A

Long-lived assets to be disposed of

Property and Equipment

N/A

—

3,557

Assets and Liabilities Measured at Fair Value upon Initial Recognition

The carrying amount and the estimated fair value of financial instruments held by the Company as of February 28, 2017, December 31, 2016 and December 31, 2015 were:


	As of February 28, 2017				As of December 31, 2016				As of December 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents	$	136,666	$	136,666	$	118,016	$	118,016	$	66,655	$	66,655
Accounts receivable	$	275,041	$	275,041	$	279,712	$	279,712	$	280,858	$	280,858
Senior Credit Facilities (Level 1)	$	1,768,850	$	1,791,665	$	1,767,338	$	1,784,972	$	1,776,647	$	1,774,860
Senior Notes (Level 2)	$	983,402	$	1,037,554	$	982,751	$	1,041,406	$	979,069	$	1,026,250

11.

Commitments

Lease Commitments

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2017 (remaining)	$	13,360
2018		14,450
2019		9,540
2020		7,647
2021		7,131
Thereafter		16,280

Total minimum lease payments	$	68,408

Total rent expense for all operating leases was $2,873, $16,773 and $14,806 for the period from January 1, 2017 to February 28, 2017 and the years ended December 31, 2016 and 2015, respectively.

Post-employment Benefits

The Company generally offers post-employment benefits to its employees in the case of certain employee termination events consisting of severance and outplacement services. The extent of such benefits vary based on employee title and, in some cases, accumulate based on the respective employee’s years of service to the Company. Due to the episodic nature of the Company’s severance benefit history and the inability to reasonably predict future termination events, no accrual for accumulating severance benefits is accrued until the point that the payment of a severance benefit is probable and can be reasonably estimated. As of February 28, 2017 and December 31, 2016, the Company recognized a liability related to these benefits in the amount of $10,588 and $7,047, respectively.

12.

Legal Proceedings

Additionally, in the normal course of business, the Company is involved in various claims and legal proceedings. While the ultimate resolution of these matters has yet to be determined, the Company does not believe that their outcomes will have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

13.

Incentive Compensation Plans

Equity

Compensation Plans

In connection with the 2011 Merger, the Company assumed the Equity Plan. Pursuant to the Equity Plan, 180,950 shares of the Company’s common stock have been reserved for the issuance of equity awards to employees, directors and consultants of the Company and its affiliates.

Equity Awards

The Company grants equity-based awards of its common stock to certain employees and directors under the Equity Plan. Grants under the Equity Plan consist of one, or a combination of, time-vested awards and/or performance-based awards. In each case, the equity awards are subject to certain call rights by the Company in the event of termination of service by the award holder and put rights by the award holder or his/her beneficiaries in the event of death or disability. The Company’s practice is to repurchase shares of its common stock held by former employees no earlier than six months following issuance of such shares of its common stock.

Rollover Awards : In connection with the 2011 Merger, certain outstanding grants for members of senior management under the Equity Plan were exchanged for new options of common stock (the “Rollover Awards”).

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Time Vested Awards : The time-vested awards consist of the following:

(i) Tier I Time Awards were granted with an exercise price equal to the fair value of the Company’s common stock on the date of grant and generally vest in equal 20% installments on the first through fifth anniversary of the 2011 Merger or the grant date, subject to the award holder’s continued employment through each vesting date. The Company estimates the fair value of the Tier I Time Awards using the Black-Scholes option pricing model. The Company determined that as of February 28, 2017, the consummation of the MTS Transaction was probable and as a result all remaining expense related to the Tier I Time Awards was accelerated.

(ii) Tier II Time Awards were granted with an exercise price greater than the fair value of the common stock on the date of grant and generally vest in equal 20% installments on the first through fifth anniversary of the 2011 Merger or grant date, subject to the award holder’s continued employment through each vesting date. As the Tier II Time Awards were granted with an exercise price that was significantly out of the money as of the grant date, the Tier II Time Awards contain an implied market condition. As a result, the requisite service period is the longer of the explicit and derived service periods. The Company determined that as of February 28, 2017, the consummation of the MTS Transaction was probable and as a result all remaining expense related to the Tier II Time Awards was accelerated.

Performance Awards : The performance awards were granted with an exercise price equal to the fair value of the Company’s common stock on the date of grant and vest, subject to the employee’s continued employment through the vesting date, on the date when Blackstone has sold at least 25% of the maximum number of the Company’s shares held by it (i.e. a liquidity event) and achieved specified rates of return. The Company values the performance awards using a Monte Carlo simulation. Because vesting of the performance awards is contingent upon the occurrence of a liquidity event, no compensation expense had been previously recorded related to the performance awards. In the event that a sale by Blackstone of at least 25% of its stock occurs, the Company will record all related compensation expense at that time for awards that are probable of vesting. The Company determined that as of February 28, 2017, the consummation of the MTS Transaction was probable and as a result expense related to a portion of performance awards was accelerated. As of February 28, 2017, unrecognized compensation expense related to the unvested performance awards was $16,125.

Restricted Stock Units : During 2014, the Company granted 1,500 restricted stock units with a grant date fair value of $1,020 that vests in 20% equal installments on the first through fifth anniversary of the grant date, subject to the employee’s continued employment through each vesting date. As of February 28, 2017, 900 stock units were vested with an intrinsic value of $2,160 at the time of vesting and unrecognized compensation expense related to the restricted stock units was $612. This expense is expected to be recognized over a weighted average period of 1.92 years.

Activity Summary

A summary of award activity under the Equity Plan for the period from January 1, 2017 to February 28, 2017 and the year ended December 31, 2016, is presented separately below for awards valued using the Black Scholes option pricing model and a Monte Carlo simulation.

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Awards Valued Using the Black Scholes Option Pricing Model


	Awards						Weighted Average Exercise Price				Weighted Average Remaining Contractual Term				Aggregate Intrinsic Value
	Tier I Time Awards			Rollover Awards			Tier I Time Awards		Rollover Awards		Tier I Time Awards		Rollover Awards		Tier I Time Awards		Rollover Awards
Outstanding at January 1, 2016		74,115.5			2,342.0		$	1,218	$	217		7.9		6.5	$	40,942	$	3,637
Granted		1,650.0			—			1,770		—
Exercised		(1,922.0	)		(550.0	)		1,055		250						1,374		836
Expired		—			—			—		—
Forfeited		(7,426.5	)		—			1,406		—
Outstanding at December 31, 2016		66,417.0			1,792.0		$	1,215	$	207		6.9		5.6	$	78,705	$	3,929

Granted		—			—			—		—
Exercised		—			—			—		—
Expired		—			—			—		—
Forfeited		—			—			—		—
Outstanding at February 28, 2017		66,417.0			1,792.0		$	1,215	$	207		6.8		5.5	$	78,705	$	3,929

Exercisable at February 28, 2017		40,479.8			1,792.0		$	1,093	$	207		6.2		5.5	$	52,895	$	3,929

Awards Valued Using a Monte Carlo Simulation


	Awards						Weighted Average Exercise Price				Weighted Average Remaining Contractual Term				Aggregate Intrinsic Value
	Tier II Time Awards			Performance Awards			Tier II Time Awards		Performance Awards		Tier II Time Awards		Performance Awards		Tier II Time Awards		Performance Awards
Outstanding at January 1, 2016		14,250.0			67,572.5		$	2,500	$	1,237		7.2		8.0	$	—	$	—
Granted		—			1,650.0			—		1,770
Exercised		—			—			—		—
Expired		—			—			—		—
Forfeited		(2,800.0	)		(12,866.0	)		2,500		1,277
Outstanding at December 31, 2016		11,450.0			56,356.5		$	2,500	$	1,243		6.4		7.1	$	—	$	—

Granted		—			—			—		—
Exercised		—			—			—		—
Expired		—			—			—		—
Forfeited		—			—			—		—
Outstanding at February 28, 2017		11,450.0			56,356.5		$	2,500	$	1,243		6.2		6.9	$	—	$	—

Exercisable at February 28, 2017		8,610.0			—		$	2,500	$	—		6.1		—	$	—	$	—

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Restricted Stock Units


	Restricted Stock Units
Unvested at December 31, 2015		1,200
Granted		—
Canceled		—
Vested		300

Unvested at December 31, 2016		900
Granted		—
Canceled		—
Vested		300

Unvested at February 28, 2017		600

Black-Scholes and Monte Carlo Simulation Option Pricing Model Assumptions

The following table summarizes the weighted average grant date fair values of awards valued using the Black-Scholes and Monte Carlo Simulation option pricing models, as appropriate, and the weighted average assumptions used to develop the fair value estimates under each of the valuation models for the years ended December 31, 2016 and 2015, respectively (no awards were granted in the period from January 1, 2017 to February 28, 2017)


	Tier I Awards			Tier II Awards		Performance Awards
Year Ended December 31, 2016:
Weighted average grant date fair value	$	884.33			N/A	$	478.35
Expected volatility		49.34	%		N/A		50.06	%
Risk-free interest rate		1.71	%		N/A		1.62	%
Expected term (years)		6.49			N/A		N/A
Year Ended December 31, 2015:
Weighted average grant date fair value	$	864.02			N/A	$	465.06
Expected volatility		51.24	%		N/A		50.70	%
Risk-free interest rate		1.76	%		N/A		1.70	%
Expected term (years)		6.49			N/A		N/A

Expected dividend yield—The Company is subject to limitations on the payment of dividends under its Senior Credit Facilities as further discussed in Note 8 above to these consolidated financial statements. An increase in the dividend yield will decrease compensation expense.

Expected volatility—This is a measure of the amount by which the price of the equity instrument has fluctuated or is expected to fluctuate. The expected volatility was based upon the levered median historical volatility of a group of guideline companies. An increase in the expected volatility will increase compensation expense.

Risk-free interest rate—This is the U.S. Treasury rate for the week of the grant having a term approximating the expected life of the award. An increase in the risk-free interest rate will increase compensation expense.

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Summary of Equity Compensation Expense

For the period from January 1, 2017 to February 28, 2017 and the years ended December 31, 2016 and 2015, the Company recognized expense of $26.4 million, $10.1 million and $9.3 million. The Company recognized a deferred income tax benefit of $10.5 million, $4.0 million and $3.8 million, respectively, for the period from January 1, 2017 to February 28, 2017 and the years ended December 31, 2016 and 2015, related to the aforementioned equity-based compensation expense. The actual tax benefits realized from stock options exercised for the period from January 1, 2017 to February 28, 2017 and the year ended December 31, 2016 and 2015 was $7.5 million, $0.4 million and $0.2 million, respectively.

Long Term Cash Incentive Plan

During 2013, the Company adopted the Change Healthcare Holdings, Inc. Long Term Cash Incentive Plan (the “LTIP”). Under the terms of the LTIP, each participant has the opportunity to accrue a specified percentage of their respective annual base salary during each year of the 2013 to 2017 performance period based on the amount by which earnings before interest, taxes, depreciation and amortization of the participants designated business unit exceed a specified threshold. Aggregate payments under the LTIP will occur only in connection with a change in control of the Company and generally require the continued service of the respective participants through the date of the change in control.

At February 28, 2017, based on current participants, the maximum amount of cash payments that could be payable under the LTIP in the event of a change in control are $5,742. As of February 28, 2017, an estimated $3,997 of this maximum amount has been earned by the participants and was paid in March 2017 upon the closing of the MTS Transaction. Because any payments under the LTIP are contingent upon a change in control, no amounts under the LTIP had been accrued in the accompanying consolidated balance sheets prior to the period ending February 28, 2017.

14.

Retirement Plans

Employees of the Company may participate in a 401k plan, which provides for matching contributions from the Company. Expenses related to this 401k plan were $1,379, $7,803 and $6,322 for the period from January 1, 2017 to February 28, 2017 and the years ended December 31, 2016 and 2015, respectively.

15.

Income Taxes

The income tax provision (benefit) for the period from January 1, 2017 to February 28, 2017 and the years ended December 31, 2016 and 2015, respectively, was as follows:


	January 1, through February 28, 2017			Year Ended December 31,
	January 1, through February 28, 2017			2016			2015
Current:
Federal	$	—		$	(84	)	$	—
State		184			1,139			3,359
Current income tax provision (benefit)		184			1,055			3,359
Deferred:
Federal		(21,128	)		(21,252	)		(61,349	)
State		(4,482	)		1,106			(24,589	)
Deferred income tax provision (benefit)		(25,610	)		(20,146	)		(85,938	)

Total income tax provision (benefit)	$	(25,426	)	$	(19,091	)	$	(82,579	)

The differences between the federal statutory rate and the effective income tax rate principally relate to the impact of valuation allowances and uncertain tax positions related to state income taxes, changes in the

F-143

Company’s Tennessee apportionment resulting from the enactment of the Tennessee Revenue Modernization Act in May 2015, book versus tax basis differences in the Company’s investment in subsidiary prior to the change in tax status of such subsidiary from a partnership to a corporation in January 2014 and stock compensation expense. The reconciliation between the federal statutory rate and the effective income tax rate is as follows:


	January 1, through February 28, 2017			Year Ended December 31,
	January 1, through February 28, 2017			2016			2015
Statutory U.S. federal tax rate		35.00	%		35.00	%		35.00	%
State income taxes (net of federal benefit)		3.56			(9.40	)		13.11
Other		(0.56	)		0.50			0.96
Transaction costs		(7.55	)		(5.60	)		—
Change in tax status		—			—			—
Equity based compensation		10.54			—			(0.20	)
Tax receivable agreements		—			—			(0.41	)

Effective income tax rate		40.99	%		20.50	%		48.46	%

At February 28, 2017, the Company had net operating loss carryforwards (tax effected) for federal and state income tax purposes of approximately $185,143 and $42,702, respectively, which expire from 2026 through 2035 and 2016 through 2035, respectively. A portion of net operating loss carryforwards may be subject to an annual limitation regarding their utilization against taxable income in future periods due to the “change of ownership related to a legal entity simplification” provisions of the Internal Revenue Code and similar state provisions.

The Company and certain of its subsidiaries are included in its consolidated filing group for U.S. federal income tax purposes, as well as in certain state income tax returns that include the Company.

Significant components of the Company’s deferred tax assets (liabilities) as of February 28, 2017, December 31, 2016 and December 31, 2015 were as follows:


	February 28, 2017			December 31, 2016			December 31, 2015
Deferred tax assets and (liabilities):
Depreciation and amortization	$	(485,033	)	$	(511,743	)	$	(522,281	)
Accounts receivable		1,286			1,318			2,129
Fair value of interest rate swap		(506	)		(356	)		1,009
Accruals and reserves		30,403			15,613			14,340
Capital and net operating losses		229,388			261,790			235,934
Debt discount and interest		311			1,291			14
Equity compensation		9,444			14,839			11,839
Valuation allowance		(25,310	)		(23,562	)		(1,670	)
Tax receivable agreement obligation to related parties		43,659			42,923			40,981
Other		4,492			2,646			3,108

Net deferred tax assets and (liabilities)	$	(191,867	)	$	(195,241	)	$	(214,597	)

Reported as:
Non-current deferred tax assets		—			—			—
Non-current deferred tax liabilities		(191,867	)		(195,241	)		(214,597	)

Net deferred tax assets and (liabilities)	$	(191,867	)	$	(195,241	)	$	(214,597	)

F-144

A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:


	January 1, through February 28, 2017		Year Ended December 31,
	January 1, through February 28, 2017		2016			2015
Unrecognized benefit from prior years	$	10,228	$	10,312		$	10,312
Decreases from prior period tax positions		—		(84	)		—
Increases from current period tax positions		49,851		—			—
Decreases from settlements with taxing authorities		—		—			—

Ending unrecognized benefit	$	60,079	$	10,228		$	10,312

The Company had unrecognized tax benefits of $50,518, $667 and $752 as of February 28, 2017, December 31, 2016 and 2015, which if recognized, would affect the effective income tax rate.

The Company recognizes interest income and expense (if any) related to income taxes as a component of income tax expense. The Company recognized no interest and penalties for the period from January 1, 2017 to February 28, 2017 and the years ended December 31, 2016 and 2015, respectively.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company’s U.S. federal and state income tax returns for the tax years 2012 and beyond remain subject to examination by the Internal Revenue Service. With respect to state and local jurisdictions and countries outside of the United States, the Company and its subsidiaries are typically subject to examination for a number of years after the income tax returns have been filed. Although the outcome of tax audits is always uncertain, the Company believes that adequate amounts of tax, interest and penalties have been provided for in the accompanying consolidated financial statements for any adjustments that may be incurred due to state, local or foreign audits.

16.

Tax Receivable Agreement Obligations to Related Parties

The Company is a party to tax receivable agreements which obligate it to make payments to the TRA Members, equal to 85% of the applicable cash savings that the Company realizes as a result of tax attributes arising from certain previous transactions, including the 2011 Merger. The Company will retain the benefit of the remaining 15% of these tax savings.

The Company expects cumulative remaining payments under the tax receivable agreements of $358,193. $184,322 of this amount, which reflected the initial fair value of the tax receivable agreement obligations plus recognized accretion, was reflected as an obligation on the accompanying consolidated balance sheet at February 28, 2017. The accompanying consolidated statement of operations for the period from January 1, 2017 to February 28, 2017 and the years ended December 31, 2016 and 2015 include accretion expense of $2,717, $8,108 and $10,496, respectively, related to this obligation.

F-145

Based on facts and circumstances at February 28, 2017, the Company estimates the aggregate payments due under the tax receivable agreements to be as follows:


2017 (remaining)	$	979
2018		973
2019		60,603
2020		82,442
2021		71,625
Thereafter		141,571

Gross expected payments		358,193
Less: Amounts representing discount		(173,872	)

Total tax receivable agreement obligations due to related parties		184,321
Less: Current portion due (included in accrued expenses)		(979	)

Tax receivable agreement obligations due to related parties	$	183,342

The timing and/or amount of aggregate payments due may vary based on a number of factors, including the amount and timing of the taxable income the Company generates in the future and the tax rate then applicable, the use of loss carryovers and the portion of payments under the tax receivable agreements constituting imputed interest or amortizable basis.

As a result of the covered change of control with respect to the tax receivable agreements that occurred in connection with the MTS Transaction on March 1, 2017, payments the Company makes under these tax receivable agreements will be calculated in the future using certain valuation assumptions, including that the Company will have sufficient taxable income to use the applicable tax attributes and that certain of such tax attributes will be used by the Company on a pro rata basis from the date of the MTS Transaction (or in certain cases from the date of certain previous transactions) through the expiration of the applicable tax attribute.

Additionally, upon the consummation of the MTS Transaction, NewCo and the Company (collectively, the “TRA Affiliates”) will be party to two additional tax receivable agreements with our current and former owners. The first of these additional tax receivable agreements generally provides for the payment by NewCo to affiliates of McKesson of 85% of certain cash tax savings realized (or, in certain circumstances, deemed to be realized) by HCIT and its subsidiaries in certain periods ending on or after the date on which McKesson ceases to own at least 20% of NewCo as a result of (i) certain amortizable tax basis in assets transferred to NewCo at the closing of the MTS Transactions and (ii) imputed interest deductions and certain other tax attributes arising from payments under this tax receivable agreement with McKesson.

The second tax receivable agreement generally provides for the payment by the Company to affiliates of certain HCIT stockholders of 85% of the net cash tax savings realized (or, in certain circumstances, deemed to be realized) by the Company in periods ending on or after the MTS Transactions as a result of certain net operating losses and certain other tax attributes of the Company as of the closing of the MTS Transactions. Upon the consummation of the MTS Transaction, the gross expected payments of the second tax receivable agreement are expected to be approximately $134,947 (unaudited).

17.

Other Related Party Transactions

Transaction and Advisory Fee Agreement

In connection with the 2011 Merger, the Company entered into a transaction and advisory fee agreement with Blackstone Management Partners L.L.C., an affiliate of Blackstone (“BMP”), and Hellman & Friedman,

F-146

L.P., an affiliate of Hellman & Friedman (“HFLP,” and, together with BMP, the “Managers”), for a term of twelve years. Pursuant to the agreement, in consideration for certain advisory services, the Company is obligated to pay the Managers at the beginning of each fiscal year an aggregate advisory fee of $6,000 or an agreed upon amount not to exceed 2% of consolidated EBITDA (as defined in the Senior Credit Agreement) for such fiscal year. Pursuant to the agreement, the Managers are also entitled to receive transaction fees equal to 1% of the aggregate transaction value upon the consummation of any acquisition, divestiture, disposition, merger, consolidation, restructuring or recapitalization, issuance of private or public debt or equity securities (including an initial public offering of equity securities), financing or similar transaction involving the Company.

Pursuant to the agreement, in connection with or in anticipation of a change in control of the Company, sale of all or substantially all of the assets of the Company or an initial public offering of the equity of the Company or their successors, the Managers have the option to receive, in consideration of such Manager’s role in facilitating such transaction and in settlement of the termination of the services, a single lump sum cash payment equal to the then-present value of all the then-current and future annual advisory fees payable under the agreement, assuming a remaining twelve-year payment period. To the extent that the Company does not pay the lump sum fee when due, the obligation will accrue interest at an annual rate of 10%, compounded quarterly. In connection with the MTS Transaction, the Managers did not exercise their option to receive such a lump sum payment.

During the period from January 1, 2017 to February 28, 2017, the Company paid $1,000 ($725 to BMP and $275 to HFLP) in advisory fees and approximately $50 as reimbursement to BMP for their out of pocket expenses. During the years ended December 31, 2016 and 2015, the Company paid $6,000 ($4,350 to BMP and $1,650 to HFLP) in advisory fees for each year and approximately $400 and $700, respectively, as reimbursement to BMP for their out of pocket expenses. The advisory fees are reflected within sales, marketing, general and administrative expense in the accompanying consolidated statements of operations.

Term Loans Held by Related Party

During the period from January 1, 2017 to February 28, 2017 and the years ended December 31, 2016 and 2015, certain investment funds managed by GSO Capital Partners LP (the “GSO-managed funds”) held a portion of the term loans under the Senior Credit Facilities. GSO Advisor Holdings LLC (“GSO Advisor”) is the general partner of GSO Capital Partners LP. Blackstone, indirectly through its subsidiaries, holds all of the issued and outstanding equity interests of GSO Advisor. As of February 28, 2017, December 31, 2016 and December 31, 2015, the GSO-managed funds held $51,240, $51,368 and $55,247 in principal amount of the Senior Credit Facilities ($512, $514 and $552 of which is classified within current portion of long-term debt), respectively.

Transactions with Blackstone Portfolio Companies

The Company provides various services to certain Blackstone portfolio companies under contracts that were executed in the normal course of business. The Company recognized revenue of $767, $3,469 and $3,167 related to services provided to Blackstone portfolio companies for the period from January 1, 2017 to February 28, 2017 and the years ended December 31, 2016 and 2015, respectively.

Transactions with Hellman & Friedman Portfolio Companies

The Company both provides various services to, and purchases from, certain Hellman & Friedman portfolio companies under contracts that were executed in the normal course of business. The Company recognized revenue of $1,164, $6,177 and $5,751 related to services provided to Hellman & Friedman portfolio companies for the period from January 1, 2017 to February 28, 2017 and the years ended December 31, 2016 and 2015, respectively. The Company paid Hellman & Friedman portfolio companies $0, $577 and $233 related to services provided to the Company for the period from January 1, 2017 to February 28, 2017 and the years ended December 31, 2016 and 2015, respectively.

F-147

Other

During 2015, the Company executed agreements with a vendor and its affiliate in which a director of the Company is the president and chief executive officer to provide certain software related services. Under these agreements, the Company paid the vendor approximately $70, $102 and $681 in the aggregate for the period from January 1, 2017 and February 28, 2017 and the years ended December 31, 2016 and December 31, 2015.

18.

Segment Reporting

Effective January 1, 2015, the Company completed an internal reorganization of its reporting structure which resulted in a change in the composition of its operating segments. Additionally, the Company periodically makes other changes to the composition of its operating segments. Prior period segment information throughout the notes to these consolidated financial statements is restated to reflect the organizational structure and any other changes made.

Management views the Company’s operating results in three reportable segments: (a) software and analytics, (b) network solutions and (c) technology-enabled services. Listed below are the results of operations for each of the reportable segments. This information is reflected in the manner utilized by management to make operating decisions, assess performance and allocate resources. Such amounts include allocations of corporate shared services functions that are essential to the core operations of the reportable segments such as information technology, operations and product development functions. Segment assets and related depreciation expenses are not presented to management for purposes of operational decision making, and therefore are not included in the accompanying tables. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in Note 2 to these consolidated financial statements.

Software and Analytics

The software and analytics segment provides revenue cycle technology, revenue optimization, payment integrity, electronic payment, risk adjustment, quality reporting, data and analytics and engagement solutions.

Network Solutions

The network solutions segment provides financial and administrative information exchange solutions for medical, pharmacy and dental claims management and other standardized healthcare transactions, including clinical information exchange capabilities.

Technology-enabled Services

The technology-enabled services segment provides payment and communication, eligibility and enrollment, healthcare consulting, payment automation and pharmacy benefits administration solutions.

Corporate and Eliminations

Inter-segment revenue and expenses primarily represent claims management and payment and communication solutions provided between segments.

Corporate and eliminations includes pass-through postage costs, management, administrative and certain other shared corporate services functions such as legal, finance, human resources and marketing, as well as eliminations to remove inter-segment revenue and expenses. These administrative costs are excluded from the adjusted EBITDA measure for each respective operating segment.

F-148

The revenue and adjusted EBITDA for the operating segments are as follows:


	Period from January 1, 2017 to February 28, 2017
	Software and Analytics		Network Solutions		Technology- enabled Services		Corporate and Eliminations			Consolidated
Revenue from external customers:
Solutions revenue	$	86,220	$	60,143	$	61,596	$	(3,532	)	$	204,427
Postage revenue		—		—		—		46,661			46,661
Inter-segment revenue		306		152		1,424		(1,882	)		—

Net revenue	$	86,526	$	60,295	$	63,020	$	41,247		$	251,088

Income (loss) before income taxes	$	18,354	$	30,208	$	14,963	$	(125,554	)	$	(62,029	)
Interest expense		—		—		—		30,012			30,012
Depreciation and amortization		—		—		—		43,315			43,315

EBITDA		18,354		30,208		14,963		(52,227	)		11,298
Equity compensation		4,163		413		995		20,853			26,424
Acquisition accounting adjustments		21		—		77		—			98
Acquisition-related costs		818		—		—		—			818
MTS transaction-related costs		6,479		1,759		1,985		11,477			21,700
Monitoring fees and related costs		—		—		—		1,046			1,046
Strategic initiatives, duplicative and transition costs		920		1,131		340		466			2,857
Severance costs		196		4		206		113			519
Accretion		—		—		—		2,717			2,717
Other non-routine, net		1,405		128		1,012		(13	)		2,532

EBITDA Adjustments		14,002		3,435		4,615		36,659			58,711

Adjusted EBITDA	$	32,356	$	33,643	$	19,578	$	(15,568	)	$	70,009

F-149


	Year Ended December 31, 2016
	Software and Analytics		Network Solutions			Technology- enabled Services		Corporate and Eliminations			Consolidated
Revenue from external customers:
Solutions revenue	$	513,642	$	379,739		$	390,181	$	(31,343	)	$	1,252,219
Postage revenue		—		—			—		304,956			304,956
Inter-segment revenue		966		586			3,746		(5,298	)		—

Net revenue	$	514,608	$	380,325		$	393,927	$	268,315		$	1,557,175

Income (loss) before income taxes		167,127		206,488			124,283		(592,351	)		(94,453	)
Interest expense		—		—			—		185,890			185,890
Depreciation and amortization		—		—			—		252,285			252,285

EBITDA		167,127		206,488			124,283		(154,176	)		343,722
Equity compensation		2,903		668			624		5,952			10,147
Acquisition accounting adjustments		643		(4	)		475		—			1,114
Acquisition-related costs		4,713		79			474		1,531			6,797
MTS transaction-related costs		5,391		1,464			1,652		28,356			28,356
Monitoring fees and related costs		—		—			—		6,360			6,360
Strategic initiatives, duplicative and transition costs		2,012		888			553		7,171			19,131
Severance costs		3,819		1,219			2,625		5,011			12,674
Accretion		—		—			—		8,108			8,108
Impairment of long-lived assets		—		—			—		689			689
Other non-routine, net		1,626		337			275		698			2,936

EBITDA Adjustments		21,107		4,651			6,678		63,876			96,312

Adjusted EBITDA	$	188,234	$	211,139		$	130,961	$	(90,300	)	$	440,034

F-150


	Year Ended December 31, 2015
	Software and Analytics			Network Solutions		Technology- enabled Services		Corporate and Eliminations			Consolidated
Revenue from external customers:
Solutions revenue	$	353,526		$	375,582	$	421,455	$	(26,375	)	$	1,124,188
Postage revenue		—			—		—		352,895			352,895
Inter-segment revenue		1,190			383		4,478		(6,051	)		—

Net revenue	$	354,716		$	375,965	$	425,933	$	320,469		$	1,477,083

Income (loss) before income taxes		115,721			194,166		144,776		(625,075	)		(170,412	)
Interest expense		—			—		—		168,252			168,252
Depreciation and amortization		—			—		—		342,303			342,303

EBITDA		115,721			194,166		144,776		(114,520	)		340,143
Equity compensation		1,972			820		701		5,792			9,285
Acquisition accounting adjustments		1,165			5		636		—			1,806
Acquisition-related costs		395			93		1,012		6,943			8,443
Monitoring fees and related costs		—			—		—		6,703			6,703
Strategic initiatives, duplicative and transition costs		2,101			1,333		1,784		5,672			10,890
Severance costs		2,209			846		2,748		1,192			6,995
Accretion		—			—		—		10,496			10,496
Impairment of long-lived assets		2,178			5,953		999		(578	)		8,552
Contingent consideration		(4,825	)		—		—		—			(4,825	)
Other non-routine, net		944			521		114		3,538			5,117

EBITDA Adjustments		6,139			9,571		7,994		39,758			63,462

Adjusted EBITDA	$	121,860		$	203,737	$	152,770	$	(74,762	)	$	403,605

19.

Accumulated Other Comprehensive Income (Loss)

The following is a summary of the accumulated other comprehensive income (loss) balances, net of taxes, as of and for the year ended December 31, 2016 and for the period from January 1, 2017 to February 28, 2017.


	Foreign Currency Translation Adjustment			Cash Flow Hedge			Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2016	$	(1,137	)	$	(1,519	)	$	(2,656	)
Change associated with foreign currency translation		147			—			147
Change associated with current period hedging		—			4,489			4,489
Reclassification into earnings		—			(2,593	)		(2,593	)

Balance at December 31, 2016	$	(990	)	$	377		$	(613	)

Change associated with foreign currency translation		97			—			97
Change associated with current period hedging		—			438			438
Reclassification into earnings		—			(220	)		(220	)

Balance at February 28, 2017	$	(893	)	$	595		$	(298	)

F-151

20.

Supplemental Condensed Consolidating Financial Information

In lieu of providing separate annual and interim financial statements for each guarantor of debt securities to be registered, Regulation S-X of SEC Guidelines, Rules and Regulations (“Regulation S-X”) provides companies, if certain criteria are satisfied, with the option to instead provide condensed consolidating financial information for its issuers, guarantors and non-guarantors. In the case of CHH, the applicable criteria include the following: (i) the Senior Notes are fully and unconditionally guaranteed on a joint and several basis (subject to customary release provisions), (ii) each of the guarantors of the Senior Notes is a direct or indirect 100%-owned subsidiary of CHH and (iii) any non-guarantors are considered minor as that term is defined in Regulation S-X. Because each of these criteria has been satisfied by CHH, summarized condensed consolidating balance sheets at February 28, 2017, December 31, 2016 and 2015, condensed consolidating statements of operations, comprehensive income (loss) and cash flows for the period from January 1, 2017 to February 28, 2017 and for each of the years ended December 31, 2016 and 2015, respectively, for CHH, segregating the issuer, the subsidiary guarantors and consolidating adjustments, are reflected below. Prior year amounts have been reclassified to conform to the current year presentation.

F-152

Condensed Consolidating Balance Sheet


	As of February 28, 2017
	Change Healthcare Holdings, Inc.		Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	251	$	136,415	$	—		$	136,666
Accounts receivable, net of allowance for doubtful accounts		—		275,041		—			275,041
Prepaid expenses and other current assets		9,060		37,619		—			46,679

Total current assets		9,311		449,075		—			458,386
Property and equipment, net		—		224,633		—			224,633
Due from affiliates		—		214,217		(214,217	)		—
Investment in consolidated subsidiaries		2,110,871		—		(2,110,871	)		—
Goodwill		—		2,171,267		—			2,171,267
Intangible assets, net		—		1,512,111		—			1,512,111
Other assets, net		305,310		7,687		(301,406	)		11,591

Total assets	$	2,425,492	$	4,578,990	$	(2,626,494	)	$	4,377,988

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	545	$	41,306	$	—		$	41,851
Accrued expenses		52,390		154,623		—			207,013
Deferred revenue		—		23,818		—			23,818
Current portion of long-term debt		3,438		21,724		—			25,162

Total current liabilities		56,373		241,471		—			297,844
Due to affiliates		214,217		—		(214,217	)		—
Long-term debt, excluding current portion		1,016,884		1,720,892		—			2,737,776
Deferred income tax liabilities		—		493,273		(301,406	)		191,867
Tax receivable agreement obligations to related parties		183,342		—		—			183,342
Other long-term liabilities		1,655		12,483		—			14,138
Commitments and contingencies
Equity		953,021		2,110,871		(2,110,871	)		953,021

Total liabilities and equity	$	2,425,492	$	4,578,990	$	(2,626,494	)	$	4,377,988

F-153

Condensed Consolidating Balance Sheet


	As of December 31, 2016
	Change Healthcare Holdings, Inc.		Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	32,047	$	85,969	$	—		$	118,016
Accounts receivable, net of allowance for doubtful accounts		—		279,712		—			279,712
Prepaid expenses and other current assets		2,570		42,119		—			44,689

Total current assets		34,617		407,800		—			442,417
Property and equipment, net		—		230,731		—			230,731
Due from affiliates		—		188,280		(188,280	)		—
Investment in consolidated subsidiaries		2,215,234		—		(2,215,234	)		—
Goodwill		—		2,212,898		—			2,212,898
Intangible assets, net		—		1,605,669		—			1,605,669
Other assets, net		289,581		7,230		(285,984	)		10,827

Total assets	$	2,539,432	$	4,652,608	$	(2,689,498	)	$	4,502,542

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	160	$	30,392	$	—		$	30,552
Accrued expenses		39,658		150,796		—			190,454
Deferred revenue		—		22,757		—			22,757
Current portion of long-term debt		3,437		21,584		—			25,021

Total current liabilities		43,255		225,529		—			268,784
Due to affiliates		188,280		—		(188,280	)		—
Long-term debt, excluding current portion		1,016,128		1,719,885		—			2,736,013
Deferred income tax liabilities		—		481,225		(285,984	)		195,241
Tax receivable agreement obligations to related parties		180,625		—		—			180,625
Other long-term liabilities		1,429		10,735		—			12,164
Commitments and contingencies
Equity		1,109,715		2,215,234		(2,215,234	)		1,109,715

Total liabilities and equity	$	2,539,432	$	4,652,608	$	(2,689,498	)	$	4,502,542

F-154

Condensed Consolidating Balance Sheet


	As of December 31, 2015
	Change Healthcare Holdings, Inc.		Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	738	$	65,917	$	—		$	66,655
Accounts receivable, net of allowance for doubtful accounts		—		280,858		—			280,858
Prepaid expenses and other current assets		2,234		33,179		—			35,413

Total current assets		2,972		379,954		—			382,926
Property and equipment, net		3		244,142		—			244,145
Due from affiliates		135,406		—		(135,406	)		—
Investment in consolidated subsidiaries		1,976,243		—		(1,976,243	)		—
Goodwill		—		2,213,770		—			2,213,770
Intangible assets, net		1,000		1,706,863		—			1,707,863
Other assets, net		268,137		8,050		(267,687	)		8,500

Total assets	$	2,383,761	$	4,552,779	$	(2,379,336	)	$	4,557,204

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	—	$	27,950	$	—		$	27,950
Accrued expenses		10,689		156,480		—			167,169
Deferred revenue		—		12,943		—			12,943
Current portion of long-term debt		8,099		24,676		—			32,775

Total current liabilities		18,788		222,049		—			240,837
Due to affiliates		—		135,406		(135,406	)		—
Long-term debt, excluding current portion		1,015,243		1,725,935		—			2,741,178
Deferred income tax liabilities		—		482,284		(267,687	)		214,597
Tax receivable agreement obligations to related parties		173,493		—		—			173,493
Other long-term liabilities		1,092		10,862		—			11,954
Commitments and contingencies
Equity		1,175,145		1,976,243		(1,976,243	)		1,175,145

Total liabilities and equity	$	2,383,761	$	4,552,779	$	(2,379,336	)	$	4,557,204

F-155

Condensed Consolidating Statement of Operations


	Two Months Ended February 28, 2017
	Change Healthcare Holdings, Inc.			Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Revenue:
Solutions revenue	$	—		$	204,427		$	—		$	204,427
Postage revenue		—			46,661			—			46,661

Total revenue		—			251,088			—			251,088
Costs and expenses:
Cost of operations (exclusive of depreciation and amortization below)		—			98,263			—			98,263
Development and engineering		—			14,203			—			14,203
Sales, marketing, general and administrative		39,651			38,295			—			77,946
Customer postage		—			46,661			—			46,661
Depreciation and amortization		—			43,315			—			43,315
Accretion		2,717			—			—			2,717

Operating income (loss)		(42,368	)		10,351			—			(32,017	)
Equity in earnings of consolidated subsidiaries		(3,851	)		—			3,851			—
Interest expense, net		13,661			16,351			—			30,012

Income (loss) before income tax provision (benefit)		(52,178	)		(6,000	)		(3,851	)		(62,029	)
Income tax provision (benefit)		(15,575	)		(9,851	)		—			(25,426	)

Net income (loss)	$	(36,603	)	$	3,851		$	(3,851	)	$	(36,603	)

F-156

Condensed Consolidating Statement of Operations


	Year Ended December 31, 2016
	Change Healthcare Holdings, Inc.			Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Revenue:
Solutions revenue	$	—		$	1,252,219	$	—		$	1,252,219
Postage revenue		—			304,956		—			304,956

Total revenue		—			1,557,175		—			1,557,175
Costs and expenses:
Cost of operations (exclusive of depreciation and amortization below)		—			561,061		—			561,061
Development and engineering		—			60,048		—			60,048
Sales, marketing, general and administrative		10,387			268,204		—			278,591
Customer postage		—			304,956		—			304,956
Depreciation and amortization		1,003			251,282		—			252,285
Accretion		8,108			—		—			8,108
Impairment of long-lived assets		—			689		—			689

Operating income (loss)		(19,498	)		110,935		—			91,437
Equity in earnings of consolidated subsidiaries		(7,405	)		—		7,405			—
Interest expense, net		82,921			102,969		—			185,890

Income (loss) before income tax provision (benefit)		(95,014	)		7,966		(7,405	)		(94,453	)
Income tax provision (benefit)		(19,652	)		561		—			(19,091	)

Net income (loss)	$	(75,362	)	$	7,405	$	(7,405	)	$	(75,362	)

F-157

Condensed Consolidating Statement of Operations


	Year Ended December 31, 2015
	Change Healthcare Holdings, Inc.			Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Revenue
Solutions revenue	$	—		$	1,124,188		$	—		$	1,124,188
Postage revenue		—			352,895			—			352,895

Total revenue		—			1,477,083			—			1,477,083
Costs and expenses:
Cost of operations (exclusive of depreciation and amortization below)		228			507,130			—			507,358
Development and engineering		—			45,489			—			45,489
Sales, marketing, general and administrative		11,447			206,269			—			217,716
Customer postage		—			352,895			—			352,895
Depreciation and amortization		132,509			209,794			—			342,303
Accretion		10,496			—			—			10,496
Impairment of long-lived assets		—			8,552			—			8,552

Operating income (loss)		(154,680	)		146,954			—			(7,726	)
Equity in earnings of consolidated subsidiaries		(56,575	)		—			56,575			—
Interest expense, net		91,904			76,348			—			168,252
Contingent consideration		—			(4,825	)		—			(4,825	)
Other		—			(741	)		—			(741	)

Income (loss) before income tax provision (benefit)		(190,009	)		76,172			(56,575	)		(170,412	)
Income tax provision (benefit)		(102,176	)		19,597			—			(82,579	)

Net income (loss)	$	(87,833	)	$	56,575		$	(56,575	)	$	(87,833	)

F-158

Condensed Consolidating Statement of Comprehensive Income (Loss)


	Two Months Ended February 28, 2017
	Change Healthcare Holdings, Inc.			Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Net income (loss)	$	(36,603	)	$	3,851	$	(3,851	)	$	(36,603	)
Other comprehensive income (loss):
Changes in fair value of interest rate swap, net of taxes		218			—		—			218
Foreign currency translation adjustment		—			97		—			97
Equity in other comprehensive income (loss)		97			—		(97	)		—

Other comprehensive income (loss)		315			97		(97	)		315

Total comprehensive income (loss)	$	(36,288	)	$	3,948	$	(3,948	)	$	(36,288	)

F-159

Condensed Consolidating Statement of Comprehensive Income (Loss)


	Year Ended December 31, 2016
	Change Healthcare Holdings, Inc.			Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Net income (loss)	$	(75,362	)	$	7,405	$	(7,405	)	$	(75,362	)
Other comprehensive income (loss):
Changes in fair value of interest rate swap, net of taxes		1,896			—		—			1,896
Foreign currency translation adjustment		—			147		—			147
Equity in other comprehensive income (loss)		147			—		(147	)		—

Other comprehensive income (loss)		2,043			147		(147	)		2,043

Total comprehensive income (loss)	$	(73,319	)	$	7,552	$	(7,552	)	$	(73,319	)

F-160

Condensed Consolidating Statement of Comprehensive Income (Loss)


	Year Ended December 31, 2015
	Change Healthcare Holdings, Inc.			Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	(87,833	)	$	56,575		$	(56,575	)	$	(87,833	)
Other comprehensive income (loss):
Changes in fair value of interest rate swap, net of taxes		(47	)		—			—			(47	)
Foreign currency translation adjustment		—			(654	)		—			(654	)
Equity in other comprehensive income (loss)		(654	)		—			654			—

Other comprehensive income (loss)		(701	)		(654	)		654			(701	)

Total comprehensive income (loss)	$	(88,534	)	$	55,921		$	(55,921	)	$	(88,534	)

F-161

Condensed Consolidating Statement of Cash Flows


	Two Months Ended February 28, 2017
	Change Healthcare Holdings, Inc.			Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Operating activities
Net income (loss)	$	(36,603	)	$	3,851		$	(3,851	)	$	(36,603	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		—			43,315			—			43,315
Accretion		2,717			—			—			2,717
Equity compensation		772			25,652			—			26,424
Deferred income tax expense (benefit)		(15,575	)		(10,035	)		—			(25,610	)
Amortization of debt discount and issuance costs		756			1,408			—			2,164
Equity in earnings of consolidated subsidiaries		(3,851	)		—			3,851			—
Other		—			(133	)		—			(133	)
Changes in operating assets and liabilities:
Accounts receivable		—			(4,436	)		—			(4,436	)
Prepaid expenses and other		(6,797	)		1,943			—			(4,854	)
Accounts payable		385			6,031			—			6,416
Accrued expenses, deferred revenue and other liabilities		13,328			8,438			—			21,766
Due to/from affiliates		25,937			(25,937	)		—			—

Net cash provided (used in) by operating activities		(18,931	)		50,097			—			31,166

Investing activities
Purchases of property and equipment		—			(7,358	)		—			(7,358	)
Payments for acquisitions, net of cash acquired		—			2,187			—			2,187
Purchases of technology-based intangible assets		—			(2,803	)		—			(2,803	)
Investment in subsidiaries, net		(8,682	)		—			8,682			—

Net cash provided by (used in) investing activities		(8,682	)		(7,974	)		8,682			(7,974	)

Financing activities
Distributions from (to) Change Healthcare, Inc., net		—			8,682			(8,682	)		—
Payments of deferred financing obligations		—			(359	)		—			(359	)
Repurchase of common stock		(4,183	)		—			—			(4,183	)

Net cash provided by (used in) financing activities		(4,183	)		8,323			(8,682	)		(4,542	)

Net increase (decrease) in cash and cash equivalents		(31,796	)		50,446			—			18,650
Cash and cash equivalents at beginning of period		32,047			85,969			—			118,016

Cash and cash equivalents at end of period	$	251		$	136,415		$	—		$	136,666

F-162

Condensed Consolidating Statement of Cash Flows


	Year Ended December 31, 2016
	Change Healthcare Holdings, Inc.			Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Operating activities
Net income (loss)	$	(75,362	)	$	7,405		$	(7,405	)	$	(75,362	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		1,003			251,282			—			252,285
Accretion		8,108			—			—			8,108
Equity compensation		416			9,731			—			10,147
Deferred income tax expense (benefit)		(19,652	)		(494	)		—			(20,146	)
Amortization of debt discount and issuance costs		4,385			9,353			—			13,738
Impairment of long-lived assets		—			689			—			689
Equity in earnings of consolidated subsidiaries		(7,405	)		—			7,405			—
Other		(1,497	)		(7	)		—			(1,504	)
Changes in operating assets and liabilities:
Accounts receivable		—			155			—			155
Prepaid expenses and other		(3,544	)		(6,851	)		—			(10,395	)
Accounts payable		160			(3,235	)		—			(3,075	)
Accrued expenses, deferred revenue and other liabilities		33,090			5,017			—			38,107
Tax receivable agreement obligations to related parties		(986	)		—			—			(986	)
Due to/from affiliates		307,356			(307,356	)		—			—

Net cash provided (used in) by operating activities		246,072			(34,311	)		—			211,761

Investing activities
Purchases of property and equipment		—			(75,342	)		—			(75,342	)
Payments for acquisitions, net of cash acquired		—			1,502			—			1,502
Purchases of technology-based intangible assets		—			(49,132	)		—			(49,132	)
Investment in subsidiaries, net		(204,446	)		—			204,446			—

Net cash provided by (used in) investing activities		(204,446	)		(122,972	)		204,446			(122,972	)

Financing activities
Distributions from (to) Change Healthcare, Inc., net		—			204,446			(204,446	)		—
Payments on Term Loan Facility		(363	)		(18,157	)		—			(18,520	)
Payment of data sublicense obligation		(7,696	)		—			—			(7,696	)
Payments of deferred financing obligations		—			(8,954	)		—			(8,954	)
Repurchase of common stock		(2,258	)		—			—			(2,258	)

Net cash provided by (used in) financing activities		(10,317	)		177,335			(204,446	)		(37,428	)

Net increase (decrease) in cash and cash equivalents		31,309			20,052			—			51,361
Cash and cash equivalents at beginning of period		738			65,917			—			66,655

Cash and cash equivalents at end of period	$	32,047		$	85,969		$	—		$	118,016

F-163

Condensed Consolidating Statement of Cash Flows


	Year Ended December 31, 2015
	Change Healthcare Holdings, Inc.			Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Operating activities
Net income (loss)	$	(87,833	)	$	56,575		$	(56,575	)	$	(87,833	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		132,509			209,794			—			342,303
Accretion		10,496			—			—			10,496
Equity compensation		315			8,970			—			9,285
Deferred income tax expense (benefit)		(24,507	)		(61,431	)		—			(85,938	)
Amortization of debt discount and issuance costs		3,390			7,396			—			10,786
Contingent consideration		—			(4,825	)		—			(4,825	)
Impairment of long-lived assets		—			8,552			—			8,552
Equity in earnings of consolidated subsidiaries		(56,575	)		—			56,575			—
Other		(1,488	)		(332	)		—			(1,820	)
Changes in operating assets and liabilities:
Accounts receivable		—			5,078			—			5,078
Prepaid expenses and other		(77,416	)		78,626			—			1,210
Accounts payable		—			11,391			—			11,391
Accrued expenses, deferred revenue and other liabilities		9,464			(60,430	)		—			(50,966	)
Tax receivable agreement obligations to related parties		(944	)		—			—			(944	)
Due to/from affiliates		(316,014	)		316,014			—			—

Net cash provided by (used in) operating activities		(408,603	)		575,378			—			166,775

Investing activities
Purchases of property and equipment		—			(56,963	)		—			(56,963	)
Payments for acquisitions, net of cash acquired		—			(717,669	)		—			(717,669	)
Purchased of technology-based intangible assets		—			(5,325	)		—			(5,325	)
Investment in subsidiaries, net		4,755			—			(4,755	)		—

Net cash provided by (used in) investing activities		4,755			(779,957	)		(4,755	)		(779,957	)

Financing activities
Distributions from (to) Change Healthcare, Inc., net		—			(4,755	)		4,755			—
Proceeds from Term Loan Facility		8,481			376,930			—			385,411
Payments on Term Loan Facility		(320	)		(16,180	)		—			(16,500	)
Proceeds from Senior Notes		243,453			—			—			243,453
Proceeds from Revolving Facility		—			60,000			—			60,000
Payments on Revolving Facility		—			(60,000	)		—			(60,000	)
Payment of loan costs		(2,500	)		—			—			(2,500	)
Payment of debt assumed from acquisition		—			(154,469	)		—			(154,469	)
Payment of data sublicense obligation		(6,433	)		—			—			(6,433	)
Payments of deferred financing obligations		—			(6,987	)		—			(6,987	)
Repurchase of common stock		(5,772	)		—			—			(5,772	)
Proceeds from issuance of common stock		166,881			—			—			166,881
Payment of contingent consideration		—			(5,553	)		—			(5,553	)

Net cash provided by (used in) financing activities		403,790			188,986			4,755			597,531

Net increase (decrease) in cash and cash equivalents		(58	)		(15,593	)		—			(15,651	)
Cash and cash equivalents at beginning of period		796			81,510			—			82,306

Cash and cash equivalents at end of period	$	738		$	65,917		$	—		$	66,655

F-164

21.

Subsequent Events

The Company has evaluated subsequent events through June 1, 2017, the date the financial statements were available to be issued.

F-165

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Members of Change Healthcare LLC

Opinion on the Financial Statements

We have audited the accompanying combined balance sheets of Core MTS (see note 1 to the combined financial statements) (the “Company”) as of February 28, 2017 and March 31, 2016, and the related combined statements of operations, comprehensive income, equity, and cash flows for the eleven months ended February 28, 2017 and the year ended March 31, 2016. These combined financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these combined financial statements based on our audits.

Basis for Opinion

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such combined financial statements present fairly, in all material respects, the financial position of Core MTS as of February 28, 2017 and March 31, 2016, and the results of their operations and their cash flows for the eleven months ended February 28, 2017 and the year ended March 31, 2016, in conformity with principles generally accepted in the United States of America.

As discussed in Note 1 to the combined financial statements, the accompanying combined financial statements have been prepared from the separate records maintained by McKesson Corporation and may not necessarily be indicative of the conditions that would have existed or the results of operations or cash flows if Core MTS had been operated as an unaffiliated entity. Portions of certain expenses represent allocations made from McKesson Corporation that are directly attributable to Core MTS.

/s/ Deloitte & Touche LLP

Atlanta, Georgia

October 26, 2018

F-166

CORE MTS

COMBINED STATEMENTS OF OPERATIONS

(In millions)


	Periods Ended
	February 28, 2017			March 31, 2016
Revenue	$	1,712		$	1,909
Cost of sales		(848	)		(951	)

Gross profit		864			958
Operating expenses
Selling, distribution and administrative expenses		(457	)		(448	)
Research and development		(159	)		(197	)

Total operating expenses		(616	)		(645	)

Operating income		248			313
Other income, net		2			3

Income before income taxes		250			316
Income tax expense		(14	)		(26	)

Net income		236			290

Net income attributable to noncontrolling interests		(1	)		(1	)

Net income attributable to Core MTS	$	235		$	289

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

F-167

CORE MTS

COMBINED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)


	Periods Ended
	February 28, 2017			March 31, 2016
Net income	$	236		$	290
Other comprehensive loss, net of tax
Foreign currency translation adjustments arising during the period, net of zero tax		(4	)		—

Other comprehensive loss, net of tax		(4	)		—

Comprehensive income		232			290
Comprehensive income attributable to noncontrolling interests		(1	)		(1	)

Comprehensive income attributable to Core MTS	$	231		$	289

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

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CORE MTS

COMBINED BALANCE SHEETS

(In millions)


	February 28, 2017			March 31, 2016
ASSETS
Current assets
Cash and cash equivalents	$	31		$	46
Receivables, net		419			407
Prepaid expenses and other		71			73

Total current assets		521			526
Property, plant and equipment, net		87			66
Goodwill		1,080			1,058
Intangible assets, net		83			101
Other noncurrent assets		231			215

Total assets	$	2,002		$	1,966


LIABILITIES AND EQUITY
Current liabilities
Drafts and accounts payable	$	36		$	47
Deferred revenue		509			504
Other accrued liabilities		189			202

Total current liabilities		734			753
Other noncurrent liabilities		124			184
Commitments and contingent liabilities (Note 19)
Equity
Net parent investment		1,157			1,038
Accumulated other comprehensive loss		(13	)		(9	)

Total Core MTS equity		1,144			1,029
Noncontrolling interests		—			—

Total equity		1,144			1,029

Total liabilities and equity	$	2,002		$	1,966

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

F-169

CORE MTS

COMBINED STATEMENTS OF EQUITY

(In millions)


	Net Parent Investment			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests			Total Equity
Balance as of March 31, 2015	$	1,177		$	(9	)	$	—		$	1,168
Net income		289			—			1			290
Distribution to noncontrolling interests		—			—			(1	)		(1	)
Net transfers to parent		(428	)		—			—			(428	)

Balance as of March 31, 2016		1,038			(9	)		—			1,029
Net income		235			—			1			236
Other comprehensive loss		—			(4	)		—			(4	)
Distribution to noncontrolling interests		—			—			(1	)		(1	)
Net transfers to parent		(116	)		—			—			(116	)

Balance as of February 28, 2017	$	1,157		$	(13	)	$	—		$	1,144

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

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CORE MTS

COMBINED STATEMENTS OF CASH FLOWS

(In millions)


	Periods Ended
	February 28, 2017			March 31, 2016
Operating Activities
Net income	$	236		$	290
Adjustments to reconcile to net cash provided by operating activities:
Depreciation		13			12
Amortization		38			48
Provision for bad debt expense		3			6
Gain on disposal of businesses		—			(54	)
Other non-cash items		—			13
Changes in operating assets and liabilities:
Receivables		(12	)		41
Inventories		2			(3	)
Drafts and accounts payable		(11	)		9
Deferred revenue		(11	)		11
Accrued taxes		(55	)		(3	)
Other		(23	)		5

Net cash provided by operating activities		180			375


Investing Activities
Payments for property, plant and equipment		(27	)		(13	)
Capitalized software expenditures		(26	)		(29	)
Acquisitions, net of cash and cash equivalents acquired		(28	)		—
Proceeds from sale of businesses, net		1			90

Net cash (used in) provided by investing activities		(80	)		48


Financing Activities
Net transfer to parent		(116	)		(428	)
Other financing		—			(1	)

Net cash used in financing activities		(116	)		(429	)

Effect of exchange rate changes on cash and cash equivalents		1			—

Net (decrease) increase in cash and cash equivalents		(15	)		(6	)
Cash and cash equivalents at the beginning of the period		46			52

Cash and cash equivalents at the end of the period	$	31		$	46

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

F-171

CORE MTS

NOTES TO COMBINED FINANCIAL STATEMENTS

1.	Business Overview and Basis of Presentation

McKesson Technology Solutions (“MTS”) is a segment of McKesson Corporation (“McKesson”). MTS provides a comprehensive portfolio of information technology and services to help healthcare organizations improve quality of care and ensure patient safety, reduce the cost and variability of care and better manage their resources and revenue streams. MTS markets its products and services to integrated delivery networks, hospitals, physician practices, home healthcare providers, retail pharmacies and payers.

The product portfolio for MTS is designed to address a wide array of healthcare clinical and business performance needs ranging from medication safety and information access to revenue cycle management, resource utilization and physician adoption of electronic health records. Analytics software enables organizations to measure progress as they automate care processes for optimal clinical outcomes, business and operating results and regulatory compliance. To ensure that organizations achieve the maximum value for their information technology investment, we also offer a wide range of services to support the implementation and use of solutions as well as to assist with business and clinical redesign, process re-engineering and staffing (both information technology and back-office).

MTS consists of the following businesses: McKesson Health Solutions (“MHS”), Connected Care and Analytics (“MCCA”), Imaging and Workflow Solutions (“IWS”), Business Performance Services (“BPS”) and Enterprise Information Solutions (“EIS”).

On June 28, 2016, McKesson entered into a contribution agreement as well as various other agreements (collectively referred to as the “Agreements”) with Change Healthcare Performance, Inc. (formerly Change Healthcare, Inc.) (“Legacy CHC”), a Delaware corporation, and others to form Change Healthcare LLC (the “Joint Venture”), a joint venture, and Change Healthcare Holdings, LLC, an indirect subsidiary of the Joint Venture (referred to as the “Transaction”). Under the terms of the Agreements, McKesson contributes the majority of its MTS business to the Joint Venture; McKesson retains its RelayHealth Pharmacy, a business of MCCA, and EIS businesses. The businesses to be contributed by McKesson are herein referred to as Core MTS (the “Company” or “we” and other similar pronouns). The Transaction closed on March 1, 2017.

Throughout the periods included in these Combined Financial Statements, Core MTS operated as part of McKesson and consisted of several legal entities, acquired businesses, as well as businesses with no separate legal status. Separate financial statements have not historically been prepared for Core MTS. The Combined Financial Statements have been derived from McKesson’s historical accounting records as if Core MTS’s operations had been conducted independently from McKesson and were prepared on a stand-alone basis in accordance with U.S. generally accepted accounting principles (“GAAP”).

Unless otherwise noted, all references to fiscal year 2017 in these Combined Financial Statements shall mean the eleven month fiscal period which began on April 1, 2016 and ended on February 28, 2017, the day prior to closing of the Transaction; all references to other years shall mean Core MTS’s normal fiscal year ending March 31. All dates related to accounting pronouncements refer to calendar year, rather than fiscal year, unless otherwise stated.

Substantially all of Core MTS’s revenue is derived from domestic customers. Sales for its BPS, Connected Care and Analytics (excluding RelayHealth Pharmacy) (“CCA”), IWS and MHS businesses as a percentage of total Core MTS sales are 34.3%, 13.1%, 17.9% and 34.7%, respectively, for the period ended February 28, 2017, and 34.9%, 13.9%, 19.3% and 31.9%, respectively, for the period ended March 31, 2016.

The historical results of operations, financial position and cash flows of Core MTS presented in these Combined Financial Statements may not be indicative of what they would have been had Core MTS

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CORE MTS

NOTES TO COMBINED FINANCIAL STATEMENTS

actually been an independent stand-alone entity, nor are they necessarily indicative of Core MTS’s future results of operations, financial position and cash flows. These Combined Financial Statements also include the results of operations and cash flows of various businesses that have been divested but were historically managed by management of Core MTS (Note 5, “Divestiture of Businesses”).

The Combined Financial Statements include all revenue and costs directly attributable to Core MTS and an allocation of expenses related to certain McKesson corporate functions (Note 3, “Corporate Allocations, Related Party Transactions, Net Parent Investment and Transaction Costs”). These expenses have been allocated to Core MTS based on direct usage or benefit where specifically identifiable, with the remainder allocated primarily on a pro rata basis of operating profit, revenue, headcount, or other measures. Core MTS considers these allocations to be a reasonable reflection of the utilization of services or the benefit received. However, the allocations may not be indicative of the actual expense that would have been incurred had Core MTS operated as an independent, stand-alone entity, nor are they indicative of Core MTS future expenses.

The Combined Financial Statements include assets and liabilities specifically attributable to Core MTS and certain liabilities that are held by McKesson that are specifically identifiable or otherwise attributable to Core MTS. McKesson uses a centralized approach for managing cash and financing operations with its segments and subsidiaries. Accordingly, a substantial portion of Core MTS’s bank cash balances are transferred to McKesson’s cash management accounts regularly by McKesson at its discretion and therefore are not included in the Combined Financial Statements. Only cash balances legally owned by Core MTS are reflected in the Combined Balance Sheets. Transfers of cash between Core MTS and McKesson are included within Net transfer to parent on the Combined Statements of Cash Flows and the Combined Statements of Equity. McKesson’s long-term debt and related interest expense have not been attributed to Core MTS for any of the periods presented because McKesson’s borrowings are neither directly attributable to Core MTS nor is Core MTS the legal obligor of such borrowings.

All intercompany transactions and balances within Core MTS have been eliminated. Transactions between Core MTS and McKesson have been included in these Combined Financial Statements and substantially all have been effectively settled for cash at the time the transaction is recorded through McKesson’s centralized cash management system. Transactions between Core MTS and other businesses of McKesson are considered related party transactions (Note 3, “Corporate Allocations, Related Party Transactions, Net Parent Investment and Transaction Costs”).

The Combined Financial Statements include subsidiaries over which Core MTS has a controlling financial interest. The Combined Financial Statements include the financial statements of all wholly-owned subsidiaries and majority-owned or controlled companies. For those consolidated subsidiaries where our ownership is less than 100%, the portion of the net income or loss allocable to the noncontrolling interests is reported as “Net income attributable to noncontrolling interests” on the Combined Statements of Operations.

Core MTS’s operations are included in the consolidated U.S. federal and certain state and local income tax returns filed by McKesson. Core MTS also files certain separate state and local and foreign income tax returns. Income tax expense and other income tax related information contained in these Combined Financial Statements are presented on a separate return basis as if Core MTS filed its own tax returns. Core MTS’s tax results as presented in the Combined Financial Statements may not be reflective of the results that Core MTS will generate in the future. In jurisdictions where Core MTS has been included in the tax returns filed by McKesson, any income taxes payable resulting from the related income tax provisions have been reflected in the Combined Balance Sheets within Net parent investment.

F-173

CORE MTS

NOTES TO COMBINED FINANCIAL STATEMENTS

2.	Significant Accounting Policies

Use of Estimates: The preparation of financial statements in conformity with GAAP requires that we make estimates and assumptions that affect the reported amounts in the Combined Financial Statements and accompanying notes. Actual amounts could differ from those estimated amounts. Significant estimates inherent in the preparation of these Combined Financial Statements include, but are not limited to, accounting for revenue and cost recognition, allocation of expenses related to certain McKesson corporate functions, evaluation of goodwill and other assets for impairment, income taxes including deferred taxes, fair value measurements, legal liabilities and other contingencies.

Cash and Cash Equivalents : Core MTS participates in McKesson’s cash management and financing programs. The cash reflected on the Combined Financial Statements represents cash on hand related to Core MTS at certain foreign and domestic legal entities that will be contributed by McKesson to the Joint Venture in conjunction with the Transaction.

The remaining cash and cash equivalents are deposited with several financial institutions. Deposits may exceed the amounts insured by the Federal Deposit Insurance Corporation in the U.S. and similar deposit insurance programs in other jurisdictions. We mitigate the risk of our short-term investment portfolio by depositing funds with reputable financial institutions and monitoring risk profiles.

Restricted Cash : Cash that is subject to legal restrictions or is unavailable for general operating purposes is classified as restricted cash and is included within Prepaid expenses and other in the Combined Balance Sheets. At February 28, 2017 and March 31, 2016, our restricted cash balances were $2 million and $2 million, respectively, which represents cash received to support refund payments to patients of BPS clients.

Concentrations of Credit Risk and Receivables: Trade receivables are subject to a concentration of credit risk with customers in the healthcare provider sector, which can be affected by a downturn in the economy and changes in reimbursement policies. This credit risk is mitigated by the size and diversity of the customer base as well as its geographic dispersion. We estimate the receivables for which we do not expect full collection based on historical collection rates and ongoing evaluations of the creditworthiness of our customers. An allowance is recorded in our Combined Financial Statements for these amounts.

Property, Plant and Equipment: We state our property, plant and equipment (“PPE”) at cost and depreciate them under the straight-line method at rates designed to distribute the cost of PPE over estimated service lives ranging from one to thirty years. When certain events or changes in operating conditions occur, an impairment assessment may be performed on the recoverability of the carrying amounts.

Goodwill: Goodwill is tested for impairment on an annual basis in the fourth quarter or more frequently if indicators for potential impairment exist. Impairment testing is conducted at the reporting unit level.

The first step in goodwill testing requires us to compare the estimated fair value of a reporting unit to its carrying value. This step may be performed utilizing either a qualitative or quantitative assessment. If the carrying value of the reporting unit is lower than its estimated fair value, no further evaluation is necessary. If the carrying value of the reporting unit is higher than its estimated fair value, the second step must be performed to measure the amount of impairment loss. Under the second step, the implied fair value of goodwill is calculated in a hypothetical analysis by subtracting the fair value of all assets and liabilities of the reporting unit, including any unrecognized intangible assets, from the fair value of the reporting unit calculated in the first step of the impairment test. If the carrying value of goodwill for the reporting unit exceeds the implied fair value of goodwill, an impairment charge is recorded for that excess.

F-174

CORE MTS

NOTES TO COMBINED FINANCIAL STATEMENTS

To estimate the fair value of our reporting units, we consider a combination of the market approach and the income approach. Under the market approach, we estimate fair value by comparing the business to similar businesses or guideline companies whose securities are actively traded in public markets. Under the income approach, we use a discounted cash flow model in which cash flows anticipated over several periods, plus a terminal value at the end of that time horizon, are discounted to their present value using an appropriate expected rate of return. The discount rate used for cash flows reflects capital market conditions and the specific risks associated with the business. The testing requires a complex series of assumptions and judgment by management in projecting future operating results, selecting guideline companies for comparisons and assessing risks. The use of alternative assumptions and estimates could affect the fair values and change the impairment determinations.

Intangible Assets: Currently all of our intangible assets are subject to amortization and are amortized based on the pattern of their economic consumption or on a straight-line basis over their estimated useful lives, ranging from one to twenty years. We review intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Determination of recoverability is based on the lowest level of identifiable estimated future undiscounted cash flows resulting from use of the asset and its eventual disposition. Measurement of any impairment loss is based on the excess of the carrying value of the asset over its fair market value.

Capitalized Software Developed for Sale: Costs incurred internally in researching and developing software developed for sale are charged to expense until technological feasibility has been established for the product. After a project has reached the point of technological feasibility, development costs for software developed for sale are capitalized. Completed projects are amortized after reaching the point of general availability using the straight-line method based on an estimated useful life of approximately three years. At each balance sheet date, or earlier if an indicator of an impairment exists, we evaluate the recoverability of unamortized capitalized software costs based on estimated future undiscounted revenue net of estimated related costs over the remaining amortization period.

Capitalized Software Held for Internal Use: The Company provides services to many of its customers using software developed for internal use. The costs that are incurred to develop such software are expensed as incurred during the preliminary project stage and classified within research and development on the combined statement of operations. Once certain criteria have been met, direct costs incurred in developing or obtaining computer software are capitalized and amortized over their estimated useful lives ranging from one to five years. Training and maintenance costs are expensed as incurred.

Revenue Recognition: Revenue is generated primarily by licensing software and software systems (consisting of software, hardware and maintenance support), licensing content, providing software as a service (“SaaS”) or SaaS-based solutions and providing claims processing, outsourcing and professional services. Revenue is recognized as follows:

Software systems are marketed under information systems agreements as well as service agreements. Perpetual software arrangements are recognized at the time of delivery, under the percentage-of-completion method if the arrangements require significant production, modification or customization of the software, or in certain instances under the completed contract method if reasonable estimates cannot be made. Contracts accounted for under the percentage-of-completion method are generally measured based on the ratio of labor hours incurred to date to total estimated labor hours to be incurred. Changes in estimates to complete and revisions in overall profit estimates on these contracts are charged to earnings in the period in which they are determined. We accrue for contract losses if and when the current estimate of total contract costs exceeds total contract revenue. Software implementation fees are recognized as the work is performed or under the percentage-of-completion method for perpetual software.

F-175

CORE MTS

NOTES TO COMBINED FINANCIAL STATEMENTS

Revenue from time-based software license agreements is recognized ratably over the term of the agreement. Software implementation fees for time-based software licenses are recognized ratably over the software license term. Maintenance and support agreements are marketed under annual or multi-year agreements and are recognized ratably over the period covered by the agreements. Hardware revenue is generally recognized upon delivery.

We also offer certain products on an application service provider basis, making our software functionality available on a remote hosting basis from our data centers. The data centers provide system and administrative support, as well as hosting services. Revenue on products sold on an application service provider basis is recognized on a monthly basis over the term of the contract beginning on the service start date of products hosted.

We engage in multiple-element arrangements, which may contain any combination of software, hardware, implementation, SaaS-based offerings, consulting services or maintenance services. For multiple-element arrangements that do not include software, revenue is allocated to the separate elements based on their relative selling price and recognized in accordance with the revenue recognition criteria applicable to each element. Relative selling price is determined based on vendor specific objective evidence (“VSOE”) of selling price if available, third-party evidence (“TPE”), if VSOE of selling price is not available, or estimated selling price (“ESP”), if neither VSOE of selling price nor TPE is available. For multiple-element arrangements accounted for in accordance with specific software accounting guidance when some elements are delivered prior to others in an arrangement and VSOE of fair value exists for the undelivered elements, revenue for the delivered elements is recognized upon delivery of such items. We establish VSOE for hardware and implementation and consulting services based on the price charged when sold separately, and for maintenance services based on substantive renewal rates offered to customers. Revenue for the software element is recognized under the residual method only when fair value has been established for all of the undelivered elements in an arrangement. If fair value cannot be established for any undelivered element, all of the arrangement’s revenue is deferred until the delivery of the last element commences or until the fair value of the undelivered element is determinable. For multiple-element arrangements with both software elements and nonsoftware elements, arrangement consideration is allocated between the software elements as a whole and nonsoftware elements. We then further allocate consideration to the individual elements within the software group, and revenue is recognized for all elements under the applicable accounting guidance and our policies described above.

Income Taxes: Income taxes as presented attribute deferred income taxes of McKesson to our stand-alone Combined Financial Statements in a manner that is systematic, rational and consistent with the asset and liability method. Accordingly, our income tax provision was prepared following the separate return method, which calculates income taxes for the stand-alone financial statements of each member of the combined group as if the group member were a separate taxpayer and a stand-alone enterprise. As a result, actual tax transactions included in the Consolidated Financial Statements of McKesson may not be included in our separate Combined Financial Statements. Similarly, the tax treatment of certain items reflected in our Combined Financial Statements may not be reflected in the Consolidated Financial Statements and tax returns of McKesson.

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CORE MTS

NOTES TO COMBINED FINANCIAL STATEMENTS

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statements and the tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Tax benefits from uncertain tax positions are recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. The amount recognized is measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon effective settlement. Deferred taxes are not provided on undistributed earnings of our foreign operations that are considered to be permanently reinvested.

Foreign Currency Translation: The reporting currency of Core MTS and its subsidiaries is the U.S. dollar. Our foreign subsidiaries generally consider their local currency to be their functional currency. Foreign currency-denominated assets and liabilities of these foreign subsidiaries are translated into U.S. dollars at year-end exchange rates and revenue and expenses are translated at average exchange rates during the corresponding period, and equity accounts are primarily translated at historical exchange rates. Foreign currency translation adjustments are included in Other comprehensive income or loss in the Combined Statements of Comprehensive Income, and the cumulative effect is included in the equity section of the Combined Balance Sheets. Realized gains and losses from currency exchange transactions are recorded in Operating expenses in the Combined Statements of Operations. We release cumulative translation adjustment from equity into net income as a gain or loss only upon complete or substantially complete liquidation of a controlling interest in a subsidiary or a group of assets within a foreign entity.

Net Parent Investment: Net parent investment in the Combined Balance Sheets represents McKesson’s historical investment in Core MTS and includes accumulated net earnings attributable to parent and the net effect of transactions with, and cost allocations from, parent. Note 3, “Corporate Allocations, Related Party Transactions, Net Parent Investment and Transaction Costs” provides additional information regarding the allocation to Core MTS for expenses incurred by McKesson.

Comprehensive Income: Comprehensive income consists of two components, net income and other comprehensive income. Other comprehensive income refers to revenue, expenses, and gains and losses that under GAAP are recorded as an element of equity but are excluded from net income. Our other comprehensive income consists of foreign currency translation adjustments from those subsidiaries where the local currency is the functional currency.

Share-Based Compensation: McKesson provides share-based compensation to certain Core MTS employees. We account for all share-based compensation transactions using a fair-value based measurement method. The share-based compensation expense, for the portion of the awards that is ultimately expected to vest, is recognized on a straight-line basis over the requisite service period. The compensation expense recognized has been classified in the Combined Statements of Operations or capitalized on the Combined Balance Sheets in the same manner as cash compensation paid to our employees.

Postretirement Benefit Plans: Certain Core MTS employees participate in defined benefit pension and other postretirement benefit plans administered and sponsored by McKesson. Core MTS does not record assets or liabilities to recognize the funded status of these plans because the Combined Financial Statements reflect the cost for these plans as if they were multi-employer plans. Costs allocated to Core MTS reflects Core MTS’s employees’ proportionate share of total costs in McKesson plans in which they participate as well as an allocation of McKesson’s corporate costs for these plans. Assets and liabilities of these plans will be retained by McKesson subsequent to the separation of Core MTS.

F-177

CORE MTS

NOTES TO COMBINED FINANCIAL STATEMENTS

Warranties: In the normal course of business, we provide warranties regarding the performance of software and products we sell. Our liability under these warranties is to bring the product into compliance with previously agreed upon specifications. For software products, this may result in additional project costs, which are reflected in our estimates used for the percentage-of-completion method of accounting for software installation services within these contracts. In addition, most of our customers who purchase our software and automation products also purchase annual maintenance agreements. Revenue from these maintenance agreements is recognized on a straight-line basis over the contract period and the cost of servicing product warranties is charged to expense when claims become estimable. Accrued warranty costs were not material to the Combined Balance Sheets.

Loss Contingencies: We are subject to various claims, including claims with customers and vendors, pending and potential legal actions for damages, investigations relating to governmental laws and regulations and other matters arising out of the normal conduct of our business. When a loss is considered probable and reasonably estimable, we record a liability in the amount of our best estimate for the ultimate loss. However, the likelihood of a loss with respect to a particular contingency is often difficult to predict and determining a meaningful estimate of the loss or a range of loss may not be practicable based on the information available and the potential effect of future events and decisions by third parties that will determine the ultimate resolution of the contingency. Moreover, it is not uncommon for such matters to be resolved over many years, during which time relevant developments and new information must be reevaluated at least quarterly to determine both the likelihood of potential loss and whether it is possible to reasonably estimate a range of possible loss. When a material loss is probable but a reasonable estimate cannot be made, disclosure of the proceeding is provided.

Disclosure is also provided when it is reasonably possible that a loss will be incurred or when it is reasonably possible that the amount of a loss will exceed the recorded provision. We review all contingencies at least quarterly to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or range of the loss can be made. As discussed above, development of a meaningful estimate of loss or a range of potential loss is complex when the outcome is directly dependent on negotiations with or decisions by third parties, such as regulatory agencies, the court system and other interested parties. Such factors bear directly on whether it is possible to reasonably estimate a range of potential loss and boundaries of high and low estimate.

Recently Adopted Accounting Pronouncements

Share-Based Payments : In March 2016, amended guidance was issued for employee share-based payment awards. Under the amended guidance, all excess tax benefits (“windfalls”) and deficiencies (“shortfalls”) related to employee share-based compensation arrangements are recognized within income tax expense. Under the previous guidance, windfalls were recognized in equity and shortfalls were only recognized to the extent they exceeded the pool of windfall tax benefits. The amended guidance also requires excess tax benefits to be classified as an operating activity in the statements of cash flows, rather than a financing activity. The amended guidance is effective for us commencing in the first quarter of 2018. Early adoption is permitted. We elected to early adopt this amended guidance in the first quarter of 2017. The primary impact of the adoption was the recognition of excess tax benefits in the income statement on a prospective basis, rather than equity. As a result, discrete tax benefits of $5 million were recognized in income tax expense during 2017. In addition, the guidance removes the requirement to delay the recognition of the excess benefit until the deduction reduces taxes payable. As a result, our deferred tax asset was increased by $13 million through Net parent investment.

Business Combinations: In the first quarter of 2017, we adopted amended guidance for an acquirer’s accounting for measurement-period adjustments. The amended guidance eliminates the requirement that an

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CORE MTS

NOTES TO COMBINED FINANCIAL STATEMENTS

acquirer in a business combination account for measurement-period adjustments retrospectively and instead requires that measurement-period adjustments be recognized during the period in which it determines the adjustment. In addition, the amended guidance requires that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The adoption of this amended guidance did not have a material effect on our Combined Financial Statements.

Fair Value Measurement: In the first quarter of 2017, we adopted amended fair value guidance on a retrospective basis. This amended guidance limits disclosures and removes the requirement to categorize investments within the fair value hierarchy if the fair value of the investment is measured using the net asset value (“NAV”) per share practical expedient. The adoption of this amended guidance did not have a material effect on our Combined Financial Statements.

Fees Paid in a Cloud Computing Arrangement : In the first quarter of 2017, we adopted amended guidance for a customer’s accounting for fees paid in a cloud computing arrangement. The amended guidance requires customers to determine whether or not an arrangement contains a software license element. If the arrangement contains a software element, the related fees paid should be accounted for as an acquisition of a software license. If the arrangement does not contain a software license, it is accounted for as a service contract. The adoption of this amended guidance did not have a material effect on our Combined Financial Statements.

Consolidation: In the first quarter of 2017, we adopted amended guidance for consolidating legal entities in which a reporting entity holds a variable interest. The amended guidance modifies the evaluation of whether limited partnerships and similar legal entities are VIEs and changes the consolidation analysis of reporting entities that are involved with VIEs that have fee arrangements and related party relationships. The adoption of this amended guidance did not have a material effect on our Combined Financial Statements.

Deferred Income Taxes: In November 2015, amended guidance was issued for the balance sheet classification of deferred income taxes. The amended guidance requires the classification of all deferred tax assets and liabilities as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. The amended guidance would have been effective for us commencing in the first quarter of 2018, however, early adoption was permitted. We early adopted this amended guidance in the fourth quarter of 2016 on a prospective basis. As a result, we reclassified current net deferred tax assets of $121 million as noncurrent on our Combined Balance Sheet as of March 31, 2016. The adoption of this guidance had no impact on our Combined Statements of Operations, Comprehensive Income or Cash Flows. This amended guidance only resulted in a change in presentation of our deferred income taxes on our Combined Balance Sheets as of February 28, 2017, and March 31, 2016.

Discontinued Operations: In the first quarter of 2016, we adopted amended guidance for reporting of discontinued operations and disclosures of disposals of components. The amended guidance revises the criteria for disposals to qualify as discontinued operations and permits significant continuing involvement and continuing cash flows with the discontinued operation. In addition, the amended guidance requires additional disclosures for discontinued operations and new disclosures for individually material disposal transactions that do not meet the definition of a discontinued operation. The adoption of this amended guidance did not have a material effect on our Combined Financial Statements.

Cumulative Translation Adjustment: In the first quarter of 2015, we adopted amended guidance for a parent’s accounting for the cumulative translation adjustment upon derecognition of certain subsidiaries or

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group of assets within a foreign entity or of an investment in a foreign entity. The amended guidance requires the release of any cumulative translation adjustment into net income only upon complete or substantially complete liquidation of a controlling interest in a subsidiary or a group of assets within a foreign entity. Also, it requires the release of all or a pro rata portion of the cumulative translation adjustment to net income in the case of sale of an equity method investment that is a foreign entity. The adoption of this amended guidance did not have a material effect on our Combined Financial Statements.

3.	Corporate Allocations, Related Party Transactions, Net Parent Investment and Transaction Costs

Corporate Allocations

The Combined Financial Statements reflect allocations of certain expenses from McKesson including, but not limited to, general corporate expenses such as management, legal, human resources, finance, accounting, treasury, tax, information technology, benefits, communications, ethics and compliance, corporate employee benefits including incentive bonuses and share-based compensation, shared services processing and administration and depreciation for corporate fixed assets. Also reflected are allocations of certain expenses from the shared services business unit of McKesson’s MTS segment including, but not limited to, general corporate expenses such as management, legal, human resources, finance, marketing and facilities. We consider these allocations to be a reasonable reflection of the utilization of services by, or the benefits provided to, Core MTS. The allocation methods used primarily include a pro rata basis of operating income, headcount, and number of transactions or other reasonable measures. Allocations for management costs and corporate support services totaled $197 million and $259 million in 2017 and 2016, respectively.

These costs have been recorded within Cost of sales, Selling, distribution and administrative expenses and Research and development in the Combined Statements of Operations as follows:


	Periods Ended
(in millions)	February 28, 2017		March 31, 2016
Cost of sales	$	29	$	58
Selling, distribution and administrative		156		188
Research and development		12		13

Total corporate allocations	$	197	$	259

The financial information in these Combined Financial Statements does not necessarily include all the expenses that would have been incurred by Core MTS had it been a separate, stand-alone entity. Actual costs that may have been incurred if Core MTS had been a stand-alone company would depend on a number of factors, including the chosen organization structure and functions outsourced or performed by employees.

Related Party Sales

In 2017 and 2016, related party sales to McKesson and its subsidiaries were $16 million and $14 million, respectively, and are recorded in Revenue on the Combined Statements of Operations. All related party receivables and payables due from or due to McKesson are settled through the intercompany accounts included within the Net parent investment line on the Combined Balance Sheets.

Net Parent Investment

Historically, McKesson has provided financing, cash management and other treasury services to Core MTS. The Core MTS cash balances are swept by McKesson and historically, we have received funding from

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McKesson for our operating and investing cash needs. Cash transferred to and from McKesson has historically been recorded as intercompany payables and receivables which are reflected in the Net parent investment line on the Combined Balance Sheets.

Transaction Costs

During the period ended February 28, 2017, we recorded $52 million of transaction-related costs primarily associated with formation of the Joint Venture within the Combined Statement of Operations as a component of Selling, distribution and administrative expenses. These costs primarily consisted of accounting and legal fees, other outside service fees and employee retention and severance costs.

4.	Restructuring

On March 14, 2016, McKesson committed to a restructuring plan to lower operating costs (the “Cost Alignment Plan”). The Cost Alignment Plan primarily consists of a reduction in workforce, and business process initiatives that was substantially implemented prior to the end of 2017. Business process initiatives primarily include plans to reduce operating costs as well as the disposal and abandonment of certain non-core businesses. As a result of the Cost Alignment Plan, $29 million of pre-tax charges were recorded during the fourth quarter of 2016. The restructuring liabilities were $2 million at February 28, 2017.

During the period ended February 28, 2017, a pre-tax credit of $7 million primarily driven by the redeployment of resources due to the Transaction was recorded as part of the Cost Alignment Plan, and $14 million of cash payments were made, primarily related to severance. At February 28, 2017, the restructuring liabilities of $2 million were recorded in Other accrued liabilities in our Combined Balance Sheets.

Under the Cost Alignment Plan, pretax charges of $22 million have been recorded to date. We do not expect to incur any material charges related to the Cost Alignment Plan in future periods.

Restructuring charges for the Cost Alignment Plan during 2017 and the fourth quarter of 2016 directly attributable to Core MTS consisted of the following:


	Periods Ended
(in millions)	February 28, 2017			March 31, 2016
Severance and employee-related costs, net	$	(8	)	$	23
Asset impairment and accelerated depreciation and amortization		1			4
Exit-related costs		—			1
Other		—			1

Total	$	(7	)	$	29

Cost of sales	$	(4	)	$	13
Operating expenses		(3	)		16

Total	$	(7	)	$	29

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The following table summarizes the activity related to the restructuring liabilities associated with the Cost Alignment Plan during 2017:


(in millions)
Balance as of March 31, 2016	$	24
Net restructuring credit		(7	)
Cash payments		(14	)
Other		(1	)

Balance as of February 28, 2017	$	2

5.	Divestiture of Businesses

During the fourth quarter of 2016, we sold a portion of our ambulatory business within BPS for net proceeds of $5 million. The decision to dispose of this business was driven by the direction of Core MTS. We recorded a pre-tax gain of approximately $3 million. In 2016, this business contributed approximately $27 million of net sales.

During the first quarter of 2016, we sold the nurse triage business within CCA for net proceeds of $85 million and recorded a pre-tax gain of $51 million from the sale. In 2016, the nurse triage business contributed approximately $16 million of net sales.

These divestitures did not meet the criteria to qualify as discontinued operations. Accordingly, the pre-tax gains were recorded in Operating expenses within continuing operations of our Combined Statements of Operations. Pre- and after tax income of these businesses were not material for 2016.

6.	Share-Based Compensation

Certain Core MTS employees participate in McKesson’s share-based compensation plans. Under these plans, McKesson may grant employees stock options to purchase common stock of McKesson, employee stock purchase plans, restricted stock units (“RSUs”), performance-based restricted stock units (“PeRSUs”) and total shareholder return units (“TSRUs”) (collectively, “share-based awards”). Most of these share-based awards are granted in the first quarter of each fiscal year.

Compensation expense for the share-based awards is recognized for the portion of awards ultimately expected to vest. We estimate the number of share-based awards that will ultimately vest primarily based on historical experience. The estimated forfeiture rate established upon grant is re-assessed throughout the requisite service period and is adjusted when actual forfeitures occur. The actual forfeitures in future reporting periods could be higher or lower than current estimates. Our share-based compensation expense has been derived from the share-based awards granted by McKesson to Core MTS’s employees. As the share-based awards are McKesson’s plans, the amounts have been recognized through Net parent investment on the Combined Balance Sheets.

The compensation expense recognized has been classified in the Combined Statements of Operations or capitalized in the Combined Balance Sheets in the same manner as cash compensation paid to our employees. The expense is deemed to have been settled with McKesson in each year through the Net parent investment on the Combined Balance Sheets. There was no material share-based compensation expense capitalized as part of the cost of an asset in 2017 or 2016.

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Impact on Net Income

The components of share-based compensation expense and related tax benefits are as follows:


	Periods Ended
(in millions)	February 28, 2017			March 31, 2016
Share-based compensation expenses	$	23		$	26
Tax benefit for share-based compensation expense ⁽¹⁾		(7	)		(8	)

Share-based compensation expense, net of tax	$	16		$	18

(1)

Income tax benefit is computed using the tax rates of applicable tax jurisdictions. Additionally, a portion of pre-tax compensation expense is not tax-deductible.

Stock Plans

In July 2013, McKesson’s stockholders approved the 2013 Stock Plan to replace the 2005 Stock Plan. These stock plans provide employees, officers and non-employee directors the opportunity to receive equity-based, long-term incentives in the form of stock options, restricted stock, RSUs, PeRSUs, TSRUs and other share-based awards. The 2013 Stock Plan reserves 30 million shares plus the remaining number of shares reserved but unused under the 2005 Stock Plan. As of February 28, 2017, 28 million shares remain available for future grant under the 2013 Stock Plan.

Stock Options

Stock options are granted with an exercise price at no less than the fair market value and those options granted under the stock plans generally have a contractual term of seven years and follow a four-year vesting schedule.

Compensation expense for stock options is recognized on a straight-line basis over the requisite service period and is based on the grant-date fair value for the portion of the awards that is ultimately expected to vest. McKesson uses the Black-Scholes options-pricing model to estimate the fair value of stock options. Once the fair value of an employee stock option is determined, current accounting practices do not permit it to be changed, even if the estimates used are different from actual. The options-pricing model requires the use of various estimates and assumptions as follows:

•

Expected stock price volatility is based on a combination of historical volatility of McKesson’s common stock and implied market volatility. We believe that this market-based input provides a reasonable estimate of future stock price movements and is consistent with employee stock option valuation considerations.

•

Expected dividend yield is based on historical experience and investors’ current expectations with respect to McKesson.

•

The risk-free interest rate for periods within the expected life of the option is based on the constant maturity U.S. Treasury rate in effect at the time of grant.

•

Expected life of the options is based primarily on historical employee stock option exercises and other behavior data and reflects the impact of changes in contractual life of current option grants compared to historical grants.

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Weighted-average assumptions used to estimate the fair value of employee stock options were as follows:


	Periods Ended
	February 28, 2017			March 31, 2016
Expected stock price volatility		21	%		21	%
Expected dividend yield		0.7	%		0.4	%
Risk-free interest rate		1.14	%		1.4	%
Expected life (in years)		4			4

The number of options outstanding was not material in 2017 or 2016.

Restricted Stock Unit Awards

Restricted stock unit awards, or RSUs, which entitle the holder to receive at the end of a vesting term a specified number of shares of McKesson’s common stock, are accounted for at fair value at the date of grant. Total compensation expense for RSUs under McKesson’s stock plans is determined by the product of the number of shares that are expected to vest and the grant date market price of McKesson’s common stock. The McKesson Compensation Committee determines the vesting terms at the time of grant. These awards generally vest in three to four years. We recognize expense for RSUs on a straight-line basis over the requisite service period.

PeRSUs are RSUs for which the number of RSUs awarded is conditional upon the attainment of one or more performance objectives over a specified period. Each year, the McKesson Compensation Committee approves the target number of PeRSUs representing the base number of awards that could be granted if performance goals are attained. PeRSUs are accounted for as variable awards until the performance goals are reached at which time the grant date is established. Total compensation expense for PeRSUs is determined by the product of the number of shares eligible to be awarded and expected to vest, and the market price of McKesson’s common stock, commencing at the inception of the requisite service period. During the performance period, the compensation expense for PeRSUs is re-computed using the market price and the performance modifier at the end of a reporting period. At the end of the performance period, if the goals are attained, the awards are granted and classified as RSUs and accounted for on that basis. We recognize compensation expense for these awards on a straight-line basis over the requisite aggregate service period of generally four years.

TSRUs replaced PeRSUs for our executive officers beginning in 2015. The number of vested TSRUs is assessed at the end of a three-year performance period and is conditioned upon attainment of a total shareholder return metric relative to a peer group of companies. McKesson uses the Monte Carlo simulation model to measure the fair value of TSRUs. TSRUs have a requisite service period of approximately three years. Expense is attributed to the requisite service period on a straight-line basis based on the fair value of the TSRUs. For TSRUs that are designated as equity awards, the fair value is measured at the grant date. For TSRUs that are eligible for cash settlement and designated as liability awards, we measure the fair value at the end of each reporting period and also adjust a corresponding liability on our Combined Balance Sheets for changes in fair value.

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The weighted-average assumptions used to estimate the fair value of TSRUs are as follows:


	Periods Ended
	February 28, 2017			March 31, 2016
Expected stock price volatility		23	%		18	%
Expected dividend yield		0.7	%		0.4	%
Risk-free interest rate		1.05	%		0.9	%
Expected life (in years)		3			3

The number of RSUs outstanding was not material in 2017 and 2016.

Employee Stock Purchase Plan (“ESPP”)

McKesson has an ESPP under which 21 million shares have been authorized for issuance. The ESPP allows eligible employees, including certain Core MTS employees, to purchase shares of McKesson’s common stock through payroll deductions. The deductions occur over three-month purchase periods and the shares are then purchased at 85% of the market price at the end of each purchase period. Employees are allowed to terminate their participation in the ESPP at any time during the purchase period prior to the purchase of the shares. The 15% discount provided to employees on these shares is included in compensation expense. These amounts have not been significant. Shares issued under the ESPP were not material in 2017 and 2016. At February 28, 2017, 4 million shares remain available for issuance.

7.	Receivables, Net


(in millions)	February 28, 2017			March 31, 2016
Customer accounts	$	347		$	317
Unbilled receivables		76			90
Other		7			9

Total		430			416
Allowances		(11	)		(9	)

Net	$	419		$	407

8.	Prepaid Expenses and Other


(in millions)	February 28, 2017		March 31, 2016
Prepaid expenses	$	61	$	60
Inventories		8		11
Other current assets		2		2

Total prepaid expenses and other	$	71	$	73

9.	Income Taxes

During the periods presented in the combined financial statements, Core MTS’ operations are included in the consolidated US federal, and certain state and local income tax returns filed by McKesson, where applicable. Core MTS also files certain separate state and local, and foreign income tax returns. The income

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tax provision included in these combined financial statements has been calculated using the separate return basis, as if Core MTS filed separate tax returns. In the future, as a stand-alone entity, the joint venture will file tax returns on its own behalf and its deferred taxes and effective tax rate may differ from those in the historical periods.

The income from continuing operations before income taxes consists of:


	Periods Ended
(in millions)	February 28, 2017		March 31, 2016
US	$	13	$	55
International		237		261

Total	$	250	$	316

Income tax expense related to continuing operations consists of the following:


	Periods Ended
(in millions)	February 28, 2017			March 31, 2016
Current:
United States Federal	$	(1	)	$	15
State		4			4
Foreign		1			8

Total Current	$	4		$	27

Deferred:
United States Federal	$	11		$	—
State		(2	)		(1	)
Foreign		1			—

Total Deferred	$	10		$	(1	)

Total income tax expense	$	14		$	26

During 2017 and 2016, income tax expense related to continuing operations was $14 million and $26 million, respectively, and included net discrete tax expense of $4 million and net discrete tax benefits of $9 million, respectively. Discrete tax expense in 2017 included $8 million of tax expense related to settlement with the Internal Revenue Service for years FY07 though FY09 which was partially offset by $5 million of tax benefit due to the adoption of the amended accounting guidance on employee share based compensation. Discrete tax benefits in 2016 included a $14 million benefit due to the reversal of U.S. federal and state tax reserves related to the treatment of share-based compensation expense in an intercompany cost-sharing agreement; partially offset by a $7 million expense related to additional tax reserves on certain transfer pricing matters in a foreign jurisdiction.

Our reported income tax rates were 5.5% and 8.3% in 2017 and 2016, respectively. The fluctuations in our reported income tax rates are primarily due to changes within our business mix, including varying proportions of income attributable to foreign countries that have lower income tax rates and discrete items.

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The reconciliation between our effective tax rate on income from continuing operations and statutory tax rate is as follows:


	Periods Ended
(in millions)	February 28, 2017			March 31, 2016
Income tax provision at federal statutory rate	$	87		$	111
State income taxes net of federal tax benefit		1			3
Foreign income taxed at various rates		(81	)		(84	)
Unrecognized tax benefits and settlements		14			(5	)
Tax credits		(6	)		(7	)
Other, net		(1	)		8

Total income tax expense	$	14		$	26

In March 2016, amended guidance was issued for employee share-based payment awards. Under the amended guidance, all excess tax benefits (“windfalls”) and deficiencies (“shortfalls”) related to employee share-based compensation arrangements are recognized within income tax expense. We elected to early adopt this amended guidance in the first quarter of 2017. The primary impact of the adoption was the recognition of excess tax benefits in the income statement on a prospective basis, rather than net parent investment. As a result, a tax benefit of $5 million was recognized in 2017.

As of February 28, 2017 and March 31, 2016, the Companies’ subsidiaries have unremitted earnings. The carve-out financial statements include the results of operations of certain foreign entities. The foreign entities do not have direct or indirect owners within the carve-out group that are subject to tax in the U.S. As such, repatriation of the earnings of these entities would not result in U.S. tax consequences to entities included within the carve-out financial statements. If these foreign earnings were distributed to a taxable U.S. entity in the future, that entity would pay taxes at that time.

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Deferred tax balances consisted of the following:


(in millions)	February 28, 2017			March 31, 2016
Deferred tax assets:
Receivable allowances	$	4		$	3
Deferred revenue		37			35
Compensation and benefit-related accruals		70			71
Loss and credit carryforward		28			30
Capitalized costs		65			55
Other		11			17

Total deferred tax assets	$	215		$	211
Valuation allowances		(11	)		(9	)

Total realizable deferred tax assets	$	204		$	202

Deferred tax liabilities:
Basis for fixed assets		(5	)		(6	)
Intangibles		(62	)		(60	)
Other		(1	)		(1	)

Total deferred tax liabilities	$	(68	)	$	(67	)

Net deferred tax asset	$	136		$	135
Non-Current Asset	$	136		$	135

Total Tax Asset	$	136		$	135

We assess the available positive and negative evidence to determine whether deferred tax assets are more likely than not to be realized. As result of this assessment, valuation allowances have been recorded on certain deferred tax assets in various tax jurisdictions. The valuation allowance was $11 million and $9 million as of February 28, 2017 and March 31, 2016, respectively. The net increase of $2 million in the valuation allowance relates primarily to net operating losses incurred in certain tax jurisdictions for which no tax benefit was recognized.

The Company has operations in federal and certain state and local and foreign jurisdictions that on a hypothetical separate company basis would have tax credit and net operating loss carryforwards. These carryforwards may not be available for use following the formation of the joint venture. We have federal, state and foreign net operating loss carryforwards of $18 million, $186 million and $12 million, respectively. These net operating losses will expire at various dates from 2018 through 2037. We have federal, state and foreign tax credit carryforwards of $6 million, $4 million, and $9 million, respectively. These credit carryforwards will expire at various dates from 2020 through 2037.

Core MTS’s operations are included in the consolidated US Federal, and certain state and local income tax returns filed by McKesson, which is subject to continuous examination by the IRS and other state tax authorities. The IRS concluded their examination of income tax returns for years 2007 through 2009 during the first quarter of 2017 and is currently examining income tax returns for 2010 through 2012. We believe that adequate amounts have been reserved for any adjustments that may ultimately result from this examination. During 2016, we received proposed assessments from the Israeli Tax Authorities (“ITA”) related to a transfer pricing matter impacting years 2006 through 2014. We resolved this matter with the ITA during the first quarter of 2017 with no material impact.

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The following table summarizes the activity related to our gross unrecognized tax benefits for the last two periods:


	Periods Ended
(in millions)	February 28, 2017			March 31, 2016
Unrecognized tax benefits at beginning of period	$	116		$	127
Additions based on tax positions related to prior years		—			4
Reductions based on tax positions related to prior years		(15	)		(21	)
Additions based on tax positions related to current year		5			6
Reductions based on settlements		(57	)		—
Reductions based on the lapse of the applicable statutes of limitations		—			—

Unrecognized tax benefits at end of period	$	49		$	116

As of February 28, 2017, we had $49 million of unrecognized tax benefits, of which $44 million would reduce income tax expense and the effective tax rate, if recognized. During the next twelve months, we do not expect any material reduction in our unrecognized tax benefits. However, this amount may change as we continue to have ongoing negotiations with various taxing authorities throughout the year.

We report interest and penalties on income taxes as income tax expense. During 2017 and 2016, we recognized income tax expense related to interest and penalties of $1 million and $4 million, respectively. As of February 28, 2017, and March 31, 2016, we had accrued $11 million and $22 million, respectively, in interest and penalties on unrecognized tax benefits.

10.

Property, Plant and Equipment, Net


(in millions)	February 28, 2017			March 31, 2016
Land	$	8		$	8
Building, machinery, equipment and other		241			169

Total property, plant and equipment		249			177
Accumulated depreciation		(162	)		(111	)

Property, plant and equipment, net	$	87		$	66

Depreciation expense related to property, plant and equipment was $13 million and $12 million in 2017 and 2016, respectively.

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11.

Goodwill and Intangible Assets, Net

Changes in the carrying amount of goodwill were as follows:


(in millions)	February 28, 2017		March 31, 2016
Balance, at beginning of period ⁽¹⁾	$	1,058	$	1,083
Goodwill disposed		—		(28	)
Acquisition accounting ⁽²⁾		22		—
Foreign currency translation adjustments, net		—		3

Balance, at end of period	$	1,080	$	1,058

(1)

As of February 28, 2017, and March 31, 2016, we had $36 million of accumulated goodwill impairment charges.

(2)

On July 1, 2016, MTS acquired HealthQx, a leader in value-based payment analytic software solutions for health plans and health systems, for approximately $28 million via a cash purchase. The purchase price is primarily related to goodwill of approximately $22 million, of which approximately $6 million is not expected to be tax deductible, and developed technology of approximately $6 million. The acquisition was consummated to strengthen the Company’s position in the market for value-based payment offerings and resulted in acquisition of all voting interests.

Information regarding intangible assets is as follows:


			February 28, 2017							March 31, 2016
(in millions)	Weighted Average Remaining Amortization Period (Years)		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer lists		4	$	351	$	(275	)	$	76	$	359	$	(266	)	$	93
Technology		3		136		(129	)		7		127		(119	)		8
Trademarks and trade names		—		8		(8	)		—		7		(7	)		—

Total			$	495	$	(412	)	$	83	$	493	$	(392	)	$	101

Amortization expense of intangible assets was $20 million and $26 million in 2017 and 2016, respectively. Estimated annual amortization expense of intangible assets is as follows: $21 million, $16 million, $12 million, $11 million and $9 million for 2018 through 2022, and $14 million thereafter. All intangible assets were subject to amortization as of February 28, 2017 and March 31, 2016.

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12.

Capitalized Software Developed for Sale, Net

Changes in the carrying amount of capitalized software developed for sale, net, which is included in Other noncurrent assets in the Combined Balance Sheets, were as follows:


	Periods Ended
(in millions)	February 28, 2017			March 31, 2016
Balance, at beginning of period	$	38		$	48
Amounts capitalized		15			13
Amortization expense		(13	)		(17	)
Other		—			(6	)

Balance, at end of period	$	40		$	38

13.

Other Noncurrent Assets


(in millions)	February 28, 2017		March 31, 2016
Deferred tax asset – noncurrent	$	136	$	135
Capitalized software developed for sale		40		38
Capitalized software held for internal use		15		20
Other noncurrent assets		40		22

Total other noncurrent assets	$	231	$	215

Included within Capitalized software held for internal use as of March 31, 2016 is a Revenue Convergence (“RevCon”) project asset for the implementation of software to optimize revenue recognition processes in conjunction with the amended guidance for recognizing revenue from contracts with customers. During 2017, we made the decision to abandon the RevCon project because we no longer planned to pursue a systematic revenue software solution. As a result, we derecognized the asset during 2017 and recorded a corresponding impairment charge of approximately $11 million included in Selling, distribution and administrative expenses in the Combined Statement of Operations for the period ended February 28, 2017.

14.

Pension and Other Postretirement Benefits

McKesson Defined Benefit Plans

Certain Core MTS employees are eligible to participate in various defined benefit pension and other postretirement benefit (“OPEB”) plans administered and sponsored by McKesson. The Combined Financial Statements reflect periodic pension and post-retirement costs as if they were multi-employer plans and no asset or liability was recorded by Core MTS. The net periodic pension and OPEB costs include interest costs, recognized net actuarial losses and service costs that are determined based on actuarial valuations of individual participant data and projected returns on plan assets. Costs associated with the pension and OPEB plans were allocated to the Combined Financial Statements based on the Core MTS’s employees’ proportionate share of costs for the respective McKesson plans in which they participate. These costs are considered to have been settled with McKesson at the time of the allocation of these expenses.

Pension and OPEB expense for participating Core MTS employees were not significant in 2017 and 2016. As of February 28, 2017 and March 31, 2016, required contributions outstanding were not significant.

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McKesson Defined Contribution Plan

Certain Core MTS employees are eligible to participate in McKesson’s contributory profit sharing investment plan (“PSIP”). Eligible employees may contribute to the PSIP up to 75.0% of their eligible compensation on a pre-tax or post-tax basis not to exceed IRS limits. McKesson makes matching contributions in an amount equal to 100% of the employee’s first 3.0% of pay contributed and 50.0% for the next 2.0% of pay contributed. McKesson also may make an additional annual matching contribution for each plan year to enable participants to receive a full match based on their annual contribution. We recorded expense of $20 million and $22 million in 2017 and 2016, respectively, related to the PSIP plan.

Deferred Compensation Plans

Certain Core MTS employees are eligible to participate in deferred compensation plans administered and sponsored by McKesson. Pursuant to these deferred compensation plans, certain executives and other highly compensated employees may defer all or a portion of their salaries and incentive compensation at their discretion. Liabilities of $37 million and $30 million as of February 28, 2017 and March 31, 2016, respectively, were allocated to the Combined Financial Statements related to deferred compensation for Core MTS employees.

15.

Other Accrued Liabilities


(in millions)	February 28, 2017		March 31, 2016
Salary and wages	$	106	$	99
Accrued taxes		33		39
Accrued other		50		64

Total other accrued liabilities	$	189	$	202

16.

Other Noncurrent Liabilities


(in millions)	February 28, 2017		March 31, 2016
Tax liability	$	51	$	100
Deferred revenue – noncurrent		21		37
Deferred compensation		35		28
Other noncurrent		17		19

Total other noncurrent liabilities	$	124	$	184

17.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There is a three-level hierarchy that prioritizes the inputs used in determining fair value by their reliability and preferred use, as follows:

Level 1—Valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2—Valuations based on quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data.

F-192

CORE MTS

NOTES TO COMBINED FINANCIAL STATEMENTS

Level 3—Valuations based on inputs that are both significant to the fair value measurement and unobservable.

At February 28, 2017 and March 31, 2016, the carrying amounts of cash, restricted cash, receivables, drafts and accounts payable, and other current liabilities approximated their estimated fair values because of the short maturity of these financial instruments.

There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy during the periods ended February 28, 2017 and March 31, 2016.

18.

Lease Obligations

We lease facilities and equipment solely under operating leases. At February 28, 2017, future minimum lease payments required under operating leases that have initial or remaining noncancelable lease terms in excess of one year for years ending March 31 are:


( in millions )	Noncancelable Operating Leases
2018	$	24
2019		19
2020		14
2021		8
2022		6
Thereafter		8

Total minimum lease payments	$	79

Rental expense under operating leases was $33 million and $38 million in 2017 and 2016, respectively. We recognize rent expense on a straight-line basis over the term of the lease, taking into account, when applicable, lessor incentives for tenant improvements, periods where no rent payment is required and escalations in rent payments over the term of the lease. Deferred rent is recognized for the difference between the rent expense recognized on a straight-line basis and the payments made per the terms of the lease. Remaining terms for facilities leases generally range from zero to nine years, while remaining terms for equipment leases range from zero to seven years. Most real property leases contain renewal options (generally for five-year increments) and provisions requiring us to pay property taxes and operating expenses in excess of base period amounts. Sublease rental income was not material in 2017 and 2016.

19.

Commitments and Contingent Liabilities

In addition to commitments and obligations in the ordinary course of business, we are subject to various claims, including claims with customers and vendors, pending and potential legal actions for damages, investigations relating to governmental laws and regulations and other matters arising out of the normal conduct of our business. As described below, many of these proceedings are at preliminary stages and many seek an indeterminate amount of damages.

When a loss is considered probable and reasonably estimable, we record a liability in the amount of our best estimate for the ultimate loss. However, the likelihood of a loss with respect to a particular contingency is often difficult to predict and determining a meaningful estimate of the loss or a range of loss may not be practicable based on the information available and the potential effect of future events and decisions by third

F-193

CORE MTS

NOTES TO COMBINED FINANCIAL STATEMENTS

parties that will determine the ultimate resolution of the contingency. Moreover, it is not uncommon for such matters to be resolved over many years, during which time relevant developments and new information must be reevaluated at least quarterly to determine both the likelihood of potential loss and whether it is possible to reasonably estimate a range of possible loss. When a loss is probable but a reasonable estimate cannot be made, disclosure of the proceeding is provided.

Disclosure also is provided when it is reasonably possible that a loss will be incurred or when it is reasonably possible that the amount of a loss will exceed the recorded provision. We review all contingencies at least quarterly to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or range of loss can be made. As discussed above, development of a meaningful estimate of loss or a range of potential loss is complex when the outcome is directly dependent on negotiations with or decisions by third parties, such as regulatory agencies, the court system and other interested parties. Such factors bear directly on whether it is possible to reasonably estimate a range of potential loss and boundaries of high and low estimates.

We are party to the legal proceedings described below. Unless otherwise stated, we are currently unable to estimate a range of reasonably possible losses for the unresolved proceedings described below. Should any one or a combination of more than one of these proceedings be successful, or should we determine to settle any or a combination of these matters, we may be required to pay substantial sums, become subject to the entry of an injunction or be forced to change the manner in which we operate our business, which could have a material adverse impact on our financial position or results of operations.

Litigation and Claims

On May 17, 2013, McKesson Corporation was served with a complaint filed in the United States District Court for the Northern District of California by True Health Chiropractic Inc., alleging that McKesson sent unsolicited marketing faxes in violation of the Telephone Consumer Protection Act of 1991 (“TCPA”), as amended by the Junk Fax Protection Act of 2005 or JFPA, True Health Chiropractic Inc., et al. v. McKesson Corporation, et al. , CV-13-02219 (HG). True Health Chiropractic later amended its complaint, adding McLaughlin Chiropractic Associates as an additional named plaintiff and McKesson Technologies, Inc. as a defendant. Plaintiffs purport to represent all persons who were sent marketing faxes that did not contain proper opt-out notices and from whom McKesson Technologies, Inc. did not obtain prior express permission from June 2009 to the present. In July 2015, Plaintiffs filed a motion for class certification, however, on August 22, 2016, the United States District Court for the Northern District of California denied Plaintiffs’ motion which meant that Plaintiffs could only proceed on their individual claims and could not represent a class. Plaintiffs appealed that ruling to the United States Court of Appeals for the Ninth Circuit on September 6, 2016. The Court of Appeals has tentatively scheduled oral argument on the appeal to take place during the weeks of October 10, 2017 or October 17, 2017. The United States District Court for the Northern District of California administratively closed its docket for the underlying proceedings on February 1, 2017.

In August 2015, our parent, McKesson, and its subsidiaries and affiliates, including McKesson Technologies, Inc., were granted waivers from the opt-out requirement from the Federal Communications Commission (“FCC”). On March 31, 2017, the United States Court of Appeals for the District of Columbia Circuit held that the FCC did not have authority to require an opt-out notice on solicited faxes which mooted McKesson Technologies’ need for the FCC waiver for any solicited faxes that did not contain opt-out language. Plaintiffs plan to file a petition for certiorari appealing the Circuit Court’s ruling with the United States Supreme Court.

F-194

CORE MTS

NOTES TO COMBINED FINANCIAL STATEMENTS

Government Subpoenas and Investigations

From time-to-time, Core MTS receives subpoenas or requests for information from various government agencies. Core MTS generally responds to such subpoenas and requests in a cooperative, thorough and timely manner. These responses sometimes require time and effort and can result in considerable costs being incurred by Core MTS. Such subpoenas and requests also can lead to the assertion of claims or the commencement of civil or criminal legal proceedings against Core MTS and other members of the health care industry, as well as to settlements.

Other Matters

Core MTS is involved in various other litigation, governmental proceedings and claims, not described above, that arise in the normal course of business. While it is not possible to determine the ultimate outcome or the duration of such litigation, governmental proceedings or claims, Core MTS believes, based on current knowledge and the advice of counsel, that such litigation, proceedings and claims will not have a material impact on Core MTS’s financial position or results of operations.

20.

Subsequent Events

On March 1, 2017, the Transaction closed upon satisfaction of all closing conditions pursuant to the Agreements. Under the terms of the Agreements, McKesson contributed Core MTS to the Joint Venture. McKesson retained the RelayHealth Pharmacy and EIS businesses. Legacy CHC contributed substantially all of its businesses to the Joint Venture excluding its pharmacy switch and prescription routing business. In exchange for the contribution, McKesson owns 70% of the Joint Venture with the remaining equity ownership held by Legacy CHC’s shareholders. The Joint Venture is a healthcare technology company which provides software and analytics, network solutions and technology-enabled services that will deliver wide-ranging financial, operational and clinical benefits to payers, providers and consumers.

In connection with the initial issuance of the February 28, 2017 financial statements, subsequent events were evaluated for financial statement recognition purposes through August 28, 2017. In connection with the Company’s reissuance of its financial statements, subsequent events have been evaluated for disclosure purposes through October 26, 2018.

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Shares

Change Healthcare Inc.

Common Stock

LOGO

PRELIMINARY PROSPECTUS

, 2019



Barclays	Goldman Sachs & Co. LLC	J.P. Morgan

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.

OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the expenses payable by the Registrant expected to be incurred in connection with the issuance and distribution of the shares of common stock being registered hereby (other than underwriting discounts and commissions). All of such expenses are estimates, other than the filing and listing fees payable to the Securities and Exchange Commission, the Financial Industry Regulatory Authority, Inc. and Nasdaq.


Filing Fee—Securities and Exchange Commission	$	12,120
Fee—Financial Industry Regulatory Authority, Inc.		15,500
Listing Fee—Nasdaq			*
Fees of Transfer Agent			*
Fees and Expenses of Counsel			*
Fees and Expenses of Accountants			*
Printing Expenses			*
Miscellaneous Expenses			*

Total	$		*

*	To be provided by amendment.

ITEM 14.

INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 102(b)(7) of the Delaware General Corporation Law, or DGCL, allows a corporation to provide in its certificate of incorporation that a director of the corporation will not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except where the director breached the duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase or redemption in violation of Delaware corporate law or obtained an improper personal benefit. Our amended and restated certificate of incorporation will provide for this limitation of liability.

Section 145 of the DGCL, or Section 145, provides, among other things, that a Delaware corporation may indemnify any person who was, is or is threatened to be made, party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation’s best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was illegal. A Delaware corporation may indemnify any persons who were or are a party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that such person is or was a director, officer, employee or agent of another corporation or enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation’s best interests, provided further that no indemnification is permitted without judicial approval if the officer, director, employee or agent is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him or her against the expenses which such officer or director has actually and reasonably incurred.

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Section 145 also provides that the expenses incurred by a director, officer, employee or agent of the corporation or a person serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise in defending any action, suit or proceeding may be paid in advance of the final disposition of the action, suit or proceeding, subject, in the case of current officers and directors, to the corporation’s receipt of an undertaking by or on behalf of such officer or director to repay the amount so advanced if it shall be ultimately determined that such person is not entitled to be indemnified.

Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of his or her status as such, whether or not the corporation would otherwise have the power to indemnify him or her under Section 145.

Our amended and restated bylaws will provide that we must indemnify our directors and officers to the fullest extent authorized by the DGCL and must also pay expenses incurred in defending any such proceeding in advance of its final disposition upon delivery of an undertaking, by or on behalf of an indemnified person, to repay all amounts so advanced if it should be determined ultimately that such person is not entitled to be indemnified under our amended and restated bylaws or otherwise.

The indemnification rights set forth above shall not be exclusive of any other right which an indemnified person may have or hereafter acquire under any statute, provision of our amended and restated certificate of incorporation, our amended and restated bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

We expect to maintain standard policies of insurance that provide coverage (1) to our directors and officers against loss arising from claims made by reason of breach of duty or other wrongful act and (2) to us with respect to indemnification payments that we may make to such directors and officers.

We intend to enter into indemnification agreements with our directors and executive officers. These agreements will require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”), may be permitted to directors or executive officers, we have been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy and is therefore unenforceable.

The proposed form of Underwriting Agreement to be filed as Exhibit 1.1 to this Registration Statement provides for indemnification to our directors and officers by the underwriters against certain liabilities.

ITEM 15.

RECENT SALES OF UNREGISTERED SECURITIES.

On March 1, 2017, the Registrant issued an aggregate of 597,126.75 shares of its common stock, par value $0.001 per share, to investment funds associated with The Blackstone Group L.P., investment funds associated with the affiliated companies of Hellman & Friedman LLC, and certain management and other equity holders, pursuant to transactions contemplated by that certain Agreement of Contribution and Sale dated as of June 28, 2016 by and among McKesson Corporation and the other parties thereto. See “Certain Relationships and Related Person Transactions—Contribution Agreement” in the prospectus included in this registration statement. The issuance of such shares of common stock was not registered under the Securities Act, because the shares were offered and sold in a transaction by the issuer not involving any public offering exempt from registration under Section 4(a)(2) of the Securities Act.

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ITEM 16.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits. See the Exhibit Index immediately preceding the signature pages hereto, which is incorporated by reference as if fully set forth herein.

(b) Financial Statement Schedules. Financial statement schedules have been omitted because they are not required, not applicable, or not present in amounts sufficient to require submission of the schedule.

ITEM 17.

UNDERTAKINGS

(1)	The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

(2)

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

(3)	The undersigned registrant hereby undertakes that,

(A)

For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(B)

For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(C)

For the purpose of determining liability under the Securities Act of 1933 to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(D)

For the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are

II-3

offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i)

Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii)

Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii)

The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv)

Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

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EXHIBIT INDEX


Exhibit No.		Description

1.1		Form of Underwriting Agreement*

2.1		Agreement of Contribution and Sale, dated as of June 28, 2016, by and among McKesson Corporation, Change Healthcare Inc. (f/k/a HCIT Holdings, Inc.), Change Healthcare Performance, Inc. (f/k/a Change Healthcare, Inc.), PF2 NewCo LLC, PF2 NewCo Intermediate Holdings, LLC, PF2 NewCo Holdings, LLC, Change Aggregator L.P., H&F Echo Holdings, L.P.

2.2		Amendment No. 1 to Agreement of Contribution and Sale, dated as of March 1, 2017, by and among Change Healthcare Inc. (f/k/a HCIT Holdings, Inc.), Change Healthcare Performance, Inc. (f/k/a Change Healthcare, Inc.), Change Healthcare LLC (f/k/a PF2 NewCo LLC), Change Healthcare Intermediate Holdings, LLC (f/k/a PF2 NewCo Intermediate Holdings, LLC), Change Healthcare Holdings, LLC (f/k/a PF2 NewCo Holdings, LLC), certain affiliates of The Blackstone Group, L.P., certain affiliates of Hellman & Friedman LLC and McKesson Corporation

3.1		Form of Amended and Restated Certificate of Incorporation of the Registrant*

3.2		Form of Amended and Restated Bylaws of the Registrant*

4.1		Indenture, dated as of February 15, 2017, among Change Healthcare Holdings, LLC, Change Healthcare Finance, Inc., the guarantors named therein and Wilmington Trust, National Association, as trustee, transfer agent, registrar and paying agent

4.2		Completion Date Supplemental Indenture, dated as of March 1, 2017, among the guarantors named therein and Wilmington Trust, National Association, as trustee

4.3		Form of 5.75% Senior Note due 2025 (included in Exhibit 4.1)

5.1		Opinion of Simpson Thacher & Bartlett LLP*

10.1		Third Amended and Restated Limited Liability Company Agreement of Change Healthcare LLC, dated as of March 1, 2017

10.2		Tax Receivable Agreement, dated as of March 1, 2017, among Change Healthcare LLC, PF2 IP LLC, PF2 PST Services, Inc., McKesson Corporation and Change Healthcare Inc. (formerly HCIT Holdings, Inc.)

10.3		Tax Receivable Agreement, dated as of February 28, 2017, among Change Healthcare Performance, Inc. (formerly Change Healthcare, Inc.), Change Healthcare Inc. (formerly HCIT Holdings, Inc.), Change Healthcare LLC and the other parties named therein

10.4		Amended and Restated Tax Receivable Agreement (Reorganizations), dated as of November 2, 2011, by and among Change Healthcare Holdings, Inc. (formerly Emdeon Inc.), H&F ITR Holdco, L.P., Beagle Parent LLC and GA-H&F ITR Holdco, L.P.

10.5		Amended and Restated Tax Receivable Agreement (Exchanges), dated as of November 2, 2011, by and among Change Healthcare Holdings, Inc. (formerly Emdeon Inc.), H&F ITR Holdco, L.P., Beagle Parent LLC and GA-H&F ITR Holdco, L.P.

10.6		Tax Receivable Agreement (Management), dated August 17, 2009, by and among Change Healthcare Holdings, Inc. (formerly Emdeon Inc.) and the persons named therein

10.7		First Amendment to Tax Receivable Agreement (Management), dated as of November 2, 2011, by and among Change Healthcare Holdings, Inc. (formerly Emdeon Inc.) and the parties named therein

10.8		Registration Rights Agreement, dated as of March 1, 2017, among Change Healthcare LLC, the Company Parties, the MCK Members, the Sponsor Holders (each, as defined therein) and Change Healthcare Inc. (formerly HCIT Holdings, Inc.)

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10.9		Stockholders Agreement, dated as of March 1, 2017, among Change Healthcare Inc. (formerly HCIT Holdings, Inc.), Change Healthcare LLC, McKesson Corporation and the Sponsors, Other Investors and Managers named therein

10.10		Form of Indemnification Agreement†

10.11		Form of Omnibus Incentive Plan*†

10.12		Credit Agreement, dated as of March 1, 2017, among Change Healthcare Intermediate Holdings, LLC, Change Healthcare Holdings, LLC, the other borrowers party thereto, the other guarantors party thereto from time to time, Bank of America, N.A., as administrative agent, collateral agent, swing line lender and L/C issuer, and the other lenders party thereto from time to time

10.13		Security Agreement, dated as of March 1, 2017, among the grantors identified therein and Bank of America, N.A., as collateral agent

10.14		Option to Enter into a Purchase Agreement, dated February 28, 2017, among eRx Network Holdings, Inc., Change Healthcare Solutions, LLC and the other parties thereto

10.15		Agreement and Plan of Merger, dated as of December 20, 2016, among Change Healthcare Inc. (formerly HCIT Holdings, Inc.), McKesson Corporation and PF2 SpinCo LLC

10.16		Form of Separation and Distribution Agreement (included in Exhibit 10.1)

10.17		Form of Tax Matters Agreement (included in Exhibit 10.1)

10.18		Amended and Restated Letter Agreement Relating to Agreement of Contribution and Sale, dated as of September 28, 2018, among McKesson Corporation, the McK Members (as defined therein), Change Healthcare Inc. (formerly HCIT Holdings, Inc.), Change Healthcare LLC and Change Healthcare Holdings, LLC

10.19		Transition Services Agreement, dated as of February 28, 2017, between Change Healthcare Performance, Inc. (formerly Change Healthcare, Inc.) and eRx Network LLC

10.20		Transition Services Agreement, dated as of March 1, 2017, between McKesson Corporation and Change Healthcare LLC (McKesson Corporation as service provider to Change Healthcare LLC)

10.21		Transition Services Agreement, dated as of March 1, 2017, between McKesson Corporation and Change Healthcare LLC (Change Healthcare LLC as service provider to McKesson Corporation)

10.22		Transition Services Agreement, dated as of March 1, 2017, between McKesson Corporation and Change Healthcare LLC (Change Healthcare LLC as service provider to the McKesson EIS Business (as defined therein))

10.23		Transition Services Agreement, dated as of March 1, 2017, between McKesson Corporation and Change Healthcare LLC (McKesson Corporation as service provider on behalf of the McKesson EIS Business (as defined therein) to Change Healthcare LLC)

10.24		Cross License Agreement, dated as of March 1, 2017, by and among Change Healthcare LLC (formerly PF2 NewCo LLC), eRx Network, LLC and McKesson Corporation

10.25		Data License Agreement, dated as of February 28, 2017, by and between eRx Network, LLC and Change Healthcare Performance, Inc. (formerly Change Healthcare, Inc.)

10.26		Form of Employee Stock Purchase Plan*†

10.27		Amended and Restated HCIT Holdings, Inc. 2009 Equity Incentive Plan†

10.28		Amended and Restated Employment Agreement, dated as of June 3, 2017, between Change Healthcare LLC and Neil de Crescenzo†

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10.29		Offer Letter, dated as of March 12, 2018, between Change Healthcare Operations LLC and Fredrik Eliasson†

10.30		Form of Nonqualified Exit Vesting Stock Option Agreement Under the HCIT Holdings, Inc. 2009 Equity Incentive Plan†

10.31		Form of Amendment to Nonqualified Exit Vesting Stock Option Agreement Under the HCIT Holdings, Inc. 2009 Equity Incentive Plan*†

10.32		Form of Nonqualified Time Vesting Stock Option Agreement Under the HCIT Holdings, Inc. 2009 Equity Incentive Plan†

10.33		Form of Amendment to Nonqualified Exit Vesting Stock Option Agreement Under the HCIT Holdings, Inc. 2009 Equity Incentive Plan†

10.34		Form of Replacement 2.5x Restricted Stock Grant Agreement Under the HCIT Holdings, Inc. 2009 Equity Incentive Plan†

10.35		Form of Replacement Trache I Nonqualified Stock Option Agreement Under the HCIT Holdings, Inc. 2009 Equity Incentive Plan†

10.36		Form of Replacement Trache II Nonqualified Stock Option Agreement Under the HCIT Holdings, Inc. 2009 Equity Incentive Plan†

10.37		Form of Replacement Trache III Nonqualified Stock Option Agreement Under the HCIT Holdings, Inc. 2009 Equity Incentive Plan†

10.38		Form of Nonqualified Exit Vesting Stock Option Agreement Under the HCIT Holdings, Inc. 2009 Equity Incentive Plan (Neil de Crescenzo)†

10.39		Form of Nonqualified Time Vesting Stock Option Agreement Under the HCIT Holdings, Inc. 2009 Equity Incentive Plan (Neil de Crescenzo)†

10.40		Form of Nonqualified Stock Option Agreement (Exit Vesting – Frederik Eliasson)†

10.41		Replacement Unvested Stock Appreciation Rights Agreement Under the HCIT Holdings, Inc. 2009 Equity Incentive Plan (Howard Lance)†

10.42		Replacement Vested Stock Appreciation Rights Agreement Under the HCIT Holdings, Inc. 2009 Equity Incentive Plan (Howard Lance)†

10.43		McKesson Technologies LLC Supplemental 401(k) Plan†

10.43.1		First Amendment to the McKesson Technologies Inc. Supplemental 401(k) Plan†

10.44		McKesson Technologies Inc. Deferred Compensation Administration Plan†

10.44.1		First Amendment to the McKesson Technologies Inc. Deferred Compensation Administration Program†

10.45		Change Healthcare LLC U.S. Executive Severance Benefit Guidelines†

10.46		Form of Nonqualified Stock Option Agreement Under the HCIT Holdings, Inc. 2009 Equity Incentive Plan (Directors)†

10.47		Waiver and Amendment by and among Change Healthcare Inc., Change Healthcare LLC, McKesson Corporation, Change Healthcare Solutions, LLC and the requisite holders of Echo Shares to Stockholders Agreement, by and among Change Healthcare Inc. (formerly HCIT Holdings, Inc.), Change Healthcare LLC, McKesson Corporation and the Sponsors, Other Investors and Managers named therein, dated as of March 1, 2017, Third Amended and Restated Limited Liability Company Agreement of Change Healthcare LLC, dated as of March 1, 2017 and Option to Enter into a Purchase Agreement by and among the Connect Parties named therein, the Company Parties named therein, the Sponsors named therein and the Echo Shareholders named therein, dated as of February 28, 2017*

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21.1		Subsidiaries of the Registrant

23.1		Consent of Deloitte & Touche LLP as to Change Healthcare Inc. (formerly HCIT Holdings, Inc.)

23.2		Consent of Deloitte & Touche LLP as to Change Healthcare LLC

23.3		Consent of Deloitte & Touche LLP as to Core MTS

23.4		Consent of Ernst & Young LLP as to Change Healthcare Performance, Inc. (formerly Change Healthcare, Inc.)

23.5		Consent of Simpson Thacher & Bartlett LLP (included as part of Exhibit 5.1)*

23.6		Consent of John H. Hammergren to be named as a director nominee

23.7		Consent of Howard L. Lance to be named as a director nominee

23.8		Consent of Bansi Nagji to be named as a director nominee

23.9		Consent of Philip M. Pead to be named as a director nominee

23.10		Consent of Phillip W. Roe to be named as a director nominee

23.11		Consent of Britt Vitalone to be named as a director nominee

23.12		Consent of Robert J. Zollars to be named as a director nominee

24.1		Power of Attorney (included in signature pages of this Registration Statement)

*	To be filed by amendment.

†	Management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Nashville, Tennessee, on the 15th day of March, 2019.


CHANGE HEALTHCARE INC.

By:		/s/ Neil E. de Crescenzo
		Name: Neil E. de Crescenzo
		Title: Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Neil E. de Crescenzo, Fredrik Eliasson, and Loretta A. Cecil, and each of them, any of whom may act without joinder of the other, the individual’s true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for the person and in his or her name, place and stead, in any and all capacities, to sign this Registration Statement and any or all amendments, including post-effective amendments to the Registration Statement, including a prospectus or an amended prospectus therein and any Registration Statement for the same offering that is to be effective upon filing pursuant to Rule 462 under the Securities Act, and all other documents in connection therewith to be filed with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact as agents or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement and Power of Attorney have been signed by the following persons in the capacities indicated on the 15th day of March, 2019.


Signature		Title

/s/ Neil E. de Crescenzo		Chief Executive Officer and Director (principal executive officer)
Neil E. de Crescenzo

/s/ Neil P. Simpkins		Director
Neil P. Simpkins

/s/ Justin L. Sunshine		Director
Justin L. Sunshine

/s/ Fredrik Eliasson		Chief Financial Officer (principal financial officer)
Fredrik Eliasson

/s/ Paul Rareshide		SVP, Corporate Controller (principal accounting officer)
Paul Rareshide

II-9

Exhibit 2.1

Execution Version

AGREEMENT OF CONTRIBUTION AND SALE

dated as of

June 28, 2016

by and among

PF2 NEWCO LLC

PF2 NEWCO INTERMEDIATE HOLDINGS, LLC

PF2 NEWCO HOLDINGS, LLC

MCKESSON CORPORATION

HCIT HOLDINGS, INC.

CHANGE HEALTHCARE, INC.

CHANGE AGGREGATOR L.P.

and

H&F ECHO HOLDINGS, L.P.

TABLE OF CONTENTS


	P AGE

ARTICLE 1
Definitions and Terms
Section 1.01. Certain Definitions		6
Section 1.02. Other Terms		28
Section 1.03. Other Definitional and Interpretative Provisions		31

ARTICLE 2
Closing
Section 2.01. Closing		32
Section 2.02. Closing Statements		34
Section 2.03. True-up Adjustments		36

ARTICLE 3
Contributions and Transfers
Section 3.01. Pre-Closing Actions		37
Section 3.02. Contributions and Other Transfers		37
Section 3.03. Assumed Liabilities		40
Section 3.04. Excluded Assets		42
Section 3.05. Wrong-Pockets		42
Section 3.06. Assignment of Contracts and Rights		43

ARTICLE 4
Representations and Warranties
Section 4.01. Representations and Warranties of Echo Holdco		43
Section 4.02. Representations and Warranties of MCK		58

ARTICLE 5
Covenants
Section 5.01. Conduct of the Echo Business		73
Section 5.02. Conduct of the Core MTS Business		76
Section 5.03. Debt Financing		78
Section 5.04. No Solicitation; Other Offers		81
Section 5.05. Access to Information		81
Section 5.06. Notices of Certain Events		83
Section 5.07. Reasonable Best Efforts		83
Section 5.08. Certain Filings		85
Section 5.09. Public Announcements		85
Section 5.10. Business Plan; Operating and Capital Budget; Capital Structure		85
Section 5.11. Core MTS Financial Statements		86
Section 5.12. Echo Connect Separation		86
Section 5.13. Further Assurances		86
Section 5.14. Non-Solicitation		86


Section 5.15. Tax Matters			87
Section 5.16. Employee Matters			87
Section 5.17. Litigation and Similar Claims			88
Section 5.18. Proposed Data License			89
Section 5.19. Echo Shareholder Matters			89

ARTICLE 6
Tax Matters
Section 6.01. Tax Cooperation; Allocation of Taxes			89
Section 6.02. Tax Returns			91
Section 6.03. Tax Refunds in Respect of Certain Tax Liabilities			93
Section 6.04. Dispute Resolution			93

ARTICLE 7
Closing Conditions
Section 7.01. Conditions to Closing			94
Section 7.02. Conditions to the Obligations of the Echo Parties			94
Section 7.03. Conditions to the Obligations of MCK			95

ARTICLE 8
Indemnification
Section 8.01. Survival of Representations and Warranties			96
Section 8.02. Indemnification by Echo			97
Section 8.03. Indemnification by MCK and its Subsidiaries			98
Section 8.04. Indemnification Procedures			99
Section 8.05. Calculation of Damages			100
Section 8.06. Remedies			101

ARTICLE 9
Miscellaneous
Section 9.01. Termination; Effect of Termination			103
Section 9.02. No Assignment			105
Section 9.03. Entire Agreement			105
Section 9.04. Governing Law; Submission to Jurisdiction			106
Section 9.05. [Reserved]			107
Section 9.06. Dispute Resolution			107
Section 9.07. Waiver of Jury Trial			107
Section 9.08. Fees and Expenses			107
Section 9.09. Notices			108
Section 9.10. No Personal Liability; Limited Recourse			109
Section 9.11. Disclosure Schedules			109
Section 9.12. Execution In Counterparts; Effectiveness			110
Section 9.13. Third Party Beneficiaries			110
Section 9.14. Severability			110
Section 9.15. Provisions Regarding Echo and Echo Holdco Shareholder Representative			110
Section 9.16. The Company Parties			112

EXHIBITS


Exhibit A		Form of LLC Agreement
Exhibit B		Form of Transition Services Agreements
Exhibit C		Form of MCK Tax Receivable Agreement
Exhibit D		Form of Echo Shareholders’ Agreement
Exhibit E		Form of Management Services Agreement
Exhibit F		Form of Echo Connect Option Agreement
Exhibit G		Form of Registration Rights Agreement
Exhibit H		Form of Certificate of Incorporation of Echo
Exhibit I		Form of New Echo Tax Receivable Agreement

SCHEDULES


Schedule I		Other Equityholders of Echo Holdco
Schedule II		Intellectual Property Licensing Agreement Term Sheet
Schedule III		Calculation of Core MTS Adjusted EBITDA
Schedule IV		Form of BX Principal Shareholder Letter
Schedule V		Form of H&F Principal Shareholder Letter
Schedule VI		MCK Pre-Closing Restructuring
Schedule VII		Echo Connect Separation
Schedule VIII		Echo Disclosure Schedule
Schedule IX		MCK Disclosure Schedule

ANNEXES


Annex I		Echo Working Capital Schedule
Annex II		MCK Working Capital Schedule
Annex III		Core MTS Unburdened, Adjusted EBITDA Calculation
Annex IV		Adjustment Methodology
Annex V		Assumed Facts

THIS AGREEMENT OF CONTRIBUTION AND SALE (this “ Agreement ”) is made and entered into as of June 28, 2016 by and among PF2 NewCo LLC, a Delaware limited liability company (the “ Company ”), PF2 NewCo Intermediate Holdings, LLC, a Delaware limited liability company (“ NewCo Intermediate Holdings ”), PF2 NewCo Holdings, LLC, a Delaware limited liability company (“ NewCo Holdings ”, and together with NewCo Intermediate Holdings, the “ Company Parties ”), HCIT Holdings, Inc., a Delaware corporation (“ Echo ”), Change Healthcare, Inc., a Delaware corporation (“ Echo Holdco ”), Change Aggregator L.P., a Delaware limited partnership (“ BX ”), H&F Echo Holdings, L.P., a Delaware limited partnership (“ H&F ” and, together with BX and the other equityholders of Echo Holdco set forth on Schedule I hereto, the “ Echo Shareholders ”) and McKesson Corporation, a Delaware corporation (“ MCK ”).

WITNESSETH:

WHEREAS, the Company was formed on June 17, 2016 for purposes of the transactions contemplated hereby;

WHEREAS, the Echo Shareholders and MCK wish to contribute and/or sell, or cause to be contributed and/or sold, certain equity interests, assets, properties and businesses to the Company, as set forth herein;

WHEREAS, the Company desires to accept such contributions and/or transfers and, upon the execution and delivery of the other Transaction Documents (as defined below) (other than the Tax Matters Agreement) by the parties thereto at the Closing (as defined below), to admit Echo and one or more Subsidiaries (as defined below) of MCK as Members (as defined below), subject to the terms and conditions of the LLC Agreement (as defined below);

WHEREAS, immediately after consummation of the Echo Contributions and Transfer (as defined below) and the MCK Contributions (as defined below), the Company shall contribute all the assets and liabilities from the Echo Contributions and Transfer and the MCK Contributions to NewCo Intermediate Holdings, which in turn shall contribute all the assets and liabilities from the Echo Contributions and Transfer and the MCK Contributions to NewCo Holdings, in each case for which no additional equity interests of NewCo Intermediate Holdings or NewCo Holdings will be issued;

WHEREAS, NewCo Holdings has received executed and binding commitment letters (together with any related fee letters or engagement letters, the “ Debt Commitment Letters ”) from Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Bank PLC, Citigroup Global Markets Inc., Citibank, N.A., and Goldman Sachs Bank USA (the “ Lenders ”) confirming their respective commitments to provide Echo Holdco and NewCo Holdings, as co-obligors, with debt financing in connection with the transactions contemplated hereby in the amount set forth therein and on the terms and conditions set forth therein (the “ Debt Financing ”);

WHEREAS, the aggregate proceeds of the Debt Financing are in an amount sufficient to (a) repay the principal, interest and all other amounts on account of all of the Echo Holdco Debt (as defined below) (the “ Refinancing ”), including all Debt Breakage Costs (as defined below), (b) pay all Debt Financing Expenses (as defined below), (c) pay all Shared Transaction Expenses (as defined below), (d) pay all Echo Holdco Transaction Expenses (as defined below), (e) pay all MCK Transaction Expenses (as defined below), (f) pay the Echo Holdco Sale Consideration (as defined below) and (g) pay the amount of the MCK Note Payment (as defined below); and

WHEREAS, it is intended for the Transactions (as defined below) to be treated for U.S. federal income tax purposes as (a) to the extent applicable, transactions described in Section 721 of the Code (as defined below) and (b) otherwise, transactions described in Section 1001 of the Code.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements and covenants hereinafter set forth and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties (each, a “ Party ” and, together, the “ Parties ”) hereby agree as follows:

ARTICLE 1

D EFINITIONS AND T ERMS

Section 1.01 . Certain Definitions. As used in this Agreement, the following terms have the meanings set forth below:

“ Affiliate ” means, with respect to any specified Person, any other Person that, at the time of determination, directly or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with such specified Person; provided that (i) the Echo Parties and their Affiliates shall not be deemed to be Affiliates of MCK and its Affiliates and MCK and its Affiliates shall not be deemed to be Affiliates of the Echo Parties and their Affiliates, (ii) prior to Closing, Echo, Echo Holdco and its Subsidiaries shall not be deemed to be Affiliates of the Company and (iii) the term Affiliate, (A) when used with respect to Echo, the Echo Shareholders, MCK or any of their respective Affiliates following Closing, shall not include the Company or any of its Subsidiaries and (B) when used with respect to the Company or any of its Subsidiaries following Closing, shall not include Echo, the Echo Shareholders, MCK or any of their respective Affiliates.

“ Alternative Tax Opinion Advisor ” means a law or accounting firm that is nationally recognized as an expert in federal income Tax matters and reasonably acceptable to the Echo Parties and MCK, it being understood that it shall not be unreasonable for a party to not accept an Alternative Tax Advisor that has an advisory relationship with the other party or their Affiliates.

“ Antitrust Law ” means the HSR Act, the FTC Act, the Antitrust Civil Process Act or any other Applicable Laws that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade.

“ Applicable Law ” means, with respect to any Person, any published statute, decree, constitution, regulation, rule, legally imposed duty, code, order, ordinance or directive of any Governmental Authority, any Health Care Law, or any published treaty, pact, compact or other agreement to which any Governmental Authority is a signatory or party, and includes any published legislative, judicial or administrative interpretation or application of any of the foregoing, including any published guideline, guidance, directive, interpretation, rule or regulation of any Governmental Authority, and is in reference to any of the foregoing as amended, substituted, reissued or reenacted (specifically including, without limitation, anti-corruption laws), from time to time that is binding upon or applicable to such Person or any of its assets.

“ Assumed Facts ” means, collectively, the facts set forth on Annex V hereto.

“ Balance Sheet ” means, as applicable, the unaudited balance sheet of (a) the Echo Business (pro forma for the Echo Connect Separation) or (b) the Core MTS Business, in each case as of March 31, 2016.

“ Balance Sheet Date ” means March 31, 2016.

“ Base Echo Purchase Price ” means $1,750,000,000.

“ Business Day ” means any day on which commercial banks are open for business in New York City.

“ Capex Budget ” means, as applicable, the capital expenditure budgets for the Echo Business and the Core MTS Business set forth in Section 1.01 of the Echo Disclosure Schedule and the MCK Disclosure Schedule, respectively.

“ Cash ” means, with respect to any Person, (i) cash and cash equivalents in accordance with GAAP, minus (ii) deposits in transit, cash overdrafts, outstanding checks, and negative bank balances, minus (iii) restricted cash.

“ CHH ” means Change Healthcare Holdings, Inc., an indirect, wholly-owned Subsidiary of Echo Holdco.

“ Code ” means the Internal Revenue Code of 1986.

“ Contract ” means any agreement, contract, arrangement, obligation, promise or undertaking (whether written or oral and whether express or implied).

“ Contributed Business ” means each of the Core MTS Business and the Echo Business, as applicable.

“ Control ” (including, with correlative meaning, the terms “Controlling” and “Controlled”) means, as to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities or partnership interests, by contract or otherwise.

“ Core MTS Adjusted EBITDA ” means, for the fiscal year ended March 31, 2016, based on the Core MTS Financial Statements, consolidated net income (loss) for such period, plus: (i) provision for income taxes based on federal, foreign and state taxes, (ii) interest expense net of interest income, (iii) depreciation and amortization (including amortization of intangible assets and capitalized software expenditures and excluding any amortization of deferred commissions or project costs), as shown in the calculation of Annex III , (iv) the amount of any non-cash expense or reduction consisting of income attributable to minority interests or non-controlling interests of third parties in any non-wholly owned subsidiary, determined on a combined and consistent basis in accordance with GAAP; provided that there shall be excluded from such consolidated net income (loss) of the Core MTS Financial Statements (to the extent otherwise included therein), without duplication:

(i) one-time costs, including non-recurring or unusual gains or losses related to severance, relocation cost, restructuring charges, whether or not classified as restructuring expense, integration & transaction related costs and costs related to closure/consolidation of facilities and exiting lines of business, as shown in the calculation of Annex III ;

(ii) any gain (loss) on asset sales, disposals or abandonments;

(iii) any non-cash impairment charge, asset write-off or write-down related to intangible assets (including goodwill), Property, Plant & Equipment as well as software;

(iv) any expenses associated with revenue convergence or similar one-time finance and accounting related projects to the extent accrued or paid;

(v) any non-cash expenses incurred or allocated pursuant to any stock-based awards compensation expense;

(vi) any corporate McKesson allocations, as shown in the calculation of Annex III ;

(vii) any segment shared services allocations or expenses as shown in the calculation of Annex III ; and

(viii) any net income or loss attributable to any discontinued operation, divested business, product line or business unit which have been excluded from the Core MTS Business defined herein.

A sample calculation of Core MTS Adjusted EBITDA using the Unaudited MTS Financials (in accordance with the above methodology) is set forth on Schedule III .

“ Core MTS Adjusted EBITDA Peg ” means $611,665,000.

“ Core MTS Business ” means the entities (including the assets and properties held by such entities) and other assets, properties and businesses that are owned, held or used primarily in the conduct of the McKesson Technology Solutions business, including the MCK Licensed Intellectual Property, including those reflected, as of the Balance Sheet Date, in the Unaudited MTS Financials, including the businesses of McKesson Health Solutions, McKesson Business Performance Services, McKesson Connected Care & Analytics, and McKesson Imaging & Workflow Solutions, but excluding the McKesson EIS Business and McKesson RHP, as more specifically set forth (as of the date of this Agreement) on Section 1.01 of the MCK Disclosure Schedule.

“ Core MTS Multiplier ” means 14.

“ Debt Breakage Costs ” means, without duplication, all fees, costs and expenses, breakage costs, prepayment fees or premiums, whether accrued or not, paid or payable by Echo Holdco, the Company or any of their respective Subsidiaries in respect of (a) the Echo Holdco Debt and arising out of or resulting from the payment or the prepayment of the Echo Holdco Debt, which, for the avoidance of doubt, shall not include the Debt Financing Expenses or any principal or interest with respect to the Echo Holdco Debt, and (b) Swap and Derivative Termination Costs.

“ Debt Financing Expenses ” means the financing and other fees and expenses directly relating to the Debt Financing, including those set forth in the Debt Commitment Letters, that are paid or payable by the Company or any of its Subsidiaries, including any fees and expenses of counsel incurred on behalf of the Company in connection with the Debt Financing, and including any financing and other fees and expenses directly related to the Echo Holdco Refinanced Debt that are paid or payable by Echo Holdco or any of its Subsidiaries, including any fees and expenses of counsel incurred on behalf of Echo Holdco in connection with the Echo Holdco Refinanced Debt.

“ Echo Business ” means the entities (including the assets and properties held by such entities) and other assets, properties and businesses owned, held or used in the conduct of Echo Holdco’s and its Subsidiaries’ business , excluding Echo Connect, including those reflected, as of the Balance Sheet Date, in the balance sheet included in the Echo Pro Forma Financial Statements.

“ Echo Connect ” means the entities (if any) (including the assets and properties held by such entities) and other assets, properties and businesses to be distributed by Echo Holdco and its Subsidiaries in connection with the Echo Connect Separation (a) that are owned, held or primarily used in the conduct of Change Healthcare’s pharmacy switch and prescription routing business and (b) none of which are reflected, as of the Balance Sheet Date, in the balance sheet included in the Echo Pro Forma Financial Statements, as more specifically set forth (as of the date of this Agreement) on Section 1.01 of the Echo Disclosure Schedule.

“ Echo Connect Separation ” means the separation of Echo Connect from the Echo Business, such that Echo Connect is not contributed or otherwise transferred to the Company at Closing as part of the Echo Contributions and Transfers, whether by way of a spin-off or other distribution of Echo Connect to the Echo Shareholders pursuant to the plan attached as Schedule VII hereto.

“ Echo Contributed Percentage ” equals 100% minus the Echo Purchase Price Percentage.

“ Echo Covered Tax ” means any (a) Tax of Echo Holdco or any of its Subsidiaries described in clause (a) of the definition of Tax related to a Pre-Closing Tax Period, (b) Tax of Echo Holdco or any of its Subsidiaries described in clause (b) of the definition of Tax and (c) Apportioned Obligation, or portion thereof for which Echo is responsible under Section 6.01, it being understood that no amount owed under any of the Existing Echo TRAs will be considered an Echo Covered Tax, and no income Tax of Echo Holdco or any of its Subsidiaries arising from the consummation of the Echo Connect Separation will be considered an Echo Covered Tax.

“ Echo Deemed Option Shares Outstanding ” means, as of immediately prior to the Closing, the number of Echo Holdco Shares that would be issued if all unexercised Echo Holdco Options that are vested or would vest immediately upon Closing, with an exercise price less than the Echo Per Share Purchase Price, in each case, assuming the price per Echo Holdco Share equals the Echo Per Share Purchase Price, had been cashless exercised into Echo Holdco Shares as of such time.

“ Echo Deemed Shares Outstanding ” means, as of immediately prior to the Closing, the number of Echo Holdco Shares issued and outstanding plus the Echo Deemed Option Shares Outstanding.

“ Echo Disclosure Schedule ” means the disclosure schedule delivered by Echo Holdco to the Company and MCK concurrently with the execution of this Agreement.

“ Echo Form 10-K ” means CHH’s Form 10-K filed with the SEC on March 14, 2016.

“ Echo Holdco Adjusted EBITDA Adjustment Amount ” means, if the Core MTS Adjusted EBITDA is less than the Core MTS Adjusted EBITDA Peg by more than $15,291,625, (a) the amount, if any, by which (1) the Core MTS Adjusted EBITDA Peg exceeds the Core MTS Adjusted EBITDA less (2) $7,645,813 multiplied by (b) the Core MTS Multiplier multiplied by (c) the Membership Percentage of Echo.

“ Echo Holdco Debt ” means all of the outstanding indebtedness of Echo Holdco and its Subsidiaries for borrowed money and indebtedness guaranteed by Echo Holdco and its Subsidiaries in each case under the credit agreement dated as of November 2, 2011, 11% Senior Notes due December 31, 2019, 11.25% Senior Notes due December 31, 2020 and 6% Senior Notes due February 15, 2021, in each case, as amended, replaced, extended, refinanced or renewed in accordance with this Agreement; provided that Echo Holdco Debt shall not include any Echo Holdco Refinanced Debt.

“ Echo Holdco Refinanced Debt ” mean any indebtedness incurred, with prior written consent of MCK (not to be unreasonably withheld, conditioned or delayed in advance of any such planned financing process), by Echo Holdco or its Subsidiaries to refinance or replace Echo Holdco Debt or otherwise, and in any case which will be rolled, converted into, or exchanged for, corresponding loans and/or commitments under Debt Financing or otherwise rolled over and incorporated into the capital structure of the Company and its Subsidiaries in lieu of being refinanced, in each case, as contemplated in the Debt Commitment Letters.

“ Echo Holdco Swaps and Derivatives ” means the swaps and derivatives set forth on Section 1.01 of the Echo Disclosure Schedule.

“ Echo Holdco Transaction Expenses ” means, without duplication, the fees and expenses paid by NewCo (or to which NewCo reimburses any Echo Party (other than the Echo Holdco and its Subsidiaries)) with respect to fees and expenses of Echo Holdco or any of its Subsidiaries (other than the Company and its Subsidiaries) to third parties (including all fees and expenses of counsel, investment banks, financial advisors, accountants and integration and other consultants) or to any Echo Participating Employees for retention payments or plans, whether or not invoiced, incurred in connection with the negotiation and preparation of this Agreement or the Transaction Documents, the performance of the terms of this Agreement and the Transaction Documents and the consummation of the Transactions contemplated herein and therein, including any fees or expenses of the Echo Shareholders to be paid or reimbursed by Echo Holdco or its Subsidiaries, but in each case, excluding fees and expenses that are Shared Transaction Expenses; provided that the fees and expenses of integration consultants shall only be Echo Holdco Transaction Expenses to the extent paid or payable prior to the date of this Agreement.

“Echo Licensed Intellectual Property” means all Intellectual Property Rights, excluding Echo Connect, owned by a third party and licensed or sublicensed to Echo Holdco or any of its Subsidiaries or for which Echo Holdco or any of its Subsidiaries has obtained a license, right, authorization or covenant not to be sued.

“ Echo Net Debt ” means an amount equal to (i) the outstanding aggregate principal amount, including any accrued and unpaid interest thereon, under any indebtedness for borrowed money of Echo Holdco and its Subsidiaries, including the Echo Holdco Debt but excluding the Echo Holdco Refinanced Debt as of the Closing minus (ii) Cash of Echo Holdco and its Subsidiaries as of the Closing.

“ Echo Net Debt Peg ” means $2,719,000,000, minus the aggregate principal amount of the Echo Holdco Debt refinanced or repaid by the Echo Holdco Refinanced Debt; provided that such amount shall not be less than $0.

“ Echo Net Working Capital ” means, (x) with respect to any Taxes, as of the end of the day on the Closing Date and (y) with respect to all other items, as of the close of the business on the Business Day immediately preceding Closing, an amount equal to (i) the consolidated current assets (excluding Cash, restricted cash, and deferred income tax assets) of the Echo Business set forth on the Echo Working Capital Schedule attached hereto as Annex I, minus (ii) the consolidated current liabilities (excluding amounts included in Echo Net Debt and Echo Holdco Refinance Debt, Echo Transaction Expenses, obligations for pass through customer payments, and deferred income tax liabilities) of the Echo Business set forth on the Echo Working Capital

Schedule attached hereto as Annex I, minus (iii) long term portion of deferred revenue, long term portion of severance, restructuring and exit related obligations, long term portion of retirement plans outstanding, and long term portion of escheatment obligations outstanding of the Echo Business set forth on the Echo Working Capital Schedule attached hereto as Annex I, in each case, determined on a consolidated and consistent basis in accordance with GAAP and, to the extent consistent with GAAP, the Echo Business’ accounting policies, practices, estimation methodologies, procedures and classifications. The Echo Working Capital Schedule attached hereto as Annex I sets forth an illustrative calculation of Echo Working Capital as of December 31, 2015 using such balance sheet accounts.

“ Echo Net Working Capital Peg ” means $159,500,000.

“ Echo Owned Intellectual Property ” means all Intellectual Property Rights, excluding Echo Connect, owned, or purported to be owned, by Echo Holdco or any of its Subsidiaries, including, but not limited to, the Intellectual Property Rights set forth or listed on Section 1.01 of the Echo Disclosure Schedule.

“ Echo Participating Employee ” means an employee or other service provider who primarily provides services to the Echo Business.

“ Echo Parties ” means the Echo Shareholders, Echo and Echo Holdco.

“ Echo Per Share Purchase Price ” means $2,400.

“ Echo Purchase Price ” means (i) the Base Echo Purchase Price minus (ii) the Estimated Echo Net Debt Adjustment plus (iii) the Estimated Echo Net Working Capital Adjustment, but only to the extent that the Estimated Echo Net Working Capital Adjustment is a negative number plus (iv) the Echo Special Closing Adjustment, if any, plus (v) the Echo Holdco Adjusted EBITDA Adjustment Amount, to the extent the Echo Holdco Adjusted EBITDA Adjustment Amount is a positive number.

“ Echo Purchase Price Percentage ” means an amount equal to the quotient of (a) the quotient of (i) the Echo Purchase Price divided by (ii) the Echo Per Share Purchase Price divided by (b) the Echo Deemed Shares Outstanding, expressed as a percentage.

“ Echo Securities ” means (a) shares of capital stock or other voting securities of or ownership interests in Echo, (b) securities of Echo convertible into or exchangeable for shares of capital stock or other voting securities of or ownership interests in Echo, (c) warrants, calls, options or other rights to acquire from Echo, or other obligation of Echo to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of Echo or (d) restricted shares, stock appreciation rights, performance units, contingent value rights, “phantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock of or voting securities of Echo, or any combination of the foregoing.

“ Echo Special Closing Adjustment ” means an amount equal to (i) if the Estimated Echo Amount Owed multiplied by MCK True-Up Percentage is greater than the Estimated MCK Amount Owed and if the Estimated Total Amount Owed is greater than $125,000,000, (a) the amount, which is expressed as a positive number, by which the Estimated Total Amount Owed exceeds $125,000,000 multiplied by (b) the Membership Percentage of Echo, (ii) if the Estimated Echo Amount Owed multiplied by MCK True-Up Percentage is less than the Estimated MCK Amount Owed and if the Estimated Total Amount Owed is greater than $125,000,000, (a) the amount, which is expressed as a negative number, by which the Estimated Total Amount Owed exceeds $125,000,000 multiplied by (b) the Membership Percentage of Echo or (iii) if the Estimated Total Amount Owed is equal to $125,000,000 or less, zero.

“ Echo True-Up Percentage ” means an amount equal to the Membership Percentage of Echo divided by the aggregate Membership Percentage of MCK Contributors and MCK IPCo.

“ Employee Plan ” means (whether written or oral) an “employee benefit plan,” as defined in Section 3(3) of ERISA, each employment, consulting, severance or similar contract, plan, arrangement or policy and each other contract, plan, arrangement or policy providing for compensation, bonuses, retention payments, change of control payments, profit-sharing, stock option or other stock- or equity-related rights or other forms of incentive or deferred compensation, vacation benefits, insurance (including any self-insured arrangements), health or medical benefits, employee assistance benefits, disability or sick leave benefits, workers’ compensation, supplemental unemployment benefits, severance benefits and post-employment or retirement benefits (including compensation, pension, health, medical or life insurance benefits).

“ Employee Pool ” has the meaning set forth in the LLC Agreement.

“ Enforceability Exceptions ” means the applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally and general principles of equity.

“ ERISA ” means the Employee Retirement Income Security Act of 1974.

“ ERISA Affiliate ” of any entity means any other entity that, together with such first entity, would be treated at any relevant time as a single employer under Section 414 of the Code.

“ Escheat Payment ” means any payment required to be made to any state abandoned property administrator or any other Person pursuant to an abandoned property, escheat or similar Applicable Law.

“ Estimated Echo Amount Owed ” means an amount equal to (i) the Estimated MCK Transaction Expenses multiplied by the Echo True-Up Percentage plus (ii) to the extent the Estimated Echo Net Working Capital Adjustment is a positive number, the Estimated Echo Net Working Capital Adjustment.

“ Estimated Echo Net Debt Adjustment ” means an amount equal to (i) if the Estimated Echo Net Debt exceeds the Echo Net Debt Peg, the amount, if any, by which the Estimated Echo Net Debt exceeds the Echo Net Debt Peg, which amount shall be expressed as a positive number, (ii) if the Estimated Echo Net Debt is less than the Echo Net Debt Peg, the amount, if any, by which the Echo Net Debt Peg exceeds the Estimated Echo Net Debt, which amount shall be expressed as a negative number, or (iii) if the Estimated Echo Net Debt is equal to the Echo Net Debt Peg, zero.

“ Estimated Echo Net Working Capital Adjustment” means (i) if the Estimated Echo Net Working Capital exceeds the Echo Net Working Capital Peg, the amount, if any, by which the Estimated Echo Net Working Capital exceeds the Echo Net Working Capital Peg, which amount shall be expressed as a positive number, (ii) if the Estimated Echo Net Working Capital is less than the Echo Net Working Capital Peg, the amount, if any, by which the Echo Net Working Capital Peg exceeds the Estimated Echo Net Working Capital, which amount shall be expressed as a negative number, or (iii) if the Estimated Echo Net Working Capital is equal to the Echo Net Working Capital Peg, zero.

“ Estimated MCK Amount Owed ” means an amount equal to (i) (a) the sum of the Estimated Echo Holdco Transaction Expenses plus the Debt Breakage Costs multiplied by (b) the MCK True-Up Percentage plus (ii) to the extent the Estimated MCK Net Working Capital Adjustment is a positive number, the Estimated MCK Net Working Capital Adjustment.

“ Estimated MCK Net Debt Adjustment ” means an amount equal to (i) if the Estimated MCK Net Debt exceeds the MCK Net Debt Peg, the amount, if any, by which the Estimated MCK Net Debt exceeds the MCK Net Debt Peg, which amount shall be expressed as a positive number, (ii) if the Estimated MCK Net Debt is less than the MCK Net Debt Peg, the amount, if any, by which the MCK Net Debt Peg exceeds the Estimated MCK Net Debt, which amount shall be expressed as a negative number, or (iii) if the Estimated MCK Net Debt is equal to the MCK Net Debt Peg, zero.

“ Estimated MCK Net Working Capital Adjustment” means (i) if the Estimated MCK Net Working Capital exceeds the MCK Net Working Capital Peg, the amount, if any, by which the Estimated MCK Net Working Capital exceeds the MCK Net Working Capital Peg, which amount shall be expressed as a positive number, (ii) if the Estimated MCK Net Working Capital is less than the MCK Net Working Capital Peg, the amount, if any, by which the MCK Net Working Capital Peg exceeds the Estimated MCK Net Working Capital, which amount shall be expressed as a negative number, or (iii) if the Estimated MCK Net Working Capital is equal to the MCK Net Working Capital Peg, zero.

“ Estimated Total Amount Owed ” means an amount equal to (i) if the Estimated Echo Amount Owed multiplied by MCK True-Up Percentage is greater than the Estimated MCK Amount Owed, (a) the Estimated Echo Amount Owed minus (b) the product of the Estimated MCK Amount Owed multiplied by the Echo True-Up Percentage or (ii) if the Estimated Echo Amount Owed multiplied by MCK True-Up Percentage is less than the Estimated MCK Amount Owed, (a) the Estimated MCK Amount Owed minus (b) the product of the Estimated Echo Amount Owed multiplied by the MCK True-Up Percentage.

“ Exchange Act ” means the Securities and Exchange Act of 1934.

“ Existing Echo TRAs ” means the Amended and Restated Tax Receivable Agreement (Reorganizations), dated as of November 2, 2011, by and among CHH, H&F ITR Holdco, L.P., Beagle Parent LLC and GA-H&F ITR Holdco, L.P., Amended and Restated Tax Receivable Agreement (Exchanges), dated as of November 2, 2011, by and among CHH, H&F ITR Holdco, L.P., Beagle Parent LLC and GA-H&F ITR Holdco, L.P. and Tax Receivable Agreement (Management) by and among CHH and the persons named therein, dated August 17, 2009, as amended by the First Amendment to Tax Receivable Agreement (Management), dated as of November 2, 2011, by and among CHH and the parties named thereto.

“ Family Member ” means, with respect to any individual, (a) such Person’s spouse, (b) each parent, brother, sister or child of such Person or such Person’s spouse, (c) the spouse of any Person described in clause (b) above, (d) each child of any Person described in clauses (a), (b) or (c) above, (e) each trust created for the benefit of one or more of the Persons described in clauses (a) through (d) above and (f) each custodian or guardian of any property of one or more of the Persons described in clauses (a) through (e) above in his or her capacity as such custodian or guardian.

“ Financing Sources ” means the Persons that have committed to provide or otherwise entered into agreements in connection with the Debt Financing in connection with the transactions contemplated hereby, including the lenders under the Debt Commitment Letters and any joinder agreements, indentures or credit agreements entered into pursuant thereto or relating thereto together with their Affiliates, officers, directors, employees, attorneys, agents, advisors and representatives involved in the Debt Financing and their successors and assigns.

“ Final Echo Amount Owed ” means an amount equal to (i) the product of (a) the Final MCK Transaction Expenses multiplied by (b) the Echo True-Up Percentage minus (ii) the Final Echo Net Debt Adjustment plus (iii) the Final Echo Net Working Capital Adjustment plus (iv) to the extent the Estimated Echo Net Working Capital Adjustment is a positive number, the Estimated Echo Net Working Capital Adjustment plus (v) the Echo Special Closing Adjustment.

“ Final Echo Holdco Transaction Expenses ” means Echo Holdco Transaction Expenses as shown on the Final Echo Closing Statement if no Dispute Notice with respect thereto is duly delivered; or if a Dispute Notice with respect thereto is duly delivered, as agreed by MCK (as the Disputing Party) and Echo (as the Defending Party) pursuant to Section 2.02(e); or, in the absence of such agreement, as shown in the Valuation Firm’s calculation delivered pursuant to Section 2.02(e).

“ Final Echo Net Debt Adjustment ” means an amount equal to (i) if the Final Echo Net Debt exceeds the Estimated Echo Net Debt, the amount, if any, by which the Final Echo Net Debt exceeds the Estimated Echo Net Debt, which amount shall be expressed as a positive number, (ii) if the Final Echo Net Debt is less than the Estimated Echo Net Debt, the amount, if any, by which the Estimated Echo Net Debt exceeds the Final Echo Net Debt, which amount shall be expressed as a negative number, or (iii) if the Final Echo Net Debt is equal to the Estimated Echo Net Debt, zero.

“ Final Echo Net Debt ” means Echo Net Debt as shown on the Final Echo Closing Statement if no Dispute Notice with respect thereto is duly delivered; or if a Dispute Notice with respect thereto is duly delivered, as agreed by MCK (as the Disputing Party) and Echo (as the Defending Party) pursuant to Section 2.02(e); or, in the absence of such agreement, as shown in the Valuation Firm’s calculation delivered pursuant to Section 2.02(e).

“ Final Echo Net Working Capital ” means Echo Net Working Capital as shown on the Final Echo Closing Statement if no Dispute Notice with respect thereto is duly delivered; or if a Dispute Notice with respect thereto is duly delivered, as agreed by MCK (as the Disputing Party) and Echo (as the Defending Party) pursuant to Section 2.02(e); or, in the absence of such agreement, as shown in the Valuation Firm’s calculation delivered pursuant to Section 2.02(e).

“ Final Echo Net Working Capital Adjustment ” means an amount equal to (i) if the Final Echo Net Working Capital exceeds the Estimated Echo Net Working Capital, the amount, if any, by which the Final Echo Net Working Capital exceeds the Estimated Echo Net Working Capital, which amount shall be expressed as a positive number, (ii) if the Final Echo Net Working Capital is less than the Estimated Echo Net Working Capital, the amount, if any, by which the Estimated Echo Net Working Capital exceeds the Final Echo Net Working Capital, which amount shall be expressed as a negative number, or (iii) if the Final Echo Net Working Capital is equal to the Estimated Echo Net Working Capital, zero.

“ Final MCK Amount Owed ” means an amount equal to (i) (a) the sum of (1) the Final Echo Holdco Transaction Expenses plus (2) the Debt Breakage Costs multiplied by (b) the MCK True-Up Percentage minus (ii) the Final MCK Net Debt Adjustment plus (iii) the Final MCK Net Working Capital Adjustment plus (iv) to the extent the Estimated MCK Net Working Capital Adjustment is a positive number, the Estimated MCK Net Working Capital Adjustment, minus (v) the MCK Special Closing Adjustment.

“ Final MCK Net Debt ” means MCK Net Debt as shown on the Final MCK Closing Statement if no Dispute Notice with respect thereto is duly delivered; or if a Dispute Notice with respect thereto is duly delivered, as agreed by Echo (as the Disputing Party) and MCK (as the Defending Party) pursuant to Section 2.02(e); or, in the absence of such agreement, as shown in the Valuation Firm’s calculation delivered pursuant to Section 2.02(e).

“ Final MCK Net Debt Adjustment ” means an amount equal to (i) if the Final MCK Net Debt exceeds the Estimated MCK Net Debt, the amount, if any, by which the Final MCK Net Debt exceeds the Estimated MCK Net Debt, which amount shall be expressed as a positive number, (ii) if the Final MCK Net Debt is less than the Estimated MCK Net Debt, the amount, if any, by which the Estimated MCK Net Debt exceeds the Final MCK Net Debt, which amount shall be expressed as a negative number, or (iii) if the Final MCK Net Debt is equal to the Estimated MCK Net Debt, zero.

“ Final MCK Net Working Capital ” means MCK Net Working Capital as shown on the Final MCK Closing Statement if no Dispute Notice with respect thereto is duly delivered; or if a Dispute Notice with respect thereto is duly delivered, as agreed by Echo (as the Disputing Party) and MCK (as the Defending Party) pursuant to Section 2.02(e); or, in the absence of such agreement, as shown in the Valuation Firm’s calculation delivered pursuant to Section 2.02(e).

“ Final MCK Net Working Capital Adjustment ” means an amount equal to (i) if the Final MCK Net Working Capital exceeds the Estimated MCK Net Working Capital, the amount, if any, by which the Final MCK Net Working Capital exceeds the Estimated MCK Net Working Capital, which amount shall be expressed as a positive number, (ii) if the Final MCK Net Working Capital is less than the Estimated MCK Net Working Capital, the amount, if any, by which the Estimated MCK Net Working Capital exceeds the Final MCK Net Working Capital, which amount shall be expressed as a negative number, or (iii) if the Final MCK Net Working Capital is equal to the Estimated MCK Net Working Capital, zero.

“ Final MCK Transaction Expenses ” means MCK Transaction Expenses as shown on the Final MCK Closing Statement if no Dispute Notice with respect thereto is duly delivered; or if a Dispute Notice with respect thereto is duly delivered, as agreed by Echo (as the Disputing Party) and MCK (as the Defending Party) pursuant to Section 2.02(e); or, in the absence of such agreement, as shown in the Valuation Firm’s calculation delivered pursuant to Section 2.02(e).

“ Final Total Amount Owed ” means an amount equal to (i) if the Final Echo Amount Owed multiplied by MCK True-Up Percentage is greater than the Final MCK Amount Owed, (a) the Final Echo Amount Owed minus (b) the product of the Final MCK Amount Owed multiplied by the Echo True-Up Percentage or (ii) if the Final Echo Amount Owed multiplied by MCK True-Up Percentage is less than the Final MCK Amount Owed, (a) the Final MCK Amount Owed minus (b) the product of the Final Echo Amount Owed multiplied by the MCK True-Up Percentage.

“ FTC Act ” means the Federal Trade Commission Act.

“ GAAP ” means generally accepted accounting principles in the United States.

“ Governmental Authority ” means any national, federal, regional, municipal or foreign government; international authority (including, in each case, any central bank or fiscal, Tax or monetary authority); governmental agency, authority, division, department; the government of any prefecture, state, province, country, municipality or other political subdivision thereof; and any governmental body, agency, authority, division, department, board or commission, or any instrumentality or officer acting in an official capacity of any of the foregoing, including any court, arbitral tribunal or committee exercising any executive, legislative, judicial, regulatory or administrative functions of government.

“ Health Care Laws ” means all Applicable Laws pertaining to health care regulatory matters applicable to the business or the operations of MCK or Echo Holdco and their respective Subsidiaries, including, without limitation: (a) fraud and abuse, including the following statutes: the Federal anti-kickback law (42 U.S.C. § 1320a-7b(b)), the Federal False Claims Act (31 U.S.C. §§ 3729, et seq.), and the Federal Civil Monetary Penalties Law (42 U.S.C. § 1320a-7a); (b) all Information Laws as defined herein; (c) the Patient Protection and Affordable Care Act (Pub. L. 111-148) as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), including the Federal Sunshine Act provisions; (d) the Federal Food, Drug and Cosmetic Act, 21 U.S.C. 321 et seq.; (e) Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395-1395hhh (the Medicare statute), including the amendments implemented by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 and the Medicare Improvements for Patients and Providers Act of 2008; (f) Title XIX of the Social Security Act, 42 U.S.C. §§1396-1396v (the Medicaid statute); (g) TRICARE, 10 U.S.C. §1071 et seq.; (h) CHAMPVA, the Civilian Health and Medical Program of the Department of Veterans Affairs; (i) any other health care program maintained by a Governmental Authority; (j) Laws regarding the provision of management or administrative services in connection with the practice of medicine and other medical professions such as nursing; (k) the regulations, legally enforceable policies and agency guidance promulgated under each of the foregoing Laws; and (l) any other Law with respect to kickbacks, remuneration, billing, utilization review, coding, fee-splitting, patient or program charges, exclusion, debarment or suspension, claims submissions, refunding of overpayments, the provision of free or discounted health care items or services, medical or clinical documentation, quality, safety, privacy, security, licensure, accreditation or any other aspect of providing health care.

“ HIPAA ” means the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act provisions of the American Recovery and Reinvestment Act of 2009, and as otherwise may be amended from time to time, and any and all implementing regulations, as in effect from time to time, including, but not limited to, the Privacy Standards (45 C.F.R. Parts 160 and 164, Subparts A and E), the Electronic Transactions Standards (45 C.F.R. Parts 160 and 162), the Security Standards (45 C.F.R. Parts 160 and 164, Subparts A and C), and the Notification in the Case of Breach of Unsecured Protected Health Information Standards (45 CFR Part 164, Subpart D).

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

“ Information Laws ” means (a) all Applicable Laws concerning the privacy and/or security of Personal Information including, where applicable, HIPAA, state data breach notification Laws, state social security number protection Laws and the Section V of the Federal Trade Commission Act (as it relates to Personal Information); and (b) all applicable Payment Card Industry Security Standards with respect to account data protection.

“ Initial Management Team ” means those employees who shall fill the senior Company’s management roles as of the Closing.

“ Intellectual Property Right ” means any and all intellectual property rights or similar proprietary rights in the United States and all other nations throughout the world, including, without limitation, (i) trademarks, service marks, trade dress, logos, brand names, certification marks, domain names, trade names and corporate names (whether or not registered) and other indication of origin, the goodwill associated with the foregoing and registrations in any jurisdiction of, and applications in any jurisdiction to register, the foregoing, including any extension, modification or renewal of any such registration or application (“ Trademarks ”); (ii) inventions and discoveries, whether patentable or not, in any jurisdiction; (iii) patents and patent applications (including all reissues, divisions, continuations, continuations-in-part, and reexaminations thereof and the equivalents of any of the foregoing in any jurisdiction) and any renewals, extensions or reissue thereof, in any jurisdiction (“ Patents ”); (iv) writings and other works, whether copyrightable or not, in any jurisdiction, and any and all copyright rights, whether registered or not, in any jurisdiction, and registrations or applications for registration of copyrights in any jurisdiction, and any renewals or extensions thereof; (v) trade secrets, information, data, specifications, processes, methods, knowledge, experience, skills, technology, Software, know-how (including manufacturing and production processes and techniques and research and development information) and rights in any jurisdiction to limit the use or disclosure thereof by any person (“ Trade Secrets ”), (vi) rights of privacy, personality and publicity and social media accounts, and (vii) all rights to sue or recover and retain damages and costs and attorneys’ fees for past, present and future infringement, misappropriation or other violation of any of the foregoing.

“ IT Assets ” means any and all computers, Software, firmware, middleware, servers, workstations, digital storage, routers, hubs, switches, data communications lines and all other information technology assets, including all associated data contained therein, and all associated data contained therein, and all associated documentation related to any of the foregoing.

“ knowledge ” means, with respect to the Echo Parties, the actual knowledge of the individuals set forth on Section 1.01 of the Echo Disclosure Schedule, and, with respect to MCK, the actual knowledge of the individuals set forth on Section 1.01 of the MCK Disclosure Schedule, in each case after reasonable inquiry of those with managerial authority for the subject matter in question.

“ Lien ” means with respect to any property or asset, any mortgage, lien, license, pledge, charge, security interest, adverse claim, or encumbrance in respect of such property or asset.

“ Material Adverse Effect ” means, with respect to a Contributed Business, any event, condition, occurrence, state of facts, change, development or effect, individually or in the aggregate with all other events, conditions, occurrences, state of facts, changes, developments or effects, that is, or would reasonably be expected to be, materially adverse to the condition (financial or otherwise), business, assets or results of operations of such Contributed Business, taken as a whole, excluding any effect to the extent resulting from or arising in connection with (a) changes in GAAP after the date of this Agreement, (b) changes in Applicable Law or directives or policies of a Governmental Authority after the date of this Agreement, (c) changes in the financial, securities, credit or other capital markets or general economic, regulatory, legislative or political conditions in the United States or any other country or region in which such Contributed Business does business, including changes in interest rates and foreign exchange rates, (d) changes generally affecting the industry in which such Contributed Business operates, (e) acts of war, sabotage or terrorism or major hostilities or natural or man-made disasters or other force majeure events, (f) the announcement, pendency or consummation of the

transactions contemplated by this Agreement (including any loss of, or adverse change in, the relationship of such Contributed Business with its employees, customers, distributors, partners, suppliers or other business partners that is related thereto) to the extent relating to, in the case of the Echo Parties, the identity of MCK as a Party hereto and, in the case of MCK, the identity of the Echo Parties as Parties hereto; provided that this clause (f) shall not apply to the determination of a breach or violation of the representations and warranties contained in Section 4.01(d) and Section 4.02(d) or the covenants and agreements set forth in Section 5.01 and Section 5.02, (g) any failure, in and of itself, by such Contributed Business to meet its internal or published budgets, projections, forecasts or predictions of financial performance for any period (it being understood that this clause (g) shall not prevent a party from asserting that any events, conditions, occurrences, state of facts, changes, developments or effects that may have contributed to such change or failure independently constituted or contributed to a Material Adverse Effect), (h) any action taken or omitted to be taken by the Contributed Business at the written request, or with the written consent, of the other Party hereto or (i) any actions or proceedings made or brought by any of the current or former stockholders of MCK (on their own or on behalf of MCK) with respect to the Core MTS Business or the Transactions contemplated hereby; provided that events, conditions, occurrences, state of facts, changes, developments or effects set forth in clauses (a), (b), (c), (d) and (e) above shall not be excluded in determining whether a “Material Adverse Effect” has occurred or would reasonably be expected to occur with respect to such Contributed Business if and to the extent such events, conditions, occurrences, state of facts, changes, developments or effects, individually or in the aggregate, have a materially disproportionate effect on such Contributed Business, taken as a whole, relative to other participants in the industries in which such Contributed Business operates.

“ MCK Contributed Assets ” means (a) the MCK IPCo Owned Intellectual Property and (b) any other assets, properties and businesses (if any) of the Core MTS Business that are contributed to the Company pursuant to the Non-IP Contribution pursuant to Section 3.01, excluding any MCK Contributed Entity.

“ MCK Contributed Entity ” means (a) any Person the equity interests of which are contributed to the Company pursuant to the MCK IPCo Contribution or the Non-IP Contribution and (b) any Person that is a subsidiary of a Person described in the preceding clause (a) as of the Closing.

“ MCK Covered Tax ” means any (a) Tax of an MCK Contributed Entity (or predecessor thereof) or relating to the MCK Contributed Assets or Core MTS Business (including Tax liability as a transferee or successor attributable to the MCK Contributed Assets or Core MTS Business), in each case, described in clause (a) of the definition of Tax related to a Pre-Closing Tax Period, (b) Tax of an MCK Contributed Entity described in clause (b) of the definition of Tax, (c) payroll Tax of MCK or its Affiliates in respect of any employee of the Core MTS Business and (d) Apportioned Obligation or portion thereof for which MCK is responsible under Section 6.01; provided, however , that no MCK Excluded Tax shall be considered an MCK Covered Tax.

“ MCK Disclosure Schedule ” means the disclosure schedule delivered by MCK to the Echo Parties and the Company concurrently with the execution of this Agreement.

“ MCK Excluded Tax ” means any liability of an MCK Contributed Entity for the payment of any amounts of the type described in clause (a) of the definition of Tax as a result of being or having been before the Closing (i) a member of an affiliated, consolidated, combined or unitary group, or a party to any agreement or arrangement, as a result of which liability of the Person to a Taxing Authority is determined or taken into account with reference to the activities of any other Person or (ii) a party to any Tax Sharing Agreement.

“ MCK IPCo ” means a wholly-owned direct or indirect subsidiary of MCK to be designated by MCK as such prior to the Closing.

“ MCK IPCo Initial Percentage ” means a percentage to be determined by MCK prior to the Closing; provided that the Non-IP Initial Percentage shall be consistent with MCK’s good faith determination of (i) the relative values of the assets and businesses transferred to the Company by the MCK Contributors, on the one hand, and MCK IPCo, on the other hand, and (ii) the fair market value of the MCK Tax Receivable Agreement as of the Closing; and provided, further that the sum of the Non-IP Initial Percentage and the MCK IPCo Initial Percentage shall be equal to 70% (before taking into account the Employee Pool).

“ MCK IPCo Owned Intellectual Property ” means all Intellectual Property Rights owned, or purported to be owned or that will be owned or purported to be owned at Closing, by MCK IPCo to the extent primarily relating to the Core MTS Business, including, but not limited to, Intellectual Property Rights set forth or listed on Section 1.01 of the MCK Disclosure Schedule.

“MCK Licensed Intellectual Property” means all Intellectual Property Rights owned by a third party and licensed or sublicensed to the Core MTS Business or for which the Core MTS Business has obtained a license, right, authorization or covenant not to be sued, including, but not limited to, the licenses that are not commercially available to the Company listed on Section 1.01 of the MCK Disclosure Schedule.

“ MCK Net Debt ” means an amount equal to (i) the outstanding aggregate principal amount, including any accrued and unpaid interest thereon, for any indebtedness for borrowed money of the Core MTS Business outstanding as of Closing minus (ii) Cash of the Core MTS Business as of the Closing.

“ MCK Net Debt Peg ” means $0.00.

“ MCK Net Working Capital ” means, (x) with respect to any Taxes, as of the end of the day on the Closing Date and (y) with respect to all other items, as of the close of the business on the Business Day immediately preceding Closing, an amount equal to (i) the consolidated current assets (excluding Cash, restricted cash, and deferred income tax assets) of the Core MTS

Financial Statements set forth on the MCK Working Capital Schedule attached hereto as Annex II, minus (ii) the consolidated current liabilities (excluding amounts included in MCK Net Debt, MCK Transaction Expenses, obligations for pass through customer payments, and deferred income tax liabilities) of the Core MTS Financial Statements set forth on the MCK Working Capital Schedule attached hereto as Annex II, minus (iii) long term portion of deferred revenue, long term portion of severance, restructuring and exit related obligations, long term portion of retirement plans outstanding, and long term portion of escheatment obligations outstanding of the Core MTS Financial Statements set forth on the MCK Working Capital Schedule attached hereto as Annex II, in each case, determined on a consolidated and consistent basis in accordance with GAAP and, to the extent consistent with GAAP, the Core MTS Business’ accounting policies, practices, estimation methodologies, procedures and classifications. The Working Capital Schedule attached hereto as Annex II sets forth an illustrative calculation of MCK Working Capital as of March 31, 2016 using such balance sheet accounts.

“ MCK Net Working Capital Peg ” means $(109,700,000).

“ MCK Owned Intellectual Property ” means (i) all MCK IPCo Owned Intellectual Property and (ii) all Intellectual Property Rights owned, or purported to be owned, by MCK or any of its Subsidiaries, (other than MCK IPCo Owned Intellectual Property) to the extent primarily relating to the Core MTS Business, in each case including, but not limited to, Intellectual Property Rights set forth or listed on Section 1.01 of the MCK Disclosure Schedule.

“ MCK Promissory Note ” means a promissory note in the amount of the MCK Promissory Note Principal Amount, which shall be payable immediately after the Closing to MCK or one of its direct or indirect, wholly-owned Subsidiaries.

“ MCK Promissory Note Principal Base Amount ” means $1,250,000,000.

“ MCK Promissory Note Principal Amount ” means an amount equal to (i) the MCK Promissory Note Principal Base Amount minus (ii) the Estimated MCK Net Debt Adjustment plus (iii) the Estimated MCK Net Working Capital Adjustment, but only to the extent that the Estimated MCK Net Working Capital Adjustment is a negative number plus (iv) the MCK Special Closing Adjustment, if any, minus (v) the Echo Holdco Adjusted EBITDA Adjustment Amount, to the extent the Echo Holdco Adjusted EBITDA Adjustment Amount a positive number.

“ MCK Special Closing Adjustment ” means an amount equal to (i) if the Estimated Echo Amount Owed multiplied by MCK True-Up Percentage is greater than the Estimated MCK Amount Owed and if the Estimated Total Amount Owed is greater than $125,000,000, (a) the amount, which is expressed as a negative number, by which the Estimated Total Amount Owed exceeds $125,000,000 multiplied by (b) the Membership Percentage of Echo, (ii) if the Estimated Echo Amount Owed multiplied by MCK True-Up Percentage is less than the Estimated MCK Amount Owed and if the Estimated Total Amount Owed is greater than $125,000,000, (a) the amount, which is expressed as a positive number, by which the Estimated Total Amount Owed exceeds $125,000,000 multiplied by (b) the Membership Percentage of Echo or (iii) if the Estimated Total Amount Owed is equal to $125,000,000 or less, zero.

“ MCK Transaction Expenses ” means, without duplication, the fees and expenses paid by NewCo (or to which NewCo reimburses MCK or any of its Subsidiaries (other than the Company and its Subsidiaries)) with respect to fees and expenses of MCK or any of its Subsidiaries (other than the Company and its Subsidiaries) to (a) third parties (including all fees and expenses of counsel, investment banks, financial advisors, accountants (including any preparation costs and audit fees associated with the Core MTS Financials) and integration, separation and other consultants), (b) MCK employees for retention and sale bonuses and (c) third parties in respect of MCK corporate reporting, in each case, whether or not invoiced, incurred in connection with the negotiation and preparation of this Agreement or the Transaction Documents, the performance of the terms of this Agreement and the Transaction Documents and the consummation of the Transactions contemplated herein and therein, other than fees and expenses that are Shared Transaction Expenses.

“ MCK True-Up Percentage ” means an amount equal to the aggregate Membership Percentage of MCK Contributors and MCK IPCo divided by the Membership Percentage of Echo.

“ MCK 721 Tax Opinion ” means an opinion to the effect that, disregarding the effect of (i) any adjustment payments under Section 2.03 and any cash payments made by the Company under Section 8.06 and (ii) the MCK Tax Receivable Agreement, the transactions described in Section 3.02(a)(v) and Section 3.02(a)(vi) should constitute (1) separate contributions to which Section 721(a) of the Code applies and (2) the assumption and repayment of a “qualified liability” within the meaning of Treasury Regulations Section 1.707-5, and as a consequence, each of MCK IPCo and the MCK Contributors should not recognize income or gain on such transactions that they would otherwise recognize if the legal conclusions described in clauses (1) or (2) above did not apply.

“ McKesson Business Performance Services ” means the business unit of McKesson Technology Solutions providing medical coding and billing services, charge capture services, accounts receivable management services, practice management and consulting services, patient access services, chronic care management services, and value based care and accountable care services.

“ McKesson Connected Care & Analytics ” means the business unit of McKesson Technology Solutions providing connected care and communications and messaging services, health information exchange services, population health, risk management, data management, and data analytics software and services, patient engagement, identification, matching, consents and data repository services, homecare and hospice software and services, workforce management software and services, and capacity management software and services.

“ McKesson EIS Business ” means the business unit of McKesson Technology Solutions providing electronic health record and clinical management software and services, revenue cycle management software and services, supply chain software and services, document management software and services, intelligent coding software and services, laboratory and surgery management software and services, information technology outsourcing, and remote hosting services, as more specifically set forth on Section 1.01 of the MCK Disclosure Schedule.

“ McKesson Health Solutions ” means the business unit of McKesson Technology Solutions providing medical necessity and point-of-care decision support software and services, payor claims management software and services, payor fraud and abuse detection software and services, payor network management software and services, and claims editing, claims processing, and claims clearinghouse software and services.

“ McKesson Imaging & Workflow Solutions ” means the business unit of McKesson Technology Solutions providing enterprise imaging, radiology imaging, and cardiology imaging software and services, and imaging management and workflow software and services.

“ McKesson RHP ” means the sub-business unit of McKesson Connected Care & Analytics providing communications and messaging services among pharmacies, payors, and pharmaceutical manufacturers, pharmacy network management services, pharmacy claims editing, pharmacy claims processing, and pharmacy claims clearinghouse services, pharmacy e-prescribing, prior authorization, couponing, and co-pay assistance services, and pharmacy data management and pharmacy data analytics services.

“ McKesson Technology Solutions ” means one of two external financial reporting segments of McKesson Corporation consisting of five business units: McKesson Business Performance Services, McKesson Connected Care & Analytics, McKesson EIS Business, McKesson Health Solutions, and McKesson Imaging & Workflow Solutions.

“ Member ” shall have the meaning assigned thereto in the LLC Agreement.

“ Membership Percentage ” shall have the meaning assigned thereto in the LLC Agreement.

“ Membership Unit Value ” means the value of a Unit in the Company as of the Closing Date, based on the number of Units outstanding at Closing and the Initial Members’ Initial Capital Contributions (each as defined in the LLC Agreement).

“ MTI Participating Employee ” means an employee or other service provider who primarily provides services to the Core MTS Business.

“ Multiemployer Plan ” means a multiemployer plan as defined in Section 3(37) of ERISA.

“ Non-IP Initial Percentage ” means a percentage to be determined by MCK prior to the Closing; provided that the Non-IP Initial Percentage shall be consistent with MCK’s good faith determination of (i) the relative values of the assets and businesses transferred to the Company by the MCK Contributors, on the one hand, and MCK IPCo, on the other hand, and (ii) the fair market value of the MCK Tax Receivable Agreement as of the Closing; and provided, further that the sum of the Non-IP Initial Percentage and the MCK IPCo Initial Percentage shall be equal to 70% (before taking into account the Employee Pool).

“ Permitted Liens ” means (a) with respect to Echo Holdco and its Subsidiaries, (i) Liens disclosed on Section 1.01 of the Echo Disclosure Schedule, (ii) Liens for Taxes that are not yet due or are being contested in good faith, in each case, for which adequate reserves have or will be included in the Estimated Echo Closing Statement, (iii) mechanic’s, materialman’s, carrier’s, repairer’s and other similar Liens arising or incurred in the ordinary course of business consistent with past practice or that are not yet due and payable or are being contested in good faith, (iv) any Lien securing payments under capital lease agreements, (v) any Lien that will be terminated or released in connection with the consummation of the Transactions, (vi) any restrictions on the ownership and transfer of capital stock under Applicable Law, (vii) any other Lien which would not reasonably be expected to materially impair the use of the asset to which such Lien relates and (viii) Liens securing Echo Holdco Refinanced Debt, and (b) with respect to the Core MTS Business, (i) Liens disclosed on Section 1.01 of the MCK Disclosure Schedule, (ii) Liens for Taxes that are not yet due or are being contested in good faith, in each case, for which adequate reserves have or will be included in the MCK Closing Statement, (iii) mechanic’s, materialman’s, carrier’s, repairer’s and other similar Liens arising or incurred in the ordinary course of business consistent with past practice or that are not yet due and payable or are being contested in good faith, (iv) any Lien securing payments under capital lease agreements, (v) any Lien that will be terminated or released in connection with the consummation of the Transactions, (vi) any restrictions on the ownership and transfer of capital stock under Applicable Law and (vii) any other Lien which would not reasonably be expected to materially impair the use of the asset to which such Lien relates.

“ Person ” means an individual, corporation, limited liability company, partnership, association, trust or other entity or organization, including any Governmental Authority.

“ Personal Information ” means any information that can be directly associated with a specific person, or that reasonably can be used to identify a specific person, including individually identifiable health information and “Protected Health Information” or “Electronic Protected Health Information” as such terms are defined by HIPAA.

“ Post-Closing Tax Period ” means any Tax period beginning after the Closing Date and, with respect to a Straddle Tax Period, the portion of such Tax period beginning after the Closing Date.

“ Pre-Closing Tax Period ” means any Tax period ending on or before the Closing Date and, with respect to a Straddle Tax Period, the portion of such Tax period ending on the Closing Date.

“ Representatives ” means, with respect to any Person, collectively, the partners, principals, managers, directors, officers, employees, agents, consultants, counsel, advisors and other representatives of such Person.

“ SEC ” means the Securities and Exchange Commission.

“ Section 355(e) Tax Opinion ” means an opinion, which shall assume the Assumed Facts, to the effect that Section 355(e) of the Code should not apply to a Qualified MCK Exit (as defined in the LLC Agreement).

“ Securities Act ” means the Securities Act of 1933.

“ service provider ” means director, officer, employee or individual independent contractor.

“ Shared Transaction Expenses ” means, without duplication, the fees and expenses paid or payable by the Company or any of its Subsidiaries to third parties, whether or not invoiced, incurred in connection with the negotiation and preparation of this Agreement or the Transaction Documents, the performance of the terms of this Agreement and the Transaction Documents and the consummation of the Transactions contemplated herein and therein, including (a) the Debt Financing Expenses, (b) fees and expenses related to the preparation of pro forma financial statements of the Company (including audit fees), (c) fees and expenses of separation, integration, synergy, information technology and other consultants mutually selected by MCK and Echo Holdco and (d) Transfer Taxes. For the avoidance of doubt, Shared Transaction Expenses shall not include (v) the Debt Breakage Costs, (w) the MCK Transaction Expenses or (y) the Echo Holdco Transaction Expenses.

“ Software ” means information technology software programs in all forms and formats (including source code, object code, firmware, operating systems and specifications).

“ Subsidiary ” means any entity that is at least 50% owned and Controlled by any Person, directly or through one or more Subsidiaries.

“ Swap and Derivative Termination Costs ” means the Swap Termination Value of the Echo Holdco Swaps and Derivatives, and all other fees, costs and expenses, breakage costs and prepayment fees or premiums, whether accrued or not, paid or payable by the Company, Echo Holdco or any of their respective Subsidiaries, to terminate at Closing the Echo Holdco Swaps and Derivatives or any other Swap Contract or other derivative contract of Echo, Echo Holdco or their respective Subsidiaries.

“ Straddle Tax Period ” means any Tax period beginning on or before, and ending after, the Closing Date.

“ Swap Contract ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement relating to any of the foregoing, including any such obligations or liabilities under any such agreement.

“ Swap Termination Value ” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts.

“ Tainting Acquisition ” means one or more acquisitions of MCK stock that, assuming the Assumed Facts, would reasonably be expected to result in Section 355(e) of the Code applying to a Qualified MCK Exit.

“ Tax ” means (a) any tax, other governmental assessment or charge of any kind whatsoever in the nature of a tax (including withholding on amounts paid to or by any Person) or Escheat Payment, together with any interest, penalty, addition to tax or additional amount (including penalties for failure to file or late filing any return, report or other filing) and (b) in the case of any Person, any liability for the payment of any amounts of the type described in clause (a) as a transferee or successor or as a result of being or having been before the Closing (i) a member of an affiliated, consolidated, combined or unitary group, or a party to any agreement or arrangement, as a result of which liability of the Person to a Taxing Authority is determined or taken into account with reference to the activities of any other Person or (ii) a party to any Tax Sharing Agreement or other express obligation to indemnify any other Person; it being understood that no payment, or obligation to make a payment, under any tax receivables agreement (including the Existing Echo TRAs) shall be considered a Tax.

“ Tax Opinion Advisor ” means, with respect to MCK, Davis Polk & Wardwell LLP or Ernst & Young LLP, and, with respect to the Echo Parties, Ropes & Gray LLP, or an Alternative Tax Opinion Advisor to any of them.

“ Tax Return ” means any return, declaration, report, statement, form (including elections, estimates, declarations or amendments), claim for refund or information return relating to Taxes, including any attachment, exhibit, schedule or supplement thereto and amendment thereof.

“ Tax Sharing Agreement ” means any agreement or arrangement (whether or not written) entered into prior to the Closing that provides for the allocation, apportionment, sharing or assignment of any Tax liability or benefit, or the transfer or assignment of income, revenues, receipts or gains for the purpose of determining any Person’s Tax liability.

“ Taxing Authority ” means any Governmental Authority responsible for the imposition or collection of any Tax.

“ Total Echo Option Cash Amount ” means the product of (a) the Echo Deemed Option Shares Outstanding, multiplied by (b) the Echo Purchase Price Percentage, multiplied by (c) the Echo Per Share Purchase Price.

“ Unit ” shall have the meaning assigned thereto in the LLC Agreement.

Section 1.02 . Other Terms. The following terms have the meanings defined for such terms in the Sections set forth below:


Term		Section
Acquisition Proposal		5.04(a)
Action		9.04(a)
Adjustment Units		8.06(a)
Agreement		Preamble
Apportioned Obligations		6.01(b)
Assumed Liabilities		3.03(a)
BX		Preamble
BX Principal Shareholder Letter		2.01(a)(xi)
Cap		8.02(a)(ii)
Closing		2.01
Closing Actions		2.01
Closing Date		2.01
Company		Preamble
Company Employees		5.16(c)
Company Parties		Preamble
Company Plans		5.16(c)
Confidentiality Agreement		5.05


Core MTS Financial Statements		5.11
Damages		8.02(a)
Debt Commitment Letters		Recitals
Debt Financing		Recitals
Deductible		8.02(a)(i)
Defending Party		2.02(d)
Dispute Notice		2.02(d)
Disputing Party		2.02(d)
DOJ		5.07(d)
Early Termination Payment		4.01(bb)
Echo		Preamble
Echo Connect Liabilities		3.03(b)(i)
Echo Connect Option Agreement		2.01(a)(x)
Echo Contribution		3.02(a)(i)
Echo Contributions and Transfers		3.02(a)(iv)
Echo Fundamental Reps		7.03(b)
Echo Holdco		Preamble
Echo Holdco Options		4.01(e)(i)
Echo Holdco Sale Consideration		3.02(a)(iv)
Echo Holdco Share Transfer		3.02(a)(iv)
Echo Holdco Shares		4.01(e)(i)
Echo Indemnified Parties		8.03(a)
Echo Indemnifying Party		8.02(a)
Echo Material Contract		4.01(j)(ii)
Echo Membership and Sale Consideration		3.02(a)(iv)
Echo Membership Consideration		3.02(a)(i)
Echo Optionholders		4.01(e)(i)
Echo Plans		4.01(r)(i)
Echo Pro Forma Financial Statements		4.01(g)(ii)
Echo Representative		9.15(a)
Echo Securities		4.01(e)(ii)
Echo Shareholders		Preamble
Echo Shareholders’ Agreement		2.01(a)(vii)
Echo Straddle Returns		6.02(e)
Echo Subsidiary Securities		4.01(f)(ii)
Employment Transfer Date		5.16(c)
End Date		9.01(a)(iii)
Estimated Echo Closing Statement		2.02(a)
Estimated Echo Holdco Transaction Expenses		2.02(a)
Estimated Echo Net Debt		2.02(a)
Estimated Echo Net Working Capital		2.02(a)
Estimated MCK Closing Statement		2.02(a)
Estimated MCK Net Debt		2.02(a)
Estimated MCK Net Working Capital		2.02(a)
Estimated MCK Transaction Expenses		2.02(a)
Final Echo Closing Statement		2.02(b)


Final MCK Closing Statement		2.02(c)
FTC		5.07(d)
Fundamental Representations		7.03(b)
Government Official		4.01(l)(ii)
H&F		Preamble
H&F Principal Shareholder Letter		2.01(a)(xii)
Indemnified Party		8.04(a)
Indemnifying Party		8.04(a)
Intellectual Property Licensing Agreement		2.01(a)(vii)
IPCo Membership Consideration		3.02(a)(vi)
Lenders		Recitals
LLC Agreement		2.01(a)(iii)
Management Selection Committee		5.10(a)(iii)
Management Services Agreement		2.01(a)(ix)
MCK		Preamble
MCK Contributions		3.02(a)(vi)
MCK Contributor		3.02(a)(v)
MCK Contributor Securities		4.02(e)(i)
MCK DRE Contributed Entities		3.02(a)(v)
MCK Excluded Liabilities		3.03(b)(ii)
MCK Fundamental Reps		7.02(b)
MCK Indemnified Parties		8.02(a)
MCK Indemnifying Parties		8.03(a)
MCK IPCo Contribution		3.02(a)(vi)
MCK Membership Consideration		3.02(a)(vi)
MCK Note Payment		3.02(a)(vi)
MCK Plan		4.02(q)(i)
MCK Pre-Closing Restructuring		3.01(a)
MCK Straddle Returns		6.02(e)
MCK Tax Memo		4.02(s)(vii)
MCK Tax Receivable Agreement		2.01(a)(vi)
MTI Material Contract		4.02(i)(ii)
New Company Benefit Plans		5.16(b)
New Echo Tax Receivable Agreement		3.01(a)(i)
NewCo Holdings		Preamble
NewCo Intermediate Holdings		Preamble
Non-IP Contribution		3.02(a)(v)
Non-IP Membership Consideration		3.02(a)(v)
Non-Preparing Parties		6.02(g)
Order		7.01(b)
Party or Parties		Recitals
Patents		1.01
Permits		4.01(p)
Plan Determination Date		5.16(b)
Preparing Party		6.02(g)
Principal Shareholder Letters		2.01(a)(xii)


Refinancing		Recitals
Registration Rights Agreement		2.01(a)(xiii)
Required Information		5.03(c)(iii)
Straddle Returns		6.02(e)
Tax Advisor		6.04
Tax Matters Agreement		2.01(a)(xiii)
TCPA Matter”		3.03(b)(ii)(F)
Trade Secrets		1.01
Trademarks		1.01
Transaction Documents		2.01(a)(xiii)
Transactions		2.01
Transfer Taxes		6.01(c)
Transition Services Agreements		2.01(a)(v)
Unaudited MTS Financials		4.02(f)
Valuation Firm		2.02(e)
Vested Optionholder		3.02(a)(ii)
Warranty Breach		8.02(a)

Section 1.03. Other Definitional and Interpretative Provisions . The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections, Exhibits, Annexes and Schedules are to Articles, Sections, Exhibits, Annexes and Schedules of this Agreement unless otherwise specified. All Exhibits, Annexes and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit, Annex or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. Except as expressly set forth herein or in another Transaction Document, references to “law”, “laws” or to a particular statute or law shall be deemed also to include any Applicable Law.

ARTICLE 2

C LOSING

Section 2.01 . Closing.

(a) Subject to the satisfaction or waiver of the conditions set forth in Article 7, the closing (the “ Closing ”) of the transactions contemplated by this Agreement and the Transaction Documents (the “ Transactions ”) shall take place at the offices of Davis Polk & Wardwell LLP, 1600 El Camino Real, Menlo Park, California as soon as practicable, but in no event later than the second Business Day, after the date on which each of the conditions set forth in Article 7 (other than conditions that by their nature are to be satisfied by actions taken at the Closing and are expected to be satisfied at the Closing, and subject to their satisfaction at the Closing) have been satisfied or waived, or at such other place or on such other date as MCK and Echo Holdco may mutually agree; provided , that if any such date falls on a day that is not the first Business Day of a given calendar month, then the Parties agree that, to the extent it does not adversely affect the Debt Financing, the Closing shall occur on the earlier of the first Business Day of the next succeeding calendar month or the last Business Day immediately prior to the End Date. The date on which the Closing occurs is the “ Closing Date .” At the Closing, the following actions shall be taken and the following agreements, certificates and other documents shall be executed and delivered by the Parties thereto (such actions, executions and deliveries, collectively, the “ Closing Actions ”):

(i) the contribution and/or sale of the Echo Business and the Core MTS Business through the Echo Contributions and Transfers and the MCK Contributions, respectively, shall occur as set forth in Article 3;

(ii) the Company and Echo Holdco shall, or shall cause one or more of their Subsidiaries to, consummate the Debt Financing (to the extent not consummated prior to the Closing) and use a portion of the Debt Financing (or shall cause a portion of the Debt Financing to be used) to pay (or reimburse the applicable Echo Party or MCK or its Subsidiaries (other than the Company) for (A) all obligations outstanding on the Closing Date under the Echo Holdco Debt (to the extent not paid or unreimbursed prior to the Closing), (B) the Debt Financing Expenses and the Debt Breakage Costs, (C) the Shared Transaction Expenses, (D) the Echo Holdco Transaction Expenses and (E) the MCK Transaction Expenses;

(iii) the Company shall deliver the Echo Membership and Sale Consideration and the MCK Membership Consideration as set forth in Article 3, and each of the Company, Echo and each MCK Contributor shall execute and deliver the Amended and Restated Limited Liability Company Agreement of the Company in substantially the form attached hereto as Exhibit A (the “ LLC Agreement ”);

(iv) the MCK Note Payment shall occur as set forth in Section 3.02(a)(vi);

(v) each of the Company and MCK and/or one or more of its Subsidiaries shall execute and deliver Transition Services Agreements in substantially the forms attached hereto as Exhibit B (the “ Transition Services Agreements ”);

(vi) each of the Company, Echo and MCK and certain of MCK’s wholly owned direct and indirect subsidiaries shall execute and deliver the Tax Receivable Agreement in substantially the form attached hereto as Exhibit C (the “ MCK Tax Receivable Agreement ”);

(vii) each of the Company and MCK or one of its Subsidiaries shall execute and deliver an Intellectual Property Licensing Agreement on terms substantially consistent with the term sheet attached hereto as Schedule II (the “ Intellectual Property Licensing Agreement ”);

(viii) each of the Echo Shareholders and MCK shall execute and deliver the Echo Shareholders’ Agreement in substantially the form attached hereto as Exhibit D (the “ Echo Shareholders ’ Agreement ”);

(ix) each of the Company, MCK, Blackstone Management Partners, L.L.C. and Hellman & Friedman, L.P. shall execute and deliver the Management Services Agreement in substantially the form attached hereto as Exhibit E (the “ Management Services Agreement ”);

(x) each of Echo Holdco, Change Healthcare Solutions, LLC, the Echo Shareholders and entities that form Echo Connect shall enter into an option agreement relating to the purchase of Echo Connect by the Company in substantially the form attached hereto as Exhibit F (the “ Echo Connect Option Agreement ”);

(xi) Each of MCK and one or more entities affiliated with BX shall execute and deliver to the other Person party thereto a counterpart to a letter agreement substantially in the form attached hereto as Schedule IV (the “ BX Principal Shareholder Letter ”);

(xii) Each of MCK and one or more entities Affiliated with H&F shall execute and deliver to the other Person party thereto a counterpart to a letter agreement substantially in the form attached hereto as Schedule V (the “ H&F Principal Shareholder Letter ” and, together with the BX Principal Shareholder Letter, the “ Principal Shareholder Letters ”)

(xiii) Echo, the Echo Shareholders and each MCK Contributor shall execute and deliver a Registration Rights Agreement in substantially the form attached hereto as Exhibit G (the “ Registration Rights Agreement ” and, together with this Agreement, the LLC Agreement, Transition Services Agreements, MCK Tax Receivable Agreement, New Echo Tax Receivable Agreement, Intellectual Property Licensing Agreement, Echo Shareholders’ Agreement, Management Services Agreement, Principal Shareholder Letters, Echo Connect Option Agreement, Registration Rights Agreement and the Tax Matters Agreement by and among MCK, Echo and the other parties thereto attached as Exhibit E to the LLC Agreement (the “ Tax Matters Agreement ”), the Merger Agreement attached as Exhibit D to the LLC Agreement (the “ Merger Agreement ”), the Form of Separation and Distribution Agreement attached as Exhibit C to the LLC Agreement (the “ Separation Agreement ”), collectively, the “ Transaction Documents ”); and

(xiv) the Echo Shareholders shall cause to be delivered to the Company (i) a certification for Echo Holdco, signed under penalties of perjury by Echo Holdco and dated not more than 30 days prior to the Closing Date, that satisfies the requirements of Treasury Regulation Sections 1.897-2(h) and 1.1445-2(c)(3) and confirms that Echo Holdco is not, nor has it been within 5 years of the date of the certification, a “United States real property holding corporation” as defined in Section 897 of the Code and (ii) a notice to the Internal Revenue Service, signed by Echo Holdco, that satisfies the requirements of Treasury Regulation Section 1.897-2(h)(2).

(b) At the Closing, each Party shall receive any document that such Party has previously reasonably requested as to the existence of any other Party hereto or the authority of any other Parties hereto to enter into any Transaction Document to which it is a Party.

Section 2.02 . Closing Statements.

(a) Echo Holdco shall prepare in good faith and shall provide to the Company and MCK no later than five (5) Business Days prior to the Closing Date an estimated closing statement (the “ Estimated Echo Closing Statement ”) setting forth in reasonable detail Echo Holdco’s good faith estimate of (i) Debt Breakage Costs, (ii) Echo Holdco Transaction Expenses (the “ Estimated Echo Holdco Transaction Expenses ”), (iii) Echo Net Debt (the “ Estimated Echo Net Debt ”) and (iv) Echo Net Working Capital (the “ Estimated Echo Net Working Capital ”). Following delivery of the Estimated Echo Closing Statement, Echo Holdco shall provide MCK and its advisors reasonable access to the work papers and other books and records of Echo Holdco and its Subsidiaries for the purpose of assisting MCK and its advisors in their review of the Estimated Echo Closing Statement. MCK shall prepare in good faith and shall provide to the Company and Echo Holdco no later than five (5) Business Days prior to the Closing Date an estimated closing statement (the “ Estimated MCK Closing Statement ”) setting forth in reasonable detail MCK’s good faith estimate of (i) MCK Transaction Expenses (the “ Estimated MCK Transaction Expenses ”), (iii) MCK Net Debt (the “ Estimated MCK Net Debt ”); (iv) MCK Net Working Capital (the “ Estimated MCK Net Working Capital ”) and (v) the Core MTS Adjusted EBITDA. Following delivery of the Estimated MCK Closing Statement, MCK shall provide Echo Holdco and its advisors reasonable access to the work papers and other books and records of the Core MTS Business for the purpose of assisting Echo Holdco and its advisors in their review of the Estimated MCK Closing Statement.

(b) As promptly as practicable, but no later than 90 days, after the Closing Date, the Company (under the supervision and subject to the sole consent of the MCK Directors (as defined in the LLC Agreement)) will cause to be prepared and delivered to Echo and MCK a closing statement (the “ Final Echo Closing Statement ”) setting forth in reasonable detail the Company’s calculation of (i) Echo Holdco Transaction Expenses, (ii) Echo Net Debt and (iii) Echo Net Working Capital.

(c) As promptly as practicable, but no later than 90 days, after the Closing Date, the Company (under the supervision and subject to the sole consent of the Echo Directors (as defined in the LLC Agreement)) will cause to be prepared and delivered to Echo and MCK a closing statement (the “ Final MCK Closing Statement ”) setting forth in reasonable detail the Company’s calculation of (i) MCK Transaction Expenses, (iii) MCK Net Debt and (iv) MCK Net Working Capital.

(d) If MCK disagrees with the Company’s calculation of the MCK Transaction Expenses, the MCK Net Debt or the MCK Net Working Capital as set forth in the Final MCK Closing Statement, and/or if Echo disagrees with the Company’s calculation of the Echo Holdco Transaction Expenses, Echo Net Debt or Echo Net Working Capital as set forth in the Final Echo Closing Statement, MCK or Echo, as applicable (the “ Disputing Party ”), may, within 30 days after delivery of the Final Echo Closing Statement or the Final MCK Closing Statement, as applicable, deliver a notice (a “ Dispute Notice ”) to Echo or MCK, as applicable (the “ Defending Party ”), and the Company, disagreeing with such calculation and setting forth in reasonable detail the Disputing Party’s calculation of such amount. Any such Dispute Notice shall specify those items or amounts as to which the Disputing Party disagrees, and the Disputing Party shall be deemed to have agreed with all other items and amounts contained in the applicable closing statement. Any item or amount to which no dispute is raised in an applicable Dispute Notice will be final, conclusive and binding on the parties of such 30 ^th day after delivery of the Final Echo Closing Statement or Final MCK Closing Statement, as applicable.

(e) If a Dispute Notice shall be delivered pursuant to Section 2.02(d), the Company, the Disputing Party and the Defending Party shall, during the 21 days following such delivery, use their reasonable best efforts to reach agreement on the disputed items or amounts in order to determine, as may be required, the amount of (i) MCK Transaction Expenses, (ii) MCK Net Debt or (iii) MCK Net Working Capital or the amount of (a) Echo Holdco Transaction Expenses, (b) Echo Net Debt or (c) Echo Net Working Capital, as applicable. If, during such period, the Disputing Party and the Defending Party are unable to reach such agreement, they shall promptly thereafter cause an independent accounting firm or valuation firm of nationally recognized standing reasonably satisfactory to the Disputing Party and the Defending Party (who shall not have any material relationship with the Disputing Party, the Defending Party or the Company) (the “ Valuation Firm ”), promptly to review this Agreement and the disputed items or amounts for the purpose of calculating (i) MCK Transaction Expenses, (ii) MCK Net Debt or (iii) MCK Net Working Capital or the amount of (a) Echo Holdco Transaction Expenses, (b) Echo Net Debt or (c) Echo Net Working Capital, as applicable. In making such calculation, the Valuation Firm

shall consider only those items or amounts in the Final Echo Closing Statement or the Final MCK Closing Statement, as applicable, with which the Disputing Party has disagreed. The Valuation Firm shall deliver to the Company, the Disputing Party and the Defending Party, as promptly as practicable, a report setting forth such calculation; provided that, in no event shall the amount of (i) MCK Transaction Expenses, (ii) MCK Net Debt or (iii) MCK Net Working Capital or the amount of (a) Echo Holdco Transaction Expenses, (b) Echo Net Debt or (c) Echo Net Working Capital, as applicable, be more than the amount of shown for such applicable calculation in the Final Echo Closing Statement or Final MCK Closing Statement, as applicable, nor less than the amount shown for the applicable calculation in the applicable Dispute Notice. Such report shall be final and binding upon the Company, the Disputing Party and the Defending Party absent manifest error. The cost of such review and report shall be borne by the Company.

(f) The Disputing Party, the Defending Party and the Company agree that they will, and agree to cause their respective independent accountants and Subsidiaries to, reasonably cooperate and assist in the preparation of the Final Echo Closing Statement, the Final MCK Closing Statement and any Dispute Notice and in the conduct of the audits and reviews referred to in this Section 2.02, including the making available to the extent necessary of books, records, work papers and personnel.

Section 2.03. True-up Adjustments.

(a) Post-Closing True-Up Adjustment .

(i) At a mutually convenient time and place within five (5) Business Days after the Final Echo Closing Statement and Final MCK Closing Statement are finally determined in accordance with Section 2.02, the Company shall pay or cause to be paid the Final Total Amount Owed (a) to the Echo Representative, for the benefit of Echo, the Echo Shareholders and the Vested Optionholders, if the Final Echo Amount Owed is greater than the Final MCK Amount Owed or (b) to MCK IPCo, if the Final MCK Amount Owed is greater than the Final Echo Amount Owed. To the extent a Party is owed the Final Total Amount Owed, and such amount cannot be paid in cash, each of the Company, MCK and Echo will cooperate with each other to make such payment when available or to adjust the equity interest of MCK and Echo so that such Party receives the benefits set forth in this Section 2.03(a)(i).

(ii) For purposes of this Agreement, calculations of the Echo Purchase Price, MCK Promissory Note Principal Amount and any adjustments pursuant to this Section 2.03(a), shall be made in accordance with Annex IV and any conflicts between the methodology reflected in the Annex IV and the methodologies otherwise set forth in this Agreement shall be resolved in favor of Annex IV .

(b) Indemnification Adjustments . Following the Closing and subject to Section 2.03(c), each Member’s Membership Percentage in the Company may be adjusted from time to time pursuant to Article 8 of this Agreement or otherwise as set forth in the LLC Agreement.

(c) Minimum Ownership . No true-up equity adjustment under Article 8 shall result in Echo holding less than the Echo Minimum Ownership (as defined in the LLC Agreement) of the Company, unless otherwise consented to in writing by MCK.

ARTICLE 3

C ONTRIBUTIONS AND T RANSFERS

Section 3.01 . Pre-Closing Actions.

(a) Prior to the Closing:

(i) each of Echo Holdco, Echo, the Company, Change Aggregator L.P. and H&F Echo Holdings, L.P. shall have entered into a Tax Receivable Agreement substantially in the form set forth attached hereto in Exhibit I (the “ New Echo Tax Receivable Agreement ”);

(ii) the Echo Shareholders shall contribute pro rata in proportion to their ownership of Echo Holdco capital stock, an aggregate of the Echo Contributed Percentage of the issued and outstanding capital stock of Echo Holdco to Echo in exchange for 100% of the issued and outstanding capital stock of Echo;

(iii) MCK shall have delivered to the other Parties hereto a statement setting forth the Non-IP Initial Percentage and the MCK IPCo Initial Percentage; and

(iv) the MCK Pre-Closing Restructuring shall have occurred.

The “ MCK Pre-Closing Restructuring ” means the separation of the Core MTS Business from MCK’s other businesses. The MCK Pre-Closing Restructuring will include, without limitation, the transactions set forth in Schedule VI hereto, as may be revised from time to time by MCK; provided , that no such revision to Schedule VI shall alter the Parties’ economic rights or obligations under this Agreement or the LLC Agreement or otherwise adversely affect the Company or the Echo Parties in any non-de minimis respect.

Section 3.02. Contributions and Other Transfers.

(a) At the Closing:

(i) Echo shall, and the Echo Shareholders shall cause Echo to, contribute, convey, transfer, assign and deliver, or cause to be contributed, conveyed, transferred, assigned and delivered, to the Company, free and clear of all Liens (other than Permitted Liens), and the Company will accept from Echo, shares of common stock of Echo Holdco representing the Echo Contributed Percentage of the issued and outstanding capital stock of Echo Holdco, subject to the terms and conditions of this Agreement (the “ Echo

Contribution ”). In consideration of the Echo Contribution, the Company shall, at the Closing, (A) issue Units to Echo representing a Membership Percentage equal to 30.0% (before taking into account the Employee Pool), subject to adjustment as set forth herein, and Echo shall accept such Units, and (B) admit Echo as a Member, with the rights, powers, obligations and duties set forth in the LLC Agreement (the “ Echo Membership Consideration ”).

(ii) Each outstanding and unexercised vested (or vesting upon the Closing) Echo Holdco Option with an exercise price less than the Echo Per Share Purchase Price shall immediately and automatically be forfeited and cancelled, and the Echo Optionholder thereof (a “ Vested Optionholder ”) shall be entitled to receive in exchange therefor (i) an amount of the Echo Purchase Price (including any additional payments pursuant to Section 2.03(a)) equal to such Vested Optionholder’s pro rata portion (based on such Vested Optionholder’s Echo Deemed Option Shares Outstanding) of the Total Echo Option Cash Amount and (ii) Echo Securities (with equivalent value to such vested (or vesting upon the Closing) Echo Holdco Options other than those Echo Holdco Options receiving a portion of the Echo Purchase Price in clause (i) above) subject to terms to be agreed upon by MCK, Echo and Echo Holdco.

(iii) Each Echo Holdco Option (i) that was outstanding but unvested immediately prior to the Closing and (ii) that was outstanding and vested (or vesting upon the Closing) with an exercise price greater than or equal to the Echo Per Share Purchase Price, shall immediately and automatically be forfeited and cancelled and the Echo Optionholder thereof shall be entitled to receive in exchange thereof Echo Securities (with equivalent value to such Echo Holdco Options) subject to terms to be agreed upon by MCK, Echo and Echo Holdco.

(iv) The Echo Shareholders shall sell to the Company, and the Company will purchase from the Echo Shareholders, free and clear of all Liens (other than Permitted Liens), shares of common stock of Echo Holdco (allocated among the Echo Shareholders as determined by Echo Holdco prior to Closing and set forth on the Estimated Echo Closing Statement) representing the Echo Purchase Price Percentage of the issued and outstanding capital stock of Echo Holdco, subject to the terms and conditions of this Agreement (the “ Echo Holdco Share Transfer ” and, together with the Echo Contribution, the “ Echo Contributions and Transfers ”). At the Closing, the Company shall deliver to the Echo Shareholders, as the aggregate purchase price for the shares transferred to the Company pursuant to the Echo Holdco Share Transfer and Vested Optionholders, an amount equal to the Echo Purchase Price, in immediately available funds by wire transfer to accounts for the benefit of the Echo with a bank in the United States designated by the Echo Representative by notice to the Company, which notice shall be delivered not later than two Business Days prior to the Closing Date (the “ Echo Holdco Sale Consideration ” and, together with the Echo Membership Consideration, the “ Echo Membership and Sale Consideration ”).

(v) MCK shall cause one or more of its wholly-owned, direct or indirect Subsidiaries (each, an “ MCK Contributor ”) to contribute, convey, transfer, assign and deliver, or cause to be contributed, conveyed, transferred, assigned and delivered, to the Company, free and clear of all Liens (other than Permitted Liens), and the Company will accept from the MCK Contributors, 100% of the Core MTS Business (including the MCK Licensed Intellectual Property but excluding the MCK IPCo Owned Intellectual Property and the equity interests of certain MCK Contributed Entities (the “ MCK DRE Contributed Entities ”)), subject to the terms and conditions of this Agreement (the “ Non-IP Contribution ”). In consideration of the Non-IP Contribution, the Company shall, at the Closing, (i) issue Units to the MCK Contributors representing an aggregate Membership Percentage equal to the Non-IP Initial Percentage, subject to adjustment as set forth herein, and MCK shall cause the MCK Contributors to accept such Units, and (ii) admit each MCK Contributor as a Member, with the rights, powers, obligations and duties set forth in the LLC Agreement (the “ Non-IP Membership Consideration ”).

(vi) MCK shall cause MCK IPCo to contribute, convey, transfer, assign and deliver, or cause to be contributed, conveyed, transferred, assigned and delivered, to the Company, free and clear of all Liens (other than Permitted Liens), and the Company will accept from MCK IPCo, the MCK IPCo Owned Intellectual Property and the equity interests of the MCK DRE Contributed Entities, subject to the terms and conditions of this Agreement (the “ MCK IPCo Contribution ” and, together with the Non-IP Contribution, the “ MCK Contributions ”). In consideration of the MCK IPCo Contribution, the Company shall, at the Closing, (i) issue Units to MCK IPCo representing a Membership Percentage equal to the MCK IPCo Initial Percentage, subject to adjustment as set forth herein, and MCK shall cause MCK IPCo to accept such Units, (ii) admit MCK IPCo as a Member, with the rights, powers, obligations and duties set forth in the LLC Agreement, and (iii) assume the MCK Promissory Note (the “ IPCo Membership Consideration ” and, together with the Non-IP Membership Consideration, the “ MCK Membership Consideration ”). On the Closing Date, the Company shall repay the MCK Promissory Note Principal Amount in full satisfaction thereof in immediately available funds by wire transfer to an account of MCK with a bank in New York City designated by MCK, by notice to the Company, which notice shall be delivered not later than two Business Days prior to the Closing Date (the “ MCK Note Payment ”).

(vii) Immediately after consummation of the Echo Contributions and Transfer and the MCK Contributions, the Company shall contribute all the assets and liabilities from the Echo Contributions and Transfer and the MCK Contributions to NewCo Intermediate Holdings, which in turn shall contribute all the assets and liabilities from the Echo Contributions and Transfer and the MCK Contributions to NewCo Holdings, in each case for which no additional equity interests of NewCo Intermediate Holdings or NewCo Holdings will be issued.

(b) The Echo Shareholders shall deliver, and shall cause Echo to deliver, to the Company certificates for the shares of capital stock of Echo Holdco contributed or transferred to the Company pursuant to the Echo Contributions and Transfers, duly endorsed or accompanied by stock powers duly endorsed in blank, with any required transfer stamps affixed thereto. MCK shall deliver, and shall cause Subsidiaries to deliver, to the Company certificates for the shares of capital stock of Subsidiaries of MCK contributed or transferred to the Company pursuant to the MCK Contributions, duly endorsed or accompanied by stock powers duly endorsed in blank, with any required transfer stamps affixed thereto.

Section 3.03. Assumed Liabilities.

(a) Upon the terms and subject to the conditions of this Agreement, the Company agrees, effective at the time of the Closing, to assume the debts, obligations, contracts and liabilities of any kind, character or description (whether known or unknown, accrued, absolute, contingent or otherwise) to the extent relating to or arising out of the Core MTS Business and the Echo Business, excluding the MCK Excluded Liabilities and the Echo Connect Liabilities (the “ Assumed Liabilities ”), including the following:

(i) all liabilities to the extent set forth on the Balance Sheet of the Core MTS Business and the Balance Sheet of the Echo Business, and all liabilities incurred following the respective dates thereof in accordance with the terms hereof to the extent related to the Core MTS Business and the Echo Business, respectively, and, in each case, to the extent not satisfied prior to the Closing Date;

(ii) all liabilities and obligations to the extent relating to the Core MTS Business and the Echo Business under the MTI Material Contracts and the Echo Material Contracts, respectively;

(iii) all environmental liabilities to the extent relating to the Core MTS Business and the Echo Business;

(iv) all liabilities and obligations arising out of any action, suit, investigation or proceeding to the extent relating to or arising out of the Core MTS Business or the Echo Business before any arbitrator or any Governmental Authority, except to the extent such matters are expressly excluded pursuant to Section 3.03(b);

(v) the portion of the nonqualified deferred compensation plans set forth on Section 4.02(q)(i) of the MCK Disclosure Schedule with respect to actively employed, U.S.-based MTI Participating Employees and shared services employees who are transferred to the Core MTS Business prior to Closing or otherwise transferred to the Company pursuant to Section 5.16; and

(vi) Liabilities arising out of or related to the Uniloc v. McKesson matter (the “Uniloc Matter”) with respect to products that are not retained by MCK, subject to Section 5.17(b).

(b) Notwithstanding the foregoing or any other provision in this Agreement or otherwise, the Company shall not assume:

(i) the debts, obligations, contracts and liabilities of any kind, character or description (whether known or unknown, accrued, absolute, contingent or otherwise), to the extent relating to or arising out of any entities (including the assets and properties of such entities) and other assets, properties and businesses owned, held or used in the conduct of the Echo Connect business (the “ Echo Connect Liabilities ”), which Echo Connect Liabilities, for the avoidance of doubt, shall not include any Echo Holdco Debt or any Taxes for a Pre-Closing Tax Period; or

(ii) any obligations and liabilities of MCK or any of its Affiliates, other than the Assumed Liabilities (the “ MCK Excluded Liabilities ”), including:

(A) the debts, obligations, contracts and liabilities of any kind, character or description (whether known or unknown, accrued, absolute, contingent or otherwise), to the extent relating to or arising out of the entities (including the assets and properties held by such entities) and other assets, properties and businesses owned, held or used in the conduct of the McKesson EIS Business;

(B) the debts, obligations, contracts and liabilities of any kind, character or description (whether known or unknown, accrued, absolute, contingent or otherwise), including those set forth on Section 1.01 of the MCK Disclosure Schedule, to the extent relating to or arising out of the entities (including the assets and properties held by such entities) and other assets, properties and businesses owned, held or used in the conduct of McKesson RHP;

(D) all liabilities and obligations arising from any actions or proceedings made or brought by any of the current or former stockholders of MCK (on their own or on behalf of MCK) with respect to the Core MTS Business or the Transactions contemplated hereby or otherwise, except with respect to any action or proceeding made or brought by any such stockholders against the Echo Parties in respect of breach of this Agreement or any other agreement,

(E) unless otherwise assumed in Section 3.03(a)(v) or assumed as part of a Mirror Plan ( provided that pre-Closing liabilities will only be assumed if mutually agreed among the Company, MCK and Echo Holdco), all liabilities and obligations with respect to: (i) MCK Plans, other than MCK Plans sponsored by the Core MTS Business, (ii) transaction bonus, severance, or retention-related payments to MTI Participating Employees; (iii) any Employee Plan subject to Title IV of ERISA or Sections 412 or 430 of the Code which respect to which MCK or any of its Subsidiaries has or could have any liability or obligation; (vi) any frozen defined benefit pension plan, policy, or arrangement not otherwise subject to ERISA, for current or former MCK service providers, and that at any time was sponsored, maintained, contributed to, or required to be contributed to by MCK or any of its Subsidiaries with respect to which MCK has or could have any liability or obligation; (v) any plan, program, policy, arrangement, or agreement that provides post-employment or retirement health, medical, or life

insurance benefits to any current or former MCK service provider; and (vi) any pay in lieu of notice or severance compensation or benefits arising as of or prior to the Closing (except as mutually agreed by Echo Holdco and MCK with respect to any MTS Participating Employees for whom such Parties mutually agree not to transfer to the Company);

(F) Liabilities arising out of or related to the class action lawsuit in the Northern District of California before Judge Gilliam, filed by plaintiffs True Health and McLaughlin Chiropractic, both of which are current customers of Physician Practice Solutions (PPS), a business division of MTI until recently. True Health and McLaughlin Chiropractic allege violations of the Telephone Consumer Protection Act (TCPA) related to unsolicited fax advertisements for PPS’s Medisoft and Lytec products (the “ TCPA Matter ”); and

(G) Liabilities arising out of or related to the Uniloc Matter with respect to products that are retained by MCK, subject to Section 5.17(b).

Section 3.04. Excluded Assets . The Parties acknowledge and agree that the following assets and properties shall not be contributed or sold to the Company pursuant to this Agreement:

(a) Echo Connect, the McKesson EIS Business and McKesson RHP (including the entities, property and assets of such businesses set forth on Section 1.01 of the Echo Disclosure Schedule and the MCK Disclosure Schedule, respectively);

(b) insurance policies of MCK relating to the Core MTS Business and all claims, credits, causes of action or rights thereunder;

(c) assets sold or otherwise disposed of in the ordinary course of business as permitted by Article 5 by the Echo Business or the Core MTS Business;

(d) Patents not primarily relating to the Core MTS Business, including, but not limited to, Patents set forth or listed on Section 3.04(d) of the MCK Disclosure Schedule;

(e) Trademarks not primarily related to the Core MTS Business, including, but not limited to, Trademarks set forth or listed on Section 3.04(e) of the MCK Disclosure Schedule; and

(f) the assets set forth on Section 3.04(f) of the Echo Disclosure Schedule and the MCK Disclosure Schedule, respectively.

Section 3.05. Wrong-Pockets. If, after Closing, (i) any asset related to the Core MTS Business or the Echo Business, as the case may be, as of the Closing, has not been contributed or otherwise transferred to the Company as required pursuant to Section 3.02, Echo, the Echo Shareholders or MCK, as the case may be, shall cause such asset (and any related liability) to be transferred to the Company as soon as practicable or (ii) any liability related to the Core MTS Business or the Echo Business, as the case may be, as of the Closing, has not been transferred to and/or assumed by the Company as required pursuant to Section 3.02 or Section 3.03, Echo, the Echo Shareholders or MCK, as the case may be, shall cause such liability (and any related

property, right or asset) to be transferred to and assumed by the Company as soon as practicable in each case for no additional consideration; provided that until such time (if any) of the completion of any such transfer or assumption, as the case may be, the Parties shall cooperate to structure alternative arrangements reasonably acceptable to the Parties under which the Company would obtain the benefits and assume the obligations of the relevant asset, claim, right, benefit or liability in accordance with this Agreement as if the relevant transfer or assumption had taken place, including by sub-contract, sub-license or sub-lease to the Company, or under which MCK, its Affiliates, Echo or the Echo Shareholders, as the case may be, would, with respect to an agreement, enforce for the benefit and at the cost of the Company, with the Company assuming such Person’s obligations, and any and all rights of such Person against any third party thereunder. The Parties shall reasonably cooperate with each other in connection with the transfers contemplated by this Section 3.05. This Section 3.05 shall terminate on the fifth (5 ^th ) anniversary of the date of this Agreement.

Section 3.06. Assignment of Contracts and Rights . Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign any asset or any right thereunder if an attempted assignment, without the consent of a third party, would constitute a breach or in any way adversely affect the rights of Echo, the Echo Shareholders or MCK or their respective Subsidiaries thereunder. If such consent is not obtained, the Company, Echo, and MCK will cooperate in a mutually agreeable arrangement under which the Company would obtain the benefits and assume the obligations thereunder in accordance with this Agreement.

ARTICLE 4

R EPRESENTATIONS AND W ARRANTIES

Section 4.01. Representations and Warranties of Echo Holdco. Except as set forth in the Echo Disclosure Schedule delivered concurrently herewith, Echo Holdco represents and warrants to MCK and its Subsidiaries that:

(a) Existence and Activities .

(i) Each of Echo and Echo Holdco is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all corporate powers required to own, lease and operate its properties and assets and to carry on its businesses as now conducted. Each of Echo and Echo Holdco is duly qualified to do business as a foreign corporation or other foreign business entity and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified or to be in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Echo Business or prevent or delay the Closing beyond the End Date.

(ii) Each Echo Shareholder that is not a natural Person is duly organized, validly existing and (if applicable) in good standing under the laws of its jurisdiction of incorporation or formation and has all corporate (or comparable) powers required to own, lease and operate its properties and assets and to carry on its businesses as now conducted. Each Echo Shareholder that is not a natural Person is duly qualified to do business as a foreign corporation or other foreign business entity and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified or to be in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Echo Business or prevent or delay the Closing beyond the End Date.

(iii) Echo has been formed solely for the purpose of engaging in the Transactions and existing as a holding company of Units in the Company. Except as expressly provided in the LLC Agreement or this Agreement, Echo has not at any time after its formation been an obligor or guarantor under, or otherwise been subject to, any indebtedness and has not conducted any operations or owned any assets other than capital stock of Echo Holdco, which it will own as a result of the Transactions, and any assets or liabilities incidental to its ownership of capital stock of Echo Holdco or the Units in the Company and its status as a holding company.

(b) Authorization . The execution, delivery and performance by the Echo Parties of this Agreement and each of the Transaction Documents to which they are or will be a party, and the consummation of the transactions contemplated hereby and thereby, are within the Echo Parties’ corporate powers and have been duly authorized by all necessary corporate (or similar) action on the part of the Echo Parties. This Agreement constitutes a valid and binding agreement of the Echo Parties, and each such Transaction Document, when executed and assuming the due execution by the other parties thereto, will constitute a valid and binding agreement of the Echo Parties, in each case enforceable against the Echo Parties in accordance with its terms (subject to the Enforceability Exceptions). The execution, delivery and performance by each of the Echo Parties’ Affiliates, as applicable, of each of the Transaction Documents to which such Affiliate will be a party, and the consummation of the transactions contemplated hereby and thereby, are or will be within such Affiliate’s corporate (or similar) powers and have been or will be duly authorized by all necessary corporate (or similar) action on the part of such Affiliate. Each such Transaction Document, when executed and assuming the due execution by the other parties thereto, will constitute a valid and binding agreement of the applicable Affiliate of the Echo Parties, in each case enforceable against such Affiliate in accordance with its terms (subject to the Enforceability Exceptions).

(c) Governmental Authorization . The execution, delivery and performance by the Echo Parties of this Agreement and each of the Transaction Documents to which they are or will be a party, the execution, delivery and performance by each of the Echo Parties’ Affiliates, as applicable, of each of the Transaction Documents to which such Affiliate will be a party and the consummation of the transactions contemplated hereby and thereby, do not and will not require any authorization, consent, waiver, order, approval, clearance, registration or other action by, from or in respect of, filing with or notification to, any Governmental Authority, or observation, termination or expiration of any waiting period under Applicable Law (each, a “ Consent ”), other than (i) compliance with, and filings under, the HSR Act and foreign antitrust laws and (ii) any other Consents as to which the failure to take, make or obtain has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Echo Business.

(d) Noncontravention . The execution, delivery and performance by the Echo Parties of this Agreement and each of the Transaction Documents to which they are or will be a party, the execution, delivery and performance by each of the Echo Parties’ Affiliates, as applicable, of each of the Transaction Documents to which such Affiliate will be a party and the consummation of the transactions contemplated hereby and thereby do not and will not (i) violate the certificate of formation, partnership agreement or other similar organizational documents of any Echo Party or any of such Affiliates, (ii) assuming compliance with the matters referred to in Section 4.01(c), violate any Applicable Law, (iii) require any consent, waiver, notification to or other action by any Person under, constitute a default under, or give rise to any right of modification, termination, cancellation or acceleration (in each case, with or without notice or lapse of time or both) of any right or obligation or to a loss of any benefit under any provision of any Echo Material Contract or (iv) result in the creation or imposition of any Lien on the assets or properties of the Echo Business, except, in the case of clauses (ii) through (iv), as has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Echo Business.

(e) Capitalization; Indebtedness; Swaps and Derivatives .

(i) The authorized capital stock of Echo Holdco consists of 1,500,000 shares of common stock, par value $0.01 per share. As of the date hereof, the authorized capital stock of Echo consists of 1,000 shares of common stock, par value $0.001 per share. As of June 23, 2016, there were outstanding 1,309,569.84 shares of common stock, par value $0.01 per share, of Echo Holdco (the “ Echo Holdco Shares ”), and outstanding employee stock options (“ Echo Holdco Options ”) to purchase an aggregate of 149,688.25 Echo Holdco Shares. All of the Echo Holdco Shares are held by the Echo Shareholders as set forth on Section 4.01(e)(i) (and BX and H&F collectively hold in excess of a majority of the such Echo Holdco Shares) and all Echo Holdco Options are held by the Persons set forth on a schedule delivered separately to MCK (the “ Echo Optionholders ”). BX and H&F have and will have all power and authority (and agree to exercise such power and authority) necessary and advisable in connection with the actions contemplated by Section 5.19. All outstanding shares of capital stock of each of Echo Holdco and Echo have been, and all shares of each of Echo and Echo Holdco that may be issued in accordance with this Agreement after the date hereof will be, when issued in accordance with the respective terms thereof, duly authorized and validly issued, fully paid and non-assessable.

(ii) Except as disclosed pursuant to Section 4.01(e)(i) and except for changes since June 23, 2016 resulting from the exercise of Echo Holdco stock options outstanding on such date, there are no issued, reserved for issuance or outstanding (A) shares of capital stock or other voting securities of or ownership interests in Echo Holdco, (B) securities of Echo Holdco convertible into or exchangeable for shares of capital stock or other voting securities of or ownership interests in Echo Holdco, (C) warrants, calls, options or other rights to acquire from Echo Holdco, or other obligation of Echo Holdco

to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of Echo Holdco or (D) restricted shares, stock appreciation rights, performance units, contingent value rights, “phantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock of or voting securities of Echo Holdco (the items in clauses (A) through (D) being referred to collectively as the “ Echo Securities ”). There are no outstanding obligations of Echo Holdco or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the Echo Securities.

(iii) None of (A) the shares of capital stock of Echo Holdco or Echo or (B) Echo Securities are owned by any Subsidiary of Echo Holdco.

(iv) Section 4.01(f)(i) of the Echo Disclosure Schedule sets forth all of the outstanding indebtedness for borrowed money (including any guarantees with respect to borrowed money) of Echo Holdco and its Subsidiaries (other than intercompany indebtedness among entities comprising the Echo Business) as of the date of this Agreement. As of the Balance Sheet Date, there was approximately $3.0 billion in principal amount of Echo Holdco Debt outstanding, $10.8 million of outstanding obligations with respect to the data sublicense described in the Echo Form 10-K and $2.2 million of outstanding deferred financing obligations.

(v) The Echo Holdco Swaps and Derivatives are the only outstanding Swap Contract or other derivative contracts of Echo Holdco and its Subsidiaries.

(f) Subsidiaries.

(i) Each Subsidiary of Echo Holdco has been duly organized, is validly existing and (where applicable) in good standing under the laws of its jurisdiction of organization, has all organizational powers and all governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted, except for those licenses, authorizations, permits, consents and approvals the absence of which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Echo Business. Each such Subsidiary is duly qualified to do business as a foreign entity and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Echo Business. Section 4.01(f)(i) of the Echo Disclosure Schedule, sets forth a list of all Subsidiaries of Echo Holdco and their respective jurisdictions of organization as of the date hereof. There are no Subsidiaries of Echo.

(ii) All of the outstanding capital stock of or other voting securities of, or ownership interests in, each Subsidiary of Echo Holdco, is owned by Echo Holdco, directly or indirectly, free and clear of any Lien (other than Permitted Liens). As of June 24, 2016, there were no issued, reserved for issuance or outstanding (A) securities of Echo Holdco or any of its Subsidiaries convertible into, or exchangeable for, shares of capital stock or other voting securities of, or ownership interests in, any Subsidiary of

Echo Holdco, (B) warrants, calls, options or other rights to acquire from Echo Holdco or any of its Subsidiaries, or other obligations of Echo Holdco or any of its Subsidiaries to issue, any capital stock or other voting securities of, or ownership interests in, or any securities convertible into, or exchangeable for, any capital stock or other voting securities of, or ownership interests in, any Subsidiary of Echo Holdco or (C) restricted shares, stock appreciation rights, performance units, contingent value rights, “phantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock or other voting securities of, or ownership interests in, any Subsidiary of Echo Holdco (the items in clauses (A) through (C) being referred to collectively as the “ Echo Subsidiary Securities ”). There are no outstanding obligations of Echo Holdco or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the Echo Subsidiary Securities.

(g) Financial Statements .

(i) The financial statements for each of the two fiscal years ended December 31, 2013, 2014 and 2015 and the quarter ended March 31, 2016 filed by CHH with the SEC comply in all material respects with all applicable accounting requirements, and present fairly in all material respects in accordance with GAAP, consistently applied (except as may be indicated in the notes thereto), the financial condition of CHH as of the respective dates thereof and the results of operations thereof for the respective periods then ended (subject to normal and recurring year-end adjustments in the case of any interim statements). Echo Holdco does not engage in any operating or business activities, hold any assets or have any liabilities of any nature, except for its ownership of, and assets and liabilities incidental or related to, its wholly-owned Subsidiary, Change Healthcare Intermediate Holdings, Inc., which in turn, does not engage in any operating or business activities, hold any assets or have any liabilities of any nature, except for its ownership of or related to, and assets and liabilities incidental to its wholly-owned Subsidiary, CHH.

(ii) The financial statements of the Echo Business for the fiscal year ended December 31, 2015 and the quarter ended March 31, 2016, in each case previously provided to MCK, pro forma for the Echo Connect Separation (the “ Echo Pro Forma Financial Statements ”), present fairly in all material respects the financial condition of the Echo Business as of the respective dates thereof and the results of operations thereof for the respective periods then ended.

(h) Absence of Certain Changes .

(i) Since the Balance Sheet Date, (x) other than with respect to the Echo Connect Separation and the other transactions expressly contemplated hereby or as expressly permitted by Section 5.01, the Echo Business has been, and will be, conducted in all material respects in the ordinary course of business consistent with past practice and (y) there has not been any event, occurrence, development or state of circumstances or facts that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Echo Business.

(ii) From the Balance Sheet Date through the date hereof, other than with respect to the Echo Connect Separation, there has not been any action taken by Echo Holdco or any of its Subsidiaries that, if taken during the period from the date hereof through the Closing Date would constitute a breach of Section 5.01.

(i) No Undisclosed Liabilities . (x) There are no liabilities of the Echo Business, whether accrued, contingent, absolute, determined, determinable or otherwise, and (y) to the knowledge of the Echo Parties there is no existing condition, situation or set of circumstances which could reasonably be expected to result in such a liability, other than in each case:

(i) liabilities to the extent provided for in the Balance Sheet of the Echo Business or disclosed in the notes thereto;

(ii) liabilities incurred in the ordinary course of business consistent with past practice between the Balance Sheet Date and the Closing;

(iii) liabilities incurred pursuant to this Agreement and the other Transaction Documents and liabilities arising under agreements and commitments entered into in accordance with Section 5.01 between the date hereof and the Closing;

(iv) liabilities set forth on Section 4.01(i)(iv) of the Echo Disclosure Schedule; and

(v) other undisclosed liabilities which, individually or in the aggregate, are not material to the Echo Business, taken as a whole.

(j) Material Contracts .

(i) None of Echo, Echo Holdco or any of its Subsidiaries, with respect to the Echo Business, is a party to or bound by:

(A) any agreement for the lease or sublease (whether of real or personal property) providing for annual payments of $750,000 or more;

(B) any agreement for the purchase of materials, supplies, goods, services, equipment or other assets providing for annual payments of $3,000,000 or more, including any independent contractor agreements, but excluding any employment agreements;

(C) any sales, distribution or other similar agreement providing for the sale of materials, supplies, goods, services, equipment or other assets representing annual payments to the Company in fiscal year 2015 of (i) $3.9 million or more with respect to its ten (10) largest provider customers, (ii) $2.7 million or more with respect to its ten (10) largest pharmacy customers and (iii) $10.0 million or more with respect to its ten (10) largest payer customers;

(D) any equity partnership, joint venture or other similar agreement or arrangement that is material to the Echo Business;

(E) any agreement relating to the acquisition or disposition of any business (whether by merger, sale of stock, sale of assets or otherwise) within the three years preceding the date hereof involving aggregate consideration of $5,000,000 or more;

(G) any agreement that restricts, prohibits or impairs (or purports to restrict, prohibit or impair), or has or would reasonably be expected to have the effect of prohibiting, restricting or impairing, any material business practice of the Echo Business (or the Company after the Closing), any material acquisition of property by the Echo Business (or the Company after the Closing) or the freedom, in any material respect, of the Echo Business (or the Company after the Closing) to conduct the following activities (a) engage in any line of business, (b) sell, license or otherwise distribute services or products in any geographic area or (c) compete with any Person (including, for the avoidance of doubt, any material agreement that includes (I) grants by the Echo Business of exclusive rights, exclusive territories, exclusive licenses or “most favored party” rights, (II) any non-competition or non-solicitation restrictions, (III) any rights of first refusal or rights of first offer or (IV) any limits on the use of any of the Echo Business’ Intellectual Property Rights);

(H) any material agreement (excluding licenses for commercial off the shelf computer software that are generally available on nondiscriminatory pricing terms) pursuant to which the Echo Business obtains the right to use, or a covenant not to be sued under, any Intellectual Property Right;

(I) any agreement pursuant to which any Person is authorized to use, or receives a covenant not to be sued under, any material Echo Owned Intellectual Property and/or Echo Licensed Intellectual Property, other than those contained within customer agreements entered into in the ordinary course of business consistent with past practice;

(J) any agreement pursuant to which the Echo Business has provided or leased, or agreed to provide or lease, any source code containing or embodying any Software included in the Echo Owned Intellectual Property and/or Echo Licensed Intellectual Property to a third party (including any contingent right to receive or lease source code containing or embodying any Software included in the Echo Owned Intellectual Property and/or Echo Licensed Intellectual Property, whether pursuant to an escrow arrangement or otherwise);

(K) any agreement relating to the employment, severance, retention or indemnification of any service provider to the Echo Business with a base salary or base compensation in excess of $300,000 per year, other than those that can be terminated without liability to the Echo Business;

(L) any agreement with or for the benefit of Echo Connect or any Subsidiary of Echo Connect with obligations that continue following the Closing (other than the Transaction Documents);

(M) any agreement between Echo, Echo Holdco or any Subsidiary of Echo, Echo Holdco and the Echo Shareholders or any of their other Affiliates (including their respective portfolio companies), other than agreements with such portfolio companies entered into on arm’s length terms and in the ordinary course of business for the purchase or sale of materials, supplies, goods, services (excluding any employment agreements), equipment or other assets that are generally available for purchase by business entities in the healthcare information technology industry on substantially similar terms from non-Affiliated suppliers or providers and which provide for annual payments of less than $1.0 million; or

(N) any agreement with any Governmental Authority relating to corporate integrity, deferred prosecution, or the Echo Business’ material non-compliance with Health Care Laws.

(ii) Each agreement required to be disclosed pursuant to this Section 4.01(j) (each, an “ Echo Material Contract ”) is a valid and binding agreement of Echo Holdco or the applicable Subsidiary of Echo Holdco and is in full force and effect, and none of Echo Holdco or any of its Subsidiaries or, to the knowledge of the Echo Parties, any other party thereto is in default or breach in any respect under the terms of such Echo Material Contract, except for any such defaults or breaches which would not reasonably be expected, individually or in the aggregate, to be material to the Echo Business, taken as a whole. True and complete copies of each Echo Material Contract, and all amendments thereto, in each case subject to the redaction of certain information, have been delivered to MCK or its outside counsel.

(k) Litigation . There is no, and since January 1, 2015 there has not been any, action, suit, investigation or proceeding pending against or, to the knowledge of the Echo Parties, threatened against Echo, Echo Holdco, the Echo Shareholders or any of their respective Subsidiaries which, if determined adversely to Echo, Echo Holdco or any of their respective Affiliates, has had or would reasonably be expected to result in injunctive relief in respect of the Echo Business or liability, individually or in the aggregate, to the Echo Business in excess of $5,000,000.

(l) Compliance with Laws .

(i) Echo Holdco and its Subsidiaries have been, since January 1, 2015, in compliance with Applicable Law, except where the failure to be in such compliance would not, individually or in the aggregate, reasonably be expected to be material to the Echo Business. Echo Holdco and its Subsidiaries have all requisite authority and other power and all governmental or judicial permits, certificates, licenses, approvals and other authorizations required to carry on and conduct their businesses as presently conducted except where the failure to have such authority, power, licenses, approvals and authorizations would not reasonably be expected to be, individually or in the aggregate, material the Echo Business.

(ii) Without limiting the foregoing, except as would not reasonably be expected to be, individually or in the aggregate, material on the Echo Business, neither Echo Holdco, any of its Subsidiaries nor any director or officer thereof nor, to the Echo Parties’ knowledge, any employee or agent of Echo Holdco or any of its Subsidiaries has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful payments relating to political activity, (ii) directly or indirectly, used, given, offered, promised or authorized to give any money or thing of value (except for payments permitted by 15 U.S.C. Section 78dd-2(b) or (c)) to any foreign or domestic government official or to any foreign or domestic political party or campaign (collectively, “ Government Official ”), for the purpose of influencing an act or decision of the Government Official, or inducing the Government Official to use his or her influence or position to affect any government act or decision to obtain or retain business of Echo Holdco or any of its Subsidiaries or (iii) directly or indirectly, made any unlawful payment. Except as would not reasonably be expected to be, individually or in the aggregate, material to the Echo Business, all books and records of Echo Holdco and its Subsidiaries accurately and fairly reflect, in reasonable detail, all transactions and dispositions of funds or assets, and there have been no false or fictitious entries made in the books or records of Echo Holdco or any of its Subsidiaries relating to any illegal payment or secret or unrecorded fund, and neither Echo Holdco nor any of its Subsidiaries has established or maintained a secret or unrecorded fund.

(m) Properties .

(i) Section 4.01(m)(i) of the Echo Disclosure Schedule correctly describes all real property that Echo Holdco or its Subsidiaries own, lease, sublease, use, license or operate primarily for the Echo Business.

(ii) Echo Holdco and its Subsidiaries have good title to, or in the case of any leased real property or tangible personal property, have valid leasehold interests in, and upon Closing, the Company will have good title to, or in the case of any leased real property or tangible personal property, valid leasehold interests in, all tangible property

and assets of the Echo Business, except where the failure to have such good title or valid leasehold interests would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Echo Business. No such property or asset of Echo Holdco or its Subsidiaries is subject to any Lien, except for Permitted Liens.

(n) Intellectual Property . Except as set forth in Section 4.01(n) of the Echo Disclosure Schedules and for rights and licenses contemplated to be provided to the Company pursuant to the Intellectual Property Licensing Agreement and Transition Services Agreements and as would not reasonably be expected to be, individually or in the aggregate, material to the Echo Business, (i) Echo Holdco and each of its Subsidiaries owns, or has a valid and enforceable license to use, all the Intellectual Property Rights necessary to, or used or held for use in, the conduct of the Echo Business as currently conducted, (ii) Echo Holdco and its Subsidiaries (and after the Echo Contributions and Transfers, the Company will be) are the sole and exclusive owners of all Echo Owned Intellectual Property and hold all of their right, title and interest in and to all Echo Owned Intellectual Property and Echo Licensed Intellectual Property, free and clear of all Liens, and, to the knowledge of the Echo Parties, all such Echo Owned Intellectual Property and Echo Licensed Intellectual Property are valid, subsisting and enforceable, (iii) to the knowledge of the Echo Parties, the conduct of the Echo Business as currently conducted does not infringe, misappropriate or otherwise violate the Intellectual Property Rights of any Person, (iv) to the knowledge of the Echo Parties, no Person has challenged, infringed, misappropriated or otherwise violated any of the Echo Owned Intellectual Property within the three years preceding the date hereof, (v) neither Echo Holdco nor any of its Subsidiaries has received any written notice or otherwise has knowledge of any pending claim, action, suit, order or proceeding with respect to any Echo Owned Intellectual Property and/or Echo Licensed Intellectual Property or alleging that any services provided, processes used or products manufactured, used, imported, offered for sale or sold by Echo Business infringes, misappropriates or otherwise violates any Intellectual Property Rights of any Person, (vi) the consummation of the transaction contemplated by this Agreement will not (x) alter, encumber, impair or extinguish any Echo Owned Intellectual Property and/or Echo Licensed Intellectual Property and will not result in the breach of, or create on behalf of any third party, the right to terminate or modify any rights in or to such owned and licensed Intellectual Property Rights or (y) impair the Company to develop, use, sell, license or dispose of, or to bring any action for the infringement of, any Echo Owned Intellectual Property and/or Echo Licensed Intellectual Property, (vii) Echo Holdco and its Subsidiaries have taken reasonable steps in accordance with normal industry practice to maintain the confidentiality of all Trade Secrets owned, used or held for use by Echo Holdco or any of its Subsidiaries and, to the knowledge of the Echo Parties, no such Trade Secrets have been disclosed other than to employees, representatives and agents of Echo Holdco or any of its Subsidiaries all whom are bound by written confidentiality agreements, (viii) the IT Assets of Echo Holdco and its Subsidiaries operate and perform in a manner that permits Echo Holdco to conduct Echo Business as currently conducted and to the knowledge of the Echo Parties, no Person has gained unauthorized access to such IT Assets and no Personal Information used in the Core MTS Business has been lost, inappropriately accessed, misappropriated or misused and (ix) Echo Holdco and its Subsidiaries have implemented reasonable backup and disaster recovery technology consistent with industry practices.

(o) Sufficiency of Assets . The entities and other assets, licenses, data, capabilities, systems, properties and businesses of Echo Holdco and its Subsidiaries to be contributed or otherwise transferred to the Company pursuant to the Echo Contributions and Transfers constitute all of the assets, properties and businesses of Echo Holdco and its Subsidiaries owned, held or used by Echo, Echo Holdco and their respective Subsidiaries in the conduct of the Echo Business, and are sufficient for the Company and its Subsidiaries to continue, in all material respects, the conduct of the Echo Business after the Closing in the same manner as conducted by the Echo Parties and their Subsidiaries prior to the Closing.

(p) Permits . Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Echo Business, Echo Holdco and its Subsidiaries possess all permits, approvals, orders, authorizations, consents, licenses, certificates, franchises, exemption of, or filings or registrations with, or issued by, any Governmental Authority (“ Permits ”) necessary for the operation of the Echo Business as currently conducted, each such Permit is valid and in full force and effect, and there are no actions pending which would reasonably be expected to result in the revocation or termination of any material Permit required to own and operate the Echo Business as conducted as of the date hereof.

(q) Echo Participating Employees .

(i) All services necessary to continue, in all material respects, the conduct of the Echo Business in the same manner as currently conducted, and as currently planned to be conducted, by Echo Holdco and its Subsidiaries prior to the Closing are provided by Echo Participating Employees or will be provided pursuant to the Transition Services Agreements.

(ii) Neither Echo Holdco nor any of its Subsidiaries is a party to or subject to, or is currently negotiating in connection with entering into, any collective bargaining or other labor agreement applicable to any Echo Participating Employee in the United States or, to the knowledge of the Echo Parties, any material, non-customary collective bargaining, works council or other labor agreement applicable to any Echo Participating Employee outside the United States, and, to the knowledge of the Echo Parties, there has not been any organizational campaign, petition or other unionization activity seeking recognition of a collective bargaining unit relating to any Echo Participating Employee.

(r) Employee Benefit Plans .

(i) Section 4.01(r)(i) of the Echo Disclosure Schedule contains a correct and complete list identifying each material Employee Plan which is maintained, administered, contributed to or required to be contributed to by the Echo Business or any ERISA Affiliate thereof and covers any current or former service provider to the Echo Business or any of its Subsidiaries, or with respect to which Echo Holdco has or may have any liability after the Closing (the “ Echo Plans ”). With respect to each Echo Plan, true and

complete copies of the following documents, to the extent applicable, have been furnished to MCK: (i) if the plan has been reduced to writing, the plan document together with all material amendments thereto, (ii) if the plan has not been reduced to writing, a written summary of all material plan terms, (iii) each trust, custodial, administrative, investment management and any similar agreements and each insurance policy or contract, (iv) each summary plan description, employee handbook or similar employee communications, (v) the most recent determination letter from the Internal Revenue Service and any related correspondence, and any pending request for determination with respect to the plan’s qualification, and (vi) any material notices, letters or other correspondence from the Internal Revenue Service or the U.S. Department of Labor.

(ii) Neither Echo Holdco nor any ERISA Affiliate nor any predecessor thereof sponsors, maintains or contributes to or is required to contribute to, or has in the past sponsored, maintained, contributed to or been required to contribute to, any Employee Plan subject to Title IV of ERISA or Sections 412 or 430 of the Code that is or would become a liability of the Company.

(iii) Neither Echo Holdco nor any ERISA Affiliate nor any predecessor thereof contributes to or is required to contribute to, or has in the past contributed to or been required to contribute to, any Multiemployer Plan that is or would become a liability of the Company.

(iv) Each Echo Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter upon which it can rely, or has pending or has time remaining in which to file, an application for such determination from the Internal Revenue Service, and the Echo Parties do not have any knowledge of any reason why any such determination letter should be revoked or not be reissued. Each Echo Plan has been operated and maintained in compliance in all material respects with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations, including ERISA and the Code, which are applicable to such Echo Plan.

(v) Neither the execution of this Agreement nor the consummation of the Transactions, either alone or together with any other event, will (i) result in any severance or other payment or benefit to any current or former service provider to the Echo Business that would not be deductible pursuant to the terms of Section 280G of the Code, (ii) accelerate the time of payment or vesting or increase the amount of compensation or benefits due under any Echo Plan, (iii) entitle any person to severance pay or any other payment, (iv) require the funding of any Echo Plan, or (v) result in any forgiveness of indebtedness to any current or former service provider to the Echo Business.

(vi) The Echo Business does not have any liability in respect of post-retirement health, medical or life insurance benefits for current or former service providers to the Echo Business that would become a liability of the Company, except as required to avoid an excise tax under Section 4980B of the Code at the sole cost of the participant.

(vii) There is no material action, suit, investigation, audit or proceeding pending against or involving or, to the knowledge of the Echo Parties, threatened against or involving, any Echo Plan before any Governmental Authority, other than routine claims for benefits, that would become a liability of the Company.

(s) Environmental Matters . Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Echo Business:

(i) no written notice, order, complaint or penalty has been received by Echo Holdco or any of its Subsidiaries arising out of any environmental Applicable Laws, and there are no judicial, administrative or other actions, suits or proceedings pending or, to the knowledge of the Echo Parties, threatened which allege a violation by Echo Holdco or any of its Subsidiaries of any environmental Applicable Laws;

(ii) Echo Holdco and its Subsidiaries have all environmental permits necessary for its operations to comply with all applicable environmental Applicable Laws and is in compliance with the terms of such permits; and

(iii) the operations of the Echo Business are in compliance with the terms of environmental Applicable Laws.

Except set forth in this Section 4.01(s), no representations or warranties are being made with respect to matters arising under or relating to environmental matters.

(t) Taxes .

(i) Each of Echo Holdco and its Subsidiaries has (A) timely filed all material Tax Returns required to be filed by it and (B) timely paid all Taxes shown as due on such Tax Returns. All such Tax Returns were correct and complete in all material respects. Each of Echo Holdco and its Subsidiaries has withheld and paid all material Taxes required to have been withheld and paid by it in connection with any amounts paid or owing to any Person.

(ii) There are no Liens for Taxes (except for Taxes not yet due or for which adequate reserves have been established on the Balance Sheet of the Echo Business in accordance with GAAP) upon any of the assets or properties included in the Echo Business.

(iii) There are no U.S. federal, state, local or non-U.S. Tax audits currently pending with regard to any material Taxes or Tax of Echo Holdco or any of its Subsidiaries in which a Taxing Authority has raised an issue that relates to the Echo Business, and to the knowledge of the Echo Parties, no such Tax audit is threatened. To the knowledge of the Echo Parties, no claim has ever been made by a Taxing Authority in a jurisdiction where Echo Holdco or any of its Subsidiaries does not file Tax Returns that it is or may be subject to taxation by that jurisdiction as a consequence of operating the Echo Business.

(iv) None of Echo Holdco and its Subsidiaries (A) has, during the last eight years, been a member of an affiliated, consolidated, combined or unitary group (other than any such group the common parent of which was Echo Holdco or a Subsidiary of Echo Holdco) or (B) during the two-year period ending on the date hereof, was a distributing corporation or a controlled corporation in a transaction intended to be governed by Section 355 of the Code.

(v) None of Echo Holdco and its Subsidiaries will be required to include in or for, or allocate with respect to, a Post-Closing Tax Period a material amount of taxable income attributable to income economically realized in a Pre-Closing Tax Period (nor has any material deduction economically attributable to a Post-Closing Tax Period been claimed in a Pre-Closing Tax Period), including as a result of any (A) change in accounting method made prior to the Closing Date, (B) closing or similar agreement with any Tax authority entered into prior to the Closing, (C) installment sale or open transaction disposition made on or prior to the Closing Date, (D) election under Section 108(i) of the Code or (E) prepaid amount received prior to the Closing Date.

(vi) None of Echo Holdco and its Subsidiaries is a party to any understanding or arrangement described in Section 6662(d)(C)(ii) of the Code, or has participated in a “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4.

(vii) Notwithstanding any other provision of this Agreement, nothing in this Agreement (including this Section 4.01(t) or otherwise) shall be construed as providing a representation or warranty with respect to the existence, amount, expiration date or limitations on (or availability of) any Tax asset or method of Tax accounting of any of Echo Holdco or its Subsidiaries for a Post-Closing Tax Period.

(u) Insurance . Each of Echo Holdco and its Subsidiaries either have insurance policies or are named insureds under insurance policies of its Affiliates, in such amounts and against such risks, as would reasonably be expected with regard to the nature and size of the Echo Business and as is required by Applicable Law; all such insurance policies are in full force and effect; and to the knowledge of the Echo Parties, neither Echo Holdco nor any of its Subsidiaries (or the applicable Affiliate) has received notice of cancellation or termination with respect to any such insurance policies. Section 4.01(u) of the Echo Disclosure Schedule sets forth a list of each such insurance policy applicable to Echo Holdco and its Subsidiaries, including type and identifying policy information.

(v) Acquisition for Investment. Echo is acquiring the Units for investment for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof. Echo and the Echo Shareholders (either alone or together with their advisors) have sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of their investment in the Company and are capable of bearing the economic risks of such investment.

(w) Accredited Investor Status . Echo is an “accredited investor,” as such term is defined in Rule 501(a) promulgated under the Securities Act, is sophisticated in financial matters and is able to evaluate the risks and benefits of the investment in the Units to be issued to it in accordance with Article 3.

(x) Full Information . Echo is an informed and sophisticated investor, and has engaged expert advisors experienced in transactions of the type contemplated by this Agreement and the other Transaction Documents. Echo has been given the opportunity to ask questions of and receive answers from the Company and MCK concerning the Core MTS Business, the Transactions and all other related matters. Echo, to its knowledge, has been furnished with, and has evaluated, all information that it deems necessary, desirable and appropriate to evaluate the merits and risks of the Transactions, and has received such legal, financial and other advice as deemed by it to be necessary, desirable and appropriate to enable it to make an informed decision with respect to the execution, delivery and performance of this Agreement and the other Transaction Documents.

(y) Finders ’ Fees. Except for the Echo Parties’ financial advisor, a copy of whose engagement agreement has been provided to the Company and MCK, there is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of Echo or the Echo Parties or any of their respective Subsidiaries who might be entitled to any fee or commission from Echo Holdco or any of its Subsidiaries in connection with the transactions contemplated by this Agreement.

(z) Affiliate Transactions. Except for the matters disclosed on Section 4.01(z) and Section 4.01(j)(M) of the Echo Disclosure Schedule, no Affiliate of Echo or Echo Holdco and no officer or director (or equivalent) of Echo Holdco or any of its Subsidiaries (or, to the knowledge of the Echo Parties, any Family Member of any such Person who is an individual or any entity in which any such Person or any such Family Member thereof owns a material interest): (a) has any material interest in any material asset used in connection with the Echo Business or (b) has engaged in any material transaction, arrangement or understanding with the Echo Business (other than compensation provided to officers and directors (or equivalent) in the ordinary course of business).

(aa) Customers and Suppliers. Section 4.01(aa) of the Echo Disclosure Schedule sets forth a complete and accurate list of (a) the ten (10) largest customers of the Echo Business (measured by aggregate billings) during the fiscal year ended December 31, 2015 and (b) the ten (10) largest suppliers of materials, products or services to the Echo Business (measured by the aggregate amount purchased by the Echo Business) during the fiscal year ended December 31, 2015. Except as disclosed on Section 4.01(aa) of the Echo Disclosure Schedule, as of the date of this Agreement none of such customers or suppliers has cancelled, terminated or otherwise materially altered its relationship with the Echo Business (including any material reduction in the rate or amount of sales or purchases or material increase in the prices charged or paid, as the case may be) or notified in writing the Echo Business of any intention to do any of the foregoing.

(bb) Existing Echo TRAs. No Early Termination Payment (as defined in the Existing Echo TRAs, respectively, an “ Early Termination Payment ”) is currently due under any Existing Echo TRA, and no event has occurred as a result of which an Early Termination Payment will become due under any Existing Echo TRA.

(cc) No Other Representations and Warranties.

(i) Except for the representations and warranties set forth in this Agreement and the Transaction Documents and certificates delivered in connection the with Transactions, each of the Company and MCK acknowledges and agrees that no representation or warranty of any kind whatsoever, express or implied, at law or in equity, is made or shall be deemed to have been made by or on behalf of Echo or the Echo Parties to the Company or MCK, and Echo and the Echo Parties hereby disclaim any such representation or warranty, whether by or on behalf of Echo Holdco, and notwithstanding the delivery or disclosure to the Company or MCK, or any of their Representatives or Affiliates of any documentation or other information by the Echo Parties or any of their Representatives or Affiliates with respect to any one or more of the foregoing.

(ii) Each of the Company and MCK also acknowledges and agrees that, except for the representations and warranties set forth in this Agreement and the Transaction Documents and certificates delivered in connection the with Transactions, the Echo Parties make no representation or warranty with respect to any projections, forecasts or other estimates, plans or budgets of future revenues, expenses or expenditures, future results of operations (or any component thereof), future cash flows (or any component thereof) or future financial condition (or any component thereof) of the Echo Business or the future business or the operations or affairs of the Echo Business heretofore or hereafter delivered to or made available to the Company, MCK or their respective Representatives or Affiliates.

Section 4.02 . Representations and Warranties of MCK. Except as set forth in the MCK Disclosure Schedule delivered concurrently herewith, MCK represents and warrants to the Echo Parties that:

(a) Existence and Activities .

(i) MCK is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all corporate powers required to own, lease and operate its properties and assets and to carry on its businesses as now conducted. MCK is duly qualified to do business as a foreign corporation or other foreign business entity and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified or to be in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Core MTS Business or prevent or delay the Closing beyond the End Date.

(ii) At Closing, each of the MCK Contributed Entities shall be duly organized, validly existing and (if applicable) in good standing under the laws of its jurisdiction of incorporation or formation and shall have all corporate (or comparable) powers required to own, lease and operate its properties and assets and to carry on its businesses as then conducted. Each of the MCK Contributed Entities shall be duly qualified to do business as a foreign corporation or other foreign business entity and shall be in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified or to be in good standing has would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Core MTS Business or prevent or delay the Closing beyond the End Date.

(b) Authorization . The execution, delivery and performance by MCK of this Agreement and each of the Transaction Documents to which it is or will be a party, and the consummation of the transactions contemplated hereby and thereby, is within MCK’s corporate powers and has been duly authorized by all necessary corporate action on the part of MCK. This Agreement constitutes a valid and binding agreement of MCK, and each such Transaction Document, when executed and assuming the due execution by the other parties thereto, will constitute a valid and binding agreement of MCK, in each case enforceable against MCK in accordance with its terms (subject to the Enforceability Exceptions). The execution, delivery and performance by each of MCK’s Affiliates, as applicable, of each of the Transaction Documents to which such Affiliate will be a party, and the consummation of the transactions contemplated hereby and thereby, are within such Affiliate’s corporate (or similar) powers and have been or will be duly authorized by all necessary corporate (or similar) action on the part of such Affiliate. Each such Transaction Document, when executed and assuming the due execution by the other parties thereto, will constitute a valid and binding agreement of the applicable Affiliate of MCK, in each case enforceable against such Affiliate in accordance with its terms (subject to the Enforceability Exceptions).

(c) Governmental Authorization . The execution, delivery and performance by MCK of this Agreement and each of the Transaction Documents to which it is or will be a party, the execution, delivery and performance by each of MCK’s Affiliates, as applicable, of each of the Transaction Documents to which such Affiliate will be a party and the consummation of the transactions contemplated hereby and thereby, do not and will not require any Consent, other than (i) compliance with, and filings under, the HSR Act and foreign antitrust laws and (ii) any other Consents as to which the failure to take, make or obtain has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Core MTS Business.

(d) Noncontravention . The execution, delivery and performance by MCK of this Agreement and each of the Transaction Documents to which it is or will be a party, the execution, delivery and performance by each of MCK’s Affiliates, as applicable, of each of the Transaction Documents to which such Affiliate will be a party and the consummation of the transactions contemplated hereby and thereby do not and will not (i) violate the certificate of formation,

partnership agreement or other similar organizational documents of MCK or any of such Affiliates, (ii) assuming compliance with the matters referred to in Section 4.02(c) violate any Applicable Law, (iii) require any consent, waiver, notification to or other action by any Person under, constitute a default under, or give rise to any right of modification, termination, cancellation or acceleration (in each case, with or without notice or lapse of time or both) of any right or obligation or to a loss of any benefit under any provision of any MCK Material Contract, or (iv) result in the creation or imposition of any Lien on the assets or properties of the Core MTS Business, except, in the case of clauses (ii) through (iv), as has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Core MTS Business.

(e) MCK Contributed Entities; Indebtedness.

(i) All of the outstanding capital stock of or other voting securities of, or ownership interests in, the MCK Contributed Entities shall be owned directly or indirectly by MCK at the Closing, free and clear of any Lien, other than Permitted Liens. As of Closing, there shall be no issued, reserved for issuance or outstanding (A) securities of the MCK Contributed Entities or any of their respective Subsidiaries convertible into, or exchangeable for, shares of their capital stock or other voting securities, or ownership interests, (B) warrants, calls, options or other rights to acquire from the MCK Contributed Entities or any of their Subsidiaries, or other obligations of the MCK Contributed Entities or any of their Subsidiaries to issue, any capital stock or other voting securities of, or ownership interests in, or any securities convertible into, or exchangeable for, any capital stock or other voting securities, or ownership interests or (C) restricted shares, stock appreciation rights, performance units, contingent value rights, “phantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock or other voting securities of, or ownership interests in, the MCK Contributed Entities (the items in clauses (A) through (C) being referred to collectively as the “ MCK Contributor Securities ”). There are no outstanding obligations of the MCK Contributed Entities or any of their Subsidiaries to repurchase, redeem or otherwise acquire any of the MCK Contributor Securities.

(ii) Section 4.02(e)(ii) of the MCK Disclosure Schedule sets forth all of the outstanding indebtedness for borrowed money (including any guarantees with respect to borrowed money) of the MCK Contributed Entities (other than (i) intercompany indebtedness among the MCK Contributed Entities and (ii) intercompany indebtedness among any the MCK Contributed Entity, on the one hand, and MCK or any of its Affiliates (other than the MCK Contributed Entities), on the other hand; provided that, in the case of clause (ii) any such indebtedness shall be paid off in full at or prior to the Closing).

(f) Financial Statements . Except as set forth in Section 4.02(f) of the MCK Disclosure Schedule, the unaudited financial statements of the Core MTS Business for the fiscal years ended March 31, 2015 and 2016 provided by MCK to the Echo Parties (the “ Unaudited MTS Financials ”) present fairly in all material respects the financial condition of the Core MTS Business as of March 31, 2015 and 2016 and results of operations and cash flows for the two years ended March 31 2016.

(g) Absence of Certain Changes .

(i) Since the Balance Sheet Date, (x) other than with respect to the MCK Pre-Closing Restructuring and the other transactions expressly contemplated hereby or as expressly permitted by Section 5.02, the Core MTS Business has been and will be conducted in all material respects in the ordinary course of business consistent with past practice and (y) there has not been any event, occurrence, development or state of circumstances or facts that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Core MTS Business.

(ii) From the Balance Sheet Date through the date hereof, there has not been any action taken by MCK or any of its Affiliates that, if taken during the period from the date hereof through the Closing Date would constitute a breach of Section 5.02.

(h) No Undisclosed Liabilities . (x) There are no liabilities of the Core MTS Business, whether accrued, contingent, absolute, determined, determinable or otherwise, and (y) to the knowledge of MCK there is no existing condition, situation or set of circumstances which could reasonably be expected to result in such a liability, other than in each case:

(i) liabilities to the extent provided for in the Balance Sheet of the Core MTS Business or disclosed in the notes thereto;

(ii) liabilities incurred in the ordinary course of business consistent with past practice between the Balance Sheet Date and the Closing;

(iv) liabilities set forth on Section 4.02(h)(iv) of the MCK Disclosure Schedule; and

(v) other undisclosed liabilities which, individually or in the aggregate, are not material to the Core MTS Business, taken as a whole.

(i) Material Contracts .

(i) None of the Core MTS Business or any of its Subsidiaries is a party to or bound by:

(A) any agreement for the lease or sublease (whether of real or personal property) providing for annual payments of $750,000 or more;

(B) any agreement for the purchase of materials, supplies, goods, services, equipment or other assets providing for annual payments of $3.0 million or more in MCK’s fiscal year 2016, including any independent contractor agreements, but excluding any employment agreements;

(C) any sales, distribution or other similar agreement providing for the sale of materials, supplies, goods, services, equipment or other assets that provides for annual payments of $5.0 million or more in MCK’s fiscal year 2016;

(D) any equity partnership, joint venture or other similar agreement or arrangement that is material to the Core MTS Business;

(F) any agreement relating to indebtedness for borrowed money, the deferred purchase price of property or capital leases (in either case, whether incurred, assumed, guaranteed or secured by any asset) involving payment obligations of $1,500,000 or more (other than (i) intercompany indebtedness among the MCK Contributed Entities and (ii) intercompany indebtedness among any the MCK Contributed Entity, on the one hand, and MCK or any of its Affiliates (other than the MCK Contributed Entities), on the other hand; provided that, in the case of clause (ii) any such indebtedness shall be paid off in full at or prior to the Closing);

(G) any agreement that restricts, prohibits or impairs (or purports to restrict, prohibit or impair), or has or would reasonably be expected to have the effect of prohibiting, restricting or impairing, any material business practice of the Core MTS Business (or the Company after the Closing), any material acquisition of property by the Core MTS Business (or the Company after the Closing) or limits the freedom, in any material respect, of the Core MTS Business (or the Company after the Closing) to conduct the following activities (i) engage in any line of business, (ii) sell, license or otherwise distribute services or products in any geographic area or (iii) compete with any Person (including, for the avoidance of doubt, any material agreement that includes (I) grants by the Core MTS Business of exclusive rights, exclusive territories, exclusive licenses or “most favored party” rights, (II) any non-competition or non-solicitation restrictions, (III) any rights of first refusal or rights of first offer or (IV) any limits on the use of any of the MCK Owned Intellectual Property and/or MCK Licensed Intellectual Property);

(H) any material agreement (excluding licenses for commercial off the shelf computer software that are generally available on nondiscriminatory pricing terms) pursuant to which the Core MTS Business obtains the right to use, or a covenant not to be sued under, any Intellectual Property Right;

(I) any agreement pursuant to which any Person is authorized to use, or receives a covenant not to be sued under, any material MCK Owned Intellectual Property and/or MCK Licensed Intellectual Property, other than those contained within customer agreements entered into in the ordinary course of business consistent with past practice;

(J) any agreement pursuant to which the Core MTS Business has provided or leased, or agreed to provide or lease, any source code containing or embodying any Software included in MCK Owned Intellectual Property and/or MCK Licensed Intellectual Property to a third party (including any contingent right to receive or lease source code containing or embodying any Software included in the MCK Owned Intellectual Property and/or MCK Licensed Intellectual Property, whether pursuant to an escrow arrangement or otherwise);

(K) any agreement relating to the employment, severance, retention or indemnification of any service provider of the Core MTS Business with a base salary or base compensation in excess of $300,000 per year, other than those that can be terminated without liability to the Core MTS Business;

(L) any agreement with or for the benefit of MCK or any Affiliate of MCK with obligations that continue following the Closing (other than the Transaction Documents);

(M) any agreement with or for the benefit of MCK or any Affiliate of MCK with obligations that continue following the Closing (other than the Transaction Documents), other than agreements with MCK or any Affiliate of MCK entered into on arm’s length terms and in the ordinary course of business for the purchase or sale of materials, supplies, goods, services (excluding any employment agreements), equipment or other assets that are generally available for purchase by business entities in the healthcare information technology industry on substantially similar terms from non-Affiliated suppliers or providers and which provide for annual payments of less than $1.0 million; or

(N) any agreement with any Governmental Authority relating to corporate integrity, deferred prosecution, or the Core MTS Business’ or MCK’s material non-compliance with Health Care Laws.

(ii) Each agreement required to be disclosed pursuant to this Section 4.02(i) (each, a “ MTI Material Contract ”) is a valid and binding agreement of the Core MTS Business and is in full force and effect, and none of the Core MTS Business, or, to the knowledge of MCK, any other party thereto is in default or breach in any respect under the terms of such MTI Material Contract, except for any such defaults or breaches which would not reasonably be expected, individually or in the aggregate, to be material to the Core MTS Business, taken as a whole. True and complete copies of each MTI Material Contract, and all amendments thereto, in each case subject to the redaction of certain information, have been delivered to MCK or its outside counsel.

(j) Litigation . There is no, and since January 1, 2015 there has not been any, action, suit, investigation or proceeding pending against or, to the knowledge of MCK, threatened against Core MTS Business, MCK or its Affiliates which, if determined adversely to Core MTS Business, MCK or its Affiliates, has had or would reasonably be expected to result in injunctive relief or liability, individually or in the aggregate, to the Core MTS Business in excess of $5,000,000.

(k) Compliance with Laws .

(i) The Core MTS Business has been since January 1, 2015, in compliance with Applicable Law, except where the failure to be in such compliance would not, individually or in the aggregate, reasonably be expected to be material to the Core MTS Business. The Core MTS Business has all requisite authority and other power and all governmental or judicial permits, certificates, licenses, approvals and other authorizations required to carry on and conduct its business as presently conducted except where the failure to have such authority, power, licenses, approvals and authorizations would not reasonably be expected to be, individually or in the aggregate, material to the Core MTS Business.

(ii) Without limiting the foregoing, except as would not reasonably be expected to be, individually or in the aggregate, material to Core MTS Business, neither the Core MTS Business, any of its Subsidiaries nor any director or officer thereof nor, to MCK’s knowledge, any employee or agent of the Core MTS Business or any of its Subsidiaries has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful payments relating to political activity, (ii) directly or indirectly, used, given, offered, promised, or authorized to give, any money or thing of value (except for payments permitted by 15 U.S.C. Section 78dd-2(b) or (c)) to any Government Official for the purpose of influencing an act or decision of the Government Official, or inducing the Government Official to use his or her influence or position to affect any government act or decision to obtain or retain business of the Core MTS Business or any of its Subsidiaries or (iii) directly or indirectly, made any unlawful payment. Except as would not reasonably be expected to be, individually or in the aggregate, material to the Core MTS Business, all books and records of the Core MTS Business and its Subsidiaries accurately and fairly reflect, in reasonable detail, all transactions and dispositions of funds or assets, and there have been no false or fictitious entries made in the books or records of the Core MTS Business or any of its Subsidiaries relating to any illegal payment or secret or unrecorded fund, and neither the Core MTS Business nor any of its Subsidiaries has established or maintained a secret or unrecorded fund.

(l) Properties .

(i) Section 4.02(l) of the MCK Disclosure Schedule correctly describes all real property that MCK or its Subsidiaries own, lease, sublease, use, license or operate primarily for the Core MTS Business.

(ii) MCK and its Subsidiaries have good title to, or in the case of any leased real property or tangible personal property have valid leasehold interests in, and upon the Closing the Company will have good title to, or in the case of any leased real property or tangible personal property valid leasehold interests in, all tangible property and assets of the Core MTS Business required to be contributed pursuant to the MCK Contribution, except where the failure to have such good title or valid leasehold interests would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Core MTS Business. No such property or asset of MCK or its Subsidiaries is subject to any Lien, except for Permitted Liens.

(m) Intellectual Property . Except for rights and licenses contemplated to be provided to the Company pursuant to the Intellectual Property Licensing Agreement and the Transition Services Agreements and as would not reasonably be expected to be, individually or in the aggregate, material to the Core MTS Business, (i) MCK and each of its Subsidiaries owns, or has a valid and enforceable license to use, all the Intellectual Property Rights necessary to, or used or held for use in, the conduct of the Core MTS Business as currently conducted, (ii) MCK and its

Subsidiaries are (and after the MCK Contributions, the Company will be) the sole and exclusive owners of all MCK Owned Intellectual Property and hold all of their right, title and interest in and to all MCK Owned Intellectual Property and MCK Licensed Intellectual Property, free and clear of all Liens, and, to the knowledge of MCK, all such MCK Owned Intellectual Property and MCK Licensed Intellectual Property are valid, subsisting and enforceable, (iii) to the knowledge of MCK, the conduct of the Core MTS Business as currently conducted does not infringe, misappropriate or otherwise violate the Intellectual Property Rights of any Person, (iv) to the knowledge of MCK, no Person has challenged, infringed, misappropriated or otherwise violated any of the MCK Owned Intellectual Property within the three years preceding the date hereof, (v) neither MCK nor any of its Subsidiaries has received any written notice or otherwise has knowledge of any pending claim, action, suit, order or proceeding with respect to any MCK Owned Intellectual Property and/or MCK Licensed Intellectual Property or alleging that any services provided, processes used or products manufactured, used, imported, offered for sale or sold by Core MTS Business infringes, misappropriates or otherwise violates any Intellectual Property Rights of any Person, (vi) the consummation of the transaction contemplated by this Agreement will not (x) alter, encumber, impair or extinguish any MCK Owned Intellectual Property and/or MCK Licensed Intellectual Property and will not result in the breach of, or create on behalf of any third party, the right to terminate or modify any rights in or to such owned and licensed Intellectual Property Rights or (y) impair the Company to develop, use, sell, license or dispose of, or to bring any action for the infringement of, any MCK Owned Intellectual Property and/or MCK Licensed Intellectual Property, (vii) MCK and its Subsidiaries have taken reasonable steps in accordance with normal industry practice to maintain the confidentiality of all Trade Secrets owned, used or held for use by MCK or any of its Subsidiaries and, to the knowledge of MCK, no such Trade Secrets have been disclosed other than to employees, representatives and agents of MCK or any of its Subsidiaries all whom are bound by written confidentiality agreements, (viii) the IT Assets operate and perform in a manner that permits MCK to conduct Core MTS Business as currently conducted and to the knowledge of MCK, no Person has gained unauthorized access to the IT Assets and no Personal Information used in the Core MTS Business has been lost, inappropriately accessed, misappropriated or misused and (ix) MCK and its Subsidiaries have implemented reasonable backup and disaster recovery technology consistent with industry practices in connection with the Core MTS Business. Section 4.02(m) of the MCK Disclosure Schedule sets forth a list of all Intellectual Property Rights or IT Assets used by the Core MTS Business that, as of the date hereof, are owned, licensable or licensed by MCK and its Affiliates which are not commercially available to the Company for a replacement cost of less than $1,000,000.00 in the aggregate (other than rights and licenses contemplated to be provided to the Company pursuant to the Intellectual Property Licensing Agreement or pursuant to the MCK Contributions).

(n) Sufficiency of Assets . The entities and other assets, properties and businesses to be contributed or otherwise transferred to the Company pursuant to the MCK Contributions constitute all of the assets, licenses, data, capabilities, systems, properties and businesses owned, held or used by MCK and its Affiliates primarily in the conduct of the Core MTS Business, and, together with the rights granted to the Company pursuant to the Transaction Documents, are sufficient for the Company and its Subsidiaries to continue, in all material respects, the conduct of the Core MTS Business after the Closing in the same manner as conducted by MCK and its Affiliates prior to the Closing.

(o) Permits . Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Core MTS Business, the Core MTS Business possesses all Permits necessary for the operation of the Core MTS Business as currently conducted, each such Permit is valid and in full force and effect, and there are no actions pending which would reasonably be expected to result in the revocation or termination of any material Permit required to own and operate the Core MTS Business as conducted as of the date hereof.

(p) MTI Participating Employees .

(i) All services necessary to continue, in all material respects, the conduct of the Core MTS Business in the same manner as currently conducted, and as currently planned to be conducted, by MCK and its Affiliates prior to the Closing are provided by MTI Participating Employees or will be provided pursuant to the Transition Services Agreements.

(ii) Neither the Core MTS Business nor any of its Affiliates is a party to or subject to, or is currently negotiating in connection with entering into, any collective bargaining or other labor agreement applicable to any MTI Participating Employee in the United States or, to MCK’s knowledge, any material, collective bargaining, works council or other labor agreement applicable to any MTI Participating Employee outside the United States, and, to the knowledge of MCK, there has not been any organizational campaign, petition or other unionization activity seeking recognition of a collective bargaining unit relating to any MTI Participating Employee.

(q) Employee Benefit Plans .

(i) Except for retention agreements pursuant to which the Core MTS Business will not have liability after Closing, Section 4.02(q) of the MCK Disclosure Schedule contains a correct and complete list identifying each material MCK Plan. “ MCK Plan ” means each Employee Plan which is maintained, administered, contributed to or required to be contributed to by the Core MTS Business or any ERISA Affiliate thereof and covers any current or former service provider to the Core MTS Business, or with respect to which the Core MTS Business has or may have any liability. With respect to each MCK Plan, true and complete copies of the following documents, to the extent applicable, have been furnished to the Echo Parties: (i) if the plan has been reduced to writing, the plan document together with all material amendments thereto, (ii) if the plan has not been reduced to writing, a written summary of all material plan terms, (iii) each trust, custodial, administrative, investment management and any similar agreements and each insurance policy or contract, (iv) each summary plan description, employee handbook or similar employee communications, (v) the most recent determination letter from the Internal Revenue Service and any related correspondence, and any pending request for determination with respect to the plan’s qualification, and (vi) any material notices, letters or other correspondence from the Internal Revenue Service or the U.S. Department of Labor.

(ii) Neither the Core MTS Business nor any ERISA Affiliate thereof nor any predecessor thereof sponsors, maintains, contributes to or is required to contribute to, or has in the past sponsored, maintained, contributed to or been required to contribute to, any plan subject to Title IV of ERISA or Sections 412 or 430 of the Code that is or would become a liability of the Company.

(iii) Neither the Core MTS Business nor any ERISA Affiliate nor any predecessor thereof contributes to or is required to contribute to, or has in the past contributed to or been required to contribute to, any Multiemployer Plan that is or would become a liability of the Company.

(iv) Each MCK Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter upon which it can rely, or has pending or has time remaining in which to file, an application for such determination from the Internal Revenue Service, and MCK is not aware of any reason why any such determination letter should be revoked or not be reissued. Each MCK Plan has been operated and maintained in compliance in all material respects with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations, including ERISA and the Code, which are applicable to such MCK Plan.

(v) Neither the execution of this Agreement nor the consummation of the Transactions, either alone or together with any other event, will (i) result in any severance or other payment or benefit to any current or former service provider to the Core MTS Business that would not be deductible pursuant to the terms of Section 280G of the Code, (ii) accelerate the time of payment or vesting or increase the amount of compensation or benefits due under any MCK Plan, except as would not result in liability to the Company following Closing, (iii) entitle any person to severance pay or any other payment, except as would not result in liability of the Company following Closing, (iv) require the funding of any MCK Plan, or (v) result in any forgiveness of indebtedness to any current or former service provider to the Core MTS Business.

(vi) The Core MTS Business does not have any liability in respect of post-retirement health, medical or life insurance benefits for current or former service providers to the Core MTS Business that would become a liability of the Company, except as required to avoid an excise tax under Section 4980B of the Code at the sole cost of the participant.

(vii) There is no material action, suit, investigation, audit or proceeding pending against or involving or, to the knowledge of MCK, threatened against or involving, any MCK Plan with respect to any current or former service provider to the Core MTS Business before any Governmental Authority, other than routine claims for benefits, that would become a liability of the Company.

(r) Environmental Matters . Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Core MTS Business:

(i) no written notice, order, complaint or penalty has been received by the Core MTS Business arising out of any environmental Applicable Laws, and there are no judicial, administrative or other actions, suits or proceedings pending or, to the knowledge of MCK, threatened which allege a violation by the Core MTS Business of any environmental Applicable Laws;

(ii) the Core MTS Business has all environmental permits necessary for its operations to comply with all applicable environmental Applicable Laws and is in compliance with the terms of such permits; and

(iii) the operations of the Core MTS Business are in compliance with the terms of applicable environmental Applicable Laws.

Except set forth in this Section 4.02(r), no representations or warranties are being made with respect to matters arising under or relating to environmental matters.

(s) Taxes . For purposes of this Section 4.02(s), references to “MCK Contributed Entities” also refer to McKesson Technologies, Inc., a Delaware corporation, as the predecessor to MTI LLC (as defined in Schedule VI ) and any other entities that similarly convert into an entity that is an MCK Contributed Entity.

(i) Each of the MCK Contributed Entities, and, with respect to the MCK Contributed Assets and Core MTS Business, each of MCK and its Affiliates has (A) timely filed all material Tax Returns required to be filed by it and (B) timely paid all Taxes shown as due on such Tax Returns. All such Tax Returns were correct and complete in all material respects. Each of the MCK Contributed Entities, and, with respect to the MCK Contributed Assets and Core MTS Business, each of MCK and its Affiliates has withheld and paid all material Taxes required to have been withheld and paid by it in connection with any amounts paid or owing to any Person.

(ii) There are no Liens for Taxes (except for Taxes not yet due or for which adequate reserves have been established on the Balance Sheet of the Core MTS Business in accordance with GAAP) upon any of the MCK Contributed Assets or the assets, properties and businesses of the MCK Contributed Entities.

(iii) There are no U.S. federal, state, local or non-U.S. Tax audits currently pending with regard to any material Taxes or Tax Returns of any of the MCK Contributed Entities, and, with respect to the MCK Contributed Assets and Core MTS Business, any material Taxes or Tax Returns of any of MCK and its Affiliates, in which a Taxing Authority has raised an issue that relates to the Core MTS Business, and to the knowledge of MCK, no such Tax audit is threatened. To the knowledge of MCK, no

claim has ever been made by a Taxing Authority in a jurisdiction where any MCK Contributed Entity, or, with respect to the MCK Contributed Assets and Core MTS Business, any of MCK and its Affiliates, does not file Tax Returns that it is or may be subject to taxation by that jurisdiction as a consequence of operating the Core MTS Business.

(iv) None of the MCK Contributed Entities (A) has, during the last eight years, been a member of an affiliated, consolidated, combined or unitary group (other than any such group the common parent of which was MCK) or (B) during the two-year period ending on the date hereof, was a distributing corporation or a controlled corporation in a transaction intended to be governed by Section 355 of the Code.

(v) Neither the Company, nor any of its Affiliates (with respect to the Core MTS Business) nor any MCK Contributed Entity will be required to include in or for, or allocate with respect to, a Post-Closing Tax Period a material amount of taxable income attributable to income economically realized in a Pre-Closing Tax Period (nor has any material deduction economically attributable to a Post-Closing Tax Period been claimed in a Pre-Closing Tax Period), including as a result of any (A) change in accounting method made prior to the Closing Date, (B) closing or similar agreement with any Tax authority entered into prior to the Closing, (C) installment sale or open transaction disposition made on or prior to the Closing Date, (D) election under Section 108(i) of the Code or (E) prepaid amount received prior to the Closing Date.

(vi) None of the MCK Contributed Entities and, with respect to the MCK Contributed Assets and Core MTS Business, none of MCK and its Affiliates, is a party to any understanding or arrangement described in Section 6662(d)(C)(ii) of the Code, or has participated in a “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4.

(vii) Reference is made to the memorandum dated May 26, 2016 from McKesson Tax to Tax Files with the subject heading “Section 197 Intangibles – Anti-Churning” (the “ MCK Tax Memo ”). All of the factual statements set forth in the MCK Tax Memo are true, correct and complete in all material respects, including (i) that the entity referred to in the MCK Tax Memo as McKesson Financial Holdings or IP3 “is not liquidating and continues to operate with remaining IP related to businesses not [being transferred to the Company],” (ii) that the MCK IPCo Owned Intellectual Property does not include “goodwill, going concern value, trademarks or trade names [or] workforce” (iii) that the MCK IPCo Owned Intellectual Property consists only of “computer software, coding, and technology know-how” related to the use of such computer software and coding and (iv) that the MCK IPCo Owned Intellectual Property was developed in 2001 or thereafter; provided , that for the avoidance of doubt, neither the MCK Tax Memo nor this Section 4.02(s)(vii) includes, or shall be construed as including, any representation regarding any conclusion of law. Further to clause (i) of the preceding sentence, IP3 will not have disposed of 90 percent or more of the fair market value of its net assets or 70 percent or more of the fair market value of its gross assets held immediately prior to the transactions contemplated by the MCK Tax Memo, treating any

expenses paid by IP3 and any redemptions or distributions of cash or other property by IP3 in connection with the transactions contemplated by the MCK Tax Memo as assets of IP3. Any license under which IP3 has or had the right to develop the Intellectual Property that will be MCK IPCo Owned Intellectual Property relates solely to the right to use “computer software, coding, and technology know-how” related to the use of such computer software and coding.

(viii) Notwithstanding any other provision of this Agreement, other than Section 4.02(s)(vii), nothing in this Agreement (including the other clauses of this Section 4.02(s) or otherwise) shall be construed as providing a representation or warranty with respect to the existence, amount, expiration date or limitations on (or availability of) any Tax asset or method of Tax accounting of any of the MCK Contributed Entities for a Post-Closing Tax Period.

(t) Insurance . The Core MTS Business either has insurance policies or is a named insured under insurance policies of its Affiliates, in such amounts and against such risks, as would reasonably be expected with regard to the nature and size of the Core MTS Business and as is required by Applicable Law; all such insurance policies are in full force and effect; and to the knowledge of MCK, MCK (or the applicable Affiliate) has not received notice of cancellation or termination with respect to any such insurance policies. Section 4.02(t) of the MCK Disclosure Schedule sets forth each such insurance policy applicable to the Core MTS Business.

(u) Acquisition for Investment. MCK is acquiring a beneficial ownership interest in the Units for investment for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof. MCK (either alone or together with its advisors) has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Company and is capable of bearing the economic risks of such investment.

(v) Accredited Investor Status . MCK is an “accredited investor”, as such term is defined in Rule 501(a) promulgated under the Securities Act is sophisticated in financial matters and is able to evaluate the risks and benefits of the investment in the Units to be issued to it in accordance with Article 3.

(w) Full Information . MCK is an informed and sophisticated investor, and has engaged expert advisors, experienced in transactions of the type contemplated by this Agreement and the other Transaction Documents. MCK has been given the opportunity to ask questions of and receive answers from the Echo Parties concerning the Echo Business, Echo Holdco and the Transactions. To its knowledge, MCK has been furnished with, and have evaluated, all information that it deems necessary, desirable and appropriate to evaluate the merits and risks of the Transactions, and has received such legal, financial and other advice as deemed by it to be necessary, desirable and appropriate to enable it to make an informed decision with respect to the execution, delivery and performance of this Agreement and the other Transaction Documents.

(x) Finders ’ Fees. Except for Goldman, Sachs & Co., a copy of whose engagement agreement has been provided to the Echo Parties, there is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of MCK or any of its Subsidiaries who might be entitled to any fee or commission from MCK or any of its Affiliates in connection with the transactions contemplated by this Agreement.

(y) Affiliate Transactions. Except for the matters disclosed on Section 4.02(y) of the MCK Disclosure Schedule, neither MCK nor any Affiliate of MCK and no officer or director (or equivalent) of MCK or the Core MTS Business (or, to the knowledge of MCK, any Family Member of any such Person who is an individual or any entity in which any such Person or any such Family Member thereof owns a material interest): (a) has any material interest in any material asset used in connection with the Core MTS Business or (b) has engaged in any material transaction, arrangement or understanding relating to the Core MTS Business (other than compensation provided to, officers and directors (or equivalent) in the ordinary course of business).

(z) Customers and Suppliers. Section 4.02(z) of the MCK Disclosure Schedule sets forth a complete and accurate list of (a) the ten (10) largest customers of the Core MTS Business (measured by aggregate revenue) during each of the fiscal year ended March 31, 2016 and (b) the ten (10) largest suppliers of materials, products or services to the Core MTS Business (measured by the aggregate amount purchased by the Core MTS Business) during the fiscal year ended March 31, 2016. Except as disclosed on Section 4.02(z) of the MCK Disclosure Schedule, as of the date of this Agreement, none of such customers or suppliers has cancelled, terminated or otherwise materially altered its relationship with the Core MTS Business (including any material reduction in the rate or amount of sales or purchases or material increase in the prices charged or paid, as the case may be) or notified in writing the Core MTS Business of any intention to do any of the foregoing.

(aa) No Other Representations and Warranties.

(i) Except for the representations and warranties set forth in this Agreement and the Transaction Documents and certificates delivered in connection the with Transactions, each of the Company and the Echo Parties acknowledges and agrees that no representation or warranty of any kind whatsoever, express or implied, at law or in equity, is made or shall be deemed to have been made by or on behalf of MCK or any of its Subsidiaries to the Company or the Echo Parties, and MCK hereby disclaims any such representation or warranty, whether by or on behalf of MCK or any of its Subsidiaries, and notwithstanding the delivery or disclosure to the Company or the Echo Parties, or any of their Subsidiaries, representatives or Affiliates of any documentation or other information by MCK or any of its Subsidiaries, representatives or Affiliates with respect to any one or more of the foregoing.

(ii) Each of the Company and the Echo Parties also acknowledges and agrees that, except for the representations and warranties set forth in this Agreement and the Transaction Documents and certificates delivered in connection the with Transactions, neither MCK nor any of its Subsidiaries makes any representation or warranty with respect to any projections, forecasts or other estimates, plans or budgets of future revenues, expenses or expenditures, future results of operations (or any component

thereof), future cash flows (or any component thereof) or future financial condition (or any component thereof) of MCK or the future business, operations or affairs of the Core MTS Business heretofore or hereafter delivered to or made available to the Company, the Echo Parties or their respective Subsidiaries, representatives or Affiliates.

ARTICLE 5

C OVENANTS

Section 5.01. Conduct of the Echo Business . Except as set forth in Section 5.01 of the Echo Disclosure Schedule or as expressly contemplated or permitted in this Agreement or the other Transaction Documents or with the prior written consent of MCK (not to be unreasonably withheld, delayed or conditioned), from the date hereof until the Closing, Echo Holdco shall conduct, or cause to be conducted, the Echo Business, in all material respects, in the ordinary course of business consistent with past practice and shall use its reasonable best efforts to (i) preserve intact the present business organization of the Echo Business, (ii) maintain in effect all foreign, federal, state and local licenses, permits, consents, franchises, approvals and authorizations material to the Echo Business, (iii) keep available the services of the officers and other senior management employees of the Echo Business, (iv) maintain satisfactory relationships with customers, lenders, suppliers and others having material business relationships with the Echo Business, (v) manage working capital of the Echo Business (including the timing of collection of accounts receivable and of the payment of accounts payable and the management of inventory) in the ordinary course of business consistent with past practice, and (vi) continue to make capital expenditures consistent with the Capex Budget of the Echo Business. Without limiting the generality of the foregoing, from the date hereof until the Closing, except as disclosed on Section 5.01 of the Echo Disclosure Schedule, as expressly contemplated or permitted by this Agreement or the other Transaction Documents or with the prior written consent of MCK (not to be unreasonably withheld, delayed or conditioned), Echo Holdco shall not, and shall cause its respective Subsidiaries not to, in each case with respect to the Echo Business:

(a) amend the articles of incorporation, bylaws or other similar organizational documents of Echo Holdco or any of its Subsidiaries (whether by merger, consolidation or otherwise);

(b) split, combine or reclassify any shares of capital stock of Echo Holdco or any of its Subsidiaries or declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of the capital stock of Echo Holdco or any of its Subsidiaries, or redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or otherwise acquire any securities of Echo Holdco or any of its Subsidiaries (other than repurchases from employees of CHH holding capital stock of Echo Holdco whose employment is terminated for any reason pursuant to the Echo Plans);

(c) issue, deliver or sell, or authorize the issuance, delivery or sale of, any equity securities of Echo Holdco or any of its Subsidiaries or amend any term of any equity security of Echo Holdco or any of its Subsidiaries (in each case, whether by merger, consolidation or otherwise); other than the issuances of securities of CHH upon conversion or exercise of equity securities of CHH outstanding as of the date hereof pursuant to the Echo Plans;

(d) incur any capital expenditures or any obligations or liabilities in respect thereof, except for those contemplated by the Capex Budget of the Echo Business and any unbudgeted capital expenditures not to exceed $500,000 individually or $1,000,000 in the aggregate;

(e) acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any assets, securities, properties, interests or businesses, other than (i) supplies in the ordinary course of business in a manner that is consistent with past practice and (ii) acquisitions with a purchase price (including assumed indebtedness) that does not exceed $10,000,000 individually or $25,000,000 in the aggregate;

(f) sell, lease, abandon, license or otherwise transfer, or create or incur any Lien on (other than Permitted Liens or with respect to liens in respect of indebtedness permitted under Section 5.01(i)), any assets, securities, properties, interests or businesses of Echo Holdco or any of its Subsidiaries (including, in each case, any Echo Owned Intellectual Property and/or Echo Licensed Intellectual Property), other than sales of assets, securities, properties, interests or businesses with a sale price (including any related assumed indebtedness) that does not exceed $1,000,000 individually or $5,000,000 in the aggregate;

(g) make any loans, advances or capital contributions to, or investments in, any other Person (other than intercompany indebtedness among Echo Holdco and its Subsidiaries), other than in the ordinary course of business consistent with past practice in an amount that does not exceed $1,000,000 individually or $5,000,000 in the aggregate;

(h) create, incur, assume, suffer to exist or otherwise be liable with respect to any indebtedness for borrowed money or guarantees (other than intercompany debt) thereof having an aggregate principal amount outstanding at any time greater than (i) with respect to the Echo Holdco Debt or Echo Holdco Refinanced Debt that has not been consented to by MCK an amount no greater than $4.4 billion and (ii) with respect to all other indebtedness for borrowed money (including deferred financing arrangements with vendors and the Echo Holdco data sublicense disclosed in the Echo Form 10-K), $10,000,000;

(i) (i) enter into any agreement or arrangement that limits or otherwise restricts in any material respect the Echo Business, or any Affiliates of the Echo Business or any successors thereto or that could, after the Closing, limit or restrict in any material respect the Company, the Echo Business, or the Core MTS Business or any of their respective Affiliates, from engaging or competing in any line of business, in any location or with any Person or (ii) enter into, amend or modify in any material respect or terminate any Echo Material Contract or any contract that if entered into during the period from the date hereof through the Closing would be an Echo Material Contract (other than (A) the Transaction Documents, (B) agreements entered into, amended, modified or terminated in connection with the Echo Connect Separation (including with respect to separating Echo Connect from the Echo Business); (C) subject to the other sections of this Section 5.01, documents governing the Echo Holdco Debt; (D) documents governing Echo Holdco Refinanced Debt; provided , that in the case of the foregoing clauses (C) and (D), no such

entry into, amendment, modification or termination limits or restricts the ability of the Company or Echo Holdco or any of their Subsidiaries to conduct the Refinancing or to obtain the Debt Financing or (E) subject to the other sections of this Section 5.01, the entry into, amendments, modifications or termination made with respect to any Echo Material Contract or any contract that if entered into during the period from the date hereof through the Closing would be an Echo Material Contract that is or would be an Echo Material Contract solely under one or more of Section 4.01(j)(i)(A), Section 4.01(j)(i)(B), Section 4.01(j)(i)(C), Section 4.01(j)(i)(H), Section 4.01(j)(i)(I), Section 4.01(j)(i)(J) or Section 4.01(j)(i)(M) in the ordinary course of business consistent with past practice), or otherwise waive, release or assign any material rights, claims or benefits of the Echo Business;

(j) change the Echo Business’s methods of accounting, except as required by concurrent changes in GAAP, as agreed to by its independent public accountants;

(k) settle, or offer or propose to settle, (i) any litigation, investigation, arbitration, proceeding or other claim involving or against the Echo Business, (ii) any stockholder litigation or dispute against the Echo Business or any of its officers or directors (in each of (i) and (ii), involving monetary remedies with a value in excess of $15,000,000 in the aggregate for all such litigations, investigations, arbitrations, proceedings or other claims (net of any insurance proceeds and indemnity, contribution and similar payments actually received by Echo Holdco or any of its Subsidiaries in respect thereof)) or (iii) any litigation, arbitration, proceeding or dispute that relates to the Transactions; provided, settlement of any such matter set forth in any of subsections (i), (ii) or (iii) above will be permitted to the extent the settlement is for the payment of cash by Echo Holdco prior to the Closing;

(l) make or change any material tax election, change any annual tax accounting period, adopt or change any method of tax accounting, materially amend any material tax returns or file claims for material tax refunds, enter any material closing agreement, settle any material tax claim, audit or assessment, or surrender any right to claim a material tax refund, offset or other reduction in tax liability;

(m) permit Echo to engage in any operating business or activity, hold any assets (other than its ownership of the capital stock of Echo Holdco) or incur any liabilities or obligations of any nature, other than pursuant to or in connection with this Agreement, the Transaction Documents and the Transactions and except for the ownership of assets or incurrence of liabilities incidental to its ownership of the capital stock of Echo Holdco and its status as a holding company;

(n) take any action, or refrain from taking any action, if doing so would give rise to an obligation to make an Early Termination Payment under any Existing Echo TRA; or

(o) agree, resolve or commit to do any of the foregoing.

Section 5.02. Conduct of the Core MTS Business . Except as set forth in Section 5.02 of the MCK Disclosure Schedule or in connection with the MCK Pre-Closing Restructuring (subject to the proviso of the definition thereof) or as expressly contemplated or permitted in this Agreement or the other Transaction Documents or with the prior written consent of Echo Holdco (not to be unreasonably withheld, delayed or conditioned), from the date hereof until the Closing, MCK shall conduct, or cause to be conducted, the Core MTS Business, in all material respects, in the ordinary course of business consistent with past practice and shall use its reasonable best efforts to (i) preserve intact the present business organization of the Core MTS Business, (ii) maintain in effect all foreign, federal, state and local licenses, permits, consents, franchises, approvals and authorizations material to the Core MTS Business, (iii) keep available the services of the senior management employees primarily providing services to the Core MTS Business, (iv) maintain satisfactory relationships with customers, lenders, suppliers and others having material business relationships with the Core MTS Business, (v) manage working capital of the Core MTS Business (including the timing of collection of accounts receivable and of the payment of accounts payable and the management of inventory) in the ordinary course of business consistent with past practice, and (vi) continue to make capital expenditures consistent with the Capex Budget of the Core MTS Business. Without limiting the generality of the foregoing, from the date hereof until the Closing, except as disclosed on Section 5.02 of the MCK Disclosure Schedule or in connection with the MCK Pre-Closing Restructuring (subject to the proviso of the definition thereof), as expressly contemplated or permitted by this Agreement or the other Transaction Documents or with the prior written consent of Echo Holdco (not to be unreasonably withheld, delayed or conditioned), MCK shall not, and shall cause its Affiliates not to, in each case with respect to the Core MTS Business or to the extent the Core MTS Business is effected:

(a) amend the articles of incorporation, bylaws or other similar organizational documents of the entities holding the assets of the Core MTS Business (whether by merger, consolidation or otherwise);

(b) split, combine or reclassify any shares of capital stock of the entities holding the assets of the Core MTS Business or declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of the capital stock of the entities holding the assets of the Core MTS Business, or redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or otherwise acquire any securities of the entities holding the assets of the Core MTS Business; provided that nothing herein will prohibit the Core MTS Business from sweeping its cash to MCK or any of its Subsidiaries;

(c) issue, deliver or sell, or authorize the issuance, delivery or sale of, any securities of the entities holding the assets of the Core MTS Business or amend any term of any security of the Core MTS Business (in each case, whether by merger, consolidation or otherwise);

(d) incur any capital expenditures or any obligations or liabilities in respect thereof, except for those contemplated by the Capex Budget of the Core MTS Business and any unbudgeted capital expenditures not to exceed $500,000 individually or $1,000,000 in the aggregate;

(f) sell, lease, abandon, license or otherwise transfer, or create or incur any Lien (other than Permitted Liens) on, any assets, securities, properties, interests or businesses of Core MTS Business (including, in each case, any MCK Owned Intellectual Property and MCK Licensed Intellectual Property), other than sales of assets, securities, properties, interests or businesses with a sale price (including any related assumed indebtedness) that does not exceed $1,000,000 individually or $5,000,000 in the aggregate;

(g) make any loans, advances or capital contributions to, or investments in, any other Person (other than (i) intercompany indebtedness among the MCK Contributed Entities and (ii) intercompany indebtedness among any the MCK Contributed Entity, on the one hand, and MCK or any of its Affiliates (other than the MCK Contributed Entities), on the other hand; provided that, in the case of clause (ii) any such indebtedness shall be paid off in full at or prior to the Closing), other than in the ordinary course of business consistent with past practice in an amount that does not exceed $1,000,000 individually or $3,000,000 in the aggregate;

(h) create, incur, assume, suffer to exist or otherwise be liable with respect to any indebtedness for borrowed money or guarantees thereof (other than (i) intercompany indebtedness among the MCK Contributed Entities; and (ii) intercompany indebtedness among any the MCK Contributed Entity, on the one hand, and MCK or any of its Affiliates (other than the MCK Contributed Entities), on the other hand; provided that, in the case of clause (ii) any such indebtedness shall be paid off in full at or prior to the Closing), other than such indebtedness or guarantees having an aggregate principal amount (together with all other indebtedness for borrowed money) outstanding at any time greater than $10,000,000;

(i) (i) enter into any agreement or arrangement that limits or otherwise restricts in any material respect the Core MTS Business, or any Affiliates of the Core MTS Business or any successor thereto or that could, after the Closing, limit or restrict in any material respect the Company, the Echo Business, the Core MTS Business or any of their respective Affiliates, from engaging or competing in any line of business, in any location or with any Person or (ii) enter into, amend, modify or terminate any MTI Material Contract or any contract that if entered into during the period from the date hereof through the Closing would be an MTI Material Contract (other than (A) the Transaction Documents, (B) agreements entered into, amended, modified or terminated in connection with the Pre-Closing MCK Restructuring (including with respect to separating the Core MTS Business from MCK’s retained businesses) or (C) subject to the other sections of this Section 5.02, any entry into, amendment, modification or termination of any MTI Material Contract or any contract that if entered into during the period from the date hereof through the Closing would be an MTI Material Contract that is or would be an MTI Material Contract solely under one or more of (1) Section 4.02(i)(i)(A), Section 4.02(i)(i)(B), Section 4.01(j)(i)(C), Section 4.02(i)(i)(H), Section 4.02(i)(i)(I) or Section 4.02(i)(i)(J) in the ordinary course of business consistent with past practice or (2) Section 4.02(i)(i)(L) involving an annual amount up to $10.0 million), or otherwise waive, release or assign any material rights, claims or benefits of the Core MTS Business;

(j) change the Core MTS Business’ methods of accounting, except as required by concurrent changes in GAAP, as agreed to by its independent public accountants;

(k) settle, or offer or propose to settle, (i) any litigation, investigation, arbitration, proceeding or other claim involving the Core MTS Business, (ii) any stockholder litigation or dispute involving the Core MTS Business or any of the officers or directors of the entities holding the assets of the Core MTS Business (in each of (i) and (ii), involving monetary remedies with a value in excess of $15,000,000 in the aggregate for or allocable to the Core MTS Business for all such litigations, investigations, arbitrations, proceedings or other claims (net of any insurance proceeds and indemnity, contribution (including from MCK or its Subsidiaries that are not included in the Core MTS Business) and similar payments actually received by the Core MTS Business or any of its Subsidiaries in respect thereof)) or (iii) any litigation, arbitration, proceeding or dispute that relates to the Transactions; provided, settlement of any such matter set forth in any of subsections (i), (ii) or (iii) above will be permitted to the extent the settlement is for the payment of cash by the Core MTS Business prior to Closing;

(l) if taking such action would increase the Tax liability of the Company or any Member thereof, make or change any material tax election, change any annual tax accounting period, adopt or change any method of tax accounting, materially amend any material tax returns or file claims for material tax refunds, enter any material closing agreement, settle any material tax claim, audit or assessment, or surrender any right to claim a material tax refund, offset or other reduction in tax liability, in each case, involving the Core MTS Business;

(m) amend in a manner that would increase the benefits payable under any deferred compensation plan set forth on Section 4.02(q)(i) of the MCK Disclosure Schedule with respect to current, U.S.-based MTI Participating Employees and shared services employees who are transferred to the Core MTS Business prior to Closing; or

(n) agree, resolve or commit to do any of the foregoing.

Section 5.03. Debt Financing .

(a) The Company, MCK and Echo Holdco and their respective Subsidiaries shall use their reasonable best efforts to assist the Company to arrange and obtain the Debt Financing on the terms and conditions described in the Debt Commitment Letters as promptly as practicable after the date hereof, including their reasonable best efforts to (i) maintain in effect the Debt Commitment Letters, (ii) negotiate and enter into definitive agreements with respect thereto on the terms and conditions contained in the Debt Commitment Letters (including any flex provisions) or on other terms no less favorable to the Company, (iii) satisfy on a timely basis all conditions in the Debt Commitment Letters that are within their control and (iv) upon satisfaction of the conditions set forth in the Debt Commitment Letters, consummate the Debt Financing at or prior to the Closing; it being understood that, if any portion of the Debt Financing to be provided as contemplated by the Debt Commitment Letters pursuant to a public offering, private offering under Rule 144A or otherwise has not been provided, and all conditions precedent to the Parties’ obligations hereunder shall have been satisfied or waived (other than receipt of the Debt Financing and those conditions which by their nature will not be satisfied except by actions taken at the

Closing, but subject to the their satisfaction at the Closing), the Company shall draw upon the commitments under the Debt Commitment Letters to provide the bridge financing contemplated by and on the terms and conditions (including any applicable “flex” provisions) set forth in the Debt Commitment Letters. Each of the Company, MCK and Echo Holdco shall keep each other reasonably informed with respect to all material activity concerning the status of the Debt Financing contemplated by the Debt Commitment Letters and shall give each other notice of any material adverse change with respect to such Debt Financing as promptly as practicable.

(b) In the event that any portion of the Debt Financing becomes unavailable on the terms and conditions contemplated by the Debt Commitment Letters (including any flex provisions), the Company, MCK and Echo Holdco and their respective Subsidiaries shall use their reasonable best efforts to assist the Company to arrange and obtain any such portion from alternative sources, on terms, taken as whole, that are no less favorable than the terms contained in the Debt Commitment Letters, as promptly as practicable following the occurrence of such event.

(c) The Company, MCK and Echo Holdco shall use their reasonable best efforts to, and shall cause their respective Subsidiaries and their respective Representatives to use their reasonable best efforts to, provide all cooperation in connection with the arrangement of the Debt Financing as may be reasonably requested, including:

(i) participation in meetings, due diligence sessions, drafting sessions, presentations, “road shows” and sessions with prospective Financing Sources, investors and ratings agencies, and reasonably cooperating with the marketing efforts of the Company and its Financing Sources, in each case in connection with the Debt Financing;

(ii) assisting with the preparation of materials for rating agency presentations, offering documents, private placement memoranda, bank information memoranda (including a bank information memorandum that does not include material non-public information and the delivery of customary authorization letters with respect to the bank information memoranda and consents of accountants for use of their reports in any materials relating to the Debt Financing), prospectuses and similar documents required in connection with the Debt Financing;

(iii) timely furnishing financial and other pertinent information regarding the Company, the Core MTS Business and/or the Echo Business, including financial statements, pro forma financial information, financial data, audit reports and other information of the type required by Regulation S-X or Regulation S-K under the Securities Act and other information of the type customarily (A) included in a bank information memorandum (including pro forma financial information) and (B) a registered offering of debt securities by Regulation S-X and Regulation S-K under the Securities Act and of the type and form that are customarily included in a private placement of debt securities pursuant to Rule 144A promulgated under the Securities Act and including, in any event, all information and data necessary to satisfy the conditions set forth in paragraphs 8, 9 and 12 of Exhibit D to the Debt Commitment Letters (collectively, the “ Required Information ”), all of which shall be provided by the Company, MCK and Echo Holdco or their respective Affiliates as promptly as practicable after the date hereof;

(iv) obtaining (x) accountants’ comfort letters, legal opinions, surveys and title insurance, certificates and insurance endorsements and (y) other reasonably requested documents at least 10 days prior to the Closing to the extent required under applicable “know your customer” and anti-money laundering rules and regulations including the USA PATRIOT Act in order to satisfy the conditions set forth in paragraph 13 of Exhibit D to the Debt Commitment Letters;

(v) facilitating the granting of a security interest (and perfection thereof) at Closing in collateral as security for the Debt Financing; and

(vi) (x) taking corporate actions reasonably necessary to permit the consummation of the Debt Financing and to permit the proceeds thereof to be made available to the Company and (y) executing and delivering any commitment letters, underwriting or placement agreements, registration statements, credit agreements, indentures, pledge and security documents, other definitive financing documents or other requested certificates or documents, including a customary solvency certificate by the chief financial officer or person performing similar functions of the Company in the form of Annex I to Exhibit D to the Debt Commitment Letters (provided that (A) none of the letters (except the authorization letters contemplated by clause (ii) above), agreements, registration statements, documents and certificates shall be executed and delivered by any such Persons (other than the Company and its Subsidiaries) except at the Closing and their respective Representatives executing any such letters, agreements, registration statements, documents and certificates shall remain as officers of the Company, (B) the effectiveness thereof (other than with respect to the Company and its Subsidiaries) shall be conditioned upon, or only become operative after, the occurrence of the Closing and (C) no personal liability shall be imposed on the officers or employees involved); provided , that nothing in this Section 5.03 shall require MCK, or the Echo Parties (or any of their respective Subsidiaries, other than the Company and its Subsidiaries and, subject to the consummation of the Closing, Echo Holdco and its Subsidiaries and the MCK Contributed Entities) to (1) pledge or cause or permit any Lien to be placed on any of their respective assets in connection with the Debt Financing,(2) guarantee any of the Company’s or its Subsidiaries’ indebtedness or (3) incur any liability in connection with the Debt Financing.

(d) All material non-public information provided by MCK or the Echo Parties or any of their respective Subsidiaries or Representatives pursuant to this Section 5.03 shall be kept confidential in accordance with the Confidentiality Agreement, except that the Parties shall be permitted to disclose such information to the Financing Sources and other potential sources of capital, rating agencies and prospective lenders (but not prospective investors in any debt securities offering) during syndication of the Debt Financing or any permitted replacement, amended, modified or alternative financing subject to the potential sources of capital, ratings agencies and prospective lenders and investors entering into customary confidentiality undertakings with respect to such information (including through a notice and undertaking in a form customarily used in confidential information memoranda for senior credit facilities).

(e) The Company, MCK and Echo Holdco and their respective Subsidiaries shall cooperate with, and take all actions reasonably required by, the other Parties in order to facilitate the termination and payoff of the commitments under the Echo Holdco Debt at or prior to Closing (including the repayment in full of all obligations then outstanding thereunder and the release of all encumbrances, security interests and collateral and the termination of all guaranties and the agreements evidencing subordination in connection therewith at or prior to the Closing).

Section 5.04. No Solicitation; Other Offers.

(a) From the date hereof until the earlier of the Closing and the termination of this Agreement in accordance with Section 9.01, none of the Echo Parties, Echo or any of their respective Subsidiaries shall, nor shall they or any of their Subsidiaries authorize or permit any of their respective Representatives to, directly or indirectly, (i) solicit, initiate or take any action to facilitate or encourage the submission of any offer, proposal or inquiry relating to, or any third party indication of interest in, the acquisition or purchase of any portion of (an “ Acquisition Proposal ”) the Echo Business, (ii) enter into or participate in any discussions or negotiations with, furnish any information relating to the Echo Business or afford access to the business, properties, assets, books or records of the Echo Business to, otherwise cooperate in any way with, or knowingly assist, participate in, facilitate or encourage any effort by any third party that is seeking to make, or has made, an Acquisition Proposal relating to the Echo Business or (iii) enter into any agreement in principle, letter of intent, term sheet, merger agreement, acquisition agreement, option agreement or other similar instrument relating to an Acquisition Proposal relating to the Echo Business.

(b) From the date hereof until the earlier of the Closing and the termination of this Agreement in accordance with Section 9.01, none of MCK or its Subsidiaries shall, nor shall it or any of its Subsidiaries authorize or permit any of their respective Representatives to, directly or indirectly, (i) solicit, initiate or take any action to facilitate or encourage the submission of any Acquisition Proposal relating to the Core MTS Business, (ii) enter into or participate in any discussions or negotiations with, furnish any information relating to the Core MTS Business or afford access to the business, properties, assets, books or records of the Core MTS Business to, otherwise cooperate in any way with, or knowingly assist, participate in, facilitate or encourage any effort by any third party that is seeking to make, or has made, an Acquisition Proposal relating to the Core MTS Business or (iii) enter into any agreement in principle, letter of intent, term sheet, merger agreement, acquisition agreement, option agreement or other similar instrument relating to an Acquisition Proposal relating to the Core MTS Business.

Section 5.05. Access to Information. From the date hereof until the earlier of the Closing and the termination of this Agreement in accordance with Section 9.01 and subject to Applicable Law and the Non-Disclosure Agreement dated as of September 18, 2015, as amended on September 30, 2015, between MCK, Blackstone Management Partners L.L.C., Emdeon, Inc. and Hellman & Friedman Advisors LLC (the “ Confidentiality Agreement ”), which shall remain in effect until the Closing or termination of this Agreement, each of MCK and Echo Holdco shall,

and shall cause their respective Subsidiaries to, (i) give to the other Parties hereto (and their respective Representatives) reasonable access to the offices, properties, books and records of the applicable Contributed Business; (ii) furnish to the other Parties hereto (and their respective Representatives) such financial and operating data and other information relating to the Contributed Business as may be reasonably requested and (iii) instruct the employees, counsel and financial advisors of the Contributed Business to reasonably cooperate with the other Parties hereto in their investigation of the Contributed Business, provided , however, that (A) Echo Holdco and MCK shall not be required to permit such access to the extent that such access would reasonably be likely to interfere unreasonably with the Contributed Business or otherwise result in any unreasonable interference with the prompt and timely discharge by such employees of their normal duties and (B) Echo Holdco and MCK shall not be required to permit disclosure to the extent that such disclosure would reasonably likely to (I) result in the loss of the protection of any attorney-client privilege, work product doctrine or other legal privilege or (II) violate any Applicable Law; provided that, with respect to clause (B) above, the Party withholding such information shall (i) (if permitted by Applicable Law) provide notice to the other Party that such information is being withheld pursuant to such Applicable Law or privilege if such notice can, in the good faith discretion of the withholding Party, be provided in a manner that would not result in such loss or violation and (ii) use commercially reasonable efforts to disclose such documents and information in a manner that would not result in such loss or violation; and provided , further , that notwithstanding anything to the contrary in this Agreement, in no event shall any Party or any of its respective Affiliates be entitled to any information relating to, or a copy of, any consolidated, combined, affiliated or unitary Tax Return that includes MCK or any of its Affiliates (other than pro forma information relating only to the Core MTS Business). Notwithstanding anything to the contrary contained herein, in the event that there is any pending dispute between Echo Parties, on the one hand, and MCK or its Subsidiaries, on the other hand, no party shall be required to grant access or disclosure pursuant to this Section 5.05 in respect of such Dispute and any such access and disclosure in respect of such dispute shall be subject to the applicable discovery rules. For the avoidance of doubt, notwithstanding Sections 5.06 and 5.09, the Parties acknowledge that BX and H&F and their Affiliates may provide non-public information about this Agreement, the Transactions and the Company to their existing and potential limited partners, members and other investors; provided that BX and H&F shall not provide any non-public financial information or competitively or strategically sensitive information about the Company or any of its Subsidiaries to (a) any limited partner that is not subject to customary confidentiality and non-use restrictions with respect to such information (subject to customary exceptions) or (b) to any other Person in the course of investing or fundraising activities that is not subject to customary confidentiality and non-use restrictions with respect to such information (subject to customary exceptions) and, in any of either (a) or (b), any non-public financial information shall be limited to BX’s and H&F’s valuation of the Company and its Subsidiaries without providing underlying forecasted financial data or trends; provided that BX shall be permitted to disclose underlying forecasted financial data or trends to the two co-investors in Echo Holdco and Echo who have entered into confidentiality agreements which are reasonably acceptable to MCK; provided , further , that in any case BX shall provide prompt written notice of such disclosure to MCK. For the avoidance of doubt, in the event of any conflict between the Confidentiality Agreement and this Agreement, the terms of this Agreement shall control.

Section 5.06. Notices of Certain Events. Each of Echo Holdco and its Subsidiaries, on the one hand, and MCK and its Subsidiaries, on the other hand, shall promptly notify the other of:

(a) any material notice or other communication to such Party from any Person alleging that the consent of such Person is or may be required in connection with the Transactions;

(b) any material notice or other communication to such Party from any Governmental Authority in connection with the Transactions, other than with respect to Antitrust Laws which shall be governed by Section 5.07;

(c) any actions, suits, claims, investigations or proceedings commenced or, to such Party’s knowledge threatened against in writing, relating to or involving or otherwise affecting such Party or the applicable Contributed Business that, if pending on the date of the Transaction Documents, would have been required to have been disclosed pursuant to the representations and warranties contained in this Agreement or that relate to the consummation of the Transactions;

(d) any inaccuracy of any representation or warranty of such Party contained in this Agreement at any time during the term thereof that could be reasonably expected to cause the conditions precedent to the Closing set forth in this Agreement not to be satisfied; provided , however , that no such notification shall affect or be deemed to modify any representation or warranty of such Party set forth herein or therein or the conditions to the obligations of the other Parties to consummate the Transactions, or the remedies available to the Parties hereto; provided further , that failure to give any such notice shall not be treated as a breach of covenant or agreement for the purposes of Section 9.01(a)(vii) or Section 9.01(a)(viii) of this Agreement, as applicable; and

(e) any failure of such Party to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it pursuant to the Transaction Documents.

Section 5.07. Reasonable Best Efforts. (a) Subject to the terms and conditions of this Agreement, each of MCK, Echo Holdco and the Company shall use their reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under Applicable Law to consummate the Transactions, including (i) preparing and filing as promptly as practicable with any Governmental Authority or other third party all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents and (ii) obtaining and maintaining all approvals, consents, registrations, permits, authorizations and other confirmations required to be obtained from any Governmental Authority or other third party that are necessary, proper or advisable to consummate the Transactions.

(b) In furtherance and not in limitation of the foregoing, each such Party hereto shall (i) to the extent required by the HSR Act, make an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the Transactions as promptly as practicable and advisable, and in any event within 14 Business Days of the date hereof or any other date mutually agreed upon by the Parties, (ii) use reasonable best efforts to make an appropriate filing pursuant to any foreign antitrust Applicable Law with respect to the Transactions as promptly as practicable and (iii) supply as promptly as practicable any additional information and documentary material that may be requested pursuant to the HSR Act and any information or documentary material that may be requested by any Governmental Authority pursuant to the FTC Act, the Antitrust Civil Process Act or any other antitrust Applicable Law and (iv) use their reasonable best efforts to take all other actions necessary to cause the expiration or termination of the applicable waiting periods under the HSR Act or any other antitrust Applicable Law, as applicable, as soon as practicable. For the avoidance of doubt, the foregoing obligations shall apply to each such Party, regardless of whether such Party or any of its Affiliates is required to file a Notification and Report Form pursuant to the HSR Act with respect to the Transactions.

(c) The Parties understand and agree that the reasonable best efforts of the MCK, Echo Holdco and the Company pursuant to this Section 5.07 shall be deemed to include proposing, negotiating, offering to agree to, agreeing to or effecting such conditions, commitments or restrictions on or related to the conduct of the Company’s business (including amendments to or waivers of provisions of any agreement among any or all of the Parties and the Company that relate to the Company’s business or operations) as are necessary, proper or advisable to cause the expiration or termination of the applicable waiting periods under the HSR Act or to avoid a suit by a Governmental Authority seeking to enjoin the Transactions pursuant to any Antitrust Law, provided that no Party shall be required to agree to any conditions, commitments or restrictions that, individually or in the aggregate, would reasonably be expected to materially adversely impact the assets, business, expected results of operation or financial condition of the Company. Notwithstanding anything to the contrary in this Agreement, neither MCK, nor the Company, nor the Echo Parties or any of their Affiliates shall be required to divest, transfer, sell, or otherwise dispose of or hold separate (or agree to do any of the foregoing), any business, asset or any portion thereof, whether or not to be contributed to the Company.

(d) In connection with the efforts required under this Section 5.07, each such Party shall (i) cooperate in all respects with each other Party in connection with any filing or submission and in connection with any investigation, inquiry or proceeding under any applicable Antitrust Law, (ii) keep each other Party reasonably informed of the status of matters related to the Transactions contemplated by this Agreement, including furnishing the other Parties with any written notices or other communications received by such Party from, or given by such Party to, the Federal Trade Commission (the “ FTC ”), the Antitrust Division of the Department of Justice (the “ DOJ ”) or any other U.S. or foreign Governmental Authority and of any communication received or given in connection with any proceeding by a private party under applicable Antitrust Laws, in each case regarding any of the Transactions contemplated hereby; and (iii) permit the other Party to review any communication given by it to, and consult with each other in advance of any meeting or conference with, the FTC, the DOJ or any other Governmental Authority under or in connection with any applicable Antitrust Laws, and to the extent permitted by the FTC, the DOJ or such other applicable Governmental Authority or other Person, give the other party the opportunity to attend and participate in such meetings and conferences in accordance with Antitrust Law.

Section 5.08. Certain Filings. Each of MCK, Echo Holdco and the Company agrees that, from the date hereof until the earlier of the Closing and the termination of this Agreement in accordance with Section 9.01 and subject to terms and conditions set forth herein, each such Party hereto shall cooperate with each other such Party hereto (i) in determining whether any action by or in respect of, or filing with, any Governmental Authority is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any material contracts, in connection with the consummation of the Transactions and (ii) in taking such actions or making any such filings, furnishing information required in connection therewith and seeking timely to obtain any such actions, consents, approvals or waivers.

Section 5.09. Public Announcements. MCK and the Echo Parties agree that, from the date hereof until the earlier of the Closing and the termination of this Agreement in accordance with Section 9.01, each of MCK and Echo Holdco (or their respective Subsidiaries) shall consult before issuing any press release or making any public statement with respect to the Transaction Documents or the Transactions and, except as may be required by Applicable Law or any listing agreement with any national securities exchange, shall not issue any such press release or make any such public statement prior to such consultation.

Section 5.10. Business Plan; Operating and Capital Budget; Capital Structure .

(a) Subject to the terms and conditions of this Agreement, MCK and Echo Holdco shall use commercially reasonably efforts to take, or cause to be taken, the following actions prior to the Closing:

(i) prepare a five-year business plan for the Company covering the period from and after the Closing that is reasonably acceptable to MCK and Echo Holdco;

(ii) prepare an annual operating and capital budget and an annual operating plan for the Company covering the period from and after the Closing for at least one year following the Closing that is reasonably acceptable to MCK and Echo Holdco; and

(iii) form a committee (the “ Management Selection Committee ”) comprised of John H. Hammergen, Patrick J. Blake, Bansi Nagji, Neil Simpkins, Neil de Crescenzo and an individual to be appointed by BX.

provided that if MCK and Echo Holdco are unable to agree on a business plan and/or annual operating and capital budget pursuant to Section 5.10(a)(i) or Section 5.10(a)(ii), then the Company shall operate pursuant to an initial business plan and/or annual operating and capital budget, as applicable, determined in the good faith discretion of the Company’s chief executive officer to be consistent with the financing plans of the Company provided to the Financing Sources in connection with the Debt Financing, until a replacement business plan and/or annual operating and capital budget is approved by the Company in accordance with the LLC Agreement.

(b) The Management Selection Committee shall agree upon the Initial Management Team and the initial compensation packages for the Initial Management Team of the Company prior to the Closing; provided , that the chief executive officer of the Company following the Closing shall be Neil de Crescenzo.

Section 5.11. Core MTS Financial Statements . Prior to Closing, MCK shall deliver to the Echo Parties audited financial statements for the Core MTS Business for the fiscal years ended March 31, 2015 and 2016 (the “ Core MTS Financial Statements ”). The Core MTS Financial Statements shall fairly present in all material respects, in conformity with GAAP applied on a consistent basis (except as may be indicated in the notes thereto), the consolidated financial position of the Core MTS Business as of March 31, 2015 and 2016 and consolidated results of operations and cash flows for the two years ended March 31 2016.

Section 5.12 . Echo Connect Separation . The Echo Parties shall take all actions necessary or advisable to cause the Echo Connect Separation to occur at or prior to the Closing.

Section 5.13 . Further Assurances. At and after the Closing, the officers and Board (as defined in the LLC Agreement) shall be authorized to execute and deliver, in the name and on behalf of the Company, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of the Company, any other actions and things to vest, perfect or confirm of record or otherwise in the Company any and all right, title and interest in, to and under any of the rights, properties or assets of the Company contributed and/or transferred to the Company pursuant to this Agreement.

Section 5.14. Non-Solicitation. Other than with respect to MTI Participating Employees, from the date hereof and for a period of one year following the Closing Date, (i) neither the Company, Echo nor Echo Holdco and their respective Subsidiaries shall, directly or indirectly, solicit for employment any employee of MCK or any of its Subsidiaries, and (ii) MCK and its Subsidiaries shall not solicit for employment any employee of the Company, Echo, Echo Holdco, Echo Connect or their respective Subsidiaries, unless such employee ceased to be an employee of MCK or its Subsidiaries or Company, Echo, Echo Holdco, Echo Connect or their respective Subsidiaries, as applicable, prior to such action by such soliciting Person, or, in the case of such employee’s voluntary termination of employment with MCK or its Subsidiaries or Company, Echo, Echo Holdco, Echo Connect or their respective Subsidiaries, as applicable, at least one (1) month prior to such action by such soliciting Person; provided , that the foregoing provision will not prevent the Company, the Echo Parties or any of their respective Affiliates or MCK or any of its Affiliates from employing any current or former employee of MCK or any of its Subsidiaries or the Company, Echo, Echo Holdco, Echo Connect or their respective Subsidiaries, as applicable, who contacts the soliciting Person on his or her own initiative without any direct or indirect solicitation by, or encouragement from, such soliciting Person; provided, further , that the publication of advertisements in newspapers and/or electronic media of general circulation (including advertisements posted on the Internet) will not be deemed a violation of this Section 5.14; provided further that, for the avoidance of doubt, this non-solicit shall not apply to any portfolio company Affiliated with any Echo Shareholder unless such Echo Shareholder has directed such portfolio company to solicit such employee.

Section 5.15. Tax Matters . Except as expressly contemplated or permitted in this Agreement or the other Transaction Documents, from the date hereof until the first to occur of (x) a Qualified MCK Exit (as defined in the LLC Agreement), (y) the expiration or termination of the MCK Exit Window (as defined in the LLC Agreement) and (z) the expiration or termination of the IPO Preference Period prior to the occurrence of a Qualified IPO (each as defined in the LLC Agreement), (i) Echo shall not, and shall cause BX and H&F not to, (I) enter into “an agreement, understanding, arrangement, or substantial negotiations” (within the meaning of Treasury Regulation Section 1.355-7(b)(2)) or (II) otherwise engage in any discussions in any form, in each case with respect to the acquisition, directly or indirectly, of Echo, SpinCo (as defined in the LLC Agreement) and/or the Company, and (ii) and Echo shall cause BX and H&F not to make an Acquiror Shareholder Acquisition (as defined in the form of Tax Matters Agreement attached as Exhibit E to the LLC Agreement). This Section 5.15 shall be construed on the basis of the tax law and regulations in effect as of the date hereof.

Section 5.16. Employee Matters.

(a) MCK and Echo Holdco shall agree to cooperate in good faith following the date hereof to identify the MTI Participating Employees that are not employed by a MCK Contributed Entity (including those providing shared services and working at a corporate level) in a manner intended to be consistent (along with the Transition Services Agreements) with the “stand-alone cost model” included in Section 5.16 of the MCK Disclosure Schedule and either (i) MCK shall use its commercially reasonable efforts to transfer the employment of such MTI Participating Employees to a MCK Contributed Entity prior to the Closing or (ii) the parties will take efforts to transfer the employment of such MTI Participating Employees to the Company or one of its Subsidiaries as of, or as soon as commercially practicable following, the Closing Date.

(b) MCK and Echo Holdco agree to cooperate in good faith between the date hereof and such date (the “ Plan Determination Date ”) that allows MCK to reasonably set up Mirror Plans (as defined below) necessary to determine the appropriate employee benefits plans (the “ New Company Benefit Plans ”) for Company Employees with the intention that similarly situated Echo Participating Employees and MTI Participating Employees will receive substantially comparable benefits to the other by January 1, 2018, which may include establishment of plans at the applicable MCK Contributed Entity level effective January 1, 2017 (“New Subsidiary Plans”). If MCK and Echo Holdco fail to mutually agree upon the New Company Benefit Plans by the Plan Determination Date, MCK shall use its commercially reasonable efforts to cause the applicable MCK Contributed Entity to establish “mirror” benefit plans for each material health and welfare and nonqualified deferred compensation plan that covers the MTI Participating Employees as of the date hereof, effective starting no later than the Closing Date (such plans or the New Subsidiary Plans, as applicable, the “ Mirror Plans ”). Each Mirror Plan is intended to be substantially similar to the corresponding MCK plan. To the extent the Mirror Plans are “spin-offs” of MCK Plans that are funded through a rabbi trust, MCK shall provide sufficient assets (or access to such assets) to the Company to cover any existing liabilities as of Closing associated with such Mirror Plans. The expenses incurred in connection with setting up such New Company Benefit Plans or Mirror Plans, as applicable, shall be considered a Shared Transaction Expense.

(c) For a period of at least one year following the Closing Date, the Company shall provide (x) each Echo Participating Employee and (y) each MTI Participating Employee, in each case who is employed by the Company or one of its Subsidiaries immediately after the Closing Date or the employment transfer date (the “ Employment Transfer Date ”), if after the Closing Date (collectively, the “ Company Employees ”), with base salary or wage rate at least equal to the base salary or wage rate provided to such Company Employee immediately prior to the Closing Date. With respect to all benefit plans of the Company or its Subsidiaries in which Company Employees participate after the Closing Date (the “ Company Plans ”) (including any vacation, paid time-off and severance plans), for all purposes (but not for benefit accrual under any defined benefit plan or vesting under any equity compensation plan), including determining eligibility to participate, level of benefits, vesting, benefit accruals and early retirement subsidies, each Company Employee’s service with Echo Holdco or MCK, as applicable (as well as service with any predecessor employer to the extent service with the predecessor employer is recognized by Echo Holdco or MCK, as applicable) shall, to the extent permitted by applicable Law and the Company Plan, be treated as service with the Company; provided, however, that such service need not be recognized to the extent that such recognition would result in any duplication of benefits for the same period of service.

(d) The Company, Echo Holdco and MCK shall use reasonable best efforts between the date of this Agreement and Closing to determine appropriate management equity incentive plans for the employees of the Company post-Closing.

Section 5.17. Litigation and Similar Claims.

(a) From and after the Closing, each of MCK, Echo Holdco and the Company will cooperate in defending and pursuing, as appropriate, litigation and similar claims brought against the Company or any of the parties hereto, reasonably make available relevant employees and preserve and make reasonably available, to the extent legally and contractually permissible, all records reasonably necessary for such matters; provided that this Section 5.17(a) shall not apply with respect to any disputes among any party hereto or any of its Affiliates, on the one hand, or any other party hereto or its Affiliates, on the other hand.

(b) Prior to Closing, MCK shall have full and absolute discretion in and control of the defense of the Uniloc Matter (at its sole expense), including without limitation selecting any counsel of its choice and entering into any settlement or compromise or offering to enter into any settlement or compromise in relation to the Uniloc Matter or foregoing any appeal or recourse in relation thereto, without the prior consent of Echo Holdco (but only to the extent such settlement or compromise involves solely monetary damages and does not include any injunctive or other equitable relief), provided, however, that MCK shall keep Echo Holdco reasonably informed and shall reasonably consult with Echo Holdco regarding the conduct of the defense of the Uniloc Matter, provided further, however, that such information and consultation shall not in any manner whatsoever limit MCK’s right to control the defense of the Uniloc Matter in its full and absolute discretion. Following Closing, MCK shall continue to have full and absolute discretion in and

control of the defense of the Uniloc Matter (at its sole expense) as set forth above; provided, that with respect to any settlement or compromise involving a payment by the Company or any of its Subsidiaries or any injunctive or other equitable relief against the Company or any of its Subsidiaries, MCK may only enter into such a settlement or compromise if the Company has given its prior written consent; provided, further, that the Company shall use commercially reasonable efforts to cooperate, and shall cause its directors, officers and employees, to use commercially reasonable efforts to cooperate with MCK in the defense of the Uniloc Matter.

(c) MCK shall have full and absolute discretion in and control of the defense of the TCPA Matter (at its sole expense), including without limitation selecting any counsel of its choice and entering into any settlement or compromise or offering to enter into any settlement or compromise in relation to the TCPA Matter or foregoing any appeal or recourse in relation thereto, without the prior consent of Echo Holdco (but only to the extent such settlement or compromise involves solely monetary damages and does not include any injunctive or other equitable relief applicable to the Company).

Section 5.18. Proposed Data License . The Company, Echo Holdco and MCK agree to cooperate in good faith to negotiate and enter into a mutually acceptable agreement between the Company and MCK or one or more of its Subsidiaries relating to the licensing by the Company of certain data obtained through the operation of the RelayHealth Pharmacy Network.

Section 5.19. Echo Shareholder Matters. From the date hereof until the Closing, Echo Holdco will use reasonable best efforts to cause the other Echo Shareholders to enter into joinders to this Agreement. To the extent Echo Holdco is unable to obtain all of such joinders, BX and H&F will exercise their rights under the existing Echo Holdco stockholders agreement to require the other Echo Shareholders to participate in this Transaction on the terms and conditions set forth herein.

ARTICLE 6

T AX M ATTERS

Section 6.01 . Tax Cooperation; Allocation of Taxes . (a) MCK, Echo and Echo Holdco agree to furnish or cause to be furnished to each other and the Company, upon request, as promptly as practicable, such information and assistance relating to their respective Contributed Businesses (including access to books and records) as is reasonably necessary for the filing of all Tax Returns, the making of any election relating to Taxes, the preparation for any audit by any Taxing Authority and the prosecution or defense of any claim, suit or proceeding relating to any Tax. MCK, Echo Holdco and Echo shall retain all books and records with respect to Taxes pertaining to the Contributed Businesses for a period of at least seven years following the Closing. The Company, its Affiliates, MCK and Echo shall cooperate with each other in the conduct of any audit or other proceeding relating to Taxes involving the Contributed Business. Notwithstanding anything to the contrary in this Agreement, in no event shall any Party or any of its respective Affiliates be entitled to any information relating to, or a copy of, any consolidated, combined, affiliated or unitary Tax Return that includes MCK or any of its Affiliates (other than pro forma information relating only to the Core MTS Business).

(b) All real property taxes, personal property taxes and similar ad valorem obligations levied with respect to a Contributed Business for a Straddle Tax Period (collectively, the “ Apportioned Obligations ”) shall be apportioned between MCK or Echo, as the case may be, and the Company based on the number of days of such Straddle Tax Period included in the Pre-Closing Tax Period and the number of days of such Straddle Tax Period in the Post-Closing Tax Period. MCK or Echo, as the case may be, shall be responsible for the proportionate amount of such taxes and similar obligations that is attributable to the Pre-Closing Tax Period. An estimate of Apportioned Obligations apportioned to Echo and MCK shall be included in the Echo Closing Statement and the MCK Closing Statement, respectively. The Company shall be responsible for the proportionate amount of such taxes that is attributable to the Post-Closing Tax Period.

(c) All sales, use, value added, registration stamp, recording, documentary, conveyancing, transfer and similar Taxes, levies, charges and fees incurred in connection with the transactions contemplated by this Agreement (collectively, “ Transfer Taxes ”) shall be borne by the Company. MCK and Echo shall cooperate in providing the Company with any appropriate resale exemption certifications and other similar documentation.

(d) Apportioned Obligations and Transfer Taxes shall be timely paid, and all applicable filings, reports and returns shall be filed, as provided by Applicable Law. Upon payment of any such Apportioned Obligation, the paying party shall present a statement to the non-paying party setting forth the amount in respect of which the paying party is entitled to indemnification under Article 8, as the case may be, together with such supporting evidence as is reasonably necessary to calculate such amount.

(e) For purposes of the determination of Echo Covered Taxes and MCK Covered Taxes (in each case described in clause (a) of the definition of Tax and other than Apportioned Obligations and Transfer Taxes) in respect of a Straddle Tax Period, Echo Covered Taxes or MCK Covered Taxes (as the case may be) shall be deemed to include (i) in the case of a Tax based on or measured by income or receipts, the amount that would be payable if the relevant Straddle Tax Period ended on and included the Closing Date (taking into account the proviso in Section 6.02(d)) and (ii) in the case of any other Tax, the amount of such Tax for the entire Straddle Tax Period multiplied by a fraction the numerator of which is the number of days in the portion of the Straddle Tax Period ending on the Closing Date and the denominator of which is the number of days in such Straddle Tax Period; provided , that, in the case of Taxes described in the preceding clause (i), the amount of any item that is taken into account only once for each taxable period (e.g., the benefit of graduated Tax rates, exemption amounts, etc.) shall be allocated between the two portions of the Straddle Tax Period in proportion to the number of days in each.

Section 6.02. Tax Returns .

(a) Where required or permitted by Applicable Law, MCK shall include, or cause to be included, each MCK Contributed Entity in, and shall file, or shall cause to be filed, (i) the United States consolidated federal income Tax Returns of the consolidated group of corporations of which MCK is the common parent for the taxable periods (or portions thereof) of the MCK Contributed Entities ending on or prior to the Closing Date and (ii) where applicable, all other consolidated, combined or unitary Tax Returns for the taxable periods (or portions thereof) of the MCK Contributed Entities ending on or prior to the Closing Date; provided , that the Parties hereby agree that any Tax item (including any item of income, gain, deduction, loss or credit) of an MCK Contributed Entity arising on the Closing Date after the Closing shall be properly allocable to a Post-Closing Tax Period and any transaction giving rise to any such Tax item shall be treated for all Tax purposes (to the extent permitted by Applicable Law) as having occurred at the beginning of the day following the Closing Date.

(b) In addition to the Tax Returns described in Section 6.02(a), MCK shall prepare (or cause to be prepared), where permitted by Applicable Law, all Tax Returns (i) required to be filed by any of the MCK Contributed Entities on or prior to the Closing Date (taking into account any applicable extension periods) and (ii) required to be filed by any of the MCK Contributed Entities after the Closing Date (taking into account any applicable extension periods) but which relate to a Pre-Closing Tax Period (other than any such period that is part of a Straddle Tax Period). With respect to Tax Returns described in clause (ii), the Company shall cause the applicable MCK Contributed Entity to execute and file such Tax Returns, pay any and all Taxes shown due thereon and provide MCK with evidence of such filing and payment, as applicable.

(c) Echo shall prepare (or cause to be prepared), where permitted by Applicable Law, all Tax Returns (i) required to be filed by any of Echo Holdco and its subsidiaries on or prior to the Closing Date (taking into account any applicable extension periods) and (ii) required to be filed by any of Echo Holdco and its subsidiaries after the Closing Date (taking into account any applicable extension periods) but which relate to a Pre-Closing Tax Period (other than any such period that is part of a Straddle Tax Period). With respect to Tax Returns described in clause (ii), the Company shall cause Echo Holdco or the applicable subsidiary thereof to execute and file such Tax Returns, pay any and all Taxes shown due thereon and provide Echo with evidence of such filing and payment, as applicable.

(d) With respect to any Straddle Tax Period for which a Tax Return in respect of Income Taxes is to be filed, to the extent permitted by Applicable Law, the Parties and their respective Affiliates shall use commercially reasonable efforts to elect to treat the Closing Date as the last day of the taxable period (it being understood that the taxable period of the U.S. federal income consolidated group of which Echo Holdco is the common parent will not terminate on the Closing Date); provided , that the Parties hereby agree that any Tax item (including any item of income, gain, deduction, loss or credit) of an MCK Contributed Entity or Echo Holdco or its subsidiaries, as the case may be, arising on the Closing Date after the Closing shall be properly allocable to a Post-Closing Tax Period and any transaction giving rise to any such Tax item shall be treated for all Tax purposes (to the extent permitted by Applicable Law) as having occurred at the beginning of the day following the Closing Date.

(e) Echo shall cause to be prepared, and, following such preparation and after the requirements of Section 6.02(g) have been satisfied, the Company shall cause to be filed, all income and similar Tax Returns of Echo Holdco and its subsidiaries for Straddle Tax Periods (“ Echo Straddle Returns ”). MCK shall cause to be prepared, following such preparation and

after the requirements of Section 6.02(g) have been satisfied, the Company shall cause to be filed, all income and similar Tax Returns of the MCK Contributed Entities and their subsidiaries for Straddle Tax Periods (“ MCK Straddle Returns ” and, together with the Echo Straddle Returns, “ Straddle Returns ”). All Straddle Returns shall be prepared in a manner consistent with past practice. The Company shall timely pay or cause to be paid all Taxes shown on such Straddle Returns and provide Echo and MCK with evidence of such filing and payment.

(f) The Company shall cause to be prepared and filed all Tax Returns of the MCK Contributed Entities, Echo Holdco and its Subsidiaries, other than those Tax Returns described in Section 6.02(a) through Section 6.02(c) and Straddle Returns. All such Tax Returns shall be prepared in a manner consistent with past practice.

(g) In the case of any Tax Return in respect of a Straddle Tax Period, the Party responsible for preparing such Tax Return under this Section 6.02 (the “ Preparing Party ”) shall deliver, at least sixty (60) days prior to the due date for filing such Tax Return (including any applicable extension period), to the two of MCK, Echo and the Company that are not so responsible (the “ Non-Preparing Parties ”) (i) a statement setting forth in reasonable detail the amount of MCK Covered Tax or Echo Covered Tax, as the case may be, shown on such Tax Return and the calculation thereof and (ii) copies of such Tax Return. Each of the Non-Preparing Parties shall have the right to review such Tax Return and the calculation of such amount and to suggest to the Preparing Party any reasonable changes to such Tax Return no later than thirty (30) days prior to the due date for filing such Tax Return. The Company, MCK and Echo, agree to consult and to attempt to resolve in good faith any issue arising as a result of the review of any such Tax Return. If the Company, MCK, and Echo are unable to resolve any such issue, the dispute shall be resolved in accordance with Section 6.04.

(h) Any amended Tax Return or claim for a refund with respect to any MCK Contributed Entity, Echo Holdco or its subsidiaries may be made only by the Preparing Party for the original Tax Return with respect to such Person pursuant to this Section 6.02, or with such Preparing Party’s consent if such Preparing Party is not permitted under Applicable Law to make such filing. If such filing would change the Tax liability of another Party (or any Affiliate of such other Party) for any taxable period, no such filing shall be made without the prior written consent of such other Party, which consent shall not be unreasonably withheld or delayed. The Company and its Subsidiaries shall not file a Tax Return for any Pre-Closing Tax Period or Straddle Tax Period other than in compliance with this Section 6.02.

(i) Each of the Parties (i) agrees to treat any adjustment to a Party’s respective Membership Percentage pursuant to Section 2.03 and Section 8.06 as an adjustment to the value of the consideration originally transferred to the Company by, and the number of Units originally issued to, such Party for all Tax purposes (to the extent permitted by Applicable Law), and (ii) shall not take any position inconsistent with the treatment described in the preceding clause (i) on any Tax Return except as otherwise required by Applicable Law.

Section 6.03. Tax Refunds in Respect of Certain Tax Liabilities.

(a) Any refunds or credits in lieu thereof with respect to MCK Covered Taxes shall be for the account of MCK, and any refunds or credits in lieu thereof with respect to Echo Covered Taxes shall be for the account of the Echo Shareholders and Echo. This Section 6.03 shall not apply to (i) any refunds or credits resulting from a carryback of any losses, credits or other attributes arising in the Post-Closing Tax Period to the Pre-Closing Tax Period or (ii) refunds or credits reflected as an asset in the MCK Closing Statement or Echo Closing Statement, as applicable.

(b) The Company shall (i) forward to MCK, or reimburse MCK, for any refunds or credits in lieu thereof with respect to MCK Covered Taxes (but only to the extent the corresponding MCK Covered Tax was reflected in the MCK Closing Statement or paid prior to the Closing) within ten days from receipt thereof by the Company or any of its Subsidiaries and (ii) forward to the Echo Shareholders and Echo, or reimburse the Echo Shareholders and Echo, for any refunds or credits in lieu thereof with respect to Echo Covered Taxes (but only to the extent the corresponding Echo Covered Taxes was reflected in the Echo Closing Statement or paid prior to the Closing) within ten days from receipt thereof by the Company or any of its Subsidiaries.

(c) In the case of refunds or credits in respect of MCK Covered Taxes or Echo Covered Taxes, as the case may be, that were neither reflected in the MCK Closing Statement or the Echo Closing Statement, as applicable, nor paid prior to the Closing, within ten days from the receipt thereof by the Company or any of its Subsidiaries, the Company shall issue to MCK or Echo, as the case may be, a number of Units equal to (i) the amount of such refund or credit divided by (ii) the Membership Unit Value.

Section 6.04. Dispute Resolution. In the event of any dispute relating to this Article 6, the Parties shall work together in good faith to resolve such dispute within 30 days. In the event that such dispute is not resolved, upon written notice by a Party after such 30-day period, the matter will be referred to a U.S. tax counsel or other tax advisor of recognized national standing (the “ Tax Advisor ”) that will be jointly chosen by the parties to the dispute; provided, however , that, if the parties to the dispute do not agree on the selection of the Tax Advisor after five days of good faith negotiation, each party to the dispute shall select a Tax Advisor and the Tax Advisors so selected shall jointly select, within ten days of their selection, a Tax Advisor to whom the dispute shall be referred. The Tax Advisor may, in its discretion, obtain the services of any third party necessary to assist it in resolving the dispute. The Tax Advisor shall furnish written notice to the parties to the dispute of its resolution of the dispute as soon as practicable, but in any event no later than 90 days after acceptance of the matter for resolution. Any such resolution by the Tax Advisor shall be binding on the Parties, and the Parties shall take, or cause to be taken, any action necessary to implement such resolution. All fees and expenses of the Tax Advisor shall be borne by the Company. If any dispute regarding the preparation of a Tax Return is not resolved before the due date for filing such return, the return shall be filed in the manner deemed correct by the Party responsible for filing the return without prejudice to the rights and obligations of the Parties hereunder, provided that the preparing Party shall file an amended Tax Return, within ten days after the completion of the process set forth in this Section 6.04, reflecting any changes made in connection with such process.

ARTICLE 7

C LOSING C ONDITIONS

Section 7.01. Conditions to Closing. The respective obligations of each Party to enter into the applicable Transaction Documents and to perform the other Closing Actions and consummate the Closing are subject to the satisfaction or waiver at the Closing of the following conditions:

(a) no Applicable Law shall prohibit the consummation of the Transactions;

(b) no restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Transactions (an “ Order ”) shall have taken effect and shall still be in effect;

(c) any applicable waiting period (and any extension thereof) under the HSR Act relating to the Transactions shall have expired or been terminated and all approvals under those foreign antitrust laws identified on Section 7.01(d) of the Echo Disclosure Schedule and the MCK Disclosure Schedule, respectively, to the extent required to be obtained at or prior to the Closing in respect of the Transactions, shall have been obtained at or prior to the Closing;

(d) the Company or one of its Subsidiaries shall have received the proceeds of the Debt Financing, which shall be sufficient to make the payments contemplated by Article 2 and Article 3; and

(e) the Company shall have received customary payoff letters with respect to the Echo Holdco Debt in connection with the Refinancing on or prior to the Closing Date.

Section 7.02. Conditions to the Obligations of the Echo Parties . The obligations of the Echo Parties to enter into the applicable Transaction Documents and to perform the other Closing Actions and consummate the Closing are subject to the satisfaction or waiver at the Closing of the following conditions:

(a) MCK and its Subsidiaries shall have performed in all material respects the obligations of MCK hereunder required to be performed by MCK or its Subsidiaries at or prior to the Closing,

(b) (i) the representations and warranties of MCK set forth in Section 4.02(a), Section 4.02(b), Section 4.02(e) and Section 4.02(x) (collectively, the “ MCK Fundamental Reps ”) (disregarding all materiality and Material Adverse Effect qualifications contained therein) shall be true and correct in all material respects at and as of the Closing as if made at and as of such time (other than such representations and warranties that by their terms address matters only as of another specified time, which shall be true and correct in all material respects only as of such

time); and (ii) the representations and warranties (other than the MCK Fundamental Reps) of MCK contained in this Agreement or in any certificate or other writing delivered by MCK or its Affiliates pursuant hereto (disregarding all materiality and Material Adverse Effect qualifications contained therein) shall be true and correct at and as of the Closing as if made at and as of such time (other than representations and warranties that by their terms address matters only as of another specified time, which shall be true and correct only as of such time), with only such exceptions as have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Core MTS Business;

(c) the Echo Parties shall have received a certificate signed by an executive officer of MCK certifying the satisfaction of the conditions set forth in Section 7.02(a), (b), (e) and (f);

(d) the Echo Parties shall have received the Core MTS Financial Statements;

(e) the MCK Pre-Closing Restructuring shall have occurred or will occur at the Closing; and

(f) no Material Adverse Effect on the Core MTS Business shall have occurred between the date hereof and the Closing Date.

Section 7.03 . Conditions to the Obligations of MCK . The obligations of MCK and its Subsidiaries to enter into the applicable Transaction Documents and to perform the other Closing Actions and consummate the Closing are subject to the satisfaction or waiver at the Closing of the following conditions:

(a) the Echo Parties and their Subsidiaries shall have performed in all material respects all of their respective obligations hereunder required to be performed by them or their respective Subsidiaries at or prior to the Closing,

(b) the representations and warranties of Echo Holdco set forth in Section 4.01(a), Section 4.01(b), Section 4.01(e)(i), Section 4.01(e)(ii) and Section 4.01(y) (collectively, the “ Echo Fundamental Reps ” and collectively with the MCK Fundamental Reps, the “ Fundamental Representations ”) (disregarding all materiality and Material Adverse Effect qualifications contained therein) shall be true and correct in all material respects at and as of the Closing as if made at and as of such time (other than representations and warranties that by their terms address matters only as of another specified time, which shall be true and correct in all material respects only as of such time) and (ii) the representations and warranties of Echo Holdco (other than the Echo Fundamental Reps) contained in this Agreement or in any certificate or other writing delivered by Echo Holdco pursuant hereto (disregarding all materiality and Material Adverse Effect qualifications contained therein) shall be true and correct at and as of the Closing as if made at and as of such time (other than representations and warranties that by their terms address matters only as of another specified time, which shall be true and correct only as of such time), with only such exceptions as have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Echo Business;

(c) MCK shall have received a certificate signed by an executive officer of Echo Holdco certifying the satisfaction of the conditions set forth in Section 7.03(a), Section 7.03(b) and Section 7.03(d);

(d) no Material Adverse Effect on the Echo Business shall have occurred between the date hereof and the Closing Date;

(e) the Echo Connect Separation shall have occurred or will occur at Closing;

(f) The certificate of incorporation of Echo in substantially the form attached hereto as Exhibit I shall have been adopted and approved by the board of directors and stockholders of Echo in accordance with Applicable Law and shall have been filed with the Secretary of State of the state of Delaware, with effectiveness of such certificate of incorporation conditioned only on the Closing;

(g) MCK shall have received a certificate signed by an executive officer of Echo Holdco certifying that Echo has received an Echo 721 Tax Opinion from the Echo Tax Opinion Advisor or an Alternative Tax Opinion Advisor; and

(h) The merger agreement relating to the Merger (as defined in the LLC Agreement) in substantially the form attached as Exhibit D to the LLC Agreement shall have been adopted and approved by the board of directors and stockholders of Echo in accordance with Applicable Law, and Echo shall have executed and released its counterpart signature page(s) to such merger agreement, with such release to be effective concurrently with the Closing.

ARTICLE 8

I NDEMNIFICATION

Section 8.01 . Survival of Representations and Warranties . Claims arising out of representations and warranties of MCK and Echo Holdco set forth in this Agreement or any certificate delivered hereunder shall survive the Closing until the earlier of (a) 60 days following delivery to the Company of the audited consolidated financial statements of the Company and its Subsidiaries for the first full fiscal year of the Company completed after the Closing and (b) the consummation of a Qualified IPO (as defined in the LLC Agreement), except that claims arising out of Fundamental Representations shall survive the Closing until consummation of a Qualified IPO and claims arising out of representations and warranties contained in Section 4.01(t) ( Taxes ) and Section 4.02(s) ( Taxes ) shall survive the Closing until the earlier of consummation of a Qualified IPO and the 30 ^th day following the expiration of the statute of limitations for the matters set forth therein. Claims arising out of agreements and covenants of a Party set forth in this Agreement that, by their nature were to be performed at or prior to Closing, shall survive until the earlier of 60 days following delivery to the Company of the audited consolidated financial statements of the Company and its Subsidiaries for the first full fiscal year of the Company completed after the Closing and consummation of the Qualified IPO and claims

arising out of any other covenants and agreements shall survive until such obligations has been fully discharged. For the avoidance of doubt, claims related to the Echo Connect Liabilities, MCK Excluded Liabilities, Echo Covered Taxes and MCK Covered Taxes shall survive indefinitely. Notwithstanding the preceding sentences, any claim in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate if notice of the matter giving rise to such claim of indemnity shall have been given to the party against whom such indemnity may be sought prior to such time.

Section 8.02. Indemnification by Echo.

(a) Echo (the “ Echo Indemnifying Party ”) will indemnify MCK, its Affiliates and their respective officers, directors, partners, managers, stockholders and members (the “ MCK Indemnified Parties ”) against any loss or damage (including expenses of investigation and reasonable attorneys’ fees and expenses in connection with any action, suit or proceeding whether involving a third-party claim or a claim solely between the parties hereto) (“ Damages ”) suffered by any of them as a result of, without duplication, (v) a breach or inaccuracy of any representation or warranty contained in this Agreement or any certificate delivered in connection with this Agreement or any breach of Section 5.06(d) (each such breach or inaccuracy, a “ Warranty Breach ”) of Echo Holdco, (w) a breach of any covenant or agreement (other than Section 5.06(d)) made or to be performed by or on behalf of the Echo Parties or Echo or their respective Subsidiaries pursuant to this Agreement, (x) Echo Connect Liabilities, (y) Echo Covered Taxes (except to the extent included in the Echo Closing Statement) or (z) any of the matters described on Section 8.02(a)(z) of the Echo Disclosure Schedules. The Echo Indemnifying Party’s obligation to indemnify the MCK Indemnified Parties as provided in this Section 8.02, however, shall be subject to the following limitations:

(i) the Echo Indemnifying Party shall not, in any case, be obligated to indemnify against any Damages (a) for Warranty Breaches of Echo Holdco or (b) related to any of the matters described on Section 8.02(a)(z) of the Echo Disclosure Schedules unless and until the aggregate amount of Damages for such Warranty Breaches and related to any of the matters described on Section 8.02(a)(z) of the Echo Disclosure Schedules exceeds $50,000,000 (the “ Deductible ”), and then shall be liable for all such Damages;

(ii) the Echo Indemnifying Party shall not be obligated to indemnify against any Damages (a) for Warranty Breaches of Echo Holdco and (b) related to any of the matters described on Section 8.02(a)(z) of the Echo Disclosure Schedules to the extent the aggregate amount thereof exceeds $500,000,000 (the “ Cap ”);

(iii) any Damages for which the MCK Indemnified Parties are indemnified under this Section 8.02 (other than Damages related to Echo Connect Liabilities which shall be paid in cash) shall be paid exclusively in the form of an adjustment to the relative Membership Percentage of the applicable MCK-Affiliated Members, on the one hand, and Echo, on the other hand, as provided in Section 8.06(a) below;

(iv) the MCK Indemnified Parties may assert any claim for indemnification against the Echo Indemnifying Party under Section 8.02(a)(v) and Section 8.02(a)(w) only until the date on which such representation, warranty, covenant or agreement ceases to survive as provided in Section 8.01;

(v) the Damages for which the MCK Indemnified Parties are indemnified under this Section 8.02 shall not include any punitive or exemplary damages, except for punitive or exemplary damages payable to third parties in respect of third-party claims; and

(vi) the Damages for which the MCK Indemnified Parties are indemnified under this Section 8.02 shall not result in the Echo Shareholders or Echo holding less than the Echo Minimum Ownership.

(b) Notwithstanding the foregoing, (x) the limitations on the Echo Indemnifying Party’s obligation to indemnify the MCK Indemnified Parties set forth in Section 8.02(a)(i) and Section 8.02(a)(ii) shall not apply to (i) Warranty Breaches of Echo Fundamental Reps and Section 4.01(t) ( Taxes ) or (ii) arising out of fraud (and the Damages set forth in clause (i) and (ii) of this Section 8.02(b) shall not count towards determining whether the Damages for Warranty Breaches have exceeded the Cap), (y) the Echo Indemnifying Party’s obligation to indemnify the MCK Indemnified Parties set forth in this Section 8.02 shall only apply after the Closing and (z) the representations and warranties of Echo Holdco (other than the representations and warranties contained in Section 4.01(g) (Financial Statements), Section 4.01(h) (Absence of Certain Changes) and Section 4.01(j) (Material Contracts)) shall be read as if all qualifications as to materiality or Material Adverse Effect were deleted therefrom.

Section 8.03. Indemnification by MCK and its Subsidiaries .

(a) MCK and its Subsidiaries (the “ MCK Indemnifying Parties ”) will indemnify Echo, its Affiliates and their respective officers, directors, partners, managers, stockholders and members (the “ Echo Indemnified Parties ”) against any Damages suffered by any of them as a result of, without duplication, (v) a Warranty Breach of MCK (other than a breach of Section 4.02(f), for which case there will be no indemnification remedy), (w) a breach of covenant or agreement (other than Section 5.06(d)) made or to be performed by MCK or its Subsidiaries pursuant to this Agreement, (x) MCK Excluded Liabilities, (y) MCK Covered Taxes (except to the extent included in the MCK Closing Statement) or (z) any of the matters described on Section 8.03(a)(z) of the MCK Disclosure Schedules. The obligation of the MCK Indemnifying Parties to indemnify the Echo Indemnified Parties as provided in this Section 8.03, however, shall be subject to the following limitations:

(i) the MCK Indemnifying Parties shall not, in any case, be obligated to indemnify against any Damages for (a) Warranty Breaches of MCK or (b) related to any of the matters described on Section 8.03(a)(z) of the MCK Disclosure Schedules, unless and until the aggregate amount of Damages for such Warranty Breaches and related to any of the matters described on Section 8.03(a)(z) of the MCK Disclosure Schedules exceeds the Deductible, and then shall be liable for all such Damages;

(ii) the MCK Indemnifying Parties shall not be obligated to indemnify against any Damages (a) for Warranty Breaches of MCK or (b) related to any of the matters described on Section 8.03(a)(z) of the MCK Disclosure Schedules, to the extent the aggregate amount thereof exceeds the Cap;

(iii) any Damages for which the Echo Indemnified Parties are indemnified under this Section 8.03 (other than Damages related to MCK Excluded Liabilities or MCK Covered Taxes, which shall be paid in cash) shall be paid in the form of an adjustment to the relative Membership Percentage of the applicable MCK-Affiliated Members, on the one hand, and Echo, on the other hand, as provided in Section 8.06(a) below;

(iv) the Echo Indemnified Parties may assert any claim for indemnification against the MCK Indemnifying Parties under Section 8.03(a)(v) and Section 8.03(a)(w) only until the date on which such representation and warranty ceases to survive as provided in Section 8.01; and

(v) the Damages for which the Echo Indemnified Parties are indemnified under this Section 8.03 shall not include punitive or exemplary damages (except for punitive or exemplary damages payable to third parties in respect of third-party claims).

(b) Notwithstanding the foregoing, (x) the limitations to the obligation of the MCK Indemnifying Parties to indemnify the Echo Indemnified Parties set forth in Sections 8.03(a)(i) and (ii) shall not apply to Damages for (i) Warranty Breaches of MCK Fundamental Reps and Section 4.02(s) ( Taxes ) or (ii) arising out of fraud (and the Damages set forth in clause (i) and (ii) shall not count towards determining whether the Damages for Warranty Breaches have exceeded the Cap), (y) MCK’s obligation to indemnify the Echo Indemnified Parties set forth in Section 8.03 shall only apply after the Closing and (z) the representations and warranties of MCK (other than the representations and warranties contained in Section 4.02(f) (Financial Statements), Section 4.02(g) (Absence of Certain Changes) and Section 4.02(i) (Material Contracts)) shall be read as if all qualifications as to materiality or Material Adverse Effect were deleted therefrom.

Section 8.04. Indemnification Procedures .

(a) In the event that any written claim or demand for which an indemnifying party (the “ Indemnifying Party ”) may have liability to any indemnified party (the “ Indemnified Party ”) hereunder is asserted against or sought to be collected from any Indemnified Party by a third party, the Indemnified Party shall notify the Indemnifying Party of such claim promptly (by notice to the Echo Representative in the case of indemnification claimed under Section 8.02 and by notice to MCK in the case of indemnification claimed under Section 8.03). Notwithstanding the foregoing, the Indemnified Party’s failure to so notify the Indemnifying Party shall not (except as stated in Section 8.01 with respect to the survival of representations and warranties and the right to

claim thereunder) preclude it from seeking indemnification hereunder except to the extent such failure materially prejudices the Indemnifying Party’s ability to defend as provided herein (in which event the Indemnified Party’s right to indemnity will be reduced equitably to reflect such material prejudice). The Indemnifying Party shall promptly following notice of the claim from the Indemnified Party (but in any case no less than 10 Business Days before the due date for the answer or response to a claim) notify the Indemnified Party of its desire to defend such claim. In the event the Indemnifying Party so notifies the Indemnified Party, the Indemnifying Party shall have the right to defend such claim at its own expense and by counsel of its own choosing reasonably satisfactory to the Indemnified Party; provided that (i) the Indemnifying Party states in such notice that the Indemnifying Party will, and thereby covenants to, indemnify, defend and hold harmless the Indemnified Party from and against the entirety of any and all Damages the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by such claim, (ii) such claim involves only money damages and does not seek an injunction or other equitable relief against the Indemnified Party, (iii) the Indemnified Party has not been advised by counsel that an actual or potential conflict exists between the Indemnified Party and the Indemnifying Party in connection with the defense of such claim, (iv) such claim does not relate to or otherwise arise in connection with any criminal or regulatory enforcement action, and (v) such claim is not in respect of Taxes of the Indemnified Party. If the Indemnifying Party elects to, and is able to, defend such claim, the Indemnified Party may participate at its own expense in the defense of such claim by counsel of its own choosing. Notwithstanding the foregoing, the Indemnified Party shall be entitled to direct or control the defense of such claim if (x) the Indemnified Party waives all right to indemnification it may have in respect of such claim under this Article 8 or (y) the Indemnifying Party elects not to defend against such claim or fails to vigorously defend such claim thereafter. Unless the Indemnified Party has assumed the defense of a claim, the Indemnifying Party shall have the authority on behalf of the Indemnified Party to settle any such claim (with the Indemnifying Party being responsible for all costs and expenses of such settlement); provided that the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed) shall be required unless (1) such settlement releases the Indemnified Party from all liabilities and obligations with respect to such claim, (2) such settlement shall not permit any order, injunction or other equitable relief to be entered, directly or indirectly, against the Indemnified Party, and (3) there is no admission by the Indemnified Party of any liability or of any violation of Applicable Law. Each of the Indemnifying Party and the Indemnified Party shall cooperate, and cause its Affiliates to cooperate, in the defense of any claim. No settlement of any claim may be made by the Indemnified Party without the consent of the Indemnifying Party (such consent not to be unreasonably withheld, delayed or conditioned).

Section 8.05 . Calculation of Damages. The amount of any Damages payable under this Article 8 by the Indemnifying Party shall be net of any (i) amounts actually recovered by the Indemnified Party under applicable insurance policies or from any other Person alleged to be responsible therefor (net of any Tax and expenses, including the amount of any increases in insurance premiums (but only to the extent such increases actually and directly result from the applicable claim and are payable in respect of the two year period commencing on the date such claim is made), incurred by the Indemnified Party in connection with such recovery), and (ii) Tax benefit actually realized by the Indemnified Party arising from the incurrence or payment of any such Damages at any time prior to MCK’s direct or indirect disposition of its interest in the

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Company. If the Indemnified Party receives any amounts under applicable insurance policies, or from any other Person alleged to be responsible for any Damages, subsequent to an indemnification payment by the Indemnifying Party or equity adjustment pursuant to Section 8.06(a), then such Indemnified Party’s relative Membership Percentage in the Company shall be adjusted, or such Indemnified Party shall promptly reimburse the Indemnifying Party for any payment made or expense incurred by such Indemnifying Party in connection with providing such indemnification payment, up to the equity adjustment or payment amount received by the Indemnified Party, net of any Tax and expenses, including the amount of any increases in insurance premiums (but only to the extent such increases actually and directly result from the applicable claim and are payable in respect of the two year period commencing on the date the applicable claim is made), incurred by such Indemnified Party in collecting such amount. The Indemnified Party shall use commercially reasonable efforts to pursue any claim against any insurer under its insurance policies (or insurance policies under which it is a named insured) or any other Person alleged to be responsible for any Damages (other than the Indemnifying Party) for Damages for which it seeks indemnification hereunder and, subject to the foregoing sentence, the expenses reasonably incurred by the Indemnified Party in pursuing any such claim shall be Damages subject to indemnification hereunder; provided that nothing in this Section 8.05 shall be deemed to obligate an Indemnified Party to maintain any insurance policy or to file a lawsuit or commence any other proceeding against any insurer or any other Person.

Section 8.06. Remedies .

(a) Subject to Section 8.02(a)(vi) and MCK’s Top-up Option (as defined in the LLC Agreement) and the last sentence of this Section 8.06(a), the exclusive remedy for any Damages for which the MCK Indemnified Parties are indemnified under Section 8.02 (other than with respect to claims brought under Section 8.02(a)(x), which may be paid solely in cash), on the one hand, or for which the Echo Indemnified Parties are indemnified under Section 8.03 (other than with respect to claims brought under Section 8.03(a)(y) and Section 8.03(a)(x) which may be paid solely in cash), on the other hand, shall be at the sole election of the Indemnifying Party, in the form of either (X) an adjustment by the Company to the Membership Percentage of Echo or the MCK Contributors and MCK IPCo, as applicable, or (Y) payment in cash by the Indemnifying Party. The number of Units to be so adjusted (the “ Adjustment Units ”) shall be determined (1) in the case of Damages representing expenses incurred directly by the Indemnified Party, by dividing (i) the amount of the indemnifiable Damages by (ii) the Membership Unit Value, and (2) otherwise , by dividing (i) the amount of the indemnifiable Damages by (ii) the product of (A) the Membership Unit Value and (B) the aggregate Membership Percentages of the Indemnified Party as of the time such Damages arose. The applicable Indemnifying Party shall have a number of Units equal to the Adjustment Units cancelled for no consideration. The number of Adjustment Units deducted from each MCK Contributor and MCK IPCo shall be allocated among the MCK Contributors and MCK IPCo (i) based on which such Person contributed, sold or assigned the asset or liability to which such Damages relate, if ascertainable, and (ii) otherwise shall be allocated among the MCK Contributors and MCK IPCo based on their relative Membership Percentage as of the time the related Damages arose. With respect to Damages representing expenses incurred directly by the Indemnified Party, such Indemnified Party shall also be entitled to payment of and/or reimbursement by the Company of such expenses at the time such expenses are payable by such Indemnified Party.

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(b) Except in the case of fraud, after the Closing, (x) the rights and remedies of the Parties hereto (i) under this Article 8, (ii) under Section 2.02(f) and (iii) to seek specific performance or injunctive relief, shall be sole and exclusive and in lieu of any and all other rights and remedies which the parties may have under this Agreement or otherwise against each other with respect to (A) any breach or inaccuracy of any representation or warranty set forth in this Agreement or any certificates delivered hereunder or (B) any failure to perform any covenant or agreement set forth in this Agreement, and (y) each party expressly waives any and all other rights or causes of action it or its Affiliates may have against any other party or its Affiliates now or in the future with respect to the representations, warranties, covenants and agreements set forth in this Agreement and the certificates delivered hereunder.

(c) The rights of each Echo Indemnified Party and each MCK Indemnified Party under this Article 8 are cumulative, and each Echo Indemnified Party and MCK Indemnified Party will have the right in any particular circumstance, in its sole discretion, to enforce any provision of this Article 8 without regard to the availability of a remedy under any other provision of this Article 8 provided that no Party shall be permitted to recover more than once for each loss.

(d) The Parties hereby acknowledge and agree that, notwithstanding the foregoing provisions of this Article 8, an Indemnified Party may have certain rights to indemnification, advancement of expenses and/or insurance provided by other sources. The Parties hereby acknowledge and agree (i) that the Indemnifying Party is the indemnitor of first resort (i.e., its obligations to an Indemnifying Party are primary and any obligation of such other sources to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Indemnifying Party are secondary) and (ii) that the Indemnifying Party shall be required to advance the full amount of expenses incurred by an Indemnifying Party 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 the terms of this Agreement without regard to any rights an Indemnified Party may have against such other sources. The Parties further agree that no advancement or payment by such other sources on behalf of an Indemnified Party with respect to any claim for which such Indemnified Party has sought indemnification, advancement of expenses or insurance from an Indemnifying Party shall affect the foregoing, and that such other sources 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 such Indemnified Party against the Indemnifying Party.

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ARTICLE 9

M ISCELLANEOUS

Section 9.01 . Termination; Effect of Termination .

(a) This Agreement may be terminated at any time prior to the Closing:

(i) by mutual written agreement of Echo Holdco and MCK;

(ii) by either Echo Holdco or MCK if the Transactions have not occurred on or prior to June 28, 2017 (the “ End Date ”); provided that the right to terminate this Agreement shall not be available to any party whose failure to fulfill any obligation under this Agreement shall have been the cause, or shall have resulted in, the failure of the Closing prior to the End Date;

(iii) by either Echo Holdco or MCK if there shall be any Order preventing the consummation of the Transactions in effect that shall have become final and nonappealable;

(iv) by MCK if there shall have occurred, after the date hereof, (A) any change in Applicable Law or (B) any Tainting Acquisition that was not within the control of, or at the request of MCK, in each case, as a result of which MCK’s Tax Opinion Advisor shall have notified MCK that such Tax Opinion Advisor will be unable to render a Section 355(e) Opinion; provided, however , that following any such notification by MCK’s Tax Opinion Advisor, MCK shall use its reasonable best efforts to obtain a Section 355(e) Opinion from an Alternative Tax Opinion Advisor within 60 days of such notification, and if MCK obtains a Section 355(e) Opinion from an Alternative Tax Opinion Advisor within such period (or fails to obtain a Section 355(e) Opinion from an Alternative Tax Opinion Advisor within such period by reason of failure to use its reasonable best efforts to do so), MCK may not terminate this Agreement pursuant to this Section 9.01(a)(iv). For purposes of determining whether it is unable to render a Section 355(e) Opinion by reason of a Tainting Acquisition or a change in Applicable Law, MCK’s Tax Opinion Advisor shall be required to assume the Assumed Facts, provided that prior to MCK being permitted to terminate this Agreement pursuant to this Section 9.01(a)(iv), MCK shall use commercially reasonable efforts, and shall permit and provide such information so as to permit the Echo Parties to use commercially reasonable efforts, to receive written confirmation from the holder of the stock acquired in such Tainting Acquisition to the effect that (x) such holder will not exchange such stock for SpinCo (as defined in the LLC Agreement) common stock and (y) such holder is not a shareholder of Echo Holdco or a Person whose stock would be aggregated with, or attributed to, any such Person under Section 355(e)(4)(C) of the Code.

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(v) by Echo or MCK if there shall have occurred, after the date hereof, (i) a change in Applicable Law (for this purpose, the finalization of proposed Treasury Regulation Sections 1.385-1 through 1.385-4 (or any portion thereof) in the form as of the date of this Agreement shall not be a change in Applicable Law), or (ii) a change in applicable facts since the date of this Agreement (which, for the avoidance of doubt, shall not include a change in a Party’s or Tax Opinion Advisor’s knowledge of underlying facts that have not changed since the date of this Agreement) not within the control of Echo, in each case as a result of which change in Applicable Law or facts Echo’s Tax Opinion Advisor shall have notified Echo that such Tax Opinion Advisor will be unable to render an Echo 721 Tax Opinion; provided, however , that following any such notification by Echo’s Tax Opinion Advisor, Echo shall use its reasonable best efforts to obtain an Echo 721 Tax Opinion from an Alternative Tax Opinion Advisor within 60 days of such notification, and if Echo obtains an Echo 721 Tax Opinion from an Alternative Tax Opinion Advisor within such period (or if Echo fails to obtain an Echo 721 Tax Opinion from an Alternative Tax Opinion Advisor within such period by reason of failure to use its reasonable best efforts to do so), Echo may not terminate this Agreement under this Section 9.01(a)(v);

(vi) by MCK if there shall have occurred, after the date hereof, (i) a change in Applicable Law (for this purpose, the finalization of proposed Treasury Regulation Sections 1.385-1 through 1.385-4 (or any portion thereof) in the form as of the date of this Agreement shall not be a change in Applicable Law), or (ii) a change in applicable facts since the date of this Agreement (which, for the avoidance of doubt, shall not include a change in a Party’s or Tax Opinion Advisor’s knowledge of underlying facts that have not changed since the date of this Agreement) not within the control of MCK, in each case as a result of which change in Applicable Law or facts MCK’s Tax Opinion Advisor shall have notified MCK that such Tax Opinion Advisor will be unable to render an MCK 721 Tax Opinion; provided, however , that following any such notification by MCK’s Tax Opinion Advisor, MCK shall use its reasonable best efforts to obtain an MCK 721 Tax Opinion from an Alternative Tax Opinion Advisor within 60 days of such notification, and if MCK obtains an MCK 721 Tax Opinion from an Alternative Tax Opinion Advisor within such period (or if MCK fails to obtain an MCK 721 Tax Opinion from an Alternative Tax Opinion Advisor within such period by reason of failure to use its reasonable best efforts to do so), MCK may not terminate this Agreement under this Section 9.01(a)(vi);

(vii) by Echo Holdco if a breach or inaccuracy of any representation or warranty or failure to perform any covenant or agreement on the part of MCK set forth in this Agreement shall have occurred that (A) would cause the conditions to the obligations of the Echo Parties to consummate the Transactions set forth in Article 7 not to be satisfied, and (B) is incapable of being cured by the End Date or, if curable, is not cured by MCK within 30 days of receipt by MCK of written notice of such breach or inaccuracy or failure (or, if the End Date is less than 30 days from the date of receipt of

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such notice, by the End Date); provided , that Echo Holdco shall not have the right to terminate this Agreement pursuant to this Section 9.01(a)(viii) if the Echo Parties are then in material breach of their obligations under this Agreement such that the closing conditions in Section 7.03(a) or Section 7.03(b) would not be satisfied at such time; or

(viii) by MCK, if a breach or inaccuracy of any representation or warranty or failure to perform any covenant or agreement on the part of the Echo Parties set forth in this Agreement shall have occurred that would (A) cause the conditions to the obligations of MCK to consummate the Transactions set forth in Article 7 not to be satisfied, and (B) is incapable of being cured by the End Date or, if curable, is not cured by the Echo Parties within 30 days of receipt by the Echo Parties of written notice of such breach or inaccuracy or inaccuracy or failure (or, if the End Date is less than 30 days from the date of receipt of such notice, by the End Date); provided , that MCK shall not have the right to terminate this Agreement pursuant to this Section 9.01(a)(viii) if MCK is then in material breach of its obligations under this Agreement such that the closing conditions in Section 7.02(a) or Section 7.02(b) would not be satisfied at such time.

(b) If this Agreement is terminated as permitted by this Section 9.01, such termination shall be effective as against all Parties hereto and shall be without liability of any party (or any of such Party’s, direct or indirect, former, current or future general or limited partners, stockholders, directors, officers, employees, managers, members, Affiliates, agents, other Representatives, or any former, current or future general or limited partners, stockholders, directors, officers, employees, managers, members, Affiliates, Agents or other Representatives of any of the foregoing) to the other Parties to this Agreement (including for the avoidance of doubt, the Financing Sources and any of their related parties); provided that if such termination shall result from the (i) intentional and willful failure of a Party to fulfill a condition to the performance of the obligations of the other Party, (ii) intentional and willful failure of a Party to perform a covenant under this Agreement or (iii) breach by a Party hereto of any of its Fundamental Representations or intentional and willful breach by a Party hereto of any other representation or warranty contained herein, subject to Section 9.10, such Party (in the case of a breach by MCK) and Echo Holdco (in the case of a breach by any of the Echo Parties) shall be fully liable for any and all liabilities and Damages incurred or suffered by the other Parties as a result of such failure or breach.

Section 9.02. No Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and is not assignable without the prior written consent of the Company, MCK and the Echo Representative, and any assignment without such consent shall be null and void and of no effect; provided that the Company may assign this Agreement and its rights hereunder without the prior written consent of any other Party to any of the Financing Sources to the extent necessary for purposes of creating a security interest herein or otherwise assigning as collateral in respect of the Debt Financing.

Section 9.03 . Entire Agreement. This Agreement, together with the Confidentiality Agreement and the other Transaction Documents, sets forth the entire understanding of the parties hereto with respect to the subject matter hereof, and supersedes any prior oral or written agreements, understandings, representations or covenants with respect to the Transactions. This

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Agreement may be modified only by written instruments signed by the Company, MCK and the Echo Representative; provided that this Agreement may not be modified without prior written consent of H&F (i) to the extent H&F would be disproportionately and adversely affected by such modification in any material respect, (ii) to the extent that such modification (x) changes the amount or type of consideration payable to, or to be received by, H&F and BX under this Agreement or (y) imposes additional liabilities or obligations on H&F or (iii) to the extent such modification relates to Exhibit A , Exhibit D , Exhibit G or Exhibit H , in each case, if such modification would require the consent of H&F if such modification was made following the Closing. Notwithstanding the foregoing, Section 9.02, Section 9.04(c), Section 9.10, Section 9.13 and this sentence may not be amended in a manner materially adverse to the interests of the Financing Sources to the extent provided in the Debt Commitment Letters without the written consent of the Lenders to the extent provided in the Debt Commitment Letters.

Section 9.04 . Governing Law; Submission to Jurisdiction.

(a) This Agreement and any related dispute shall be governed by and construed in accordance with the Applicable Laws of the State of Delaware, without regard to its conflicts of law principles.

(b) For the purposes of any suit, action or other proceeding arising out of or relating to this Agreement (each, an “ Action ”), each Party to this Agreement irrevocably submits, to the fullest extent permitted by Applicable Law, to the exclusive jurisdiction of any federal or state court sitting in the State of Delaware and the appellate courts having jurisdiction of appeals in such courts. For the purposes of any Action, each Party irrevocably and unconditionally waives, to the fullest extent permitted by Applicable Law, any objection to the laying of venue in any federal or state court sitting in the State of Delaware, and hereby further irrevocably and unconditionally waives, to the fullest extent permitted by Applicable Law, and agrees not to plead or claim in any such court that any such Action brought in any such court has been brought in an inconvenient forum. Each Party irrevocably consents, to the fullest extent permitted by Applicable Law, to service of process in connection with any such Action by registered mail to such Party at its address set forth in this Agreement, in accordance with the provisions of this Section 9.05. The consent to jurisdiction set forth in this Section 9.05 shall not constitute a general consent to service of process in the State of Delaware and shall have no effect for any purpose except as provided in this Section 9.05. The parties hereto agree that a final judgment in any such Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Applicable Law.

(c) Notwithstanding anything to the contrary contained in this Agreement, each Party: (i) agrees that it will not bring or support any Person in any Action of any kind or description, whether in Law or in equity, whether in contract or in tort or otherwise, against any of the Financing Sources in any way relating to this Agreement or any of the transactions contemplated by this Agreement, including, but not limited to, any dispute arising out of or relating in any way to the Debt Commitment Letters or the performance thereof or the financings contemplated thereby, in any forum other than the federal and New York state courts located in the Borough of Manhattan within the City of New York, (ii) agrees that, except as specifically set forth in the Debt Commitment Letters, all claims or causes of action (whether at law, in equity, in contract, in

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tort or otherwise) against any of the Financing Sources in any way relating to this Agreement, the Debt Financing or the performance thereof or the transactions contemplated hereby or thereby shall be exclusively governed by, and construed in accordance with, the internal laws of the State of New York, without giving effect to principles or rules or conflict of laws to the extent such principles or rules would require or permit the application of laws of another jurisdiction and (iii) hereby irrevocably and unconditionally waives any right such Party may have to a trial by jury in respect of any litigation (whether in Law or in equity, whether in contract or in tort or otherwise) directly or indirectly arising out of or relating in any way to the Debt Commitment Letters or the performance thereof or the financings contemplated thereby.

Section 9.05 . [Reserved]

Section 9.06 . Dispute Resolution. Unless otherwise specified herein, including Section 2.02, any dispute arising out of or relating to this Agreement shall first be escalated to an ad hoc committee consisting of senior representatives of MCK, on the one hand, and the Echo Representative, on the other hand, to attempt to achieve mutually satisfactory resolution within 30 days, as set out under Section 5.08 of the LLC Agreement; provided that any 30 day period shall be automatically shortened to the extent required to preserve a claim prior to expiration (as set forth in Section 8.01).

Section 9.07. Waiver of Jury Trial. EACH OF THE PARTIES HEREBY KNOWINGLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTERS (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR THE RELATIONSHIP ESTABLISHED HEREUNDER.

Section 9.08. Fees and Expenses . Except as otherwise set forth in this Agreement or any other agreement among the Echo Parties if the Transactions are not consummated, all fees and expenses incurred in connection with this Agreement and the Transactions, including the fees and disbursements of counsel, financial advisors and accountants, shall be paid by the Party incurring such fees or expenses; provided , that, (a) if the Transactions are consummated, the Shared Transaction Expenses, Echo Holdco Transaction Expenses, MCK Transaction Expenses, and Debt Breakage Costs shall be allocated to the Company, MCK and the Echo Parties as set forth in Article 2, (b) if the Transactions are not consummated, the Shared Transaction Expenses and Debt Financing Expenses incurred through termination of this Agreement shall be split equally.

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Section 9.09 . Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by email or facsimile with receipt confirmed or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses:

If to the Echo Parties or the Company:

c/o The Blackstone Group

345 Park Avenue

New York, NY 10154

Attention: Neil Simpkins

Facsimile: (212) 583-5749

and

Change Healthcare, Inc.

3055 Lebanon Pike, Suite 1000

Nashville, Tennessee 37214

Attention: General Counsel

Facsimile: (615) 340-6153

And a copy (which copy shall not constitute notice) to:

Ropes & Gray LLP

Prudential Tower, 800 Boylston Street

Boston, MA 02199-3600

Attention: R. Newcomb Stillwell

Facsimile: (617) 235-0213

and

Ropes & Gray LLP

Three Embarcadero Center

San Francisco, CA 94111-4006

Attention: Jason S. Freedman

Facsimile: (415) 315-4876

If to MCK:

McKesson Corporation

One Post Street, 32 ^nd Floor

San Francisco, CA 94104

Attention: General Counsel

Facsimile: (415) 983-8826

And a copy (which copy shall not constitute notice) to:

Davis Polk & Wardwell LLP

1600 El Camino Real

Menlo Park, CA 94025

Attention: Alan F. Denenberg

Facsimile: (650) 752-2004

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All notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a Business Day. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day. By written notice to the Company and the other Parties, any Party may change the address or facsimile number to which notices shall be directed.

Section 9.10 . No Personal Liability; Limited Recourse. It is expressly understood and agreed that, except as expressly provided herein, or in the case of fraud by any Person specified below, no Party’s direct or indirect, former, current or future general or limited partners, stockholders, directors, officers, employees, managers, members, Affiliates, agents, other Representatives, or any former, current or future general or limited partners, stockholders, directors, officers, employees, managers, members, Affiliates, Agents or other Representatives of any of the foregoing, or holder of equity interests in any Party hereto shall have any liability for or in respect of any obligation of such Party (it being further understood that, with respect to any obligations of a Party, the other Parties shall look solely to the assets of that Party with respect to such obligations). Notwithstanding anything to the contrary contained in this Agreement, (a) none of the Parties nor any of their respective Subsidiaries, Affiliates, directors, officers, employees, agents, partners, managers, members or stockholders shall have any rights or claims against the Financing Sources, in any way relating to this Agreement or any of the Transactions, or in respect of any oral representations made or alleged to have been made in connection herewith or therewith, including any dispute arising out of or relating in any way to the Debt Commitment Letters or the performance thereof or the financings contemplated thereby, whether at law or in equity, in contract, in tort or otherwise and (b) the Financing Sources shall not have any liability (whether in contract, in tort or otherwise) to any of the Parties or any of their respective Subsidiaries, Affiliates, directors, officers, employees, agents, partners, managers, members or stockholders for any obligations or liabilities of any Party hereto under this Agreement or for any claim based on, in respect of, or by reason of, the Transactions or in respect of any oral representations made or alleged to have been made in connection herewith or therewith, including any dispute arising out of or relating in any way to the Debt Commitment Letters or the performance thereof or the financings contemplated thereby, whether at law or in equity, in contract, in tort or otherwise; provided that notwithstanding anything to the contrary, the foregoing shall not limit the duties, obligations or liabilities of the Financing Sources under the Debt Commitment Letters (or any definitive documentations in respect of the financings contemplated thereby) or any rights and remedies against the Financing Sources under the Debt Commitment Letters (or any definitive documentations in respect of the financings contemplated thereby), subject to any limitations expressly provided therein.

Section 9.11 . Disclosure Schedules. The Parties have set forth information on their respective disclosure schedules to this Agreement in a section thereof that corresponds to the section of this Agreement to which it relates. A matter set forth in one schedule need not be set forth in any other schedule so long as its relevance to such other schedule or section of this

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Agreement is reasonably apparent on the face of the information disclosed therein to the Person to which such disclosure is being made. The Parties acknowledge and agree that (i) the disclosure schedules may include certain items and information solely for informational purposes for the convenience of the Parties and (ii) the disclosure by a Party of any matter in its disclosure schedules shall not be deemed to constitute an acknowledgment by such Party that the matter is required to be disclosed by the terms of this Agreement or that the matter is material.

Section 9.12 . Execution In Counterparts; Effectiveness. This Agreement may be executed in two or more counterparts, by either an original signature or signature transmitted by facsimile transmission, PDF, or other similar process, each copy of which when so executed and delivered shall be deemed an original, and such counterparts together shall constitute one instrument. This Agreement shall become effective when each Party hereto shall have received a counterpart hereof signed by the other Parties hereto. Until and unless each Party has received a counterpart hereof signed by the other Party hereto, this Agreement shall have no effect and no Party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication).

Section 9.13. Third Party Beneficiaries . No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations, or liabilities hereunder upon any Person other than the Parties hereto and their respective successors and assigns; provided that, notwithstanding the foregoing, the Financing Sources are intended third-party beneficiaries of, and may enforce, Section 9.01(b), Section 9.02, Section 9.04(c), the last sentence of Section 9.03, Section 9.07, Section 9.10 and this Section 9.13.

Section 9.14 . Severability. If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any Applicable Law or public policy, all other terms or provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic and legal substance of the Transactions is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner so that the Transactions are consummated as originally contemplated to the greatest extent possible

Section 9.15. Provisions Regarding Echo and Echo Holdco Shareholder Representative

(a) Appointment by Echo Shareholders other than H&F . Each Echo Shareholder, other than H&F, and each holder of Echo Holdco Options hereby irrevocably appoints (i) from the date of this Agreement until the Closing, Echo Holdco, and (ii) from and after the Closing, Echo, as the sole and exclusive agent, proxy and attorney-in-fact for such Echo Shareholder (other than H&F) for all purposes of this Agreement and the Transactions, with full and exclusive power and authority to act on such Echo Shareholder’s behalf (the “ Echo Representative ”). The appointment of the Echo Representative hereunder is coupled with an interest, shall be irrevocable and shall not be affected by the death, incapacity, insolvency, bankruptcy, illness or other inability to act of any Echo Shareholder (other than H&F) or any holder of Echo Holdco Options. Without limiting the generality of the foregoing, the Echo Representative is hereby authorized, on behalf of the Echo Shareholders (other than H&F) and the holders of Echo Holdco Options, to:

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(i) in connection with the Closing, execute and receive all documents, instruments, certificates, statements and agreements on behalf of and in the name of each Echo Shareholder (other than H&F) necessary to effectuate the Closing and consummate the Transactions;

(ii) receive and give all notices and service of process, make all filings, enter into all Contracts, make all decisions, bring, prosecute, defend, settle, compromise or otherwise resolve all claims, disputes and actions, authorize payments in respect of any such claims, disputes or actions, and take all other actions, in each case, with respect to the matters set forth in Section 2.02, Article 6, Article 8, Section 9.02 or any other actions directly or indirectly arising out of or relating to this Agreement or the Transactions;

(iii) execute and deliver, should it elect to do so in its good faith discretion, on behalf of the Echo Shareholders (other than H&F) or any holder of Echo Holdco Options, any amendment to, or waiver of, any term or provision of this Agreement, or any consent, acknowledgment or release relating to this Agreement; and

(iv) take all other actions permitted or required to be taken by or on behalf of the Echo Shareholders (other than H&F) or the holders of Echo Holdco Options under this Agreement and exercise any and all rights that the Echo Shareholders (other than H&F) and Echo Representative are permitted or required to do or exercise under this Agreement.

(b) Appointment by H&F . H&F hereby irrevocably appoints the Echo Representative as the sole and exclusive agent, proxy and attorney-in-fact with full and exclusive power an authority to receive and give all notices and service of process, make all filings, enter into all Contracts, make all decisions, bring, prosecute, defend, settle, compromise or otherwise resolve all claims, disputes and actions, authorize payments in respect of any such claims, disputes or actions, and take all other actions for H&F, in each case, solely with respect to the matters set forth in Section 2.02, Section 2.03, the determination of whether the conditions set forth in Section 7.01 and Section 7.02 have been satisfied, and any matters arising under Article 8 other than with respect to any allegation that H&F has breached any of its representations, warranties, covenants or agreements under this Agreement or the other Transaction Documents. The appointment of the Echo Representative hereunder is coupled with an interest, shall be irrevocable and shall not be affected by the death, incapacity, insolvency, bankruptcy, illness or other inability to act of H&F.

(c) Liability . The Echo Representative shall not be held liable by any of the Echo Shareholders or the holders of Echo Holdco Options for actions or omissions in exercising or failing to exercise all or any of the power and authority of the Echo Representative pursuant to this Agreement, except in the case of the Echo Representative’s willful misconduct. The Echo Representative shall be entitled to rely on the advice of counsel, public accountants or other independent experts that it reasonably determines to be experienced in the matter at issue, and will not be liable to any Echo Shareholder and the holders of Echo Holdco Options for any action taken or omitted to be taken in good faith based on such advice.

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(d) Reliance on Appointment; Successor Echo Representative . The Company and MCK and the other MCK Indemnified Parties may rely on the appointment and authority of the Echo Representative granted pursuant to this Section 9.15 until receipt of written notice of the appointment of a successor Echo Representative made in accordance with this Section 9.15. In so doing, the Company and MCK and the other MCK Indemnified Parties may rely on any and all actions taken by and decisions of the Echo Representative under this Agreement notwithstanding any dispute or disagreement among any of the Echo Shareholders, the holders of Echo Holdco Options and the Echo Representative with respect to any such action or decision without any liability to, or obligation to inquire of, any Echo Shareholder, holders of Echo Holdco Options, the Echo Representative or any other Person. Except in respect of H&F with respect to its rights under Section 9.03, any decision, act, consent or instruction of the Echo Representative shall constitute a decision of all the Echo Shareholders and all holders of Echo Holdco Options and shall be final and binding upon each of the Echo Shareholders and each of the Echo Holdco Options. At any time after the Closing, with or without cause, by a written instrument that is signed in writing by holders of at least a majority-in-interest of the Echo Shareholders (including BX) and delivered to the Company, the Echo Shareholders may remove and designate a successor Echo Representative.

Section 9.16. The Company Parties . The Company Parties hereby agree that each of the Company Parties and their respective Subsidiaries will be jointly and severally liable for any payment obligations of the Company contained in this Agreement.

[Remainder of this page intentionally left blank]

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.


CHANGE HEALTHCARE, INC.

By:	/s/ Gregory T. Stevens
	Name:	Gregory T. Stevens
	Title:	General Counsel and Secretary


MCKESSON CORPORATION

By:	/s/ John H. Hammergren
	Name:	John H. Hammergren
	Title:	Chairman, President and Chief Executive Officer


HCIT HOLDINGS, INC.

By:	/s/ Gregory T. Stevens
	Name:	Gregory T. Stevens
	Title:	President and Treasurer


PF2 NEWCO LLC

By:	/s/ John Saia
	Name:	John Saia
	Title:	Co-President and Co-Secretary


By:	/s/ Gregory T. Stevens
	Name:	Gregory T. Stevens
	Title:	Co-President and Co-Secretary

[Signature Page to Contribution Agreement]


PF2 NEWCO INTERMEDIATE HOLDINGS, LLC

By PF2 NewCo LLC, its Managing Member

By:		McKESSON CORPORATION, Managing Member

By:		/s/ John G. Saia
		Name: John G. Saia
		Title: Secretary



By:		CHANGE HEALTHCARE, INC. Managing Member

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: General Counsel and Secretary


PF2 NEWCO HOLDINGS, LLC

By		PF2 NewCo Intermediate Holdings, LLC, its Managing Member

By		PF2 Newco LLC, its Managing Member

By:		McKESSON CORPORATION, Managing Member

By:		/s/ John G. Saia
		Name: John G. Saia
		Title: Secretary

[Signature Page to Contribution Agreement]

114


PF2 NEWCO HOLDINGS, LLC

By		PF2 NewCo Intermediate Holdings, LLC, its Managing Member

By		PF2 Newco LLC, its Managing Member

By:		CHANGE HEALTHCARE, INC., Managing Member

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: General Counsel and Secretary


CHANGE AGGREGATOR L.P.

By:		Change Aggregator GP L.L.C., its general partner

By:		Blackstone Management Associates VI L.L.C., its managing member

By:		BMA VI L.L.C., its sole member

By:		/s/ Vikrant Sawhney
		Name: Vikrant Sawhney
		Title: Senior Managing Director

[Signature Page to Contribution Agreement]

115


H&F ECHO HOLDINGS, L.P.

By:		H&F Echo GP, L.L.C., its general partner

By:		Hellman & Friedman Investors VI, L.P., its managing member

By:		Hellman & Friedman LLC, its general partner

By:		/s/ P. Hunter Philbrick
		Name: P. Hunter Philbrick
		Title: Managing Director

[Signature Page to Contribution Agreement]

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Exhibit 2.2

Execution Version

AMENDMENT NO. 1 TO

AGREEMENT OF CONTRIBUTION AND SALE

This Amendment No. 1 to Agreement of Contribution and Sale (this “ Amendment ”) is entered into as of March 1, 2017 by and among Change Healthcare LLC (f/k/a PF2 NewCo LLC), a Delaware limited liability company (the “ Company ”), Change Healthcare Intermediate Holdings, LLC (f/k/a PF2 NewCo Intermediate Holdings, LLC), a Delaware limited liability company (“ Intermediate Holdings ”), Change Healthcare Holdings, LLC (f/k/a PF2 NewCo Holdings, LLC), a Delaware limited liability company (“ Holdings ”), HCIT Holdings, Inc., a Delaware corporation (“ Echo ”), Change Healthcare, Inc., a Delaware corporation (“ Echo Holdco ”), for itself and in its capacity as Echo Representative, certain affiliates of The Blackstone Group, L.P. (“ BX ”), certain affiliates of Hellman & Friedman LLC (“ H&F ” and, together with BX and the other equityholders of Echo Holdco, the “ Echo Shareholders ”), and McKesson Corporation, a Delaware corporation (“ MCK ”).

RECITALS

WHEREAS, the Company, Intermediate Holdings, Holdings, Echo, Echo Holdco, BX, H&F and MCK have entered into that certain Agreement of Contribution and Sale dated as of June 28, 2016 (the “ Agreement ”);

WHEREAS, Capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings ascribed to them in the Agreement.

WHEREAS, each of the Parties desires to amend the Agreement as set forth herein.

AGREEMENT

NOW THEREFORE, in consideration of the mutual agreements and covenants set forth below, the parties hereto agree as follows:

A. Amendment of the Agreement . The Agreement is hereby amended as follows:

(1) The definition of “ MCK Promissory Note Principal Base Amount ” is hereby amended to read in its entirety as follows:

“ MCK Promissory Note Principal Base Amount ” means $1,250,000,000, minus the Aggregate MCK DRE Contributed Entity Note Principal Amount.

(2) The definition of “ Transaction Documents ” is hereby amended such that that certain Letter Agreement Relating to Agreement of Contribution and Sale dated March 1, 2017 (“ Letter Agreement ”) is included in the definition of Transaction Documents.

(3) The definition of “ Echo 721 Tax Opinion ” is hereby amended to read in its entirety as follows:

“ Echo 721 Tax Opinion ” means a written opinion of the Tax Opinion Advisor to the Echo Parties to the effect that, for U.S. federal income tax purposes, disregarding the effect of (w) any adjustment payments under Section 2.03, (x) any cash payments made by the Company under Section 6.03 or Section 8.06, (y) any distributions or deemed distributions made by the Company to Echo in connection with the cancellation or repurchase of any options to acquire Echo stock or Echo stock held, immediately prior to such cancellation or repurchase, by any former employee of Echo Holdco, or (z) any distributions or deemed distributions made by the Company to Echo in connection with the Letter Agreement, the transactions described in Section 3.02(a)(i) should constitute a contribution to which Section 721(a) of the Code applies and, as a consequence, Echo should recognize no income or gain on such transactions.

(4) The definition of “ Echo Contributed Percentage ” is hereby amended to read in its entirety as follows:

“ Echo Contributed Percentage ” equals 100% minus the Echo Tendered Purchase Price Percentage.

(5) The following new defined terms are hereby inserted in the appropriate alphabetical location of Section 1.01 of the Agreement (with any referenced Annexes being inserted as new Annexes to the Agreement where indicated):

“ Additional Agreed Employees ” means the employees of MCK or its Subsidiaries set forth on Annex VI.

“ Aggregate MCK DRE Contributed Entity Note Principal Amount ” means the aggregate principal amount of the MCK DRE Contributed Entity Promissory Notes.

“ Echo Rollover Shares ” means the Echo Holdco Shares owned, as of immediately prior to the Echo Contribution, by the Echo Shareholders listed on Annex VIII (such Echo Shareholders, the “ Echo Rollover Holders ”).

“ Echo Tendered Deemed Shares Outstanding ” means, as of immediately prior to the Closing, the number of Echo Holdco Shares issued and outstanding minus the Echo Rollover Shares.

“ Echo Tendered Purchase Price ” means an amount equal to the Echo Purchase Price minus the Total Echo Option Cash Amount.

“ Echo Tendered Purchase Price Percentage ” means an amount equal to the quotient of (a) the quotient of (i) the Echo Tendered Purchase Price divided by (ii) the Echo Per Share Purchase Price divided by (b) the Echo Tendered Deemed Shares Outstanding, expressed as a percentage.

“ Finance Process Separation ” means, from time to time, the work reflected in “Project Hamlet” as further described in Annex VII to implement reasonably necessary processes, documentation and controls into the MTS finance and accounting processes that are necessary to allow for the transfer of the employment of the MTS Finance Transition

Services Employees by the Company on or prior to the Finance Separation Date, after due consideration of the impact of any such transfer on MCK’s compliance with the Sarbanes-Oxley Act of 2002, as amended (“ SOX ”), and other federal and state securities laws and the Company’s readiness to conduct an initial public offering, including with respect to compliance with SOX, and other federal securities laws. The Parties acknowledge that (1) the Finance Process Separation may occur in phases, allowing for the transfer of subsets of the MTS Finance Transition Services Employees to the Company pursuant to Section 5.16(d), and (2) there will be cohabitation of Core MTS data and MCK data on the MCK finance systems after the Finance Separation Date.

“ Finance Separation Date ” means September 30, 2017, or such other date as the FSSC may mutually agree; provided , that it is the intent of MCK and the Company to cooperate in good faith to enable a Finance Separation Date of July 31, 2017.

“ LTIP” means the McKesson Corporation Long-Term Incentive Plan.

“ MCK DRE Contributed Entity Promissory Note ” means a promissory note in a form reasonably satisfactory to MCK, the Company and Echo Holdco that is issued in favor of MCK Sub by a Purchasing Sub as consideration in an MCK DRE Sale.

“ MIP ” means the fiscal year 2017 McKesson Corporation Management Incentive Plan.

“ MTS Finance Transition Services Employees ” means those employees of MCK or its Subsidiaries providing finance and accounting services for the Core MTS Business (“ Core MTS Finance Services ”) whose employment is not transferred to the Company as of the Closing but who will be identified and made offers of employment by the Company as provided in Sections 5.16(c) and (d); provided that the costs (in the aggregate) associated with such employees will be consistent with the Cost Model.

(6) Schedule VI of the Agreement ( MCK Pre-Closing Restructuring ) is hereby replaced in its entirety by Schedule I hereto (the “ Revised Schedule ”) and all references in the Agreement to Schedule VI shall hereby be replaced by references to the Revised Schedule.

(7) Section 2.01(a)(iii) and (iv) of the Agreement is hereby amended and restated to read in its entirety as follows:

“(iii) the Company shall assume the MCK Promissory Note and shall deliver, or cause to be delivered, the Echo Membership and Sale Consideration, the MCK Membership Consideration and the MCK DRE Contributed Entity Promissory Notes as set forth in Article 3, and each of the Company, Echo and each MCK Contributor shall execute and deliver the Amended and Restated Limited Liability Company Agreement of the Company in substantially the form attached hereto as Exhibit A (the “ LLC Agreement ”);”

(iv) the MCK Note Payment shall occur as set forth in Section 3.02(a)(vi) and the MCK DRE Note Payment shall occur as set forth in Section 3.02(a)(vii);”

(8) Section 3.01(a)(ii) is hereby amended and restated to read in its entirety as follows:

“(ii) (A) the Echo Shareholders (other than the Echo Rollover Holders) shall contribute pro rata in proportion to their ownership of Echo Holdco capital stock, an aggregate of the Echo Contributed Percentage of the issued and outstanding capital stock of Echo Holdco (excluding the Echo Rollover Shares) and (B) the Echo Rollover Holders shall contribute all of the Echo Rollover Shares, to Echo in exchange for 100% of the issued and outstanding capital stock of Echo;”

(9) Section 3.02(a)(i) is hereby amended and restated to read in its entirety as follows:

“(i) Echo shall, and the Echo Shareholders shall cause Echo to, contribute, convey, transfer, assign and deliver, or cause to be contributed, conveyed, transferred, assigned and delivered, to the Company, free and clear of all Liens (other than Permitted Liens), and the Company will accept from Echo, shares of common stock of Echo Holdco held by Echo representing (A) the Echo Contributed Percentage of the issued and outstanding capital stock of Echo Holdco (excluding the Echo Rollover Shares) and (B) the Echo Rollover Shares, subject to the terms and conditions of this Agreement (the “ Echo Contribution ”). In consideration of the Echo Contribution, the Company shall, at the Closing, (A) issue Units to Echo representing a Membership Percentage equal to 30.0% (before taking into account the Employee Pool), subject to adjustment as set forth herein, and Echo shall accept such Units, and (B) admit Echo as a Member, with the rights, powers, obligations and duties set forth in the LLC Agreement (the “ Echo Membership Consideration ”).”

(10) Section 3.02(a)(iv) of the Agreement is hereby amended and restated to read in its entirety as follows:

“(iv) The Echo Shareholders (other than the Echo Rollover Holders) shall sell to the Company, and the Company will purchase from the Echo Shareholders (other than the Echo Rollover Holders), free and clear of all Liens (other than Permitted Liens), shares of common stock of Echo Holdco (allocated among the Echo Shareholders (other than the Echo Rollover Holders) as determined by Echo Holdco prior to Closing and set forth on the Estimated Echo Closing Statement) representing the Echo Tendered Purchase Price Percentage of the issued and outstanding capital stock of Echo Holdco (excluding the Echo Rollover Shares), subject to the terms and conditions of this Agreement (the “ Echo Holdco Share Transfer ” and, together with the Echo Contribution, the “ Echo Contributions and Transfers ”). At the Closing, the Company shall deliver (i) to the Echo Shareholders (other than the Echo Rollover Holders), as the aggregate purchase price for the shares transferred to the Company pursuant to the Echo Holdco Share Transfer an amount in the aggregate equal to the Echo Tendered Purchase Price in immediately available funds by wire transfer to the accounts with a bank in the United States designated by the Echo Representative by notice to the Company, which notice shall be delivered not later than two Business Days prior to the Closing Date and (ii) to the Vested Optionholders, an amount equal to the Echo Purchase PriceTotal Echo Option Cash Amount, in immediately available funds by wire transfer to accounts for the benefit of the Echo with a

bank in the United States designated by the Echo Representative by notice to the Company, which notice shall be delivered not later than two Business Days prior to the Closing Date (the “ Echo Holdco Sale Consideration ” and, together with the Echo Membership Consideration, the “ Echo Membership and Sale Consideration ”).”

(11) Section 3.02(a)(vi) of the Agreement is hereby amended and restated to read in its entirety as follows:

“(vi) MCK shall cause MCK IPCo to contribute, convey, transfer, assign and deliver, or cause to be contributed, conveyed, transferred, assigned and delivered, to the Company, free and clear of all Liens (other than Permitted Liens), and the Company will accept from MCK IPCo, the MCK IPCo Owned Intellectual Property, subject to the terms and conditions of this Agreement (the “ MCK IPCo Contribution ”). In consideration of the MCK IPCo Contribution, the Company shall, at the Closing, (i) issue Units to MCK IPCo representing a Membership Percentage equal to the MCK IPCo Initial Percentage, subject to adjustment as set forth herein, and MCK shall cause MCK IPCo to accept such Units, (ii) admit MCK IPCo as a Member, with the rights, powers, obligations and duties set forth in the LLC Agreement, and (iii) assume the MCK Promissory Note (the consideration in (i) and (ii), the “ IPCo Membership Consideration ” and, together with the Non-IP Membership Consideration, the “ MCK Membership Consideration ”). On the Closing Date, the Company shall repay the MCK Promissory Note Principal Amount in full satisfaction thereof in immediately available funds by wire transfer to an account of MCK with a bank in New York City or London designated by MCK, by notice to the Company, which notice shall be delivered not later than two Business Days prior to the Closing Date (the “ MCK Note Payment ”).”

(12) Section 3.02(a)(vii) of the Agreement shall be renumbered Section 3.02(a)(viii), and a new Section 3.02(a)(vii) shall be inserted into the Agreement to read in its entirety as follows:

“(vii) MCK shall cause McKesson Financial Holdings Unlimited Company, a company incorporated under the laws of Ireland (“ MCK Sub ”), to sell to one or more of Echo Holdco’s wholly-owned Subsidiaries to be mutually determined by MCK, the Company and Echo Holdco (each, a “ Purchasing Sub ”), free and clear of all Liens (other than Permitted Liens), and the Company and Echo Holdco will cause the Purchasing Subs to purchase, all of the equity interests of the MCK DRE Contributed Entities from MCK Sub, subject to the terms and conditions of this Agreement (each such purchase and sale of an MCK DRE Contributed Entity, an “ MCK DRE Sale ”, and the MCK DRE Sales together with the Non-IP Contribution and the MCK IPCo Contribution, the “ MCK Contributions ”). In consideration of each MCK DRE Sale, the Company and Echo Holdco shall cause the relevant Purchasing Sub, at the Closing, to issue to MCK Sub one MCK DRE Contributed Entity Promissory Note, with the individual amount of each such MCK DRE Contributed Entity Promissory Note to be mutually determined by MCK, the Company and Echo Holdco prior to Closing. Promptly following the Closing, the Company and Echo Holdco shall cause the Purchasing Subs to repay the Aggregate MCK DRE Contributed Entity Note Principal Amount in full satisfaction of the MCK DRE Contributed Entity Promissory Notes in immediately available funds by wire transfer to an account of MCK with a bank in New York City or Bermuda designated by MCK, by notice to the Company, which notice shall be delivered not later than two Business Days prior to the Closing Date (the “ MCK DRE Note Payment ”).”

(13) Section 3.02(b) of the Agreement shall be amended and restated to read in its entirety as follows:

“(b) The Echo Shareholders shall deliver, and shall cause Echo to deliver, to the Company certificates for the shares of capital stock of Echo Holdco contributed or transferred to the Company pursuant to the Echo Contributions and Transfers, duly endorsed or accompanied by stock powers duly endorsed in blank, with any required transfer stamps affixed thereto. To the extent such shares are in certificated form, MCK shall deliver, and shall cause its Subsidiaries to deliver, to the Company certificates for the shares of capital stock of Subsidiaries of MCK contributed or transferred to the Company and the Purchasing Subs, duly endorsed or accompanied by stock powers duly endorsed in blank, with any required transfer stamps affixed thereto.”

(14) Section 3.03(a)(v) of the Agreement shall be amended and restated to read in its entirety as follows:

“(v) (A) the portion of the nonqualified deferred compensation plans set forth on Section 4.02(q)(i) of the MCK Disclosure Schedule with respect to actively employed, U.S.-based MTI Participating Employees and shared services employees who are transferred to the Core MTS Business prior to Closing or otherwise transferred to the Company pursuant to Section 5.16, (B) MIP Liabilities and (C) LTIP Liabilities; and”

(15) Section 5.16 of the Agreement shall be amended and restated to read in its entirety as follows:

“Section 5.16. Employee Matters.

(a) MCK and Echo Holdco shall cooperate in good faith following the date hereof to identify the MTI Participating Employees (including those providing shared services and working at a corporate level) in a manner intended to be consistent (along with the Transition Services Agreements) with the “stand-alone cost model” included in Section 5.16 of the MCK Disclosure Schedule (the “ Cost Model ”); provided, that the Parties hereby agree that (i) the Additional Agreed Employees shall be deemed to be MTI Participating Employees for all purposes under this Agreement (including, for the avoidance of doubt, Section 5.16(f)) and (ii) the salaries, benefits and other on-going costs associated with the Company’s employment or engagement of the Additional Agreed Employees shall not be taken into account for purposes of determining whether the MTI Participating Employees have been identified in a manner consistent with the Cost Model.

(b) MCK shall use its commercially reasonable efforts to cause all of its or its Subsidiaries’ employees who are identified as MTI Participating Employees pursuant to Section 5.16(a), other than the MTS Finance Transition Services Employees who shall be transferred pursuant to Section 5.16(d), to be employed or engaged by a MCK Contributed Entity prior to the Closing, such that such MTI Participating Employees are transferred to the Company at the Closing.

(c) Following the Closing, MCK and the Company will establish a Finance Separation Steering Committee (“ FSSC ”) made up of two representatives from each of MCK and the Company, which representatives will be senior-level accounting and finance executives with decision-making authority around the matters within scope for the FSSC, provided that representatives of the Company shall not include current directors, officers, consultants or employees of MCK, its subsidiaries, or its Affiliates, and provided further that any individual who serves on the FSSC may be replaced or removed at any time by the party that he or she represents on the FSSC. The initial MCK representatives on the FSSC will be Erin Lampert and Sundeep Reddy and the initial Company representatives on the FSSC will be Randy Giles and Dennis Robbins. Either party may replace any member designated by such party to the FSSC upon reasonable prior notice to the other party. As soon as practicable following Closing, the FSSC will review the employees of MCK or its Subsidiaries providing Core MTS Finance Services and identify the MTS Finance Transition Services Employees, who, based on the FSSC’s reasonable judgment, shall together, be able to provide reasonably necessary and adequate finance and accounting services to the Company following the Closing comparable to those provided to the Core MTS Business immediately prior to the Closing, and who shall subsequently receive offers of employment from the Company. The FSSC will meet regularly to provide oversight of the Finance Process Separation, establish timelines and resolve issues. The FSSC will also receive updates on the Company’s financial system migration, anticipated compliance with SOX and related securities laws, and efforts to achieve synergies from the finance organization and will work together to resolve any needs related to finance systems access by the Company’s offshore contractors in connection with such synergy realization efforts. Any such access will be strictly for the purpose of performing accounting and finance functions for the Core MTS Business and shall be consistent with MCK’s and the Company’s security, privacy and confidentiality requirements. If any MTS Finance Transition Services Employees are terminated involuntarily by MCK, and such termination is consented to by the Company (which consent shall not be unreasonably withheld, conditioned or delayed), the Company will be responsible for such MTS Finance Transition Services Employee’s severance costs.

(d) Following the Closing, MCK and the Company will use their reasonable best efforts to transfer the employment of any MTS Finance Transition Services Employees to the Company on or before the Finance Separation Date and in a manner that is consistent with the Cost Model; provided, that to the extent MTS Finance Transition Services Employees who are providing services to the Company pursuant to the Transition Services Agreements are transferred to the Company, the services fees under the Transition Services Agreement shall be reduced by the amount of the cost of the MTS Finance Transition Services Employees being so transferred. In furtherance of the foregoing, the Company agrees that, from time to time, it will make offers of employment to the applicable MTS Finance Transition Services Employees then employed by MCK or one of its Subsidiaries within 10 days of completion of a Finance Process Separation phase; provided, that the Company shall make offers of employment to all MTS Finance Transition Services Employees then employed by MCK or its Subsidiaries no later than the Finance Separation Date.

(e) MCK and Echo Holdco agree to cooperate in good faith between the date hereof and such date (the “ Plan Determination Date ”) that allows MCK to reasonably set up Mirror Plans (as defined below) necessary to determine the appropriate employee benefits plans (the “ New Company Benefit Plans ”) for Company Employees with the intention that similarly situated Echo Participating Employees and MTI Participating Employees will receive substantially comparable benefits to the other by January 1, 2018, which may include establishment of plans at the applicable MCK Contributed Entity level effective January 1, 2017 (“ New Subsidiary Plans ”). If MCK and Echo Holdco fail to mutually agree upon the New Company Benefit Plans by the Plan Determination Date, MCK shall use its commercially reasonable efforts to cause the applicable MCK Contributed Entity to establish “mirror” benefit plans for each material health and welfare and nonqualified deferred compensation plan that covers the MTI Participating Employees as of the date hereof, effective starting no later than the Closing Date (such plans or the New Subsidiary Plans, as applicable, the “ Mirror Plans ”). Each Mirror Plan is intended to be substantially similar to the corresponding MCK plan. To the extent the Mirror Plans are “spinoffs” of MCK Plans that are funded through a rabbi trust, MCK shall provide sufficient assets (or access to such assets) to the Company to cover any existing liabilities as of Closing associated with such Mirror Plans. The expenses incurred in connection with setting up such New Company Benefit Plans or Mirror Plans, as applicable, shall be considered a Shared Transaction Expense.

(f) For a period of at least one year following the Closing Date, the Company shall provide (x) each Echo Participating Employee and (y) each MTI Participating Employee, in each case who is employed by the Company or one of its Subsidiaries immediately after the Closing Date or the employment transfer date (the “Employment Transfer Date”), if after the Closing Date (collectively, the “ Company Employees ”), with base salary or wage rate at least equal to the base salary or wage rate provided to such Company Employee immediately prior to the Closing Date. In addition, the Company shall provide that each MTI Participating Employee shall (i) be eligible for an annual cash bonus opportunity for fiscal year 2018 comparable to such employee’s cash bonus opportunity for fiscal year 2017 as an employee of MCK and consistent with the approvals of the Management Selection Committee prior to Closing and (ii) receive additional compensation from the Company that is consistent with the approvals of the Management Selection Committee prior to Closing and intended to be an amount sufficient to replace the fair market value of the unvested MCK equity and non-equity awards held by such MTI Participating Employee that were cancelled in connection with such employee’s transfer to the Company, determined as of the Closing Date or the Employment Transfer Date, as the case may be; provided, that the final determinations of annual cash bonuses and additional compensation shall be at the discretion of the board of directors of the Company. With respect to all benefit plans of the Company or its Subsidiaries in which Company Employees participate after the Closing Date (the “Company Plans”) (including any vacation, paid time-off and severance plans), for all purposes (but not for benefit accrual under any defined benefit plan or vesting under any equity compensation plan), including determining eligibility to participate, level of benefits, vesting, benefit accruals and early retirement subsidies, each Company Employee’s service with Echo Holdco or MCK, as

applicable (as well as service with any predecessor employer to the extent service with the predecessor employer is recognized by Echo Holdco or MCK, as applicable) shall, to the extent permitted by applicable Law and the Company Plan, be treated as service with the Company; provided, however, that such service need not be recognized to the extent that such recognition would result in any duplication of benefits for the same period of service.

(g) The Company, Echo Holdco and MCK shall use reasonable best efforts between the date of this Agreement and Closing to determine appropriate management equity incentive plans for the employees of the Company post-Closing.

(h) The Company shall pay to eligible MTI Participating Employees who have been transferred to the Company on or before the payment date all amounts payable to such MTI Participating Employees under the MIP in respect of fiscal year 2017 (“ MIP Liabilities ”) no later than June 30, 2017, provided that: (i) for the period from April 1, 2016 through February 28, 2017, payment will be subject to company and personal modifiers set by MCK (including MCK managers), (ii) for the period from March 1, 2017 through March 31, 2017, payment will be calculated at target, without application of any modifier; provided, further, that eleven-twelfths (11/12ths) of the MIP Liabilities shall be included as current liabilities in the calculation of MCK Net Working Capital.

(i) The Company shall pay to eligible MTI Participating Employees who are transferred to the Company on or before the payment date, all amounts payable to such MTI Participating Employees under the fiscal years 2015 – 2017 cycle under the LTIP no later than June 30, 2017 (“ LTIP Liabilities ”); provided, that all of the LTIP Liabilities shall be included as current liabilities in the calculation of MCK Net Working Capital.

(j) Prior to the Finance Separation Date, MCK and its Subsidiaries shall use reasonable best efforts to limit access to the Company’s finance and accounting data, processes and other confidential information, by the employees, officers, service providers, and consultants of MCK and its Subsidiaries who are not MTS Finance Transition Services Employees. Notwithstanding anything in this Agreement or the Transaction Documents, the Parties acknowledge and agree that the Company will be responsible for all third party expenses (including capex) relating to revenue convergence for the Core MTS Business. MCK will be responsible for revenue convergence costs and all other operative expense, capex and third party costs with respect to business retained by MCK. On and after such time that the Company and its Subsidiaries are required to comply with SOX, to the extent that any systems, processes or procedures of MCK and its Subsidiaries cause the Company and its Subsidiaries to have a material weakness under SOX, MCK and its Subsidiaries will take reasonable best efforts, at their sole expense, to remedy any such non-compliance. The parties acknowledge that reasonable cooperation among the parties may be required to remedy such non-compliance.

(k) Notwithstanding anything in Section 5.14, MCK and its Subsidiaries (other than the Company and its Subsidiaries) shall not solicit for employment any MTS Finance Transition Services Employee who was employed at the level 109 and above from the Closing until one year from such employee’s Finance Separation Date, unless such employee (i) ceases to be an employee of the Company or their respective Subsidiaries, by

reason of voluntary termination of employment, at least one month prior to such action by such soliciting Person or (ii) is terminated involuntarily by the Company, provided that the foregoing provision will not prevent MCK or its Subsidiaries from employing any MTS Finance Transition Services Employee who contacts the soliciting Person on his or her own initiative without any direct or indirect solicitation by, or encouragement from, such soliciting Person; provided further, that the publication of advertisements in newspapers and/or electronic media of general circulation (including advertisements posted on the Internet) will not be deemed a violation of this Section 5.16(k).”

(16) A new Section 5.20 is added to the Agreement as follows:

“Section 5.20 Customer Transition Costs . Notwithstanding any other provision of this Agreement, after the Closing, MCK shall submit to the Company payments totaling one million dollars ($1,000,000.00) (the “ Transition Payment ”) as payment for the costs that the Company may incur transitioning the Company’s obligations related to the McKesson EIS Business under customer agreements to non-Company entities, and/or terminating the portion of each customer agreement that relates to McKesson EIS Business. MCK shall pay the Transition Payment in twelve equally monthly installments of eighty three thousand, three hundred and thirty-three dollars and thirty-three cents ($83,333.33 starting the first day of the month following the Closing). Making the Transition Payment shall be MCK’s sole obligation with respect to payment to the Company for any costs associated with the customer transition described in this Section 5.20.”

B. No Breach . The parties hereto agree that the adoption of the 3-Year Position (as defined in the Letter Agreement) by the Company pursuant to and in accordance with the Letter Agreement will not constitute a breach of the Contribution Agreement by any party to the Contribution Agreement.

C. Authority . Each party hereto represents and warrants that it has all requisite corporate or limited liability company, as applicable, power and authority to execute and deliver this Amendment and to perform its obligations hereunder; and the execution, delivery and performance of this Amendment has been duly authorized by all necessary corporate or limited liability company, as applicable, action.

D. Ratification . The Agreement, as amended hereby, is ratified and confirmed and remains in full force and effect.

E. Governing Law; Dispute Resolution; Waiver of Jury Trial . The provisions of Sections 9.02 through 9.10 and Section 9.12 through 9.14 of the Agreement are hereby incorporated by reference, mutatis mutandis .

[ Signatures Follow ]

IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be duly executed and delivered in its name and on its behalf, all as of the day and year first written above.


CHANGE HEALTHCARE, INC. , as Echo HoldCo and on behalf of the Echo Shareholders as the “Echo Representative”



By:		/s/ Gregory T. Stevens


Name:		Gregory T. Stevens

MCKESSON CORPORATION



By:		/s/ Bansi Nagji


Name:		Bansi Nagji
Title: Executive Vice President, Corporate Strategy and Business Development



HCIT HOLDINGS, INC.

By:		/s/ Gregory T. Stevens


Name:		Gregory T. Stevens
Title: President and Treasurer



CHANGE HEALTHCARE LLC

By:		/s/ Gregory T. Stevens


Name:		Gregory T. Stevens
Title: Co-President and Co-Secretary



By:		/s/ John G. Saia


Name:		John G. Saia
Title: Co-President and Co-Secretary



H&F HARRINGTON AIV II, L.P.



By:		Hellman & Friedman Investors VI, its general partner

By:		Hellman & Friedman LLC, its general partner

By:		/s/ P. Hunter Philbrick


Name:		P. Hunter Philbrick
Title:		Managing Director

Signature Page to Amendment



HFCP VI DOMESTIC AIV, L.P.

By:		Hellman & Friedman Investors VI, its general partner

By:		Hellman & Friedman LLC, its general partner



By:		/s/ P. Hunter Philbrick


Name:		P. Hunter Philbrick
Title:		Managing Director



HELLMAN & FRIEDMAN INVESTORS VI, L.P.



By:		Hellman & Friedman LLC, its general partner



By:		/s/ P. Hunter Philbrick


Name:		P. Hunter Philbrick
Title:		Managing Director



HELLMAN & FRIEDMAN CAPITAL EXECUTIVES VI, L.P.



By:		Hellman & Friedman Investors VI, its general

By:		Hellman & Friedman LLC, its general partner



By:		/s/ P. Hunter Philbrick


Name:		P. Hunter Philbrick
Title:		Managing Director


HELLMAN & FRIEDMAN CAPITAL ASSOCIATES VI, L.P.



By:		Hellman & Friedman Investors VI, its general partner

By:		Hellman & Friedman LLC, its general partner

By:		/s/ P. Hunter Philbrick


Name:		P. Hunter Philbrick
Title:		Managing Director

CHANGE HEALTHCARE INTERMEDIATE HOLDINGS, LLC



By:		/s/ Gregory T. Stevens


Name:		Gregory T. Stevens
Title:		Co-President and Co-Secretary



By:		/s/ John G. Saia


Name:		John G. Saia
Title:		Co-President and Co-Secretary



CHANGE HEALTHCARE HOLDINGS, LLC



By:		/s/ Gregory T. Stevens


Name:		Gregory T. Stevens
Title:		Co-President and Co-Secretary



By:		/s/ John G. Saia


Name:		John G. Saia
Title:		Co-President and Co-Secretary

Exhibit 4.1

INDENTURE

Dated as of February 15, 2017

Among

CHANGE HEALTHCARE HOLDINGS, LLC,

as the Issuer,

CHANGE HEALTHCARE FINANCE, INC.,

as the Co-Issuer,

and

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Trustee, Transfer Agent, Registrar and Paying Agent

$1,000,000,000 5.75% SENIOR NOTES DUE 2025

TABLE OF CONTENTS


		Page

ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01.	Definitions		1
Section 1.02.	Other Definitions		58
Section 1.03.	Rules of Construction		59
Section 1.04.	Acts of Holders		60
Section 1.05.	Timing of Payment		62
Section 1.06.	Limited Condition Transaction		62
Section 1.07.	Certain Compliance Calculations		63

ARTICLE 2
THE NOTES

Section 2.01.	Form and Dating; Terms		64
Section 2.02.	Execution and Authentication		66
Section 2.03.	Registrar, Transfer Agent and Paying Agent		66
Section 2.04.	Paying Agent to Hold Money in Trust		67
Section 2.05.	Holder Lists		67
Section 2.06.	Transfer and Exchange		68
Section 2.07.	Replacement Notes		80
Section 2.08.	Outstanding Notes		81
Section 2.09.	Treasury Notes		81
Section 2.10.	Temporary Notes		81
Section 2.11.	Cancellation		82
Section 2.12.	Defaulted Interest		82
Section 2.13.	CUSIP Numbers; ISINs		82

ARTICLE 3
REDEMPTION

Section 3.01.	Notices to Trustee		83
Section 3.02.	Selection of Notes to Be Redeemed		83
Section 3.03.	Notice of Redemption		84
Section 3.04.	Effect of Notice of Redemption		85
Section 3.05.	Deposit of Redemption Price		85
Section 3.06.	Notes Redeemed in Part		85
Section 3.07.	Optional Redemption		86
Section 3.08.	Offers to Repurchase by Application of Excess Proceeds		88
Section 3.09.	Mandatory Redemption		90
Section 3.10.	Special Mandatory Redemption		90


ARTICLE 4
COVENANTS

Section 4.01.	Payment of Notes	91
Section 4.02.	Maintenance of Office or Agency	91
Section 4.03.	Reports and Other Information	92
Section 4.04.	Compliance Certificate	95
Section 4.05.	Taxes	95
Section 4.06.	Stay, Extension and Usury Laws	95
Section 4.07.	Limitation on Restricted Payments	95
Section 4.08.	Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries	108
Section 4.09.	Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock	111
Section 4.10.	Asset Sales	121
Section 4.11.	Transactions with Affiliates	126
Section 4.12.	Liens	130
Section 4.13.	Company Existence	131
Section 4.14.	Offer to Repurchase Upon Change of Control	131
Section 4.15.	Limitation on Guarantees of Indebtedness by Restricted Subsidiaries	134
Section 4.16.	Limitation on Business Activities of the Co-Issuer	135
Section 4.17.	Suspension of Covenants	135
Section 4.18.	Escrow of Gross Proceeds	136
Section 4.19.	Activities Prior to the Release	137

ARTICLE 5
SUCCESSORS

Section 5.01.	Merger, Amalgamation, Consolidation or Sale of All or Substantially All Assets	138
Section 5.02.	Successor Person Substituted	141
ARTICLE 6
DEFAULTS AND REMEDIES

Section 6.01.	Events of Default	141
Section 6.02.	Acceleration	144
Section 6.03.	Other Remedies	144
Section 6.04.	Waiver of Past Defaults	144
Section 6.05.	Control by Majority	145
Section 6.06.	Limitation on Suits	145
Section 6.07.	Right of Holders to Sue for Payment	145
Section 6.08.	Collection Suit by Trustee	145
Section 6.09.	Restoration of Rights and Remedies	146
Section 6.10.	Rights and Remedies Cumulative	146
Section 6.11.	Delay or Omission Not Waiver	146
Section 6.12.	Trustee May File Proofs of Claim	146
Section 6.13.	Priorities	147
Section 6.14.	Undertaking for Costs	147



ARTICLE 7
TRUSTEE

Section 7.01.	Duties of Trustee	147
Section 7.02.	Rights of Trustee	148
Section 7.03.	Individual Rights of Trustee	150
Section 7.04.	Trustee’s Disclaimer	151
Section 7.05.	Notice of Defaults	151
Section 7.06.	Compensation and Indemnity	151
Section 7.07.	Replacement of Trustee	152
Section 7.08.	Successor Trustee by Merger, etc.	153
Section 7.09.	Eligibility; Disqualification	153
Section 7.10.	Escrow Authorization	153

ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01.	Option to Effect Legal Defeasance or Covenant Defeasance	153
Section 8.02.	Legal Defeasance and Discharge	153
Section 8.03.	Covenant Defeasance	154
Section 8.04.	Conditions to Legal or Covenant Defeasance	155
Section 8.05.	Deposited Money and U.S. Government Securities to be Held in Trust; Other Miscellaneous Provisions	156
Section 8.06.	Repayment to Issuers	157
Section 8.07.	Reinstatement	157

ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01.	Without Consent of Holders	157
Section 9.02.	With Consent of Holders	159
Section 9.03.	Revocation and Effect of Consents	160
Section 9.04.	Notation on or Exchange of Notes	161
Section 9.05.	Trustee to Sign Amendments, etc.	161
Section 9.06.	Additional Voting Terms; Calculation of Principal Amount	161
Section 9.07.	No Impairment of Right of Holders to Receive Payment	162

ARTICLE 10
GUARANTEES

Section 10.01.	Guarantee	162
Section 10.02.	Limitation on Guarantor Liability	164
Section 10.03.	Execution and Delivery	164
Section 10.04.	Subrogation	164
Section 10.05.	Benefits Acknowledged	164
Section 10.06.	Release of Guarantees	164

iii



ARTICLE 11
SATISFACTION AND DISCHARGE

Section 11.01.	Satisfaction and Discharge	166
Section 11.02.	Application of Trust Money	167

ARTICLE 12
MISCELLANEOUS

Section 12.01.	Notices	167
Section 12.02.	[Reserved]	169
Section 12.03.	Certificate and Opinion as to Conditions Precedent	169
Section 12.04.	Statements Required in Certificate or Opinion	169
Section 12.05.	Rules by Trustee and Agents	170
Section 12.06.	No Personal Liability of Directors, Officers, Employees and Stockholders	170
Section 12.07.	Governing Law	170
Section 12.08.	Waiver of Jury Trial	170
Section 12.09.	Force Majeure	170
Section 12.10.	No Adverse Interpretation of Other Agreements	171
Section 12.11.	Successors	171
Section 12.12.	Severability	171
Section 12.13.	Counterpart Originals	171
Section 12.14.	Table of Contents, Headings, etc.	171
Section 12.15.	Trust Indenture Act	171
Section 12.16.	USA Patriot Act	171


EXHIBITS
Exhibit A		FORM OF NOTE
Exhibit B		FORM OF CERTIFICATE OF TRANSFER
Exhibit C		FORM OF CERTIFICATE OF EXCHANGE
Exhibit D		FORM OF COMPLETION DATE SUPPLEMENTAL INDENTURE
Exhibit E		FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSEQUENT GUARANTORS

INDENTURE, dated as of February 15, 2017, among (a) Change Healthcare Holdings, LLC, a Delaware limited liability company, as Issuer (as defined herein), (b) Change Healthcare Finance, Inc., a Delaware corporation, as Co-Issuer (as defined herein), (c) the Guarantors (as defined herein) from time to time party hereto, and (d) Wilmington Trust, National Association, as Trustee, Transfer Agent, Registrar and Paying Agent.

W I T N E S E T H

WHEREAS, the Issuers (as defined herein) have duly authorized the creation of an issue of $1,000,000,000 aggregate principal amount of the Issuers’ 5.75% Senior Notes due 2025 (the “ Initial Notes ”);

WHEREAS, the Issuers will be jointly and severally liable for all obligations under the Notes (as defined herein); and

WHEREAS, the Issuers have duly authorized the execution and delivery of this Indenture (as defined herein).

NOW, THEREFORE, each of the Issuers and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders (as defined herein).

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01. Definitions .

“ 144A Global Note ” means a Global Note, substantially in the form of Exhibit A hereto, bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the applicable Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of Notes sold in reliance on Rule 144A.

“ Acquired Indebtedness ” means, with respect to any specified Person,

(1) Indebtedness of any other Person existing at the time such other Person is merged, amalgamated or consolidated with or into or became a Restricted Subsidiary of such specified Person, including Indebtedness incurred or assumed in connection with, or in contemplation of, such other Person merging, amalgamating or consolidating with or into, or becoming a Restricted Subsidiary of, such specified Person, and

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“ Additional Notes ” means any additional Notes (other than the Initial Notes) issued from time to time under this Indenture in accordance with Sections 2.01, 2.02 and 4.09 hereof.

“ Affiliate ” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “ controlling ,” “ controlled by ” and “ under common control with ”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

“ Agent ” means any Registrar, Transfer Agent or Paying Agent.

“ Applicable Premium ” means, with respect to any Note on any Redemption Date, the greater of:

(1) 1.0% of the principal amount of such Note, and

(2) the excess, if any, of (a) the present value at such Redemption Date of (i) the redemption price of such Note at March 1, 2020 (such redemption price being set forth in the table in Section 3.07(c) hereof), plus (ii) all required remaining scheduled interest payments due on such Note through March 1, 2020 (excluding accrued but unpaid interest to the Redemption Date), computed using a discount rate equal to the Applicable Treasury Rate as of such Redemption Date plus 50 basis points over (b) the then outstanding principal amount of such Note on such Redemption Date,

as calculated by the Issuer (or on behalf of the Issuer by such Person as the Issuer shall designate); provided that such calculation (or any calculation in connection therewith) shall not be a duty or an obligation of the Trustee.

“ Applicable Procedures ” means, with respect to any transfer or exchange of or for, redemption of, or notice with respect to beneficial interests in any Global Note or the redemption or repurchase of any Global Note, the rules and procedures of DTC, the Depositary, Euroclear and/or Clearstream that apply to such transfer, exchange, redemption or repurchase.

“ Applicable Treasury Rate ” means, with respect to any Note on any Redemption Date, the weekly average (for the most recently completed week for which such information is available as of the date that is two Business Days prior to the Redemption Date) of the yield to maturity of United States Treasury securities with a constant maturity (as compiled and published in Federal Reserve Statistical Release H.15 with respect to each applicable day during such week or, if such Statistical Release is no longer published, any publicly available source of similar market data) most nearly equal to the period from the Redemption Date to March 1, 2020 (as determined by the Issuer and rounded to the nearest 1/100 ^th of a percentage point); provided , however , that if the period from the Redemption Date to March 1, 2020 is not equal to the constant maturity of a United States Treasury security for which such a yield is given, the Applicable Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the redemption date to March 1, 2020 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used, in each case, as determined by the Issuer.

“ Asset Sale ” means:

(1) the sale, conveyance, transfer or other disposition, whether in a single transaction or a series of related transactions (including by way of a Sale and Lease-Back Transaction), of property or assets of the Issuer or any of its Restricted Subsidiaries (each referred to in this definition as a “ disposition ”); or

(2) the issuance or sale of Equity Interests of any Restricted Subsidiary (other than Preferred Stock or Disqualified Stock of Restricted Subsidiaries issued in compliance with Section 4.09 hereof), whether in a single transaction or a series of related transactions;

in each case, other than:

(a) any disposition of (i) Cash Equivalents or Investment Grade Securities, (ii) obsolete, damaged, unnecessary, unsuitable or worn out equipment, inventory or other property or assets in the ordinary course of business or consistent with industry practice, (iii) any assets held for sale or no longer used or useful in the ordinary course of business, (iv) any assets not associated with the core or principal business of the Issuer and its Restricted Subsidiaries as of the Completion Date, or no longer economically practicable or commercially reasonable to maintain (in each case, as determined in good faith by the management of the Issuer), (v) inventory and goods, (vi) improvements made to leased real property pursuant to customary terms of leases entered into in the ordinary course of business; and (vii) assets for purposes of charitable contributions or similar gifts to the extent such assets are not material to the ability of the Issuer and its Restricted Subsidiaries, taken as a whole, to conduct its business in the ordinary course;

(b) the disposition of all or substantially all of the assets of the Issuer or a Restricted Subsidiary in a manner permitted pursuant to Section 5.01 hereof or any disposition that constitutes a Change of Control pursuant to this Indenture;

(d) any disposition of property or assets or issuance or sale of Equity Interests of any Restricted Subsidiary in any transaction or series of related transactions with an aggregate fair market value of less than $60.0 million;

(e) any disposition of property or assets or issuance or sale of securities by a Restricted Subsidiary to the Issuer or by the Issuer or a Restricted Subsidiary to a Restricted Subsidiary;

(f) to the extent allowable under Section 1031 of the Code, or comparable law or regulation, any exchange of like property (excluding any boot thereon) for use in a Similar Business;

(g) (i) the lease, assignment, sub-lease, license or sub-license of any real or personal property in the ordinary course of business or consistent with industry practice and (ii) the exercise of termination rights with respect to any lease, sublease, license or sublicense or other agreement;

(h) any issuance, disposition or sale of Equity Interests in, or Indebtedness, assets or other securities of, an Unrestricted Subsidiary (or a Restricted Subsidiary which owns one or more Unrestricted Subsidiaries so long as such Restricted Subsidiary owns no assets other than the Equity Interests of such Unrestricted Subsidiary);

(i) foreclosures, condemnation, expropriation, forced dispositions, eminent domain or any similar action with respect to assets or the granting of Liens not prohibited by this Indenture;

(j) sales of accounts receivable, or participations therein, or Securitization Assets or related assets, or any disposition of the Equity Interests in a Subsidiary, all or substantially all of the assets of which are Securitization Assets, in each case in connection with any Qualified Securitization Facility or the disposition of an account receivable in connection with the collection or compromise thereof in the ordinary course of business or consistent with industry practice or in bankruptcy or similar proceedings;

(k) any financing transaction with respect to property built or acquired by the Issuer or any Restricted Subsidiary after the Completion Date, including Sale and Lease-Back Transactions and asset securitizations permitted by this Indenture;

(l) the sale, lease, assignment, license, sublease or discount or other disposition of inventory, equipment, accounts receivable, notes receivable or other current assets in the ordinary course of business or consistent with industry practice or the conversion of accounts receivable to notes receivable;

(m) the licensing or sub-licensing of intellectual property or other general intangibles in the ordinary course of business or consistent with industry practice;

(n) any surrender or waiver of contract rights or the settlement, release or surrender of contract rights or other litigation claims in the ordinary course of business or consistent with industry practice;

(o) the unwinding of any Hedging Obligations;

(p) sales, transfers and other dispositions of Investments in joint ventures to the extent required by, or made pursuant to, customary buy/sell arrangements between the joint venture parties set forth in joint venture arrangements and similar binding arrangements;

(q) the lapse or abandonment of intellectual property rights in the ordinary course of business or consistent with industry practice, which in the reasonable good faith determination of the Issuer (i) are not material to the conduct of the business of the Issuer and its Restricted Subsidiaries taken as a whole or (ii) are no longer economically practicable or commercially reasonable to maintain;

(r) the granting of a Lien that is permitted under Section 4.12 hereof;

(s) the issuance of directors’ qualifying shares and shares issued to foreign nationals as required by applicable law;

(t) Permitted Intercompany Activities and related transactions;

(u) transfers of property subject to Casualty Events upon receipt of the Net Proceeds of such Casualty Event; provided that any Cash Equivalents received by the Issuer or any of its Restricted Subsidiaries in respect of such Casualty Event shall be deemed to be Net Proceeds of an Asset Sale, and such Net Proceeds shall be applied in accordance with Section 4.10 hereof;

(v) dispositions of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) an amount equal to the Net Proceeds of such disposition are promptly applied to the purchase price of such replacement property;

(w) any Sale and Lease-Back Transaction;

(x) the disposition of property or assets for an aggregate fair market value not to exceed $80.0 million in any calendar year (with unused amounts in any calendar year being carried over to the succeeding two calendar years);

(y) any disposition to a Captive Insurance Subsidiary; and

(z) any sale of property or assets, if the acquisition of such property or assets was financed with Excluded Contributions and the proceeds of such sale are used to make a Restricted Payment pursuant to Section 4.07(b)(ix)(B).

In the event that a transaction (or a portion thereof) meets the criteria of one or more of the categories set forth in clauses (a) through (z) above and would also be a permitted Restricted Payment or Permitted Investment, the Issuer, in its sole discretion, will be entitled to divide and classify such transaction (or a portion thereof) as a disposition under such categories and/or one or more of the types of permitted Restricted Payments or Permitted Investments.

“ Bank Products ” means any facilities or services related to cash management, including treasury, depository, overdraft, credit or debit card, purchase card, automatic clearinghouse transfer transactions, controlled disbursements, foreign exchange facilities, stored value cards, merchant services, electronic funds transfer and other cash management arrangements.

“ Bankruptcy Law ” means Title 11, U.S. Code, as amended, or any similar federal or state law for the relief of debtors.

“ Blackstone Funds ” means, individually or collectively, any investment fund, co-investment vehicles and/or other similar vehicles or accounts, in each case managed by The Blackstone Group L.P. or any Affiliate thereof, or any of their respective successors.

“ Board of Directors ” means, for any Person, the board of directors or other governing body (or equivalent thereof) of such Person or, if such Person does not have such a board of directors or other governing body (or equivalent thereof) and is owned or managed by a single entity, the Board of Directors of such entity, or, in either case, any committee thereof duly authorized to act on behalf of such Board of Directors. Unless otherwise provided, “Board of Directors” means the Board of Directors of the Issuer.

“ Broker-Dealer Regulated Subsidiary ” means any Subsidiary of the Issuer that is registered as a broker-dealer under the Exchange Act or any other applicable laws requiring such registration.

“ Business Day ” means each day which is not a Legal Holiday.

“ Capital Markets Indebtedness ” means any Indebtedness consisting of bonds, debentures, notes or other similar debt securities issued in (a) a public offering registered under the Securities Act, (b) a private placement to institutional investors that is resold in accordance with Rule 144A or Regulation S under the Securities Act, whether or not it includes registration rights entitling the holders of such debt securities to registration thereof with the SEC or (c) a private placement to institutional investors. For the avoidance of doubt, the term “Capital Markets Indebtedness” does not include any Indebtedness under commercial bank facilities, loans, Indebtedness incurred in connection with a Sale and Lease-Back Transaction, Indebtedness incurred in the ordinary course of business of the Issuer, Capitalized Lease Obligations or recourse transfer of any financial asset or any other type of Indebtedness incurred in a manner not customarily viewed as a “securities offering.”

“ Capital Stock ” means:

(1) in the case of a corporation, corporate stock or shares in the capital of such corporation;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person; but excluding from all of the foregoing any debt securities convertible into or exchangeable for Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

(whether or not such operating lease obligations were in effect on such date or entered into thereafter) shall continue to be accounted for as operating lease obligations (and not as Capitalized Lease Obligations) for purposes of this Indenture regardless of any change in GAAP following the Issue Date that would otherwise require such obligations to be recharacterized (on a prospective or retroactive basis or otherwise) as Capitalized Lease Obligations.

“ Capitalized Software Expenditures ” means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities) by a Person and its Restricted Subsidiaries during such period in respect of licensed or purchased software or internally developed software and software enhancements that, in conformity with GAAP, are or are required to be reflected as capitalized costs on the consolidated balance sheet of a Person and its Restricted Subsidiaries.

“ Captive Insurance Subsidiary ” means (i) any Subsidiary established by the Issuer for the primary purpose of insuring the businesses or properties owned or operated by the Issuer or any of its Subsidiaries or (ii) any Subsidiary of any such insurance subsidiary established for the same primary purpose described in clause (i) above.

“ Cash Equivalents ” means:

(1) United States dollars;

(2) (a) Canadian dollars, pounds sterling, yen, euros or any national currency of any participating member state of the EMU; or

(b) such local currencies held by the Issuer or any Restricted Subsidiary from time to time in the ordinary course of business or consistent with industry practice;

(3) securities issued or directly and fully and unconditionally guaranteed or insured by the U.S. government or any agency or instrumentality thereof, the securities of which are unconditionally guaranteed as a full faith and credit obligation of such government with maturities of 36 months or less from the date of acquisition;

(4) certificates of deposit, time deposits and eurodollar time deposits with maturities of 36 months or less from the date of acquisition, demand deposits, bankers’ acceptances with maturities not exceeding three years and overnight bank deposits, in each case with any domestic or foreign commercial bank having capital and surplus of not less than $250.0 million in the case of U.S. banks and $100.0 million (or the U.S. Dollar Equivalent as of the date of determination) in the case of non-U.S. banks;

(5) repurchase obligations for underlying securities of the types described in clauses (3), (4), (7) and (8) of this definition entered into with any financial institution or recognized securities dealer meeting the qualifications specified in clause (4) above;

(6) commercial paper and variable or fixed rate notes rated at least P-2 by Moody’s or at least A-2 by S&P (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency) and in each case maturing within 36 months after the date of creation thereof;

(7) marketable short-term money market and similar funds having a rating of at least P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency);

(8) readily marketable direct obligations issued or directly and fully unconditionally guaranteed by any state, commonwealth or territory of the United States of America or any political subdivision or taxing authority thereof, in each case, having an Investment Grade Rating from either Moody’s or S&P (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency) with maturities of 36 months or less from the date of acquisition;

(9) readily marketable direct obligations issued or directly and fully unconditionally guaranteed by any foreign government or any political subdivision or public instrumentality thereof, in each case having an Investment Grade Rating from either Moody’s or S&P (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency) with maturities of 36 months or less from the date of acquisition;

(10) Investments with average maturities of 36 months or less from the date of acquisition in money market funds rated AAA(or the equivalent thereof) or better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency);

(11) securities with maturities of 36 months or less from the date of acquisition backed by standby letters of credit issued by any financial institution or recognized securities dealer meeting the qualifications specified in clause (4) above;

(12) Indebtedness or Preferred Stock issued by Persons with a rating of “A” or higher from S&P or “A2” or higher from Moody’s (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency) with maturities of 36 months or less from the date of acquisition;

(13) investment funds investing at least 90.0% of their assets in securities of the types described in clauses (1) through (12) above; and

(14) solely with respect to any Captive Insurance Subsidiary, any investment that the Captive Insurance Subsidiary is not prohibited to make in accordance with applicable law.

In the case of Investments by any Foreign Subsidiary that is a Restricted Subsidiary or Investments made in a country outside the United States of America, Cash Equivalents shall also include (a) investments of the type and maturity described in clauses (1) through (14) above of foreign obligors, which Investments or obligors (or the parents of such obligors) have ratings described in such clauses or equivalent ratings from comparable foreign rating agencies and (b) other short-term investments utilized by Foreign Subsidiaries that are Restricted Subsidiaries in accordance with normal investment practices for cash management in investments analogous to the foregoing investments in clauses (1) through (14) and in this paragraph.

Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in currencies other than those set forth in clauses (1) and (2) above, provided that such amounts, except amounts used to pay non-dollar denominated obligations of the Issuer or any Restricted Subsidiary in the ordinary course of business, are converted into any currency listed in clauses (1) and (2) as promptly as practicable and in any event within ten Business Days following the receipt of such amounts.

For the avoidance of doubt, any items identified as Cash Equivalents under this definition will be deemed to be Cash Equivalents for all purposes under this Indenture regardless of the treatment of such items under GAAP.

“ Casualty Event ” means any event that gives rise to the receipt by the Issuer or any Restricted Subsidiary of any insurance proceeds or condemnation awards in respect of any equipment, fixed assets or real property (including any improvements thereon) to replace or repair such equipment, fixed assets or real property.

“ CFC ” means a “controlled foreign corporation” within the meaning of Section 957(a) of the Code.

“ Change of Control ” means the occurrence of any of the following after the Completion Date:

(1) the sale, lease, transfer, conveyance or other disposition in one or a series of related transactions (other than by merger, consolidation, amalgamation or other business combination), of all or substantially all of the assets of the Issuer and its Subsidiaries, taken as a whole, to any Person other than one or more Permitted Holders, the Issuer or any Guarantor; or

(2) the Issuer becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by (A) any Person (other than a Permitted Holder) or (B) Persons (other than one or more Permitted Holders) that are together a group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any such group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of more than 50.0% of the total voting power of the Voting Stock of the Issuer directly or indirectly through any Parent Company, unless (a) the Permitted Holders have, at such time, directly or indirectly, the right or the ability by voting power, contract or otherwise, to elect or designate for election at least a majority of the Board of Directors of the Issuer or (b) such acquisition occurs in connection with any transaction or series of transactions as a result of which the Issuer shall become the Wholly-Owned Subsidiary of a Parent Company.

Notwithstanding the preceding or any provision of Section 13d-3 of the Exchange Act, (i) a Person or group shall not be deemed to beneficially own Voting Stock subject to a stock 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, (ii) if any group includes one or more Permitted Holders, the issued and outstanding Voting Stock of the Issuer 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 and (iii) a Person or group will not be deemed to beneficially own the Voting Stock of another Person as a result of its ownership of Voting Stock or other securities of such other Person’s parent entity (or related contractual rights) unless it owns 50.0% or more of the total voting power of the Voting Stock entitled to vote for the election of directors of such parent entity having a majority of the aggregate votes on the board of directors (or similar body) of such parent entity.

“ Clearstream ” means Clearstream Banking, a société anonyme , as currently in effect or any successor securities clearing agency.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Co-Issuer ” means Change Healthcare Finance, Inc., a Delaware corporation (and not any of its Subsidiaries or Affiliates), until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Co-Issuer shall mean such successor Person.

“ Completion Date ” means the Issue Date or, if the Escrow Release Conditions have not been satisfied on or prior to (or substantially concurrently with) the Issue Date, the Escrow Release Date.

“ Completion Date Supplemental Indenture ” means a supplemental indenture to this Indenture substantially in the form of Exhibit D .

“ consolidated ” when used with respect to any Person refers to such Person consolidated with its Restricted Subsidiaries.

“ Consolidated Depreciation and Amortization Expense ” means with respect to any Person for any period, (a) the total amount of depreciation and amortization expense and (b) capitalized fees related to any Qualified Securitization Facility, in each case, of such Person and its Restricted Subsidiaries, including the amortization of intangible assets, deferred financing costs, debt issuance costs, commissions, fees and expenses and Capitalized Software Expenditures of such Person and its Restricted Subsidiaries for such period on a consolidated basis and otherwise determined in accordance with GAAP.

“ Consolidated Interest Expense ” means, with respect to any Person for any period, the sum, without duplication, of:

(1) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, to the extent such expense was deducted (and not added back) in computing Consolidated Net Income (including (a) amortization of original issue discount resulting from the issuance of Indebtedness at less than par, (b) all commissions, discounts and other fees and charges owed with respect to letters of credit or bankers acceptances, (c) non-cash interest payments (but excluding any non-cash interest expense attributable to the movement in mark-to-market valuation of Hedging Obligations or derivative instruments pursuant to GAAP), (d) the interest component of Capitalized Lease Obligations, and (e) net payments, if any made (less net payments, if any, received), pursuant to interest rate Hedging Obligations with respect to Indebtedness, and excluding (q) Excluded Contract Amounts, (r) annual agency fees paid to the administrative agents and collateral agents under any Credit Facilities, (s) costs associated with obtaining Hedging Obligations and breakage costs in respect of Hedging Obligations related to interest rates on account of the early termination thereof, (t) any expense resulting from the discounting of any Indebtedness in connection with the application of recapitalization accounting or, if applicable, purchase accounting in connection with the Transactions or any acquisition, (u) penalties and interest relating to taxes, (v) any “additional interest” or “liquidated damages” with respect to other securities for failure to timely comply with registration rights obligations, (w) amortization or expensing of deferred financing fees, amendment and consent fees, debt issuance costs, commissions, fees, expenses and discounted liabilities and any other amounts of non-cash interest, (x) any expensing of bridge, commitment and other financing fees and any other fees related to the Transactions or any acquisitions after the Completion Date, (y) commissions, discounts, yield and other fees and charges (including any interest expense) related to any Qualified Securitization Facility, (z) any accretion of accrued interest on discounted liabilities and any prepayment premium or penalty, (aa) interest expense resulting from push-down accounting and (bb) any lease, rental or other expense in connection with any lease that is not a Capitalized Lease Obligation); plus

(2) consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued; less

(3) interest income of such Person and its Restricted Subsidiaries for such period.

For purposes of this definition, interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by such Person to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP.

“ Consolidated Net Income ” means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, and otherwise determined in accordance with GAAP; provided , that, without duplication:

(1) any after-tax effect of extraordinary, non-recurring or unusual gains or losses (less all fees and expenses relating thereto), charges or expenses (including relating to any multiyear strategic initiatives), Transaction Expenses, restructuring and duplicative running costs, restructuring charges and reserves, relocation costs, integration costs, Public Company Costs, facility consolidation and closing costs, severance costs and expenses, one-time charges, costs relating to pre-opening, opening and conversion costs for facilities, signing, retention and completion bonuses, recruiting costs, costs incurred in connection with any strategic initiatives, transition costs, costs incurred in connection with acquisitions (including travel and out-of-pocket costs, professional fees for legal, accounting and other services), human resources costs (including relocation bonuses) and restructuring costs (including recruiting costs and employee severance), management transition costs, advertising costs, losses associated with temporary decreases in work volume and expenses related to maintaining underutilized personnel, and non-recurring product and intellectual property development, integration costs, start-up or initial costs for any project or new production line, division or new line of business, other business optimization expenses and reserves (including costs and expenses relating to business optimization programs and new systems design, retention charges, system establishment costs, costs or reserves associated with improvements to IT and accounting functions and implementation costs and project start-up costs) and operating expenses attributable to the implementation of cost-savings initiatives, and curtailments or modifications to pension and post-retirement employee benefit plans shall be excluded;

(2) at the election of the Issuer with respect to any quarterly period, the cumulative effect of a change in accounting principles and changes as a result of the adoption or modification of accounting policies during such period (including, but not limited to, the impact of Accounting Standards Update 2016-12, Revenue from Contracts with Customers (Topic 606) or similar revenue recognition policies promulgated after the Completion Date) shall be excluded;

(3) any net after-tax effect of gains or losses on disposal, abandonment (including asset retirement costs) or discontinuance of disposed, abandoned or discontinued operations, as applicable, shall be excluded;

(4) any net after-tax effect of gains or losses (less all fees, expenses and charges relating thereto) attributable to asset dispositions or abandonments or the sale or other disposition of any Capital Stock of any Person other than in the ordinary course of business shall be excluded;

(5) the Net Income for such period of any Person that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting shall be excluded; provided , that Consolidated Net Income shall be increased by the amount of dividends or distributions or other payments (other than Excluded Contributions) that are actually paid in Cash Equivalents (or other assets to the extent converted into Cash Equivalents) to such Person or a Restricted Subsidiary thereof in respect of such period;

(6) solely for the purposes of determining the amount available for Restricted Payments under clause (C)(1) of Section 4.07(a) hereof, the Net Income for such period of any Restricted Subsidiary (other than the Co-Issuer or any Guarantor) shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of its Net Income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule, or governmental regulation applicable to that Restricted Subsidiary or its stockholders (other than restrictions in the Notes or this Indenture), unless such restriction with respect to the payment of dividends or similar distributions has been legally waived; provided , that Consolidated Net Income of such Person will be increased by the amount of dividends or other distributions or other payments actually paid in Cash Equivalents (or to the extent converted into Cash Equivalents) to such Person or a Restricted Subsidiary thereof in respect of such period, to the extent not already included therein;

(7) effects of adjustments (including the effects of such adjustments pushed down to such Person and its Restricted Subsidiaries) in such Person’s consolidated financial statements pursuant to GAAP (including in the inventory (including any impact of changes to inventory valuation policy methods, including changes in capitalization of variances), property and equipment, software, goodwill, intangible assets, in-process research and development, deferred revenue and debt line items thereof) resulting from the application of recapitalization accounting or purchase accounting, as the case may be, in relation to the Transactions or any consummated acquisition or joint venture investment or the amortization or write-off or write-down of any amounts thereof, net of taxes, shall be excluded;

(8) any after-tax effect of income (loss) from the early extinguishment or conversion of (i) Indebtedness, (ii) Hedging Obligations or (iii) other derivative instruments shall be excluded;

(9) any impairment charge or asset write-off or write-down, including impairment charges or asset write-offs or write-downs related to intangible assets, long-lived assets, investments in debt and equity securities and investments recorded using the equity method or as a result of a change in law or regulation, in each case, pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP, shall be excluded;

(10) any equity-based or non-cash compensation or similar charge or expense or reduction of revenue, including any such charge, expense or amount arising from grants of stock appreciation or similar rights, stock options, restricted stock, profits interests or other rights or equity or equity-based incentive programs (“ equity incentives ”), any cash charges associated with the equity incentives or other long-term incentive compensation plans (including under deferred compensation arrangements of the Issuer, any Restricted Subsidiary or any Parent Company), rollover, acceleration, or payout of Equity Interests by management, other employees or business partners of such Person or of a Restricted Subsidiary or any Parent Company, shall be excluded;

(11) any fees, expenses or charges incurred during such period, or any amortization thereof for such period, in connection with any acquisition, recapitalization, Investment, Asset Sale, disposition, incurrence or repayment of Indebtedness (including such fees, expenses or charges related to the offering and issuance of the Notes and other securities and the syndication and incurrence of any Credit Facilities), issuance of Equity Interests of the Issuer or any Parent Company, refinancing transaction or amendment or modification of any debt instrument (including any amendment or other modification of the Notes and other securities and any Credit Facilities) and including, in each case, any such transaction consummated on or prior to the Completion Date and any such transaction undertaken but not completed, and any charges or non-recurring merger costs incurred during such period as a result of any such transaction, in each case whether or not successful or consummated (including, for the avoidance of doubt the effects of expensing all transaction related expenses in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic No. 805, Business Combinations), shall be excluded;

(12) accruals and reserves that are established or adjusted as a result of the Transactions or established or adjusted as a result of, and within twelve months after the closing of, any acquisition or a Change of Control, in each case, in accordance with GAAP or changes as a result of modifications of accounting policies, shall be excluded;

(13) any expenses, charges or losses to the extent covered by insurance or indemnity and actually reimbursed, or, so long as such Person has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer or indemnifying party and only to the extent that such amount is in fact reimbursed within 365 days of the date of the insurable or indemnifiable event (net of any amount so added back in any prior period to the extent not so reimbursed within the applicable 365-day period), shall be excluded;

(14) (a) any noncash compensation expense resulting from the application of Accounting Standards Codification Topic No. 718, Compensation—Stock Compensation or Accounting Standards Codification Topic 505-50, Equity-Based Payments to Non-Employees, and (b) any income (loss) attributable to deferred compensation plans or trusts, shall, in each case, be excluded;

(15) the following items shall be excluded:

(a) any net unrealized gain or loss (after any offset) resulting in such period from Hedging Obligations and the application of Accounting Standards Codification Topic No. 815, Derivatives and Hedging,

(b) any net unrealized gain or loss (after any offset) resulting in such period from currency transaction or translation gains or losses, including those related to currency remeasurements of Indebtedness (including any net loss or gain resulting from (A) Hedging Obligations for currency exchange risk and (B) resulting from intercompany indebtedness) and any other foreign currency transaction or translation gains and losses, to the extent such gains or losses are non-cash items,

(c) any adjustments resulting from the application of Accounting Standards Codification Topic No. 460, Guarantees, or any comparable regulation,

(d) at the election of the Issuer with respect to any quarterly period, effects of adjustments to accruals and reserves during a prior period relating to any change in the methodology of calculating reserves for returns, rebates and other chargebacks,

(e) earn-out, non-compete and contingent consideration obligations (including to the extent accounted for as bonuses or otherwise) and adjustments thereof and purchase price adjustments,

(f) any non-cash rent expense, and

(g) any non-cash expenses, accruals or reserves related to adjustments to historical tax exposures; and

(16) if the Issuer or any Restricted Subsidiary is treated as a disregarded entity or partnership, or is a member of a Tax Group of which a Parent Company is the parent, in each case for U.S. federal, state and/or local income tax purposes for such period or any portion thereof, the amount of distributions actually made to any Parent Company in respect of such period in accordance with clause (xiv)(B) of Section 4.07(b) shall be taken into account in calculating Consolidated Net Income as though such amounts had been paid as taxes directly by such Person for such period;

In addition, to the extent not already included in the Consolidated Net Income of such Person and its Restricted Subsidiaries, notwithstanding anything to the contrary in the foregoing, Consolidated Net Income shall include the amount of proceeds received from business interruption insurance and reimbursements of any expenses and charges that are covered by indemnification or other reimbursement provisions in connection with any acquisition, Investment or any sale, conveyance, transfer or other disposition of assets permitted under this Indenture.

Notwithstanding the foregoing, for the purpose of Section 4.07(a) hereof only (other than clause (C)(4) of Section 4.07(a) hereof), there shall be excluded from Consolidated Net Income any income arising from any sale or other disposition of Restricted Investments made by the Issuer and its Restricted Subsidiaries, any repurchases and redemptions of Restricted Investments from the Issuer and its Restricted Subsidiaries, any repayments of loans and advances which constitute Restricted Investments by the Issuer or any of its Restricted Subsidiaries, any sale of the stock of an Unrestricted Subsidiary or any distribution or dividend from an Unrestricted Subsidiary, in each case only to the extent such amounts increase the amount of Restricted Payments permitted under such covenant pursuant to clause (C)(4) of Section 4.07(a) hereof.

“ Consolidated Secured Debt Ratio ” means, as of any date of determination, the ratio of (i) Consolidated Total Secured Indebtedness of the Issuers and their Restricted Subsidiaries as of the end of the most recent Test Period immediately preceding the date on which such event for which such calculation is being made shall occur minus Cash Equivalents included on the consolidated balance sheet of the Issuer and its Restricted Subsidiaries as of the end of such most recent Test Period to (ii) EBITDA of the Issuer for the most recently ended Test Period immediately preceding the date on which such event for which such calculation is being made shall occur, in each case with such pro forma adjustments to Consolidated Total Secured Indebtedness, Cash Equivalents and EBITDA as are appropriate and consistent with the pro forma effect and adjustment provisions set forth in the definition of “Fixed Charge Coverage Ratio.”

“ Consolidated Total Debt Ratio ” means, as of any date of determination, the ratio of (i) Consolidated Total Indebtedness of the Issuer and its Restricted Subsidiaries as of the end of the most recent Test Period immediately preceding the date on which such event for which such calculation is being made shall occur minus Cash Equivalents included on the consolidated balance sheet of the Issuer and its Restricted Subsidiaries as of the end of such most recent Test Period to (ii) EBITDA of the Issuer for the most recently ended Test Period immediately preceding the date on which such event for which such calculation is being made shall occur, in each case with such pro forma adjustments to Consolidated Total Indebtedness, Cash Equivalents and EBITDA as are appropriate and consistent with the pro forma effect and adjustment provisions set forth in the definition of “Fixed Charge Coverage Ratio.”

“ Consolidated Total Indebtedness ” means, as of any date of determination, an amount equal to the sum of (1) the aggregate principal amount of all outstanding Indebtedness of the Issuer and its Restricted Subsidiaries on a consolidated basis, in an amount that would be reflected on a balance sheet prepared as of such date on a consolidated basis in accordance with GAAP (but excluding the effects of any discounting of Indebtedness resulting from the application of purchase accounting in connection with the Transactions or any acquisition), consisting of Indebtedness for borrowed money, Obligations in respect of Capitalized Lease Obligations, Purchase Money Obligations and Indebtedness evidenced by promissory notes and similar instruments, as determined in accordance with GAAP and (2) the aggregate amount of all outstanding Disqualified Stock of the Issuer and all Preferred Stock of its Restricted Subsidiaries on a consolidated basis, with the amount of such Disqualified Stock and Preferred Stock equal to the greater of their respective voluntary or involuntary liquidation preferences and maximum fixed repurchase prices, in each case determined on a consolidated basis in accordance with GAAP (but excluding the effects of any discounting of Indebtedness resulting from the application of repurchase or purchase accounting in connection with the Transactions or any acquisition), in the case of clause (1) and (2) above, excluding for the avoidance of doubt all undrawn amounts under revolving credit facilities and letters of credit, and all obligations relating to Qualified Securitization Facilities and Excluded Contract Amounts; provided , that Consolidated Total Indebtedness shall not include Indebtedness in respect of (A) any letter of credit, bank guarantees and performance or similar bonds, except to the extent of obligations in respect of drawn standby letters of credit which have not been reimbursed within five Business Days and (B) Hedging Obligations. The U.S. Dollar Equivalent principal amount of any Indebtedness denominated in a foreign currency will reflect the currency translation effects, determined in accordance with GAAP, of Hedging Obligations for currency exchange risks with respect to the applicable currency in effect on the date of determination of the U.S. Dollar Equivalent principal amount of such Indebtedness. For purposes hereof, the “ maximum fixed

repurchase price ” of any Disqualified Stock or Preferred Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock or Preferred Stock as if such Disqualified Stock or Preferred Stock were purchased on any date on which Consolidated Total Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock or Preferred Stock, such fair market value shall be determined reasonably and in good faith by the Issuer.

“ Consolidated Total Secured Indebtedness ” means, as of any date of determination, an amount equal to the sum of the aggregate principal amount of all outstanding Indebtedness of the Issuer and its Restricted Subsidiaries on a consolidated basis, in an amount that would be reflected on a balance sheet prepared as of such date on a consolidated basis in accordance with GAAP (but excluding the effects of any discounting of Indebtedness resulting from the application of purchase accounting in connection with the Transactions or any acquisition), consisting of Indebtedness for borrowed money, Obligations in respect of Capitalized Lease Obligations, Purchase Money Obligations and Indebtedness evidenced by promissory notes and similar instruments, as determined in accordance with GAAP (excluding for the avoidance of doubt all undrawn amounts under revolving credit facilities and letters of credit, and all obligations relating to Qualified Securitization Facilities and Excluded Contract Amounts), in each case, to the extent secured by Liens on the property of the Issuers and the Guarantors securing their respective obligations under the Senior Secured Credit Facilities; provided , that Consolidated Total Secured Indebtedness shall not include Indebtedness in respect of (A) any letter of credit, bank guarantees and performance or similar bonds, except to the extent of obligations in respect of drawn standby letters of credit which have not been reimbursed within three Business Days and (B) permitted Hedging Obligations. The U.S. Dollar Equivalent principal amount of any Indebtedness denominated in a foreign currency will reflect the currency translation effects, determined in accordance with GAAP, of Hedging Obligations for currency exchange risks with respect to the applicable currency in effect on the date of determination of the U.S. Dollar Equivalent principal amount of such Indebtedness.

“ Contingent Obligations ” means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness (a “ primary obligation ”) of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent,

(1) to purchase any such primary obligation or any property constituting direct or indirect security therefor;

(2) to advance or supply funds,

(a) for the purchase or payment of any such primary obligation; or

(b) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; or

(3) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.

“ Contributed Businesses ” means those certain equity interests, assets, properties and businesses contributed or otherwise transferred, directly or indirectly, to the Issuer, pursuant to the Contribution Agreement.

“ Contribution ” means the direct or indirect contribution and/or transfer of the Contributed Businesses to the Issuer pursuant to the Contribution Agreement.

“ Contribution Agreement ” means the Agreement of Contribution and Sale, dated as of June 28, 2016 (as amended, supplemented or modified and in effect from time to time, and including all schedules and exhibits thereto), among Change Healthcare LLC (f/k/a PF2 NewCo LLC), Change Healthcare Intermediate Holdings, LLC (f/k/a PF2 NewCo Intermediate Holdings, LLC), the Issuer, MCK, HCIT Holdings, Inc., Change Healthcare, Inc., certain entities affiliated with The Blackstone Group, L.P., certain entities affiliated with Hellman & Friedman LLC and the other parties thereto.

“ Controlled Investment Affiliate ” means, as to any Person, any other Person, other than any Investor, which directly or indirectly is in control of, is controlled by, or is under common control with such Person and is organized by such Person (or any Person controlling such Person) primarily for making direct or indirect equity or debt investments in the Issuer and/or other companies.

“ Core MTS Business ” means the McKesson’s Technology Solutions businesses, excluding McKesson’s Enterprise Information Solutions business and RelayHealth Pharmacy Network, as more particularly described in the Offering Circular.

“ Corporate Trust Office ” means the office of the Trustee at which any time its corporate trust business related to this Indenture shall be administered, which office at the date hereof is 246 Goose Lane, Suite 105, Guilford, CT 06437, or such other address as the Trustee may designate from time to time by notice to the Holders and the Issuers, or the principal corporate trust office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Holders and the Issuers).

“ Credit Facilities ” means, with respect to the Issuer or any of its Restricted Subsidiaries, one or more debt facilities, including the Senior Secured Credit Facilities, or other financing arrangements (including, without limitation, commercial paper facilities, note purchase agreements, agreements or indentures) providing for revolving credit loans, term loans, letters of credit, bank guarantees, notes, debt securities or other indebtedness for borrowed money, including any notes, mortgages, guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements or refundings thereof, in whole or in part, and any debt facilities, credit facilities, commercial paper facilities, debt securities, note purchase agreements, indentures, agreements or other financing arrangements that replace, refund, supplement, extend, renew, restate, amend, modify or refinance any part of the loans, notes, credit facilities, debt securities,

commitments or other obligations thereunder, including any such exchange, replacement, refunding, supplemental, extended, renewed, restated, amended, modified or refinancing facility, note purchase agreement, indenture, agreement or arrangement that increases the amount permitted to be borrowed or issued thereunder or alters the maturity thereof ( provided , that such increase in borrowings or issuances is permitted under Section 4.09 hereof) or adds Restricted Subsidiaries as additional borrowers or guarantors thereunder and whether by the same or any other agent, trustee, lender or group of lenders, purchasers or other holders, initial purchasers or underwriters.

“ Custodian ” means the Trustee, as custodian with respect to the Notes, each in global form, or any successor entity thereto.

“ Data Sublicense Agreements ” means the Amended and Restated Data License Agreement, effective February 8, 2008, and the Data Sublicense Agreement, effective October 1, 2009, each as amended, restated, amended and restated, supplemented or modified from time to time, among WebMD Health Corp. and Change Healthcare Holdings, Inc. (f/k/a Emdeon Inc.) and its Affiliates relating to the processing of and use of health information.

“ Default ” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default; provided that any Default that results solely from the taking of an action that would have been permitted but for the continuation of a previous Default will be deemed to be cured if such previous Default is cured prior to becoming an Event of Default.

“ Definitive Note ” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06(c) hereof, substantially in the form of Exhibit A hereto, except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

“ Depositary ” means, with respect to the Notes issuable or issued in whole or in part in global form, any Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as Depositary hereunder and having become such pursuant to the applicable provision of this Indenture.

“ Designated Non-cash Consideration ” means the fair market value of non-cash consideration received by the Issuer or a Restricted Subsidiary in connection with an Asset Sale that is so designated as Designated Non-cash Consideration pursuant to an Officer’s Certificate, setting forth the basis of such valuation executed by a Financial Officer of the Issuer, less the amount of Cash Equivalents received in connection with a subsequent sale, redemption or repurchase of, or collection or payment on, such Designated Non-cash Consideration.

“ Designated Preferred Stock ” means Preferred Stock of the Issuer or any Parent Company (in each case other than Disqualified Stock) that is issued for cash (other than to a Restricted Subsidiary or an employee stock ownership plan or trust established by the Issuer or any of its Subsidiaries) and is so designated as Designated Preferred Stock, pursuant to an Officer’s Certificate executed by a Financial Officer of the Issuer on or promptly after the issuance date thereof, the cash proceeds of which are excluded from the calculation set forth in clause (C) of Section 4.07(a) hereof.

“ Disinterested Director ” means, with respect to any Affiliate Transaction, a member of the Board of Directors of the Issuer having no material direct or indirect financial interest in or with respect to such Affiliate Transaction. A member of the Board of Directors of the Issuer shall be deemed not to have such a financial interest by reason of such member’s holding Capital Stock of the Issuer or any options, warrants or other rights in respect of such Capital Stock.

“ Disqualified Stock ” means, with respect to any Person, any Capital Stock of such Person which, by its terms, or by the terms of any security into which it is convertible or for which it is redeemable or exchangeable, or upon the happening of any event, matures or is mandatorily redeemable (other than (i) for any Qualified Equity Interests or (ii) solely as a result of a change of control, asset sale, casualty, condemnation or eminent domain) pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other than for any Qualified Equity Interests or solely as a result of a change of control, asset sale, casualty, condemnation or eminent domain), in whole or in part, in each case prior to the date 91 days after the earlier of the maturity date of the Notes or the date the Notes are no longer outstanding; provided that if such Capital Stock is issued pursuant to any plan for the benefit of future, current or former employees, directors, officers, managers, members of management, consultants or independent contractors (or their respective Controlled Investment Affiliates or Immediate Family Members or permitted transferees) of the Issuer or its Subsidiaries or any Parent Company or by any such plan to such employees, directors, officers, managers, members of management, consultants or independent contractors (or their respective Controlled Investment Affiliates or Immediate Family Members or permitted transferees), such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Issuer or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s, director’s, officer’s, manager’s, management member’s, consultant’s or independent contractor’s termination, death or disability; provided , further , that any Capital Stock held by any future, current or former employee, director, officer, manager, member of management, consultant or independent contractor (or their respective Controlled Investment Affiliates or Immediate Family Members or permitted transferees) of the Issuer, any of its Subsidiaries, any Parent Company, or any other entity in which the Issuer or a Restricted Subsidiary has an Investment and is designated in good faith as an “affiliate” by the Issuer, in each case pursuant to any equity subscription or equity holders’ agreement, management equity plan or stock option plan or any other management or employee benefit plan or agreement shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Issuer or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s, director’s, officer’s, manager’s, management member’s, consultant’s or independent contractor’s termination, death or disability.

“ Domestic Subsidiary ” means any direct or indirect Subsidiary that is organized under the laws of the United States, any state thereof or the District of Columbia.

“ EBITDA ” means, with respect to any Person for any period, the Consolidated Net Income of such Person and its Restricted Subsidiaries for such period:

(1) increased (without duplication) by the following, in each case (other than with respect to clause (h), clause (l) and the applicable pro forma adjustments in clause (p)) to the extent deducted (and not added back) in determining Consolidated Net Income for such period:

(a) provision for taxes based on income or profits or capital, including federal, foreign, state, franchise, local unitary, property, excise, value added and similar taxes and foreign withholding taxes (including any future taxes or other levies which replace or are intended to be in lieu of such taxes and any penalties and interest related to such taxes or arising from tax examinations) paid or accrued during such period and the net tax expense associated with any adjustments made pursuant to the definition of “Consolidated Net Income,” and, without duplication, any distributions and payments to a Parent Company in respect of any of the foregoing; plus

(b) Fixed Charges of such Person for such period (including (x) net losses on Hedging Obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, (y) bank fees and other financing fees and (z) costs of surety bonds in connection with financing activities), plus items excluded from the definition of “Consolidated Interest Expense” (including those set forth in clauses (1)(q) through (bb) in the definition thereof); plus

(d) equity-based or non-cash compensation charges or expenses including any such charges or expenses arising from grants of stock appreciation or similar rights, stock options, restricted stock or other rights; plus

(e) any other non-cash charges, including non-cash losses on the sale of assets and any write-offs or write-downs reducing Consolidated Net Income for such period ( provided that if any such non-cash charges represent an accrual or reserve for potential cash items in any future period, (A) the Issuer may elect not to add back such non-cash charge in the current period and (B) to the extent the Issuer elects to add back such noncash charge, the cash payment in respect thereof in such future period shall be subtracted from EBITDA to such extent, and excluding amortization of a prepaid cash item that was paid in a prior period); plus

(f) the amount of any non-controlling interest or minority interest expense consisting of Subsidiary income attributable to non-controlling or minority equity interests of third parties in any non-Wholly-Owned Subsidiary; plus

Parent Company and (z) payments made to optionholders of such Person or any Parent Company in connection with, or as a result of, any distribution or dividend being made to equityholders of such Person or any Parent Company, which payments are being made to compensate such optionholders as though they were equityholders at the time of, and entitled to share in, such distribution or dividend, in each case to the extent permitted under this Indenture; plus

(h) the amount of (x) “run rate” cost savings, operating expense reductions and synergies related to the Transactions that are reasonably identifiable and factually supportable and projected by the Issuer in good faith to result from actions that have been taken or with respect to which substantial steps have been taken (including prior to the Completion Date) or are expected to be taken (in the good faith determination of the Issuer) within 36 months after the Completion Date (calculated on a pro forma basis as though such cost savings, operating expense reductions and synergies had been realized on the first day of such period for which EBITDA is being determined and as if such cost savings, operating expense reductions and synergies were realized during the entirety of such period), net of the amount of actual benefits realized during such period from such actions and (y) “run rate” cost savings, operating expense reductions and synergies related to mergers, business combinations, acquisitions, Investments, dispositions, divestitures, other Specified Transactions and other similar transactions, restructurings, operating improvements, cost savings initiatives and other initiatives (including the restructuring, modification and renegotiation of contracts and other arrangements) that are reasonably identifiable and factually supportable and projected by the Issuer in good faith to result from actions that have been taken or with respect to which substantial steps have been taken (including prior to the Completion Date or the date of such transaction, initiative or event) or are expected to be taken (in the good faith determination of the Issuer) within 24 months after any such transaction, initiative or event (calculated on a pro forma basis as though such cost savings, operating expense reductions and synergies had been realized on the first day of such period for which EBITDA is being determined and as if such cost savings, operating expense reductions and synergies were realized during the entirety of such period), net of the amount of actual benefits realized during such period from such actions; plus

(i) the amount of loss or discount on sale of receivables, Securitization Assets and related assets to any Securitization Subsidiary in connection with a Qualified Securitization Facility; plus

(j) interest income or investment earnings on retiree medical and intellectual property, royalty or license receivables; plus

(k) any costs or expense incurred by the Issuer or a Restricted Subsidiary or a Parent Company pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, to the extent that such cost or expenses are funded with cash proceeds contributed to the capital of such Person or net cash proceeds of an issuance of Equity Interest of such Person (other than Disqualified Stock) solely to the extent that such net cash proceeds are excluded from the calculation set forth in clause (C) of Section 4.07(a) hereof; plus

(l) cash receipts (or any netting arrangements resulting in reduced cash expenditures) not representing EBITDA or Consolidated Net Income in any period to the extent non-cash gains relating to such income were deducted in the calculation of EBITDA pursuant to clause (2) below for any previous period and not added back; plus

(m) any net loss from disposed, abandoned or discontinued operations (other than, at the option of the Issuer, operations and assets held for sale or subject to any agreement to dispose of such operations or assets pending consummation of such disposition); plus

(n) Excluded Contract Amounts; plus

(o) any net pension or post-employment benefit costs representing amortization of unrecognized prior service costs, actuarial losses, including amortization of such amounts arising in prior periods, amortization of the unrecognized net obligation (and loss or cost) existing at the date of initial application of Statement on Financial Accounting Standards No. 87, 106 and 112, and any other items of a similar nature; plus

(p) adjustments of the nature used in connection with the calculation of “Adjusted EBITDA” as set forth in “Summary—Summary Unaudited Pro Forma and Historical Financial and Other Data” contained in the Offering Circular, applied in good faith by the Issuer to the extent such adjustments continue to be applicable during the period in which EBITDA is being calculated; plus

(q) any payments in the nature of compensation or expense reimbursement made to independent members of any Board of Directors; and

(2) decreased (without duplication) by the following, in each case to the extent included in determining Consolidated Net Income for such period:

(a) non-cash gains (including non-cash gains on the sale of assets) increasing Consolidated Net Income of such Person for such period, excluding any non-cash gains to the extent they represent the reversal of an accrual or reserve for a potential cash item that reduced EBITDA in any prior period and any non-cash gains with respect to cash actually received in a prior period so long as such cash did not increase EBITDA in such prior period; plus

(b) any net income from disposed, abandoned or discontinued operations (other than, at the option of the Issuer, operations and assets held for sale or subject to any agreement to dispose of such operations or assets pending consummation of such disposition); and

(3) increased or decreased (without duplication) by, as applicable, any non-cash adjustments resulting from the application of FASB Interpretation No. 45 Guarantees .

For all purposes of this Indenture, EBITDA shall be calculated with such pro forma adjustments as are appropriate and consistent with the pro forma effect and adjustment provisions set forth in the definition of “Fixed Charge Coverage Ratio”, without duplication.

“ Echo Connect ” has the meaning set forth in the Contribution Agreement.

“ Echo Connect Option Agreement ” means the Echo Connect Option Agreement, dated on or about the Completion Date, by and among Change Healthcare, Inc., Change Healthcare Solutions, LLC, certain entities affiliated with The Blackstone Group, L.P., certain entities affiliated with Hellman & Friedman LLC, the other equityholders of Echo Connect as set forth therein and the other parties thereto, as in effect on or about the Completion Date or as amended and replaced thereafter so long as any such amendment or replacement is not materially disadvantageous in the good faith judgment of the Issuer to the Holders when taken as a whole, as compared to the Echo Connect Option Agreement as in effect on or about the Completion Date.

“ Eligible Escrow Investments ” means such customary short-term liquid investments in which amounts on deposit in the Escrow Account may be invested in accordance with the Escrow Agreement.

“ EMU ” means economic and monetary union as contemplated in the Treaty on European Union. “ Equity Holders ” means the Investors, any co-investor, Management Stockholder and any other Person from time to time directly or indirectly owning any Equity Interests of the Issuer or any Parent Company.

“ Equity Interests ” means Capital Stock and all warrants, options or other rights to acquire Capital Stock, but excluding any debt security that is convertible into, or exchangeable for, Capital Stock.

“ Equity Offering ” means any public or private sale or issuance of common equity or Preferred Stock (excluding Disqualified Stock), of the Issuer or any Parent Company other than:

(1) public offerings with respect to the Issuer’s or any Parent Company’s common equity registered on Form S-4 or Form S-8;

(2) issuances to any Subsidiary of the Issuer; and

(3) any such public or private sale or issuance that constitutes an Excluded Contribution.

“ Escrow Account ” means a segregated account, under the control of the Escrow Agent, that includes only cash items, U.S. Government Securities and Eligible Escrow Investments, the proceeds thereof and interest earned thereon, free from all Liens other than the Lien in favor of the Trustee for its benefit and the benefit of the Holders.

“ Escrowed Proceeds ” means (1) the proceeds from the offering of any debt securities or other Indebtedness paid into an escrow account with an independent escrow agent on the date of the applicable offering or incurrence, (2) any additional funds deposited from time to time to fund interest, any mandatory redemption or sinking fund payments and any other amounts on, or with respect to, such debt securities or other Indebtedness, (3) any investments in such escrow account and the proceeds thereof and (4) all interest or other income earned on the amounts held in escrow or from such investments, in each case, pursuant to escrow arrangements that permit the release of amounts on deposit in such escrow account upon satisfaction of certain conditions or the occurrence of certain events.

“ euro ” means the lawful currency of participating member states of the EMU.

“ Euroclear ” means Euroclear Bank S.A./N.V., as operator of the Euroclear system, or any successor securities clearing agency.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

“ Excluded Contract Amounts ” means any payments and obligations (a) under the Tax Agreements, (b) under the Data Sublicense Agreements and (c) on account of franchise, excise and similar taxes, consideration for services performed, licensing rights and obligations, indemnities, expense reimbursements and similar amounts under the Transaction Documents, in each case, including, but not limited to, any charges, costs, expenses (including accrual or accretion of interest expense), losses and liabilities reflected on the consolidated financial statements of the Issuer in accordance with GAAP.

“ Excluded Contribution ” means net cash proceeds, the fair market value of marketable securities or the fair market value of Qualified Proceeds received by the Issuer from:

(1) contributions to its common equity capital;

(2) dividends, distributions, fees and other payments from any joint ventures that are not Restricted Subsidiaries; and

(3) the sale (other than to a Restricted Subsidiary of the Issuer or to any management equity plan or stock option plan or any other management or employee benefit plan or agreement of the Issuer) of Capital Stock (other than Disqualified Stock and Designated Preferred Stock) of the Issuer (or any Parent Company to the extent contributed as common Capital Stock to the Issuer),

in each case designated as Excluded Contributions pursuant to an Officer’s Certificate executed by a Financial Officer of the Issuer, which are excluded from the calculation set forth in clause (C) of Section 4.07(a) hereof.

“ Excluded Proceeds ” means, with respect to any Required Divestiture, if after pro forma giving effect thereto and the application of Net Proceeds thereof, (i) the Consolidated Total Debt Ratio of the Issuer would be less than or equal to 5.80 to 1.00, 100.0% of the Net Proceeds from such Required Divestiture, and (ii) the Consolidated Total Debt Ratio of the Issuer would exceed 5.80 to 1.00, 100.0% of the Net Proceeds from such Required Divestiture minus the portion of such Net Proceeds, which if applied on a pro forma basis to reduce Indebtedness as contemplated by Section 4.10 hereof, would result in the Consolidated Total Debt Ratio of the Issuer being equal to 5.80 to 1.00.

“ Excluded Subsidiary ” means (1) any Subsidiary that is not a Wholly-Owned Subsidiary of the Issuer or a Guarantor, (2) any Foreign Subsidiary, (3) any direct or indirect Domestic Subsidiary (i) that is a direct or indirect Subsidiary of a Foreign Subsidiary that is a CFC or (ii) substantially all of whose assets consist of capital stock and/or indebtedness of one or more (A) Subsidiaries that are CFCs or (B) other Subsidiaries described in this clause (3)(ii), and any other assets incidental thereto, (4) any Subsidiary, including any regulated entity that is subject to net worth or net capital or similar capital and surplus restrictions, that is prohibited or restricted by applicable law, accounting policies or by contractual obligation existing on the Completion Date (or, with respect to any Subsidiary acquired by the Issuer or a Restricted Subsidiary after the Completion Date (and so long as such contractual obligation was not incurred in contemplation of such acquisition), on the date such Subsidiary is so acquired) from providing a Guarantee (including any Broker-Dealer Regulated Subsidiary), or if such Guarantee would require governmental (including regulatory) or third party consent, approval, license or authorization, (5) any special purpose securitization vehicle (or similar entity), including any Securitization Subsidiary, (6) any Captive Insurance Subsidiary, (7) any not-for-profit Subsidiary, (8) any other Subsidiary with respect to which, in the reasonable judgment of the Issuer, the burden or cost (including any adverse tax consequences to the Issuer, any of its Subsidiaries, any Parent Company or, for as long as it owns, directly or indirectly, beneficial ownership of more than 50.0% of the Equity Interests in the Issuer, MCK) of providing the Guarantee will outweigh the benefits to be obtained by the Holders therefrom and (9) each Unrestricted Subsidiary; provided that any such Subsidiary that is an Excluded Subsidiary pursuant to clause (8) above will cease to be an Excluded Subsidiary at any time such Subsidiary guarantees Indebtedness under the Senior Secured Credit Facilities or Capital Markets Indebtedness of the Issuer or the Co-Issuer or any other Guarantor.

“ fair market value ” means, with respect to any property, asset or liability, the fair market value of such property, asset or liability as determined by the Issuer in good faith.

“ Financial Officer ” means the chief financial officer, accounting officer, treasurer, controller or other senior financial or accounting officer of the Issuer, as appropriate.

“ Fixed Charge Coverage Ratio ” means, with respect to any Test Period, the ratio of (1) EBITDA of the Issuer for such Test Period to (2) the Fixed Charges of the Issuer and its Restricted Subsidiaries on a consolidated basis for such Test Period.

In the event that the Issuer or any Restricted Subsidiary incurs, assumes, guarantees, redeems, repays, retires or extinguishes any Indebtedness (other than Indebtedness incurred or repaid under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced) or issues, repurchases or redeems Disqualified Stock or Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to or simultaneously with the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “ Fixed Charge Coverage Ratio Calculation

Date ”), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee, redemption, repayment, retirement or extinguishment of Indebtedness, or such issuance, repurchase or redemption of Disqualified Stock or Preferred Stock, as if the same had occurred at the beginning of the applicable Test Period (and for the purposes of the numerator of the Consolidated Secured Debt Ratio and the Consolidated Total Debt Ratio, as if the same had occurred on the last day of the applicable Test Period), in each case, for the avoidance of doubt, subject to Section 1.07 hereof.

For purposes of making the computation referred to above, any Specified Transaction that has been consummated by the Issuer or any of its Restricted Subsidiaries during any Test Period or subsequent to such Test Period and on or prior to or simultaneously with the Fixed Charge Coverage Ratio Calculation Date shall be calculated on a pro forma basis assuming that all such Specified Transactions (and the change in any associated fixed charge obligations and the change in EBITDA resulting therefrom) had occurred on the first day of the Test Period. If since the beginning of such Test Period any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into the Issuer or any of its Restricted Subsidiaries since the beginning of such Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Specified Transaction had occurred at the beginning of the applicable Test Period.

For purposes of this definition, whenever pro forma effect is to be given to Specified Transaction (including the Transactions), the pro forma calculations shall be made in good faith by a Financial Officer of the Issuer and may include, for the avoidance of doubt, the “run rate” cost savings, synergies and operating expense reductions projected by the Issuer in good faith to result from or relating to such Specified Transaction (including the Transactions) which is being given pro forma effect that have been or are expected to be realized based on actions taken, committed to be taken or with respect to which substantial steps have been taken or are expected in good faith to be taken within 24 months (or, in the case of the Transactions, 36 months) (in each case as though such cost savings, synergies and operating expense reductions had been realized on the first day of the applicable period and as if such cost savings and synergies were realized for the entirety of such reference period). For purposes of this Indenture, “run rate” means the full recurring benefit for a period that is associated with any action taken, committed to be taken, or with respect to which substantial steps have been taken or are expected to be taken (including any savings expected to result from the elimination of a public target’s compliance costs with public company requirements), net of the amount of actual benefits realized during such period from such actions.

If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the Fixed Charge Coverage Ratio Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness). Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a Financial Officer of the Issuer to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the

applicable period except as set forth in the second paragraph of this definition. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Issuer may designate.

“ Fixed Charges ” means, with respect to any Person for any period, the sum of, without duplication:

(1) Consolidated Interest Expense of such Person for such period;

(2) all cash dividends or other cash distributions paid (excluding items eliminated in consolidation) on any series of Preferred Stock during such period; and

(3) all cash dividends or other cash distributions paid (excluding items eliminated in consolidation) on any series of Disqualified Stock during such period.

“ Foreign Subsidiary ” means any direct or indirect Restricted Subsidiary of the Issuer that is not a Domestic Subsidiary.

“ GAAP ” means (1) generally accepted accounting principles in the United States of America as in effect on the date of any calculation or determination required hereunder or (2) if elected by the Issuer by written notice to the Trustee in connection with the delivery of financial statements and information, the accounting standards and interpretations (“ IFRS ”) adopted by the International Accounting Standard Board, as in effect on the first date of the period for which the Issuer is making such election; provided , that (a) any such election once made shall be irrevocable, (b) all financial statements and reports required to be provided after such election pursuant to this Indenture shall be prepared on the basis of IFRS, (c) from and after such election, all ratios, computations and other determinations based on GAAP contained in this Indenture shall be computed in conformity with IFRS, and (d) in connection with the delivery of financial statements (x) for any of its first three financial quarters of any financial year, it shall restate its consolidated interim financial statements for such interim financial period and the comparable period in the prior year to the extent previously prepared in accordance with GAAP and (y) for delivery of audited financial information, it shall provide consolidated historical financial statements prepared in accordance with IFRS for the prior most recent fiscal year to the extent previously prepared in accordance with GAAP. Notwithstanding the foregoing, all ratios, baskets and calculations based on GAAP or terms determined in accordance with GAAP in this Indenture shall be computed in accordance with GAAP as in effect on the Issue Date (or IFRS as of the date of such election above) or, if elected by the Issuer by written notice to the Trustee on one or more occasions after the Issue Date, GAAP (or IFRS) as in effect on the date of such notice and any such election shall be irrevocable; provided , that if the Issuer makes such election, the Issuer may elect to exclude any changes in GAAP occurring after the Issue Date (or in IFRS occurring after the date of such election above) (the “ Excluded Accounting Changes ”) as may be identified in such notice to the Trustee, in which case, GAAP (or IFRS) for such purposes shall be as in effect on the date specified in such notice except for the Excluded Accounting Changes, which shall not be applied in determining such ratios, baskets and calculations and any provisions of GAAP (or IFRS) affected by such Excluded Accounting Changes shall continue to be determined as in effect on the Issue Date (or IFRS as of the date of such election above). For the avoidance of doubt, solely making an election (without any other action) referred to in this definition will not be treated as an incurrence of Indebtedness.

“ Global Note Legend ” means the legend set forth in Section 2.06(g)(ii) hereof, which is required to be placed on all Global Notes issued under this Indenture.

“ Global Notes ” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A hereto, issued in accordance with Section 2.01, 2.06(b) or 2.06(d) hereof.

“ guarantee ” means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business or consistent with industry practice), direct or indirect, in any manner (including letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations.

“ Guarantee ” means the guarantee by any Guarantor of the Issuers’ Obligations under this Indenture and the Notes.

“ Guarantor ” means, from and after the Escrow Release Date, each Restricted Subsidiary of the Issuer (other than the Co-Issuer), if any, that Guarantees the Notes in accordance with the terms of this Indenture; provided that upon release or discharge of such Restricted Subsidiary from its Guarantee in accordance with this Indenture, such Restricted Subsidiary ceases to be a Guarantor.

“ H&F Funds ” means, individually or collectively, any investment fund, co-investment vehicles and/or other similar vehicles or accounts, in each case managed by Hellman & Friedman LLC or any Affiliate thereof, or any of their respective successors.

“ Hedging Obligations ” means, with respect to any Person, the obligations of such Person under any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, commodity swap agreement, commodity cap agreement, commodity collar agreement, foreign exchange contract, currency swap agreement or similar agreement providing for the transfer, modification or mitigation of interest rate, currency, commodity or similar risks either generally or under specific contingencies.

“ Holder ” means, at any time, the Person in whose name a Note is registered on the Registrar’s books at such time.

“ 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, qualified domestic partner, sibling, mother-in-law, father-in-law, son-in-law and daughter-in-law (including adoptive relationships) and any trust, partnership or other bona fide estate-planning vehicle the only beneficiaries of which are any of the foregoing individuals 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.

“ Indebtedness ” means, with respect to any Person, without duplication:

(1) any indebtedness of such Person, whether or not contingent:

(a) representing the principal and premium (if any) in respect of borrowed money;

(b) representing the principal and premium (if any) in respect of debt obligations evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without duplication, reimbursement agreements in respect thereof);

(c) representing the principal component in respect of obligations to pay the deferred and unpaid balance of the purchase price of any property (including Capitalized Lease Obligations), except (i) any such balance that constitutes an obligation in respect of a commercial letter of credit, a trade payable or similar obligation to a trade creditor, in each case accrued in the ordinary course of business and (ii) any earn-out obligations until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and is not paid after becoming due and payable; or

(d) representing the net obligations under any Hedging Obligations,

if and to the extent that any of the foregoing Indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP; provided , that Indebtedness of any Parent Company appearing upon the balance sheet of the Issuer solely by reason of push-down accounting under GAAP shall be excluded;

(2) to the extent not otherwise included, any obligation by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, the obligations of the type referred to in clause (1) above of a third Person (whether or not such items would appear upon the balance sheet of such first Person), other than by endorsement of negotiable instruments for collection in the ordinary course of business or consistent with industry practice; and

(3) to the extent not otherwise included, the obligations of the type referred to in clause (1) above of a third Person secured by a Lien on any asset owned by such first Person, whether or not such Indebtedness is assumed by such first Person; provided , that the amount of any such Indebtedness will be the lesser of (a) the fair market value of such asset at such date of determination, (b) the amount of such Indebtedness of such third Person and (c) the maximum amount of such Indebtedness for which such Person could be liable;

provided , that, notwithstanding the foregoing, Indebtedness shall be deemed not to include (a) Contingent Obligations incurred in the ordinary course of business or consistent with industry practice, (b) [reserved], (c) obligations under or in respect of Qualified Securitization Facilities, straight-line leases, operating leases or Sale and Lease-Back Transactions (except any resulting Capitalized Lease Obligations), (d) Excluded Contract Amounts, (e) [reserved], (f) [reserved],

(g) obligations under the Transaction Documents and (h) asset retirement obligations and obligations in respect of reclamation and workers compensation (including pensions and retiree medical care); provided , further , that Indebtedness shall be calculated without giving effect to the effects of Financial Accounting Standards Board Accounting Standards Codification Topic No. 815 and related interpretations to the extent such effects would otherwise increase or decrease an amount of Indebtedness for any purpose under this Indenture as a result of accounting for any embedded derivatives created by the terms of such Indebtedness.

“ Indenture ” means this Indenture, as amended, supplemented or otherwise modified from time to time.

“ Independent Assets or Operations ” means, with respect to any Parent Company, that Parent Company’s total assets, revenues, income from continuing operations before income taxes and cash flows from operating activities (excluding in each case amounts related to its investment in the Issuer and the Restricted Subsidiaries), determined in accordance with GAAP and as shown on the most recent balance sheet of such Parent Company, is more than 3.0% of such Parent Company’s corresponding consolidated amount.

“ Independent Financial Advisor ” means an accounting, appraisal, investment banking firm or consultant of nationally recognized standing that is, in the good faith judgment of the Issuer, qualified to perform the task for which it has been engaged.

“ Indirect Participant ” means a Person who holds a beneficial interest in a Global Note through a Participant.

“ Initial Notes ” has the meaning set forth in the recitals hereto.

“ Initial Purchasers ” means the initial purchasers of the Notes on the Issue Date pursuant to the Purchase Agreement.

“ Interest Payment Date ” means March 1 and September 1 of each year to stated maturity.

“ Investment Grade Rating ” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB(or the equivalent) by S&P, or if the applicable securities are not then rated by Moody’s or S&P an equivalent rating by any other Rating Agency.

“ Investment Grade Securities ” means:

(1) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (other than Cash Equivalents);

(2) debt securities or debt instruments with an Investment Grade Rating, but excluding any debt securities or debt instruments constituting loans or advances among the Issuer and its Subsidiaries;

(3) investments in any fund that invests at least 95.0% of its assets in investments of the type described in clauses (1) and (2) of this definition which fund may also hold immaterial amounts of cash pending investment or distribution; and

(4) corresponding instruments in countries other than the United States of America customarily utilized for high quality investments.

“ Investments ” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (excluding accounts receivable, credit card and debit card receivables, trade credit, advances to customers, commission, travel and similar advances to employees, directors, officers, managers, members of management, independent contractors and consultants, in each case made in the ordinary course of business or consistent with industry practice), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any other Person and investments that are required by GAAP to be classified on the balance sheet (excluding the footnotes) of the Issuer in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property. For purposes of the definitions of “Permitted Investments” and “Unrestricted Subsidiary” and Section 4.07 hereof:

(1) “Investments” shall include the portion (proportionate to the Issuer’s equity interest in such Subsidiary) of the fair market value of the net assets of a Subsidiary of the Issuer at the time that such Subsidiary is designated an Unrestricted Subsidiary; and

(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer.

The amount of any Investment outstanding at any time shall be the original cost of such Investment, reduced by any dividend, distribution, interest payment, return of capital, repayment or other amount received in Cash Equivalents (or fair market value of property and assets received) by the Issuer or a Restricted Subsidiary in respect of such Investment.

“ Investors ” means any of the Blackstone Funds, the H&F Funds, MCK and any of their respective Affiliates, but not including, however, in the case of the Blackstone Funds or the H&F Funds, any portfolio company thereof.

“ Issue Date ” means February 15, 2017.

“ Issuer ” means Change Healthcare Holdings, LLC (and not any of its Subsidiaries or Affiliates), until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Issuer” shall mean such successor Person.

“ Issuers’ Order ” means a written request or order signed on behalf of the Issuers by an Officer of each Issuer who must be the principal executive officer, a co-president, a Financial Officer, the secretary, a co-secretary, the principal accounting officer or an executive vice president of such Issuer and delivered to the Trustee.

“ Issuers ” means the Issuer and the Co-Issuer, collectively.

“ Legal Holiday ” means a Saturday, a Sunday or a day on which commercial banking institutions are not required to be open in the State of New York or at the place of payment in respect of the Notes. If a payment date is on a Legal Holiday, payment will be made on the next succeeding day that is not a Legal Holiday and no interest will accrue for the intervening period.

“ Lien ” means, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge, hypothecation, charge, security interest, preference, priority or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction; provided , that in no event shall an operating lease be deemed to constitute a Lien.

“ Limited Condition Transaction ” means (1) any Investment or acquisition (whether by merger, amalgamation, consolidation or other business combination or the acquisition of Capital Stock or otherwise) whose consummation is not conditioned on the availability of, or on obtaining, third party financing, (2) any redemption, repurchase, defeasance, satisfaction and discharge or repayment of Indebtedness, Disqualified Stock or Preferred Stock requiring irrevocable notice in advance of such redemption, repurchase, defeasance, satisfaction and discharge or repayment and (3) any Restricted Payment requiring irrevocable notice in advance thereof.

“ LLC Agreement ” means the limited liability company agreement of Change Healthcare LLC (f/k/a PF2 NewCo LLC) as in effect on the Completion Date (or as amended and replaced thereafter so long as any such amendment or replacement is not materially disadvantageous in the good faith judgment of the Issuer to the Holders when taken as a whole, as compared to the LLC Agreement as in effect on the Completion Date).

“ Management Stockholders ” means the current and former employees and members of management (and their Controlled Investment Affiliates and Immediate Family Members and any permitted transferees thereof) of the Issuer (or a Parent Company) who are holders of Equity Interests of the Issuer or any Parent Company on the Completion Date or will become holders of such Equity Interests in connection with the Transactions.

“ Market Capitalization ” means an amount equal to (i) the total number of issued and outstanding shares of common Equity Interests of the Issuer or any applicable Parent Company on the date of the declaration of a Restricted Payment permitted pursuant to Section 4.07(b)(viii) hereof multiplied by (ii) the arithmetic mean of the closing prices per share of such common Equity Interests on the principal securities exchange on which such common Equity Interests are traded for the 30 consecutive trading days immediately preceding the date of declaration of such Restricted Payment.

“ MCK ” means McKesson Corporation, a Delaware corporation.

“ Merger Agreement ” means the Agreement and Plan of Merger dated as of December 20, 2016 by and among PF2 SpinCo, LLC, a Delaware limited liability company affiliated with MCK, HCIT Holdings, Inc. and MCK, or as amended and replaced thereafter so long as any such amendment or replacement is not materially disadvantageous in the good faith judgment of the Issuer to the Holders when taken as a whole, as compared to the Merger Agreement as in effect immediately prior to such amendment or replacement.

“ Moody’s ” means Moody’s Investors Service, Inc. and any successor to its rating agency business.

“ MTI ” means McKesson Technologies Inc., a Delaware corporation, which is expected to be converted into McKesson Technologies LLC, a Delaware limited liability company, on or prior to the Completion Date, or any successor of any of the foregoing.

“ Net Income ” means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of Preferred Stock dividends.

“ Net Proceeds ” means the aggregate Cash Equivalents proceeds received by the Issuer or any of its Restricted Subsidiaries in respect of any Asset Sale, including any Cash Equivalents received upon the sale or other disposition of any Designated Non-cash Consideration received in any Asset Sale, net of the direct costs relating to such Asset Sale and the sale or disposition of such Designated Non-cash Consideration, including legal, accounting and investment banking fees, payments made in order to obtain a necessary consent or required by applicable law, and brokerage and sales commissions, all dividends, distributions or other payments required to be made to minority interest holders in Restricted Subsidiaries as a result of any such Asset Sale by a Restricted Subsidiary, the amount of any purchase price or similar adjustment claimed by any Person to be owed by the Issuer or any Restricted Subsidiary, until such time as such claim shall have been settled or otherwise finally resolved, or paid or payable by the Issuer or any Restricted Subsidiary, in either case, in respect of such Asset Sale, any relocation expenses incurred as a result thereof, costs and expenses in connection with unwinding any Hedging Obligation in connection therewith, other fees and expenses, including title and recordation expenses, taxes paid or payable (including distributions described in Section 4.07(xiv)(B) hereof) as a result thereof or any transactions occurring or deemed to occur to effectuate a payment under this Indenture (including taxes that are or would be imposed on the distribution or repatriation of any such Net Proceeds) (after taking into account any available tax credits or deductions and any tax sharing arrangements), Excluded Contract Amounts payable as a result of such Asset Sale, amounts required to be applied to the repayment of principal, premium, if any, and interest on Senior Indebtedness or amounts required to be applied to the repayment of Indebtedness secured by a Lien on such assets and required (other than required by Section 4.10(b)(i) hereof) to be paid as a result of such transaction and any deduction of appropriate amounts to be provided by the Issuer or any of its Restricted Subsidiaries as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by the Issuer or any of its Restricted Subsidiaries after such sale or other disposition thereof, including pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction; provided , that for purposes of Section 4.10 hereof, Net Proceeds shall be deemed to exclude all Excluded Proceeds.

“ Non-U.S. Person ” means a Person who is not a U.S. Person.

“ Notes ” means the Initial Notes and more particularly means any Note authenticated and delivered under this Indenture. Unless the context requires otherwise, all references to “Notes” for all purposes of this Indenture shall include any Additional Notes that are actually issued. Except as otherwise provided in this Indenture, the Initial Notes and the Additional Notes will be treated as a single class for all purposes under this Indenture.

“ Obligations ” means any principal, interest (including any interest accruing on or subsequent to the filing of a petition in bankruptcy, reorganization or similar proceeding at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable state, federal or foreign law), premium, penalties, fees, indemnifications, reimbursements (including reimbursement obligations with respect to letters of credit and banker’s acceptances), damages and other liabilities, and guarantees of payment of such principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities, payable under the documentation governing any Indebtedness; provided , that any of the foregoing (other than principal and interest) shall no longer constitute “Obligations” after payment in full of such principal and interest except to the extent such obligations are fully liquidated and non-contingent on or prior to such payment in full.

“ Offering Circular ” means the offering circular, dated February 3, 2017, relating to the sale of the Initial Notes.

“ Officer ” means the Chairman of the Board of Directors, the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the President, any Co-President, any Executive Vice President, Senior Vice President, Vice President or Co-Vice President, the Treasurer, the Secretary or any Co-Secretary of a Person or any other officer of such Person designated by any such individuals. Unless otherwise indicated, Officer shall refer to an officer of the Issuer.

“ Officer’s Certificate ” means a certificate signed on behalf of a Person or Persons by an Officer of such Person or Persons that meets the requirements set forth in this Indenture. Unless otherwise indicated, Officer’s Certificate shall refer to an Officer’s Certificate of any Officer of the Issuer.

“ Opinion of Counsel ” means a written opinion (which opinion may be subject to customary assumptions and exclusions) from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of, or outside counsel to, the Issuer or the Trustee.

“ ordinary course of business ” means activity conducted in the ordinary course of business of the Issuer and any Restricted Subsidiary.

“ Parent Company ” means any Person that is a direct or indirect parent (which may be organized as, among other things, a partnership or limited liability company) of the Issuer so long as such Person is (a) directly or indirectly controlled by one or more of the Investors (or any group directly or indirectly controlled by one or more of the Investors) or (b) a public company (i) which owns, directly or indirectly, beneficial ownership of more than 50.0% of the total voting power of the Voting Stock of the Issuer ( provided that, for purposes of this clause (b), no

Person (other than a Permitted Holder) or Persons (other than one or more Permitted Holders) that are together a group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision) owns more than 50.0% of the total voting power of the Voting Stock of such public company, unless the Permitted Holders have, at such time, directly or indirectly, the right or the ability by voting power, contract or otherwise, to elect or designate for election at least a majority of the Board of Directors of the Issuer), (ii) beneficial ownership of which is owned, directly or indirectly, more than 50.0% by one or more Permitted Holders or (iii) if no Person (other than a Permitted Holder) or Persons (other than one or more Permitted Holders) that are together a group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision) owns, directly or indirectly, a greater beneficial ownership in such public company than the Permitted Holders; it being understood that (x) there may be more than one direct or indirect Parent Companies of the Issuer and (y) any Person that is a direct or indirect Subsidiary of any Person described above whose primary assets are the Capital Stock of the Issuer or one or more other Parent Companies shall be a Parent Company.

“ Participant ” means, with respect to the Depositary, a Person who has an account with the Depositary (and, with respect to DTC, shall include Euroclear and Clearstream).

“ Permitted Asset Swap ” means the substantially concurrent purchase and sale or exchange of Related Business Assets or a combination of Related Business Assets and Cash Equivalents between the Issuer or any of its Restricted Subsidiaries and another Person; provided , that any Cash Equivalents received must be applied in accordance with Section 4.10 hereof.

“ Permitted Holders ” means (1) any of the Investors and Management Stockholders and any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any of the foregoing are members; provided , that in the case of such group and without giving effect to the existence of such group or any other group, such Investors and Management Stockholders, collectively, have, directly or indirectly, beneficial ownership of more than 50.0% of the total voting power of the Voting Stock of the Issuer and (2) any Person acting in the capacity of an underwriter (solely to the extent that and for so long as such Person is acting in such capacity) in connection with a public or private offering of Capital Stock of the Issuer or any Parent Company. Any Person or group whose acquisition of beneficial ownership constitutes a Change of Control in respect of which any required Change of Control Offer is made in accordance with the requirements of this Indenture (or would have required a Change of Control Offer in the absence of the waiver of such requirement by Holders in accordance with the provisions of this Indenture) will thereafter, together with its Affiliates, constitute an additional Permitted Holder.

“ Permitted Incremental Amount ” means such amount that would not result in the Consolidated Secured Debt Ratio exceeding 5.75 to 1.00 for the Issuer’s most recently ended Test Period determined on a pro forma basis, including a pro forma application of the net proceeds therefrom, as if the additional Indebtedness had been incurred and the application of proceeds occurred on the last day of such Test Period ( provided that for purposes of determining the amount that may be incurred under this definition, (I) all Indebtedness then being incurred pursuant to this definition on such date in reliance on this definition shall be deemed to be

included as Consolidated Total Secured Indebtedness in clause (i) of the definition of “Consolidated Secured Debt Ratio” and (II) any cash proceeds of any new Indebtedness then being incurred shall not be netted from the numerator in the Consolidated Secured Debt Ratio for purposes of calculating the Consolidated Secured Debt Ratio under this definition for purposes of determining whether such Indebtedness can be incurred).

“ Permitted Intercompany Activities ” means any transactions (A) between or among the Issuer and its Restricted Subsidiaries that are entered into in the ordinary course of business of the Issuer and its Restricted Subsidiaries and, in the good faith judgment of the Issuer are necessary or advisable in connection with the ownership or operation of the business of the Issuer and its Restricted Subsidiaries, including, but not limited to, (i) payroll, cash management, purchasing, insurance and hedging arrangements; (ii) management, technology and licensing arrangements; and (iii) customer loyalty and rewards programs and (B) between or among the Issuer, its Restricted Subsidiaries and any Captive Insurance Subsidiary.

“ Permitted Investments ” means:

(1) any Investment in the Issuer or any of its Restricted Subsidiaries (including guarantees of obligations of the Issuers or any Restricted Subsidiary);

(2) any Investment in Cash Equivalents or Investment Grade Securities and Investments that were Cash Equivalents or Investment Grade Securities when made;

(3) any Investment by the Issuer or any of its Restricted Subsidiaries in a Person (including, to the extent constituting an Investment, in assets of a Person that represent substantially all of its assets or a division, business unit or product line, including research and development and related assets in respect of any product) that is engaged directly or through entities that will be Restricted Subsidiaries in a Similar Business if as a result of such Investment:

(a) such Person becomes a Restricted Subsidiary; or

(b) such Person, in one transaction or a series of related transactions, is amalgamated, merged or consolidated with or into, or transfers or conveys substantially all of its assets (or such division, business unit or product line) to, or is liquidated into, the Issuer or a Restricted Subsidiary, and, in each case, any Investment held by such Person; provided , that such Investment was not acquired by such Person in contemplation of such acquisition, merger, amalgamation, consolidation or transfer;

(4) any Investment in securities or other assets, including earn-outs, not constituting Cash Equivalents or Investment Grade Securities and received in connection with an Asset Sale made pursuant to Section 4.10(a) hereof or any other disposition of assets not constituting an Asset Sale;

(5) any Investment existing on the Completion Date or made pursuant to binding commitments in effect on the Completion Date or an Investment consisting of any extension, modification or renewal of any such Investment or binding commitment existing on the Completion Date; provided , that the amount of any such Investment or binding commitment may be increased in such extension, modification or renewal only (a) as required by the terms of such Investment or binding commitment as in existence on the Completion 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 (b) as otherwise permitted under this Indenture;

(6) any Investment acquired by the Issuer or any of its Restricted Subsidiaries:

(a) consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business or consistent with industry practice;

(b) in exchange for any other Investment or accounts receivable, endorsements for collection or deposit held by the Issuer or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of, or settlement of delinquent accounts and disputes with, or judgments against, the issuer of such other Investment or accounts receivable (including any trade creditor or customer); or

(d) as a result of a foreclosure by the Issuer or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default; or

(e) as a result of the settlement, compromise or resolution of litigation, arbitration or other disputes;

(7) Hedging Obligations permitted under Section 4.09(b)(x) hereof;

(8) any Investment in a Similar Business having an aggregate fair market value taken together with all other Investments made pursuant to this clause (8) that are at that time outstanding not to exceed the greater of (a) $375.0 million and (b) 35.0% of EBITDA of the Issuer for the most recently ended Test Period (calculated on a pro forma basis) at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); provided , however , that if any Investment pursuant to this clause (8) is made in any Person that is not a Restricted Subsidiary of the Issuer at the date of the making of such Investment and such Person becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant to this clause (8);

(9) Investments the payment for which consists of Equity Interests (other than Disqualified Stock) of the Issuer or any Parent Company; provided , that such Equity Interests will not increase the amount available for Restricted Payments under clause (C) of Section 4.07(a) hereof;

(10) (i) guarantees of Indebtedness permitted under Section 4.09 hereof, performance guarantees and Contingent Obligations incurred in the ordinary course of business or consistent with industry practice and (ii) the creation of Liens on the assets of the Issuer or any Restricted Subsidiary in compliance with Section 4.12 hereof;

(11) any transaction to the extent it constitutes an Investment that is permitted by and made in accordance with the provisions of Section 4.11(b) hereof (except transactions described in clauses (ii), (v), (ix) and (xxii) of Section 4.11(b) hereof);

(12) Investments consisting of (i) purchases or other acquisitions of inventory, supplies, material, services, equipment or similar assets or (ii) the licensing or contribution of intellectual property in the ordinary course of business or pursuant to joint marketing arrangements with other Persons;

(13) Investments having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (13) that are at that time outstanding (without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash or marketable securities), not to exceed the greater of (a) $375.0 million and (b) 35.0% of EBITDA of the Issuer for the most recently ended Test Period (calculated on a pro forma basis) at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); provided , however , that if any Investment pursuant to this clause (13) is made in any Person that is not a Restricted Subsidiary of the Issuer at the date of the making of such Investment and such Person becomes a Restricted Subsidiary after such date, such investment shall thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant to this clause (13);

(14) Investments in or relating to a Securitization Subsidiary that, in the good faith determination of the Issuer are necessary or advisable to effect any Qualified Securitization Facility (including any contribution of replacement or substitute assets to such subsidiary) or any repurchase obligation in connection therewith;

(15) loans and advances to, or guarantees of Indebtedness of, officers, directors, employees, consultants, members of management, independent contractors and managers not in excess of $40.0 million outstanding in the aggregate;

(16) loans and advances to employees, directors, officers, managers, members of management, independent contractors and consultants (a) for business-related travel expenses, moving expenses and other similar expenses or payroll advances, in each case incurred in the ordinary course of business or consistent with industry practice or (b) to fund such Person’s purchase of Equity Interests of the Issuer or any Parent Company and any taxes resulting from such purchase;

(17) advances, loans or extensions of trade credit in the ordinary course of business or consistent with industry practice by the Issuer or any of its Restricted Subsidiaries;

(18) any Investment in any Subsidiary or any joint venture in connection with intercompany cash management arrangements or related activities arising in the ordinary course of business or consistent with industry practice;

(19) Investments consisting of purchases and acquisitions of assets or services in the ordinary course of business or consistent with industry practice;

(20) Investments made in the ordinary course of business or consistent with industry practice in connection with obtaining, maintaining or renewing client contracts and loans or advances made to distributors;

(21) Investments in prepaid expenses, negotiable instruments held for collection and lease, utility and workers compensation, performance and similar deposits entered into as a result of the operations of the business in the ordinary course of business or consistent with industry practice;

(22) repurchases of Notes;

(23) Investments in the ordinary course of business or consistent with industry practice consisting of Uniform Commercial Code Article 3 endorsements for collection of deposit and Article 4 customary trade arrangements with customers;

(24) Investments consisting of promissory notes issued by the Issuer or any Restricted Subsidiary to future, present or former officers, directors and employees, managers, members of management, independent contractors or consultants of the Issuer or any of its Subsidiaries (or their respective Controlled Investment Affiliates or Immediate Family Members or permitted transferees) to finance the purchase or redemption of Equity Interests of the Issuer or any Parent Company, to the extent the applicable Restricted Payment is a permitted by Section 4.07 hereof;

(25) Investments (i) by any Captive Insurance Subsidiary made in the ordinary course of its business or consistent with industry practice, and (ii) in any Captive Insurance Subsidiary in the ordinary course of business or consistent with industry practice or required under statutory or regulatory authority applicable to such Captive Insurance Subsidiary;

(26) Investments made in connection with Permitted Intercompany Activities and related transactions;

(27) Investments made as part of, to effect or resulting from, the Transactions;

(28) Investments made after the Completion Date in joint ventures of the Issuer or any of its Restricted Subsidiaries existing on the Completion Date;

(29) Investments in Unrestricted Subsidiaries and joint ventures of the Issuer or any of its Restricted Subsidiaries, taken together with all other Investments made pursuant to this clause (29) that are at that time outstanding, not to exceed the greater of (a) $375.0 million and (b) 35.0% of EBITDA of the Issuer for the most recently ended Test Period (calculated on a pro forma basis) at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); provided , however , that if any Investment pursuant to this clause (29) is made in any Person that is not a Restricted Subsidiary of the Issuer at the date of the making of such Investment and such Person becomes a Restricted Subsidiary after such date, such investment shall thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant to this clause (29);

(30) Investments made from casualty insurance proceeds in connection with the replacement, substitution, restoration or repair of assets on account of a Casualty Event;

(31) Investments of assets relating to non-qualified deferred payment plans in the ordinary course of business or consistent with industry practice;

(32) intercompany current liabilities owed to Unrestricted Subsidiaries or joint ventures incurred in the ordinary course of business or consistent with industry practice in connection with the cash management operations of the Issuer and its Subsidiaries;

(33) Investments resulting from pledges and deposits permitted pursuant to the definition of “Permitted Liens”;

(34) loans and advances to any Parent Company in lieu of and not in excess of the amount of (after giving effect to any other loans, advances or Restricted Payments in respect thereof) Restricted Payments to the extent permitted to be made in cash to such Parent Company in accordance with Section 4.07 hereof at such time, such Investment being treated for purposes of the applicable clause of Section 4.07 hereof including any limitations, as if a Restricted Payment were made pursuant to such applicable clause;

(35) any other Investments if on a pro forma basis after giving effect to such Investment, the Consolidated Total Debt Ratio would be equal to or less than 5.80 to 1.00 as of the last day of the Test Period most recently ended;

(36) the acquisition of Echo Connect in accordance with the terms of the Echo Connect Option Agreement; and

(37) Eligible Escrow Investments.

“ Permitted Liens ” means, with respect to any Person:

(1) pledges, deposits or security by such Person under workmen’s compensation laws, unemployment insurance, employers’ health tax, and other social security laws or similar legislation or other insurance related obligations (including, but not limited to, in respect of deductibles, self-insured retention amounts and premiums and adjustments thereto) or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees for the benefit of) insurance carriers providing property, casualty or liability insurance, or good faith deposits in connection with bids,

tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or U.S. government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business;

(2) (i) Liens imposed by law, such as landlords’, carriers’, warehousemen’s, materialmen’s, repairmen’s and mechanics’ Liens, in each case, for sums not yet overdue for a period of more than 60 days or, if more than 60 days overdue, that are unfiled and no other action has been taken to enforce such Lien or that are being contested in good faith by appropriate actions and (ii) other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review if adequate reserves with respect thereto are maintained on the books of such Person in accordance with GAAP;

(3) Liens for taxes, assessments or other governmental charges not yet overdue for a period of more than 30 days or not yet payable or subject to penalties for nonpayment or which are being contested in good faith by appropriate actions diligently conducted, if adequate reserves with respect thereto are maintained on the books of such Person in accordance with GAAP;

(4) Liens in favor of issuers of performance, surety, bid, indemnity, warranty, release, appeal or similar bonds or with respect to other regulatory requirements or letters of credit, bank guarantees or bankers acceptances issued, and completion guarantees provided for, in each case, issued pursuant to the request of and for the account of such Person in the ordinary course of its business or consistent with industry practice;

(5) minor survey exceptions, minor encumbrances, ground leases, easements, restrictions, protrusions, encroachments or reservations of, or rights of others for, licenses, rights-of-way, servitudes, sewers, electric lines, drains, telegraph, telephone and cable television lines and other similar purposes, or zoning, building codes or other restrictions (including minor defects and irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not incurred in connection with Indebtedness and which do not in the aggregate materially interfere with the ordinary conduct of the business of the Issuer or any of its Restricted Subsidiaries, taken as a whole, and exceptions on title policies insuring liens granted on Mortgaged Properties (as defined in the Senior Secured Credit Facilities);

(6) Liens securing Obligations relating to any Indebtedness permitted to be incurred pursuant to clause (iv), (xii), (xiii), (xiv), (xxiii) or (xxv) of Section 4.09(b) hereof; provided , that (a) Liens securing Obligations relating to any Indebtedness to be incurred pursuant to clause (iv) of Section 4.09(b) hereof extend only to the assets so purchased, leased or improved and proceeds and products thereof ( provided that individual financings of assets provided by a counterparty may be cross-collateralized to other financings of assets provided by such counterparty); (b) Liens securing Obligations relating to any Indebtedness permitted to be incurred pursuant to clause (xiii) of Section

4.09(b) hereof relate only to Obligations relating to Refinancing Indebtedness that (x) is secured by Liens on the same assets as the assets that secured the Indebtedness being refinanced, plus improvements, accessions, proceeds or dividends or distributions in respect thereof and after-acquired property or (y) extends, replaces, refunds, refinances, renews or defeases Indebtedness incurred under clauses (iii) (solely to the extent such Indebtedness was secured by a Lien prior to such refinancing), (iv) or (xii) (solely to the extent such Indebtedness was secured by a Lien prior to such refinancing) of Section 4.09(b) hereof; (c) Liens under this clause (6) securing Indebtedness permitted to be incurred pursuant to clause (xiv) of Section 4.09(b) hereof shall only be permitted if such Liens are limited to all or part of the same property or assets, including Capital Stock (plus improvements, accessions, proceeds or dividends or distributions in respect thereof, after-acquired property and replacements of any thereof) acquired, or of any Person acquired or merged or consolidated with or into the Issuer or any Restricted Subsidiary, in any transaction to which such Indebtedness relates; and (d) Liens securing Indebtedness permitted to be incurred pursuant to clauses (xxiii) and (xxv) of Section 4.09(b) hereof shall only be permitted if such Liens extend only to the assets of Restricted Subsidiaries of the Issuer that are not Guarantors;

(7) Liens existing, or provided for under binding contracts existing, on the Completion Date (excluding Liens under the Senior Secured Credit Facilities), including Liens securing any Refinancing Indebtedness of any Indebtedness secured by such Liens;

(8) Liens on property or shares of stock or other assets of a Person at the time such Person becomes a Subsidiary; provided , that such Liens are not created or incurred in connection with, or in contemplation of, such other Person becoming such a Subsidiary; provided , further , that such Liens are limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof and after-acquired property) that secured the obligations to which such Lien relates;

(9) Liens on property or other assets at the time the Issuer or a Restricted Subsidiary acquired the property or such other assets, including any acquisition by means of a merger, amalgamation or consolidation with or into the Issuer or any of its Restricted Subsidiaries; provided , that such Liens are not created or incurred in connection with, or in contemplation of, such acquisition, amalgamation, merger or consolidation; provided , further , that such Liens are limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof and after-acquired property) that secured the obligations to which such Liens relate;

(10) Liens securing Obligations relating to any Indebtedness or other obligations of a Restricted Subsidiary owing to the Issuer or another Restricted Subsidiary permitted to be incurred in accordance with Section 4.09 hereof;

(11) Liens securing (x) Hedging Obligations and (y) obligations in respect of Bank Products;

(12) Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s accounts payable or similar trade obligations in respect of bankers’ acceptances, bank guarantees or letters of credit issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

(13) leases, sub-leases, licenses or sub-licenses granted to others in the ordinary course of business or consistent with industry practice which do not materially interfere with the ordinary conduct of the business of the Issuer or any of its Restricted Subsidiaries, taken as a whole, and do not secure any Indebtedness;

(14) Liens arising from Uniform Commercial Code (or equivalent statute) financing statement filings regarding operating leases or consignments entered into by the Issuer and its Restricted Subsidiaries in the ordinary course of business or consistent with industry practice or purported Liens evidenced by the filing of precautionary Uniform Commercial Code financing statements or similar public filings;

(15) Liens in favor of the Issuer, the Co-Issuer or any Guarantor;

(16) Liens on vehicles or equipment of the Issuer or any of its Restricted Subsidiaries granted in the ordinary course of business or consistent with industry practice;

(17) Liens on accounts receivable, Securitization Assets and related assets incurred in connection with a Qualified Securitization Facility;

(18) Liens to secure any modification, refinancing, refunding, extension, renewal or replacement (or successive modifications, refinancing, refunding, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clauses (6), (7), (8), (9), this clause (18) and clause (39) of this definition; provided , that (a) such new Lien shall be limited to all or part of the same property that secured the original Lien (plus improvements, accessions, proceeds or dividends or distributions in respect thereof and after-acquired property), and (b) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (i) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (6), (7), (8), (9), this clause (18) and clause (39) of this definition at the time the original Lien became a Permitted Lien under this Indenture, (ii) any accrued and unpaid interest on the Indebtedness being so modified, refinanced, extended, replaced, refunded or renewed and (iii) an amount necessary to pay any fees and expenses (including original issue discount, upfront fees or similar fees) and premiums (including tender premiums and accrued and unpaid interest), penalties or similar amounts related to such modification, refinancing, refunding, extension, renewal or replacement (including with respect to such new Indebtedness);

(19) deposits made or other security provided in the ordinary course of business or consistent with industry practice to secure liability to insurance carriers or self-insurance arrangements;

(20) Liens securing obligations in an aggregate principal amount outstanding which does not exceed the greater of (a) $250.0 million and (b) 25.0% of EBITDA of the Issuer for the most recently ended Test Period (calculated on a pro forma basis) at the time of such incurrence;

(21) security given to a public utility or any municipality or governmental authority when required by such utility or authority in connection with the operations of that Person in the ordinary course of business or consistent with industry practice;

(22) Liens securing judgments for the payment of money not constituting an Event of Default under clause (v) of Section 6.01(a) hereof;

(23) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business or consistent with industry practice;

(24) Liens (a) of a collection bank arising under Section 4-210 of the Uniform Commercial Code or any comparable or successor provision on items in the course of collection, (b) attaching to commodity trading accounts or other commodity brokerage accounts incurred in the ordinary course of business or consistent with industry practice, and (c) in favor of banking institutions arising as a matter of law or under general terms and conditions encumbering deposits (including the right of set-off) and which are within the general parameters customary in the banking industry;

(25) Liens deemed to exist in connection with Investments in repurchase agreements permitted under this Indenture;

(26) Liens encumbering reasonable customary deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business (or consistent with industry practice) and not for speculative purposes;

(27) Liens that are contractual rights of set-off or rights of pledge (a) relating to the establishment of depository relations with banks or other deposit-taking financial institutions or other electronic payment service providers and not given in connection with the issuance of Indebtedness, (b) relating to pooled deposit or sweep accounts of the Issuer or any of its Restricted Subsidiaries to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business or consistent with industry practice or (c) relating to purchase orders and other agreements entered into with customers of the Issuer or any of its Restricted Subsidiaries in the ordinary course of business or consistent with industry practice;

(28) Liens securing Obligations under the Senior Secured Credit Facilities;

(29) any encumbrance or restriction (including put and call arrangements) with respect to Capital Stock of any joint venture or similar arrangement pursuant to any joint venture or similar agreement;

(30) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale or purchase of goods entered into by the Issuer or any Restricted Subsidiary in the ordinary course of business or consistent with industry practice;

(31) Liens solely on any cash earnest money deposits made by the Issuer or any of its Restricted Subsidiaries in connection with any letter of intent or purchase agreement permitted by this Indenture;

(32) ground leases in respect of real property on which facilities owned or leased by the Issuer or any of its Subsidiaries are located;

(33) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;

(34) Liens on Capital Stock of an Unrestricted Subsidiary that secure Indebtedness or other obligations of such Unrestricted Subsidiary;

(35) Liens on the assets of non-guarantor Restricted Subsidiaries securing Indebtedness of such Subsidiaries that were permitted by the terms of this Indenture to be incurred;

(36) Liens on cash advances in favor of the seller (or its representative or agent) of any property to be acquired in an Investment permitted under this Indenture to be applied against the purchase price for such Investment;

(37) any interest or title (and all encumbrances and other matters affecting such interest or title) of a lessor, sub-lessor, franchisor, licensor or sub-licensor or secured by a lessor’s, sub-lessor’s, franchisor’s, licensor’s or sub-licensor’s interest under leases or licenses entered into by the Issuer or any of the Restricted Subsidiaries in the ordinary course of business or consistent with industry practice;

(38) deposits of cash with the owner or lessor of premises leased and operated by the Issuer or any of its Subsidiaries in the ordinary course of business or consistent with industry

practice to secure the performance of the Issuer’s or such Subsidiary’s obligations under the terms of the lease for such premises;

(39) Liens securing Indebtedness (including Liens securing any Obligations in respect thereof) permitted to be incurred pursuant to Section 4.09 hereof (including, without limitation, Indebtedness incurred under one or more Credit Facilities) so long as after giving pro forma effect to such incurrence and such Liens, the Consolidated Secured Debt Ratio shall be equal to or less than 5.75 to 1.00 for the Issuer’s most recently ended Test Period immediately preceding the date on which such Lien is incurred;

(40) Liens securing obligations in respect of Indebtedness and other Obligations under Credit Facilities, including any letter of credit facility relating thereto, that was permitted by the terms of this Indenture to be incurred pursuant to Section 4.09(b)(i) hereof;

(41) (i) the prior rights of consignees and their lenders under consignment arrangements entered into in the ordinary course of business or consistent with industry practice, and (ii) Liens arising by operation of law under Article 2 of the Uniform Commercial Code;

(42) Liens on assets deemed to arise in connection with and solely as a result of the execution, delivery or performance of contracts to sell such assets if such sale is otherwise permitted under this Indenture;

(43) Liens on cash and Cash Equivalents that are earmarked to be used to defease, redeem, satisfy or discharge Indebtedness; provided (a) such cash and/or Cash Equivalents are deposited into an account from which payment is to be made, directly or indirectly, to the Person or Persons holding the Indebtedness that is to be defeased, redeemed, satisfied or discharged, (b) such Liens extend solely to such cash and/or Cash Equivalents (and any interest or other income thereon) and the account in which such cash and/or Cash Equivalents are deposited and are solely in favor of the Person or Persons holding the Indebtedness (or any agent or trustee for such Person or Persons) that is to be defeased, redeemed, satisfied or discharged, and (c) the defeasance, redemption, satisfaction or discharge of such Indebtedness is not prohibited by this Indenture;

(44) Liens in connection with a Sale and Lease-Back Transaction;

(45) Liens on cash and Permitted Investments used to satisfy or discharge Indebtedness; provided that such satisfaction or discharge is permitted under this Indenture;

(46) Liens securing guarantees of any Indebtedness or other obligations otherwise permitted to be secured by a Lien under this Indenture;

(47) Liens securing Obligations in respect of the Notes and the Guarantees;

(48) Liens on Escrowed Proceeds for the benefit of the related holders of debt securities or other Indebtedness (or the underwriters, trustee, escrow agent or arrangers thereof) or on cash set aside at the time of the incurrence of any Indebtedness or government securities purchased with such cash, in either case to the extent such cash or government securities prefund the payment of interest on such Indebtedness and are held in an escrow account or similar arrangement to be applied for such purpose;

(49) Liens on any funds or securities held in escrow accounts established for the purpose of holding proceeds from issuances of debt securities by the Issuer or any of its Restricted Subsidiaries issued after the Completion Date, together with any additional funds required in order to fund any mandatory redemption or sinking fund payment on such debt securities within 360 days of their issuance; provided that such Liens do not extend to any assets other than such proceeds and such additional funds;

(50) Liens on assets securing any Indebtedness owed to any Captive Insurance Subsidiary by the Issuer or any Restricted Subsidiary; and

(51) prior to the Escrow Release Date, Liens on escrow property securing the Notes.

For purposes of this definition, the term “Indebtedness” shall be deemed to include interest on such Indebtedness.

“ Person ” means any individual, corporation, limited liability company, partnership (including a limited partnership), joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

“ Preferred Stock ” means any Equity Interest with preferential rights of payment of dividends or upon liquidation, dissolution, or winding up.

“ Private Placement Legend ” means the legend set forth in Section 2.06(g)(i) hereof to be placed on all Notes issued under this Indenture, except where otherwise permitted by the provisions of this Indenture.

“ Public Company Costs ” means the initial costs relating to establishing compliance with the Sarbanes-Oxley Act of 2002, as amended, and other expenses arising out of or incidental to the Issuer’s or its Restricted Subsidiaries’ or any Parent Company’s initial establishment of compliance with the obligations of a reporting company, including costs, fees and expenses (including legal, accounting and other professional fees) relating to compliance with provisions of the Securities Act and Exchange Act.

“ Purchase Agreement ” means that certain Purchase Agreement, dated as of February 3, 2017, between the Issuers and Goldman, Sachs & Co., as representative of the several Initial Purchasers listed on Annex A thereto.

“ Purchase Money Obligations ” means any Indebtedness incurred or issued, to finance or refinance the purchase, leasing, expansion, construction, installation, replacement, repair or improvement of property (real or personal) or assets, and whether directly or indirectly, including through the acquisition of the Capital Stock of any Person.

“ QIB ” means a “qualified institutional buyer” as defined in Rule 144A.

“ Qualified Equity Interests ” means Equity Interests that are not Disqualified Stock.

“ Qualified Proceeds ” means the fair market value of assets that are used or useful in, or Capital Stock of any Person engaged in, a Similar Business.

“ Qualified Securitization Facility ” means any Securitization Facility (a) constituting a securitization financing facility that meets the following conditions: (i) the Board of Directors or management of the Issuer shall have determined in good faith that such Securitization Facility is in the aggregate economically fair and reasonable to the Issuer and (ii) all sales and/or contributions of Securitization Assets and related assets to the applicable Securitization Subsidiary are made at fair market value (as determined in good faith by the Issuer) or (b) constituting a receivables or payables financing or factoring facility.

“ Rating Agencies ” means Moody’s and S&P or if Moody’s or S&P or both shall not make a rating on the Notes publicly available, a nationally recognized statistical rating agency or agencies, as the case may be, selected by the Issuer which shall be substituted for Moody’s or S&P or both, as the case may be.

“ Record Date ” means, for the interest payable on any applicable Interest Payment Date, the February 15 and August 15 (whether or not a Business Day) immediately preceding such Interest Payment Date.

“ Regulation S ” means Regulation S promulgated under the Securities Act.

“ Regulation S Global Note ” means a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as applicable.

“ Regulation S Permanent Global Note ” means a permanent Global Note, substantially in the form of Exhibit A hereto, bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the applicable Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the applicable Restricted Period.

“ Regulation S Temporary Global Note ” means a temporary Global Note, substantially in the form of Exhibit A hereto, bearing the Global Note Legend, the Private Placement Legend and the Regulation S Temporary Global Note Legend and deposited with or on behalf of, and registered in the name of, the applicable Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903.

“ Regulation S Temporary Global Note Legend ” means the legend set forth in Section 2.06(g)(iii) hereof.

“ Related Business Assets ” means assets (other than Cash Equivalents) used or useful in a Similar Business or any securities of a Person received by the Issuer or a Restricted Subsidiary in exchange for assets transferred by the Issuer or a Restricted Subsidiary; provided that any such securities shall not be deemed to be Related Business Assets, unless upon receipt of the securities of such Person, such Person is or would become a Restricted Subsidiary.

“ Required Divestiture ” means an Asset Sale made in connection with the approval of any applicable antitrust authority or otherwise necessary or advisable in the good faith determination of the Issuer in order to obtain the approval of any applicable antitrust authority, in connection with the Transactions or any acquisition permitted under this Indenture.

“ Responsible Officer ” means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such Person’s knowledge of and familiarity with the particular subject and, in each case, who shall have direct responsibility for the administration of this Indenture.

“ Restricted Definitive Note ” means a Definitive Note bearing, or that is required to bear, the Private Placement Legend.

“ Restricted Global Note ” means a Global Note bearing, or that is required to bear, the Private Placement Legend.

“ Restricted Investment ” means an Investment other than a Permitted Investment.

“ Restricted Period ” means, in respect of any Note issued under Regulation S, the 40-day distribution compliance period as defined in Regulation S applicable to such Note.

“ Restricted Subsidiary ” means, at any time, any direct or indirect Subsidiary of the Issuer (including the Co-Issuer and any Foreign Subsidiary) that is not then an Unrestricted Subsidiary; provided , that upon an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such Subsidiary shall be included in the definition of “Restricted Subsidiary.”

“ Rule 144 ” means Rule 144 promulgated under the Securities Act. “ Rule 144A ” means Rule 144A promulgated under the Securities Act. “ Rule 903 ” means Rule 903 promulgated under the Securities Act. “ Rule 904 ” means Rule 904 promulgated under the Securities Act.

“ S&P ” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., and any successor to its rating agency business.

“ Sale and Lease-Back Transaction ” means any arrangement providing for the leasing by the Issuer or any of its Restricted Subsidiaries of any real or tangible personal property, which property has been or is to be sold or transferred by the Issuer or such Restricted Subsidiary to a third Person in contemplation of such leasing.

“ SEC ” means the U.S. Securities and Exchange Commission.

“ Secured Indebtedness ” means any Indebtedness of the Issuer or any of its Restricted Subsidiaries secured by a Lien.

“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

“ Securitization Assets ” means (a) the accounts receivable, royalty or other revenue streams and other rights to payment and any other assets subject to a Qualified Securitization Facility and the proceeds thereof and (b) contract rights, lockbox accounts and records with respect to such accounts receivable and any other assets customarily transferred together with accounts receivable in a securitization financing.

“ Securitization Facility ” means any of one or more receivables, factoring or securitization financing facilities as amended, supplemented, modified, extended, renewed, restated or refunded from time to time, the Obligations of which are non-recourse (except for customary representations, warranties, covenants and indemnities made in connection with such facilities) to the Issuer or any of its Restricted Subsidiaries (other than a Securitization Subsidiary) pursuant to which the Issuer or any of its Restricted Subsidiaries sells or grants a security interest in its accounts receivable, payables or Securitization Assets or assets related thereto to either (a) a Person that is not a Restricted Subsidiary or (b) a Securitization Subsidiary that in turn sells its accounts receivable, payables or Securitization Assets or assets related thereto to a Person that is not a Restricted Subsidiary.

“ Securitization Fees ” means distributions or payments made directly or by means of discounts with respect to any participation interest issued or sold in connection with, and other fees and expenses (including reasonable fees and expenses of legal counsel) paid to a Person that is not a Securitization Subsidiary in connection with, any Qualified Securitization Facility.

“ Securitization Subsidiary ” means any Subsidiary formed for the purpose of, and that solely engages only in one or more Qualified Securitization Facilities and other activities reasonably related thereto.

“ Senior Indebtedness ” means:

(1) all Indebtedness of the Issuers or any Guarantor outstanding under the Senior Secured Credit Facilities, the Notes and related Guarantees (including interest accruing on or after the filing of any petition in bankruptcy or similar proceeding or for reorganization of the Issuers or any Guarantor (at the rate provided for in the documentation with respect thereto, regardless of whether or not a claim for post-filing interest is allowed in such proceedings)), and any and all other fees, expense reimbursement obligations, indemnification amounts, penalties, and other amounts (whether existing on the Completion Date or thereafter created or incurred) and all obligations of the Issuers or any Guarantor to reimburse any bank or other Person in respect of amounts paid under letters of credit, bank guarantees, acceptances or other similar instruments;

(2) all (x) Hedging Obligations (and guarantees thereof) and (y) obligations in respect of Bank Products (and guarantees thereof) owing to a lender under the Senior Secured Credit Facilities or any Affiliate of such lender (or any Person that was a lender or an Affiliate of such lender at the time the applicable agreement giving rise to such Hedging Obligation was entered into); provided , that such Hedging Obligations and obligations in respect of Bank Products, as the case may be, are permitted to be incurred under the terms of this Indenture;

(3) any other Indebtedness of the Issuers or any Guarantor permitted to be incurred under the terms of this Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is subordinated in right of payment to the Notes or any related Guarantee; and

(4) all Obligations with respect to the items listed in the preceding clauses (1), (2) and (3); provided that Senior Indebtedness shall not include:

(a) any obligation of such Person to the Issuer or any of the Issuer’s Restricted Subsidiaries;

(b) any liability for federal, state, local or other taxes owed or owing by such Person;

(c) any accounts payable or other liability to trade creditors arising in the ordinary course of business or consistent with industry practice;

(d) any Indebtedness or other Obligation of such Person which is contractually subordinated in right of payment to any other Indebtedness or other Obligation of such Person; or

(e) that portion of any Indebtedness which at the time of incurrence is incurred in violation of this Indenture.

“ Senior Secured Credit Facilities ” means, collectively, the term loan facility, the revolving facility and any other credit facilities from time to time under that certain Credit Agreement, to be dated on or about the Completion Date, by and among the Issuer, Bank of America, N.A., as the administrative agent, and the lenders and other entities party thereto, including any guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements, refundings, refinancings or replacements thereof and any one or more debt securities, loans, notes, indentures, note purchase agreements, agreements, credit facilities or commercial paper facilities with banks or other institutional lenders, or investors, whether or not secured, that replace, refund, supplement or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing debt securities, loans, notes, indentures, note purchase agreements, agreements, credit facilities or commercial paper facilities that increase the amount borrowable thereunder or alters the maturity thereof ( provided that such increase in borrowings is permitted under Section 4.09 hereof) or adds Restricted Subsidiaries as additional borrowers or guarantors thereunder and whether by the same or any other agent, trustee, lender or group of lenders or holders.

“ Significant Subsidiary ” means any Restricted Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X promulgated pursuant to the Securities Act, as such regulation is in effect on the Issue Date; provided that notwithstanding the foregoing, in no event will any Securitization Subsidiary be considered a Significant Subsidiary for purposes of clauses (v), (vi) or (vii) under Section 6.01(a) hereof.

“ Similar Business ” means (1) any business conducted or proposed to be conducted by the Issuer or any of its Restricted Subsidiaries on the Completion Date, and any reasonable extension thereof, or (2) any business or other activities that are reasonably similar, ancillary, incidental, complementary or related to, or a reasonable extension, development or expansion of, the businesses in which the Issuer and its Restricted Subsidiaries are engaged or propose to be engaged on the Completion Date.

“ Specified TMA Payments ” means any payments or obligations allocated to Spinco (as defined in the Tax Matters Agreement) (or successor thereof) under Section 4(c)(iii) or Section 4(c)(iv) of the Tax Matters Agreement.

“ Specified Transaction ” means (i) solely for the purposes of determining the applicable cash balance, any contribution of capital, including as a result of an Equity Offering, to the Issuer, in each case, in connection with an acquisition or Investment, (ii) any designation of operations or assets of the Issuer or a Restricted Subsidiary as discontinued operations (as defined under GAAP), (iii) any Investment that results in a Person becoming a Restricted Subsidiary, (iv) any designation of a Subsidiary as a Restricted Subsidiary or an Unrestricted Subsidiary in compliance with this Indenture, (v) any purchase or other acquisition of a business of any Person, or assets constituting a business unit, line of business or division of any Person, (vi) any disposition (a) that results in a Restricted Subsidiary ceasing to be a Subsidiary of the Issuer or (b) of a business, business unit, line of business or division of the Issuer or a Restricted Subsidiary, in each case whether by merger, amalgamation, consolidation or otherwise, (vii) any operational changes identified by the Issuer that have been made by the Issuer or any Restricted Subsidiary during the Test Period or (viii) any Restricted Payment or other transaction that by the terms of this Indenture requires a financial ratio to be calculated on a pro forma basis.

“ Subordinated Indebtedness ” means, with respect to the Notes,

(1) any Indebtedness of the Issuers which is by its terms subordinated in right of payment to the Notes, and

(2) any Indebtedness of any Guarantor which is by its terms subordinated in right of payment to the Guarantee of such entity of the Notes.

“ Subsidiary ” means, with respect to any Person:

(1) any corporation, association, or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50.0% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof; and

(2) any partnership, joint venture, limited liability company or similar entity of which:

(a) more than 50.0% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof whether in the form of membership, general, special or limited partnership or otherwise; and

(b) such Person or any Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity.

For the avoidance of doubt, any entity that is owned at a 50.0% or less level (as described above) shall not be a “Subsidiary” for any purpose under this Indenture, regardless of whether such entity is consolidated on the Issuer’s or any Restricted Subsidiary’s financial statements.

Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” refer to a Subsidiary or Subsidiaries of the Issuer.

“ Support and Services Agreement ” means the management services or similar agreements among one or more of the Investors or certain of the management companies associated with one or more of the Investors or their advisors, if applicable, and the Issuer (and/or any Parent Company), as in effect from time to time.

“ Tax Agreements ” means, collectively, the Tax Receivables Agreements and the Tax Matters Agreement.

“ Tax Matters Agreement ” means the Tax Matters Agreement, substantially in the form attached as Exhibit E to the LLC Agreement, as in effect on or about the Completion Date or as amended and replaced thereafter so long as any such amendment or replacement is not materially disadvantageous in the good faith judgment of the Issuer to the Holders when taken as a whole, as compared to the Tax Matters Agreement in the form attached as Exhibit E to the LLC Agreement as in effect on or about the Completion Date.

“ Tax Receivable Agreements ” means, collectively, (i) the Amended and Restated Tax Receivable Agreement (Reorganizations), dated as of November 2, 2011, by and among Change Healthcare Holdings, Inc., H&F ITR Holdco, L.P., Beagle Parent LLC and GA-H&F ITR Holdco, L.P., (ii) the Amended and Restated Tax Receivable Agreement (Exchanges), dated as of November 2, 2011, by and among Change Healthcare Holdings, Inc., H&F ITR Holdco, L.P., Beagle Parent LLC and GA-H&F ITR Holdco, L.P., (iii) the Tax Receivable Agreement (Management) by and among Change Healthcare Holdings, Inc. and the persons named therein, dated August 17, 2009, as amended by the First Amendment to Tax Receivable Agreement (Management), dated as of November 2, 2011, by and among Change Healthcare Holdings, Inc. and the parties named thereto, (iv) the Tax Receivable Agreement dated on or about the Completion Date, by and among HCIT Holdings, Inc., Change Healthcare, Inc., Change Healthcare LLC, certain entities affiliated with The Blackstone Group, L.P., certain entities affiliated with Hellman & Friedman LLC and the other parties thereto and (v) the Tax Receivable Agreement dated as on or about the Completion Date, by and among Change Healthcare LLC, HCIT Holdings, Inc., MCK, certain of MCK’s wholly-owned direct and indirect subsidiaries and the other parties thereto, in each case as in effect on or about the Completion Date or as amended and replaced thereafter so long as any such amendment or replacement is not materially disadvantageous in the good faith judgment of the Issuer to the Holders when taken as a whole, as compared to the Tax Receivable Agreements as in effect on or about the Completion Date.

“ Test Period ” in effect at any time means the Issuer’s most recently ended four consecutive fiscal quarters for which internal financial statements are available (as determined in good faith by the Issuer); provided that prior to the first date on which internal financial statements are available (as determined in good faith by the Issuer) for the four consecutive fiscal quarters ended on June 30, 2017, the Test Period in effect will be the period of four consecutive fiscal quarters of the Issuer ended September 30, 2016.

“ Transaction Documents ” means, collectively, (a) the Transaction Documents (as defined in the Contribution Agreement), (b) the Merger Agreement and (c) any other document contemplated by any of the foregoing, in each case, as in effect on or about the Completion Date (or in substantially the form of such Transaction Document attached to the Contribution Agreement or other Transaction Document as in effect on or about the Completion Date), together with any amendment, modification, supplement, substitution or replacement thereof or thereto so long as such amendment, modification, supplement, substitution or replacement (when taken as a whole) is not materially disadvantageous, in the good faith judgment of the Issuer, to the Holders as compared to the Transaction Documents as in effect immediately prior thereto (or in substantially the form of such Transaction Document attached to the Contribution Agreement or other Transaction Document as in effect on or about the Completion Date).

“ Transaction Expenses ” means any fees, expenses, costs or charges incurred or paid by the Investors, the Issuer or any of its (or their) Subsidiaries in connection with the Transactions (including expenses in connection with hedging transactions, if any, payments to officers, employees and directors as change of control payments, severance payments, special or retention bonuses and charges for repurchase or rollover of, or modifications to, stock options and/or restricted stock, expenses in connection with hedging transactions related to the Senior Secured Credit Facilities and any original issue discount or upfront fees), the Support and Services Agreement, this Indenture, the Loan Documents (as defined in the Senior Secured Credit Facilities) and the transactions contemplated hereby and thereby.

“ Transactions ” means the Contribution (including payment of the consideration for the Contribution and other payments contemplated by the Contribution Agreement), the borrowings under the Senior Secured Credit Facilities and the repayment and refinancing of certain Indebtedness and other obligations on or prior to the Completion Date, the issuance of the Notes on the Issue Date and the guarantees thereof and the application of the proceeds therefrom, the payment of Transaction Expenses, the making of certain Restricted Payments of the nature described in the Offering Circular that are related to the Transactions and other transactions in connection therewith or incidental thereto in the nature described in the Offering Circular.

“ Trust Indenture Act ” means the Trust Indenture Act of 1939, as amended (15 U.S.C. §§ 77aaa77bbbb).

“ Trustee ” means Wilmington Trust, National Association, as trustee, until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.

“ Uniform Commercial Code ” means the Uniform Commercial Code or any successor provision thereof as the same may from time to time be in effect in the State of New York.

“ Unrestricted Definitive Note ” means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend.

“ Unrestricted Global Note ” means a permanent Global Note, substantially in the form of Exhibit A hereto, bearing the Global Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto, and that is deposited with or on behalf of and registered in the name of the applicable Depositary, representing Notes that do not bear the Private Placement Legend.

“ Unrestricted Subsidiary ” means:

(1) any Subsidiary of the Issuer which at the time of determination is an Unrestricted Subsidiary (as designated by the Issuer, as provided below); and

(2) any Subsidiary of an Unrestricted Subsidiary.

The Issuer may designate any Subsidiary of the Issuer other than the Co-Issuer (including any existing Subsidiary and any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien on, any property of, the Issuer or any Subsidiary of the Issuer (other than solely any Subsidiary of the Subsidiary to be so designated); provided , that:

(1) either (a) the Subsidiary to be so designated has total consolidated assets of $1,000 or less or (b) if the Subsidiary to be so designated has total consolidated assets in excess of $1,000, such designation complies with Section 4.07 hereof; and

(2) each of (a) the Subsidiary to be so designated and (b) its Subsidiaries has not, at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Issuer or any Restricted Subsidiary (other than Equity Interests in an Unrestricted Subsidiary).

The Issuer may designate any Unrestricted Subsidiary to be a Restricted Subsidiary at any time; provided , that, immediately after giving effect to such designation, (i) no Default shall have occurred and be continuing and (ii) (x) any outstanding Indebtedness of such Unrestricted Subsidiary would be permitted to be incurred by a Restricted Subsidiary under Section 4.09 hereof (including pursuant to Section 4.09(b)(xiv) treating such redesignation as an acquisition for the purpose of such clause) and shall be deemed to be incurred thereunder and (y) all Liens encumbering the assets of such Unrestricted Subsidiary would be permitted to be incurred by a Restricted Subsidiary under Section 4.12 hereof and shall be deemed to be incurred thereunder, in each case calculated on a pro forma basis as if such designation had occurred at the beginning of the applicable reference period.

Any such designation by the Issuer shall be notified by the Issuer to the Trustee by promptly filing with the Trustee a copy of the resolution of the Board of Directors of the Issuer or any committee thereof after giving effect to such designation and an Officer’s Certificate certifying that such designation complied with the foregoing provisions.

“ U.S. Dollar Equivalent ” means with respect to any monetary amount in a currency other than U.S. dollars, at any time for determination thereof, the amount of U.S. dollars obtained by converting such foreign currency involved in such computation into U.S. dollars at the spot rate for the purchase of U.S. dollars with the applicable foreign currency as published in The Wall Street Journal in the “Exchange Rates” column under the heading “Currency Trading” on the date two Business Days prior to such determination.

“ U.S. Government Securities ” means securities that are:

(1) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged; or

(2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America, the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America,

which, in either case, are not callable or redeemable at the option of the issuers thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such U.S. Government Securities or a specific payment of principal of or interest on any such U.S. Government Securities held by such custodian for the account of the holder of such depository receipt; provided , that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Securities or the specific payment of principal of or interest on the U.S. Government Securities evidenced by such depository receipt.

“ U.S. Person ” means a U.S. person as defined in Rule 902(k) under the Securities Act.

“ Voting Stock ” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

“ Weighted Average Life to Maturity ” means, when applied to any Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, at any date, the quotient obtained by dividing:

(1) the sum of the products of the number of years (calculated to the nearest one-twenty-fifth) from the date of determination to the date of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Disqualified Stock or Preferred Stock, multiplied by the amount of such payment; by

(2) the sum of all such payments;

provided , that for purposes of determining the Weighted Average Life to Maturity of any Indebtedness that is being extended, replaced, refunded, refinanced, renewed or defeased (the “ Applicable Indebtedness ”), the effects of any amortization or prepayments made on such Applicable Indebtedness prior to the date of the applicable extension, replacement, refunding, refinancing, renewal or defeasance shall be disregarded.

“ Wholly-Owned Subsidiary ” of any Person means a Subsidiary of such Person, 100.0% of the outstanding Equity Interests of which (other than directors’ qualifying shares and shares issued to foreign nationals as required by applicable law) shall at the time be owned by such Person and/or by one or more Wholly-Owned Subsidiaries of such Person.

“ Wholly-Owned Restricted Subsidiary ” is any Wholly-Owned Subsidiary that is a Restricted Subsidiary.

Section 1.02. Other Definitions .


Term		Defined in Section
“Acceptable Commitment”		4.10
“Advance Offer”		4.10
“Advance Portion”		4.10
“Affiliate Transaction”		4.11
“Applicable Indebtedness”		1.01
“Applicable Premium Deficit”		8.04
“Asset Sale Offer”		4.10
“Authentication Agent”		2.02
“Authentication Order”		2.02
“Change of Control Offer”		4.14
“Change of Control Payment”		4.14
“Change of Control Payment Date”		4.14
“Covenant Defeasance”		8.03
“Covenant Suspension Event”		4.17
“DTC”		2.03
“ERISA”		2.06
“equity incentives”		1.01
“Escrow Agent”		4.18
“Escrow Agreement”		4.18
“Escrow Guarantees”		4.18
“Escrow Release Date”		4.18
“Escrow Release Conditions”		4.18
“Escrow Termination Date”		3.10
“Event of Default”		6.01
“Excess Proceeds”		4.10
“Fixed Charge Coverage Test”		4.07
“Foreign Disposition”		4.10
“incur” and “incurrence”		4.09
“LCT Election”		1.06
“LCT Test Date”		1.06
“Legal Defeasance”		8.02
“Note Register”		2.03


Term		Defined in Section
“Offer Amount”		3.08
“Offer Period”		3.08
“Pari Passu Indebtedness”		4.10
“Paying Agent”		2.03
“primary obligations”		1.01
“primary obligor”		1.01
“Purchase Date”		3.08
“Redemption Date”		3.01
“Refinancing Indebtedness”		4.09
“Refunding Capital Stock”		4.07
“Registrar”		2.03
“Release”		4.18
“Restricted Payments”		4.07
“Reversion Date”		4.17
“Second Commitment”		4.10
“Special Mandatory Redemption”		3.10
“Special Mandatory Redemption Date”		3.10
“Special Mandatory Redemption Event”		3.10
“Special Mandatory Redemption Price”		3.10
“Successor Co-Issuer”		5.01
“Successor Company”		5.01
“Successor Person”		5.01
“Suspended Covenants”		4.17
“Suspension Date”		4.17
“Suspension Period”		4.17
“Tax Group”		4.07
“Transfer Agent”		2.03
“Treasury Capital Stock”		4.07

Section 1.03. Rules of Construction . Unless the context otherwise requires:

(a) a term has the meaning assigned to it;

(b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(d) the words “including,” “includes” and similar words shall be deemed to be followed by “without limitation”;

(e) words in the singular include the plural, and in the plural include the singular;

(f) “shall” and “will” shall be interpreted to express a command;

(g) provisions apply to successive events and transactions;

(h) references to sections of, or rules under, the Securities Act or the Exchange Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time;

(i) unless the context otherwise requires, any reference to an “Article,” “Section” or “clause” refers to an Article, Section or clause, as the case may be, of this Indenture;

(j) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not any particular Article, Section, clause or other subdivision;

(k) the principal amount of any non-interest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the Issuer dated such date prepared in accordance with GAAP;

(l) words used herein implying any gender shall apply to both genders;

(m) 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”; and

(n) the principal amount of any Preferred Stock at any time shall be (i) the maximum liquidation value of such Preferred Stock at such time or (ii) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock at such time, whichever is greater.

Section 1.04. Acts of Holders .

(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Issuers. Proof of execution of any such instrument or of a writing appointing any such agent, or the holding by any Person of a Note, shall be sufficient for any purpose of this Indenture and (subject to Section 7.01 hereof) conclusive in favor of the Trustee and the Issuers, if made in the manner provided in this Section 1.04.

(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by or on behalf of any legal entity other than an individual, such certificate or affidavit shall also constitute proof of the authority of the Person executing the same. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient.

(d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of any action taken, suffered or omitted by the Trustee or the Issuers in reliance thereon, whether or not notation of such action is made upon such Note.

(e) The Issuers may set a record date for purposes of determining the identity of Holders entitled to give any request, demand, authorization, direction, notice, consent, waiver or take any other act, or to vote or consent to any action by vote or consent authorized or permitted to be given or taken by Holders. Unless otherwise specified, if not set by the Issuers prior to the first solicitation of a Holder made by any Person in respect of any such action, or in the case of any such vote, prior to such vote, any such record date shall be the later of 10 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation.

(f) Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Note may do so with regard to all or any part of the principal amount of such Note or by one or more duly appointed agents, each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. Any notice given or action taken by a Holder or its agents with regard to different parts of such principal amount pursuant to this Section 1.04(f) shall have the same effect as if given or taken by separate Holders of each such different part.

(g) Without limiting the generality of the foregoing, a Holder, including DTC, that is a Holder of a Global Note, may make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders, and any Person, that is a Holder of a Global Note, including DTC, may provide its proxy or proxies to the beneficial owners of interests in any such Global Note through such Depositary’s standing instructions and customary practices.

(h) The Issuers may fix a record date for the purpose of determining the Persons who are beneficial owners of interests in any Global Note held by DTC entitled under the procedures of such Depositary to make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders. If such a record date is fixed, the Holders on such record date or their duly appointed proxy or proxies, and only such Persons, shall be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders after such record date. No such request, demand, authorization, direction, notice, consent, waiver or other action shall be valid or effective if made, given or taken more than 120 days after such record date.

Section 1.05. Timing of Payment . Notwithstanding anything herein to the contrary, if the date on which any payment is to be made pursuant to this Indenture or the Notes is not a Business Day, the payment otherwise payable on such date shall be payable on the next succeeding Business Day with the same force and effect as if made on such scheduled date and ( provided such payment is made on such succeeding Business Day) no interest shall accrue on the amount of such payment from and after such scheduled date to the time of such payment on such next succeeding Business Day and the amount of any such payment that is an interest payment will reflect accrual only through the original payment date and not through the next succeeding Business Day.

Section 1.06. Limited Condition Transactions . When calculating the availability under any basket or ratio under this Indenture or compliance with any provision of this Indenture in connection with any Limited Condition Transaction and any actions or transactions related thereto (including acquisitions, Investments, the incurrence or issuance of Indebtedness, Disqualified Stock or Preferred Stock and the use of proceeds thereof, the incurrence of Liens, repayments and Restricted Payments), in each case, at the option of the Issuer (the Issuer’s election to exercise such option, an “ LCT Election ”), the date of determination for availability under any such basket or ratio and whether any such action or transaction is permitted (or any requirement or condition therefor is complied with or satisfied (including as to the absence of any (or any type of) continuing Default or Event of Default)) under this Indenture shall be deemed to be the date (the “ LCT Test Date ”) the definitive agreements for such Limited Condition Transaction are entered into (or, if applicable, the date of delivery of an irrevocable notice, declaration of a Restricted Payment or similar event), and if, after giving pro forma effect to the Limited Condition Transaction and any actions or transactions related thereto (including acquisitions, Investments, the incurrence or issuance of Indebtedness, Disqualified Stock or Preferred Stock and the use of proceeds thereof, the incurrence of Liens, repayments and Restricted Payments) and any related pro forma adjustments, the Issuer or any of its Restricted Subsidiaries would have been permitted to take such actions or consummate such transactions on the relevant LCT Test Date in compliance with such ratio, test or basket (and any related requirements and conditions), such ratio, test or basket (and any related requirements and conditions) shall be deemed to have been complied with (or satisfied) for all purposes (in the case of Indebtedness, for example, whether such Indebtedness is committed, issued or incurred at the LCT Test Date or at any time thereafter); provided , that (a) if financial statements for one or more subsequent fiscal quarters shall have become available, the Issuer may elect, in its sole discretion, to re-determine all such ratios, tests or baskets on the basis of such financial statements, in which case, such date of redetermination shall thereafter be deemed to be the applicable LCT Test Date for purposes of such ratios, tests or baskets, and (b) except as contemplated in the foregoing clause (a), compliance with such ratios, tests or baskets (and any related requirements and conditions) shall not be determined or tested at any time after the applicable LCT Test Date for such Limited Condition Transaction and any actions or transactions related thereto (including acquisitions, Investments, the incurrence or issuance of Indebtedness, Disqualified Stock or Preferred Stock and the use of proceeds thereof, the incurrence of Liens, repayments and Restricted Payments).

For the avoidance of doubt, if the Issuer has made an LCT Election, (1) if any of the ratios, tests or baskets for which compliance was determined or tested as of the LCT Test Date would at any time after the LCT Test Date have been exceeded or otherwise failed to have been

complied with as a result of fluctuations in any such ratio, test or basket, including due to fluctuations in EBITDA or total assets of the Issuer or the Person subject to such Limited Condition Transaction, such baskets, tests or ratios will not be deemed to have been exceeded or failed to have been complied with as a result of such fluctuations; (2) if any related requirements and conditions (including as to the absence of any (or any type of) continuing Default or Event of Default) for which compliance or satisfaction was determined or tested as of the LCT Test Date would at any time after the LCT Test Date not have been complied with or satisfied (including due to the occurrence or continuation of any Default or Event of Default), such requirements and conditions will not be deemed to have been failed to be complied with or satisfied (and such Default or Event of Default shall be deemed not to have occurred or be continuing); and (3) in calculating the availability under any ratio, test or basket in connection with any action or transaction unrelated to such Limited Condition Transaction following the relevant LCT Test Date and prior to the earlier of the date on which such Limited Condition Transaction is consummated or the date that the definitive agreement or date for redemption, purchase or repayment specified in an irrevocable notice or declaration for such Limited Condition Transaction is terminated, expires or passes, as applicable, without consummation of such Limited Condition Transaction, any such ratio, test or basket shall be determined or tested giving pro forma effect to such Limited Condition Transaction.

Section 1.07. Certain Compliance Calculations . Notwithstanding anything to the contrary herein (except as set forth in the proviso to clause (c)(i) of Section 4.09 hereof), in the event any item of Indebtedness, Disqualified Stock or Preferred Stock, Lien, Permitted Lien, Restricted Payment, Permitted Investment or other transaction or action (any of the foregoing in a single transaction or a series of substantially concurrent related transactions) meets the criteria of one or more than one categories of exceptions, thresholds or baskets under this Indenture, including any financial ratio based exceptions, thresholds or baskets (including the Fixed Charge Coverage Ratio, Consolidated Secured Debt Ratio or Consolidated Total Debt Ratio), (1) unless otherwise expressly provided in this Indenture, the Issuer will, in its sole discretion, be entitled to divide and classify and later re-divide and reclassify on or more occasions (based on circumstances existing on the date of any such re-division and reclassification) any such item of Indebtedness, Disqualified Stock or Preferred Stock, Lien, Permitted Lien, Restricted Payment, Permitted Investment or other transaction or action, in whole or in part, among one or more than one categories of exceptions, thresholds or baskets under this Indenture, and (2) availability and utilization of any category of financial ratio based exceptions, thresholds and baskets shall first be calculated without giving effect to amounts to be utilized under any other category of exceptions, thresholds and baskets at such time of determination (including at the time of any initial division and classification and any later re-divisions and reclassifications) and thereafter, availability and utilization of any category of exceptions, thresholds and baskets that are not financial ratio based shall be calculated. Each item of item of Indebtedness, Disqualified Stock or Preferred Stock, Lien, Permitted Lien, Restricted Payment, Permitted Investment or other transaction or action will be deemed to have been incurred, issued, made or taken first, to the extent available, pursuant to any available categories of financial ratio based exceptions, thresholds and baskets (including the Fixed Charge Coverage Ratio, Consolidated Secured Debt Ratio or Consolidated Total Debt Ratio) as set forth above prior to any other category of exceptions, thresholds and baskets. If any item of Indebtedness, Disqualified Stock or Preferred Stock, Lien, Permitted Lien, Restricted Payment, Permitted Investment or other transaction or action (or any portion of the foregoing) previously divided and classified (or re-divided and

reclassified) as set forth above under any category of non-financial ratio based exceptions, thresholds or baskets could subsequently be re-divided and reclassified under a category of financial ratio based exceptions, thresholds or baskets (including the Fixed Charge Coverage Ratio, Consolidated Secured Debt Ratio or Consolidated Total Debt Ratio), such re-division and reclassification shall be deemed to occur automatically and such item of Indebtedness, Disqualified Stock or Preferred Stock, Lien, Permitted Lien, Restricted Payment, Permitted Investment or other transaction or action (or any portion of the foregoing) shall cease to be deemed made or outstanding for purposes of any category of exceptions, thresholds and baskets that are not financial ratio based. Notwithstanding anything to the contrary herein, in the event an item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) is incurred or issued, any Lien is incurred or other transaction is undertaken in reliance on a ratio basket based on the Fixed Charge Coverage Ratio, Consolidated Secured Debt Ratio or Consolidated Total Debt Ratio, such ratio(s) shall be calculated without regard to the incurrence of any Indebtedness under any revolving facility prior to or in connection therewith.

ARTICLE 2

THE NOTES

Section 2.01. Form and Dating; Terms .

(a) General . The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rules or usage. Each Note shall be dated the date of its authentication. The Notes shall be issued in minimum denominations of $2,000 and any integral multiple of $1,000 in excess thereof.

(b) Global Notes . Notes issued in global form shall be substantially in the form of Exhibit A hereto, including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto. Notes issued in definitive form shall be substantially in the form of Exhibit A hereto, but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto. Each Global Note shall represent such of the outstanding Notes as shall be specified in the “Schedule of Exchanges of Interests in the Global Note” attached thereto and each shall provide that it shall represent up to the aggregate principal amount of Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as applicable, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof.

(c) Temporary Global Notes . Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Custodian and registered in the name of the applicable Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Issuers and authenticated by the Trustee as hereinafter provided.

Following (i) the termination of the applicable Restricted Period and (ii) the receipt by the Trustee of (A) a certification or other evidence in a form reasonably acceptable to the Issuers of non-United States beneficial ownership of 100.0% of the aggregate principal amount of the Regulation S Temporary Global Note (except to the extent of any beneficial owners thereof who acquired an interest therein during the Restricted Period pursuant to another exemption from registration under the Securities Act and who shall take delivery of a beneficial ownership interest in a 144A Global Note bearing the Private Placement Legend, all as contemplated by Section 2.06(b) hereof) and (B) an Officer’s Certificate from the Issuers, the Trustee shall remove the Regulation S Temporary Global Note Legend from the Regulation S Temporary Global Note, following which temporary beneficial interests in the Regulation S Temporary Global Note shall automatically become beneficial interests in the Regulation S Permanent Global Note pursuant to the Applicable Procedures.

The aggregate principal amount of a Regulation S Temporary Global Note and a Regulation S Permanent Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided.

(d) Terms . The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is unlimited.

The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Issuers, the Guarantors and the Trustee, by their execution and delivery of this Indenture, or a supplemental indenture to this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.

The Notes shall be subject to repurchase by the Issuers pursuant to an Asset Sale Offer as provided in Section 4.10 hereof or a Change of Control Offer as provided in Section 4.14 hereof. The Notes shall not be redeemable, other than as provided in Article 3 hereof.

Subject to compliance with Section 4.09 hereof, the Issuers may issue Additional Notes from time to time ranking pari passu with the Initial Notes without notice to or consent of the Holders, and such Additional Notes shall be consolidated with and form a single class with the Initial Notes and shall have the same terms as to status, redemption or otherwise as the Initial Notes, except that interest may accrue on the Additional Notes from their date of issuance (or such other date specified by the Issuers), subject to the Issuers’ right to issue Additional Notes of a different series as set forth in the next paragraph; provided that if any Additional Notes are not fungible with the Initial Notes for U.S. federal income tax purposes, such Additional Notes will have a separate CUSIP number or ISIN number, as applicable. Any Additional Notes may be issued with the benefit of an indenture supplemental to this Indenture.

The Issuers may designate the maturity date, interest rate and optional redemption provisions applicable to each series of Additional Notes, which may differ from the maturity date, interest rate and optional redemption provisions applicable to the Initial Notes. Additional Notes that differ with respect to maturity date, interest rate or optional redemption provisions

from the Initial Notes will constitute a different series of Notes from the Initial Notes. Additional Notes that have the same maturity date, interest rate and optional redemption provisions as the Initial Notes will be treated as the same series as the Initial Notes unless otherwise designated by the Issuers. The Issuers similarly may vary the application of related other provisions (including the issue price and any applicable original issue discount legend) to any series of Additional Notes.

(e) Euroclear and Clearstream Procedures Applicable . The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream Banking” and “Customer Handbook” of Clearstream shall be applicable to transfers of beneficial interests in the Regulation S Global Notes that are held by Participants through Euroclear or Clearstream.

Section 2.02. Execution and Authentication . At least one Officer of each of the Issuer and the Co-Issuer shall execute the Notes on behalf of the Issuer and the Co-Issuer, as applicable, by manual, facsimile or electronic (including “.pdf”) signature.

If an Officer of the Issuer or the Co-Issuer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall nevertheless be valid.

A Note shall not be entitled to any benefit under this Indenture or be valid or obligatory for any purpose until authenticated substantially in the form of Exhibit A hereto, by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been duly authenticated and delivered under this Indenture.

On the Issue Date, the Trustee shall, upon receipt of an Issuers’ Order (an “ Authentication Order ”), authenticate and deliver the Initial Notes in the aggregate principal amount or amounts specified in such Authentication Order. In addition, at any time, from time to time, the Trustee shall, upon receipt of an Authentication Order, authenticate and deliver any Additional Notes for an aggregate principal amount specified in such Authentication Order for such Additional Notes issued or increased hereunder.

The Trustee may appoint an authenticating agent (an “ Authentication Agent ”) acceptable to the Issuers to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An Authentication Agent has the same rights as an Agent to deal with Holders or an Affiliate of the Issuers.

Section 2.03. Registrar, Transfer Agent and Paying Agent . The Issuers shall maintain (i) an office or agency where the Notes may be presented for registration (the “ Registrar ”), which shall be Wilmington Trust, National Association as of the date of this Indenture, (ii) an office or agency where Notes may be presented for transfer or for exchange (the “ Transfer Agent ”), which shall be Wilmington Trust, National Association as of the date of this Indenture, and (iii) an office or agency where the Notes may be presented for payment (the “ Paying Agent ”), which shall be Wilmington Trust, National Association as of the date of this Indenture. The Registrar shall keep a register of the Notes (“ Note Register ”) and of their transfer and exchange in accordance with the rules and procedures of DTC. The registered Holder of a Note

will be treated as the owner of such Note for all purposes and only registered Holders shall have rights under this Indenture and the Notes. The Issuers may appoint one or more co-registrars, one or more co-transfer agents and one or more additional paying agents. The term “ Registrar ” includes any co-registrar, the term “ Transfer Agent ” includes any co-transfer agent and the term “ Paying Agent ” includes any additional paying agents. The Issuers may change any Paying Agent, Transfer Agent or Registrar without prior notice to any Holder. The Issuers shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Issuers fail to appoint or maintain another entity as Registrar, Transfer Agent or Paying Agent, the Trustee or an affiliate of the Trustee shall act as such. The Issuer or any of its Subsidiaries may act as Paying Agent, Transfer Agent or Registrar.

The Issuers initially appoint The Depository Trust Company, its nominees and successors (“ DTC ”) to act as Depositary with respect to the Global Notes.

The Issuers initially appoint the Trustee to act as the Paying Agent, Transfer Agent and Registrar for the Notes and to act as Custodian with respect to the Global Notes.

If any Notes are listed on an exchange and the rules of such exchange so require, the Issuers will satisfy any requirement of such exchange as to paying agents, registrars and transfer agents and will comply with any notice requirements required under such exchange in connection with any change of paying agent, registrar or transfer agent.

Section 2.04. Paying Agent to Hold Money in Trust . The Issuers shall require each Paying Agent other than the Trustee to agree in writing that such Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by such Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and will notify the Trustee in writing of any default by the Issuers in making any such payment. While any such default continues, the Trustee may require a Paying Agent (other than the Trustee) to pay all money held by it to the Trustee. The Issuers at any time may require a Paying Agent (other than the Trustee) to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Issuer or a Subsidiary thereof or the Trustee) shall have no further liability for the money. If the Issuer or a Subsidiary thereof acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Issuer or the Co-Issuer, the Trustee shall serve as Paying Agent for the Notes.

Section 2.05. Holder Lists . The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders. If the Trustee is not the Registrar, the Issuers shall furnish to the Trustee at least two Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders.

Section 2.06. Transfer and Exchange .

(a) Transfer and Exchange of Global Notes . Except as otherwise set forth in this Section 2.06, a Global Note may be transferred, in whole and not in part, only to another nominee of the Depositary or to a successor thereto or a nominee of such successor thereto. A beneficial interest in a Global Note may not be exchanged for a Definitive Note unless, and, if applicable, subject to the limitation on issuance of Definitive Notes set forth in Section 2.06(c)(ii), (i) the Depositary (x) notifies the Issuers that it is unwilling or unable to continue as Depositary for such Global Note or (y) has ceased to be a clearing agency registered under the Exchange Act, and, in either case, a successor Depositary is not appointed by the Issuers within 120 days, (ii) the Issuers, at their option, notify the Trustee in writing that they elect to cause the issuance of Definitive Notes (although Regulation S Temporary Global Notes may not be exchanged for Definitive Notes prior to (A) the expiration of the applicable Restricted Period and (B) the receipt by the Registrar of any certification of beneficial ownership required pursuant to Rule 903(b)(3)(ii)(B)), (iii) upon the request of a Holder if there shall have occurred and be continuing a Default or Event of Default with respect to the Notes, or (iv) the Trustee has received a written request by or on behalf of the Depositary to issue Definitive Notes. Upon the occurrence of any of the events described in clause (i), (ii), (iii) or (iv) above, Definitive Notes delivered in exchange for any Global Note or beneficial interests therein will be registered in the names, and issued in any approved denominations, requested by or on behalf of the Depositary (in accordance with its customary procedures). Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Sections 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note, except for Definitive Notes issued subsequent to any of the events described in clause (i), (ii), (iii) or (iv) above and pursuant to Section 2.06(c) hereof. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a); provided , however , beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) or (c) hereof.

(b) Transfer and Exchange of Beneficial Interests in the Global Notes . The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:

(i) Transfer of Beneficial Interests in the Same Global Note . Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Temporary Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person other than pursuant to Rule 144A. Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i).

(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes . In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(i) hereof, the transferor of such beneficial interest must deliver to the Registrar either (A)(1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in a Regulation S Temporary Global Note prior to (x) the expiration of the applicable Restricted Period therefor and (y) the receipt by the Registrar of any certification of beneficial ownership required pursuant to Rule 903(b)(3)(ii)(B). Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof.

(iii) Transfer of Beneficial Interests to Another Restricted Global Note . A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(ii) hereof and the Registrar receives the following:

(A) if the transferee will take delivery in the form of a beneficial interest in a 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; or

(B) if the transferee will take delivery in the form of a beneficial interest in a Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof.

(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note . A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(ii) hereof and:

(A) such Notes are sold or exchanged pursuant to an effective registration statement under the Securities Act; or

(B) the Registrar receives the following:

(1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or

(2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (B), if the Issuers so request or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Issuers to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

If any such transfer is effected pursuant to subparagraph (A) or (B) above at a time when an Unrestricted Global Note has not yet been issued, the Issuers shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (A) or (B) above.

Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.

(i) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes . If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon the occurrence of any of the events described in clause (i), (ii), (iii) or (iv) of Section 2.06(a) hereof and receipt by the Registrar of the following documentation:

(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder substantially in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;

(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;

(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (2) thereof;

(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(a) thereof;

(E) if such beneficial interest is being transferred to the Issuer, the Co-Issuer or any of their Subsidiaries, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(b) thereof; or

(F) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Issuers shall execute and, upon receipt of an Authentication Order, the Trustee shall authenticate and send to the Person designated in the instructions a Definitive Note in the applicable principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall send such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) (except transfers pursuant to clause (F) above) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.

(ii) Beneficial Interests in Regulation S Temporary Global Note to Definitive Notes . Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation S Temporary Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (A) the expiration of the applicable Restricted Period therefor and (B) the receipt by the Registrar of any certifications of beneficial ownership required pursuant to Rule 903(b)(3)(ii)(B) of the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.

(iii) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes . A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only upon the occurrence of any of the events described in clause (i), (ii), (iii) or (iv) of Section 2.06(a) hereof and if the Registrar receives the following:

(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or

(B) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subclause (iii), if the Issuers so request or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Issuers to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

(iv) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes . If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon the occurrence of any of the events described in clause (i), (ii), (iii) or (iv) of Section 2.06(a) hereof and satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Issuers shall execute and, upon receipt of an Authentication Order, the Trustee shall authenticate and send to the Person designated in the instructions a Definitive Note in the applicable principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from or through the Depositary and the Participant or Indirect Participant. The Trustee shall send such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall not bear the Private Placement Legend.

(d) Transfer and Exchange of Definitive Notes for Beneficial Interests .

(i) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes . If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:

(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;

(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;

(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (2) thereof;

(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(a) thereof;

(E) if such Restricted Definitive Note is being transferred to the Issuer, the Co-Issuer or any of their Subsidiaries, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(b) thereof; or

(F) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee shall cancel the Restricted Definitive Note and increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the applicable Restricted Global Note, in the case of clause (B) above, the applicable 144A Global Note, and in the case of clause (C) above, the applicable Regulation S Global Note.

(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes . A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if the Registrar receives the following:

(A) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or

(B) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subclause (ii), if the Issuers so request or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Issuers to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

Upon satisfaction of the applicable conditions of this Section 2.06(d)(ii), the Trustee shall cancel the Restricted Definitive Note and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.

(iii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes . A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.

If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to Section 2.06(d)(ii) or (iii) above at a time when an Unrestricted Global Note has not yet been issued, the Issuers shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.

(e) Transfer and Exchange of Definitive Notes for Definitive Notes . Upon request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer or exchange in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e):

(i) Restricted Definitive Notes to Restricted Definitive Notes . Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:

(A) if the transfer will be made to a QIB in accordance with Rule 144A, then the transferor must deliver a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;

(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; or

(C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications required by item (3) thereof, if applicable.

(ii) Restricted Definitive Notes to Unrestricted Definitive Notes . Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if the Registrar receives the following:

(A) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or

(B) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subclause (ii), if the Issuers so request, an Opinion of Counsel in form reasonably acceptable to the Issuers to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes . A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.

(f) [Reserved].

(g) Legends . The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture:

(i) Private Placement Legend .

(A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:

“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE

ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. [IN THE CASE OF REGULATION S NOTES: BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”).] THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL, OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS [IN THE CASE OF RULE 144A NOTES: ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY)] [IN THE CASE OF REGULATION S NOTES: 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE DATE ON WHICH THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) WAS FIRST OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN RULE 902 OF REGULATION S) IN RELIANCE ON REGULATION S], ONLY (A) TO AN ISSUER OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C), (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM.”

Except as permitted by subparagraph (B) below, each Global Note and Definitive Note issued in a transaction exempt from registration pursuant to Regulation S shall also bear the legend in substantially the following form:

“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES (AS DEFINED IN REGULATION S) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON (AS DEFINED IN REGULATION S), EXCEPT IN COMPLIANCE WITH RULE 144A (“RULE 144A”) UNDER THE SECURITIES ACT (SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A) TO A PERSON THE HOLDER HEREOF REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A) (A “QIB”) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QIB, IN EACH CASE TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE UPON RULE 144A, AND UPON DELIVERY OF THE CERTIFICATIONS REQUIRED BY THE INDENTURE REFERRED TO HEREIN.”

(B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraph (b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii) or (e)(iii) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend.

(ii) Global Note Legend . Each Global Note shall bear a legend in substantially the following form (with appropriate changes in the last sentence of the first paragraph if DTC is not the Depositary):

“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06(h) OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUERS. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS

PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”) TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

BY ACQUIRING THIS NOTE OR ANY INTEREST THEREIN, EACH HOLDER AND EACH TRANSFEREE IS DEEMED TO REPRESENT AND WARRANT THAT EITHER (A) NO PORTION OF THE ASSETS USED BY SUCH HOLDER OR TRANSFEREE TO ACQUIRE OR HOLD THE NOTES CONSTITUTES ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OF A PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER ARRANGEMENT THAT IS SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), OR PROVISIONS UNDER ANY OTHER FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAWS”), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE “PLAN ASSETS” OF ANY SUCH PLAN, ACCOUNT OR ARRANGEMENT OR (B) THE ACQUISITION AND HOLDING OF THE NOTES BY SUCH HOLDER OR TRANSFEREE WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS.”

(iii) Regulation S Temporary Global Note Legend . The Regulation S Temporary Global Note shall bear a legend in substantially the following form:

“THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).”

(h) Cancellation and/or Adjustment of Global Notes . At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or cancelled in whole and not in part, each such Global Note shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global

Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.

(i) General Provisions Relating to Transfers and Exchanges .

(i) To permit registrations of transfers and exchanges, the Issuers shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 hereof or at the Registrar’s request.

(ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Issuers may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.08, 4.10, 4.14 and 9.04 hereof).

(iii) Neither the Registrar nor the Issuers shall be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the delivery of a notice of redemption of the Notes to be redeemed under Section 3.03 hereof and ending at the close of business on the day such notice of redemption is sent, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part, (C) to register the transfer or exchange of a Note between a Record Date and the next succeeding Interest Payment Date or (D) to register the transfer or exchange of any Notes tendered (and not withdrawn) for repurchase in connection with a Change of Control Offer or an Asset Sale Offer.

(iv) Neither the Registrar nor the Issuers shall be required to register the transfer or exchange of any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; provided that new Notes will only be issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.

(v) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Issuers, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.

(vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Issuers shall deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of (and premium, if any) and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Issuers shall be affected by notice to the contrary.

(vii) Upon surrender for registration of transfer of any Note at the office or agency of the Issuers designated pursuant to Section 4.02 hereof, the Issuers shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more replacement Notes of any authorized denomination or denominations of a like aggregate principal amount.

(viii) At the option of the Holder, subject to Section 2.06(a) hereof, Notes may be exchanged for other Notes of any authorized denomination or denominations of a like aggregate principal amount upon surrender of the Notes to be exchanged at such office or agency. Whenever any Global Notes or Definitive Notes are so surrendered for exchange, the Issuers shall execute, and the Trustee shall authenticate and deliver, the replacement Global Notes and Definitive Notes which the Holder making the exchange is entitled to in accordance with the provisions of Section 2.02 hereof.

(ix) All certifications, certificates and Opinions of Counsel required to be submitted pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile.

(x) Neither the Trustee nor the Registrar shall have any duty to monitor any Issuer’s compliance with or have any responsibility with respect to any Issuer’s compliance with any federal or state securities laws in connection with registrations of transfers and exchanges of the Notes. The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Notes (including any transfers between or among the Depositary’s Participants or beneficial owners of interests in any Global Note) other than to require delivery of such certificates and other documentation, as is expressly required by, and to do so if and when expressly required by, the terms of this Indenture or the Notes and to examine the same to determine substantial compliance as to form with the express requirements hereof.

(xi) The Issuer, the Trustee, and the Registrar reserve the right to require the delivery by any Holder or purchaser of a Note of such legal opinions, certifications or other evidence as may reasonably be required in order to determine that the proposed transfer of any Restricted Global Note or Restricted Definitive Note is being made in compliance with the Securities Act or the Exchange Act, or rules or regulations adopted by the SEC from time to time thereunder, and applicable state securities laws.

Section 2.07. Replacement Notes . If either (x) any mutilated Note is surrendered to the Trustee, the Registrar or the Issuers, or (y) the Issuers and the Trustee receive evidence to their satisfaction of the ownership and destruction, loss or theft of any Note, then the Issuers shall issue and the Trustee, upon receipt of an Authentication Order and satisfaction of any other requirements of the Trustee, shall authenticate a replacement Note. If required by the Trustee or the Issuers, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of both (i) the Trustee to protect the Trustee and (ii) the Issuers to protect the Issuers, the Trustee, any Agent and any Authentication Agent from any loss that any of them may suffer if a Note is replaced. The Issuers and the Trustee may charge the Holder for their expenses in replacing a Note.

Every replacement Note is a contractual obligation of the Issuers and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.

Section 2.08. Outstanding Notes . The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Issuer, the Co-Issuer or a Guarantor or an Affiliate of the Issuer, the Co-Issuer or a Guarantor holds the Note.

If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser (as defined in Section 8-303 of the Uniform Commercial Code).

Notes in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture shall not be deemed to be outstanding for purposes hereof.

If the principal amount of any Note is considered paid under Section 4.01 hereof, such Note shall cease to be outstanding and interest thereon shall cease to accrue.

If a Paying Agent (other than the Issuer, the Co-Issuer or a Guarantor or an Affiliate of the Issuer, the Co-Issuer or a Guarantor) holds, on a Redemption Date or maturity date, money sufficient to pay Notes (or portions thereof) payable on that date, then on and after that date such Notes (or portions thereof) shall be deemed to be no longer outstanding (including for accounting purposes) and shall cease to accrue interest on and after such date.

Section 2.09. Treasury Notes . In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuer, the Co-Issuer or by any Affiliate of the Issuer or the Co-Issuer shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Notes so owned which have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right to deliver any such direction, waiver or consent with respect to such pledged Notes and that the pledgee is not the Issuer, the Co-Issuer or a Guarantor or any Affiliate of the Issuer, the Co-Issuer or a Guarantor.

Section 2.10. Temporary Notes . Until certificates representing Notes are ready for delivery, the Issuers may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Issuers consider appropriate for temporary Notes. Without unreasonable delay, the Issuers shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes.

Holders and beneficial holders, as the case may be, of temporary Notes shall be entitled to all of the benefits accorded to Holders, or beneficial holders, respectively, of Notes under this Indenture.

Section 2.11. Cancellation . The Issuers at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee or, at the direction of the Trustee, the Registrar or the Paying Agent and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall dispose of such cancelled Notes in its customary manner (subject to the record retention requirements of the Exchange Act). Certification of the cancellation of all cancelled Notes shall be delivered to the Issuers upon their written request therefor. The Issuers may not issue new Notes to replace Notes that they have paid or that have been delivered to the Trustee for cancellation.

Section 2.12. Defaulted Interest . If the Issuers default in a payment of interest on the Notes, they shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Issuers shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment, and at the same time the Issuers shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such defaulted interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such defaulted interest as provided in this Section 2.12. The Issuers shall fix or cause to be fixed any such special record date and payment date; provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. The Issuers shall promptly notify the Trustee of any such special record date. At least 15 days before any such special record date, the Issuers (or, upon the written request of the Issuer, the Trustee in the name and at the expense of the Issuers) shall mail or cause to be mailed, first-class postage prepaid, or otherwise deliver in accordance with the Applicable Procedures, to each Holder, with a copy to the Trustee, a notice at his or her address as it appears in the Note Register that states the special record date, the related payment date and the amount of such interest to be paid.

Subject to the foregoing provisions of this Section 2.12 and for greater certainty, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.

Section 2.13. CUSIP Numbers; ISINs . The Issuers in issuing the Notes may use CUSIP numbers and ISINs (in each case, if then generally in use) and, if so, the Trustee shall use CUSIP numbers and ISINs in notices of redemption or exchange as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such

numbers either as printed on the Notes or as contained in any notice of redemption or exchange and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Issuers will as promptly as practicable notify the Trustee in writing of any change in the CUSIP numbers or ISINs.

ARTICLE 3

REDEMPTION

Section 3.01. Notices to Trustee . If the Issuers elect to redeem Notes pursuant to Section 3.07 hereof, the Issuer shall furnish to the Trustee, at least two Business Days (unless waived or a shorter notice shall be agreed to by the Trustee) before notice of redemption is required to be delivered or mailed to Holders pursuant to Section 3.03 hereof, an Officer’s Certificate setting forth (a) the paragraph or subparagraph of such Note and/or Section of this Indenture pursuant to which the redemption shall occur, (b) the date of redemption, which shall be selected by the Issuers in their discretion, subject to any limitations set forth herein (as such date may be delayed pursuant to Section 3.07(f) hereof, the “ Redemption Date ”), (c) the principal amount of the Notes to be redeemed and (d) the redemption price.

Section 3.02. Selection of Notes to Be Redeemed . If less than all of the Notes are to be redeemed at any time, the Trustee shall select the Notes to be redeemed (a) if the Notes are listed on an exchange (if such listing is known to the Trustee), in compliance with the requirements of such exchange or (b) if the Notes are not listed on an exchange (or it is not known to the Trustee that the Notes are listed on an exchange), on a pro rata basis to the extent practicable, or, if a pro rata basis is not practicable for any reason by lot or by such other method as the Trustee shall deem fair and appropriate and otherwise in accordance with the Applicable Procedures to the extent applicable. In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 10 nor more than 60 days prior to the Redemption Date by the Trustee from the outstanding Notes not previously called for redemption.

The Trustee shall promptly notify the Issuers in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected shall be in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof and no Notes in denominations of $2,000 or less can be redeemed in part, except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder shall be redeemed, even if not in a principal amount of at least $2,000. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.

Section 3.03. Notice of Redemption . Subject to Section 3.07(e) and Section 3.08 hereof, the Issuers shall send electronically, mail or cause to be mailed by first-class mail, postage prepaid, notices of redemption at least 10 days (except as set forth in Section 3.07(f) or in connection with a Special Mandatory Redemption described in Section 3.10) but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at such Holder’s registered address stated in the Note Register or otherwise in accordance with the Applicable Procedures, except that redemption notices may be delivered or mailed more than 60 days prior to a Redemption Date if the notice is issued in connection with Article 8 or Article 11 hereof or under the circumstances described in Section 3.07(f) hereof. Notices of redemption may, at the Issuers’ discretion, be conditional.

The notice shall identify the Notes to be redeemed and shall state:

(a) the Redemption Date;

(b) the redemption price;

(c) if any Definitive Note is to be redeemed in part only, the portion of the principal amount of that Note that is to be redeemed and that after the Redemption Date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion of the original Note representing the same indebtedness to the extent not redeemed will be issued in the name of the Holder upon cancellation of the original Note; provided that new Notes will only be issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof;

(d) the name and address of the Paying Agent;

(e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;

(f) that, unless the Issuers default in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date;

(g) the paragraph or subparagraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed;

(h) the CUSIP number and ISIN, if any, printed on the Notes being redeemed and that no representation is made as to the correctness or accuracy of any such CUSIP number or ISIN that is listed in such notice or printed on the Notes; and

(i) any condition to such redemption.

In addition, any notice of redemption may include additional information, including any information pursuant to Section 3.07(f) hereof, and any redemption may be subject to delay as provided in Section 3.07(f) hereof.

At the Issuers’ request, the Trustee shall give the notice of redemption in the Issuers’ name (or, if permitted to be performed by another Person, the name of such Person) and at their expense; provided that the Issuers shall have delivered to the Trustee, at least two Business Days before notice of redemption is required to be delivered electronically, mailed or caused to be mailed to Holders pursuant to this Section 3.03 (unless a shorter notice shall be agreed to by the Trustee), an Officer’s Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.

If the Notes are listed on an exchange, for so long as the Notes are so listed and the rules of such exchange so require, the Issuers shall notify the exchange of any such redemption and, if applicable, of the principal amount of any Notes outstanding following any partial redemption of Notes.

Section 3.04. Effect of Notice of Redemption . A notice of redemption, if delivered electronically, mailed or caused to be mailed in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice. In any case, failure to deliver such notice or any defect in the notice to the Holder of any Note designated for redemption in whole or in part shall not affect the validity of the proceedings for the redemption of any other Note. Notes or portions of Notes called for redemption shall become due and payable on the Redemption Date, subject to satisfaction of any conditions specified in the notice. Subject to Section 3.05 hereof, on and after the Redemption Date, unless the Issuer defaults in the payment of the redemption price, interest shall cease to accrue on the Notes called for redemption.

Section 3.05. Deposit of Redemption Price .

(a) Prior to noon (New York City time), on the Redemption Date, the Issuers shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued and unpaid interest on all Notes to be redeemed on that Redemption Date. The Trustee or the Paying Agent shall promptly return to the Issuer any money deposited with the Trustee or the Paying Agent by the Issuers in excess of the amounts necessary to pay the redemption price of, and accrued and unpaid interest on, all Notes to be redeemed.

(b) If the Issuers comply with the provisions of the preceding paragraph (a), on and after the Redemption Date, interest shall cease to accrue on the Notes called for redemption. If a Note is redeemed on or after an applicable Record Date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest to the Redemption Date shall be paid to the Person in whose name such Note was registered at the close of business on such Record Date in accordance with Applicable Procedures. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Issuers to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the Redemption Date until such principal is paid, and to the extent lawful on any interest accrued to the Redemption Date not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof.

Section 3.06. Notes Redeemed in Part . Upon surrender of a Definitive Note that is redeemed in part, upon request, the Issuers shall issue and the Trustee shall authenticate for the Holder, at the expense of the Issuers, a new Note equal in principal amount to the unredeemed portion of the Note surrendered representing the same indebtedness to the extent not redeemed; provided that each new Note will be in a minimum principal amount of $2,000 and any integral multiple of $1,000 in excess thereof. It is understood that, notwithstanding anything to the contrary in this Indenture, only an Authentication Order and an Officer’s Certificate and not an Opinion of Counsel are required for the Trustee to authenticate such new Note.

Section 3.07. Optional Redemption .

(a) Except as set forth in clauses (b), (d) and (e) of this Section 3.07, the Notes will not be redeemable at the Issuers’ option prior to March 1, 2020.

(b) At any time prior to March 1, 2020, the Issuers may, at their option and on one or more occasions, redeem all or a part of the Notes, upon notice in accordance with Section 3.03 hereof, at a redemption price equal to the sum of (A) 100.0% of the principal amount of the Notes redeemed, plus (B) the Applicable Premium as of the Redemption Date, plus (C) accrued and unpaid interest, if any, to, but excluding, the Redemption Date, subject to the right of Holders of record on the relevant Record Date to receive interest due on the Notes on the relevant Interest Payment Date falling on or prior to the Redemption Date.

(c) On and after March 1, 2020, the Issuers may, at their option and on one or more occasions, redeem the Notes, in whole or in part, upon notice in accordance with Section 3.03 hereof, at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, thereon to, but excluding, the applicable Redemption Date, subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date falling on or prior to the Redemption Date, if redeemed during the twelvemonth period beginning on March 1 of each of the years indicated below:


Year	Notes Redemption Percentage
2020		102.875	%
2021		101.438	%
2022 and thereafter		100.000	%

(d) In addition, at any time prior to March 1, 2020, the Issuers may, at their option, upon notice in accordance with Section 3.03 hereof, on one or more occasions, redeem an aggregate principal amount of the Notes (including, for the avoidance of doubt, any Additional Notes) issued under this Indenture not to exceed an amount equal to the aggregate net cash proceeds from one or more Equity Offerings to the extent such net cash proceeds are received by or contributed to the Issuer at a redemption price (as a percentage of principal amount of the Notes to be redeemed) of 105.75%, plus accrued and unpaid interest, if any, to, but excluding, the Redemption Date, subject to the right of Holders of record on the relevant Record Date to receive interest due on the Notes on the relevant Interest Payment Date falling on or prior to the Redemption Date; provided, that (i) the amount redeemed shall not exceed 40% of the aggregate principal amount of the Notes issued under this Indenture; (ii) at least 50% of the aggregate principal amount of the Notes originally issued under this Indenture on the Issue Date remains outstanding immediately after the occurrence of each such redemption; and (iii) each such redemption occurs within 180 days of the date of closing of the applicable Equity Offering or contribution.

(e) Notwithstanding the foregoing, in connection with any Change of Control Offer, Asset Sale Offer or other tender offer for the Notes, if Holders of not less than 90.0% in aggregate principal amount of the then outstanding Notes validly tender and do not validly withdraw such Notes in such Change of Control Offer, Asset Sale Offer or other tender offer and the Issuers, or any third party making such Change of Control Offer, Asset Sale Offer or other tender offer in lieu of the Issuers, purchases all of the Notes validly tendered and not validly withdrawn by such Holders, the Issuers or such third party will have the right upon not less than 10 nor more than 60 days’ prior notice, given not more than 30 days following such purchase date, to redeem all Notes that remain outstanding following such purchase at a price equal to the price offered to each other Holder in such Change of Control Offer, Asset Sale Offer or other tender offer plus, to the extent not included in the Change of Control Offer, Asset Sale Offer or other tender offer payment, accrued and unpaid interest, if any, thereon, to, but excluding, the Redemption Date or purchase date, subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date falling on or prior to the Redemption Date or purchase date.

(f) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof. Notice of any redemption, whether in connection with an Equity Offering, Change of Control, Asset Sale, other transaction or event or otherwise, may, at the Issuers’ discretion, be given prior to the completion or occurrence thereof, and any such redemption or notice may, at the Issuers’ discretion, be subject to one or more conditions precedent, including, but not limited to, completion or occurrence of the related Equity Offering, Change of Control, Asset Sale or other transaction or event, as the case may be. In addition, if such redemption is subject to satisfaction of one or more conditions precedent, such notice shall state that, in the Issuers’ discretion, the Redemption Date may be delayed until such time (which may be more than 60 days after the date the notice of redemption was mailed or delivered, including by electronic transmission) as any or all such conditions shall be satisfied (or waived by the Issuers in their sole discretion), or such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied (or waived by the Issuers in their sole discretion) by the Redemption Date, or by the Redemption Date so delayed, or that such notice may be rescinded at any time in the Issuer’s discretion if the Issuers determine that any or all of such conditions will not be satisfied. For the avoidance of doubt, if any Redemption Date shall be delayed pursuant to this Section 3.07 and the terms of the applicable notice of redemption, such Redemption Date as so delayed may occur at any time after the original Redemption Date set forth in the applicable notice of redemption and after the satisfaction of any applicable conditions precedent, including, without limitation, on a date that is less than 10 days after the original Redemption Date and/or more than 60 days after the date of the applicable notice of redemption. In addition, the Issuers may provide in such notice that payment of the redemption price and performance of the Issuers’ obligations with respect to such redemption may be performed by another Person.

(g) The Issuers, the Investors and their respective Affiliates may, at their discretion, at any time and from time to time acquire Notes by means other than a redemption, whether by tender offer, in the open market, negotiated transactions, or otherwise.

(h) The Trustee shall have no duty to calculate or verify the calculation of the Applicable Premium.

Section 3.08. Offers to Repurchase by Application of Excess Proceeds .

(a) In the event that, pursuant to Section 4.10 hereof, the Issuers shall be required to commence an Asset Sale Offer, the Issuers shall follow the procedures specified below.

(b) The Asset Sale Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the “ Offer Period ”). No later than five Business Days after the termination of the Offer Period (the “ Purchase Date ”), the Issuers shall apply all Excess Proceeds (the “ Offer Amount ”) to the purchase of Notes and, if required, Pari Passu Indebtedness (on a pro rata basis, if applicable, with adjustments as necessary so that no Notes or Pari Passu Indebtedness will be repurchased in part in an unauthorized denomination), or, if less than the Offer Amount has been tendered, all Notes and Pari Passu Indebtedness tendered in response to the Asset Sale Offer. Payment for any Notes so purchased shall be made in the same manner as interest payments are made.

(c) If the Purchase Date is on or after a Record Date and on or before the related Interest Payment Date, any accrued and unpaid interest, if any, up to but excluding the Purchase Date shall be paid to the Person in whose name a Note is registered at the close of business on such Record Date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Asset Sale Offer.

(d) Upon the commencement of an Asset Sale Offer, the Issuers shall send, electronically or by first-class mail, a notice to each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders and holders of such Pari Passu Indebtedness. The notice, which shall govern the terms of the Asset Sale Offer, shall state:

(i) that the Asset Sale Offer is being made pursuant to this Section 3.08 and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain open;

(ii) the Offer Amount, the purchase price and the Purchase Date;

(iii) that any Note not tendered or accepted for payment shall continue to accrue interest;

(iv) that, unless the Issuers default in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest on and after the Purchase Date;

(v) that any Holder electing to have less than all of the aggregate principal amount of its Notes purchased pursuant to an Asset Sale Offer may elect to have Notes purchased in an amount not less than $2,000 and in integral multiples of $1,000 in excess thereof;

(vi) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” attached to the Note completed, or transfer such Note by book-entry transfer, to the Issuers, the Depositary, if appointed by the Issuers, or a Paying Agent at the address specified in the notice at least two Business Days before the Purchase Date;

(vii) that Holders shall be entitled to withdraw their election if the Issuers, the Depositary or the Paying Agent, as the case may be, receives, not later than the close of business on the tenth Business Day prior to the expiration date of the Offer Period, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased;

(viii) that, if the aggregate principal amount of Notes or the Pari Passu Indebtedness, as the case may be, surrendered by the holders thereof exceeds the Offer Amount, the Issuers shall purchase such Notes and such Pari Passu Indebtedness, as the case may be, on a pro rata basis based on the accreted value or principal amount of the Notes or such Pari Passu Indebtedness, as the case may be, tendered (with such adjustments as may be deemed appropriate by the Issuers so that only Notes in an amount not less than $2,000 or integral multiples of $1,000 in excess thereof are purchased); and

(ix) that Holders whose certificated Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer) representing the same indebtedness to the extent not repurchased; provided that new Notes will only be issued in denominations of $2,000 and integral multiples of $1,000 in excess thereof.

(e) On or before the Purchase Date, the Issuers shall, to the extent lawful, (1) accept for payment, on a pro rata basis as described in clause (d)(viii) of this Section 3.08, the Offer Amount of Notes or portions thereof validly tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes tendered and (2) deliver or cause to be delivered to the Trustee the Notes properly accepted, together with an Officer’s Certificate stating the aggregate principal amount of Notes or portions thereof so tendered.

(f) The Issuers, the Depositary or the Paying Agent, as the case may be, shall promptly mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes properly tendered by such Holder and accepted by the Issuers for purchase, and the Issuers shall promptly issue a new Note, and the Trustee, upon receipt of an Authentication Order, shall authenticate and mail or deliver (or cause to be transferred by book-entry) such new Note to such Holder (it being understood that, notwithstanding anything in this Indenture to the contrary, only an Officer’s Certificate and not an Opinion of Counsel is required for the Trustee to authenticate and mail or deliver such new Note) in a principal amount equal to any unpurchased portion of the Note surrendered representing the same indebtedness to the extent not repurchased; provided , that each such new Note shall be in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof. Any Note not so accepted shall be promptly mailed or delivered by the Issuers to the Holder thereof. The Issuers shall publicly announce the results of the Asset Sale Offer on or as soon as practicable after the Purchase Date.

(g) Prior to noon (New York City time) on the Purchase Date, the Issuers shall deposit with the Trustee or with the Paying Agent money sufficient to pay the purchase price of and accrued and unpaid interest on all Notes to be purchased on that Purchase Date. The Trustee or the Paying Agent shall promptly return to the Issuers any money deposited with the Trustee or the Paying Agent by the Issuers in excess of the amounts necessary to pay the purchase price of, and accrued and unpaid interest on, all Notes to be redeemed.

Other than as specifically provided in this Section 3.08 or Section 4.10 hereof, any purchase pursuant to this Section 3.08 shall be made pursuant to the applicable provisions of Sections 3.01 through 3.6 and Section 3.07(e) and (f) hereof, and references therein to “redeem,” “redemption,” “Redemption Date” and similar words shall be deemed to refer to “purchase,” “repurchase,” “Purchase Date” and similar words, as applicable.

Section 3.09. Mandatory Redemption . Other than in accordance with Section 3.10, the Issuers shall not be required to make any mandatory redemption or sinking fund payment with respect to the Notes.

Section 3.10. Special Mandatory Redemption .

(a) In the event that (a) the Escrow Agent shall not have received the Officer’s Certificate described in Section 4.18(c) on or prior to July 6, 2017 (the “ Escrow Termination Date ”) or (b) the Issuer shall notify the Escrow Agent in writing that the Issuer has determined that the Escrow Release Date will not occur on or prior to the Escrow Termination Date (each such event described in clauses (a) and (b) above being a “ Special Mandatory Redemption Event ”), the Issuer will redeem all of the Notes (the “ Special Mandatory Redemption ”) at a price (the “ Special Mandatory Redemption Price ”) equal to 100.0% of the original issue price of the Notes plus accrued and unpaid interest from the Issue Date to, but excluding, the date that is three (3) Business Days after the Special Mandatory Redemption Event (such date, the “ Special Mandatory Redemption Date ”), which Special Mandatory Redemption Date shall be no later than July 11, 2017.

(b) Notice of the occurrence of a Special Mandatory Redemption Event will be given by the Issuers at least two Business Days prior to the Special Mandatory Redemption Date, to the Trustee, the Escrow Agent and DTC. On the Special Mandatory Redemption Date, funds will be released from the Escrow Account to permit the Issuers to consummate the Special Mandatory Redemption.

(c) If at any time the Escrow Account contains funds having an aggregate value, when taken together with the amount of interest on the Notes guaranteed by the Escrow Guarantees, in excess of the then applicable Special Mandatory Redemption Price, such excess cash may be released to the Issuer, at the written direction of the Issuer.

(d) By its acceptance of the Notes, each Holder shall be deemed to authorize and direct the Trustee to enter into and perform its obligations under, if any, the Escrow Agreement.

ARTICLE 4

COVENANTS

Section 4.01. Payment of Notes . The Issuers, jointly and severally shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes and this Indenture. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Issuer, the Co-Issuer or a Guarantor or an Affiliate of the Issuer, the Co-Issuer or a Guarantor, holds as of noon (New York City time) on the due date money deposited by the Issuers in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due.

The Paying Agent shall not be obliged to make any payment until such time as it has received sufficient funds in order to make such payment.

The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to the then applicable interest rate on the Notes to the extent lawful; the Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful.

Section 4.02. Maintenance of Office or Agency . The Issuers shall maintain the offices or agencies (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or Transfer Agent) required under Section 2.03 hereof where Notes may be surrendered for registration of transfer or for exchange or presented for payment and where notices and demands to or upon the Issuers in respect of the Notes and this Indenture may be served. The Issuers shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuers shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office.

The Issuers may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Issuers of their obligation to maintain such offices or agencies as required by Section 2.03 hereof for such purposes. The Issuers shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

The Issuers hereby designate the Corporate Trust Office as one such office or agency of the Issuers in accordance with Section 2.03 hereof.

Section 4.03. Reports and Other Information .

(a) So long as any Notes are outstanding, the Issuer will furnish to the Trustee and the Holders the following reports:

(1) (x) all annual and quarterly financial statements that would be required to be contained in a filing with the SEC on Forms 10-K and 10-Q of the Issuer, if the Issuer were required to file such forms, plus a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and (y) with respect to the annual financial statements only, a report on the annual financial statements by the Issuer’s independent registered public accounting firm; and

(2) all information that would be required to be contained in filings with the SEC on Form 8-K under Items 1.01, 1.02, 1.03, 2.01, 2.06, 4.01, 4.02, 5.01 and 5.02(b) and (c) (other than with respect to information otherwise required or contemplated by Items 10, 402 and 601 of Regulation S-K) as in effect on the Issue Date if the Issuer were required to file such reports;

provided , however , that (A) no such report will be required to include as an exhibit, or to include a summary of the terms of, any employment or compensatory arrangement agreement, plan or understanding between the Issuer (or any of its Subsidiaries or any Parent Company) and any director, manager or executive officer of the Issuer (or any of its Subsidiaries or any Parent Company), (B) the Issuer shall not be required to make available any information regarding the occurrence of any of the events set forth in clause (2) above if the Issuer determines in its good faith judgment that the event that would otherwise be required to be disclosed is not material to the Holders or the business, assets, operations, or financial position of the Issuer and its Restricted Subsidiaries taken as a whole; (C) no such report will be required to comply with Regulation G under the Exchange Act or Item 10(e) of Regulation S-K with respect to any “non-GAAP” financial information contained therein; (D) no such report will be required to comply with Regulation S-X, including, without limitation, Rule 3-10 thereof; (E) no such report will be required to provide any information that is not otherwise similar to information currently included in the Offering Circular; (F) in no event will such reports be required to include as an exhibit copies of any agreements, financial statements or other items that would be required to be filed as exhibits under the SEC rules, except for agreements evidencing material Indebtedness (excluding any schedules thereto); (G) trade secrets and other confidential information that is competitively sensitive in the good faith and reasonable determination of the Issuer may be excluded from any disclosures; (H) no such report will be required to comply with Section 302, Section 404 or Section 906 of the Sarbanes-Oxley Act of 2002, or related Items 307, 308 and 308T of Regulation S-K; and (I) such information will not be required to contain any “segment reporting.”

All such reports shall be furnished within 15 days after the following: (1) in the case of annual reports, 90 days after the end of the fiscal year to which they relate, except in the case of annual reports for the fiscal years ending March 31, 2017 and March 31, 2018, 135 days after the end of such fiscal year; (2) in the case of quarterly reports, 60 days after the end of the fiscal quarter to which they relate, except in the case of quarterly reports for the first six fiscal quarters ending after the Completion Date, 90 days after the end of such fiscal quarters; and (3) in the case of current reports, the date on which such current report would have been required to be reported pursuant to the SEC’s rules and regulations for reporting companies under the Exchange Act.

Notwithstanding the foregoing, with respect to the fiscal years ended March 31, 2017 and March 31, 2018: (a) if the Completion Date occurs after the first day of such fiscal year, the annual financial statements required to be furnished shall be limited to: (i) the audited financial statements of the Issuer for the period commencing on the Completion Date and ending on the last day of such fiscal year; (ii) the audited financial statements of Change Healthcare Holdings, Inc. for the periods commencing on (x) January 1, 2016 and ending on December 31, 2016, (y) January 1, 2017 and ending on the earlier of March 31, 2017 and the date immediately preceding the Completion Date and (z) if the Completion Date occurs after April 1, 2017, April 1, 2017 and ending on the date immediately preceding the Completion Date; and (iii) the audited financial statements of the Core MTS Business for the periods commencing on (x) April 1, 2016 and ending on the earlier of March 31, 2017 and the date immediately preceding the Completion Date and (y) if the Completion Date occurs after April 1, 2017, April 1, 2017 and ending on the date immediately preceding the Completion Date; provided , that notwithstanding the foregoing, at the sole election of the Issuer, the Issuer may satisfy its obligations with respect to the audited financial statements relating to the Core MTS Business for any periods specified in this clause (a)(iii) by furnishing the audited financial statements relating to MTI if such audited financial statements relating to MTI are accompanied by an unaudited balance sheet and statement of operations of the Core MTS Business for such periods on a stand-alone basis and a schedule or narrative describing at a reasonable level of detail significant differences between the financial information relating to MTI on the one hand, and the financial information relating to the Core MTS Business, on the other hand; (b) quarterly financial statements shall be furnished commencing with the first full fiscal quarter completed after the Completion Date (and not for any prior fiscal quarters); provided , that if the Completion Date occurs after April 1, 2017, such first full fiscal quarter financial statements shall also include financial information for the period beginning on the Completion Date and ending on the last day of such fiscal quarter, (c) a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” shall be furnished commencing with the fiscal quarter ending September 30, 2017 (and not for any prior fiscal periods or financial statements); and (d) comparative presentation of financial statements or financial data shall be furnished commencing with the financial statements furnished or “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the fiscal quarter ending September 30, 2018 (and not for any prior fiscal periods or financial statements).

The Issuer will be deemed to have furnished the reports referred to in subclauses (1) and (2) above if the Issuer or any Parent Company has filed reports containing such information with the SEC.

If the Issuer or any Parent Company does not file reports containing such information with the SEC, the Issuer will make available such information and such reports to the Trustee under this Indenture, to any Holder and, upon request, to any beneficial owner of the Notes, in each case by posting such information on its website, on Intralinks or any comparable password-protected online data system which will require a confidentiality acknowledgment, and will make such information readily available to any Holder, any bona fide prospective investor in the Notes (which prospective investors will be limited to QIBs that certify their status as such to the reasonable satisfaction of the Issuer), any bona fide securities analyst (to the extent providing analysis of investment in the Notes to investors and prospective investors therein) or any bona fide market maker in the Notes who agrees to treat such information as confidential or accesses such information on Intralinks or any comparable password-protected online data system which will require a confidentiality acknowledgment; provided that the Issuer shall post such information thereon and make readily available any password or other login information to any such prospective holder, securities analyst or market maker.

(b) In addition, to the extent not satisfied by the foregoing, the Issuer shall furnish to Holders, securities analysts and prospective investors upon request the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act, so long as the Notes are not freely transferable under the Securities Act.

(c) If the Issuer has designated any of its Subsidiaries as an Unrestricted Subsidiary and if any such Unrestricted Subsidiary or group of Unrestricted Subsidiaries, if taken together as one Subsidiary, would constitute a Significant Subsidiary of the Issuer, then the annual and quarterly information required by clause (1) of Section 4.03(a) hereof shall include a presentation of selected financial metrics (in the Issuer’s sole discretion) of such Unrestricted Subsidiaries as a group in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” or other comparable section.

(d) Notwithstanding the foregoing, the Issuer may satisfy its obligations under this Section 4.03 with respect to financial information relating to the Issuer by furnishing financial information relating to any Parent Company; provided that if and so long as such Parent Company has Independent Assets or Operations, the same is accompanied by selected financial metrics (in the Issuer’s sole discretion) that show the differences between the information relating to such Parent Company on the one hand, and the information relating to the Issuer and the Restricted Subsidiaries on a stand-alone basis, on the other hand.

(e) Notwithstanding anything to the contrary set forth above, if the Issuer (or any Parent Company) has made available through EDGAR or SEC filings the reports and information described in the preceding paragraphs with respect to Issuer, the Issuer shall be deemed to be in compliance with the provisions of this Section 4.03.

(f) Notwithstanding anything herein to the contrary, the Issuer will not be deemed to have failed to comply with any of its obligations hereunder for purposes of clause (iii) of Section 6.01(a) hereof until 120 days after the receipt of the written notice delivered thereunder.

To the extent any information is not provided within the time periods specified in this Section 4.3 and such information is subsequently provided, the Issuer will be deemed to have satisfied its obligations with respect thereto at such time and any Default with respect thereto shall be deemed to have been cured and not to have existed for the purposes of this Indenture.

Notwithstanding the foregoing, the financial statements, information, auditors’ reports and other documents and information required to be provided pursuant to clause (a) of this Section 4.03 may be, rather those of the Issuer, those of any predecessor or successor of the Issuer.

Notwithstanding the foregoing, if at any time the Issuer or any Parent Company has made a good faith determination to file a registration statement with the SEC with respect to an initial public offering of such entity’s Capital Stock, the Issuer will not be required to disclose any information or take any actions that, in the good faith view of the Issuer, would violate applicable securities laws or the SEC’s “gun jumping” rules.

Section 4.04. Compliance Certificate .

(a) The Issuer shall deliver to the Trustee, on or before the deadline for delivery of the annual financial statements required to be delivered pursuant to Section 4.03(a)(1)(x) hereof, a certificate from its principal executive officer, principal financial officer or principal accounting officer stating that a review of the activities of the Issuer and its Restricted Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officer with a view to determining whether the Issuer and its Restricted Subsidiaries have kept, observed, performed and fulfilled their respective obligations under this Indenture, and further stating, as to such Officer signing such certificate, that to the best of his or her knowledge, on behalf of the Issuer, the Issuer and its Restricted Subsidiaries have kept, observed, performed and fulfilled in all material respects each and every condition and covenant contained in this Indenture during such fiscal year and no Default has occurred and is continuing with respect to any of the terms, provisions, covenants and conditions of this Indenture (or, if a Default shall have occurred and is continuing, describing all such Defaults of which he or she may have knowledge and what action the Issuer is taking or proposes to take with respect thereto).

(b) The Issuer shall, within 30 days of becoming aware of any Default, deliver to the Trustee by registered or certified mail or by facsimile transmission a statement specifying such Default.

Section 4.05. Taxes . The Issuer shall pay or discharge, and shall cause each of its Restricted Subsidiaries to pay or discharge, prior to delinquency, all material taxes, lawful assessments, and governmental levies except such as are contested in good faith and by appropriate actions or where the failure to effect such payment or discharge is not adverse in any material respect to the Holders.

Section 4.06. Stay, Extension and Usury Laws . The Issuer, the Co-Issuer and each of the Guarantors covenant (to the extent that they may lawfully do so) that they shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture and the Notes; and the Issuer, the Co-Issuer and each of the Guarantors (to the extent that they may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and (to the extent that they may lawfully do so) covenant that they shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.

Section 4.07. Limitation on Restricted Payments .

(a) The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(i) declare or pay any dividend or make any payment or distribution on account of the Issuer’s, or any of its Restricted Subsidiaries’ Equity Interests (in each case, solely to a holder of Equity Interests in such Person’s capacity as a holder of such Equity Interests), including any dividend, payment or distribution payable in connection with any merger, amalgamation or consolidation other than:

(A) dividends, payments or distributions payable solely in Equity Interests (other than Disqualified Stock) of the Issuer or a Parent Company or in options, warrants or other rights to purchase such Equity Interests (other than Disqualified Stock); or

(B) dividends, payments and distributions by a Restricted Subsidiary so long as, in the case of any dividend, payment or distribution payable on or in respect of any class or series of securities issued by a Restricted Subsidiary other than a Wholly-Owned Subsidiary, the Issuer or a Restricted Subsidiary receives at least its pro rata share of such dividend, payment or distribution in accordance with its Equity Interests in such class or series of securities;

(ii) purchase, redeem, defease or otherwise acquire or retire for value any Equity Interests of the Issuer or any Parent Company, including any purchase, redemption, defeasance, acquisition or retirement in connection with any merger, amalgamation or consolidation, in each case held by Persons other than the Issuer or a Restricted Subsidiary;

(iii) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value, in each case, prior to any scheduled repayment, sinking fund payment or final maturity, any Subordinated Indebtedness, other than:

(A) Indebtedness permitted under clauses (vii), (viii) and (ix) of Section 4.09(b) hereof; or

(B) the payment, redemption, defeasance, purchase, repurchase, retirement for value or other acquisition of Subordinated Indebtedness purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such payment, redemption, defeasance, purchase, repurchase, retirement or acquisition; or

(iv) make any Restricted Investment;

(all such payments and other actions set forth in clauses (i) through (iv) above (other than any exceptions thereto) being collectively referred to as “ Restricted Payments ”; it being understood that Excluded Contract Amounts (other than Specified TMA Payments) shall not constitute Restricted Payments), unless, at the time of such Restricted Payment:

(A) (1) except in the case of a Restricted Investment, no Default shall have occurred and be continuing or would occur as a consequence thereof, and (2) in the case of a Restricted Investment, no Event of Default described under clause (i), (ii), (vi) or (vii) of Section 6.01(a) hereof shall have occurred and be continuing or would occur as a consequence thereof;

(B) except in the case of a Restricted Investment, immediately after giving effect to such transaction on a pro forma basis, the Issuer could incur $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof (the “ Fixed Charge Coverage Test ”); and

(C) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Issuer and its Restricted Subsidiaries after the Completion Date (including Restricted Payments permitted by clauses (i) or (vi)(C) of Section 4.07(b) hereof (to the extent not deducted in calculating Consolidated Net Income), but excluding all other Restricted Payments permitted by Section 4.07(b) hereof), is less than the sum of (without duplication):

(1) 50.0% of the Consolidated Net Income of the Issuer for the period (taken as one accounting period and including the predecessors of the Issuer) beginning April 1, 2017 to the end of the Issuer’s most recently ended fiscal quarter for which internal financial statements are available (as determined in good faith by the Issuer) preceding such Restricted Payment, or, in the case such Consolidated Net Income for such period is a deficit, minus 100.0% of such deficit; plus

(2) 100.0% of the aggregate net cash proceeds and the fair market value of marketable securities or other property received by the Issuer and its Restricted Subsidiaries since immediately after the Completion Date (other than net cash proceeds to the extent such net cash proceeds have been used to incur Indebtedness or issue Disqualified Stock or Preferred Stock pursuant to clause (xii)(A) of Section 4.09(b) hereof) from the issue or sale of:

(i) (A) Equity Interests of the Issuer, including Treasury Capital Stock, but excluding cash proceeds and the fair market value of marketable securities or other property received from the sale of:

(x) Equity Interests to any future, present or former employees, directors, officers, managers, members of management, independent contractors or consultants (or their respective Controlled Investment Affiliates or Immediate Family Members or permitted transferees) of the Issuer, any Parent Company or any of the Issuer’s Subsidiaries after the Completion Date to the extent such amounts have been applied to Restricted Payments made in accordance with clause (iv) of Section 4.07(b) hereof; and

(y) Designated Preferred Stock; and

(B) to the extent such net cash proceeds, marketable securities or other property are actually contributed to the Issuer or any of its Restricted Subsidiaries, Equity Interests of the Issuer or any Parent Companies (excluding contributions of the proceeds from the sale of Designated Preferred Stock of any such companies or contributions to the extent such amounts have been applied to Restricted Payments made in accordance with clause (iv) of Section 4.07(b) hereof); or

(ii) Indebtedness of the Issuer or a Restricted Subsidiary that has been converted into or exchanged for Equity Interests of the Issuer or any Parent Company;

provided , that this clause (2) shall not include the proceeds from (v) Refunding Capital Stock applied in accordance with clause (ii) of Section 4.07(b) hereof, (w) Equity Interests or convertible debt securities of the Issuer sold to a Restricted Subsidiary, (x) Disqualified Stock or debt securities that have been converted into Disqualified Stock, (y) Excluded Contributions or (z) Indebtedness of a Parent Company to the extent such proceeds have been applied to make Restricted Payments in accordance with clause (xvii) of Section 4.07(b) hereof); plus

(3) 100.0% of the aggregate amount of cash and the fair market value of marketable securities or other property contributed to the capital of the Issuer or a Restricted Subsidiary following the Completion Date (including the aggregate principal amount of any Indebtedness contributed to the Issuer or its Restricted Subsidiaries for cancellation) or that becomes part of the capital of the Issuer through consolidation, amalgamation or merger following the Completion Date, in each case, not involving cash consideration payable by the Issuer (other than (i) net cash proceeds to the extent such net cash proceeds have been used to incur Indebtedness or issue Disqualified Stock or Preferred Stock pursuant to clause (xii)(A) of Section 4.09(b) hereof, (ii) contributions by a Restricted Subsidiary, (iii) any Excluded Contributions and (iv) proceeds from Indebtedness of a Parent Company to the extent such proceeds have been applied to make Restricted Payments in accordance with clause (xvii) of Section 4.07(b) hereof; plus

(4) 100.0% of the aggregate amount received in cash and the fair market value of marketable securities or other property received by the Issuer or any Restricted Subsidiary by means of:

(i) the sale or other disposition (other than to the Issuer or a Restricted Subsidiary) of, or other returns on Investments from, Restricted Investments made by the Issuer or its Restricted Subsidiaries (including cash dividends and distributions and cash interest received in respect of Restricted Investments) and repurchases and redemptions of such Restricted Investments from

the Issuer or its Restricted Subsidiaries and repayments of loans or advances, and releases of guarantees, which constitute Restricted Investments made by the Issuer or its Restricted Subsidiaries, in each case after the Completion Date; or

(ii) the sale (other than to the Issuer or a Restricted Subsidiary) of the Equity Interests of an Unrestricted Subsidiary or a dividend or distribution (other than an Excluded Contribution) from an Unrestricted Subsidiary after the Completion Date (other than, in each case, to the extent the Investment in such Unrestricted Subsidiary constituted a Permitted Investment, but including such cash or fair market value to the extent exceeding the amount of such Permitted Investment); or

(iii) any returns, profits, dividends and distributions and similar amounts received on account of any Permitted Investment subject to a dollar-denominated or ratio-based basket (to the extent in excess of the original amount of such Investment); plus

(5) in the case of the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary or the merger, amalgamation or consolidation of an Unrestricted Subsidiary into the Issuer or a Restricted Subsidiary or the transfer of all or substantially all of the assets of an Unrestricted Subsidiary to the Issuer or a Restricted Subsidiary after the Completion Date, the fair market value of the Investment in such Unrestricted Subsidiary (or the assets transferred) at the time of the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary or at the time of such merger, amalgamation, consolidation or transfer of assets, other than to the extent the Investment in such Unrestricted Subsidiary constituted a Permitted Investment, but, to the extent exceeding the amount of such Permitted Investment, including such excess amounts of cash or fair market value; plus

(6) an amount equal to the greater of (x) $200.0 million and (y) 20.0% of EBITDA of the Issuer for the most recently ended Test Period (calculated on a pro forma basis) at the time of such Restricted Payments.

(b) The provisions of Section 4.07(a) hereof shall not prohibit:

(i) the payment of any dividend or other distribution or the consummation of any irrevocable redemption within 60 days after the date of declaration of the dividend or other distribution or the giving of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend or other distribution or redemption payment would have complied with the provisions of this Indenture;

(ii) (A) the redemption, repurchase, defeasance, retirement or other acquisition of (i) any Equity Interests of the Issuer or any Restricted Subsidiary or any Parent Company, including any accrued and unpaid dividends thereon (“ Treasury Capital Stock ”), or (ii) Subordinated Indebtedness of the Issuer or any Restricted Subsidiary, in each case, made (x) in exchange for, or out of the proceeds of the sale or issuance (other than to a Restricted Subsidiary) of, Equity Interests of the Issuer or any Parent Company to the extent contributed to the Issuer (in each case, other than any Disqualified Stock) and (y) within 120 days of such sale or issuance (“ Refunding Capital Stock ”), (B) the declaration and payment of dividends on Treasury Capital Stock out of the proceeds of the sale or issuance (other than to a Restricted Subsidiary of the Issuer or to an employee stock ownership plan or any trust established by the Issuer or any of its Restricted Subsidiaries) of Refunding Capital Stock made within 120 days of such sale or issuance, and (C) if, immediately prior to the retirement of Treasury Capital Stock, the declaration and payment of dividends thereon was permitted under clauses (vi)(A) or (B) of this Section 4.07(b), the declaration and payment of dividends on the Refunding Capital Stock (other than Refunding Capital Stock, the proceeds of which were used to redeem, repurchase, retire or otherwise acquire any Equity Interests of any Parent Company) in an aggregate amount per annum no greater than the aggregate amount of dividends per annum that were declarable and payable on such Treasury Capital Stock immediately prior to such retirement;

(iii) the prepayment, defeasance, redemption, repurchase, exchange or other acquisition or retirement of (1) Subordinated Indebtedness of the Issuer, the Co-Issuer or a Guarantor made by exchange for, or out of the proceeds of the sale, issuance or incurrence of, new Indebtedness of the Issuer, the Co-Issuer or a Guarantor or Disqualified Stock of the Issuer, the Co-Issuer or a Guarantor within 120 days of such sale, issuance or incurrence, (2) Disqualified Stock of the Issuer, the Co-Issuer or a Guarantor made by exchange for, or out of the proceeds of the sale, issuance or incurrence of, Disqualified Stock or Subordinated Indebtedness of the Issuer, the Co-Issuer or a Guarantor within 120 days of such sale, issuance or incurrence, (3) Disqualified Stock of a Restricted Subsidiary that is not a Guarantor made by exchange for, or out of proceeds of the sale of, Disqualified Stock of a Restricted Subsidiary that is not a Guarantor within 120 days of such sale and (4) any Subordinated Indebtedness that constitutes Acquired Indebtedness or any Disqualified Stock that would constitute Acquired Indebtedness if it were Indebtedness; provided that:

(A) such new Indebtedness or Disqualified Stock is sold, incurred or issued, as applicable, in compliance with Section 4.09 hereof;

(B) the principal amount (or accreted value, if applicable) of such new Indebtedness or the liquidation preference of such new Disqualified Stock does not exceed the principal amount of (or accreted value, if applicable), plus any accrued and unpaid interest on, the Subordinated Indebtedness or the liquidation preference of, plus any accrued and unpaid dividends on, the Disqualified Stock being so prepaid, defeased, redeemed, repurchased, exchanged, acquired or retired for value, plus the amount of any premium (including tender premium), penalty or similar amount required to be paid under the terms of the instrument governing the Subordinated Indebtedness or Disqualified Stock being so defeased, redeemed, repurchased, exchanged, acquired or retired, defeasance costs, underwriting costs and any fees and expenses (including original issue discount, upfront fees or similar fees) in connection therewith, including those incurred in connection with the issuance of such new Indebtedness or Disqualified Stock;

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(C) such new Indebtedness is subordinated to the Notes or the applicable Guarantee at least to the same extent as such Subordinated Indebtedness so defeased, redeemed, repurchased, exchanged, acquired or retired;

(D) such new Indebtedness or Disqualified Stock has a final scheduled maturity date equal to or later than the final scheduled maturity date of the Subordinated Indebtedness or Disqualified Stock being so defeased, redeemed, repurchased, exchanged, acquired or retired (or, if earlier, a date that is at least 91 days after the maturity date of the Notes); and

(E) such new Indebtedness or Disqualified Stock has a Weighted Average Life to Maturity equal to or greater than the remaining Weighted Average Life to Maturity of the Subordinated Indebtedness or Disqualified Stock being so defeased, redeemed, repurchased, exchanged, acquired or retired (or requires no or nominal payments in cash prior to the date that is 91 days after the maturity date of the Notes);

(iv) a Restricted Payment to pay for the repurchase, redemption or other acquisition or retirement for value of Equity Interests (other than Disqualified Stock) of the Issuer or any Parent Company held by any future, present or former employee, director, officer, manager, member of management, independent contractor or consultant (or their respective Controlled Investment Affiliates or Immediate Family Members or permitted transferees) of the Issuer, any of its Subsidiaries or any Parent Company pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement, or any stock subscription or shareholder agreement (including, for the avoidance of doubt, the payment of any principal and interest payable on any Indebtedness issued by the Issuer or any Parent Company in connection with such repurchase, retirement or other acquisition), including any Equity Interest rolled over by management, directors or employees of the Issuer, any of its Subsidiaries or any Parent Company in connection with the Transactions; provided , that the aggregate amount of Restricted Payments made under this clause (iv) do not exceed in any calendar year an amount equal to $50.0 million (which shall increase to $100.0 million subsequent to the consummation of an underwritten public Equity Offering by the Issuer or any Parent Company) (with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum (without giving effect to the following proviso) of $80.0 million in any calendar year (which shall increase to $160.0 million subsequent to the consummation of an underwritten public Equity Offering by the Issuer or any Parent Company)); provided , further , that such amount in any calendar year under this clause may be increased by an amount not to exceed:

(A) the cash proceeds from the sale of Equity Interests (other than Disqualified Stock) of the Issuer and, to the extent contributed to the Issuer, the cash proceeds from the sale of Equity Interests of any Parent Company, in each

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case to any future, present or former employees, directors, officers, managers, members of management, independent contractors or consultants (or their respective Controlled Investment Affiliates or Immediate Family Members or permitted transferees) of the Issuer, any of its Subsidiaries or any Parent Company that occurs after the Completion Date, to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments by virtue of clause (C) of Section 4.07(a) hereof; plus

(B) the amount of any cash bonuses otherwise payable to members of management, employees, directors, officers, managers, independent contractors or consultants (or their respective Controlled Investment Affiliates or Immediate Family Members or permitted transferees) of the Issuer, any of its Subsidiaries or any Parent Company that are foregone in exchange for the receipt of Equity Interests of the Issuer or any Parent Company pursuant to any deferred compensation plan of such company; plus

(C) the cash proceeds of key man life insurance policies received by the Issuer or its Restricted Subsidiaries (or any Parent Company to the extent contributed to the Issuer) after the Completion Date; less

(D) the amount of any Restricted Payments previously made with the cash proceeds described in clauses (A), (B) and (C) of this clause (iv);

and provided that the Issuer may elect to apply all or any portion of the aggregate increase contemplated by clauses (A), (B) and (C) above in any calendar year and provided , further , that (i) cancellation of Indebtedness owing to the Issuer or any Restricted Subsidiary from any future, present or former employees, directors, officers, managers, members of management, independent contractors or consultants (or their respective Controlled Investment Affiliates or Immediate Family Members or permitted transferees) of the Issuer, any Parent Company or any of the Issuer’s Restricted Subsidiaries in connection with a repurchase of Equity Interests of the Issuer or any Parent Company and (ii) the repurchase of Equity Interests deemed to occur upon the exercise of options, warrants or similar instruments if such Equity Interests represent all or a portion of the exercise price thereof or payments, in lieu of the issuance of fractional Equity Interests or withholding to pay other taxes payable in connection therewith, in the case of each of clauses (i) and (ii), will not be deemed to constitute a Restricted Payment for purposes of this Section 4.07 or any other provision of this Indenture;

(v) the declaration and payment of dividends or distributions to holders of any class or series of Disqualified Stock of the Issuer or any of its Restricted Subsidiaries or any class or series of Preferred Stock of any Restricted Subsidiary issued in accordance with Section 4.09 hereof to the extent such dividends are included in the definition of “ Fixed Charges ”;

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(vi) (A) the declaration and payment of dividends or distributions to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) issued by the Issuer or any of its Restricted Subsidiaries after the Completion Date;

(B) the declaration and payment of dividends or distributions to any Parent Company, the proceeds of which will be used to fund the payment of dividends or distributions to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) issued by such Parent Company after the Completion Date, provided that the amount of dividends and distributions paid pursuant to this clause (B) shall not exceed the aggregate amount of cash actually contributed to the Issuer from the sale of such Designated Preferred Stock; or

(C) the declaration and payment of dividends on Refunding Capital Stock that is Preferred Stock in excess of the dividends declarable and payable thereon pursuant to clause (ii) of this Section 4.07(b);

provided , in the case of each of (A) and (C) of this clause (vi), that for the most recently ended Test Period immediately preceding the date of issuance of such Designated Preferred Stock or the declaration of such dividends on Refunding Capital Stock that is Preferred Stock, after giving effect to such issuance or declaration on a pro forma basis, the Issuer would have had a Fixed Charge Coverage Ratio of at least 2.00 to 1.00;

(vii) (A) payments made or expected to be made by the Issuer or any Restricted Subsidiary in respect of withholding or similar taxes payable upon exercise of Equity Interests by any future, present or former employee, director, officer, manager, member of management, consultant or independent contractor (or their respective Controlled Investment Affiliates or Immediate Family Members or permitted transferees) of the Issuer or any Restricted Subsidiary or any Parent Company, (B) any repurchases or withholdings of Equity Interests in connection with the exercise of stock options, warrants or other equity-based awards if such Equity Interests represent a portion of the exercise price of, or withholding obligations with respect to, such options, warrants or awards or required withholding or similar taxes and (C) loans or advances to officers, directors, employees, managers, consultants and independent contractors of the Issuer or any Parent Company or any Restricted Subsidiary of the Issuer in connection with such Person’s purchase of Equity Interests of the Issuer or any Parent Company; provided that no cash is actually advanced pursuant to this clause (C) other than to pay taxes due in connection with such purchase, unless immediately repaid;

(viii) the declaration and payment of dividends on, or the purchase, redemption, defeasance or other acquisition or retirement for value of, the Issuer’s common equity (or the payment of dividends to any Parent Company to fund a payment of dividends on such Parent Company’s common equity or to fund such Parent Company’s purchase, redemption, defeasance or other acquisition or retirement for value of such Parent Company’s common equity), following the first public offering of the Issuer’s common stock or the common stock of any Parent Company after the Completion Date, in an amount not to exceed the sum of (A) up to 6.0% per annum of the amount of net cash proceeds received by or contributed to the Issuer or any of its Restricted Subsidiaries in or from any such public offering, other than public offerings with respect to the Issuer’s common equity registered on Form S-4 or Form S-8 and other than any public sale constituting an Excluded Contribution and (B) an aggregate amount per annum not to exceed 5.0% of Market Capitalization;

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(ix) Restricted Payments that are made (A) in an amount that does not exceed the aggregate amount of Excluded Contributions previously received or (B) without duplication with clause (A), in an amount that does not exceed the Net Proceeds from an Asset Sale in respect of property or assets acquired after the Completion Date, if the acquisition of such property or assets was financed with Excluded Contributions;

(x) (A) Restricted Payments in an aggregate amount taken together with all other Restricted Payments made pursuant to this clause (x)(A) (in the case of Restricted Investments, at the time outstanding (without giving effect to the sale of an Investment to the extent the proceeds of such sale do not consist of, or have not been converted to, Cash Equivalents)) not to exceed the greater of (a) $375.0 million and (b) 35.0% of EBITDA of the Issuer for the most recently ended Test Period (calculated on a pro forma basis) at the time of such Restricted Payments; and (B) any Restricted Payments, so long as, after giving pro forma effect to the payment of any such Restricted Payment, the Consolidated Total Debt Ratio for the Test Period immediately preceding such Restricted Payment shall be no greater than 5.00 to 1.00;

(xi) distributions or payments of Securitization Fees;

(xii) any Restricted Payment made in connection with the Transactions and the fees and expenses related thereto or used to fund amounts owed to Affiliates (including dividends to any Parent Company to permit payment by such Parent Company of such amounts), in each case to the extent permitted by Section 4.11 hereof;

(xiii) the repurchase, redemption or other acquisition or retirement for value of any Subordinated Indebtedness pursuant to the provisions similar to those described under Sections 4.10 and 4.14 hereof; provided, that, if the Issuers shall have been required to make a Change of Control Offer or Asset Sale Offer, as applicable, to purchase the Notes on the terms provided in this Indenture applicable to Change of Control Offers or Asset Sale Offers, respectively, all Notes validly tendered by Holders of such Notes in connection with a Change of Control Offer or Asset Sale Offer, as applicable, have been repurchased, redeemed, acquired or retired for value;

(xiv) the declaration and payment of dividends or distributions by the Issuer or a Restricted Subsidiary to, or the making of loans or advances to, any Parent Company in amounts required for any Parent Company to pay, in each case without duplication:

(A) franchise, excise and similar taxes, and other fees and expenses, required to maintain its corporate or legal existence;

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(B) (1) for any taxable period (including, for the avoidance of doubt, any “reviewed year” as defined in Section 6225(d)(1) of the Code as in effect for tax years beginning after December 31, 2017) for which the Issuer is treated as, or is disregarded as an entity separate from, a partnership (solely for purposes of clause (x), other than a partnership that is wholly owned, directly and/or indirectly, by a Parent Company that is a corporation) for U.S. federal income tax purposes, (x) distributions to the equity holders of the Issuer or any Parent Company pursuant to Section 8.02(a) of the LLC Agreement; and (y) without duplication of any amounts distributable under clause (B)(1)(x) above or clause (B)(2) below, any liability of a Parent Company for (i) any “imputed underpayment” under Section 6225 of the Code as in effect for tax years beginning after December 31, 2017, or (ii) interest and penalties payable by such Parent Company pursuant to Section 6233 of the Code as in effect for tax years beginning after December 31, 2017; and (2) for any taxable period (x) for which the Issuer is treated as, or is disregarded as an entity separate from, a corporation for U.S. federal income tax purposes and the Issuer and/or its applicable Subsidiaries are, for U.S. federal, state, local and/or non-U.S. income or similar tax purposes, members of a consolidated, combined, unitary or similar tax group (a “ Tax Group ”) of which a Parent Company is the common parent, (y) for which the Issuer is disregarded as an entity separate from a Parent Company that is a corporation for U.S. federal income tax purposes, or (z) for which the Issuer is treated as, or is disregarded as an entity separate from, a partnership that is wholly owned, directly or indirectly, by a Parent Company that is a corporation for U.S. federal income tax purposes, the portion of any income or similar taxes of such Tax Group (or, in the case of clause (y) or clause (z), of any U.S. federal and applicable state and/or local income or similar taxes of such Parent Company) for such taxable period attributable to the taxable income of the Issuer and/or its applicable Subsidiaries; provided that, with respect to this clause (2), for each taxable period, (i) the amount of such payments in the aggregate does not exceed the amount that the Issuer and its applicable Restricted Subsidiaries (and, to the extent permitted below, its applicable Unrestricted Subsidiaries) would have been required to pay if they were a stand-alone corporate Tax Group with the Issuer as the common parent of such stand-alone Tax Group, and (ii) the amount of such payments in respect of any Unrestricted Subsidiary will be permitted only to the extent that cash distributions were made by such Unrestricted Subsidiary to the Issuer or any Restricted Subsidiary for the purpose of paying such taxes;

(C) customary salary, bonus, severance and other benefits payable to, and indemnities provided on behalf of, employees, directors, officers and managers of any Parent Company and any payroll, social security or similar taxes thereof, to the extent such salaries, bonuses, severance, indemnities and other benefits are attributable to the ownership or operation of the Issuer and its Restricted Subsidiaries;

(D) general corporate operating, administrative, compliance and overhead costs and expenses of any Parent Company and, following the first public offering of the Issuer’s common stock or the common stock of any Parent Company, listing fees and other costs and expenses of such Parent Company attributable to being a publicly traded company;

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(E) fees and expenses related to any unsuccessful equity or debt offering of any Parent Company;

(F) amounts payable pursuant to the Support and Services Agreement (including any amendment thereto or replacement thereof so long as any such amendment or replacement is not materially disadvantageous in the good faith judgment of the Issuer to the Holders when taken as a whole, as compared to the Support and Services Agreement as in effect on or about the Completion Date), solely to the extent such amounts are not paid directly by the Issuer or its Subsidiaries;

(G) cash payments in lieu of issuing fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Equity Interests of the Issuer or any Parent Company;

(H) for the financing of Investments or other acquisitions that would otherwise be permitted to be made pursuant to this Section 4.07 if made by the Issuer; provided , that (1) such Restricted Payment shall be made substantially concurrently with the closing of such Investment or other acquisition, (2) such Parent Company shall, promptly following the closing thereof, cause (x) all property acquired (whether assets or Equity Interests) to be contributed to the capital of the Issuer or one of its Restricted Subsidiaries or (y) the merger or amalgamation of the Person formed or acquired into the Issuer or one of its Restricted Subsidiaries (to the extent not prohibited by Section 5.01 hereof) in order to consummate such Investment or other acquisition, (3) such Parent Company and its Affiliates (other than the Issuer or a Restricted Subsidiary) receives no consideration or other payment in connection with such transaction except to the extent the Issuer or a Restricted Subsidiary could have given such consideration or made such payment in compliance with this Indenture, (4) any property received by the Issuer shall not increase amounts available for Restricted Payments pursuant to clause (C) of Section 4.07(a) hereof and (5) to the extent constituting an Investment, such Investment shall be deemed to be made by the Issuer or such Restricted Subsidiary pursuant to another provision of this Section 4.07 (other than pursuant to clause (ix) of this Section 4.07(b)) or pursuant to the definition of “Permitted Investments” (other than clause (9) thereof);

(I) to the extent constituting Restricted Payments, amounts that would be permitted to be paid by the Issuer under Section 4.11(b) hereof (other than clauses (ii)(A) and (viii) of Section 4.11(b));

(J) interest or principal on Indebtedness the proceeds of which have been contributed to the Issuer or any Restricted Subsidiary or that has been guaranteed by, or is otherwise, considered Indebtedness of, the Issuer or any Restricted Subsidiary incurred in accordance with Section 4.09 hereof;

(K) Excluded Contract Amounts (other than Specified TMA Payments); and

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(L) amounts payable pursuant to the Transaction Documents;

(xv) the distribution, by dividend or otherwise, of any Equity Interests in, or Indebtedness owed to the Issuer or a Restricted Subsidiary, by Unrestricted Subsidiaries (other than Unrestricted Subsidiaries the primary assets of which are cash and/or Cash Equivalents, except to the extent such cash and/or Cash Equivalents consist of proceeds from the sale of the assets of such Unrestricted Subsidiary) and any Restricted Subsidiary that owns no assets other than Equity Interests of one or more Unrestricted Subsidiaries (other than Unrestricted Subsidiaries the primary assets of which are cash and/or Cash Equivalents, except to the extent such cash and/or Cash Equivalents consist of proceeds from the sale of the assets of such Unrestricted Subsidiary);

(xvi) payments and distributions to dissenting stockholders pursuant to applicable law (including in connection with, or as a result of, the exercise of appraisal rights and the settlement of any claims or actions (whether actual, contingent or potential)), pursuant to or in connection with a consolidation, amalgamation, merger or transfer of all or substantially all of the assets of the Issuer and its Restricted Subsidiaries taken as a whole that complies with the terms of this Indenture or any other transaction (including any acquisition or Investment) that complies with the terms of this Indenture;

(xvii) the payment of dividends, other distributions and other amounts by the Issuer to, or the making of loans to, any Parent Company in the amount required for such Parent Company to, if applicable, pay amounts equal to amounts required for any Parent Company, if applicable, to pay interest and/or principal (including “AHYDO catch-up payments”) on Indebtedness, the proceeds of which have been permanently contributed to the Issuer or any Restricted Subsidiary (to the extent such proceeds have not been applied to make Restricted Payments pursuant to clause (C)(2) or clause (C)(3) of Section 4.07(a)); provided that the aggregate amount of such dividends, distributions, loans and other amounts shall not exceed the amount of cash actually contributed to the Issuer or such Restricted Subsidiary from the proceeds of such Indebtedness;

(xviii) Restricted Payments (including dividends or distributions to any Parent Company to permit payment by such Parent Company of such amounts) contemplated by the Contribution Agreement as in effect on or about the Completion Date (or as amended and replaced thereafter so long as any such amendment or replacement is not materially disadvantageous in the good faith judgment of the Issuer to the Holders when taken as a whole, as compared to the Contribution Agreement as in effect on or about the Completion Date) that are (a) made on or prior to the first anniversary of the Completion Date in an amount not to exceed $175.0 million or (b) on account of tax refunds required to be forwarded or reimbursed pursuant to Section 6.03 of the Contribution Agreement;

(xix) to the extent constituting Restricted Payments, the Issuer and the Restricted Subsidiaries may enter into and consummate transactions expressly permitted by any provision of Section 4.11(b) hereof (other than clauses (ii)(A) and (viii)(A) thereof); and

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(xx) Restricted Payments that are made with proceeds released to the Issuer pursuant to the Escrow Agreement, including prior to or after the Completion Date.

provided that at the time of, and after giving effect to, any Restricted Payment permitted under clause (x)(B) of this Section 4.07(b), no Event of Default shall have occurred and be continuing or would occur as a consequence thereof.

(c) For purposes of determining compliance with this Section 4.07, in the event that a proposed Restricted Payment or Investment (or a portion thereof) meets the criteria of more than one of clauses (i) through (xx) of Section 4.07(b), Section 4.07(a) and/or the clauses contained in the definition of “Permitted Investments”, such Restricted Payment or Investment (or a portion thereof) shall be divided and classified or later re-divided and reclassified on one or more occasions among one or more of such clauses (i) through (xx) of Section 4.07(b), Section 4.07(a) and/or any clause contained in the definition of “Permitted Investments” as described in Section 1.07 hereof.

The amount of all Restricted Payments (other than cash) will be the fair market value on the date the Restricted Payment is made, or at the Issuer’s election, the date a commitment is made to make such Restricted Payment, of the assets or securities proposed to be transferred or issued by the Issuer or any Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.

(d) The Issuer shall not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to the penultimate sentence of the definition of “Unrestricted Subsidiary.” For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the Issuer and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated shall be deemed to be Restricted Payments or Permitted Investments in an amount determined as set forth in the penultimate sentence of the definition of “Investments.” Such designation shall be permitted only if a Restricted Payment or Investment in such amount would be permitted at such time, pursuant to this Section 4.07 (including the definition of “Permitted Investments”) and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries shall not be subject to any of the restrictive covenants set forth in this Indenture. For the avoidance of doubt, this Section 4.07 shall not restrict the making of any “AHYDO catch up payment” with respect to, and required by the terms of, any Indebtedness of the Issuer or any of its Restricted Subsidiaries permitted to be incurred under the terms of this Indenture.

Section 4.08. Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries .

(a) The Issuer shall not, and shall not permit any of its Restricted Subsidiaries that is not the Co-Issuer or a Guarantor to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction (it being understood that dividend or liquidation priority between classes of Capital Stock or subordination of any obligation (including the application of any remedy bars thereto) to any other obligation, will not be deemed to constitute such an encumbrance or restriction) on the ability of any such Restricted Subsidiary to:

(i) (A) pay dividends or make any other distributions to the Issuer, the Co-Issuer or any of the Issuer’s Restricted Subsidiaries that is a Guarantor on its Capital Stock or with respect to any other interest or participation in, or measured by, its profits, or

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(B) pay any Indebtedness owed to the Issuer, the Co-Issuer or any of the Issuer’s Restricted Subsidiaries that is a Guarantor;

(ii) make loans or advances to the Issuer, the Co-Issuer or any of the Issuer’s Restricted Subsidiaries that is a Guarantor; or

(iii) sell, lease or transfer any of its properties or assets to the Issuer, the Co-Issuer or any of the Issuer’s Restricted Subsidiaries that is a Guarantor.

(b) The restrictions in Section 4.08(a) hereof shall not apply to encumbrances or restrictions existing under or by reason of:

(i) contractual encumbrances or restrictions in effect on the Completion Date, including pursuant to Hedging Obligations and the related documentation, and contractual encumbrances or restrictions in effect on the Completion Date pursuant to the Senior Secured Credit Facilities and the related documentation;

(ii) this Indenture, the Notes and the Guarantees;

(iii) Purchase Money Obligations and Capitalized Lease Obligations that impose restrictions of the nature discussed in clause (iii) of Section 4.08(a) hereof on the property so acquired;

(iv) applicable law or any applicable rule, regulation or order;

(v) (A) in the case of the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary or the merger, amalgamation or consolidation of an Unrestricted Subsidiary into the Issuer or a Restricted Subsidiary or the transfer of all or substantially all of the assets of an Unrestricted Subsidiary to the Issuer or a Restricted Subsidiary, any agreement or other instrument of such Unrestricted Subsidiary (but, in any such case, not created in contemplation thereof) and (B) any agreement or other instrument of a Person acquired by or merged, amalgamated or consolidated with or into the Issuer or any of its Restricted Subsidiaries in existence at the time of such acquisition or at the time it merges, amalgamates or consolidates with or into the Issuer or any of its Restricted Subsidiaries or assumed in connection with the acquisition of assets from such Person (but, in any such case, not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person so acquired and its Subsidiaries, or the property or assets of the Person so acquired and its Subsidiaries or the property or assets so acquired;

(vi) contracts or agreements for the sale of assets, including customary restrictions with respect to a Subsidiary of the Issuer pursuant to an agreement that has been entered into for the sale or disposition of any Capital Stock or assets of such Subsidiary;

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(vii) Secured Indebtedness otherwise permitted to be incurred pursuant to Sections 4.09 and 4.12 hereof that limit the right to dispose of the assets securing such Indebtedness;

(viii) restrictions on cash or other deposits or net worth imposed by suppliers, customers or landlords under contracts entered into in the ordinary course of business, consistent with industry practice or arising in connection with any Permitted Liens;

(ix) Indebtedness, Disqualified Stock or Preferred Stock of Restricted Subsidiaries that are not Guarantors permitted to be incurred subsequent to the Completion Date pursuant to the provisions of Section 4.09 hereof;

(x) customary provisions in joint venture agreements and other similar agreements or arrangements relating to such joint venture or its members;

(xi) customary provisions contained in leases, sub-leases, licenses, sub-licenses or similar agreements, including with respect to intellectual property and other agreements;

(xii) restrictions or conditions contained in any trading, netting, operating, construction, service, supply, purchase, sale or other agreement to which the Issuer or any of its Restricted Subsidiaries is a party entered into in the ordinary course of business or consistent with industry practice; provided, that such agreement prohibits the encumbrance of solely the property or assets of the Issuer or such Restricted Subsidiary that are subject to such agreement, the payment rights arising thereunder or the proceeds thereof and does not extend to any other asset or property of the Issuer or such Restricted Subsidiary or the assets or property of another Restricted Subsidiary;

(xiii) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of any Restricted Subsidiary;

(xiv) customary provisions restricting assignment of any agreement;

(xv) restrictions arising in connection with cash or other deposits permitted under Section 4.12 hereof;

(xvi) any agreement or instrument relating to any Indebtedness, Disqualified Stock or Preferred Stock permitted to be incurred or issued subsequent to the Completion Date pursuant to Section 4.09 hereof if either (i) such encumbrances and restrictions are not materially more disadvantageous, taken as a whole, to the Holders than is customary in comparable financings for similarly situated issuers or as otherwise in effect on the Completion Date, (ii) the Issuer determines that such encumbrances or restrictions will not adversely affect, in any material respect, the Issuer’s ability to make principal and interest payments on the Notes as and when they come due or (iii) such encumbrances and restrictions apply only during the continuance of a default in respect of a payment or financial maintenance covenant relating to such Indebtedness, in each case, in the good faith judgment of the Issuer at the time of entering into such agreement or instrument;

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(xvii) customary restrictions and conditions contained in documents relating to any Lien so long as (i) such Lien is a Permitted Lien and such restrictions or conditions relate only to the specific asset subject to such Lien and (ii) such restrictions and conditions are not created for the purpose of avoiding the restrictions imposed by this Section 4.08;

(xviii) restrictions created in connection with any Qualified Securitization Facility that in the good faith determination of the Issuer are necessary or advisable to effect such Qualified Securitization Facility;

(xix) agreements entered into in connection with a Sale and Lease-Back Transaction entered into in the ordinary course of business or consistent with industry practice;

(xx) any encumbrance or restriction existing under, by reason of or with respect to Indebtedness incurred to refinance other Indebtedness; provided that the encumbrances and restrictions contained in the agreements governing such Indebtedness are, in the good faith judgment of the Issuer, not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; and

(xxi) any encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (i) through (xx) of this Section 4.08(b); provided, that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Issuer, not materially more restrictive with respect to such encumbrance and other restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

Section 4.09. Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock .

(a) The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become liable, contingently or otherwise (collectively, “incur” and, collectively, an “incurrence” ) with respect to any Indebtedness (including Acquired Indebtedness) and the Issuer shall not issue any shares of Disqualified Stock and shall not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or any Restricted Subsidiary that is not a Guarantor to issue Preferred Stock; provided , that the Issuer may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness) and issue shares of Disqualified Stock and any Restricted Subsidiary that is not a Guarantor may issue shares of Preferred Stock, if the Fixed Charge Coverage Ratio for the most recently ended Test Period immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or Preferred Stock is issued would have been at least 2.00 to 1.00, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock or Preferred Stock had been issued, as the case may be, and the application of proceeds

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therefrom had occurred at the beginning of such Test Period; provided that the then outstanding aggregate principal amount of Indebtedness (including Acquired Indebtedness), Disqualified Stock and Preferred Stock that may be incurred or issued, as applicable, pursuant to this Section 4.09(a) (plus any Refinancing Indebtedness in respect thereof) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $375.0 million and (y) 35.0% of EBITDA of the Issuer for the most recently ended Test Period (calculated on a pro forma basis), in each case, determined on the date of such incurrence or issuance.

(b) The provisions of Section 4.09(a) hereof shall not apply to:

(i) Indebtedness incurred pursuant to any Credit Facilities by the Issuer or any Restricted Subsidiary and the issuance and creation of letters of credit and bankers’ acceptances thereunder (with letters of credit and bankers’ acceptances being deemed to have a principal amount equal to the face amount thereof) in an aggregate principal amount outstanding not to exceed the sum of (A) $6,680.0 million and (B) the Permitted Incremental Amount; provided that any Indebtedness incurred under this clause (i) may be extended, replaced, refunded, refinanced, renewed or defeased with new Indebtedness so long as the principal amount of such new Indebtedness does not exceed the sum of (x) the principal amount of the Indebtedness (including unutilized commitments) being so extended, replaced, refunded, refinanced, renewed or defeased, plus (y) the amount of any premiums (including tender premiums), penalties and similar amounts, defeasance costs, accrued interest, underwriting discounts and fees and expenses (including original issue discount, upfront fees or similar fees) in connection therewith (including with respect to such new Indebtedness);

(ii) the incurrence by the Issuer, the Co-Issuer and any Guarantor of Indebtedness represented by the Notes and the Guarantees (but excluding any Additional Notes and any guarantees thereof);

(iii) Indebtedness of the Issuer and its Restricted Subsidiaries in existence on the Completion Date (other than Indebtedness described in clauses (i) and (ii) of this Section 4.09(b));

(iv) Indebtedness of the Issuer or any of its Restricted Subsidiaries incurred or issued to finance or refinance the purchase, leasing, expansion, construction, installation, replacement, repair or improvement of property (real or personal) or assets, whether acquired directly or indirectly, including through the acquisition of the Capital Stock of any Person, in an aggregate outstanding principal amount (together with any Refinancing Indebtedness in respect thereof) not to exceed the greater of (A) $315.0 million and (B) 30.0% of EBITDA of the Issuer for the most recently ended Test Period (calculated on a pro forma basis), in each case, determined on the date of such incurrence or issuance, so long as such Indebtedness is incurred, issued or exists at the date of such purchase, lease, expansion, construction, installation, replacement, repair or improvement of any asset (including any Equity Interests), or within 365 days thereafter (for the avoidance of doubt, the purchase date for any asset shall be the later of the date of acquisition, completion of construction or installation and the beginning of the full productive use of such asset);

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(v) (A) Indebtedness incurred by the Issuer or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit, bank guarantees, banker’s acceptances, warehouse receipts, or similar instruments issued or created in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; provided , that upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 45 days following such drawing or incurrence and (B) the incurrence of Indebtedness by the Issuer or any Restricted Subsidiary as an account party in respect of letters of credit, bank guarantees or similar instruments in favor of suppliers, trade creditors or other Persons incurred in the ordinary course of business or consistent with industry practice;

(vi) Indebtedness arising from (A) Permitted Intercompany Activities and (B) agreements of the Issuer or any of its Restricted Subsidiaries providing for indemnification, adjustment of purchase price, earn-outs or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided , that such Indebtedness is not reflected on the balance sheet of the Issuer, or any of its Restricted Subsidiaries (Contingent Obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet shall not be deemed to be reflected on such balance sheet for purposes of this clause (vi)), unless such Indebtedness is being contested in good faith by the Issuer or the applicable Restricted Subsidiary;

(vii) Indebtedness of the Issuer to a Restricted Subsidiary; provided , that any such Indebtedness owing to a Restricted Subsidiary that is not the Co-Issuer or a Guarantor is subordinated in right of payment to the Notes to the extent such subordination is permitted by applicable law and does not result in material adverse tax consequences; provided , further , that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to the Issuer or another Restricted Subsidiary or any pledge of such Indebtedness constituting a Permitted Lien) shall be deemed, in each case, to be an incurrence of such Indebtedness (to the extent such Indebtedness is then outstanding) not permitted by this clause (vii);

(viii) Indebtedness of a Restricted Subsidiary to the Issuer or another Restricted Subsidiary; provided , that any such Indebtedness incurred by a Guarantor or the Co-Issuer and owing to a Restricted Subsidiary that is not a Guarantor or the Co-Issuer is subordinated in right of payment to the Guarantee of the Notes of such Guarantor or the Obligations under the Notes of the Co-Issuer to the extent such subordination is permitted by applicable law and does not result in material adverse tax consequences; provided ,

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further , that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of any such Indebtedness (except to the Issuer or another Restricted Subsidiary or any pledge of such Indebtedness constituting a Permitted Lien) shall be deemed, in each case, to be an incurrence of such Indebtedness (to the extent such Indebtedness is then outstanding) not permitted by this clause (viii);

(ix) shares of Preferred Stock of a Restricted Subsidiary issued to the Issuer or another Restricted Subsidiary; provided that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock (except to the Issuer or another of its Restricted Subsidiaries or any pledge of such Preferred Stock constituting a Permitted Lien) shall be deemed, in each case, to be an issuance of such shares of Preferred Stock (to the extent such Preferred Stock is then outstanding) not permitted by this clause (ix);

(x) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes);

(xi) obligations in respect of self-insurance and obligations in respect of performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by the Issuer or any of its Restricted Subsidiaries or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case in the ordinary course of business or consistent with industry practice;

(xii) (A) Indebtedness or Disqualified Stock of the Issuer and Indebtedness, Disqualified Stock or Preferred Stock of the Issuer or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 200.0% of the net cash proceeds received by the Issuer and its Restricted Subsidiaries since immediately after the Completion Date from the issue or sale of Equity Interests of the Issuer, the Co-Issuer and the Guarantors or cash contributed to the capital of the Issuer, the Co-Issuer and the Guarantors including through consolidation, amalgamation or merger (in each case, other than Excluded Contributions, proceeds of Disqualified Stock or sales of Equity Interests to the Issuer or any of its Subsidiaries) as determined in accordance with clauses (C)(2) and (C)(3) of Section 4.07(a) hereof to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments pursuant to Section 4.07(a) hereof or to make Permitted Investments specified in clauses (8), (13), (28) or (29) of the definition thereof, and (B) Indebtedness or Disqualified Stock of the Issuer and Indebtedness, Disqualified Stock or Preferred Stock of the Issuer or any Restricted Subsidiary in an aggregate principal amount or liquidation preference, which, when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and Preferred Stock then outstanding and incurred pursuant to this clause (12)(B) does not exceed the greater of (i) $375.0 million and (ii) 35.0% of EBITDA of the Issuer for the most recently ended Test Period (calculated on a pro forma basis), in each case, determined on the date of such incurrence or issuance; provided that any Indebtedness, Disqualified Stock or Preferred Stock incurred or issued

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under this clause (xii)(B) may be extended, replaced, refunded, refinanced, renewed or defeased with new Indebtedness, Disqualified Stock or Preferred Stock so long as the principal amount or liquidation preference, as applicable, of such new Indebtedness, Disqualified Stock or Preferred Stock does not exceed the sum of (x) the principal amount or liquidation preference, as applicable, of the Indebtedness (including unutilized commitments), Disqualified Stock or Preferred Stock being so extended, replaced, refunded, refinanced, renewed or defeased, plus (y) the amount of any premiums (including tender premiums), penalties and similar amounts, defeasance costs, accrued interest and dividends, underwriting discounts and fees and expenses (including original issue discount, upfront fees or similar fees) in connection therewith (including with respect to such new Indebtedness, Disqualified Stock or Preferred Stock);

(xiii) the incurrence or issuance by the Issuer or any Restricted Subsidiary of Indebtedness, Disqualified Stock or Preferred Stock which serves to extend, replace, refund, refinance, renew or defease any Indebtedness incurred (including any existing commitments unutilized thereunder), or Disqualified Stock or Preferred Stock incurred or issued, as permitted under Section 4.09(a) hereof and clauses (ii), (iii), (iv) and (xii)(A) of this Section 4.09(b), this clause (xiii) of this Section 4.09(b) and clauses (xiv) and (xxx) of this Section 4.09(b) or any Indebtedness, Disqualified Stock or Preferred Stock incurred or issued to so extend, replace, refund, refinance, renew or defease such Indebtedness, Disqualified Stock or Preferred Stock, including, in each case, additional Indebtedness, Disqualified Stock or Preferred Stock incurred to pay premiums (including tender premiums), penalties and similar amounts, defeasance costs, accrued interest and dividends, underwriting costs and fees and expenses (including original issue discount, upfront fees or similar fees) in connection therewith (including with respect to such new Indebtedness, Disqualified Stock or Preferred Stock) (the “ Refinancing Indebtedness ”); provided , that such Refinancing Indebtedness:

(A) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining Weighted Average Life to Maturity of the Indebtedness, Disqualified Stock or Preferred Stock being extended, replaced, refunded, refinanced, renewed or defeased (or requires no or nominal payments in cash prior to the date that is 91 days after the maturity date of the Notes);

(B) to the extent such Refinancing Indebtedness extends, replaces, refunds, refinances, renews or defeases (i) Indebtedness subordinated in right of payment to the Notes or any Guarantee thereof, such Refinancing Indebtedness is subordinated in right of payment to the Notes or the Guarantee thereof at least to the same extent as the Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased, except to the extent such extension, replacement, refunding, refinancing, renewal or defeasance constitutes either (x) a Restricted Payment or (y) a payment described in clause (iii)(B) of Section 4.07(a) (in which case under clause (x) or (y), this sub-clause (B) shall not apply) or (ii) Disqualified Stock or Preferred Stock, such Refinancing Indebtedness must be Disqualified Stock or Preferred Stock, respectively; and

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(1) Indebtedness, Disqualified Stock or Preferred Stock of a Subsidiary of the Issuer that is not the Co-Issuer or a Guarantor that refinances Indebtedness, Disqualified Stock or Preferred Stock of the Issuer;

(2) Indebtedness, Disqualified Stock or Preferred Stock of a Subsidiary of the Issuer that is not the Co-Issuer or a Guarantor that refinances Indebtedness, Disqualified Stock or Preferred Stock of a Guarantor; or

(3) Indebtedness or Disqualified Stock of the Issuer or Indebtedness, Disqualified Stock or Preferred Stock of a Restricted Subsidiary that refinances Indebtedness, Disqualified Stock or Preferred Stock of an Unrestricted Subsidiary;

and, provided , further , that subclause (A) of this clause (xiii) will not apply to any extension, replacement, refunding, refinancing, renewal or defeasance of (x) any Credit Facilities or (y) any Secured Indebtedness;

(xiv) Indebtedness, Disqualified Stock or Preferred Stock of the Issuer or a Restricted Subsidiary incurred or issued to finance an acquisition (or other purchase of assets) and Indebtedness, Disqualified Stock or Preferred Stock of Persons that are acquired by the Issuer or any Restricted Subsidiary or merged into or amalgamated or consolidated with the Issuer or a Restricted Subsidiary in accordance with the terms of this Indenture or that is assumed by the Issuer or any Restricted Subsidiary in connection with such acquisition, merger, amalgamation or consolidation, so long as after giving effect to such acquisition, merger, amalgamation or consolidation, (1) the aggregate principal amount of such Indebtedness incurred under this clause (1) does not exceed $200.0 million at any time outstanding or (2) either (w) after giving pro forma effect to such acquisition, amalgamation, consolidation or merger, the Issuer would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Test set forth in Section 4.09(a) hereof, (x) after giving pro forma effect to such acquisition, amalgamation, consolidation or merger, the Fixed Charge Coverage Ratio for the Test Period preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or Preferred Stock is issued is equal to or greater than immediately prior to such acquisition, merger, amalgamation or consolidation, (y) after giving pro forma effect to such acquisition, amalgamation, consolidation or merger, the Issuer would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Total Debt Ratio test set forth in clause (xxx) below, or (z) after giving pro forma effect to such acquisition, amalgamation, consolidation or merger, the Consolidated Total Debt Ratio for the Test Period preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or Preferred Stock is issued is equal to or less than immediately prior to such acquisition, merger, amalgamation or consolidation;

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(xv) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business or consistent with industry practice;

(xvi) Indebtedness of the Issuer or any of its Restricted Subsidiaries supported by a letter of credit or bank guarantee issued pursuant to any Credit Facilities, in a principal amount not in excess of the stated amount of such letter of credit or bank guarantee;

(xvii) (A) any guarantee by the Issuer or a Restricted Subsidiary of Indebtedness or other obligations of the Issuer or any Restricted Subsidiary so long as the incurrence of such Indebtedness or other obligation incurred by the Issuer or such Restricted Subsidiary is permitted under the terms of this Indenture; or (B) any co-issuance by the Issuer or any Restricted Subsidiary of any Indebtedness or other obligations of the Issuer or any Restricted Subsidiary so long as the incurrence of such Indebtedness or other obligations by the Issuer or such Restricted Subsidiary is permitted under the terms of this Indenture;

(xviii) (A) Indebtedness consisting of Indebtedness issued by the Issuer or any of its Restricted Subsidiaries to future, present or former employees, directors, officers, managers, independent contractors and consultants thereof, their respective Controlled Investment Affiliates or Immediate Family Members or permitted transferees thereof, in each case, to finance the purchase or redemption of Equity Interests of the Issuer or any Parent Company to the extent described in clause (iv) of Section 4.07(b) hereof, and (B) Indebtedness representing deferred compensation to employees of the Issuer (or any Parent Company) or any of its Restricted Subsidiaries incurred in the ordinary course of business or consistent with industry practice;

(xix) to the extent constituting Indebtedness, customer deposits and advance payments (including progress premiums) received in the ordinary course of business or consistent with industry practice from customers for goods and services purchased in the ordinary course of business or consistent with industry practice;

(xx) (A) Indebtedness owed on a short-term basis of no longer than 45 days to banks and other financial institutions incurred in the ordinary course of business or consistent with industry practice in connection with ordinary banking arrangements to manage cash balances of the Issuer and its Restricted Subsidiaries and (B) Indebtedness in respect of Bank Products;

(xxi) Indebtedness incurred by a Restricted Subsidiary in connection with bankers’ acceptances, discounted bills of exchange or the discounting or factoring of receivables or payables for credit management purposes, in each case incurred or undertaken in the ordinary course of business or consistent with industry practice;

(xxii) Indebtedness of the Issuer or any of its Restricted Subsidiaries consisting of (A) the financing of insurance premiums or (B) take-or-pay obligations contained in supply arrangements, in each case incurred in the ordinary course of business or consistent with industry practice;

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(xxiii) Indebtedness, Disqualified Stock or Preferred Stock incurred or issued by Restricted Subsidiaries of the Issuer that are not Guarantors or the Co-Issuer, in an aggregate principal amount or liquidation preference, which, when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and Preferred Stock then outstanding and incurred pursuant to this clause (xxiii) does not exceed the greater of (A) $375.0 million and (B) 35.0% of EBITDA of the Issuer for the most recently ended Test Period (calculated on a pro forma basis), in each case, determined on the date of such incurrence or issuance; provided that any Indebtedness, Disqualified Stock or Preferred Stock incurred or issued under this clause (xxiii) may be extended, replaced, refunded, refinanced, renewed or defeased with new Indebtedness, Disqualified Stock or Preferred Stock so long as the principal amount or liquidation preference, as applicable, of such new Indebtedness, Disqualified Stock or Preferred Stock does not exceed the sum of (x) the principal amount or liquidation preference, as applicable, of the Indebtedness (including unutilized commitments), Disqualified Stock or Preferred Stock being so extended, replaced, refunded, refinanced, renewed or defeased, plus (y) the amount of any premiums (including tender premiums), penalties and similar amounts, defeasance costs, accrued interest and dividends, underwriting discounts and fees and expenses (including original issue discount, upfront fees or similar fees) in connection therewith (including with respect to such new Indebtedness, Disqualified Stock or Preferred Stock);

(xxiv) Indebtedness of the Issuer or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business;

(xxv) Indebtedness of Foreign Subsidiaries of the Issuer in an aggregate principal amount, which, when aggregated with the principal amount of all other Indebtedness then outstanding and incurred pursuant to this clause (xxv) does not exceed 10.0% of the total assets of the Foreign Subsidiaries on a consolidated basis as shown on the Issuer’s most recent balance sheet, in each case, determined on the date of such incurrence; provided that any Indebtedness incurred under this clause (xxv) may be extended, replaced, refunded, refinanced, renewed or defeased with new Indebtedness so long as the principal amount of such new Indebtedness does not exceed the sum of (x) the principal amount of the Indebtedness (including unutilized commitments) being so extended, replaced, refunded, refinanced, renewed or defeased, plus (y) the amount of any premiums (including tender premiums), penalties and similar amounts, defeasance costs, accrued interest, underwriting discounts and fees and expenses (including original issue discount, upfront fees or similar fees) in connection therewith (including with respect to such new Indebtedness);

(xxvi) Indebtedness of the Issuer or any Restricted Subsidiary to the extent that the net proceeds thereof are promptly deposited with (A) the Trustee to satisfy and discharge the Notes in accordance with the terms of this Indenture or (B) the trustee, agent or other Person acting in a similar capacity with respect to any Indebtedness to satisfy and discharge such Indebtedness in accordance with the terms thereof;

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(xxvii) guarantees incurred in the ordinary course of business or consistent with industry practice in respect of obligations to suppliers, customers, franchisees, lessors, licensees, sublicensees and distribution partners;

(xxviii) Indebtedness attributable to (but not incurred to finance) the exercise of appraisal rights or the settlement of any claims or actions (whether actual, contingent or potential) with respect to the Transactions or any other acquisition (by merger, consolidation or amalgamation or otherwise) in accordance with the terms of this Indenture;

(xxix) the incurrence of Indebtedness arising out of any Sale and Lease-Back Transaction incurred in the ordinary course of business or consistent with industry practice;

(xxx) Indebtedness (including Acquired Indebtedness) or Disqualified Stock of the Issuer or the incurrence or issuance of Indebtedness (including Acquired Indebtedness), Disqualified Stock or Preferred Stock by any Restricted Subsidiary, so long as, after giving pro forma effect thereto and the application of the net proceeds therefrom, the Consolidated Total Debt Ratio of the Issuer for the Issuer’s most recently ended Test Period preceding the date on which such additional Indebtedness, Disqualified Stock or Preferred Stock is incurred or issued would be no greater than 6.00 to 1.00, in each case determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness, Disqualified Stock or Preferred Stock had been incurred or issued, and the application of proceeds therefrom had occurred on the last day of such Test Period; and

(xxxi) to the extent constituting Indebtedness, all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in clauses (i) through (xxx) above.

(i) in the event that an item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) at any time, whether at the time of incurrence or issuance or upon the application of all or a portion of the proceeds thereof or subsequently, meets the criteria of more than one of the categories of permitted Indebtedness, Disqualified Stock or Preferred Stock described in clauses (i) through (xxx) of Section 4.09(b) hereof or is entitled to be incurred pursuant to Section 4.09(a) hereof, such item of Indebtedness, Disqualified Stock or Preferred Stock, in whole or in part, shall be divided and classified or later re-divided and reclassified on one or more occasions among one or more of such clauses (i) through (xxx) and/or Section 4.09(a) hereof as described in Section 1.07 hereof, provided , that all Indebtedness outstanding under the Senior Secured Credit Facilities on the Completion Date at all times shall be treated as incurred on the Completion Date under clause (i)(A) of Section 4.09(b) hereof;

(ii) the Issuer is entitled to divide and classify an item of Indebtedness, Disqualified Stock or Preferred Stock in more than one of the types of Indebtedness, Disqualified Stock or Preferred Stock described in Sections 4.09(a) and Section 4.09(b) hereof, subject to the proviso to clause (i) of this Section 4.09(c);

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(iii) the principal amount of Indebtedness outstanding under any clause of this Section 4.09 shall be determined after giving effect to the application of proceeds of any such Indebtedness to refinance any other Indebtedness; and

(iv) guarantees of, or obligations in respect of letters of credit relating to, Indebtedness that are otherwise included in the determination of a particular amount of Indebtedness shall not be included in the determination of such amount of Indebtedness; provided that the incurrence of the Indebtedness represented by such guarantee or letter of credit, as the case may be, was incurred in compliance with this Section 4.09.

Accrual of interest or dividends, the accretion of accreted value, the accretion or amortization of original issue discount and the payment of interest or dividends in the form of additional Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, of the same class, and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies, shall, in each case, not be deemed to be an incurrence of Indebtedness, Disqualified Stock or Preferred Stock for purposes of this Section 4.09. Any Refinancing Indebtedness and any Indebtedness, Disqualified Stock and Preferred Stock permitted to be incurred or issued to refinance Indebtedness, Disqualified Stock or Preferred Stock incurred or issued pursuant to clauses (i), (xii)(B), (xxiii) and (xxv) of Section 4.09(b) hereof shall be permitted to include additional Indebtedness, Disqualified Stock or Preferred Stock incurred to pay premiums (including tender premiums), penalties and similar amounts, defeasance costs, accrued interest and dividends, underwriting costs and fees and expenses (including original issue discount, upfront fees or similar fees) in connection with such refinancing (including with respect to such new Indebtedness, Disqualified Stock or Preferred Stock).

For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness or issuance of Disqualified Stock or Preferred Stock, the U.S. Dollar Equivalent principal amount or liquidation preference, as applicable, of Indebtedness, Disqualified Stock or Preferred Stock denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness, Disqualified Stock or Preferred Stock was incurred or issued, (or, in the case of revolving credit debt, the date such Indebtedness was first committed or first incurred (whichever yields the lower U.S. Dollar Equivalent)); provided , that if such Indebtedness is incurred or Disqualified Stock or Preferred Stock is issued, to extend, replace, refund, refinance, renew or defease other Indebtedness, Disqualified Stock or Preferred Stock, as applicable, denominated in a foreign currency, and such extension, replacement, refunding, refinancing, renewal or defeasance would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such extension, replacement, refunding, refinancing, renewal or defeasance, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount or liquidation preference, as applicable, of such refinancing Indebtedness, Disqualified Stock or Preferred Stock does not exceed (A) the principal amount or liquidation preference, as applicable, being refinanced, extended, replaced, refunded, renewed or defeased plus (B) the aggregate amount of all premiums (including tender

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premiums), penalties and similar amounts, defeasance costs, accrued interest and dividends, underwriting costs and fees and expenses (including original issue discount, upfront fees or similar fees) in connection with such refinancing (including with respect to such new Indebtedness, Disqualified Stock or Preferred Stock).

The principal amount or liquidation preference, as applicable, of any Indebtedness incurred or Disqualified Stock or Preferred Stock issued to refinance other Indebtedness, Disqualified Stock or Preferred Stock, if incurred or issued in a different currency from the Indebtedness, Disqualified Stock or Preferred Stock, as applicable, being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness, Disqualified Stock or Preferred Stock is denominated that is in effect on the date of such refinancing.

Notwithstanding anything to the contrary contained in this Indenture, the Issuer shall not, and shall not permit the Co-Issuer or any Guarantor to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness) that is contractually subordinated in right of payment to any Indebtedness of the Issuer, the Co-Issuer or such Guarantor, as the case may be, unless such Indebtedness is expressly subordinated in right of payment to the Notes or such Guarantor’s Guarantee to the extent and in the same manner as such Indebtedness is contractually subordinated to other Indebtedness of the Issuer, the Co-Issuer or such Guarantor, as the case may be.

This Indenture shall not treat (1) unsecured Indebtedness as subordinated or junior to Secured Indebtedness merely because it is unsecured or (2) Indebtedness as subordinated or junior to any other Indebtedness merely because it has a junior priority lien with respect to the same collateral or because it is secured by different collateral or issued or guaranteed by other obligors.

Section 4.10. Asset Sales .

(a) The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale, unless:

(i) the Issuer or such Restricted Subsidiary, as the case may be, receives consideration (including by way of relief from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise, in connection with such Asset Sale) at the time of such Asset Sale at least equal to the fair market value (as determined in good faith by the Issuer at the time of contractually agreeing to such Asset Sale) of the assets sold or otherwise disposed of (other than in the case of any Required Divestitures); and

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(ii) except in the case of any Permitted Asset Swap or Required Divestiture, at least 75.0% of the consideration for such Asset Sale, together with all other Asset Sales since the Completion Date (on a cumulative basis), received by the Issuer or such Restricted Subsidiary, as the case may be, is in the form of Cash Equivalents; provided that the amount of:

(A) any liabilities (including Indebtedness), as shown on the Issuer’s or such Restricted Subsidiary’s most recent balance sheet or in the footnotes thereto or, if incurred or increased subsequent to the date of such balance sheet, such liabilities that would have been shown on the Issuer’s or such Restricted Subsidiary’s balance sheet or in the footnotes thereto if such incurrence or increase had taken place on or prior to the date of such balance sheet, as determined by the Issuer, of the Issuer or such Restricted Subsidiary, other than liabilities that are by their terms subordinated to the Notes, that (i) are assumed by the transferee of any such assets (or a third party in connection with such transfer) pursuant to a written agreement which releases or indemnifies the Issuer or such Restricted Subsidiary from such liabilities, (ii) are satisfied, cancelled or terminated in connection with the transaction (other than intercompany debt owed to the Issuer or its Restricted Subsidiaries), or (iii) otherwise cease to be liabilities of the Issuer or a Restricted Subsidiary in connection with the transaction (other than intercompany debt owed to the Issuer or its Restricted Subsidiaries);

(B) any securities, notes or other obligations or assets received by the Issuer or such Restricted Subsidiary from such transferee (including earnouts and similar obligations) in the form of Cash Equivalents or that are converted by the Issuer or such Restricted Subsidiary into Cash Equivalents (to the extent of the Cash Equivalents received) or by their terms are required to be satisfied for Cash Equivalents within 180 days following the closing of such Asset Sale; and

(C) any Designated Non-cash Consideration received by the Issuer or such Restricted Subsidiary in such Asset Sale having an aggregate fair market value, taken together with all other Designated Non-cash Consideration received pursuant to this clause (c) that is at that time outstanding, not to exceed the greater of (i) $270.0 million and (ii) 25.0% of EBITDA of the Issuer for the most recently ended Test Period (calculated on a pro forma basis) at the time of the receipt of such Designated Non-cash Consideration, with the fair market value of each item of Designated Non-cash Consideration being measured, at the Issuer’s option, either at the time of contractually agreeing to such to such Asset Sale or at the time received and, in either case, without giving effect to subsequent changes in value;

shall, in each case, be deemed to be Cash Equivalents for purposes of this clause (ii) and for no other purpose.

(b) Within 540 days after the receipt of any Net Proceeds of any Asset Sale, the Issuer or such Restricted Subsidiary, at its option, may apply an amount equal to the Net Proceeds from such Asset Sale:

(i) to reduce:

(A) Obligations under the Senior Secured Credit Facilities, and to correspondingly reduce commitments with respect thereto;

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(B) Obligations under Secured Indebtedness which is secured by a Lien that is permitted by this Indenture, and to correspondingly reduce commitments with respect thereto;

(C) Obligations under the Notes or any other Senior Indebtedness of the Issuer or any Restricted Subsidiary (and, in the case of other Senior Indebtedness, to correspondingly reduce any outstanding commitments with respect thereto, if applicable) or make an offer to purchase the Notes or such other Senior Indebtedness; provided that, if the Issuer or any Restricted Subsidiary shall so repay or make an offer to purchase any Senior Indebtedness other than the Notes, the Issuer will either (x) reduce Obligations under the Notes on a pro rata basis by, at its option, (i) redeeming Notes as described under Section 3.07 hereof or (ii) purchasing Notes through open-market purchases or in privately negotiated transactions at market prices (which may be below par), or (y) make an offer (in accordance with the procedures set forth in Sections 3.08 and 4.10 hereof for an Asset Sale Offer) to all Holders to purchase their Notes on a ratable basis with such other Senior Indebtedness for no less than 100.0% of the principal amount thereof, plus the amount of accrued but unpaid interest, if any, thereon up to the principal amount of Notes to be repurchased;

(D) Obligations under Indebtedness of a Restricted Subsidiary that is not a Guarantor (and correspondingly reduce commitments with respect thereto), other than Indebtedness owed to the Issuer or another Restricted Subsidiary; or

(E) if the assets that are the subject of such Asset Sale are the property or assets of a Restricted Subsidiary that is not a Guarantor, Indebtedness (and correspondingly reduce commitments with respect thereto) of (i) a Restricted Subsidiary that is not a Guarantor, other than Indebtedness owed to the Issuer or another Restricted Subsidiary or (ii) the Issuer, Co-Issuer or a Guarantor;

(ii) to make (A) an Investment in any one or more businesses; provided that such Investment in any business is in the form of the acquisition of Capital Stock and results in the Issuer or any of its Restricted Subsidiaries, as the case may be, owning an amount of the Capital Stock of such business such that it constitutes or continues to constitute a Restricted Subsidiary, (B) capital expenditures, (C) other expenditures made in connection with the construction or development of facilities operated or to be operated by the Issuer or a Restricted Subsidiary, (D) acquisitions of properties (including fee and leasehold interests) or (E) acquisitions of other businesses, properties or assets (other than debt securities), in the case of clauses (A), (D) and this clause (E), either (i) that are or will be used or useful in a Similar Business or (ii) that replace, in whole or in part, the businesses, properties and/or assets that are the subject of such Asset Sale; provided , that, in the case of this clause (ii), a binding commitment shall be treated as a permitted application of the Net Proceeds from the date of such commitment so long as the Issuer, or such Restricted Subsidiary enters into such commitment with the good faith expectation that such Net Proceeds will be applied to satisfy such commitment within the later of such 540th day and 180 days of such commitment (an “ Acceptable Commitment ”) and, in the event any Acceptable Commitment is later cancelled or

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terminated for any reason before the Net Proceeds are applied in connection therewith, the Issuer or such Restricted Subsidiary enters into another Acceptable Commitment (a “ Second Commitment ”) within 180 days of such cancellation or termination (or, if later, 540 days after receipt of such Net Proceeds); provided , further , that if any Second Commitment is later cancelled or terminated for any reason before such Net Proceeds are applied, then such Net Proceeds shall constitute Excess Proceeds; or

(iii) any combination of the foregoing.

Notwithstanding any other provisions of this Section 4.10, (i) to the extent that any or all of the Net Proceeds of any Asset Sale by a Foreign Subsidiary (a “ Foreign Disposition ”) is (x) prohibited or delayed by applicable local law, (y) restricted by applicable organizational documents or any agreement or (z) subject to other onerous organizational or administrative impediments from being repatriated to the United States, an amount equal to the portion of such Net Proceeds so affected will not be required to be applied in compliance with this Section 4.10, and such amounts may be retained by the applicable Foreign Subsidiary; provided that if at any time within one year following the date on which the respective payment would otherwise have been required, such repatriation of any of such affected Net Proceeds is permitted under the applicable local law, the applicable organizational document or agreement or the applicable other impediment, an amount equal to such amount of Net Proceeds so permitted to be repatriated will be promptly applied (net of any taxes, costs or expenses that would be payable or reserved against if such amounts were actually repatriated whether or not they are repatriated) in compliance with this Section 4.10 and (ii) to the extent that the Issuer has determined in good faith that repatriation of any or all of the Net Proceeds of any Foreign Disposition would result in material adverse tax consequences (which, for the avoidance of doubt, includes, but is not limited to, any material tax liability as a result of a deemed dividend pursuant to Section 956 of the Code or a withholding tax) to the Issuer, any of its Subsidiaries, any Parent Company or, for as long as it owns, directly or indirectly, beneficial ownership of more than 50.0% of the Equity Interests in the Issuer, MCK, the Net Proceeds so affected may be retained by the applicable Foreign Subsidiary and an amount equal to such Net Proceeds will not be required to be applied in compliance with this Section 4.10. The non-application of any prepayment amounts as a consequence of the foregoing provisions will not, for the avoidance of doubt, constitute a Default or an Event of Default. For the avoidance of doubt, nothing in this Indenture shall be construed to require any Subsidiary to repatriate cash.

(c) Any Net Proceeds from the Asset Sale (other than any amounts excluded from this Section 4.10 as set forth in the final paragraph of Section 4.10(b)) that are not invested or applied as provided and within the time period set forth in Section 4.10(b) hereof will be deemed to constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $200.0 million, the Issuer shall make an offer (an “ Asset Sale Offer ”) to all Holders and, at the option of the Issuers, to any holders of any Indebtedness that ranks pari passu with the Notes (“ Pari Passu Indebtedness ”), to purchase the maximum aggregate principal amount of the Notes and such Pari Passu Indebtedness that is in an amount equal to at least $2,000, or an integral multiple of $1,000 in excess thereof, that may be purchased out of the Excess Proceeds at an offer price, in the case of the Notes, in cash in an amount equal to 100.0% of the principal amount thereof (or accreted value thereof, if less), plus accrued and unpaid interest, if any, to, but excluding, the date fixed for the closing of such offer, and in the case of any Pari Passu Indebtedness, at the

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offer price required by the terms thereof but not to exceed 100.0% of the principal amount thereof, plus accrued and unpaid interest, if any, in accordance with the procedures set forth in this Indenture and the agreement governing such Pari Passu Indebtedness. The Issuers will commence an Asset Sale Offer with respect to Excess Proceeds within fifteen Business Days after the date that Excess Proceeds exceed $200.0 million by mailing or electronically delivering to the Holders the notice required pursuant to the terms of this Indenture, with a copy to the Trustee, or otherwise in accordance with the procedures of the DTC. The Issuers may satisfy the foregoing obligations with respect to any Net Proceeds from an Asset Sale by making an offer to purchase Notes with respect to all or a portion of the available Net Proceeds (the “ Advance Portion ”) in advance of being required to do so by this Indenture (the “ Advance Offer ”).

To the extent that the aggregate principal amount (or accreted value, as applicable) of Notes and such Pari Passu Indebtedness, as the case may be, tendered or surrendered pursuant to an Asset Sale Offer is less than the Excess Proceeds (or in the case of an Advance Offer, the Advance Portion), the Issuer and its Restricted Subsidiaries may use any remaining Excess Proceeds (or in the case of an Advance Offer, the Advance Portion) for any purposes not prohibited under this Indenture and the obligations of the Issuer and its Restricted Subsidiaries under this Section 4.10 shall be deemed to have been satisfied to the extent of any such Asset Sale Offer and Advance Offer so made regardless of the amount tendered or surrendered pursuant thereto. If the aggregate principal amount (or accreted value, as applicable) of Notes or the Pari Passu Indebtedness, as the case may be, tendered or surrendered by such holders thereof exceeds the amount of Excess Proceeds (or in the case of an Advance Offer, the Advance Portion), the Issuers shall purchase the Notes and such Pari Passu Indebtedness, as the case may be, on a pro rata basis based on the aggregate principal amount (or accreted value, as applicable) of the Notes or such Pari Passu Indebtedness, as the case may be, tendered or surrendered with adjustments as necessary so that no Notes or Pari Passu Indebtedness, as the case may be, will be repurchased in part in an unauthorized denomination. Upon completion of (a) any such Asset Sale Offer, the amount of Excess Proceeds shall be reset to zero, and (b) any such Advance Offer, the amount of Net Proceeds the Issuers are offering to apply in such Advance Offer shall be excluded in subsequent calculations of Excess Proceeds. Additionally, upon consummation or expiration of any Asset Sale Offer or Advance Offer, any remaining Net Proceeds shall not be deemed Excess Proceeds and the Issuer and its Restricted Subsidiaries may use such Net Proceeds for any purpose not otherwise prohibited under this Indenture.

(d) Pending the final application of any Net Proceeds pursuant to this Section 4.10, the holder of such Net Proceeds may apply such Net Proceeds temporarily to reduce Indebtedness, or otherwise use such Net Proceeds in any manner not prohibited by this Indenture.

(e) The notice referred to in clause (c) of this Section 4.10, if delivered electronically or mailed in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice. If (i) the notice is delivered electronically or mailed in a manner herein provided and (ii) any Holder fails to receive such notice or a Holder receives such notice but it is defective, such Holder’s failure to receive such notice or such defect shall not affect the validity of the proceedings for the purchase of the Notes as to all other Holders that properly received such notice without defect. The Issuers shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and

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regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to an Asset Sale Offer or Advance Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture, the Issuers shall comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations described in this Indenture by virtue thereof.

The provisions of Section 3.08 and this Section 4.10 may be waived or modified with the written consent of the Holders of a majority in principal amount of all the then outstanding Notes.

Section 4.11. Transactions with Affiliates .

(a) The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Issuer (each of the foregoing, an “ Affiliate Transaction ”) involving aggregate payments or consideration in excess of $60.0 million, unless:

(i) such Affiliate Transaction is on terms that are not materially less favorable to the Issuer or its relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Issuer or such Restricted Subsidiary with an unrelated Person on an arm’s-length basis (as determined in good faith by the Issuer); and

(ii) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate payments or consideration in excess of $120.0 million, either (A) the Issuer delivers to the Trustee a resolution adopted by the majority of the Board of Directors of the Issuer approving such Affiliate Transaction and set forth in an Officer’s Certificate certifying that such Affiliate Transaction complies with clause (i) above or (B) the terms of such transactions shall have been approved by a majority of the Disinterested Directors of the Issuer.

(b) The provisions of Section 4.11(a) hereof shall not apply to the following:

(i) (A) transactions between or among the Issuer or any of its Restricted Subsidiaries (or entity that becomes a Restricted Subsidiary as a result of such transaction), and (B) any merger, consolidation or amalgamation of the Issuer and any Parent Company; provided that such merger, amalgamation or consolidation is otherwise consummated in compliance with the terms of this Indenture;

(ii) (A) Restricted Payments permitted by Section 4.07 hereof (other than pursuant to Section 4.07(b)(xii) and including any transaction specifically excluded from the definition of the term “Restricted Payments,” including pursuant to the exceptions contained in the definition thereof and the parenthetical exclusions of such definition and (B) Investments constituting “Permitted Investments” or any acquisition otherwise permitted by this Indenture;

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(iii) (A) the payment of management, consulting, monitoring, transaction, advisory and other fees, indemnities and expenses pursuant to the Support and Services Agreement (plus any unpaid management, consulting, monitoring, transaction, advisory and other fees, indemnities and expenses accrued in any prior year) and any termination fees (including any such cash lump sum or present value fee upon the consummation of a corporate event, including an initial public equity offering) pursuant to the Support and Services Agreement, or any amendment thereto or replacement thereof so long as any such amendment or replacement is not materially disadvantageous in the good faith judgment of the Board of Directors of the Issuer to the Holders when taken as a whole, as compared to the Support and Services Agreement as in effect on or about the Completion Date, and (B) the payment of indemnification and similar amounts to, and reimbursement of expenses to, the Investors and their officers, directors, employees and affiliates, in each case with respect to this clause (B), approved by, or pursuant to arrangements approved by, the Board of Directors;

(iv) (A) employment agreements, employee benefit and incentive compensation plans and arrangements, (B) the payment of reasonable and customary fees and compensation paid to, and indemnities and reimbursements and employment and severance arrangements provided on behalf of or for the benefit of, current or former employees, directors, officers, managers, members of management, independent contractors or consultants (or their respective Controlled Investment Affiliates or Immediate Family Members or any permitted transferees) of the Issuer, any Parent Company or any of its Restricted Subsidiaries, (C) payments, loans, advances or guarantees (or cancellation of loans, advances or guarantees) to future, present or former employees, officers, directors, managers, consultants or independent contractors (or their respective Controlled Investment Affiliates or Immediate Family Members or any permitted transferees) of the Issuer, any Parent Company or any of its Restricted Subsidiaries, or guarantees in respect thereof for bona fide business purposes or in the ordinary course of business or consistent with industry practice and (D) any subscription agreement or similar agreement pertaining to the repurchase of Equity Interests pursuant to put/call rights or similar rights with current, former or future officers, directors, employees, managers, consultants and independent contractors (or their respective Controlled Investment Affiliates or Immediate Family Members or any permitted transferees) of the Issuer, any Parent Company or any of its Restricted Subsidiaries;

(v) transactions in which the Issuer or any of its Restricted Subsidiaries, as the case may be, delivers to the Trustee a letter from an Independent Financial Advisor stating that such transaction is fair to the Issuer or such Restricted Subsidiary from a financial point of view or stating that the terms are not materially less favorable, when taken as a whole, to the Issuer or its relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Issuer or such Restricted Subsidiary with an unrelated Person on an arm’s-length basis;

(vi) any agreement or arrangement as in effect as of the Completion Date, or any amendment thereto or replacement thereof (so long as any such amendment or replacement is not disadvantageous in any material respect in the good faith judgment of the Issuer to the Holders when taken as a whole as compared to the applicable agreement as in effect on the Completion Date);

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(vii) the existence of, or the performance by the Issuer or any of its Restricted Subsidiaries of its obligations under the terms of, any equityholders, investor rights or similar agreement (including any registration rights agreement or purchase agreement related thereto) to which it (or any Parent Company) is a party as of the Completion Date and any amendment thereto and any similar agreements which it (or any Parent Company) may enter into thereafter; provided , that the existence of, or the performance by the Issuer or any of its Restricted Subsidiaries (or such Parent Company) of obligations under any future amendment to any such existing agreement or arrangement or under any similar agreement or arrangement entered into after the Completion Date shall only be permitted by this clause (vii) to the extent that the terms of any such amendment or new agreement or arrangement are not otherwise, when taken as a whole, more disadvantageous in any material respect in the good faith judgment of the Issuer to the Holders than those in effect on the Completion Date;

(viii) (A) the Transactions and the payment of all fees and expenses related to the Transactions, including Transaction Expenses (including any Restricted Payment made in connection with the Transactions or used to fund amounts owed to Affiliates and Equity Holders (including dividends to any Parent Company to permit payment by such Parent Company of such amounts)) and (B) any transactions and payments contemplated by, and the performance by the Issuer or any of its Restricted Subsidiaries of any other obligations under, the Transaction Documents (including any Restricted Payment made in connection with such transactions or used to fund amounts owed to Affiliates (including dividends to any Parent Company to permit payment by such Parent Company of such amounts));

(ix) transactions with customers, clients, suppliers, contractors, joint venture partners or purchasers or sellers of goods or services, or transactions otherwise relating to the purchase or sale of goods or services, in each case in the ordinary course of business consistent with industry practice and otherwise in compliance with the terms of this Indenture which are fair to the Issuer and its Restricted Subsidiaries, in the reasonable determination of the Issuer, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party;

(x) the issuance, sale or transfer of (A) Equity Interests (other than Disqualified Stock) of the Issuer or any Parent Company to any Person and the granting and performing of customary rights (including registration rights) in connection therewith, and any contribution to the capital of the Issuer and (B) directors’ qualifying shares and shares issued to foreign nationals as required by applicable law;

(xi) sales of accounts receivable, or participations therein, or Securitization Assets or related assets in connection with any Qualified Securitization Facility or any related transaction effected in order to consummate a financing contemplated by a Qualified Securitization Facility or a financing related thereto;

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(xii) payments by the Issuer or any of its Restricted Subsidiaries to any of the Investors, made for any financial advisory, consulting, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures, which payments are approved by the Issuer in good faith;

(xiii) Indebtedness or the grant or award of Disqualified Stock and other Equity Interests (and cancellation of any thereof) of the Issuer, any Parent Company and any Restricted Subsidiaries and Preferred Stock (and cancellation of any thereof) of any Restricted Subsidiary (including, in each case, any payments with respect thereof) to any future, current or former employee, director, officer, manager, member of management, independent contractor or consultant (or their respective Controlled Investment Affiliates or Immediate Family Members or permitted transferees) of the Issuer, any of its Subsidiaries or any Parent Company pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement that are, in each case, approved by the Issuer in good faith; and any employment agreements, severance arrangements, stock option plans and other compensatory arrangements (and any successor plans thereto) and any supplemental executive retirement benefit plans or arrangements with any such employees, directors, officers, managers, members of management, independent contractors or consultants (or their respective Controlled Investment Affiliates or Immediate Family Members or permitted transferees) that are, in each case, approved by the Issuer in good faith;

(xiv) (A) investments by Permitted Holders or Affiliates in securities or Indebtedness of the Issuer or any of its Restricted Subsidiaries (and payment of reasonable out-of-pocket expenses incurred by such Permitted Holders or Affiliates in connection therewith) so long as the investment is being offered by the Issuer or such Restricted Subsidiary generally to other investors on the same or more favorable terms, and (B) payments and other transactions to (or with) Permitted Holders or Affiliates in respect of securities or Indebtedness of the Issuer or any of its Restricted Subsidiaries contemplated in the foregoing subclause (A) or that were acquired from Persons other than the Issuer and its Restricted Subsidiaries, in each case, in accordance with the terms of such securities or Indebtedness;

(xv) payments to or from, and transactions with, any joint venture or Unrestricted Subsidiary in the ordinary course of business or consistent with industry practice (including, without limitation, any cash management activities related thereto);

(xvi) payments by the Issuer (and any Parent Company) and its Subsidiaries pursuant to tax sharing agreements among the Issuer (and any such Parent Company) and its Subsidiaries, to the extent such payments are permitted under clause (xiv)(B) of Section 4.07(b) hereof;

(xvii) any lease entered into between the Issuer or any Restricted Subsidiary, as lessee or lessor, and any Affiliate of the Issuer, as lessor or lessee, and transactions pursuant to that lease, which lease is approved by the Issuer in good faith;

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(xviii) intellectual property licenses in the ordinary course of business or consistent with industry practice;

(xix) the payment of reasonable out-of-pocket costs and expenses relating to registration rights and indemnities provided to equityholders of the Issuer or any Parent Company pursuant to any equityholders agreement, registration rights agreement or similar agreement;

(xx) (A) pledges and other transfers of Equity Interests in Unrestricted Subsidiaries and (B) any transactions with an Affiliate in which the consideration paid consists solely of Equity Interests of the Issuer or a Parent Company;

(xxi) (A) Permitted Intercompany Activities and related transactions and (B) any payments by the Issuer and the Issuer’s Subsidiaries made pursuant to any Tax Agreement;

(xxii) (A) transactions with a Person that is an Affiliate of the Issuer (other than an Unrestricted Subsidiary) solely because the Issuer or any Restricted Subsidiary owns Equity Interests in such Person and (B) transactions with any Person that is an Affiliate solely because a director or officer of such Person is a director or officer of the Issuer, any Restricted Subsidiary or any Parent Company;

(xxiii) transactions permitted by, and complying with, the provisions of Section 5.01 hereof solely for the purpose of (A) reorganizing to facilitate any initial public offering of securities of the Issuer or any Parent Company, (B) forming a holding company or (C) reincorporating the Issuer in a new jurisdiction;

(xxiv) transactions undertaken in good faith (as determined by the Issuer) for the purposes of improving the consolidated tax efficiency of the Issuer and its Restricted Subsidiaries and not for the purpose of circumventing any covenant set forth in this Indenture so long as any such transactions, taken as a whole, are not materially disadvantageous to the Holders in the good faith judgment of the Issuer;

(xxv) transactions undertaken in the ordinary course of business pursuant to membership in a purchasing consortium; and

(xxvi) transactions pursuant to, or contemplated by, the Echo Connect Option Agreement.

Section 4.12. Liens . The Issuer will not, and will not permit the Co-Issuer or any Guarantor to, directly or indirectly, create, incur or assume any Lien (except Permitted Liens) that secures Obligations under any Indebtedness or any related guarantee of Indebtedness, on any asset or property of the Issuer, the Co-Issuer or any Guarantor, or any income or profits therefrom, or assign or convey any right to receive income therefrom, unless:

(a) in the case of Liens securing Subordinated Indebtedness, the Notes and related Guarantees are secured by a Lien on such property, assets or proceeds that is senior in priority to such Liens until such time as such Subordinated Indebtedness is no longer secured by such Liens; and

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(b) in all other cases, the Notes or the Guarantees are equally and ratably secured until such time as such Obligations are no longer secured by such Liens, except that the foregoing shall not apply to or restrict Liens securing obligations in respect of the Notes and the Guarantees.

For purposes of determining compliance with this Section 4.12, (i) a Lien need not be incurred solely by reference to one category of Permitted Liens described in the definition thereof but is permitted to be incurred in part under any combination thereof and of any other available exemption and (ii) in the event that a Lien (or any portion thereof) meets the criteria of one or more of the categories of Permitted Liens, such Lien (or any portion thereof) shall be divided and classified or later re-divided and reclassified on one or more occasions among one or more of such categories as described in Section 1.07 hereof.

Any Lien created for the benefit of the Holders pursuant to this Section 4.12 shall be deemed automatically and unconditionally released and discharged upon the release and discharge of each of the Liens described in clauses (a) and (b) above or upon such Liens no longer attaching to assets or property of the Issuer or the Co-Issuer or a Guarantor.

The expansion of Liens by virtue of the accretion of accreted value, the accretion or amortization of original issue discount, the payment of interest or dividends in the form of Indebtedness and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies will, in each case, not be deemed to be an incurrence of Liens for purposes of this Section 4.12.

Section 4.13. Company Existence . Subject to Article 5 hereof, the Issuer shall do or cause to be done all things necessary to preserve and keep in full force and effect its existence, and the corporate, partnership, limited liability company or other existence of each of its Restricted Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Issuer or any such Restricted Subsidiary; provided that the Issuer shall not be required to preserve the corporate, partnership or other existence of its Restricted Subsidiaries, if the Issuer in good faith shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Issuer and its Restricted Subsidiaries, taken as a whole. For the avoidance of doubt, the Issuer and its Restricted Subsidiaries will be permitted to change their organizational form; provided that for so long as the Issuer is organized as a partnership or a limited liability company, it will maintain a corporate co-issuer of the Notes.

Section 4.14. Offer to Repurchase Upon Change of Control . If a Change of Control occurs, unless the Issuers have previously or concurrently electronically delivered or mailed a redemption notice with respect to all the outstanding Notes as described under Section 3.07 or Section 11.01 hereof, the Issuers shall make an offer to purchase all of the Notes pursuant to the offer described below (the “ Change of Control Offer ”) at a price in cash (the “ Change of Control Payment ”) equal to 101.0% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to, but excluding, the date of purchase, subject to the right of Holders of record on the relevant Record Date to receive interest due on the

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relevant Interest Payment Date falling on or prior to the Change of Control Payment Date. Within 60 days following any Change of Control, the Issuers will send notice of such Change of Control Offer electronically or by first-class mail, with a copy to the Trustee, to each Holder at the address of such Holder appearing in the Note Register or otherwise in accordance with the Applicable Procedures, with the following information:

(a) that a Change of Control Offer is being made pursuant to this Section 4.14 and that all Notes properly tendered pursuant to such Change of Control Offer will be accepted for payment by the Issuers;

(b) the purchase price and the purchase date, which will be no earlier than 15 days nor later than 60 days from the date such notice is mailed or otherwise delivered (the “ Change of Control Payment Date ”), except in the case of a conditional Change of Control Offer made in advance of a Change of Control;

(d) that, unless the Issuers default in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest on the Change of Control Payment Date;

(e) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender such Notes, with the form entitled “Option of Holder to Elect Purchase” on the reverse of such Notes completed, to the Paying Agent specified in the notice at the address specified in the notice or otherwise in accordance with DTC procedures, prior to the close of business on the third Business Day preceding the Change of Control Payment Date;

(f) that Holders will be entitled to withdraw their tendered Notes and their election to require the Issuers to purchase such Notes; provided that the Paying Agent receives, not later than the close of business on the second Business Day prior to the expiration date of the Change of Control Offer, a facsimile transmission or letter or other notice in accordance with DTC procedures setting forth the name of the Holder, the principal amount of Notes tendered for purchase, and a statement that such Holder is withdrawing its tendered Notes, or a specified portion thereof, and its election to have such Notes purchased;

(g) that Holders whose Notes are being purchased only in part shall be issued new Notes and such new Notes will be equal in principal amount to the unpurchased portion of the Notes surrendered. The unpurchased portion of the Notes must be equal to at least $2,000 or any integral multiple of $1,000 in excess thereof;

(h) if such notice is delivered prior to the occurrence of a Change of Control, stating that the Change of Control Offer is conditional on the occurrence of such Change of Control and shall describe each such condition, and, if applicable, shall state that, in the Issuers’ discretion, the Change of Control Payment Date may be delayed until such time (which may be more than 60 days after the date the notice was mailed or delivered,

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including by electronic transmission) as any or all such conditions shall be satisfied (or waived by the Issuers in their sole discretion), or that such repurchase may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied (or waived, in the Issuers’ sole discretion) by the Change of Control Payment Date, or by the Change of Control Payment Date as so delayed, or such notice may be rescinded at any time in the Issuers’ discretion if in the good faith judgment of the Issuers any or all of such conditions will not be satisfied. In addition, the Issuers may provide in such notice that payment of the purchase price and performance of the Issuers’ obligations with respect to such purchase may be performed by another Person; and

(i) any other instructions, as determined by the Issuers, consistent with this Section 4.14 that a Holder must follow.

While the Notes are in global form and the Issuers make an offer to purchase all of the Notes pursuant to the Change of Control Offer, a Holder may exercise its option to elect for the purchase of the Notes through the facilities of DTC, subject to its rules and regulations.

The notice referred to above, if delivered electronically or mailed in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice. If (a) the notice is delivered or mailed in a manner herein provided and (b) any Holder fails to receive such notice or a Holder receives such notice but it is defective, such Holder’s failure to receive such notice or such defect shall not affect the validity of the proceedings for the purchase of the Notes as to all other Holders that properly received such notice without defect. The Issuers shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture, the Issuer shall comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations described in this Indenture by virtue thereof.

On the Change of Control Payment Date, the Issuers shall, to the extent permitted by law:

(i) accept for payment all Notes issued by them or portions thereof validly tendered pursuant to the Change of Control Offer;

(ii) deposit with a Paying Agent an amount equal to the aggregate Change of Control Payment in respect of all Notes or portions thereof so tendered and not validly withdrawn; and

(iii) deliver, or cause to be delivered, to the Trustee for cancellation the Notes so accepted together with an Officer’s Certificate to the Trustee stating that such Notes or portions thereof have been tendered to and purchased by the Issuers.

The Issuers shall not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Issuers and purchases all Notes validly tendered and not validly withdrawn under such Change of Control Offer.

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Other than as specifically provided in this Section 4.14, any purchase pursuant to this Section 4.14 shall be made pursuant to the provisions of Sections 3.02, 3.05, 3.06 and 3.07(e) and (f) hereof, and references therein to “redeem,” “redemption,” “Redemption Date” and similar words shall be deemed to refer to “purchase,” “repurchase” and “Change of Control Payment Date” and similar words, as applicable.

The provisions of this Section 4.14 may be waived or modified (at any time, including after a Change of Control) with the written consent of the Holders of a majority in principal amount of all the then outstanding Notes.

Section 4.15. Limitation on Guarantees of Indebtedness by Restricted Subsidiaries . The Issuer will not permit any of its Wholly-Owned Subsidiaries that are Restricted Subsidiaries (and non-Wholly-Owned Subsidiaries if such non-Wholly-Owned Subsidiaries guarantee Indebtedness under the Senior Secured Credit Facilities or Capital Markets Indebtedness of the Issuer or the Co-Issuer or any Guarantor), other than a Guarantor, the Co-Issuer or an Excluded Subsidiary, to guarantee the payment of (i) any Indebtedness of the Issuer, the Co-Issuer or any Guarantor under the Senior Secured Credit Facilities incurred under Section 4.09(b)(i) hereof or (ii) Capital Markets Indebtedness of the Issuer or the Co-Issuer or any Guarantor, in each case, having an aggregate principal amount outstanding in excess of $200.0 million, unless:

(a) such Restricted Subsidiary within 60 days after the guarantee of such Indebtedness executes and delivers a supplemental indenture to this Indenture, the form of which is attached as Exhibit E hereto, providing for a Guarantee by such Restricted Subsidiary, except that with respect to a guarantee of Indebtedness of the Issuer, the Co-Issuer or any Guarantor, if such Indebtedness is by its express terms subordinated in right of payment to the Notes or such Guarantor’s Guarantee, any such guarantee by such Restricted Subsidiary with respect to such Indebtedness shall be subordinated in right of payment to such Guarantee substantially to the same extent as such Indebtedness is subordinated to the Notes; and

(b) such Restricted Subsidiary waives and shall not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other applicable rights against the Issuer or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Guarantee;

provided that this Section 4.15 shall not be applicable to any guarantee of any Restricted Subsidiary that existed at the time such Person became a Restricted Subsidiary and was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary. The Issuer may elect, in its sole discretion, to cause any Subsidiary that is not otherwise required to be a Guarantor to become a Guarantor, in which case such Subsidiary shall not be required to comply with the 60 day period described in clause (a) of this Section 4.15 and such Guarantee may be released at any time in the Issuer’s sole discretion.

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Section 4.16. Limitation on Business Activities of the Co-Issuer.

The Co-Issuer may not hold any material assets, become liable for any material obligations or engage in any material business activities; provided that it may (i) be a co-obligor or guarantor with respect to the Notes or any other Indebtedness of the Issuer or its Subsidiaries that is permitted to be issued or incurred under Section 4.09 hereof, (ii) issue its Capital Stock to the Issuer or any Wholly-Owned Restricted Subsidiary of the Issuer and (iii) engage in any activities related thereto or necessary in connection therewith. The Co-Issuer shall be a Wholly-Owned Subsidiary of the Issuer at all times.

Section 4.17. Suspension of Covenants .

(a) If on any date following the Completion Date (i) the Notes have an Investment Grade Rating from either of the Rating Agencies and (ii) no Default has occurred and is continuing under this Indenture (the occurrence of the events described in the foregoing clauses (i) and (ii) being collectively referred to as a “ Covenant Suspension Event ” and the date thereof being referred to as the “ Suspension Date ”), then (A) the Guarantees will be automatically suspended and no longer be applicable until the occurrence of the Reversion Date (and will be automatically reinstated upon the occurrence of the Reversion Date) and (B) Section 4.07, Section 4.08, Section 4.09, Section 4.10, Section 4.11, Section 4.15, clause (iv) of Section 5.01(a) and Section 5.01(f) hereof shall no longer be applicable to the Notes (collectively, the “ Suspended Covenants ”) until the occurrence of the Reversion Date.

(b) During a Suspension Period, the Issuer may not designate any of its Subsidiaries as Unrestricted Subsidiaries.

(c) In the event that the Issuer and its Restricted Subsidiaries are not subject to the Suspended Covenants under this Indenture for any period of time as a result of the foregoing, and on any subsequent date (the “ Reversion Date ”) the Notes no longer have an Investment Grade Rating, then the Issuer and its Restricted Subsidiaries will thereafter again be subject to the Suspended Covenants under this Indenture with respect to future events. The period of time between the Suspension Date and the Reversion Date is referred to in this Indenture as the “ Suspension Period .” Additionally, upon the occurrence of a Covenant Suspension Event, the amount of Excess Proceeds from any Asset Sales shall be reset to zero.

(d) During the Suspension Period, the Issuer and its Restricted Subsidiaries will be entitled to incur Liens to the extent provided for under Section 4.12 (including, without limitation, Permitted Liens) and any Permitted Liens which may refer to one or more Suspended Covenants shall be interpreted as though such applicable Suspended Covenant(s) continued to be applicable during the Suspension Period (but solely for the purposes of Section 4.12 and the definition of “Permitted Liens” and for no other covenant).

(e) Notwithstanding the foregoing, in the event of any such reinstatement of the Suspended Covenants, no action taken or omitted to be taken by the Issuer or any of its Restricted Subsidiaries or events occurring prior to such reinstatement will give rise to a Default or Event of Default under this Indenture with respect to the Notes, and no Default or Event of Default will be deemed to exist or have occurred as a result of any failure by the Issuers or any

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Restricted Subsidiary to comply with any of the Suspended Covenants during the Suspension Period; provided, that (i) with respect to Restricted Payments made after the Reversion Date, the amount available to be made as Restricted Payments will be calculated as though Section 4.07 hereof had been in effect prior to, but not during, the Suspension Period; (ii) all Indebtedness incurred, or Disqualified Stock or Preferred Stock issued, during the Suspension Period will be classified to have been incurred or issued pursuant to clause (iii) of Section 4.09(b) hereof; (iii) any Affiliate Transaction entered into after such reinstatement pursuant to an agreement entered into during any Suspension Period shall be deemed to be permitted pursuant to clause (vi) of Section 4.11(b) hereof; (iv) any encumbrance or restriction on the ability of any Restricted Subsidiary that is not a Guarantor to take any action described in clauses (i) through (iii) of Section 4.08(a) hereof that becomes effective during any Suspension Period shall be deemed to be permitted pursuant to clause (i) of Section 4.08(b) hereof; (v) no Subsidiary of the Issuer shall be required to comply with Section 4.15 hereof after such reinstatement with respect to any guarantee entered into by such Subsidiary during any Suspension Period; and (vi) all Investments made during the Suspension Period will be deemed to have been outstanding on the Completion Date, so that they are classified as Permitted Investments permitted under clause (5) of the definition of “Permitted Investments.”

(f) Notwithstanding that the Suspended Covenants may be reinstated after the Reversion Date, (1) no Default, Event of Default or breach of any kind will be deemed to exist under this Indenture, the Notes or the Guarantees with respect to the Suspended Covenants, and none of the Issuer or any of its Subsidiaries will bear any liability for any actions taken or events occurring during the Suspension Period, or any actions taken at any time pursuant to any contractual obligation arising during a Suspension Period, in each case, as a result of a failure to comply with the Suspended Covenants during the Suspension Period (or, upon termination of the Suspension Period or after that time, based on any action taken or event that occurred during the Suspension Period) and (2) following a Reversion Date, the Issuer and each Restricted Subsidiary will be permitted, without causing a Default or Event of Default, to honor, comply with or otherwise perform any contractual commitments or obligations arising during any Suspension Period (that were permitted to be entered into at such time) and to consummate any transactions contemplated thereby.

(g) The Trustee shall have no independent obligation to determine if any Suspension Date or Reversion Date has occurred.

Section 4.18. Escrow of Gross Proceeds .

(a) Concurrently with the closing of the offering of the Notes on the Issue Date, the Issuers shall enter into an escrow agreement (the “ Escrow Agreement ”) with the Trustee and Wilmington Trust, National Association, as escrow agent (the “ Escrow Agent ”), and on the Issue Date deposit (or cause to be deposited) the gross proceeds of this offering of the Notes into the Escrow Account and deliver (or cause to be delivered) to the Trustee one or more guarantees executed by Change Healthcare Holdings, Inc. (or Change Healthcare, Inc. or one or more of its other Subsidiaries) and/or MED3000 Group, Inc. (or MCK one or more of its other Subsidiaries), which guarantees will be on a several basis and shall collectively guaranty payment of accrued and unpaid interest from and including the Issue Date to but excluding the Special Mandatory Redemption Date (the “ Escrow Guarantees ” ).

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(b) The Issuers will grant to the Trustee, for its benefit and the benefit of the Holders, a first priority security interest in the Escrow Account and all amounts on deposit therein to secure the Obligations under the Notes, this Indenture and the Escrow Agreement until disbursement as described below.

(c) Pursuant to the Escrow Agreement, the Escrow Agent will release funds held in the Escrow Account (the “ Release ”) to, or at the order of or as directed by, the Issuer (the date of such release being referred to as the “ Escrow Release Date ”) upon delivery by the Issuer to the Escrow Agent and the Trustee of an Officer’s Certificate addressed to the Escrow Agent and the Trustee on or prior to 12:00 p.m. (New York time) on July 6, 2017, certifying that the following conditions (the “ Escrow Release Conditions ”) will be met substantially concurrently with or promptly following the Release on the Escrow Release Date:

(i) the Transactions shall be consummated; and

(ii) immediately upon giving effect to the Transactions, each of the Issuer’s wholly-owned domestic Restricted Subsidiaries (other than the Co-Issuer) that guarantees obligations under the Senior Secured Credit Facilities on the Escrow Release Date shall become a Guarantor of the Notes, in each case pursuant to the Completion Date Supplemental Indenture.

Section 4.19. Activities Prior to the Release .

(a) Prior to the Escrow Release Date, the primary activities of the Issuers will be restricted to issuing the Notes, issuing capital stock to, and receiving capital contributions from, a direct or indirect parent entity, performing its obligations in respect of the Notes under this Indenture and the Escrow Agreement, performing any obligations under the Contribution Agreement and the other Transactions Documents (as defined in the Contribution Agreement), including consummation of the Transactions, and redeeming the Notes, if applicable, and conducting such other activities as are necessary or appropriate to carry out the activities described above. Prior to the Escrow Release Date, the Issuers will not own, hold or otherwise have any interest in any material assets other than the Escrow Account (including all amounts on deposit therein, including Eligible Escrow Investments and any proceeds or earnings thereof), capital stock of the Co-Issuer (in the case of the Issuer), cash and Cash Equivalents and rights under the Transaction Documents.

(b) Prior to the Escrow Release Date, neither the Issuer nor the Co-Issuer shall engage in any business activity or enter into any transaction or agreement (including, without limitation, making any Restricted Payment, incurring any Indebtedness (other than obligations owing to Change Healthcare, Inc. (or one of its Subsidiaries) or MCK (or one of its Subsidiaries) or any other Investor or Parent Company in connection with the escrow arrangements contemplated by this Indenture), incurring any Liens except in favor of the Trustee and the Holders, entering into any merger, consolidation or sale of all or substantially all of its assets or engaging in any transaction with its Affiliates (other than obligations owing to Change Healthcare, Inc. (or one of its Subsidiaries) or MCK (or one of its Subsidiaries) or any other Investor or Parent Company in connection with the escrow arrangements contemplated by this Indenture)) except in the ordinary course of the primary activities described above or as necessary or advisable (as determined by the Issuer) to effectuate the Transactions; provided , that the Issuer may use any proceeds released to it pursuant to the Escrow Agreement to make Restricted Payments at any time, including prior to or after the Completion Date.

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ARTICLE 5

SUCCESSORS

Section 5.01. Merger, Amalgamation, Consolidation or Sale of All or Substantially All Assets .

(a) The Issuer may not consolidate, amalgamate or merge with or into or wind up into (whether or not the Issuer is the surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to any Person unless:

(i) the Issuer is the surviving Person or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than the Issuer) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made, is a Person organized or existing under the laws of the jurisdiction of organization of the Issuer or the laws of the United States of America, any state thereof, the District of Columbia, or any territory thereof (such Person, as the case may be, being herein called the “ Successor Company ”); provided that in the case where the surviving Person is not a corporation, a co-obligor of the Notes is a corporation;

(ii) the Successor Company, if other than the Issuer, expressly assumes all the obligations of the Issuer under the Notes pursuant to supplemental indentures or other customary documents or instruments;

(iii) immediately after such transaction, no Default exists;

(iv) immediately after giving pro forma effect to such transaction and any related financing transactions, as if such transactions had occurred at the beginning of the most recently ended Test Period:

(A) the Issuer (or the Successor Company, as applicable) would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Test, or

(B) the Fixed Charge Coverage Ratio for the Issuer (or the Successor Company, as applicable) and its Restricted Subsidiaries would be equal to or greater than the Fixed Charge Coverage Ratio for the Issuer and its Restricted Subsidiaries immediately prior to such transaction;

(v) each Guarantor, unless it is the other party to the transactions described above, in which case clause (i)(B) of Section 5.01(f) hereof shall apply, shall have by supplemental indenture confirmed that its Guarantee shall apply to such Person’s obligations under this Indenture and the Notes;

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(vi) the Co-Issuer, unless it is the party to the transactions described above, shall have by supplemental indenture confirmed that it continues to be a co-obligor of the Notes; and

(vii) the Issuer or, if applicable, the Successor Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, amalgamation, merger or transfer and such supplemental indentures, if any, comply with this Indenture.

(b) The Successor Company (if other than the Issuer) shall succeed to, and be substituted for, the Issuer under this Indenture, the Guarantees and the Notes, as applicable, and in such event the Issuer will automatically be released and discharged from its obligations under this Indenture, the Guarantees and the Notes (other than in connection with any lease).

(i) any Restricted Subsidiary may consolidate or amalgamate with or merge with or into or wind up into or sell, assign, lease, convey, transfer or otherwise dispose of all or part of its properties and assets to the Issuer or a Guarantor; and

(ii) the Issuer may consolidate with, amalgamate with or merge with or into, or wind up into an Affiliate of the Issuer solely for the purpose of reincorporating the Issuer in the United States of America, any state thereof, the District of Columbia or any territory thereof so long as the amount of Indebtedness of the Issuer and its Restricted Subsidiaries is not increased thereby.

(d) [Reserved].

(e) The Co Issuer may not consolidate, amalgamate or merge with or into or wind up into (whether or not the Co Issuer is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the Co Issuer’s properties or assets, in one or more related transactions, to any Person, unless:

(i) the Co-Issuer is the surviving Person or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than the Co-Issuer) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made, is a corporate Wholly-Owned Restricted Subsidiary of the Issuer organized and validly existing under the laws of the United States, any state thereof, the District of Columbia or any territory thereof (such Person, as the case may be, being herein called the “ Successor Co-Issuer ”) and expressly assumes all the obligations of the Co-Issuer under the Notes and this Indenture pursuant to supplemental indentures or other customary documents or instruments;

(ii) immediately after such transaction, no Default exists; and

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(iii) the Co Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, amalgamation, merger or transfer and such supplemental indenture, if any, comply with this Indenture.

The Successor Co-Issuer (if other than the Co-Issuer) will succeed to, and be substituted for, the Co-Issuer under this Indenture, the Guarantees and the Notes, as applicable, and in such event the Co-Issuer will automatically be released from its obligations under this Indenture, the Guarantees and the Notes.

(f) Subject to Section 10.06 hereof, no Guarantor shall, and the Issuer shall not permit any Guarantor to, consolidate, amalgamate or merge with or into or wind up into (whether or not such Guarantor is the surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to any Person unless:

(i) (A) such Guarantor is the surviving Person or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than such Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a Person organized or existing under the laws of the jurisdiction of organization of such Guarantor, as applicable, or the laws of the United States of America, any state thereof, the District of Columbia, or any territory thereof (such surviving Guarantor or such Person, as the case may be, being herein called the “ Successor Person ”);

(B) the Successor Person, if other than such Guarantor, expressly assumes all the obligations of such Guarantor under this Indenture and such Guarantor’s related Guarantee pursuant to supplemental indentures or other customary documents or instruments;

(D) the Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, amalgamation, merger or transfer and such supplemental indentures, if any, comply with this Indenture; or

(ii) the transaction is not prohibited by, if applicable, Section 4.10(a) hereof; or

(iii) in the case of assets comprised of Equity Interests of Subsidiaries that are not Guarantors, such Equity Interests are sold, assigned, transferred, leased, conveyed or otherwise disposed of to one or more Restricted Subsidiaries.

(g) Subject to Section 10.06 hereof, the Successor Person (if other than such Guarantor) will succeed to, and be substituted for, such Guarantor under this Indenture and such Guarantor’s Guarantee and such Guarantor will be automatically released and discharged from its obligations under this Indenture and such Guarantor’s Guarantee. Notwithstanding the foregoing, any Guarantor may (a) merge, amalgamate or consolidate with or into, wind up into or

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sell, assign, transfer, lease, convey or otherwise dispose of all or part of its properties and assets to another Guarantor or the Issuer, (b) consolidate with, amalgamate with or merge with or into, or wind up into an Affiliate of the Issuer solely for the purpose of reorganizing the Guarantor in the United States, any state thereof, the District of Columbia or any territory thereof, (c) convert into a corporation, partnership, limited partnership, limited liability company or trust organized or existing under the laws of the jurisdiction of organization of such Guarantor, or (d) liquidate or dissolve or change its legal form if the Issuer determines in good faith that such action is in the best interests of the Issuer, in each case, without regard to the requirements set forth in Section 5.01(f).

(h) Notwithstanding anything to the contrary in this Section 5.01, the Issuer may contribute Capital Stock of any or all of its Subsidiaries to any Guarantor.

(i) Notwithstanding the foregoing, this Section 5.01 will not apply to the Transactions.

Section 5.02. Successor Person Substituted . Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Issuer, the Co-Issuer or a Guarantor in accordance with Section 5.01 hereof, the successor Person formed by such consolidation or into or with which the Issuer, the Co-Issuer or such Guarantor, as applicable, is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture referring to the Issuer, the Co-Issuer or such Guarantor, as applicable, shall refer instead to the successor Person, as applicable, and not to the Issuer, the Co-Issuer or such Guarantor, as applicable), and may exercise every right and power of the Issuer, the Co-Issuer or such Guarantor, as applicable, under this Indenture with the same effect as if such successor Person, as applicable, had been named as the Issuer, the Co-Issuer or a Guarantor, as applicable, herein; provided that the predecessor Issuer and/or Co-Issuer shall be relieved from the obligation to pay the principal of and interest on the Notes and shall no longer be subject to this Indenture.

ARTICLE 6

DEFAULTS AND REMEDIES

Section 6.01. Events of Default .

(a) An “ Event of Default ,” wherever used herein, means any one of the following events:

(i) default in payment when due and payable, upon redemption, acceleration or otherwise, of principal of, or premium, if any, on the Notes;

(ii) default for 30 days or more in the payment when due of interest on or with respect to the Notes;

(iii) subject to Section 4.03(f) hereof, failure by the Issuer, the Co-Issuer or any Guarantor for 60 days after receipt of written notice given by the Trustee or the Holders of not less than 30.0% in aggregate principal amount of the then outstanding Notes to comply with any of its obligations, covenants or agreements (other than a default referred to in clause (i) or (ii) above) contained in this Indenture or the Notes;

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(iv) default under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by the Issuer or any of its Restricted Subsidiaries or the payment of which is guaranteed by the Issuer or any of its Restricted Subsidiaries, other than Indebtedness owed to the Issuer or a Restricted Subsidiary, whether such Indebtedness or guarantee now exists or is created after the issuance of the Notes, if both:

(A) such default either results from the failure to pay any principal of such Indebtedness at its stated final maturity (after giving effect to any applicable grace periods) or relates to an obligation other than the obligation to pay principal of any such Indebtedness at its stated final maturity and results in the holder or holders of such Indebtedness causing such Indebtedness to become due prior to its stated maturity; and

(B) the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at its stated final maturity (after giving effect to any applicable grace periods), or the maturity of which has been so accelerated, aggregate $200.0 million or more outstanding;

(v) failure by the Issuer or any Restricted Subsidiary that is a Significant Subsidiary (or any group of Restricted Subsidiaries that taken together (as of the latest consolidated financial statements of the Issuer made available to the Holders) would constitute a Significant Subsidiary) to pay final judgments aggregating in excess of $200.0 million (net of amounts covered by insurance policies issued by insurance companies), which final judgments remain unpaid, undischarged and unstayed for a period of more than 60 days after such judgment becomes final, and in the event such judgment is covered by insurance, an enforcement proceeding has been commenced by any creditor upon such judgment or decree which is not promptly stayed;

(vi) the Issuer or any Significant Subsidiary (or any group of Restricted Subsidiaries that taken together (as of the latest consolidated financial statements of the Issuer made available to the Holders) would constitute a Significant Subsidiary), pursuant to or within the meaning of any Bankruptcy Law:

(A) commences proceedings to be adjudicated bankrupt or insolvent;

(B) consents to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under applicable Bankruptcy Law;

(C) consents to the appointment of a receiver, liquidator, assignee, trustee, sequestrator or other similar official of it or for all or substantially all of its property;

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(D) makes a general assignment for the benefit of its creditors; or

(E) generally is not paying its debts as they become due;

(vii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(A) is for relief against the Issuer or any Significant Subsidiary (or any group of Restricted Subsidiaries that taken together (as of the latest consolidated financial statements of the Issuer made available to the Holders) would constitute a Significant Subsidiary), in a proceeding in which the Issuer or any such Significant Subsidiary or such group of Restricted Subsidiaries is to be adjudicated bankrupt or insolvent;

(B) appoints a receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Issuer or any Significant Subsidiary (or any group of Restricted Subsidiaries that taken together (as of the latest consolidated financial statements of the Issuer made available to the Holders) would constitute a Significant Subsidiary), or for all or substantially all of the property of the Issuer or any such Significant Subsidiary or such group of Restricted Subsidiaries; or

(C) orders the liquidation of the Issuer or any Significant Subsidiary (or any group of Restricted Subsidiaries that taken together (as of the latest consolidated financial statements of the Issuer made available to the Holders) would constitute a Significant Subsidiary);

and the order or decree remains unstayed and in effect for 60 consecutive days; or

(viii) the Guarantee of any Significant Subsidiary (or any group of Restricted Subsidiaries that taken together (based on the latest quarterly or annual consolidated financial statements of the Issuer made available to the Holders) would constitute a Significant Subsidiary) shall for any reason cease to be in full force and effect except as contemplated by the terms of this Indenture or be declared null and void in a final non-appealable judgment of a court of competent jurisdiction or any Financial Officer of any Guarantor that is a Significant Subsidiary (or the responsible officers of any group of Restricted Subsidiaries that taken together (based on the latest quarterly or annual consolidated financial statements of the Issuer made available to the Holders) would constitute a Significant Subsidiary), as the case may be, denies in writing that it has any further liability under its Guarantee or gives written notice to such effect, other than by reason of the termination of this Indenture or the release of any such Guarantee in accordance with this Indenture; or

(ix) the failure by the Issuer to consummate the Special Mandatory Redemption to the extent required, as described under Section 3.10.

(b) In the event of any Event of Default specified in clause (iv) of Section 6.01(a) hereof, such Event of Default and all consequences thereof (excluding any resulting payment default, other than as a result of acceleration of the Notes) shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders, if within 30 days after such Event of Default arose:

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(i) the Indebtedness or guarantee that is the basis for such Event of Default has been discharged;

(ii) the requisite number of holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default; or

(iii) the default that is the basis for such Event of Default has been cured, waived or is no longer continuing.

Section 6.02. Acceleration . If any Event of Default (other than an Event of Default of the type specified in clause (vi) or (vii) of Section 6.01(a) hereof with respect to the Issuer) occurs and is continuing under this Indenture, the Trustee or the Holders of not less than 30.0% in aggregate principal amount of all the then total outstanding Notes may, by written notice to the Issuers and the Trustee, in either case specifying in such notice the respective Event of Default and that such notice is a “notice of acceleration,” declare the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Notes to be due and payable immediately.

Upon the effectiveness of such declaration, such principal of and any previously accrued and payable premium, if any, and interest will be due and payable immediately.

Notwithstanding the foregoing, in the case of an Event of Default arising under clause (vi) or (vii) of Section 6.01(a) hereof with respect to the Issuer, all outstanding Notes will become due and payable without further action or notice. The Trustee may withhold from the Holders notice of any continuing Default, except a Default relating to the payment of principal, premium, if any, or interest, if it determines that withholding notice is in their interest.

Section 6.03. Other Remedies . If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.

Section 6.04. Waiver of Past Defaults . Holders of a majority in aggregate principal amount of all the then outstanding Notes, by notice to the Trustee (with a copy to the Issuers; provided that any waiver or rescission under this Section 6.04 shall be valid and binding notwithstanding the failure to provide a copy of such notice to the Issuers) may on behalf of the Holders of all of the Notes waive any existing Default and its consequences under this Indenture (including in connection with an Asset Sale Offer or a Change of Control Offer) (except for a continuing Default in the payment of interest on, premium, if any, or the principal of, any Note

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held by a non-consenting Holder (other than as a result of acceleration of the Notes)) and rescind any acceleration with respect to the Notes and its consequences (except if such rescission would conflict with any judgment of a court of competent jurisdiction). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereto.

Section 6.05. Control by Majority . Subject to Section 7.01(e) hereof, the Holders of a majority in aggregate principal amount of all the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or this Indenture or that is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability and may take any other action that is not inconsistent with any such direction received from the Holders.

Section 6.06. Limitation on Suits . Except to enforce the right to receive payment of principal, premium (if any) or interest when due on or after the respective due dates expressed in an outstanding Note, no Holder of a Note may pursue any remedy with respect to this Indenture or the Notes unless:

(a) such Holder has previously given the Trustee written notice that an Event of Default is continuing;

(b) the Holders of at least 30.0% in the aggregate principal amount of the then outstanding Notes have requested in writing the Trustee to pursue the remedy;

(c) the Holders have offered the Trustee security or indemnity satisfactory to it against any loss, liability or expense;

(d) the Trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity; and

(e) the Holders of a majority in aggregate principal amount of all the then outstanding Notes have not given the Trustee a direction in writing inconsistent with such written request within such 60-day period.

Section 6.07. Right of Holders to Sue for Payment . Notwithstanding any other provision of this Indenture, the contractual right expressly set forth in this Indenture or the Notes of any Holder to bring suit for the enforcement of any payment of or premium, if any, or interest on, or with respect to such Holder’s Notes on or after the respective due dates expressed in this Indenture or the Notes, shall not be impaired without the consent of such Holder.

Section 6.08. Collection Suit by Trustee . If an Event of Default specified in Section 6.01(a)(i) or (ii) hereof occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Issuers for the whole amount of principal of, premium, if any, and interest remaining unpaid on, the Notes and interest on overdue principal, if applicable, and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

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Section 6.09. Restoration of Rights and Remedies . If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceedings, the Issuers, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding has been instituted.

Section 6.10. Rights and Remedies Cumulative . Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.07 hereof, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

Section 6.11. Delay or Omission Not Waiver . No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article 6 or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

Section 6.12. Trustee May File Proofs of Claim . The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relative to any Issuer or any other obligor upon the Notes (including the Guarantors), their creditors or their property and shall be entitled and empowered to participate as a member in any official committee of creditors appointed in such matter and to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.06 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.06 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

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Section 6.13. Priorities . If the Trustee or any Agent collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order:

(a) FIRST, to the Trustee, such Agent, their agents and attorneys for amounts due to such Persons hereunder, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee or such Agent and the costs and expenses of collection;

(b) SECOND, to Holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and

(c) THIRD, to the Issuers or to such party as a court of competent jurisdiction shall direct including a Guarantor, if applicable.

The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.13.

Section 6.14. Undertaking for Costs . In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.14 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 hereof, or a suit by Holders of more than 10.0% in principal amount of the then outstanding Notes.

ARTICLE 7

TRUSTEE

Section 7.01. Duties of Trustee .

(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

(b) Except during the continuance of an Event of Default:

(i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

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(ii) in the absence of willful misconduct or bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not investigate or confirm the accuracy of mathematical calculations or other facts stated therein).

(c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(i) this paragraph does not limit the effect of paragraph (b) of this Section 7.01;

(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved in a court of competent jurisdiction that the Trustee was negligent in ascertaining the pertinent facts; and

(iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.02, 6.04 or 6.05 hereof.

(d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.

(e) The Trustee shall be under no obligation to exercise any of its rights or powers under this Indenture at the request or direction of any of the Holders unless the Holders have offered to the Trustee indemnity or security satisfactory to the Trustee against any loss, liability or expense.

(f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuers. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

Section 7.02. Rights of Trustee .

(a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document (including with respect to any matter, event or circumstance contemplated by Section 9.01), but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer and its Restricted Subsidiaries, personally or by agent or attorney at the sole cost of the Issuers and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

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(b) Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance (including with respect to any matter, event or circumstance contemplated by Section 9.01) on such Officer’s Certificate or Opinion of Counsel. The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

(c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care.

(d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.

(e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Issuer or the Co-Issuer shall be sufficient if signed by an Officer of the Issuer or the Co-Issuer, as applicable.

(f) None of the provisions of this Indenture shall require the Trustee to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers if an indemnity satisfactory to it against such risk or liability is not assured to it.

(g) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a Default or Event of Default is received by the Trustee at the Corporate Trust Office, and such notice references the Notes and this Indenture.

(h) In no event shall the Trustee be responsible or liable for special, punitive, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

(i) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each Agent, custodian and other Person employed to act hereunder.

(j) [reserved].

(k) Delivery of reports, information and documents (including, without limitation, reports contemplated under Section 4.03 hereof) to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuers’ compliance with any of their covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer’s Certificates).

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(l) The permissive rights of the Trustee to take certain actions under this Indenture shall not be construed as a duty unless so specified herein.

(m) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, note or other paper or document unless requested in writing to do so by the Holders of not less than a majority in principal amount of the Notes at the time outstanding, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuers, personally or by agent or attorney, at the expense of the Issuers and shall incur no liability of any kind by reason of such inquiry or investigation.

(n) The Trustee may request that the Issuers deliver an Officer’s Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officer’s Certificate may be signed by any Person authorized to sign an Officer’s Certificate, including any Person specified as so authorized in any such certificate previously delivered and not superseded.

(o) The Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God; earthquakes; fire; flood; terrorism; wars and other military disturbances; sabotage; epidemics; riots; loss or malfunction of utilities, computer (hardware or software) or communication services; strikes or similar labor disputes; and acts of civil or military authorities and governmental action.

(p) The Trustee shall have no duty to inquire as to the performance of the Issuers with respect to the covenants contained in Article 4 or to make any calculation in connection therewith or in connection with any redemption of the Notes. In addition, except as otherwise expressly provided herein, the Trustee shall have no obligation to monitor or verify compliance by the Issuers or any Guarantor with any other obligation or covenant under this Indenture.

(q) The Trustee shall not have any responsibility for the validity, perfection, priority, continuation or enforceability of any Lien or security interest and shall have no obligations to take any action to procure or maintain such validity, perfection, priority, continuation or enforceability.

(r) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

Section 7.03. Individual Rights of Trustee . The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuers or any of their Affiliates with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.09 hereof.

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Section 7.04. Trustee’s Disclaimer . The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Issuers’ use of the proceeds from the Notes or any money paid to the Issuers or upon the Issuers’ direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.

Section 7.05. Notice of Defaults . If a Default occurs and is continuing and if it is known to a Responsible Officer of the Trustee, the Trustee shall deliver to Holders a notice of the Default within 90 days after it occurs, unless such Default shall have been cured or waived, or if discovered after 90 days, promptly thereafter. The Trustee may withhold from the Holders notice of any continuing Default, except a Default relating to the payment of principal, premium, if any, or interest, if it determines that withholding notice is in their interest.

Section 7.06. Compensation and Indemnity . The Issuers shall pay to the Trustee from time to time such compensation for its acceptance of this Indenture and services hereunder as the parties shall agree in writing from time to time. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuers shall reimburse the Trustee promptly upon request for all out-of-pocket disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.

The Issuers and the Guarantors, jointly and severally, shall indemnify the Trustee and its officers, directors, employees, agents and any predecessor trustee and its officers, directors, employees and agents for, and hold the Trustee harmless against, any and all loss, damage, claims, liability or expense (including reasonable attorneys’ fees and expenses) incurred by it in connection with the acceptance or administration of this trust and the performance of its duties hereunder (including the reasonable costs and expenses of enforcing this Indenture against the Issuers or any of the Guarantors (including this Section 7.06) or defending itself against any claim whether asserted by any Holder, the Issuers or any Guarantor, or liability in connection with the acceptance, exercise or performance of any of its powers or duties hereunder) (but excluding taxes imposed on such Persons in connection with compensation for such administration or performance). The Trustee shall notify the Issuers promptly of any claim of which a Responsible Officer has received written notice for which it may seek indemnity. Failure by the Trustee to so notify the Issuers shall not relieve the Issuers or the Guarantors of their obligations hereunder. The Issuers shall defend the claim and the Trustee may have separate counsel and the Issuers shall pay the reasonable fees and expenses of such counsel. Neither the Issuers nor any Guarantor need reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through the Trustee’s own willful misconduct, negligence or bad faith. Neither the Issuers nor any Guarantor need pay for any settlement made without its consent.

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The obligations of the Issuers and the Guarantors under this Section 7.06 shall survive the satisfaction and discharge of this Indenture or the earlier resignation or removal of the Trustee.

To secure the payment obligations of the Issuers and the Guarantors in this Section 7.06, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except money or property held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture.

When the Trustee is requested to act upon instructions of one or more Holders, the Trustee shall not be required to act in the absence of indemnity against the costs, expenses and liabilities that may be incurred in compliance with such a request.

When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(a)(vi) or Section 6.01(a)(vii) hereof occurs, the expenses and the compensation for the services (including the reasonable fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.

Section 7.07. Replacement of Trustee . A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.07. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Issuers. The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Issuers in writing. The Issuers may remove the Trustee if:

(a) the Trustee fails to comply with Section 7.09 hereof;

(b) the Trustee is adjudged bankrupt or insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;

(d) the Trustee becomes incapable of acting.

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuers shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Issuers.

If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee (at the Issuers’ expense), the Issuers or the Holders of at least 10.0% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.09 hereof, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

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A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuers. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall deliver a notice of its succession to Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee; provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.06 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.07, the Issuers’ obligations under Section 7.06 hereof shall continue for the benefit of the retiring Trustee.

Section 7.08. Successor Trustee by Merger, etc . If the Trustee or Agent consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee or Agent. Any corporation into which the Trustee or any Agent for the time being may be merged or converted shall, on the date when such merger, conversion, consolidation, sale or transfer becomes effective and to the extent permitted by applicable law, be a successor Trustee or Agent under this Indenture without the execution or filing of any paper or any further act on the part of any of the parties to this Indenture. After the effective date all references in this Indenture to that Trustee or Agent shall be deemed to be references to that corporation.

Section 7.09. Eligibility; Disqualification . There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has, together with its parent, a combined capital and surplus of at least $150,000,000 as set forth in its most recent published annual report of condition.

Section 7.10. Escrow Authorization . The Trustee is hereby authorized and directed by the Issuers to execute and deliver the Escrow Agreement.

ARTICLE 8

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance . The Issuers may, at their option and at any time, elect to have either Section 8.02 or 8.03 hereof applied to all outstanding Notes and all obligations of the Guarantors with respect to the Guarantees upon compliance with the conditions set forth below in this Article 8.

Section 8.02. Legal Defeasance and Discharge . Upon the Issuers’ exercise under Section 8.1 hereof of the option applicable to this Section 8.02, the Issuers and the Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from their obligations with respect to all outstanding Notes and the related Guarantees and all Events of Default cured on the date the conditions set forth below are satisfied (“ Legal Defeasance ”). For this purpose, Legal Defeasance means that the Issuers and the Guarantors shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in clauses (a)

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and (b) below (it being understood that such Notes shall not be deemed outstanding for accounting purposes), and to have satisfied all their other obligations under such Notes and this Indenture including that of the Guarantors (and the Trustee, on demand of and at the expense of the Issuers, shall execute proper instruments acknowledging the same) and to have cured all then existing Events of Default, except for the following provisions which shall survive until otherwise terminated or discharged hereunder:

(a) the rights of Holders to receive payments in respect of the principal of, premium, if any, and interest on the Notes when such payments are due solely out of the trust created pursuant to this Indenture;

(b) the Issuers’ obligations with respect to Notes concerning issuing temporary Notes, registration of such Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust;

(c) the rights, powers, trusts, duties and immunities of the Trustee, and the Issuers’ obligations in connection therewith; and

(d) this Section 8.02.

Subject to compliance with this Article 8, the Issuers may exercise their option under this Section 8.2 notwithstanding the prior exercise of its option under Section 8.03 hereof.

Section 8.03. Covenant Defeasance . Upon the Issuers’ exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Issuers and the Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from their obligations under Sections 3.08, 4.03, 4.04, 4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15 and 4.16 hereof, and clauses (iii) through (vii) of Section 5.01(a), clauses (ii) and (iii) of Section 5.01(e), and Section 5.01(f) hereof with respect to all outstanding Notes and the related Guarantees, on and after the date the conditions set forth in Section 8.04 hereof are satisfied (“ Covenant Defeasance ”), and such Notes shall thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to all outstanding Notes and the related Guarantees, the Issuers and the Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes and the Guarantees shall be unaffected thereby. In addition, upon the Issuers’ exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Section 6.01(a)(iii) (solely with respect to the covenants that are released upon a Covenant Defeasance), 6.01(a)(iv), 6.01(a)(v), 6.01(a)(vi) (solely with respect to Restricted Subsidiaries (other than the Co-Issuer) subject thereto), 6.01(a)(vii) (solely with respect to Restricted Subsidiaries (other than the Co-Issuer) subject thereto) and 6.01(a)(viii) hereof shall not constitute Events of Default.

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Section 8.04. Conditions to Legal or Covenant Defeasance . The following shall be the conditions to the application of either Section 8.02 or 8.03 hereof to the outstanding Notes:

In order to exercise either Legal Defeasance or Covenant Defeasance with respect to the Notes:

(a) the Issuers shall irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in U.S. dollars, U.S. Government Securities, or a combination thereof, in such amount as will be sufficient, in the opinion of an Independent Financial Advisor to the extent such amounts consist of U.S. Government Securities, to pay the principal of, premium, if any, and interest due on such Notes on the stated maturity date or on the Redemption Date, as the case may be, of such principal, premium, if any, or interest on such Notes and the Issuers must specify whether such Notes are being defeased to maturity or to a particular Redemption Date; provided , that upon any redemption that requires the payment of the Applicable Premium, the amount deposited shall be sufficient for purposes of this Indenture to the extent that an amount is deposited with the Trustee equal to the Applicable Premium calculated as of the date of the notice of redemption, with any deficit as of the Redemption Date (any such amount, the “ Applicable Premium Deficit ”) only required to be deposited with the Trustee on or prior to the Redemption Date. Any Applicable Premium Deficit shall be set forth in an Officer’s Certificate delivered to the Trustee simultaneously with the deposit of such Applicable Premium Deficit that confirms that such Applicable Premium Deficit shall be applied toward such redemption;

(b) in the case of Legal Defeasance, the Issuers shall have delivered to the Trustee an Opinion of Counsel confirming that:

(i) the Issuers have received from, or there has been published by, the United States Internal Revenue Service a ruling, or

(ii) since the Issue Date, there has been a change in the applicable U.S. federal income tax law,

in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(c) in the case of Covenant Defeasance, the Issuers shall have delivered to the Trustee an Opinion of Counsel confirming that the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(d) no Event of Default (other than that resulting from borrowing funds to be applied to make such deposit and any similar and simultaneous deposit relating to other Indebtedness and, in each case, the granting of Liens and the consummation of other transactions in connection therewith) shall have occurred and be continuing on the date of such deposit;

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(e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, the Senior Secured Credit Facilities or any other material agreement or instrument (other than this Indenture) to which the Issuers or any Guarantor is a party or by which the Issuers or any Guarantor is bound (other than that resulting from any borrowing of funds to be applied to make the deposit required to effect such Legal Defeasance or Covenant Defeasance and any similar and simultaneous deposit relating to other Indebtedness, and, in each case, the granting of Liens and the consummation of other transactions in connection therewith);

(f) the Issuers shall have delivered to the Trustee an Officer’s Certificate stating that the deposit was not made by the Issuers with the intent of defeating, hindering, delaying or defrauding any creditors of the Issuers or any Guarantor or others; and

(g) the Issuers shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance, as the case may be, have been complied with.

Notwithstanding the foregoing, the Opinion of Counsel required by clause (b) of the immediately preceding paragraph with respect to Legal Defeasance need not be delivered if all of the Notes not theretofore delivered to the Trustee for cancellation (x) have become due and payable or (y) will become due and payable within one year or are to be called for redemption within one year under arrangements reasonably satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuers.

Section 8.05. Deposited Money and U.S. Government Securities to be Held in Trust; Other Miscellaneous Provisions . Subject to Section 8.06 hereof, all money and U.S. Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the “ Trustee ”) pursuant to Section 8.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer or a Guarantor acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium and interest, but such money need not be segregated from other funds except to the extent required by law.

The Issuers shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or U.S. Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes and the related Guarantees.

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Anything in this Article 8 to the contrary notwithstanding, the Trustee shall deliver or pay to the Issuers from time to time upon the request of the Issuers any money or U.S. Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee to the extent such requested amount consists of U.S. Government Securities (which may be the opinion delivered under Section 8.04(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

Section 8.06. Repayment to Issuer s. Subject to any applicable abandoned property law, any money deposited with the Trustee or any Paying Agent, or then held by the Issuers, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Issuers on their request or (if then held by the Issuers) shall be discharged from such trust; and the Holder of such Note shall thereafter look only to the Issuers for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Issuers as trustee thereof, shall thereupon cease.

Section 8.07. Reinstatement . If the Trustee or Paying Agent is unable to apply any United States dollars or U.S. Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Issuers’ and the Guarantors’ obligations under this Indenture and the Notes and the Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided that if the Issuers make any payment of principal of, premium, if any, or interest on any Notes following the reinstatement of their obligations, the Issuers shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.

ARTICLE 9

AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01. Without Consent of Holders . Notwithstanding Section 9.02 hereof, the Issuers, any Guarantor (with respect to a Guarantee or this Indenture to which it is a party) and the Trustee may amend or supplement this Indenture and any Guarantee or Notes without the consent of any Holder:

(a) to cure any ambiguity, omission, mistake, defect or inconsistency;

(b) to provide for uncertificated Notes in addition to or in place of certificated Notes;

(d) to provide for the assumption of the Issuers’ or any Guarantor’s obligations to the Holders;

(e) to make any change that would provide any additional rights or benefits to the Holders or that does not materially adversely affect (as determined in good faith by the Issuer) the legal rights under this Indenture of any such Holder;

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(f) to add covenants for the benefit of the Holders or to surrender any right or power conferred upon the Issuers or any Guarantor;

(g) to provide for the issuance of Additional Notes in accordance with the terms of this Indenture;

(h) to evidence and provide for the acceptance and appointment under this Indenture of a successor Trustee or a successor Paying Agent hereunder pursuant to the requirements hereof;

(i) to add an obligor or a Guarantor under this Indenture or to release a Guarantor in accordance with the terms of this Indenture;

(j) to conform the text of this Indenture, the Guarantees or the Notes to any provision of the “Description of Notes” section of the Offering Circular to the extent that such provision in the “Description of Notes” section of the Offering Circular was intended to be a verbatim recitation of a provision of this Indenture, Guarantee or Notes;

(k) to make any amendment to the provisions of this Indenture relating to the transfer and legending of Notes as permitted by this Indenture, including to facilitate the issuance and administration of the Notes; provided , however , that such amendment does not materially and adversely affect the rights of Holders to transfer Notes;

(l) at the Issuer’s election, to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act, if applicable (it being agreed that this Indenture need not qualify under the Trust Indenture Act); or

(m) to secure the Notes and/or the related Guarantees or to add collateral thereto.

Upon the request of the Issuer accompanied by a resolution of the Board of Directors of the Issuer authorizing the execution of any such amended or supplemental indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof (to the extent requested by the Trustee and subject to the last sentence of Section 9.05), the Trustee shall join with the Issuers and the Guarantors in the execution of any amended or supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall have the right, but not be obligated to, enter into such amended or supplemental indenture that affects its own rights, duties or immunities under this Indenture or otherwise. Notwithstanding the foregoing, neither an Opinion of Counsel nor an Officer’s Certificate, nor a board resolution, shall be required in connection with the addition of a Guarantor under this Indenture upon execution and delivery by such Guarantor and the Trustee of a supplemental indenture to this Indenture, the form of which is attached as Exhibit E hereto in the case of Guarantors added to this Indenture after the Completion Date.

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Section 9.02. With Consent of Holders . Except as provided in Section 9.01 and this Section 9.02, the Issuers, the Guarantors (with respect to the Guarantee or this Indenture to which it is a party) and the Trustee may amend or supplement this Indenture, the Notes and the Guarantees with the consent of the Holders of at least a majority in principal amount of all the Notes then outstanding, including consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes and, subject to Section 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Guarantees or the Notes may be waived with the consent of the Holders of a majority in principal amount of all the Notes then outstanding, voting as a single class (including consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes); provided that (x) if any such amendment or waiver will only affect one series of Notes (or less than all series of Notes) then outstanding hereunder, then only the consent of the Holders of a majority in principal amount of the Notes of such series then outstanding (including, in each case, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes) shall be required and (y) if any such amendment or waiver by its terms will affect a series of Notes in a manner different and materially adverse relative to the manner such amendment or waiver affects other series of Notes, then the consent of the Holders of a majority in principal amount of the Notes of such adversely affected series then outstanding (including, in each case, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes) shall be required. Section 2.08 hereof and Section 2.09 hereof shall determine which Notes are considered to be “outstanding” for the purposes of this Section 9.02.

Upon the request of the Issuer accompanied by a resolution of the Board of Directors of the Issuer authorizing the execution of any such amended or supplemental indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders as aforesaid, the Trustee shall join with the Issuers and the Guarantors in the execution of such amended or supplemental indenture, unless such amended or supplemental indenture directly affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental indenture.

It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof.

After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Issuers shall send to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Issuers to send such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver.

Without the consent of each affected Holder of Notes, an amendment or waiver under this Section 9.2 may not, with respect to any Notes held by a non-consenting Holder:

(a) reduce the principal amount of such Notes whose Holders must consent to an amendment, supplement or waiver;

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(b) reduce the principal of or change the fixed final maturity of any such Note or reduce the premium due and payable upon the redemption of such Notes on any date (other than provisions relating to Sections 3.08, 4.10 and 4.14 hereof); provided that any amendment to the notice requirements may be made with the consent of the Holders of a majority in aggregate principal amount of all the then outstanding Notes;

(d) (A) waive a Default in the payment of principal of or premium, if any, or interest on such Notes, except a rescission of acceleration of such Notes by the Holders of a majority in principal amount of all the then outstanding Notes and a waiver of the payment default that resulted from such acceleration, or (B) waive a Default in respect of a covenant or provision contained in this Indenture, the Notes or any Guarantee which cannot be amended or modified without the consent of all affected Holders;

(e) make any such Note payable in money other than that stated therein;

(f) make any change in the provisions of this Indenture relating to waivers of past Defaults;

(g) make any change in these amendment and waiver provisions that is materially adverse to the Holders;

(h) impair the contractual right under this Indenture of any Holder to institute suit for the enforcement of any payment of, or premium, if any, or interest on or with respect to such Holder’s Notes on or after the due dates thereof;

(i) make any change to or modify the ranking of such Notes that would adversely affect the Holders; or

(j) except as expressly permitted by this Indenture, modify the Guarantees of any Significant Subsidiary, or any group of Restricted Subsidiaries that, taken together (based on the latest quarterly or annual consolidated financial statements for the Issuer), would constitute a Significant Subsidiary in any manner materially adverse to the Holders of such Notes.

Section 9.03. Revocation and Effect of Consents . Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the amendment, supplement or waiver becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.

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The Issuers may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement, or waiver. If a record date is fixed, then, notwithstanding the preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only such Persons, shall be entitled to consent to such amendment, supplement, or waiver or to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date unless the consent of the requisite number of Holders has been obtained.

Section 9.04. Notation on or Exchange of Notes . The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Issuers in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.

Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.

Section 9.05. Trustee to Sign Amendments, etc . The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article 9 if the amendment, supplement or waiver does not adversely affect the rights, duties, liabilities or immunities of the Trustee. Neither the Issuer nor the Co-Issuer may sign an amendment, supplement or waiver until the Board of Directors of the Issuer approves it. In executing any amendment, supplement or waiver, the Trustee shall be provided with and (subject to Section 7.01 hereof) shall be fully protected in relying upon, in addition to the documents required by Section 12.03 hereof, an Officer’s Certificate and an Opinion of Counsel each stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture and that such amendment, supplement or waiver is the legal, valid and binding obligation of the Issuers and any Guarantors party thereto, enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof. Notwithstanding the foregoing, neither an Opinion of Counsel nor an Officer’s Certificate, nor a resolution, shall be required for the Trustee to execute any supplemental indenture to this Indenture, the form of which is attached as Exhibit E hereto in the case of Guarantors added to this Indenture after the Completion Date, adding a new Guarantor under this Indenture.

Section 9.06. Additional Voting Terms; Calculation of Principal Amount .

(a) Determinations as to whether Holders of the requisite aggregate principal amount of Notes have concurred in any direction, waiver or consent shall be made in accordance with this Article Nine and Section 9.06(b).

(b) With respect to any matter requiring consent, waiver, approval or other action of the Holders of a specified percentage of the principal amount of all the Notes (or the Notes of any series), such percentage shall be calculated, on the relevant date of determination, by dividing (i) the principal amount, as of such date of determination, of Notes, the Holders of which have so consented by (b) the aggregate principal amount, as of such date of determination, of the Notes (or the Notes of the applicable series) then outstanding, in each case, as determined in accordance with the preceding sentence, Section 2.08 and Section 2.09 of this Indenture. Any such calculation made pursuant to this Section 9.06(b) shall be made by the Issuers and delivered to the Trustee pursuant to an Officer’s Certificate.

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Section 9.07. No Impairment of Right of Holders to Receive Payment . For the avoidance of doubt, no amendment to, or deletion of, any of the covenants described under Article 4 or action taken in compliance with the covenants in effect at the time of such action, shall be deemed to impair or affect any legal rights of any Holders of the Notes to receive payment of principal of or premium, if any, or interest on the Notes or to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes.

ARTICLE 10

GUARANTEES

Section 10.01. Guarantee . Subject to this Article 10, each of the Guarantors hereby, jointly and severally, irrevocably and unconditionally, as a primary obligor and not merely as a surety, guarantees, on a senior unsecured basis, to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the Obligations of the Issuers hereunder or thereunder, that: (a) the principal of and interest and premium, if any, on the Notes shall be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other Obligations of the Issuers to the Holders or the Trustee hereunder or under the Notes shall be promptly paid in full, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same shall be promptly paid in full when due in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection. All payments under each Guarantee will be made in dollars.

The Guarantors hereby agree that their obligations hereunder are equivalent to the obligations of a primary obligor and shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Issuer or the Co-Issuer, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor (other than payment in full of all of the Obligations of the Issuers hereunder or under the Notes). Each Guarantor hereby waives, to the fullest extent permitted by law, diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer or the Co-Issuer, any right to require a proceeding first against the Issuers, protest, notice and all demands whatsoever and covenants that this Guarantee shall not be discharged except by full payment of the obligations contained in the Notes and this Indenture or by release in accordance with the provisions of this Indenture.

Each Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ fees) incurred by the Trustee or any Holder in enforcing any rights under this Section 10.01.

If any Holder or the Trustee is required by any court or otherwise to return to the Issuers, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Issuers or the Guarantors, then any amount paid either to the Trustee or such Holder, this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.

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Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes of this Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Guarantee. The Guarantors shall have the right to seek contribution from any nonpaying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantees. Each Guarantor that makes a payment under its Guarantee shall, to the fullest extent permitted by applicable law, be entitled upon payment in full of all guaranteed obligations under this Indenture to a contribution from each other Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP.

Until terminated in accordance with Section 10.06, each Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Issuer or the Co-Issuer for liquidation or reorganization, should the Issuer or the Co-Issuer become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Issuer’s or the Co-Issuer’s assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment of the Notes is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes or Guarantees, whether as a “voidable preference,” “fraudulent transfer” or otherwise, all as though such payment had not been made. In the event that any payment or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

In case any provision of any Guarantee shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

The Guarantee issued by any Guarantor shall be a general senior unsecured obligation of such Guarantor and shall be pari passu in right of payment with all existing and future Senior Indebtedness of such Guarantor, if any.

Each payment to be made by a Guarantor in respect of its Guarantee shall be made without setoff, counterclaim, reduction or diminution of any kind or nature.

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Section 10.02. Limitation on Guarantor Liability . Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the obligations of each Guarantor shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article 10, result in the obligations of such Guarantor under its Guarantee not constituting a fraudulent conveyance or fraudulent transfer under applicable law or being void or voidable under any law relating to insolvency of debtors.

Section 10.03. Execution and Delivery . To evidence its Guarantee set forth in Section 10.01 hereof, each Guarantor to be added under this Indenture on the Completion Date shall execute the Completion Date Supplemental Indenture and each Guarantor to be added under this Indenture after the Completion Date shall execute a supplemental indenture to this Indenture, in the form of the supplemental indenture set forth in Exhibit E , and each such supplemental indenture shall be executed on behalf of such Guarantor by one of its authorized officers.

Each Guarantor hereby agrees that its Guarantee set forth in Section 10.01 hereof shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Guarantee on the Notes.

If an officer whose signature is on this Indenture (or the Completion Date Supplemental Indenture or any supplemental indenture in the form of Exhibit E hereto) no longer holds that office at the time the Trustee authenticates a Note, the Guarantee of such Guarantor shall be valid nevertheless.

The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee set forth in this Indenture on behalf of the Guarantors.

If required by Section 4.15 hereof, the Issuer shall cause any Restricted Subsidiary to comply with the provisions of Section 4.15 hereof and this Article 10, to the extent applicable.

Section 10.04. Subrogation . Each Guarantor shall be subrogated to all rights of Holders against the Issuers in respect of any amounts paid by any Guarantor pursuant to the provisions of Section 10.01 hereof; provided that, if an Event of Default has occurred and is continuing, no Guarantor shall be entitled to enforce or receive any payments arising out of, or based upon, such right of subrogation until all amounts then due and payable by the Issuers under this Indenture or the Notes shall have been paid in full.

Section 10.05. Benefits Acknowledged . Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the guarantee and waivers made by it pursuant to its Guarantee are knowingly made in contemplation of such benefits.

Section 10.06. Release of Guarantees . Each Guarantee by a Guarantor shall be automatically and unconditionally released and discharged, and shall thereupon terminate and be of no further force and effect, and no further action by such Guarantor, the Issuer or the Trustee is required for the release of such Guarantor’s Guarantee, upon:

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(i) (A) any sale, exchange, disposition or transfer (by merger, amalgamation, consolidation, dividend, distribution or otherwise) of (i) the Capital Stock of such Guarantor, after which the applicable Guarantor is (x) no longer a Restricted Subsidiary or (y) an Excluded Subsidiary, or (ii) all or substantially all the assets of such Guarantor, in each case if such sale, exchange, disposition or transfer is made in compliance with the applicable provisions of this Indenture;

(B) the release or discharge of the guarantee by, or direct obligation of, such Guarantor of Indebtedness under the Senior Secured Credit Facilities or, to the extent such Guarantee was provided pursuant to Section 4.15 hereof on account of any Capital Market Indebtedness, of such Capital Market Indebtedness, as applicable, or the release or discharge of such other guarantee that resulted in the creation of such Guarantee, except a discharge or release by or as a result of payment under such guarantee or direct obligation (it being understood that a release subject to a contingent reinstatement will constitute a release, and that if any such guarantee or direct obligation is so reinstated, such Guarantee shall also be reinstated to the extent that such Guarantor would then be required to provide a Guarantee pursuant to Section 4.15 hereof);

(C) the designation of any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary in compliance with the applicable provisions of this Indenture;

(D) upon the merger, amalgamation or consolidation of any Guarantor with and into the Issuer, the Co-Issuer or another Guarantor or upon the liquidation of such Guarantor following the transfer of all or substantially all of its assets in a transaction that complies with the applicable provisions of this Indenture; or

(E) the exercise by the Issuers of their Legal Defeasance option or Covenant Defeasance option in accordance with Article 8 hereof or the discharge of the Issuers’ obligations under this Indenture in accordance with the terms of this Indenture; and

(ii) such Guarantor delivering to the Trustee an Officer’s Certificate of such Guarantor or the Issuer and an Opinion of Counsel, each stating that all conditions precedent provided for in this Indenture relating to such transaction or release and discharge have been complied with. Notwithstanding the foregoing, an Opinion of Counsel shall not be required in the case of a merger or consolidation in accordance with Section 10.06(i)(D).

In addition, the Issuer will have the right, upon delivery of an Officer’s Certificate to the Trustee, to cause any Guarantor that has not guaranteed any Indebtedness under the Senior Secured Credit Facilities or any Capital Markets Indebtedness of any of the Issuers or any Guarantor, and is not otherwise required by the applicable terms of this Indenture to provide a Guarantee, to be unconditionally released and discharged from all obligations under its Guarantee, and such Guarantee will thereupon automatically and unconditionally terminate and be discharged and of no further force or effect.

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ARTICLE 11

SATISFACTION AND DISCHARGE

Section 11.01. Satisfaction and Discharge . This Indenture shall be discharged and shall cease to be of further effect as to all Notes when either:

(a) all Notes theretofore authenticated and delivered, except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust, have been delivered to the Trustee for cancellation; or

(b) (i) all Notes not theretofore delivered to the Trustee for cancellation have become due and payable by reason of the giving of a notice of redemption or otherwise, will become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuers, and the Issuer or the Co-Issuer or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, U.S. Government Securities, or a combination thereof, in such amounts as will be sufficient (without consideration of any reinvestment of interest) to pay and discharge the entire indebtedness on the Notes not theretofore delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption; provided , that upon any redemption that requires the payment of the Applicable Premium, the amount deposited shall be sufficient for purposes of this Indenture to the extent that an amount is deposited with the Trustee equal to the Applicable Premium calculated as of the date of the notice of redemption, with any Applicable Premium Deficit only required to be deposited with the Trustee on or prior to the Redemption Date. Any Applicable Premium Deficit shall be set forth in an Officer’s Certificate delivered to the Trustee simultaneously with the deposit of such Applicable Premium Deficit that confirms that such Applicable Premium Deficit shall be applied toward such redemption;

(ii) the Issuers have paid or caused to be paid all sums payable by them under this Indenture; and

(iii) the Issuers have delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or the Redemption Date, as the case may be.

In addition, the Issuers must deliver an Officer’s Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. Such Opinion of Counsel may rely on such Officer’s Certificate as to matters of fact, including clauses (b)(i), (ii) and (iii) above.

Notwithstanding the satisfaction and discharge of this Indenture, if money shall have been deposited with the Trustee pursuant to clause (b)(i) of this Section 11.01, the provisions of Section 11.02 and Section 8.06 hereof shall survive such satisfaction and discharge.

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Section 11.02. Application of Trust Money . Subject to the provisions of Section 8.06 hereof, all money deposited with the Trustee pursuant to Section 11.01 hereof shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer, the Co-Issuer or a Guarantor acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.

If the Trustee or Paying Agent is unable to apply any money or U.S. Government Securities in accordance with Section 11.01 hereof by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuers’ and any Guarantor’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01 hereof; provided that if the Issuers have made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Issuers shall be subrogated to the rights of the Holders to receive such payment from the money or U.S. Government Securities held by the Trustee or Paying Agent.

ARTICLE 12

MISCELLANEOUS

Section 12.01. Notices . Any notice or communication by the Issuer, the Co-Issuer any Guarantor or the Trustee to the others is duly given if in writing and delivered in person or mailed by first-class mail (registered or certified, return receipt requested), facsimile, electronic mail or other electronic transmission or overnight air courier guaranteeing next day delivery, to the others’ address:

If to the Issuer and/or any Guarantor:

c/o Change Healthcare Holdings, LLC

5995 Windward Parkway

Alpharetta, GA 30005

Attention: Loretta Cecil, General Counsel

Facsimile: (404) 338-5145

c/o The Blackstone Group

345 Park Avenue

New York, New York 10154

Attention: John G. Finley

Facsimile: (212) 583-5749

With a copy to (which shall not constitute notice for any purpose under this Indenture):

Ropes & Gray LLP

1211 Avenue of the Americas

New York, NY 10036-8704

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Attention: Jay J. Kim

E-mail: [Email Address]

Telephone: [Phone Number]

Facsimile: (646) 728-1667

If to the Trustee:

Wilmington Trust, National Association

Attention: Joe O’Donnell

Vice President

246 Goose Lane, Suite 105

Guilford, CT 06437

Facsimile No.: 203-453-1183

[Email Address]

The Issuers, any Guarantor or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.

All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five calendar days after being deposited in the mail, postage prepaid, if mailed by first-class mail; when receipt is acknowledged, if faxed or sent electronically; the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery; and on the date sent to DTC if otherwise given in accordance with the procedures of DTC; provided that any notice or communication delivered to the Trustee shall be deemed effective upon actual receipt thereof and on the first date on which publication is made, if given by publication.

Any notice or communication to a Holder shall be electronically delivered, mailed by first-class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the Note Register kept by the Registrar. Failure to deliver a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.

If a notice or communication is mailed or otherwise delivered in the manner provided above within the time prescribed, such notice or communication shall be deemed duly given, whether or not the addressee receives it.

If an Issuer sends a notice or communication to Holders, it shall send a copy to the Trustee and each Agent at the same time.

Notwithstanding any other provision of this Indenture or any Note, where this Indenture or any Note provides for notice of any event or any other communication (including any notice of redemption or repurchase) to a holder of a Global Note (whether by mail or otherwise), such notice shall be sufficiently given if given to the Depositary (or its designee) pursuant to the standing instructions from the Depositary or its designee, including by electronic mail in accordance with accepted practices at the Depositary.

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The Trustee agrees to accept and act upon instructions or directions pursuant to this Indenture sent by unsecured email, facsimile transmission or other similar unsecured electronic methods; provided , however , that (a) the party providing such written instructions, subsequent to such transmission of written instructions, shall provide the originally executed instructions or directions to the Trustee in a timely manner, and (b) such originally executed instructions or directions shall be signed by an authorized representative of the party providing such instructions or directions. If the party elects to give the Trustee email or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee’s understanding of such instructions shall be deemed controlling.

The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The party providing electronic instructions agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including, without limitation, the risk of the Trustee acting on unauthorized instructions, and the risk or interception and misuse by third parties.

Section 12.02. [Reserved] .

Section 12.03. Certificate and Opinion as to Conditions Precedent . Upon any request or application by the Issuer, the Co-Issuer or any of the Guarantors to the Trustee to take any action under this Indenture, the Issuer, the Co-Issuer or such Guarantor, as the case may be, shall furnish to the Trustee:

(a) an Officer’s Certificate in form reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.04 hereof) stating that, in the opinion of the signer, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and

(b) an Opinion of Counsel in form reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.04 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied; provided that no such Opinion of Counsel shall be delivered in connection with the Initial Notes or the Completion Date Supplemental Indenture.

Section 12.04. Statements Required in Certificate or Opinion . Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to Section 4.04 hereof) shall include:

(a) a statement that the Person making such certificate or opinion has read such covenant or condition;

(b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

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(c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with (and, in the case of an Opinion of Counsel, may be limited to reliance on an Officer’s Certificate as to matters of fact); and

(d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with; provided , however , that with respect to matters of fact an Opinion of Counsel may rely on an Officer’s Certificate or certificates of public officials.

Section 12.05. Rules by Trustee and Agents . The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.

Section 12.06. No Personal Liability of Directors, Officers, Employees and Stockholders . No past, present or future director, officer, employee, incorporator, member, partner or direct or indirect equityholder of any Issuer, any Restricted Subsidiary or any Parent Company (other than the Issuers in respect of the Notes and each Guarantor in respect of its Guarantee) shall have any liability for any obligations of the Issuers or the Guarantors under the Notes, the Guarantees or this Indenture or any supplemental indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

Section 12.07. Governing Law . THIS INDENTURE, THE NOTES AND ANY GUARANTEE, AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS INDENTURE, THE NOTES OR ANY GUARANTEE, WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

Section 12.08. Waiver of Jury Trial . EACH OF THE ISSUERS, THE GUARANTORS AND THE TRUSTEE (1) AGREES TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES AND (2) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 12.09. Force Majeure . In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising out of or caused by, directly or indirectly, forces beyond its reasonable control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software or hardware) services.

170

Section 12.10. No Adverse Interpretation of Other Agreements . This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Issuer or its Restricted Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

Section 12.11. Successors . All agreements of the Issuers in this Indenture and the Notes shall bind their respective successors. All agreements of the Trustee in this Indenture shall bind its successors. All agreements of each Guarantor in this Indenture shall bind its successors, except as otherwise provided in Section 10.06 hereof.

Section 12.12. Severability . In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 12.13. Counterpart Originals . The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. This Indenture may be executed in multiple counterparts which, when taken together, shall constitute one instrument. The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmissions shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

Section 12.14. Table of Contents, Headings, etc . The Table of Contents, Cross-Reference Table and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

Section 12.15. Trust Indenture Act . The Issuers and the Guarantors shall not be required to qualify this Indenture under the Trust Indenture Act. The Trust Indenture Act shall not apply to this Indenture prior to any such qualification, and all references herein to compliance with the Trust Indenture Act refer to such compliance following any such qualification.

Section 12.16. USA Patriot Act . The parties hereto acknowledge that in accordance with Section 326 of the USA Patriot Act the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account. The parties to this Indenture agree that they shall provide the Trustee with such information as it may request in order to satisfy the requirements of the USA Patriot Act.

[ Signatures on following page ]

171

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first above written.


CHANGE HEALTHCARE HOLDINGS, LLC,
as Issuer

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title : Co-President and Co-Secretary

By:		/s/ John B. Saia
		Name: John B. Saia
		Title : Co-President and Co-Secretary

CHANGE HEALTHCARE FINANCE, INC., as Co-Issuer

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title : Co-President and Co-Secretary

By:		/s/ John B. Saia
		Name: John B. Saia
		Title :Co-President and Co-Secretary

[Indenture]


WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Trustee, Transfer Agent, Registrar and Paying Agent

By:		/s/ Joseph P. O’Donnell
		Name: Joseph P. O’Donnell
		Title: Vice President

[Indenture]

EXHIBIT A

[FORM OF NOTE]

[FACE OF NOTE]

[Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]

[Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture]

[Insert the Regulation S Temporary Global Note Legend, if applicable pursuant to the provisions of the Indenture]

CUSIP [•][•] ¹

ISIN [•][•] ²

[RULE 144A][REGULATION S] [GLOBAL] NOTE

representing [up to]

$[ ]

5.75% Senior Notes due 2025


No.		[$ ]

Change Healthcare Holdings, LLC, a Delaware limited liability company, and Change Healthcare Finance, Inc., a Delaware corporation, jointly and severally, promise to pay to [Cede & Co.]* or registered assigns the principal sum [set forth on the Schedule of Exchanges of Interests in the Global Note attached hereto] [of United States dollars] on March 1, 2025.

Interest Payment Dates: March 1 and September 1, commencing on September 1, 2017

Record Dates: February 15 and August 15

Additional provisions of this Note are set forth on the other side of this Note.

*	Include only if the Note is issued in global form.

¹	15911N AA3 (144A); U1600N AA6 (Reg S)

²	US15911NAA37 (144A); USU1600NAA64 (Reg S)

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IN WITNESS HEREOF, the Issuers have caused this instrument to be duly executed.

Dated:


CHANGE HEALTHCARE HOLDINGS, LLC, as Issuer

By:
		Name:
		Title :

By:
		Name:
		Title :

CHANGE HEALTHCARE FINANCE, INC., as Co-Issuer

By:
		Name:
		Title :

By:
		Name:
		Title :

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This is one of the Notes referred to in the within-mentioned Indenture:

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee

By:
		Authorized Signatory:

Date:

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[REVERSE OF NOTE]

5.75% Senior Notes due 2025

Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

1. Interest . Change Healthcare Holdings, LLC, a Delaware limited liability company (such Person, and its respective successors and assigns under the Indenture hereinafter referred to, being herein called the “ Issuer ”), Change Healthcare Finance, Inc., a Delaware corporation (such Person, and its respective successors and assigns under the Indenture hereinafter referred to, being herein called the “ Co-Issuer ” and, together with the Issuer, the “ Issuers ”), jointly and severally, promise to pay interest on the principal amount of this Note at a rate per annum of 5.75% from February 15, 2017 ³ until maturity. The Issuers will pay interest on this Note semi-annually in arrears on March 1 and September 1 of each year, beginning September 1, 2017, or, if any such day is not a Business Day, on the next succeeding Business Day (each, an “ Interest Payment Date ”). The Issuers will make each interest payment to the Holder of record of this Note on the immediately preceding February 15 and August 15 (each, a “ Record Date ”). Interest on this Note will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including the date of issuance. ⁴ The Issuers will pay interest (including postpetition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the rate borne by this Note; the Issuers shall pay interest (including postpetition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the rate borne by this Note. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

2. Method of Payment . The Issuers will pay interest on this Note to the Person who is the registered Holder of this Note at the close of business on the Record Date (whether or not a Business Day) next preceding the Interest Payment Date, even if this Note is cancelled after such Record Date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. Cash payments of principal of, premium, if any, and interest on this Note will be payable at the office or agency of the Issuers maintained for such purpose pursuant to Section 4.02 of the Indenture or, at the option of the Issuers, cash payment of interest may be made through the Paying Agent by check mailed to the Holders at their respective addresses set forth in the Note Register of Holders; provided that (a) all cash payments of principal, premium, if any, and interest with respect to Notes represented by Global Notes registered in the name of or held by DTC or its nominee will be made through the Paying Agent by wire transfer of immediately available funds to the accounts specified by the registered Holder or Holders thereof and (b) all cash payments of principal, premium, if any, and interest with respect to certificated Notes may, at the option of the Issuers, be made by wire transfer to a

³	In the case of Notes issued on the Issue Date.

⁴	In the case of Notes issued after the Issue Date, as may be modified in accordance with Section 2.01 of the Indenture.

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U.S. dollar account maintained by the payee with a bank in the United States of America if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept). Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

3. Paying Agent, Transfer Agent and Registrar . Initially, Wilmington Trust, National Association, the Trustee under the Indenture, will act as Paying Agent, Transfer Agent and Registrar. The Issuers may change any Paying Agent, Transfer Agent or Registrar without prior notice to the Holders. The Issuer or any of its Subsidiaries may act in any such capacity.

4. Indenture . The Issuers issued the Notes under an Indenture, dated as of February 15, 2017 (as amended, supplemented or otherwise modified from time to time, the “ Indenture ”), among the Issuers, the Guarantors party thereto from time to time, the Trustee, the Transfer Agent, the Registrar and the Paying Agent. This Note is one of a duly authorized issue of notes of the Issuers designated as their 5.75% Senior Notes due 2025. The Issuers shall be entitled to issue Additional Notes pursuant to Sections 2.01 and 4.09 of the Indenture. The terms of the Notes include those stated in the Indenture. The Notes are subject to all such terms, and Holders are referred to the Indenture for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.

5. Optional Redemption .

(a) Except as set forth in clauses (b), (d) and (e) of this Section 5 and in clauses (b), (d) and (e) of Section 3.07 of the Indenture, the Notes will not be redeemable at the Issuers’ option prior to March 1, 2020.

(b) At any time prior to March 1, 2020, the Issuers may, at their option and on one or more occasions, redeem all or a part of the Notes, upon notice in accordance with Section 3.03 of the Indenture, at a redemption price equal to the sum of (A) 100.0% of the principal amount of the Notes redeemed, plus (B) the Applicable Premium as of the Redemption Date, plus (C) accrued and unpaid interest, if any, to, but excluding, the Redemption Date, subject to the right of Holders of record on the relevant Record Date to receive interest due on the Notes on the relevant Interest Payment Date falling on or prior to the Redemption Date.

(c) On and after March 1, 2020, the Issuers may, at their option and on one or more occasions, redeem the Notes, in whole or in part, upon notice in accordance with Section 3.03 of the Indenture, at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, thereon to, but excluding, the applicable Redemption Date, subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date falling on or prior to the Redemption Date, if redeemed during the twelve-month period beginning on March 1 of each of the years indicated below:

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Year	Notes Redemption Percentage
2020		102.875	%
2021		101.438	%
2022 and thereafter		100.000	%

(d) In addition, at any time prior to March 1, 2020, the Issuers may, at their option, upon notice in accordance with Section 3.03 of the Indenture, on one or more occasions, redeem an aggregate principal amount of the Notes (including, for the avoidance of doubt, any Additional Notes) issued under the Indenture not to exceed an amount equal to the aggregate net cash proceeds from one or more Equity Offerings to the extent such net cash proceeds are received by or contributed to the Issuer at a redemption price (as a percentage of principal amount of the Notes to be redeemed) of 105.75%, plus accrued and unpaid interest, if any, to, but excluding, the Redemption Date, subject to the right of Holders of record on the relevant Record Date to receive interest due on the Notes on the relevant Interest Payment Date falling on or prior to the Redemption Date; provided that (i) the amount redeemed shall not exceed 40% of the aggregate principal amount of the Notes issued under the Indenture; (ii) at least 50% of the aggregate principal amount of the Notes originally issued under the Indenture on the Issue Date remains outstanding immediately after the occurrence of each such redemption; and (iii) each such redemption occurs within 180 days of the date of closing of the applicable Equity Offering or contribution.

(f) Any redemption pursuant to this paragraph 5 shall be made pursuant to the provisions of Sections 3.01 through 3.06 of the Indenture. Notice of any redemption, whether in connection with an Equity Offering, Change of Control, Asset Sale, other transaction or event or otherwise, may, at the Issuers’ discretion, be given prior to the completion or occurrence thereof, and any such redemption or notice may, at the Issuers’ discretion, be subject to one or more conditions precedent, including, but not limited to, completion or occurrence of the related Equity Offering, Change of Control, Asset Sale or other transaction or event, as the case may be. In addition, if such redemption is subject to satisfaction of one or more conditions precedent,

A-7

such notice shall state that, in the Issuers’ discretion, the Redemption Date may be delayed until such time (which may be more than 60 days after the date the notice of redemption was mailed or delivered, including by electronic transmission) as any or all such conditions shall be satisfied (or waived by the Issuers in their sole discretion), or such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied (or waived by the Issuers in their sole discretion) by the Redemption Date, or by the Redemption Date so delayed, or that such notice may be rescinded at any time in the Issuer’s discretion if the Issuers determine that any or all of such conditions will not be satisfied. For the avoidance of doubt, if any Redemption Date shall be delayed pursuant to this paragraph 5 or Section 3.07 of the Indenture and the terms of the applicable notice of redemption, such Redemption Date as so delayed may occur at any time after the original Redemption Date set forth in the applicable notice of redemption and after the satisfaction of any applicable conditions precedent including, without limitation, on a date that is less than 10 days after the original Redemption Date and/or more than 60 days after the date of the applicable notice of redemption. In addition, the Issuers may provide in such notice that payment of the redemption price and performance of the Issuers’ obligations with respect to such redemption may be performed by another Person. The Issuers, the Investors and their respective Affiliates may, at their discretion, at any time and from time to time acquire Notes by means other than a redemption, whether by tender offer, in the open market, negotiated transactions, or otherwise.

6. Mandatory Redemption . Except as provided in Section 3.10 of the Indenture, the Issuers shall not be required to make any mandatory redemption or sinking fund payment with respect to the Notes.

7. Notice of Redemption . Subject to Sections 3.03, 3.07(e) and 3.08 of the Indenture, the Issuers shall send electronically, mail or cause to be mailed by first-class mail, postage prepaid, notices of redemption at least 10 days (except as set forth in Section 3.07(f) of the Indenture or in connection with a Special Mandatory Redemption described in Section 3.10 of the Indenture) but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at such Holder’s registered address stated in the Note Register or otherwise in accordance with the Applicable Procedures, except that redemption notices may be delivered or mailed more than 60 days prior to a Redemption Date if the notice is issued in connection with Article 8 or Article 11 of the Indenture or under the circumstances described in Section 3.07(f) of the Indenture. Notes and portions of Notes selected for redemption shall be in integral multiples of $1,000 (but in a minimum amount of $2,000) and no Notes of $2,000 or less can be redeemed in part, except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder shall be redeemed, even if not in a principal amount of at least $2,000. On and after the Redemption Date, unless the Issuers default in the payment of the redemption price, interest ceases to accrue on this Note or portions thereof called for redemption.

8. Offers to Repurchase . Upon the occurrence of a Change of Control, unless the Issuers have previously or concurrently electronically delivered or mailed a redemption notice with respect to all the outstanding Notes as described under Section 3.07 or Section 11.01 of the Indenture, the Issuers shall make a Change of Control Offer in accordance with Section 4.14 of the Indenture. In connection with certain Asset Sales, the Issuers shall make an Asset Sale Offer as and when provided in accordance with Sections 3.08 and 4.10 of the Indenture.

A-8

Other than as specifically provided in Section 3.08 or Section 4.10 of the Indenture, any purchase pursuant to Section 3.08 of the Indenture shall be made pursuant to the applicable provisions of Sections 3.01 through 3.06 and Sections 3.07(e) and (f) of the Indenture, and references therein or herein to “redeem,” “redemption,” “Redemption Date” and similar words shall be deemed to refer to “purchase,” “repurchase,” “Purchase Date” and similar words, as applicable.

9. Denominations, Transfer, Exchange . The Notes are in registered form without coupons in minimum denominations of $2,000 and any integral multiple of $1,000 in excess thereof. The transfer of Notes shall be registered and Notes may only be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuers may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Issuers and the Transfer Agent need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part; provided that new Notes will only be issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. Also, the Issuers and the Transfer Agent need not exchange or register the transfer of any Notes for a period of 15 days before the delivery of a notice of redemption of Notes to be redeemed.

10. Persons Deemed Owners . The registered Holder of a Note shall be treated as its owner for all purposes. Only registered Holders shall have rights hereunder.

11. Amendment, Supplement and Waiver . The Indenture, the Guarantees or the Notes may be amended or supplemented as provided in the Indenture.

12. Defaults and Remedies .

(a) The Events of Default relating to the Notes are defined in Section 6.01 of the Indenture. If any Event of Default (other than an Event of Default of the type specified in clause (vi) or (vii) of Section 6.01(a) of the Indenture with respect to the Issuer) occurs and is continuing under the Indenture, the Trustee or the Holders of not less than 30.0% in aggregate principal amount of all of the then total outstanding Notes may, by written notice to the Issuers and the Trustee, in either case specifying in such notice the respective Event of Default and that such notice is a “notice of acceleration,” declare the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Notes to be due and payable immediately. Upon the effectiveness of such declaration, such principal of and any previously accrued and payable premium, if any, and interest will be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising under clause (vi) or (vii) of Section 6.01(a) of the Indenture with respect to the Issuer, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture, the Notes or the Guarantees except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of all the then outstanding Notes may direct the Trustee in its exercise of any trust or power.

A-9

(b) The Trustee may withhold from the Holders notice of any continuing Default, except a Default relating to the payment of principal, premium, if any, or interest, if it determines that withholding notice is in their interest.

(c) Holders of a majority in aggregate principal amount of all the then outstanding Notes, by notice to the Trustee (with a copy to the Issuers, provided that any waiver or rescission under Section 6.04 of the Indenture shall be valid and binding notwithstanding the failure to provide a copy of such notice to the Issuers) may on behalf of the Holders of all of the Notes waive any existing Default and its consequences under the Indenture (including in connection with an Asset Sale Offer or a Change of Control Offer) (except for a continuing Default in the payment of interest on, premium, if any, or the principal of any Note held by a non-consenting Holder (other than as a result of acceleration of the Notes)) and rescind any acceleration with respect to the Notes and its consequences under the Indenture (except if such rescission would conflict with any judgment of a court of competent jurisdiction). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of the Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereto.

(d) The Issuer is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Issuer shall, within 30 days of becoming aware of any Default, deliver to the Trustee by registered or certified mail or by facsimile transmission a statement specifying such Default.

13. Guarantees . The Issuers’ obligations under the Notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.

14. Authentication . This Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose until authenticated by the manual signature of the Trustee.

15. Governing Law . THIS NOTE, AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS NOTE, WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

16. CUSIP Numbers and ISINs . Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuers have caused CUSIP numbers and ISINs to be printed on the Notes and the Trustee may use CUSIP numbers and ISINs in notices of redemption as a convenience to Holders. No representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of redemption or exchange and reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers.

A-10

The Issuers will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to the Issuers at the following address:

c/o Change Healthcare Holdings, LLC

5995 Windward Parkway

Alpharetta, GA 30005

Attention: Loretta Cecil, General Counsel

Facsimile: (404) 338-5145

With a copy to:

Ropes & Gray LLP

1211 Avenue of the Americas

New York, NY 10036-8704

Attention: Jay J. Kim

E-mail: [Email Address]

Telephone: [Phone Number]

Facsimile: (646) 728-1667

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ASSIGNMENT FORM

To assign this Note, fill in the form below:


(I) or (we) assign and transfer this Note to:
		(Insert assignee’s legal name)

(Insert assignee’s soc. sec. or tax I.D. no.)

(Print or type assignee’s name, address and zip code)

and irrevocably appoint

to transfer this Note on the books of the Issuers. The agent may substitute another to act for him.

Date:


Your Signature:
		(Sign exactly as your name appears on the face of this Note)

Signature Guarantee*:

*	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

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OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Issuers pursuant to Section 4.10 or 4.14 of the Indenture, check the appropriate box below:

[ ] Section 4.10 [ ] Section 4.14

If you want to elect to have only part of this Note purchased by the Issuers pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you elect to have purchased:

Date:


Your Signature:
		(Sign exactly as your name appears on the face of this Note)

Tax Identification No.:

Signature Guarantee*:

*	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

The initial outstanding principal amount of this Global Note is $ . The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global or Definitive Note for an interest in this Global Note, have been made:

Date of Exchange

Amount of decrease

in Principal Amount

of this Global Note

Amount of increase

in Principal Amount

of this Global Note

Principal Amount of

this Global Note following
such

decrease or increase

Signature of

authorized signatory

of Trustee or

Custodian

*	This schedule should be included only if the Note is issued in global form.

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EXHIBIT B

[FORM OF CERTIFICATE OF TRANSFER]

c/o Change Healthcare Holdings, LLC

5995 Windward Parkway

Alpharetta, GA 30005

Attention: Loretta Cecil, General Counsel

Facsimile: (404) 338-5145

With a copy to:

Ropes & Gray LLP

1211 Avenue of the Americas

New York, NY 10036-8704

Attention: Jay J. Kim

E-mail: [Email Address]

Telephone: [Phone Number]

Facsimile: (646) 728-1667

Wilmington Trust, National Association

Attention: Joe O’Donnell

Vice President

246 Goose Lane, Suite 105

Guilford, CT 06437

Facsimile No.: 203-453-1183

[Email Address]

Re: 5.75% Senior Notes due 2025

Reference is hereby made to the Indenture, dated as of February 15, 2017 (as amended, supplemented or otherwise modified from time to time, the “ Indenture ”), among (a) Change Healthcare Holdings, LLC, a Delaware limited liability company (the “ Issuer ”), (b) Change Healthcare Finance, Inc., a Delaware corporation (the “ Co-Issuer ”), (c) the Guarantors (as defined therein) from time to time party thereto, and (d) Wilmington Trust, National Association, a national banking association, as Trustee, Transfer Agent, Registrar and Paying Agent. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

(the “ Transferor ”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $ in such Note[s] or interests (the “ Transfer ”), to (the “ Transferee ”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

B-1

1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE RELEVANT 144A GLOBAL NOTE OR RELEVANT DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “ Securities Act ”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States.

2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE RELEVANT REGULATION S GLOBAL NOTE OR RELEVANT DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the applicable Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Indenture and the Securities Act.

3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE RELEVANT DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):

(a) [ ] such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or

(b) [ ] such Transfer is being effected to an Issuer or a subsidiary thereof; or

B-2

(c) [ ] such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act.

4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.

(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

(b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.

B-3

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuers.


[Insert Name of Transferor]

By:
		Name:
		Title :

Dated:

B-4

ANNEX A TO CERTIFICATE OF TRANSFER

1.	The Transferor owns and proposes to transfer the following:

[CHECK

ONE OF (a) OR (b)]

(a)

[ ] a beneficial interest in the:

(i)

[ ] 144A Global Note (CUSIP: 15911N AA3; ISIN: US15911NAA37),

(ii)

[ ] Regulation S Global Note (CUSIP: U1600N AA6; ISIN: USU1600NAA64), or

(b)

[ ] a Restricted Definitive Note.

2.	After the Transfer the Transferee will hold: [CHECK ONE]

(a)

[ ] a beneficial interest in the:

(i)

[ ] 144A Global Note (CUSIP: 15911N AA3; ISIN: US15911NAA37),

(ii)

[ ] Regulation S Global Note (CUSIP: U1600N AA6; ISIN: USU1600NAA64), or

(iii)

[ ] Unrestricted Global Note (CUSIP: [ ]), or

(b)

[ ] a Restricted Definitive Note; or

(c)

[ ] an Unrestricted Definitive Note, in accordance with the terms of the Indenture.

B-5

EXHIBIT C

[FORM OF CERTIFICATE OF EXCHANGE]

c/o Change Healthcare Holdings, LLC

5995 Windward Parkway

Alpharetta, GA 30005

Attention: Loretta Cecil, General Counsel

Facsimile: (404) 338-5145

With a copy to:

Ropes & Gray LLP

1211 Avenue of the Americas

New York, NY 10036-8704

Attention: Jay J. Kim

E-mail: [Email Address]

Telephone: [Phone Number]

Facsimile: (646) 728-1667

Wilmington Trust, National Association

Attention: Joe O’Donnell

Vice President

246 Goose Lane, Suite 105

Guilford, CT 06437

Facsimile No.: 203-453-1183

[Email Address]

Re: 5.75% Senior Notes due 2025

(the “ Owner ”) owns and proposes to exchange Note[s] or an interest in such Note[s], in the principal amount of $ in such Note[s] or interests (the “ Exchange ”). In connection with the Exchange, the Owner hereby certifies that:

1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE

C-1

(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the “ Securities Act ”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

C-2

2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES

(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.

(b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE] [ ] 144A Global Note [ ] Regulation S Global Note in each case, with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.

C-3

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuers.


[Insert Name of Transferor]

By:
		Name:
		Title :

Dated:

C-4

EXHIBIT D

[FORM OF COMPLETION DATE SUPPLEMENTAL INDENTURE]

Completion Date Supplemental Indenture (this “ Completion Date Supplemental Indenture ”), dated as of [ ], 2017, among the Subsidiaries of Change Healthcare Holdings, LLC, a Delaware limited liability company (the “ Issuer ”), that are signatories hereto as Guarantors (collectively, the “ Completion Date Guarantors ”) and Wilmington Trust, National Association, a national banking association, as trustee (the “ Trustee ”).

W I T N E S S E T H :

WHEREAS, the Issuer, Change Healthcare Finance, Inc., a Delaware corporation (the “ Co-Issuer ” and, together with the Issuer, the “ Issuers ”) and the Trustee have heretofore executed and delivered an indenture, dated as of February 15, 2017 (the “ Initial Indenture ” together with this Completion Date Supplemental Indenture, and as further amended and supplemented, the “ Indenture ”), providing for the issuance of $1,000,000,000 aggregate principal amount of 5.75% Senior Notes due 2025 (the “ Notes ”);

WHEREAS, the Initial Indenture contemplates that upon the occurrence of the Completion Date, the Completion Date Guarantors shall execute and deliver to the Trustee a supplemental indenture pursuant to which each of the Completion Date Guarantors shall expressly and unconditionally guarantee, on a joint and several basis, all of the Issuers’ Obligations under the Initial Indenture and the Notes; and

WHEREAS, pursuant to Section 9.01 of the Initial Indenture, the Completion Date Guarantors and the Trustee are authorized to execute and deliver this Completion Date Supplemental Indenture to amend or supplement the Initial Indenture without the consent of any Holder of the Notes.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, each of the Completion Date Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

(1) Capitalized Terms . Capitalized terms used herein without definition shall have the meanings assigned to them in the Initial Indenture.

(2) Agreement to Guarantee . Each Completion Date Guarantor acknowledges that it has received and reviewed a copy of the Indenture and all other documents it deems necessary to review in order to enter into this Completion Date Supplemental Indenture, and acknowledges and agrees to (i) join and become a party to the Indenture as indicated by its signature below; (ii) be bound by the Indenture, as of the date hereof, as if made by, and with respect to, each signatory hereto; and (iii) perform all obligations and duties required of a Guarantor pursuant to the Indenture. Each Completion Date Guarantor hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Indenture, including, but not limited to, Article 10 thereof.

D-1

(3) Execution and Delivery . Each Completion Date Guarantor agrees that its Guarantee shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Guarantee on the Notes.

(4) No Recourse Against Others . No past, present or future director, officer, employee, incorporator, member, partner or direct or indirect equityholder of any Issuer or any Guarantor (including the Completion Date Guarantors) (other than the Issuers in respect of the Notes and each Guarantor in respect of its Guarantee) shall have any liability for any obligations of the Issuers or the Guarantors (including the Completion Date Guarantors) under the Notes, any Guarantees, the Indenture, this Completion Date Supplemental Indenture or any other supplemental indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

(5) Governing Law . THIS COMPLETION DATE SUPPLEMENTAL INDENTURE, AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS COMPLETION DATE SUPPLEMENTAL INDENTURE, WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

(6) Counterparts . The parties may sign any number of copies of this Completion Date Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. This Completion Date Supplemental Indenture may be executed in multiple counterparts which, when taken together, shall constitute one instrument. The exchange of copies of this Completion Date Supplemental Indenture and of signature pages by facsimile or PDF transmissions shall constitute effective execution and delivery of this Completion Date Supplemental Indenture as to the parties hereto and may be used in lieu of the original Completion Date Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes

(7) Effect of Headings . The Section headings herein are for convenience only and shall not affect the construction hereof.

(8) The Trustee . The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Completion Date Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Completion Date Guarantors.

(9) Benefits Acknowledged . The Completion Date Guarantors’ Guarantees are subject to the terms and conditions set forth in the Indenture. Each Completion Date Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Completion Date Supplemental Indenture and that the guarantee and waivers made by it pursuant to its Guarantee are knowingly made in contemplation of such benefits.

D-2

(10) Successors . All agreements of the Completion Date Guarantors in this Completion Date Supplemental Indenture shall bind their respective successors, except as otherwise provided in this Completion Date Supplemental Indenture. All agreements of the Trustee in this Completion Date Supplemental Indenture shall bind its successors.

[Signature Page Follows]

D-3

IN WITNESS WHEREOF, the parties hereto have caused this Completion Date Supplemental Indenture to be duly executed as of the date first above written.


[GUARANTORS]

By:
		Name:
		Title :

D-4

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Trustee



By:
		Name:
		Title:

D-5

EXHIBIT E

[FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS]

Supplemental Indenture (this “ Supplemental Indenture ”), dated as of among (the “ Guaranteeing Subsidiary ”), a Subsidiary of Change Healthcare Holdings, LLC, a Delaware limited liability company (the “ Issuer ”) and Wilmington Trust, National Association, a national banking association, as trustee (the “ Trustee ”), Transfer Agent, Registrar and Paying Agent.

W I T N E S S E T H

WHEREAS, the Issuers and the Guarantors have heretofore executed and delivered to the Trustee an Indenture (the “ Indenture ”), dated as of February 15, 2017, providing for the issuance of $1,000,000,000 aggregate principal amount of 5.75% Senior Notes due 2025 (the “ Notes ”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuers’ Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “ Guarantee ”); and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

(1) Capitalized Terms . Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

(2) Agreement to Guarantee . The Guaranteeing Subsidiary acknowledges that it has received and reviewed a copy of the Indenture and all other documents it deems necessary to review in order to enter into this Supplemental Indenture, and acknowledges and agrees to (i) join and become a party to the Indenture as indicated by its signature below; (ii) be bound by the Indenture, as of the date hereof, as if made by, and with respect to, each signatory hereto; and (iii) perform all obligations and duties required of a Guarantor pursuant to the Indenture. The Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Indenture, including, but not limited to, Article 10 thereof.

(3) Execution and Delivery . The Guaranteeing Subsidiary agrees that the Guarantee shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Guarantee on the Notes.

E-1

(4) No Recourse Against Others . No past, present or future director, officer, employee, incorporator, member, partner or direct or indirect equityholder of any Issuer or any Guarantor (including the Guaranteeing Subsidiary) (other than the Issuers in respect of the Notes and each Guarantor in respect of its Guarantee) shall have any liability for any obligations of the Issuers or the Guarantors (including the Guaranteeing Subsidiary) under the Notes, any Guarantees, the Indenture, this Supplemental Indenture or any other supplemental indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

(5) Governing Law . THIS SUPPLEMENTAL INDENTURE, AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS SUPPLEMENTAL INDENTURE, WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

(6) Counterparts . The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. This Supplemental Indenture may be executed in multiple counterparts which, when taken together, shall constitute one instrument. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmissions shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

(7) Effect of Headings . The Section headings herein are for convenience only and shall not affect the construction hereof.

(8) The Trustee . The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary.

(9) Benefits Acknowledged . The Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Supplemental Indenture and that the guarantee and waivers made by it pursuant to this Guarantee are knowingly made in contemplation of such benefits.

(10) Successors . All agreements of the Guaranteeing Subsidiary in this Supplemental Indenture shall bind its successors, except as otherwise provided in this Supplemental Indenture. All agreements of the Trustee in this Supplemental Indenture shall bind its successors.

E-2

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.


[GUARANTEEING SUBSIDIARY]

By:
		Name:
		Title:

E-3

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Trustee


By:
		Name:
		Title:

E-4

Exhibit 4.2

COMPLETION DATE SUPPLEMENTAL INDENTURE

Completion Date Supplemental Indenture (this “ Completion Date Supplemental Indenture ”), dated as of March 1, 2017, among the Subsidiaries of Change Healthcare Holdings, LLC, a Delaware limited liability company (the “ Issuer ”), that are signatories hereto as Guarantors (collectively, the “ Completion Date Guarantors ”) and Wilmington Trust, National Association, a national banking association, as trustee (the “ Trustee ”).

W I T N E S S E T H

(1) Capitalized Terms . Capitalized terms used herein without definition shall have the meanings assigned to them in the Initial Indenture.

Guarantors (including the Completion Date Guarantors) under the Notes, any Guarantees, the Indenture, this Completion Date Supplemental Indenture or any other supplemental indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

(7) Effect of Headings . The Section headings herein are for convenience only and shall not affect the construction hereof.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have caused this Completion Date Supplemental Indenture to be duly executed as of the date first above written.


CHANGE HEALTHCARE, INC. CHANGE HEALTHCARE INTERMEDIATE HOLDINGS, INC. CHANGE HEALTHCARE HOLDINGS, INC.
CHANGE HEALTHCARE OPERATIONS, LLC
CHANGE HEALTHCARE SOLUTIONS, LLC
CHANGE HEALTHCARE BUSINESS FULFILLMENT, LLC
CHANGE HEALTHCARE
CORRESPONDENCE SERVICES, INC. CHANGE HEALTHCARE COMMUNICATIONS, LLC
CHANGE HEALTHCARE ENGAGEMENT SOLUTIONS, INC. CHANGE HEALTHCARE PAYER PAYMENT INTEGRITY, LLC CHANGE HEALTHCARE PHARMACY SOLUTIONS, INC.
VIEOSOFT, INC.
ALTEGRA HEALTH, INC. CHANGE ENCIRCLE, LLC ALTEGRA HEALTH OPERATING COMPANY LLC
ALTEGRA HEALTH CONNECTIONS, LLC
ALTEGRA HEALTH OPERATING COMPANY - PUERTO RICO, LLC

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: Secretary

[Supplemental Indenture]


PST SERVICES, LLC

By:		/s/ John G. Saia
Name: John G. Saia
Title: Vice President and Secretary

MCKESSON TECHNOLOGIES LLC

By:		/s/ John G. Saia
Name: John G. Saia
Title: Vice President and Secretary

HEALTHQX, LLC

By:		/s/ John G. Saia
Name: John G. Saia
Title: Vice President and Secretary

MED3000 GROUP, INC.

By:		/s/ John G. Saia
Name: John G. Saia
Title: Vice President and Secretary

MED3000, INC.

By:		/s/ John G. Saia
Name: John G. Saia
Title: Vice President and Secretary

INTEGREAT, LLC

By:		/s/ John G. Saia
Name: John G. Saia
Title: Vice President and Secretary

[Supplemental Indenture]


PEDIATRIC HEALTH ALLIANCE, L.L.C.

By:		/s/ John G. Saia
Name: John G. Saia
Title: Manager

MED3000 HEALTH SOLUTIONS SOUTHEAST

By:		/s/ John G. Saia
Name: John G. Saia
Title: Vice President and Secretary

MED3000 INVESTMENTS, INC.

By:		/s/ John G. Saia
Name: John G. Saia
Title: Vice President and Secretary

WILMINTON TRUST, NATIONAL ASSOCIATION, as Trustee

By:		/s/ Joseph P. O’Donnell
Name: Joseph P. O’Donnell
Title: Vice President

[Supplemental Indenture]

Exhibit 10.1

THE UNITS REPRESENTED BY THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER APPLICABLE SECURITIES LAWS. SUCH UNITS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH LAWS OR EXEMPTIONS THEREFROM.

THE UNITS ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER SPECIFIED IN THIS AGREEMENT, AND CHANGE HEALTHCARE LLC RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH UNITS UNLESS AND UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO ANY TRANSFER. A COPY OF THIS AGREEMENT SHALL BE PROMPTLY FURNISHED BY CHANGE HEALTHCARE LLC TO THE HOLDER OF ANY UNITS UPON WRITTEN REQUEST AND WITHOUT CHARGE.

THIRD AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

CHANGE HEALTHCARE LLC

DATED AS OF MARCH 1, 2017

TABLE OF CONTENTS


		PAGE
ARTICLE 1
D EFINITIONS .
Section 1.01.	Defined Terms		2
Section 1.02.	Other Definitional and Interpretative Provisions		17

ARTICLE 2
O RGANIZATIONAL M ATTERS AND G ENERAL P ROVISIONS

Section 2.01.	Formation		18
Section 2.02.	Name		19
Section 2.03.	Principal Place of Business		19
Section 2.04.	Registered Agent		19
Section 2.05.	Purpose and Powers of the Company		19
Section 2.06.	Term		19
Section 2.07.	Filings; Qualification in Other Jurisdictions		19
Section 2.08.	Company Property		20
Section 2.09.	Transactions with Members and Directors		20
Section 2.10.	Certificated or Uncertificated Units		20

ARTICLE 3
C APITAL C ONTRIBUTIONS ; P REEMPTIVE R IGHTS

Section 3.01.	Initial Capital Contributions		20
Section 3.02.	Additional Capital Contributions		20
Section 3.03.	Issuance of Units		20
Section 3.04.	Withdrawal of Capital		23
Section 3.05.	Maintenance of Capital Accounts		24
Section 3.06.	No Interest		24
Section 3.07.	Preemptive Rights		24

ARTICLE 4
C ERTAIN R IGHTS AND O BLIGATIONS OF M EMBERS

Section 4.01.	Members		26
Section 4.02.	No Action on Behalf of the Company; No Dissent Rights		26
Section 4.03.	No Right to Voluntarily Withdraw		26
Section 4.04.	Member Meetings		27
Section 4.05.	Notice of Meetings		27
Section 4.06.	Quorum; Telephonic Meetings		27
Section 4.07.	Voting		27
Section 4.08.	Action Without a Meeting		28
Section 4.09.	Record Date		28
Section 4.10.	Member Approval Rights		28


Section 4.11.	Partition	28
Section 4.12.	Liability	28

ARTICLE 5
B OARD AND O FFICERS

Section 5.01.	Board	29
Section 5.02.	Removal and Resignation	32
Section 5.03.	Meetings of the Board	33
Section 5.04.	Action Without a Meeting	34
Section 5.05.	Reserved Matters	35
Section 5.06.	Chairman of the Board	39
Section 5.07.	Committees of the Board	39
Section 5.08.	Board Escalation Matters	40
Section 5.09.	Officers; Designation and Election of Officers; Duties	40

ARTICLE 6
D UTIES , E XCULPATION AND I NDEMNIFICATION

Section 6.01.	Duties, Exculpation and Indemnification	42
Section 6.02.	Other Activities; Business Opportunities	44

ARTICLE 7
A CCOUNTING , T AX , F ISCAL AND L EGAL M ATTERS

Section 7.01.	Fiscal Year	45
Section 7.02.	Bank Accounts	46
Section 7.03.	Books of Account and Other Information	46
Section 7.04.	Certain Tax Matters	46

ARTICLE 8
A LLOCATIONS AND D ISTRIBUTIONS

Section 8.01.	Allocations	48
Section 8.02.	Distributions	51

ARTICLE 9
T RANSFER R ESTRICTIONS

Section 9.01.	Restrictions on Transfers	54
Section 9.02.	Right of First Offer	56
Section 9.03.	Drag Along Right	58
Section 9.04.	Echo Stock Sales; No Asset or Unit Sales	60
Section 9.05.	Valuation of Units	61
Section 9.06.	Additional Members	62
Section 9.07.	Termination of Member Status	63
Section 9.08.	Void Transfers	63



ARTICLE 10
E XIT P ROVISIONS

Section 10.01.	Qualified IPO	63
Section 10.02.	Up-C Structure	65
Section 10.03.	Post-IPO Exit Rights	65
Section 10.04.	[Reserved]	66
Section 10.05.	Qualified MCK Exit Process	66
Section 10.06.	MCK Top-up Option	67
Section 10.07.	Registration Rights	68
Section 10.08.	Exit Events Expenses	68

ARTICLE 11
C OVENANTS

Section 11.01.	Business Opportunities	69
Section 11.02.	Confidentiality	69
Section 11.03.	Compliance Matters	71
Section 11.04.	Additional Covenants of Echo and the Company	72
Section 11.05.	Cooperation	76
Section 11.06.	Fees and Expenses of Echo Directors and Officers	77

ARTICLE 12
I NFORMATION R IGHTS ; F INANCIAL R EPORTING

Section 12.01.	Financial and Other Information	77
Section 12.02.	Certain Other Provisions Regarding Financial Reporting	78
Section 12.03.	Access to Management Personnel and Information	78
Section 12.04.	Liability	79

ARTICLE 13
D ISSOLUTION , L IQUIDATION AND T ERMINATION

Section 13.01.	No Dissolution	79
Section 13.02.	Events Causing Dissolution	79
Section 13.03.	Bankruptcy of a Member	79
Section 13.04.	Winding Up	79
Section 13.05.	Distribution of Assets	80
Section 13.06.	Distribution of Patents	80
Section 13.07.	Distributions in Cash or in Kind	81
Section 13.08.	Claims of the Members	81

ARTICLE 14
M ISCELLANEOUS

Section 14.01.	Further Assurances	82
Section 14.02.	Amendments	82
Section 14.03.	Waiver; Cumulative Remedies	82

iii


Section 14.04.	Entire Agreement	83
Section 14.05.	Third-Party Beneficiaries	83
Section 14.06.	Non Assignability; Binding Effect	83
Section 14.07.	Severability	83
Section 14.08.	Injunctive Relief	84
Section 14.09.	Governing Law	84
Section 14.10.	Dispute Resolution	84
Section 14.11.	Waiver of Jury Trial	85
Section 14.12.	Notices	85
Section 14.13.	Counterparts; Effectiveness	87
Section 14.14.	The Company Parties	87


EXHIBITS

Exhibit A		Member Information
Exhibit B		Registration Rights Agreement
Exhibit C		Form of Separation and Distribution Agreement
Exhibit D		Merger Agreement
Exhibit E		Form of Tax Matters Agreement
Exhibit F		Form of Notice of Exchange

Schedule I		Initial Capital Contributions

THIRD AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

This Third Amended and Restated Limited Liability Company Agreement (this “ Agreement ”) of Change Healthcare LLC (f/k/a PF2 NewCo LLC), a Delaware limited liability company (the “ Company ”), is made as of March 1, 2017, by and among (i) PF2 IP LLC, a Delaware limited liability company (“ MCK IPCo ”), (ii) PF2 PST Services Inc., a Delaware corporation (“ PST ”, and together with MCK IPCo, the “ MCK Members ”), (iii) HCIT Holdings, Inc., a Delaware corporation newly formed by the Echo Shareholders (as defined below) (“ Echo ”, and together with the MCK Members, the “ Initial Members ”), (iv) the Company, (v) each other Person who at any time becomes a Member in accordance with the terms of this Agreement and the Act and (vi) Change Healthcare Intermediate Holdings, LLC (f/k/a PF2 NewCo Intermediate Holdings, LLC), a Delaware limited liability company, Change Healthcare Holdings, LLC (f/k/a PF2 NewCo Holdings, LLC), a Delaware limited liability company, Change Healthcare, Inc., a Delaware corporation, Change Healthcare Holdings, Inc., a Delaware corporation, Change Healthcare Operations, LLC, a Delaware limited liability company, Change Healthcare Solutions, LLC, a Delaware limited liability company, Change Healthcare Finance, Inc., a Delaware corporation, McKesson Technologies LLC, a Delaware limited liability company, PST Services LLC, a Georgia limited liability company (collectively and together with the Company, the “ Company Parties ”).

RECITALS

WHEREAS, the Company was formed as PF2 NewCo LLC on June 17, 2016, by the filing of a Certificate of Formation (as amended or otherwise modified from time to time, the “ Certificate of Formation ”) with the Secretary of State of the State of Delaware and the adoption of that certain Limited Liability Company Agreement of the Company dated as of June 17, 2016 by and between McKesson Corporation and Change Healthcare, Inc. (the “ Initial LLC Agreement ”), which was amended and restated in its entirety by (i) that certain Amended and Restated Limited Liability Company Agreement of the Company dated as of December 22, 2016 by and among the Company, MCK IPCo, PST and Echo and (ii) that Second Amended and Restated Limited Liability Company Agreement dated as of February 1, 2017 by and among the Company, MCK IPCo, PST and Echo (the “ Existing LLC Agreement ”);

WHEREAS, pursuant to an Agreement of Contribution and Sale dated as of June 28, 2016 (as amended or otherwise modified from time to time, the “ Contribution Agreement ”) by and among MCK, Echo Holdco, the Echo Shareholders and the Company, each of MCK and the Echo Shareholders have agreed to contribute or sell (or agreed to cause to be contributed or sold) certain equity interests, assets, properties and businesses to the Company, and to take the other actions set forth therein, and in consideration of their respective contributions, the Company agreed to issue to each of the Initial Members, the MCK Units and the Echo Units (each as defined below) respectively (the “ Joint Venture ”);

WHEREAS, the parties hereto are forming the Joint Venture to allow the parties to pool their resources to develop new markets, products and technologies in the healthcare industry that the parties anticipate will provide new growth opportunities;

WHEREAS, the contributed businesses of the parties have complementary assets and capabilities, which the parties expect will allow the Company to capitalize on emerging trends in value-based care and consumerism and create a more extensive reach that provides a scaled business platform for future investment and innovation;

WHEREAS, the parties hereto wish to enter into this Agreement to, among other things, (i) amend and restate the Existing LLC Agreement in its entirety, (ii) admit New PST as a Member, (iii) provide for the governance and management of the Company and (iv) set forth the respective rights and obligations of Members generally;

WHEREAS, it is the expectation of the parties that Echo Shares (as defined below) representing up to 25% of the beneficial ownership of Echo’s outstanding common equity (after giving effect to such offering) will be offered in a Qualified IPO (as defined below).

NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1

D EFINITIONS .

Section 1.01. Defined Terms. (a) In this Agreement:

“ Act ” means the Delaware Limited Liability Company Act, 6 Del. C. § 18-101, et seq.

“ Adjusted Capital Account ” means, with respect to any Member, such Member’s Capital Account balance (a) reduced for any items described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), and (6), and (b) increased for any amount such Person is obligated to contribute or is treated as being obligated to contribute to the Company pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (relating to Member liabilities to the Company) and the penultimate sentences of Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5) (relating to Minimum Gain or Member Nonrecourse Debt Minimum Gain), as of the end of the Company’s Tax Year, after taking into account thereunder any changes during such year in Minimum Gain or Member Nonrecourse Debt Minimum Gain.

“ Adjusted Capital Account Deficit ” means with respect to any Member as of the end of any Tax Year, the amount by which the balance in such Member’s Adjusted Capital Account is less than zero.

“ Adjustment Event ” means, without duplication, (i) the filing by the Company of any amended U.S. federal income tax return, (ii) a “determination” as defined in Code Section 1313(a) and (iii) any other event (including the execution of IRS Form 870-AD) that finally and conclusively establishes the amount of any liability of any Member or former Member (or their respective current and former Affiliates) for U.S. federal income tax in respect of (x) any item of income, gain, loss or deduction of the Company (each, a “ Company Item ”) for any taxable period, or (y) any item of income, gain, loss or deduction of such Member attributable to the treatment as taxable of any issuance, repurchase, redemption or distribution by the Company to Echo described in Section 3.03(c) in connection with any Approved Plan or a redemption or repurchase of Echo

Shares pursuant to the terms of the Echo Shareholders Agreement (each, an “ Echo Benefit Plan Item ”), excluding, for the avoidance of doubt, any event establishing the liability of the Company for an “imputed underpayment” under Section 6225 of the Partnership Tax Audit Rules for which an election under Section 6226 of the Partnership Tax Audit Rules is not made.

“ Adjustment Pro Rata Tax Distribution Amount ” means, with respect to a specified Member for a Tax Year in respect of an Adjustment Event, the positive difference, if any, between (a) the product of (i) the Adjustment Tax Distribution Ratio Amount for such Adjustment Event for the Member whose Adjustment Tax Distribution Ratio Amount is the highest of any Member and (ii) such specified Member’s Membership Percentage, and (b) such specified Member’s Adjustment Tax Distribution Amount.

“ Adjustment Tax Distribution Amount ” means, for any Adjustment Event and any Member, an amount equal to (i) the greater of (x) the sum of such Member’s Adjustment Tax Year Amounts (in respect of such Adjustment Event) for all Tax Years to which the Adjustment Event relates, or (y) zero, (ii) reduced, but not below zero, by such Member’s Cumulative Pro Rata Tax Distribution Amount.

“ Adjustment Tax Distribution Ratio Amount ” means, with respect to a Member at any time of determination and for any Adjustment Event, (i) such Member’s Adjustment Tax Distribution Amount, divided by (ii) such Member’s Membership Percentage.

“ Adjustment Tax Year Amount ” means, for any Adjustment Event, any Member and any Tax Year to which such Adjustment Event relates, an amount, which may be positive or negative, determined by multiplying (i) the Applicable Tax Rate (as determined for such Tax Year) by (ii) (A) the sum of (x) the net amount of Company Items allocable to such Member and (y) the net amount of Echo Benefit Plan Items recognized by such Member, for such Tax Year after giving effect to such Adjustment Event (including any correlative adjustments to Company Items), minus (B) the sum of (x) the net amount of Company Items allocable to such Member and (y) the net amount of Echo Benefit Plan Items recognized by such Member, for such Tax Year before giving effect to such Adjustment Event (but, for the avoidance of doubt, after giving effect to any prior Adjustment Event).

“ Affiliate ” means, (a) with respect to any specified Person, any other Person that, at the time of determination, directly or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with such specified Person or (b) with respect to any natural Person holding Units or Echo Shares, any other Person who is (A) a Family Member of such Person holding Units or Echo Shares or (B) a trust or similar estate planning vehicle, a beneficiary of which is such Person, holding Units or Echo Shares, or a Family Member of such Person holding Units or Echo Shares; provided , that the term Affiliate (i) when used with respect to any Member or any of its Affiliates, shall not include the Company or any of its Subsidiaries and (ii) when used with respect to the Company or any of its Subsidiaries, shall not include any Member or any of its Affiliates, and provided further that Echo, the Echo Shareholders and their Affiliates, on the one hand, shall not be deemed to be Affiliates of the MCK Members, MCK and their Affiliates, on the other hand. H&F will be deemed an Affiliate of Echo for as long as it is entitled to the rights set forth in Section 3.1(h) of the Echo Shareholders Agreement. The terms “ Affiliated ” and “ Affiliation ” shall have correlative meanings.

“ Affirmative Steps ” means, with respect to the MCK Members during the MCK Exit Window in respect of a Qualified MCK Exit, and subject to the reasonable cooperation of the Company, Echo and their respective Subsidiaries in accordance with Section 10.05(a) , affirmative actions reasonably required to conduct a Qualified MCK Exit, which shall include at least two of the following: (a) authorization by resolution or written consent by MCK’s board of directors for MCK to take preparatory steps and incur related costs to proceed with a Qualified MCK Exit, (b) the public announcement by MCK of its intention to effect a Qualified MCK Exit, (c) the preparation of disclosure documents and other regulatory filings reasonably required to obtain material governmental approvals and consents to consummate a Qualified MCK Exit (including one or more of an information statement, proxy statement, registration statement and/or exchange offer documents required in connection with a Qualified MCK Exit by the rules and regulations of the SEC) (collectively, the “ Filings ”) and (d) the filing or submission of appropriate Filings with the relevant Governmental Authorities, to the extent deemed advisable by MCK’s advisors in order to consummate a Qualified MCK Exit.

“ Annual Operating and Capital Budget ” means the annual budget of the Company which shall initially be in the form delivered to the Initial Members at Closing.

“ Annual Tax Distribution Amount ” means with respect to a Member for a Tax Year, an amount equal to the product of (a) the aggregate amount of net taxable income and gain allocated to such Member with respect to the Units pursuant to Section 8.01(c) in respect of such Tax Year and (b) the Applicable Tax Rate.

“ Applicable Tax Rate ” means, with respect to a Tax Year, the highest combined federal, state and local income tax rate (giving effect to the deductibility of state and local income taxes for federal income tax purposes) applicable to a corporation in any United States jurisdiction.

“ Appraiser ” means a nationally recognized investment bank or accounting firm appointed in accordance with the terms of this Agreement that has experience in appraising businesses or property of a like nature.

“ Auditor ” means one of the “big-four” accounting firms appointed as an independent auditor of the Company.

“ Business Day ” means a day ending at 11:59 p.m. (Eastern Time), other than a Saturday, a Sunday or other day on which commercial banks in New York, New York are authorized or obligated by Law to close.

“ Capital Contributions ” means Initial Capital Contributions and Additional Capital Contributions.

“ Change of Control ” means, after the date hereof, (1) any acquisition, merger or consolidation of the Company by, with or into any other entity or any other similar transaction (including through an acquisition of Echo Shares), whether in a single transaction or series of related transactions, in which (A) the Members of the Company or their Affiliates immediately prior to such transaction in the aggregate cease to beneficially own more than 50% of the general voting power of the entity surviving or resulting from such transaction (or its equityholders) or (B) any Person or Group (other than a Group composed solely of the Members and their respective

Affiliates) becomes the “beneficial owner” (as such term is defined in Rule 13d-3 and Rule 13d-5 promulgated under the Exchange Act) of more than 50% of the general voting power of the entity surviving or resulting from such transaction (or its equityholders), (2) any transaction or series of related transactions in which more than 50% of the Company’s general voting power is Transferred to or acquired by any Person or Group (other than a Group composed solely of the Members and their respective Affiliates), including through an acquisition of Echo Shares or (3) the sale or Transfer by the Company of all or substantially all of its assets; provided , however , that, in determining whether a Change of Control of the Company has occurred, Transfers to any Permitted Transferee shall not be taken into account.

“ Closing ” means the closing of the transactions pursuant to Section 2.01 of the Contribution Agreement.

“ Code ” means the Internal Revenue Code of 1986.

“ Company Sale ” means a Transfer in connection with a Change of Control of the Company, whether by merger, consolidation or otherwise, pursuant to which any Person or group of Persons (other than a Member and its Affiliate) becomes the “beneficial owner” (as such term is defined in Rule 13d-3 and Rule 13d-5 promulgated under the Exchange Act), directly or indirectly, of a majority of the outstanding Units and any other voting securities of the Company.

“ Control ” means, as to any Person, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. The terms “ Controlled by ”, “ Controlled ”, “ under common Control with ” and “ Controlling ” shall have correlative meanings.

“ Conversion Amount ” means, with respect to any Member and any Conversion Event in respect of one or more Units held by such Member, an amount equal to the product of (i) such Member’s Tax Distribution Arrearage immediately before such Conversion Event and (ii) a fraction, (a) the numerator of which is the number of Units to which such Conversion Event relates and (b) the denominator of which is the number Units held by such Member immediately before such Conversion Event.

“ Conversion Event ” means, with respect to one or more Units held by a Member, the earlier to occur of (i) a Qualified MCK Exit and (ii) the Transfer of such Units by such Member to any Person other than a Permitted Transferee of such Member.

“ Conversion Number ” means, with respect to any Conversion Event in respect of one or more Units held by a Member, a number of Units equal to (i) the Conversion Amount for such Conversion Event divided by the Conversion Price for such Conversion Event.

“ Conversion Price ” means, with respect to any Conversion Event in respect of one or more Units held by a Member, the Fair Market Value of each such Unit, as determined in accordance with the valuation and appraisal process set forth in Section 9.05 .

“ Correlative Adjustment Amount ” means, in respect of any Adjustment Event, (i) for Echo, the MCK Members’ (and their Permitted Transferees’) Correlative Benefit Amount, and (ii) for the MCK Members and their Permitted Transferees as a group, Echo’s Correlative Benefit Amount.

“ Correlative Benefit Amount ” means, for Echo on the one hand and the MCK Members (and their Permitted Transferees) on the other hand, and in respect of any Adjustment Event, the greater of (i) zero and (ii) the product of (x) negative one and (y) the sum of such Member’s (or Members’) Adjustment Tax Year Amounts (in respect of such Adjustment Event) for all Tax Years to which the Adjustment Event relates.

“ Cumulative Pro Rata Tax Distribution Amount ” for a Member at any time of determination means zero, plus the total distributions previously made to such Member under Section 8.02(a)(iv) and Section 8.02(a)(v) , minus any amount of the Cumulative Pro Rata Tax Distribution Amount that was previously applied against and reduced such Member’s Adjustment Tax Distribution Amount in respect of any Adjustment Event.

“ Depreciation ” means, for each Tax Year, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable for U.S. federal income tax purposes with respect to an asset for such Tax Year, except that, if the Gross Asset Value of an asset differs from its adjusted basis for U.S. federal income tax purposes at the beginning of such Tax Year, (a) in the case of an asset which difference is being eliminated by use of the “remedial allocation method” as defined by Treasury Regulations Section 1.704-3(d), Depreciation for such Tax Year shall be the amount of book basis recovered for such Tax Year under the rules prescribed by Treasury Regulations Section 1.704-3(d)(2), and (b) in the case of any other asset, Depreciation shall be an amount that bears the same ratio to such beginning Gross Asset Value as the U.S. federal income tax depreciation, amortization, or other cost recovery deduction for such Tax Year bears to such beginning adjusted tax basis; provided , however , that in the case of clause (b) above, if the adjusted basis for U.S. federal income tax purposes of an asset at the beginning of such Tax Year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Board.

“ Echo Holdco ” means Change Healthcare, Inc., a Delaware corporation.

“ Echo Ratio ” means the number of Echo Shares that correspond to one (1) Unit, which shall be equal to: (a) the number of Echo Shares issued and outstanding as of such time divided by (b) the number of Units held by Echo as of such time; provided that (i) Unvested Echo Shares (ii) treasury stock, and (iii) Equity Securities of Echo that are convertible, exercisable for or exchangeable into Echo Shares prior to conversion, exercise or exchange shall be disregarded for purposes of calculating the Echo Ratio until such time as such Unvested Echo Shares vest in accordance with their terms or such Equity Securities of Echo are converted, exercised or exchanged into Echo Shares; provided , further that for purposes of determining the Echo Ratio in connection with a ROFO Sale, Drag-Along Sale or other Transfer, Unvested Echo Shares that will vest in accordance with their terms in connection with such sale or Transfer will be included as Echo Shares.

“ Echo Shareholders ” means the holders of the Echo Shares that are party to the Echo Shareholders Agreement and subject to the voting requirements of Section 3.4(b)(ii) thereof, as such may be amended from time to time pursuant thereto.

“ Echo Shareholders Agreement ” means the agreement dated as of the date hereof entered into by and among the Echo Shareholders, Echo and MCK and any other Person that becomes a party thereto relating to the governance and management of Echo.

“ Echo Units ” means 597,139.25 Initial Units issued to Echo at Closing pursuant to the Contribution Agreement, as adjusted by any adjustments pursuant to Section 2.03, Section 6.03 or Section 8.06 of the Contribution Agreement.

“ Equity Securities ” means, with respect to any Person, (i) any capital stock, partnership interests, limited liability company interests, units or any other type of equity interest, or other indicia of equity ownership (including profits interests), including, in the case of the Company, the Units (collectively, “ Interests ”), (ii) any security convertible into or exercisable or exchangeable for, with or without consideration, any Interests (including any option to purchase such convertible, exercisable or exchangeable security), (iii) any security carrying any warrant or right to subscribe to or purchase any security described in clause (i) or clause (ii), (iv) any such warrant or right or (v) any security issued in exchange for, upon conversion or exercise of or with respect to any of the foregoing securities of such Person.

“ Estimated Tax Distribution Amount ” means, with respect to a Member for each Estimated Tax Distribution Period of a Tax Year, an amount equal to (a) the product of (i) the estimated aggregate amount of taxable income and gain allocated to such Member with respect to such Member’s Units pursuant to Section 8.01(c) for the Tax Year through the end of such Estimated Tax Distribution Period as determined by the Board prior to the date of distribution pursuant to Section 8.02(a)(i) with respect to such Estimated Tax Distribution Period, and (ii) the Applicable Tax Rate less (b) the sum of the Estimated Tax Distribution Amount(s) previously calculated in respect of the previous Estimated Tax Distribution Period(s) with respect to such Tax Year.

“ Estimated Tax Distribution Date ” means July 15, September 15, December 15, and March 15, or such other dates as are required by Law for the payment of estimated taxes by the Members.

“ Estimated Tax Distribution Period ” means, with respect to a Tax Year, each of the following calendar periods (with all periods inclusive of the start and end dates): (i) from April 1 to June 30 of such Tax Year, (ii) from April 1 to August 31 of such Tax Year, (iii) from April 1 to November 30 of such Tax Year and (iv) from April 1 to March 31 of such Tax Year; or such other periods as are required by Law for the calculation of estimated taxes by the Members.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Fair Market Value ” means, with respect to any property, as of the relevant date of determination, the price that a willing buyer, not Affiliated with a seller of such property and under no compulsion to buy, would pay in an arm’s length transaction for such property to a willing seller, under no compulsion to sell and not taking into account lack of liquidity or any discount for a minority interest or otherwise for lack of Control.

“ Family Member ” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive relationships.

“ First Echo Sale Window ” means the three (3) month period following the expiration or termination of the lockup period relating to a Qualified IPO, solely where the Sponsor Shareholders has provided an Echo Shareholder Notice on or prior to the applicable Echo Sale Notice Deadline; provided , that the First Echo Sale Window shall terminate immediately upon the earlier of (i) the consummation of a Qualified Echo Sale (ii) receipt by the MCK Members of written notice from the Sponsor Shareholders of the Sponsor Shareholders’ decision to abandon or terminate the Echo Shareholder Sale Right with respect to such First Echo Sale Window or (iii) at such time as there are twelve (12) months or less until the termination of a MCK Exit Window pursuant to clause (iv) of the definition of the MCK Exit Window.

“ GAAP ” means accounting principles generally accepted in the United States of America.

“ Government Official ” means any public or elected official, officer or employee (regardless of rank), or other Person acting on behalf of a national, provincial or local government, including a department, agency, instrumentality, state-owned or state-controlled entity, or public international organization, or any political party, party official or candidate for political office.

“ Governmental Approval ” means any authorization, consent, waiver, order and approval of any Governmental Authority, including any applicable waiting periods associated therewith.

“ Gross Asset Value ” means with respect to any asset, the asset’s adjusted basis for U.S. federal income tax purposes, except as follows:

(a) The initial Gross Asset Value of any asset contributed (or deemed contributed for U.S. federal income tax purposes) by a Member to the Company shall be the gross fair market value of such asset, as reasonably determined by the Board in its sole discretion; provided , that the initial Gross Asset Values of the assets comprising the Initial Capital Contributions shall be as set forth on Schedule I , subject to appropriate adjustments, as reasonably determined by the Board in its sole discretion, resulting from adjustments to the Membership Percentages pursuant to Section 2.03, Section 6.03 and Section 8.06 of the Contribution Agreement;

(b) The Gross Asset Value of any asset shall be adjusted to equal its gross fair market value (taking Section 7701(g) of the Code into account), as determined by the Board in its reasonable discretion as of the following times: (i) the acquisition of one or more additional Units in the Company by any new or existing Member; (ii) the making of a Capital Contribution; (iii)

the revaluation of the property of (A) any Member treated as a partnership for U.S. federal income tax purposes or (B) any entity or arrangement treated as a partnership for such purposes in which the Company owns an equity interest, in each case pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(f), but only if an adjustment to the Gross Asset Value of the Company’s assets is permitted or required by applicable Law in such event; (iv) the distribution by the Company to a Member of more than a de minimis amount of the Company’s property as consideration for an interest in the Company; (v) the liquidation of the Company within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g); (vi) in connection with the grant of Units (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Company by an existing Member or by any other Person in anticipation of becoming a Member; and (vii) the occurrence of any event in respect of which an adjustment to the Gross Asset Value of the Company’s assets is required under applicable Law;

(c) The Gross Asset Value of any asset distributed to any Member shall be adjusted to equal the gross fair market value (taking Section 7701(g) of the Code into account) of such asset on the date of distribution as determined by the Board in its reasonable discretion;

(d) The Gross Asset Value of any asset shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such asset pursuant to Section 734(b) or 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m); provided , however , that the Gross Asset Value of an asset shall not be adjusted pursuant to this subparagraph (d) to the extent that an adjustment pursuant to subparagraph (b) is required in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (d); and

(e) If the Gross Asset Value of an asset has been determined or adjusted pursuant to subparagraph (a), (b) or (d), such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset, for purposes of computing Profits and Losses.

“ Group ” has the meaning set forth in Section 13(d)(3) and Rule 13d-5 of the Exchange Act.

“ H&F ” means H&F Harrington AIV II, L.P., HFCP VI Domestic AIV, L.P., Hellman & Friedman Investors VI, L.P., Hellman & Friedman Capital Executives VI, L.P. and Hellman & Friedman Capital Associates VI, L.P.

“ Independence Requirements ” means the requirements for independence prescribed by each of The New York Stock Exchange, the NASDAQ Stock Market and the SEC that is required to serve on the audit committee of a public issuer, whether such requirement is pursuant to Rule 5605 of the NASDAQ Listing Rules, Section 303A.01 of the NYSE Listed Company Manual, Rule 10A-3(b)(1) under the Exchange Act, or otherwise (and in each case, under any other successor rule).

“ Initial Units ” means the Units issued to each of the Initial Members at Closing, as adjusted by any adjustments pursuant to Section 2.03, Section 6.03 or Section 8.06 of the Contribution Agreement.

“ IPO Preference Period ” means the six (6) month period following the Initial Period; provided , that the IPO Preference Period shall end immediately if an IPO Demand relating to a Qualified IPO to be consummated during the IPO Preference Period is not delivered prior to or on the date that is ten (10) Business Days following the expiration of the Initial Period as required by Section 10.05(c) .

“ Law ” means any transnational, domestic or foreign federal, state or local statute, law, ordinance, regulation, rule, code, order or other requirement or rule of law, including the common law.

“ Material Company Competitor ” means (i) any Person who owns more than 10% of a health care information technology company or (ii) any Person who is employed by or on the board of a health care information technology company other than the Company or Echo.

“ MCK ” means McKesson Corporation, a Delaware corporation.

“ MCK Exit Window ” means (i) where the Sponsor Shareholders have not provided an Echo Shareholder Notice on or prior to the Echo Sale Notice Deadline for the First Echo Sale Window, then the twelve (12) month period following the expiration or termination of the underwriter lockup period relating to a Qualified IPO, or (ii) where the Sponsor Shareholders have provided an Echo Shareholder Notice on or prior to the Echo Sale Notice Deadline for the First Echo Sale Window, then the twelve (12) month period following whichever occurs first of (x) the termination of such First Echo Sale Window if such Qualified Echo Sale is (A) finally abandoned or terminated by the Sponsor Shareholders (and notified to the MCK Members in writing, which notice shall be provided by the Sponsor Shareholders promptly following any such abandonment or termination decision), or (B) otherwise not consummated during the First Echo Sale Window or (y) the Post-Echo Sale Lockup; provided , that in either of case (i) or (ii), the MCK Exit Window shall be extended up to an additional thirty (30) days upon the written request of any MCK Member during the MCK Exit Window if a Qualified MCK Exit has not occurred and the MCK Members have taken, and are continuing to take Affirmative Steps throughout such extension period, to effect a Qualified MCK Exit. Notwithstanding the foregoing, the MCK Exit Window shall automatically terminate (or be deemed to terminate) upon the earliest to occur of (i) the consummation of a Qualified MCK Exit, (ii) the MCK Members providing written notice to the Company of their intention to abandon or terminate the MCK Exit Window (which notice shall be provided by an MCK Member promptly following such abandonment or termination decision), (iii) the last Business Day of the IPO Preference Period to the extent that a Qualified IPO has not been consummated by the last Business Day of the IPO Preference Period and (iv) the date that is four (4) years from the date of Closing.

“ MCK Units ” means 1,392,367.03 Initial Units issued at Closing to the MCK Members pursuant to the Contribution Agreement in the following proportion: (x) 660,976.52 Initial Units to MCK lPCo and (y) 731,390.51 Initial Units to PST, in each case, as adjusted by any adjustments pursuant to Section 2.03, Section 6.03 or Section 8.06 of the Contribution Agreement.

“ Member ” means, at any time, for so long as such Person holds any Units, (i) each Initial Member and (ii) any other Person who, after the Closing, is admitted to the Company as a Member in accordance with the terms of this Agreement. No Person that is not a Member shall be deemed a “member” of the Company under the Act.

“ Member Nonrecourse Debt Minimum Gain ” means partner nonrecourse debt minimum gain as defined in Treasury Regulation 1.704-2(i)(2).

“ Membership Percentage ” means, with respect to any Member as of any time, the number of Units owned by such Member at such time divided by the aggregate number of Units owned by all Members in the aggregate at such time.

“ Minimum Gain ” means the partnership minimum gain determined pursuant to Treasury Regulation Section 1.704-2(d).

“ Nominee Directors ” means each of the MCK Directors and Echo Directors.

“ Partnership Tax Audit Rules ” means Sections 6221 through 6241 of the Code, as amended by the Bipartisan Budget Act of 2015, together with any guidance issued thereunder or successor provisions and any similar provision of state or local tax laws.

“ Patent Rights ” means any and all rights to patents and patent applications (including all reissues, divisions, continuations, continuations-in-part, and reexaminations thereof and the equivalents of any of the foregoing in any jurisdiction) and any renewals, extensions or reissue thereof.

“ Permitted Transferee ” means with respect to any Person, an Affiliate of such Person.

“ Person ” means any natural person, joint venture, general or limited partnership, corporation, limited liability company, trust, firm, association or organization or other legal entity.

“ Post-Echo Sale Lockup ” means the up to 90-day lockup period specified by the underwriter following the consummation of a Qualified Echo Sale.

“ Pro Rata Tax Distribution Amount ” means, at any time of determination with respect to a specified Member, (a) the product of (i) the Tax Distribution Ratio Amount for the Member whose Tax Distribution Ratio Amount is the highest of any Member and (ii) such specified Member’s Membership Percentage at such time, minus (b) such specified Member’s Total Tax Distribution Amount at such time.

“ Profit ” and “Loss” means, for each Tax Year, an amount equal to the Company’s taxable income or loss for such Tax Year, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), but with the following adjustments:

(i) Any income of the Company that is exempt from U.S. federal income tax and not otherwise taken into account in computing Profit or Loss shall be added to such taxable income or loss;

(ii) Any expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated as expenditures described in Section 705(a)(2)(B) of the Code pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing Profit or Loss shall be subtracted from such taxable income or loss;

(iii) In the event the Gross Asset Value of any asset of the Company is adjusted pursuant to subparagraphs (b), (c), or (d) of the definition of Gross Asset Value, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profit or Loss;

(iv) In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Tax Year;

(v) Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for U.S. federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of (adjusted for accumulated Depreciation with respect to such property), notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value; and (vi) Notwithstanding any other provision of this definition, any items which are specially allocated pursuant to Section 8.01(b) hereof shall not be taken into account in computing Profit or Loss. The amounts of items of Company income, gain, loss or deduction available to be specially allocated pursuant to Section 8.01(b) hereof shall be determined by applying rules analogous to those set forth in subparagraphs (i) through (v) above.

“ Property ” means all real and personal property (whether tangible or intangible) owned by the Company or its Subsidiaries, including, without limitation, (a) cash, (b) current assets (such as accounts receivable) (c) contract rights, (d) investments (such as shares, stocks, securities, notes, bonds, debentures, derivative financial instruments, and other similar financial assets), and (e) any improvements to real or personal property.

“ Qualified Echo Sale ” means a sale by holders of Echo Shares in a firm commitment underwritten public offering and in the manner contemplated in the applicable Echo Shareholder Notice; provided , that following such Qualified Echo Sale, the Echo Minimum Ownership continues to be satisfied (if applicable).

“ Qualified IPO ” means (i) a firm commitment underwritten public offering registered under the Securities Act (or any successor federal statute, and the rules and regulations thereunder, which shall be in effect at the time) of Echo Shares representing at least 10% of the beneficial ownership of the Company’s outstanding common equity (after giving effect to such offering) and (ii) pursuant to which Echo Shares are listed for trading on The New York Stock Exchange, the NASDAQ Stock Market, or any other securities exchange or quotation system in any jurisdiction that has been agreed to by the Initial Members in writing.

“ Realized Gain ” means, for any Tax Year commencing on or after the third anniversary of the Closing, the excess of the amount realized from the sale, exchange or other disposition of an item of Property over the Gross Asset Value of such item of Property at the time of such sale, exchange or other disposition; provided that, for the avoidance of doubt, the foregoing shall not include any amount realized from the sale, exchange or other disposition of Property constituting inventory or otherwise disposed of in the ordinary course of business.

“ Representative ” means, with respect to any Person, the Affiliates of such Person and the officers, directors, employees, attorneys, accountants, financial advisors, agents, consultants, professional advisors and other representatives of such person and its Affiliates.

“ Restricted Person ” means any individual who is (i) under investigation or the subject of an inquiry by a Governmental Authority relating to, has been convicted of (including as a result of the entry of a guilty plea, a consent judgment or a plea of nolo contendere ), or has been charged civilly with, in each case, a violation of any anticorruption Law; (ii) a Government Official or close family member of a Government Official; or (iii) subject to (or has been subject to) sanctions by a self-regulatory organization.

“ SEC ” means the Securities and Exchange Commission.

“ Second Echo Sale Window ” means, if a Qualified MCK Exit is not consummated prior to the termination or expiration of the MCK Exit Window, the six (6) month period following the expiration or termination of the MCK Exit Window, solely where the Echo Shareholders have provided an Echo Shareholder Notice on or prior to the applicable Echo Sale Notice Deadline; provided , that the Second Echo Sale Window shall terminate immediately upon the earlier of (i) the consummation of a Qualified Echo Sale during such Second Echo Sale Window or (ii) receipt by the MCK Members of written notice from Echo or the Echo Shareholders of the Echo Shareholders’ decision to abandon or terminate the Echo Shareholder Sale Right with respect to such Second Echo Sale Window; provided , further , that if the MCK Members consummate an offering pursuant to the Registration Rights Agreement during the MCK Exit Window and a Qualified MCK Exit is not consummated prior to the termination or expiration of the MCK Exit Window, then the Second Echo Sale Window shall not commence earlier than the end of the up to 90-day underwriter lockup period associated with any such sale undertaken pursuant to the exercise of such registration rights.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Sponsor Shareholders ” means Blackstone Capital Partners VI L.P., Blackstone Family Investment Partnership VI L.P. and Blackstone Family Investment Partnership VI-ESC L.P.

“ Subsidiary ” means, with respect to any specified Person, any other Person a majority of whose equity interests (whether by voting power or by economic interest) are at the time directly or indirectly owned by such specified Person; provided , that the term Subsidiary, when used with respect to any Member or any of its Affiliates, shall not include the Company or any of its Subsidiaries.

options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement relating to any of the foregoing, including any such obligations or liabilities under any such agreement.

“ Tax Distribution Arrearage ” means an amount, for each Member, that begins at zero and is adjusted according to the principles of Section 8.02(a) .

“ Tax Distribution Arrearage Return Rate ” means ICE Benchmark Administration London Interbank Offered Rate plus one hundred (100) basis points, compounded semi-annually.

“ Tax Distribution Deficit ” means, with respect to any Member for any Tax Year or Estimated Tax Distribution Period at any time of determination, the excess of (i) the portion of such Member’s actual aggregate liability for U.S. federal, state and local income taxes in respect of such Tax Year or Estimated Tax Distribution Period that is attributable to such Member’s ownership of Units (including but not limited to alternative minimum taxes, taxable capital shifts or Echo Benefit Plan Items), excluding the portion of any such liability that is attributable to the actual or deemed disposition of such Units (other than adjustments to Unit ownership pursuant to Section 2.03, Section 6.03 and Section 8.06 of the Contribution Agreement, and other than any such liability that is attributable to an Echo Benefit Plan Item) over (ii) the cumulative amount of distributions previously made by the Company to such Member pursuant to Section 8.02(a)(i) in respect of such Tax Year or Estimated Tax Distribution Period.

“ Tax Distribution Ratio Amount ” for a Member with respect to a Tax Year means, at any time of determination, (i) such Member’s Total Tax Distribution Amount for such Tax Year at such time, divided by (ii) such Member’s Membership Percentage.

“ Tax Year ” means (i) the Fiscal Year or (ii) if after the date of this Agreement, the taxable year of the Company is required by the Code or the Treasury Regulations promulgated thereunder to be a period other than the period described in clause (i), then each period that is the taxable year of the Company determined in accordance with the requirements of the Code or the Treasury Regulations promulgated thereunder; provided , that (x) in the case of a dissolution, Tax Year means the period from the day after the end of the most recently ended Tax Year until the dissolution of the Company and (y) for purposes of making allocations of Profit and Loss, Tax Year means any portion of a taxable year of the Company to the extent required to comply with Section 706 of the Code or the Treasury Regulations promulgated thereunder. For the avoidance of doubt, Tax Year shall include any portion of a taxable year of the Company with respect to which the allocation of Profit and Loss is determined based on a “closing of the books.”

“ Total Tax Distribution Amount ” means, with respect to a Member at any time of determination and for any Tax Year, the sum of amounts previously distributed to such Member pursuant to Section 8.02(a)(i) , Section 8.02(a)(ii) , Section 8.02(a)(iv) or Section 8.02(a)(ix) in respect of such Tax Year (with the Tax Year for which a distribution under Section 8.02(a)(ix) is made to be determined on a first in, first out basis).

“ Transaction Documents ” has the meaning set forth in the Contribution Agreement.

“ Transfer ” means to sell, transfer, pledge, assign, create an encumbrance or otherwise dispose of any direct or indirect economic, voting or other rights in or to a Unit or other Equity Security of the Company, directly or indirectly (whether by merger, operation of law or otherwise), including by means of the Transfer of an interest in a Person that directly or indirectly holds such Unit or other Equity Security of the Company, and “ Transferred ”, “ Transferring ”, “ Transferor ” and “ Transferee ” shall have correlative meanings; provided that a Transfer of (a) any Equity Security of the Sponsor Shareholders, H&F or other funds Affiliated with the Sponsor Shareholders or H&F or any Equity Security of a limited partner or any direct or indirect equityholder of a limited partner of the Sponsor Shareholders, H&F or other funds Affiliated with the Sponsor Shareholders or H&F or (b) any Equity Security of MCK shall not be deemed to be a Transfer of a direct or indirect economic, voting or other right in or to a Unit or other Equity Security of the Company.

“ Treasury Regulations ” means the regulations promulgated under the Code as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

“ Units ” means the limited liability company interests in the Company, which have the terms set forth in this Agreement and, to the extent not inconsistent with this Agreement, in the Act, and which are divided into equal proportionate units, including fractional units.

“ Unrealized Gain ” means any adjustment to the Gross Asset Value of any item of Property, occurring in any Tax Year commencing on or after the third anniversary of the Closing, if such adjustment is taken into account as an item of gain pursuant to clause (iii) of the definition of Profit and Loss.

“ Unvested Echo Shares ” means shares of Echo common stock issued pursuant to an Approved Echo Plan that are not vested pursuant to the terms thereof or any award or similar agreement relating thereto.

(b) Each of the following terms is defined in the Section set forth opposite such term:


Term		Section
Ad Hoc Committee		5.08
Additional Capital Contribution		3.02(b)
Additional Member		9.06(a)
Adjourned Meeting		5.03(d)
Agreement		Preamble
Approved Plans		5.05(a)(xxii)
Approved Echo Plan		5.05(a)(xxii)
Available Cash		8.02(a)(iv)
Board		5.01(a)
Board Escalation Matter		5.08
Capital Account		3.05(a)
Certificate of Formation		Recitals


Term		Section
Chairman		5.06
Chief Executive Officer		5.10(a)
Company		Preamble
Company Parties		Preamble
Company Owned Patent Rights		13.06(a)
Compliance Program		11.03(c)
Confidential Information		11.02(c)
Contribution Agreement		Recitals
Covenant Termination		11.04(e)
Covered Persons		6.01(b)
Director		5.01(a)
Drag-Along Sale		9.03(a)
Drag-Along Sale Notice		9.03(b)
Drag-Along Sale Price		9.03(b)
Drag-Along Sellers		9.03(a)
Drag-Along Transferee		9.03(a)
Dragged Member		9.03(a)
Echo		Preamble
Echo Directors		5.01 (c)(ii)
Echo Minimum Ownership		9.01(d)
Echo Sale Notice Deadline		10.03(b)
Echo Sale Shares		10.03(b)
Echo Shareholder Notice		10.03(b)
Echo Shareholder Sale Right		10.03(a)
Echo Shares		9.01 (b)(v)
Exchange		11.04(f)(i)
Exchange Offers		10.05(a)
Exchange Ratio		10.05(a)
Existing LLC Agreement		Recitals
Fiscal Year		7.01
Initial Appraised Value		9.05(a)
Initial Capital Contribution		3.01
Initial Members		Preamble
Initial LLC Agreement		Preamble
Initial Offer		9.02(b)
Initial Offer Notice		9.02(a)
Initial Offer Period		9.02(b)
Initial Period		10.01(c)
IPO Committee		10.01(a)
IPO Demand		10.01(c)
IPO Demanding Party		10.01(c)
Issuance Notice		3.07(a)
Joint Venture		Recitals
Liquidating Agent		13.04(a)
Marketing Period		9.02(g)(iii)


Term		Section
MCK Directors		5.01(c)(i)
MCK lPCo		Preamble
MCK Members		Preamble
Merger		10.05(a)
Merger Agreement		10.05(a)
Mutual Independent Director		5.01(c)(iii)
Non-Stock Exchanges		10.05(a)
Notice of Exchange		11.04(f)(iii)
Offer Price		9.02(a)
Offer Pro Rata Portion		9.02(b)
Offered Units		9.02(a)
Offeror		9.02(a)
Original Meeting		5.03(d)
Preemptive Rights Exercise Notice		3.07(b)
PST		Preamble
QIPO Deadline		10.01(b)
Qualified MCK Exit		10.05(a)
Registration Rights Agreement		10.07
Registration Statement		10.01(b)
Regulatory Allocations		8.01(b)(viii)
Reserved Matter		5.05(a)
Return Preparer		7.04(d)
ROFO Sale		9.02(a)
Second Notice		3.07(b)
Second Offer		9.02(c)
Second Offer Period		9.02(c)
Secretary		5.03(c)
Significant Members		9.02(a)
Spin-Off		10.05(a)
SpinCo		10.05(a)
Subsequent Appraised Value		9.05(a)
Tax Matters Agreement		10.05(d)
Tax Matters Member		7.04(c)
Top-up Units		10.06(a)
Top-up Notice		10.06(c)
Top-up Option		10.06(a)
VWAP		9.05(c)
5% Member		12.02(a)

Exhibits of this Agreement unless otherwise specified. All Exhibits annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit but not otherwise defined therein shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. Except as explicitly set forth herein or in another Transaction Documents, all references to a particular statute or other Law shall be deemed to include all rules and regulations promulgated thereunder in effect from time to time and any amendments or successors to such statutes, Laws, rules and regulations. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. Any action to be taken by or any consent to be given by any group of Persons, including the “MCK Members”, the “Sponsor Shareholders”, “H&F” or the “Echo Shareholders”, unless otherwise specified herein, are to be taken or consented to upon the approval of the Person(s) holding a majority of the Units beneficially owned by such group. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

ARTICLE 2

O RGANIZATIONAL M ATTERS AND G ENERAL P ROVISIONS

Section 2.01. Formation.

(a) The Company was formed as a Delaware limited liability company on June 17, 2016 by the filing of the Certificate of Formation in the office of the Secretary of State of the State of Delaware pursuant to the Act and the adoption of the Existing LLC Agreement. The Members desire to continue the Company for the purposes and upon the terms and conditions set forth herein.

(b) The Company shall initially have one class of interests, which shall be the Units. The Units shall have equal rights and preferences in the assets of the Company except as otherwise expressly provided herein. A Unit shall for all purposes be personal property. Each Unit shall constitute a “security” within the meaning of, and governed by, (i) Article 8 of the Uniform Commercial Code (including Section 8-102(a)(15) thereof) as in effect from time to time in the State of Delaware and (ii) Article 8 of the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995.

(c) Upon the consummation of the Closing, each Initial Member shall hold a number of Units representing the Membership Percentages set forth on Exhibit A hereto.

(d) This Agreement amends, restates and supersedes in its entirety the Existing LLC Agreement.

Section 2.02. Name. The name of the Company as of the date hereof is “Change Healthcare LLC” and, subject to Section 5.05 , its business shall be carried on in this name with such variations and changes or in such other trade names as the Board deems necessary or appropriate. Subject to Section 5.05 , the Board shall have the power at any time to change the name of the Company in its sole discretion.

Section 2.03. Principal Place of Business. The principal place of business of the Company shall be located at such location as the Board may determine from time to time. The Company may also maintain such other office or offices at such other locations as the Board may determine from time to time.

Section 2.04. Registered Agent. The Company’s registered agent and office in Delaware shall be Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808. At any time, the Board may designate another registered agent and/or registered office.

Section 2.05. Purpose and Powers of the Company.

(a) The Company is formed for the object and purpose of engaging in any and all lawful activities permitted under the Act.

(b) Subject to the terms and conditions of this Agreement, the Company shall have the power and authority to take any and all actions that limited liability companies may take under the Act and that are necessary, appropriate, proper, advisable, incidental or convenient to or for the furtherance of the purposes set forth in Section 2.05(a) . Without limiting the foregoing, but subject to the terms and conditions of this Agreement, the Company may in furtherance of its business and operations carry out its objectives and accomplish its purposes as principal or agent, directly or indirectly, alone or with associates, or as a member, stockholder, partner or participant in any firm, association, trust, corporation, partnership or other entity.

(c) The Company shall do all things necessary to maintain its limited liability company existence separate and apart from each Member and any Affiliate of any Member, including holding regular meetings of the Board and maintaining its books and records on a current basis separate from that of any Member, any Affiliate of the Company or any other Person.

Section 2.06. Term. The term of the Company commenced on the date the Certificate of Formation was filed in the office of the Secretary of State of the State of Delaware and shall continue in full force and effect in perpetuity; provided , that the Company may be dissolved in accordance with the provisions of this Agreement and the Act.

Section 2.07. Filings; Qualification in Other Jurisdictions. The Company shall prepare, following the execution and delivery of this Agreement, any documents required to be filed or, in the Board’s or an authorized executive officer’s view, appropriate for filing under the Act, and the Company shall cause each such document to be filed in accordance with the Act, and, to the extent required by Law, to be filed and recorded, and/or notice thereof to be published, in the appropriate place in each jurisdiction in which the Company may hereafter establish a place of business. The

Board may cause or authorize an executive officer to cause the Company to be qualified or registered under assumed or fictitious name statutes or similar Laws in any jurisdiction in which the Company transacts business where the Company is not currently so qualified or registered. Each executive officer shall execute, deliver and file any such documents (and any amendments and/or restatements thereof) necessary for the Company to accomplish the foregoing. The Board may appoint any other authorized persons to execute, deliver and file any such documents.

Section 2.08. Company Property. All property of the Company, both tangible and intangible, shall be deemed to be owned by the Company as an entity. A Member has no interest in specific Company property by virtue of being a “member” under the Act.

Section 2.09. Transactions with Members and Directors. Subject to the terms and conditions of this Agreement, including Section 5.05 , any Member may lend money to, borrow money from, act as a surety, guarantor or endorser for, guarantee or assume one or more obligations of, provide collateral for, and transact other business with the Company and, subject to applicable Law and the terms and conditions of this Agreement, shall have the same rights and obligations with respect to such matter as a Person who is not a Member, and any Member and the members, shareholders, partners and Affiliates thereof shall be able to transact business or enter into agreements with the Company to the fullest extent permissible under the Act.

Section 2.10. Certificated or Uncertificated Units. Units may be in certificated or uncertificated form, as may be determined from time to time by the Board.

ARTICLE 3

C APITAL C ONTRIBUTIONS ; P REEMPTIVE R IGHTS

Section 3.01. Initial Capital Contributions. In connection with the transactions contemplated by the Contribution Agreement, each of the MCK Members and Echo has made cash contributions in connection with entering into the Existing LLC Agreement and made the MCK Contributions and the Echo Contributions (each as defined in the Contribution Agreement), respectively, at the Closing (each of which shall constitute an “ Initial Capital Contribution ”) pursuant to the Contribution Agreement.

Section 3.02. Additional Capital Contributions.

(a) From and after the Closing, no Member shall be required to make any additional capital contributions to the Company except as provided in this Article 3 .

(b) After the Closing, subject to Section 3.07 and Section 5.05 , Members may from time to time make capital contributions to the Company (each, an “ Additional Capital Contribution ”) at such times and in such amounts and such price per Unit, if applicable, as the Board may determine to offer to or accept from the Members.

Section 3.03. Issuance of Units.

(a) No Units or other Equity Securities of the Company shall be issued in respect of any Additional Capital Contribution until such Additional Capital Contribution is actually made. No additional Units shall be issued by the Company after the Closing in respect of any Initial Capital Contributions, other than with respect to issuances required under Section 2.03, Section 6.03 and Section 8.06 of the Contribution Agreement and Section 8.02(a)(ix) herein.

(b) Subject to Section 3.07 and Section 5.05 , the Board may authorize the Company to issue additional Units and/or create and issue new series, types or classes of Equity Securities of the Company with such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof as the Board may determine, and authorize obligations, evidences of indebtedness or other securities or interests of the Company convertible, exercisable or exchangeable into Units or other Equity Securities of the Company, in each case to any Person in such amounts and on such terms as so approved by the Board; provided , that (other than an issuance made under Section 3.03(c) ) any such issuance will be made only in exchange for payment of Fair Market Value for such interest, as determined in the reasonable good faith judgment of the Board. The Company may issue whole or fractional Units or other Equity Securities of the Company.

(c) The Company and Echo agree to cooperate to ensure that the Echo Ratio is maintained at one Unit to one Echo Share for so long as any MCK Member (or their Permitted Transferees) holds Units. In connection therewith (and subject to Section 5.05 and 11.04(d) ):

(i) From and after the date hereof, and at all times that any MCK Member (or its Permitted Transferees) holds Units, if at any time Echo issues an Echo Share (including in a Qualified IPO) or any other Equity Security of Echo (other than the share of Class X Stock (as defined in the Echo Shareholders Agreement)), in accordance with the terms of this Agreement, (A) the Company shall issue to Echo one Unit (for each Echo Share issued) or one such other Equity Security of the Company (for each other Equity Security issued) corresponding to the Equity Security issued by Echo, and with the rights to dividends and distributions and other economic rights as are determined by the Board in good faith to correspond to those of the Equity Security issued by Echo, and (B) the net proceeds received by Echo with respect to the corresponding Echo Share or other Equity Security of Echo, if any, shall be concurrently transferred to the Company; provided that if Echo issues any Echo Shares pursuant to an Exchange or pursuant to the conversion of SpinCo stock contemplated by the Merger Agreement, then the Company shall not issue any new Units in connection therewith; provided further that in the event that the Fair Market Value of the corresponding Echo Share or other Equity Security of Echo, as determined by the Board in good faith, exceeds the net proceeds received by Echo with respect to such Echo Share or other Equity Security of Echo, then solely for purposes of Section 3.05 and Section 8.01 , (u) Echo shall be treated as having made a Capital Contribution to the Company equal to such Fair Market Value and (v) such excess shall be treated as an item of Loss. Notwithstanding the foregoing, this Section 3.03(c)(i) and Section 3.03(c)(ii) shall not apply (1) to the issuance and distribution to holders of Echo Shares of rights to purchase Equity Securities of Echo under a “poison pill” or similar shareholders’ rights plan approved under Section 11.04(d) (it being understood that (x) upon the exchange of Units for Echo Shares, such Echo Shares will be issued together with any such corresponding right and (y) upon issuance of Echo Shares in connection with exercise of a “poison pill” or similar shareholders’ rights plan approved under Section 11.04(d) , the Company will issue an equal number of Units as provided in this Section 3.03 ) or (2) to the issuance under

any Approved Echo Plan of any Equity Securities of Echo approved by the Board or any authorized committee of the Board (each, an “ Approved Issuance ”) that are convertible, exercisable for or exchangeable into Echo Shares, but shall in each of the foregoing cases, apply to the issuance of Echo Shares in connection with the conversion, exercise or exchange of such Equity Securities of Echo issued in connection with an Approved Issuance (for cash or other consideration in accordance with their terms or otherwise). In addition, this Section 3.03(c)(i) and Section 3.03(c)(ii) shall not apply to an Approved Issuance under an Approved Echo Plan of any Echo Shares that are unvested, but shall apply upon the vesting of any such Echo Share. Except for transactions pursuant to an Exchange or the conversion of SpinCo stock contemplated by the Merger Agreement, following the Closing and for so long as any MCK Member (or its Permitted Transferees) hold Units, the Company shall not issue any additional Units of the Company to Echo unless substantially simultaneously therewith Echo issues or sells, to a Person other than Echo and subject to the terms of this Agreement, an equal number of Echo Shares. This Section 3.03(c)(i) shall not apply to any adjustments pursuant to Section 2.03, Section 6.03, or Section 8.06 of the Contribution Agreement.

(ii) Following the Closing and for so long as any MCK Member (or its Permitted Transferees) holds Units, Echo may not redeem, repurchase or otherwise acquire any Echo Shares unless the Company substantially simultaneously redeems, repurchases or otherwise acquires from Echo an equal number of Units for the same price per security, and Echo may not redeem, repurchase or otherwise acquire any other Equity Security of Echo unless the Company substantially simultaneously redeems, repurchases or otherwise acquires from Echo an equal number of any outstanding corresponding Equity Securities of the Company of the corresponding class or series for the same price per security; provided that if Echo is required to redeem or repurchase any Echo Shares, including but not limited to any redemption pursuant to the terms of the Echo Shareholders Agreement, the Company shall substantially simultaneously redeem, repurchase or otherwise acquire from Echo an equal number of Units for the same price per security (provided that, if such repurchase, redemption or acquisition is prohibited by applicable Law, such repurchase, redemption or acquisition may be delayed by the Company until such time as it is not prohibited by applicable Law and appropriate adjustment shall be made to the economic and other arrangements set forth herein so as to, to the greatest extent possible, treat such Unit as having been redeemed at the time it otherwise would have been redeemed). The Company may not, following the Closing and so long as any MCK Member (or its Permitted Transferees) holds Units, redeem, repurchase or otherwise acquire any Units from Echo unless substantially simultaneously Echo redeems, repurchases or otherwise acquires an equal number of Echo Shares for the same price per security from holders thereof, and the Company may not redeem, repurchase or otherwise acquire any other Equity Securities of the Company from Echo unless substantially simultaneously Echo redeems, repurchases or otherwise acquires an equal number of Equity Securities of Echo of a corresponding class or series for the same price per security. Notwithstanding the foregoing, to the extent that any consideration payable by Echo in connection with the redemption or repurchase of any Echo Shares or other Equity Securities of Echo consists (in whole or in part) of Echo Shares or such other Equity Securities of Echo (including in connection with the cashless exercise of an option or warrant), then the redemption or repurchase of the corresponding Units or other Equity Securities of the Company shall be effectuated in an equivalent manner. This Section 3.03(c)(ii) shall not apply to any adjustments pursuant to Section 2.03, Section 6.03, or Section 8.06 of the Contribution Agreement.

(iii) Following the Closing and so long as any MCK Member (or its Permitted Transferees) holds Units, Echo shall not in any manner effect any subdivision (by any stock split, stock dividend, reclassification, recapitalization or otherwise) or combination (by reverse stock split, reclassification, recapitalization or otherwise) or other similar restructuring in respect of the Echo Shares unless such action is taken concurrently with a corresponding subdivision or combination or other similar restructuring of the Units (with corresponding changes made with respect to any other convertible, exercisable or exchangeable securities), such that the Echo Ratio is maintained at one Unit to one Echo Share. Following the Closing and so long as any MCK Member (or its Permitted Transferees) holds Units, the Company shall not in any manner effect any subdivision (by any stock split, stock dividend, reclassification, recapitalization or otherwise) or combination (by reverse stock split, reclassification, recapitalization or otherwise) or other similar restructuring of Echo (with corresponding changes made with respect to any other convertible, exercisable or exchangeable securities), such that the Echo Ratio is maintained at one Unit to one Echo Share.

(iv) In the event of any adjustments pursuant to Section 2.03, Section 6.03, or Section 8.06 of the Contribution Agreement that results in a change in the Membership Percentages of the Members (such changed percentage, the “ Adjusted Membership Percentage ”), the parties and the Company agree to issue, redeem, repurchase, subdivide (by any unit split, unit distribution, reclassification, recapitalization or otherwise), combine (by reverse unit split, reclassification, recapitalization or otherwise) or otherwise acquire or cancel Units such that following the adjustment Echo owns an aggregate number of Units of the Company such that the Echo Ratio is one Unit to one Echo Share and the Membership Percentage equals the Adjusted Membership Percentage.

Section 3.04. Withdrawal of Capital.

(a) No Member shall be entitled to withdraw any part of its Capital Contributions or to receive any distribution from the Company, except as expressly provided herein. Under circumstances requiring the return of any Capital Contribution, no Member shall have the right to demand or receive property other than cash, except as expressly provided herein. No Member shall have the right to cause the sale of any Company asset, except as expressly provided herein. No Member shall have any right to receive any salary or draw with respect to its Capital Contributions or its Capital Account or for services rendered on behalf of the Company or otherwise in its capacity as a Member.

(b) No Member shall have any liability for the return of the Capital Contributions of any other Member. Except as otherwise required by Law, no Member shall be required to make up a negative balance in its Capital Account. Except as expressly provided herein or to the extent granted by Equity Securities of the Company hereinafter approved by the Board pursuant to Section 3.03(b) , no Member shall have priority over any other Member either as to the return of the amount of such Member’s Capital Contributions or as to any allocation of any item of income, gain, loss, deduction or credit of the Company.

Section 3.05. Maintenance of Capital Accounts.

(a) The Company shall maintain a separate capital account for each Member according to the rules of Treasury Regulation Section 1.704-1(b)(2)(iv) (a “ Capital Account ”). The initial Capital Account balances of the Initial Members shall be as set forth on Schedule I .

(b) No Member shall be required to make any payment to any other Member or the Company by reason of any deficit or negative balance which may exist from time to time in such Member’s Capital Account (including upon and after dissolution of the Company).

(c) Upon a Transfer of all or a portion of any Equity Security of the Company in accordance with the terms of this Agreement (other than, for the avoidance of doubt, adjustments pursuant to Section 2.03, Section 6.03 or Section 8.06 of the Contribution Agreement, which shall be addressed by Section 3.05(d) below), the transferee Member shall succeed to the Capital Account of the transferor which is attributable to such equity interest or portion thereof.

(d) In the event of adjustments to the Membership Percentages pursuant to Section 2.03, Section 6.03 and/or Section 8.06 of the Contribution Agreement, appropriate corresponding adjustments, as reasonably determined by the Board in its sole discretion, shall be made to the Members’ Capital Accounts to reflect the treatment of adjustments pursuant to Section 2.03, Section 6.03 and/or Section 8.06 of the Contribution Agreement as adjustments to the Fair Market Values of the assets contributed to the Company pursuant to the Contribution Agreement.

Section 3.06. No Interest. No interest shall be paid on Capital Contributions or on the balance in a Member’s Capital Account.

Section 3.07. Preemptive Rights.

(a) Other than with respect to the Equity Securities of the Company described in Section 3.07(f) , the Company shall give each of the Initial Members (and their Permitted Transferees) written notice (an “ Issuance Notice ”) of any proposed issuance by the Company of any Equity Securities of the Company at least twenty (20) Business Days prior to the proposed issuance date. The Issuance Notice shall specify the price at which such Equity Securities of the Company are to be issued and the other material terms of the issuance (including the terms of the Equity Securities of the Company proposed to be issued). Subject to Section 3.07(f) , each of the Initial Members shall be entitled to purchase (or to cause its Affiliates to purchase) up to its respective Membership Percentage of the Equity Securities of the Company proposed to be issued, at the price and on the terms specified in the Issuance Notice.

(b) If any Initial Member (or its Permitted Transferees) desires to purchase or to have any of its Affiliates purchase any or all of its Membership Percentage of the Equity Securities of the Company specified in the Issuance Notice, it shall deliver a written notice to the Company (each a “ Preemptive Rights Exercise Notice ”) of its election to purchase such Equity Securities of the Company within ten (10) Business Days of receipt of the Issuance Notice. The Preemptive Rights Exercise Notice shall specify the number (or amount) of Equity Securities of the Company

to be purchased by such party or its Affiliates and shall constitute exercise by such party of its rights under this Section 3.07 and a binding agreement of such party or such party’s applicable Affiliates to purchase, at the price and on the terms specified in the Issuance Notice and in accordance with the terms of this Section 3.07 , the number of shares (or amount) of Equity Securities of the Company specified in the Preemptive Rights Exercise Notice with such purchase to be consummated as promptly as reasonably practicable. If, at the termination of such ten (10) Business Day period, any Initial Member (or its Permitted Transferees) shall not have delivered a Preemptive Rights Exercise Notice to the Company, such party shall be deemed to have waived all of its rights under this Section 3.07 with respect to the purchase of such Equity Securities of the Company. Promptly following the termination of such ten (10) Business Day period, the Company shall deliver to each of the Initial Members (or its Permitted Transferees) a copy of any Preemptive Rights Exercise Notice it has received or notify each of the Initial Members that no Preemptive Rights Exercise Notices have been received (each a “ Second Notice ”).

(c) If an Initial Member (or its Permitted Transferees) fails to exercise its preemptive rights under this Section 3.07 or elects to exercise such rights with respect to less than its Membership Percentage of the issuance and another Member has exercised its rights under this Section 3.07 with respect to its entire Membership Percentage, such other Member shall be entitled to purchase, or have its Affiliates purchase, from the Company any or all of the remaining portion of the issuance. If any such Initial Member (or its Permitted Transferees) desires to purchase or to have any of its Affiliates purchase such remaining portion, it shall deliver a written notice to the Company of its election to purchase such remaining portion within five (5) Business Days following receipt of the Second Notice from the Company.

(d) The Company shall have ninety (90) days from the date of the Issuance Notice to consummate the proposed issuance of any or all of such Equity Securities of the Company that the Initial Members (or their Permitted Transferees) have not elected to purchase at a price equal to or greater than the price specified in the Issuance Notice and otherwise upon terms that are not less favorable to the Company than those specified in the Issuance Notice; provided , that if any Governmental Approvals are required in connection with such issuance, such 90-day period shall be extended until the expiration of five (5) Business Days following the date on which all Governmental Approvals are obtained and any applicable waiting periods under applicable Law have expired or been terminated, but in no event will such period be extended for more than an additional 180 days. If the Company proposes to issue any such Equity Securities of the Company after such 90-day (or longer, as permitted by the preceding sentence) period, it shall again comply with the procedures set forth in this Section 3.07 .

(e) At the consummation of the issuance of such Equity Securities of the Company the Company shall issue certificates or other appropriate instruments representing the Equity Securities of the Company to be purchased by each party exercising preemptive rights pursuant to this Section 3.07 registered in the name of such party, against payment by such party of the purchase price for such Equity Securities of the Company in accordance with the terms and conditions as specified in the Issuance Notice.

(f) Notwithstanding the foregoing, no Initial Member (or its Permitted Transferees) shall be entitled to purchase Equity Securities of the Company as contemplated by this Section 3.07 in connection with issuances of Equity Securities of the Company (i) to employees of the Company or any of its Subsidiaries pursuant to employee benefit plans or arrangements approved by the Board in accordance with the terms of this Agreement (including Section 5.05(a) ) (and upon the conversion, exercise or exchange of Equity Securities of the Company granted pursuant to any such plans or arrangements or outstanding as of the date hereof), (ii) in connection with a Qualified IPO in accordance with the terms of this Agreement, (iii) pursuant to conversion, exercise or exchange of any convertible, exchangeable or exercisable Equity Securities of the Company issued in compliance with the terms of this Agreement, (iv) pursuant to any exercise of the Top-up Option under Section 10.06 below, (v) pursuant to equity adjustments as required under Section 2.03, Section 6.03 and Section 8.06 of the Contribution Agreement, (vi) pursuant to Section 8.02(a)(ix) , or (vii) pursuant to an issuance of Equity Securities of the Company pursuant to Section 3.03(c) . The Company shall not be obligated to consummate any proposed issuance of Equity Securities of the Company, nor be liable to any Initial Member (or its Permitted Transferees) if the Company has not consummated any proposed issuance of Equity Securities of the Company, pursuant to this Section 3.07 for whatever reason, regardless of whether it shall have delivered an Issuance Notice or received any Preemptive Rights Exercise Notices in respect of such proposed issuance.

(g) This Section 3.07 shall terminate upon consummation of a Qualified IPO.

ARTICLE 4

C ERTAIN R IGHTS AND O BLIGATIONS O F M EMBERS

Section 4.01. Members. The Members and their respective numbers of Units, including the number of Units issuable upon conversion, exercise or exchange of any Equity Securities of Echo, and Membership Percentages as of the Closing are listed on Exhibit A attached hereto. The Company shall amend Exhibit A from time to time promptly following any changes in any of such information in accordance with the terms of this Agreement; provided that the Board shall periodically review and pass a resolution approving such amendment(s). No Person may be a Member without the ownership of a Unit. The Members shall have only such rights and powers as are granted to them pursuant to the express terms of this Agreement and the Act.

Section 4.02. No Action on Behalf of the Company; No Dissent Rights. No Member (in its capacity as such) shall, without the prior written approval of the Board, have any authority to take any action on behalf of or in the name of the Company, or to enter into any commitment or obligation binding upon the Company, except for actions expressly authorized by the terms of this Agreement. No Member (in its capacity as such) shall be entitled to any rights to dissent or seek appraisal with respect to any transaction, including the merger or consolidation of the Company with any Person.

Section 4.03. No Right to Voluntarily Withdraw. No Member shall have any right to voluntarily resign or otherwise withdraw from the Company. At such time when, in accordance with this Agreement, a Member has Transferred Units such that the Member no longer holds any Units, such Member shall automatically be withdrawn and resigned as a Member. A resigning Member shall only be entitled to receive amounts approved by the Board on the terms and conditions set forth by the Board. A resigning Member shall not be entitled to a distribution of the fair value of its Units or any other equity interest in the Company under Section 18-604 of the Act. Any resigning or withdrawing Member shall remain liable to the Company for any amounts or other liabilities owed hereunder, including in respect of any breach hereof prior to such Member’s resignation or withdrawal.

Section 4.04. Member Meetings. A meeting of the Members for any purpose or purposes may be called at any time by the Board. At a meeting, no business shall be transacted and no action shall be taken other than that stated in the notice of the meeting unless all Members are present at such meeting and agree that other business not stated in the notice of the meeting can be transacted.

Section 4.05. Notice of Meetings. Written notice stating the place, day and hour of every meeting of the Members and the purpose or purposes for which the meeting is called shall be mailed not less than five (5) nor more than thirty (30) Business Days before the date of the meeting (or if sent by facsimile, not less than five (5) Business Days nor more than thirty (30) Business Days before the date of the meeting), in either case to each Member entitled to vote at such meeting, at its address maintained in the records of the Company by the Company’s Secretary. Such further notice shall be given as may be required by Law, but meetings may be held without notice if all the Members entitled to vote at the meeting are present in person or represented by proxy or if notice is waived in writing by those not present, either before or after the meeting. Presence at a meeting by a Member shall constitute a waiver of any deficiency of notice, except when a Member attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not called or convened in accordance with this Agreement.

Section 4.06. Quorum; Telephonic Meetings.

(a) Provided that notice of the meeting has been given in accordance with Section 4.05 , Members holding a majority of the outstanding Units entitled to vote with respect to the business to be transacted, who shall be present or represented by proxy at any meeting duly called, shall constitute a quorum for the transaction of business. If less than a quorum shall be in attendance at the time for which a meeting shall have been called, the meeting may be adjourned from time to time by the Members holding a majority of the Units held by Members present in person or represented by proxy and the Company shall promptly give notice of when the meeting will be reconvened.

(b) Members may, and shall be entitled to, participate in meetings of the Members by means of conference telephone or similar communications equipment by means of which all Persons participating in the meeting can hear each other. Participation in a telephonic meeting pursuant to this Section 4.06(b) shall constitute presence at such meeting for purposes of Section 4.06(a) and shall constitute a waiver of any deficiency of notice, except when a Member attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not called or convened in accordance with this Agreement.

Section 4.07. Voting.

(a) At any meeting of the Members, each Member entitled to vote on any matter coming before the meeting shall, as to such matter, have a vote, in person, by telephone or by proxy, equal to the number of Units held in its name on the relevant record date established pursuant to Section 4.09 . All Units shall constitute a single class and group of Equity Securities of the Company and the holders of Units shall vote together as a single class and group of Members.

(b) Subject to Section 5.05 , when a quorum is present, the affirmative vote or consent of Members holding a majority of the outstanding Units present in person or represented by proxy at a duly called meeting and entitled to vote on the subject matter shall constitute the act of the Members. Every proxy shall be in writing, dated and signed by the Member entitled to vote or its duly authorized attorney-in-fact.

Section 4.08. Action Without a Meeting. Notwithstanding Sections 4.04 and 4.07 above, on any matter requiring an approval or consent of Members under this Agreement or the Act at a meeting of Members, the Members may take such action without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, shall be signed by all of the Members entitled to vote thereon.

Section 4.09. Record Date. For the purpose of determining Members entitled to notice of or to vote at any meeting of Members, or entitled to receive a payment of any kind, or in order to make a determination of Members for any other proper purpose, the Board may fix in advance a date as the record date for any such determination of Members, such date in any case to be not more than thirty (30) days prior to the date on which the particular meeting or action, requiring such determination of such Members, is to be held or taken. If no record date is fixed for the determination of Members entitled to notice of or to vote at a meeting of Members, or Members entitled to receive payment of a distribution, the date on which notices of the meeting are mailed or faxed or the date on which the resolution of the Board declaring such distribution is adopted, as the case may be, shall be the record date for such determination of Members. When a determination of Members entitled to vote at any meeting of Members has been made as provided in this Section 4.09 such determination shall apply to any adjournment thereof unless the Board fixes a new record date, which it shall do if the meeting is adjourned to a date more than 90 days after the date fixed for the original meeting.

Section 4.10. Member Approval Rights. Except as otherwise expressly set forth in this Agreement or as required by Law, the Members shall have no right to vote on any matter and hereby expressly waive any right to vote that can be waived.

Section 4.11. Partition. Each Member waives any and all rights that it may have to maintain an action for partition of the Company’s property.

Section 4.12. Liability. Except as otherwise set forth herein or in the Contribution Agreement, or the Transaction Documents or as required by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member, Director or Company officer shall be obligated personally for any such debt, obligation or liability of the Company or for any losses of the Company solely by reason of being a Member or acting as a Director or Company officer. For the avoidance of any doubt, neither MCK nor any of the Echo Shareholders (or any of MCK and Echo Shareholders’ respective Affiliates) shall be required to be a guarantor for any indebtedness of the Company.

ARTICLE 5

B OARD AND O FFICERS

Section 5.01. Board.

(a) Except as otherwise expressly provided in this Agreement, the management of the business and affairs of the Company shall be vested in the board of directors of the Company (the “ Board ”). The Board shall be made up of the number of individuals (who need not be Members) (each, a “ Director ”) as specified in this Agreement. Each Director shall be a “Director” (as such term is defined in the Act) of the Company but, notwithstanding the foregoing, no Director shall have any rights or powers beyond the rights and powers expressly granted to such Director in this Agreement.

(b) The Board shall be made up of not more than ten (10) Directors, provided , that no Director or Board observer shall be a Material Company Competitor.

(c) Subject to Section 5.01(d) , at any time prior to a Qualified MCK Exit, the composition of the Board shall be as follows:

(i) MCK Members shall have the right to designate a total of four Directors, of whom (x) three Directors may be employees of MCK or any of its Affiliates and (y) one Director shall not be an employee or Affiliate of MCK or any of its Affiliates and shall satisfy the Independence Requirements (together, the “ MCK Directors ”), and none of whom may be a Restricted Person;

(ii) Echo shall have the right to designate a total of four Directors, of whom (x) three Directors may be employees of any Echo Shareholder or any of their respective Affiliates and (y) one Director shall not be an employee or Affiliate of any Echo Shareholder or any of their respective Affiliates and shall satisfy the Independence Requirements (together, the “ Echo Directors ”), and none of whom may be a Restricted Person;

(iii) the MCK Members and Echo shall mutually designate one additional Director who is neither an employee or Affiliate of MCK, nor any Echo Shareholder or any of their respective Affiliates and satisfies the Independence Requirements (the “ Mutual Independent Director ”) and who is not a Restricted Person; provided , that in the event either the MCK Members (together with the Permitted Transferees) or Echo (together with its Permitted Transferees) hold less than 10% of the MCK Units or Echo Units, respectively, the Mutual Independent Director shall be designated by the holders of a majority of the Units at such time; and

(iv) the Chief Executive Officer of the Company shall be an additional Director on the Board.

(d) The number of MCK Directors and Echo Directors shall be reduced using the following principles:

(i) the MCK Members shall have the right to designate four Directors so long as the MCK Members (together with their Permitted Transferees) hold 80% or more of the MCK Units;

(ii) the MCK Members shall have the right to designate three Directors so long as the MCK Members (together with their Permitted Transferees) hold less than 80% but not less than 60% of the MCK Units;

(iii) the MCK Members shall have the right to designate two Directors so long as the MCK Members (together with their Permitted Transferees) hold less than 60% but not less than 40% of MCK Units

(iv) the MCK Members shall have the right to designate one Director so long as the MCK Members (together with their Permitted Transferees) hold less than 40% but not less than 10% of the MCK Units;

(v) the MCK Members shall not have the right to designate any Directors to the extent that the MCK Members (together with their Permitted Transferees) hold less than 10% of the MCK Units;

(vi) Echo shall have the right to designate four Directors so long as Echo (together with its Permitted Transferees) holds 80% or more of the Echo Units;

(vii) Echo shall have the right to designate three Directors so long as Echo (together with its Permitted Transferees) holds less than 80% but not less than 60% of the Echo Units;

(viii) Echo shall have the right to designate two Directors so long as Echo (together with its Permitted Transferees) holds less than 60% but not less than 40% of the Echo Units;

(ix) Echo shall have the right to designate one Director so long as Echo (together with its Permitted Transferees) holds less than 40% but not less than 20% of the Echo Units; and

(x) Echo shall have the right to designate one Director so long as Echo (together with its Permitted Transferees) holds less than 20% but not less than 10% of the Echo Units.

provided , that if any reduction meeting a threshold set forth above occurs with respect to the MCK Members pursuant to this Section 5.01(d)(i) following a Qualified IPO, then notwithstanding anything to the contrary, each MCK Director to be removed pursuant to this provision shall be entitled to serve out any remaining designated term of such Director’s seat on the Board prior to removal. Upon any Transfer of Initial Units that results in a reduction of Initial Units meeting the thresholds specified in Section 5.01(d) for removal of an applicable Nominee Director, the party designating such Nominee Director shall promptly provide written notice to the other parties and the Company. For the avoidance of doubt, immediately following a Qualified MCK Exit, the MCK Members shall no longer have any designation rights pursuant to this Article 5 .

(e) At any such time as one of the MCK Directors serves as the Chairman of the Board, Echo shall be entitled to appoint the Vice Chairman of the Board from one of the Echo Directors. At any such time as one of the Echo Directors serves as the Chairman of the Board, the MCK Members shall be entitled to appoint the Vice Chairman of the Board from one of the MCK Directors.

(f) Each of the Company and each Member shall take all necessary action to effectuate the provisions of Section 5.01(b) , Section 5.01(c) , Section 5.01(d) and Section 5.01(e) to ensure that the Board consists of the Directors who are duly designated, elected or appointed (and/or removed pursuant to Section 5.01(c) ) in accordance with such Section, including by promptly calling and/or voting, as applicable, in any meetings or promptly participating in an action by written consent.

(g) The Board, by taking action in accordance with this Article 5 , and subject to compliance with Section 5.05 , shall have the power, discretion and authority on behalf and in the name of the Company to carry out any and all of the objects and purposes of the Company contemplated by this Agreement and to perform or authorize all acts which it may deem necessary or advisable in connection therewith. The Members agree that all determinations, decisions and actions made or taken by the Board in accordance with this Article 5 , and subject to compliance with Section 5.05 , shall be conclusive and absolutely binding upon the Company, the Members and their respective successors, assigns and personal representatives (without requirement for further consent or other action by the Members).

(h) Each Director, other than the Directors who meet the Independence Requirements, will serve as such without compensation from the Company or any of its Subsidiaries. Each of the Directors that meet the Independence Requirements shall be paid reasonable compensation for their service on the Board in an amount determined by the Board from time to time. Each Director and observer shall be entitled to reimbursement from the Company for reasonable out-of-pocket expenses incurred by such Director or observer during the course of performing his or her duties as a Director or exercising his or her rights as an observer.

(i) No Director (acting in his or her capacity as such) shall have any right or authority to act on behalf of or to bind the Company with respect to any matter except pursuant to a resolution of the Board authorizing such action, which resolution is duly adopted by the Board by the affirmative vote required for such matter pursuant to the terms of this Agreement.

(j) Each Director may authorize another individual (who may or may not be a Director, but shall meet the criteria for designation as a Director by the Member that designated such Director) to act for such Director by proxy at any meeting of the Board, or to consent to or dissent from any proposed action of the Board in writing without a meeting thereof. A writing authorizing any individual to act for any Director by proxy, which has been executed by such Director and entered into the books and records of the Company, shall be a valid means by which a Director may grant such authority.

(k) H&F shall have the right, exercisable by delivering notice to the Company, to designate one (1) non-voting observer to attend any meetings of the Board, the Ad Hoc Committee, the IPO Committee, the boards of directors and equivalent governing bodies of the Company’s Subsidiaries and any other committees thereof. Notice of meetings of the Board, the Ad Hoc Committee, the IPO Committee, the boards of directors and equivalent governing bodies of the Company’s Subsidiaries and any other committees thereof shall be furnished (together with all materials to be provided) to such observer no later than, and using the same form of communication as, notice of meetings of the Board, the Ad Hoc Committee, the IPO Committee, the boards of directors and equivalent governing bodies of the Company’s Subsidiaries and any other committees thereof, as the case may be, that are furnished to the members of the Board, the Ad Hoc Committee, the IPO Committee, the boards of directors and equivalent governing bodies of the Company’s Subsidiaries and any other committees thereof, respectively; provided , that the Company or its Subsidiaries, as the case may be, shall be entitled to remove such observer from such portions of a meeting of the Board, the Ad Hoc Committee, the IPO Committee, the boards of directors or equivalent governing bodies of any of the Company’s Subsidiaries or any other committees thereof, in each case, to the extent such observer’s presence would be likely to result in the waiver of any attorney client privilege. Any observer designated under this Section 5.01(k) shall be permitted to attend any meeting of any of the Board, the Ad Hoc Committee, the IPO Committee, the boards of directors and equivalent governing bodies of the Company’s Subsidiaries and any other committees thereof, in each case, using the same form of communication permitted for members of such Board, Ad Hoc Committee, IPO Committee, boards of directors and equivalent governing bodies of the Company’s Subsidiaries or any other committees thereof. The initial H&F observer shall be P. Hunter Philbrick.

Section 5.02. Removal and Resignation.

(a) (A) Each Member shall have the exclusive right to remove, with or without cause, any Director that such Member has the right to designate and (B) the Members shall have the right to remove any Director they mutually have the right to designate upon their mutual consent, in each case upon the giving of written notice to such Director and the Board; provided , that (i) such rights shall only be available to the MCK Members until the consummation of a Qualified MCK Exit and (ii) each Member agrees to remove any Director designated by such Member if such Director is or becomes a Restricted Person or, with respect to any independent Director, such Director fails to satisfy the Independence Requirements.

(b) Any Director may resign by written notice to the Board. Unless otherwise specified therein, a Director’s resignation shall take effect upon delivery of such notice.

(c) Vacancies created on the Board resulting from the death, disability, resignation or removal of a MCK Director or an Echo Director shall be filled by the Member that designated such Nominee Director, with such appointment to become effective immediately upon delivery of written notice of such appointment to the other Members and the Company, provided , that this right shall be applicable to the MCK Members with respect to appointments of MCK Directors solely prior to consummation of a Qualified MCK Exit. Vacancies created on the Board resulting from the death, disability, resignation or removal of the Mutual Independent Director (or any other directors who are not Nominee Directors) shall be filled (A) solely by the mutual consent of the MCK Members and Echo, in each case to the extent they (together with their respective Permitted

Transferees) hold 10% or more of the MCK Units or Echo Units, respectively, or (B) in the event either the MCK Members or Echo hold less than 10% of the MCK Units or Echo Units, respectively, upon the approval of the holders of a majority of the Units at such time, with such appointment, in each case, to become effective immediately upon delivery of written notice of such appointment to the other Members and the Company.

Section 5.03. Meetings of the Board.

(a) The Board shall hold a regularly scheduled meeting at least once every calendar quarter at such place, date and time as the Board may designate. Special meetings of the Board may be called at any time by the Chairman. Special meetings of the Board shall be called at any time by the Chairman upon the written request of at least one Director to the Chairman, specifying the matters to be discussed.

(b) Notice of any meeting of the Board or any committee thereof stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called shall be given to each Director by telephone, electronic mail or facsimile no less than seven days before the date of the meeting; provided , that the Chairman may reduce the advance notice period for any special meeting to no less than two days if the Chairman determines, acting reasonably and in good faith, that it is necessary or desirable to take action within a time period of less than seven days; and provided , further , that for the avoidance of doubt, if notice of any meeting of the Board is not given in accordance with this Section 5.03(b) , then no business may be transacted at such meeting. Notice of any meeting may be waived by any Director on behalf of such Director. Presence at a meeting of the Board by a Director shall constitute waiver of any deficiency of notice of such meeting by such Director, unless such Director objects, at the beginning of the meeting, to the transaction of any business at such meeting because such meeting was not called or convened in accordance with this Agreement.

(c) The secretary of the Company (the “ Secretary ”) shall circulate to each Director an agenda for each meeting of the Board not less than four days in advance of such meeting, or no less than two days in advance of any special meeting, if the Chairman has exercised his or her right pursuant to Section 5.03(b) to reduce the notice required for such meeting to no less than two days. Such agenda shall include any matters that any Director may reasonably request be included on such agenda.

(d) The presence in person or by proxy of a number of Directors equal to a majority of the total number of Directors on the Board at such time shall constitute a quorum for the conduct of business at any meeting of the Board, provided , that such quorum consists of not less than two MCK Directors and two Echo Directors. If a quorum is not present at any meeting of the Board, no business may be conducted at such meeting (the “ Original Meeting ”), and the Directors present shall adjourn the meeting and promptly give notice of when it will be reconvened, which shall not be more than thirty (30) days from the date of the meeting (the “ Adjourned Meeting ”). If a quorum is not present at the Adjourned Meeting and the sole reason for such lack of quorum was the absence of the Nominee Directors of the same party whose Nominee Directors’ absence was the sole cause of the Original Meeting being adjourned, then the Directors present at such Adjourned Meeting shall constitute a valid quorum.

(e) Directors may participate in any meeting of the Board or any committee thereof by means of a conference telephone or similar communications equipment by means of which all Directors participating in such meeting may hear one another. Participation in any meeting of the Board pursuant to this Section 5.03(e) shall constitute presence in person at such meeting for purposes of Section 5.03(d) and shall constitute a waiver of any deficiency of notice of such meeting, unless such Director objects, at the beginning of the meeting, to the transaction of any business at such meeting because such meeting was not called or convened in accordance with this Agreement.

(f) Each Director shall be entitled to cast one vote with respect to each matter brought before the Board (or any committee thereof of which such Director is a member) for approval. Except as otherwise expressly provided by this Agreement, the affirmative vote of Directors entitled to cast a majority of the votes that may be cast by the Directors in attendance at any meeting at which a quorum is present (whether in person or by proxy) shall be required to authorize any action by the Board and shall constitute the action of the Board for all purposes. No Director shall be disqualified from voting on any matter as to which the Member that designated such Director or any of its Affiliates may have an interest. Subject to Section 6.02(b) , notwithstanding any duty otherwise existing at Law or in equity, to the fullest extent permitted by Law, no Director shall have any duty to disclose to the Company or the Board confidential information of the Member that designated such Director or any of its Affiliates in such Director’s possession, even if such information is material and relevant to the Company and/or the Board, and in any case, such Director shall not be liable to the Company or the other Members or their respective Affiliates for breach of any duty (including the duty of loyalty or any other fiduciary duty) as a Director by reason of not disclosing such confidential information; provided , that the foregoing shall not limit the Chief Executive Officer’s or any other employee of the Company or its Subsidiaries who is a Director’s responsibility to disclose to the Board information regarding the Company and its Subsidiaries obtained as a result of the Chief Executive Officer or such employee serving in such capacity.

(g) The Secretary or, if he or she is not present, any individual whom the Chairman may appoint, shall keep minutes of each meeting of the Board, which shall reflect all actions taken by the Board thereat.

(h) The Board may establish other provisions and procedures relating to the governance of its meetings that are not in conflict with the terms of this Agreement.

(i) Each Director shall be entitled to receive all information (including without limitation, board minutes, board books and financial reports) that is made available to any Director in such Person’s capacity as such.

Section 5.04. Action Without a Meeting. Notwithstanding Section 5.03 , with respect to any matter requiring the approval or consent of the Board under this Agreement or the Act, the Board may take such action without a meeting, if a consent or consents in writing, setting forth the action to be taken, shall be signed by all of the Directors on the Board.

Section 5.05. Reserved Matters.

(a) The Company shall not, and shall cause its Subsidiaries not to, take any of the following actions (including any action by the Board or any committee of the Board) (each, a “ Reserved Matter ”) without the prior written approval of (i) an MCK Member, and (ii) Echo; provided , that no such prior written approval shall be required in the case of any action to be taken by the Company or any of its Subsidiaries pursuant to an express right of any Person set forth in this Agreement or in any other Transaction Document:

Operating Matters

(i) any material change in the line of business of the Company and its Subsidiaries (which shall initially be a health care information technology company) or the entry into any new material line of business by the Company and its Subsidiaries;

(ii) any change in either the name of the Company or its registered address or the Fiscal Year;

(iii) any appointment, removal or replacement of, or determination or approval of, or change in, compensation, benefits, perquisites and other incentives for, the Chief Executive Officer (other than the appointment of Neil de Crescenzo as the Chief Executive Officer at Closing), including the entry into and any amendment of any employment contract with such officer;

(iv) approval of the Company’s annual operating plan and the Annual Operating and Capital Budget and any amendment or modification thereto and any material deviation from the Annual Operating and Capital Budget; provided , that to the extent an MCK Member and Echo cannot agree on the Annual Operating and Capital Budget for a given year, the Annual Operating and Capital Budget for the immediately preceding year of such given year shall be deemed to be the Annual Operating and Capital Budget for such given year; for purposes of the foregoing, it shall not be deemed a “material deviation” from any Annual Operating and Capital Budget previously approved as a Reserved Matter hereunder unless expenditures for any given fiscal quarter are greater than one hundred five percent (105%) of the total expenditures, in the aggregate, included in such Annual Operating and Capital Budget for such fiscal quarter;

(v) entry into any agreement or arrangement that limits, or otherwise restricts in any material respect, either the Company (other than any employees of the Company or its Subsidiaries), the Company’s Subsidiaries, any Echo Shareholder or its Affiliates or MCK or its Affiliates, from engaging in any line of business, selling, licensing or otherwise distributing services or products in any geographic area, competing with any Person (including, for the avoidance of doubt, any material agreement that includes (1) grants of exclusive rights, exclusive territories, exclusive licenses or “most favored party” rights, (2) any non-competition or non-solicitation restrictions, (3) any rights of first refusal or rights of first offer or (4) any limits on the use of any Intellectual Property Rights (as defined in the Contribution Agreement) or, with respect to any Echo Shareholder or its Affiliates or MCK or its Affiliates, otherwise binds such Person other than with respect to an obligation of the Company or its Subsidiaries in such Person’s capacity as a Member;

(vi) prior to a Qualified IPO, appointment, removal or replacement of the Auditor of the Company;

(vii) approval of the annual financial report, adoption of any financial and accounting procedures or accounting policies, or any material changes thereto, unless permitted pursuant to policies and procedures previously approved by the Members as a Reserved Matter;

(viii) filing of any litigation, arbitration or other legal proceedings or actions in relation to a claim (or a series of related claims) of $15,000,000 or more, or any settlement of any litigation, arbitration, other legal proceeding, actions or series of related claims of $15,000,000 or more, except for any legal action involving the Members and/or their Affiliates; and provided , that notwithstanding anything to the contrary in this Agreement, in the event of any legal proceeding by or against the Company or any of its Subsidiaries, in which either Echo or any MCK Member or any Affiliate thereof is (or would be) an adverse party, the other party shall have the right to control the initiation, defense, conduct and settlement of such legal proceedings by the Company;

(ix) entry into any agreements or other transactions between a Member or any of its Affiliates, on the one hand, and the Company or any of its Subsidiaries, on the other hand, other than:

(A) the Transaction Documents (and any transactions or agreements contemplated by or ancillary to such Transaction Documents); provided , that any amendment or modification to any Transaction Document shall require approval under clause (xxx) below; or

(B) agreements or transactions with MCK or its Subsidiaries and/or portfolio companies of any Echo Shareholder that are entered into on arm’s length terms and in the ordinary course of business for the purchase of materials, supplies, goods, services (excluding any employment agreements), equipment or other assets that are generally available for purchase by business entities in the Company’s line of business on substantially similar terms from non-affiliated suppliers or providers;

Board Matters

(x) any increase or decrease in the size of the Board;

(xi) any establishment of, or change in the size of, any committee of the Board;

(xii) selection of the Mutual Independent Director, so long as each of Echo (together with its Permitted Transferees) and the MCK Members (together with their Permitted Transferees) own 10% or more of the Echo Units or MCK Units, respectively;

(xiii) the appointment, removal or replacement of the Chairman of the Board, who shall initially be John H. Hammergren, a Nominee Director of the MCK Members;

(xiv) the appointment, removal or replacement of the Executive Vice Chairman of the Board, who shall initially be Howard Lance, a Nominee Director of Echo;

Financing Matters

(xv) any declaration and payment of any dividends, the determination of any cash reserve or the making of any non-cash distributions, in each case, except as expressly contemplated in this Agreement, including pursuant to Section 8.02 ;

(xvi) any redemption and/or repurchase of any of the Company’s or any of its Subsidiaries’ Equity Securities (including any Units) excluding (A) repurchases pursuant to an Approved Plan or any redemption and/or repurchases in accordance with Sections 3.03(c) and 11.04(d) in respect of the Management Call Option or the Management Put Option pursuant to the Echo Shareholders Agreement; (B) redemptions and/or repurchases of Equity Securities of a wholly-owned Subsidiary of the Company by the Company or any other wholly-owned Subsidiary of the Company and (C) equity adjustments pursuant to Section 2.03, Section 6.03 and Section 8.06 of the Contribution Agreement;

(xvii) any issuance, or authorization of issuance of any Equity Securities of the Company or any of its Subsidiaries, excluding (A) the issuance of any Units upon conversion, vesting, exercise, exchange or settlement of Equity Securities of the Company or any of its Subsidiaries issued pursuant to an Approved Plan and approved by the Board or any authorized committee of the Board, (B) issuances by any wholly-owned Subsidiaries of the Company to the Company or another wholly-owned Subsidiary of the Company, (C) issuances in connection with a Qualified IPO; (D) issuances pursuant to the exercise of the Top-up Option by the MCK Members under Section 10.06 , (E) issuances in connection with equity adjustments pursuant to Section 2.03, Section 6.03 and Section 8.06 of the Contribution Agreement, (F) any issuances or adjustments in accordance with Section 3.03(c) and (G) pursuant to Section 8.02(a)(ix) ;

(xviii) any creation, incurrence, assumption or refinance of any indebtedness (excluding trade credits in the ordinary course of business, but including any factoring program or asset securitization program which is, or could reasonably be expected to be, treated as indebtedness under GAAP) or any assumption, guarantee, endorsement or any accommodation pursuant to which the Company or any of its Subsidiaries becomes responsible for the obligations of another Person (other than the Company or a wholly-owned Subsidiary of the Company), or any amendment to the maturity date, aggregate principal amount, interest rate or other material terms of any existing indebtedness, in each case in excess of $25 million in the aggregate, unless otherwise permitted by the Company’s policies and procedures which have been previously approved as a Reserved Matter;

(xix) pledge, encumbrance or creation of any similar security over the assets of the Company or its Subsidiaries, unless otherwise permitted by the Company’s policies and procedures which have been previously approved as a Reserved Matter;

(xx) enter into, amend or modify any Swap Contract or any other derivative contracts or transactions, unless otherwise permitted by the Company’s policies and procedures which have been previously approved as a Reserved Matter;

(xxi) make any advance or capital contribution to any Person (other than the Company or its Subsidiaries), or voluntarily prepay any indebtedness, unless otherwise permitted by the Company’s policies and procedures which have been previously approved as a Reserved Matter;

(xxii) adoption of, or changes to, equity incentive plans of (i) Echo or any of its Subsidiaries (an “ Approved Echo Plan ”) or (ii) the Company or any of its Subsidiaries (together with any Approved Echo Plans, “ Approved Plans ”); provided that the Amended and Restated 2009 Equity Incentive Plan of Echo is deemed as approved as an Approved Echo Plan as of the Closing;

Significant Transactions

(xxiii) any transaction, other than a transaction described in Section 9.03 , that results in, or that could reasonably be expected to be treated in whole or in part for U.S. federal income tax purposes as resulting in, a disposition by Echo of any of its interests in the Company or as a disposition by the Company of all or a substantial portion of its assets;

(xxiv) any Company Sale other than as expressly contemplated under this Agreement;

(xxv) any other sale, lease or disposal of assets of the Company or its Subsidiaries outside of the ordinary course of business, unless otherwise permitted by the Company’s policies and procedures which have been previously approved as a Reserved Matter;

(xxvi) any initial public offering of the Company (other than a Qualified IPO conducted in accordance with Section 10.01 or an initial public offering conducted pursuant to an IPO Demand in accordance with Section 10.01(c) and the Registration Rights Agreement), including any steps towards such initial public offering, such as selection of an underwriter and any other financial advisor for any such offering; provided , that approval of (A) the launch of any road show relating to a Qualified IPO and (B) the final pricing, size and other material terms of a Qualified IPO shall be subject to the approval of the IPO Committee;

(xxvii) acquisition (or series of acquisitions) of Equity Securities or assets of any business or Person (other than Echo, the Company or a wholly-owned Subsidiary of the Company) with a value of $10 million or more individually or $50 million or more in the aggregate;

(xxviii) the assignment, transfer, pledge, license, sublicense or other disposition of any intellectual property rights owned by the Company or its Subsidiaries with a fair market value in excess of $10 million;

(xxix) the termination, liquidation or dissolution of the Company or any of its material Subsidiaries;

Other Matters

(xxx) any amendment to, modification of, or waiver under this Agreement or, solely on behalf of the Company, the Contribution Agreement or any other Transaction Document;

(xxxi) any matter requiring the approval of the Company pursuant to Section 11.04(d) or any waiver of any covenant made by Echo or the Echo Shareholders to the Company under this Agreement, including the covenants set forth under Section 11.04 ;

(xxxii) any action by the Company that would result, or be reasonably likely to result, in the failure of Echo or the Echo Shareholders to satisfy the Echo Minimum Ownership as required by this Agreement;

(xxxiii) any amendment to, modification of, or waiver under any of the terms, rights and privileges of any class of Equity Securities of the Company or its Subsidiaries, which if made, would have a disproportionate adverse economic effect on such class; and

(xxxiv) any action having the effect of causing one or both of Change Healthcare Intermediate Holdings, LLC or Change Healthcare Holdings, LLC to cease being disregarded as entities separate from the Company for U.S. federal income tax purposes.

(b) The right of the parties to approve any of the Reserved Matters shall terminate at such time as the MCK Members (together with their Permitted Transferees) no longer hold a number of Units equal to 10% or more of the MCK Units of the Company (directly or indirectly through any securities other than Units issued pursuant to exercise of the Top-up Option).

Section 5.06. Chairman of the Board. Subject to Section 5.05 , the Chairman of the Board (the “ Chairman ”) shall be appointed by the affirmative vote of a majority of the Directors; provided, that the initial Chairman of the Board shall be John H. Hammergren. The Chairman shall preside at all meetings of Members and the Board at which he or she is present and perform such other duties as from time to time may be assigned to him or her by the Board.

Section 5.07. Committees of the Board.

(a) Subject to Section 5.05 , the Board may designate one or more committees of the Board, including an audit committee, a compensation committee, a compliance committee and a nominating committee. Subject to Section 5.05 , any committee of the Board, to the extent permitted by Law and provided in the resolutions of the Board establishing such committee, shall have and may exercise all of the powers and authority of the Board in the management of the business and affairs of the Company. Each committee shall keep regular minutes and report to the

Board promptly after the taking of any material action. Each of the Members entitled to designate a Director hereunder shall be entitled to appoint at least one Director designated by such Member to sit on each committee of the Board, with the representation on any such committee between MCK Directors and Echo Directors to be proportional to the number of MCK Directors and Echo Directors on the Board.

(b) A majority of the members of any committee may determine its action and fix the time and place of its meetings, unless the Board shall otherwise provide. Notice of such meetings shall be given to each member of the committee in the manner provided for in Section 5.03(b) .

(c) Each Director who is not an employee of the Company or its Subsidiaries shall be entitled to receive all information (including without limitation, committee minutes, committee books and reports) that is made available to any member of a committee in such Person’s capacity as such.

Section 5.08. Board Escalation Matters. At any such time that each of the MCK Members and Echo are entitled to designate an equal number of Nominee Directors, in the event that the Board shall have considered any proposed resolution or written consent with respect to any matter that is proposed by any of the Nominee Directors appointed by one party in two consecutive meetings of the Board, and in each case, the Nominee Directors appointed by the other party have not consented to such proposed resolution or written consent, with the effect that such proposed resolution or written consent has not been approved by the Board (each such event, a “ Board Escalation Matter ”), then at the written request of either MCK Member or Echo, an ad hoc committee comprising of two representatives of the MCK Members and two representatives of Echo (the “ Ad Hoc Committee ”), shall be formed and such Ad Hoc Committee shall meet (in person, by telephone or by audio-visual conference) and seek to resolve such matters within thirty (30) days after the occurrence of the Board Escalation Matter.

Section 5.09. Subsidiary Boards. At any time prior to a Qualified MCK Exit and subject to Section 5.01(d) , the Company shall take all actions necessary to cause the composition of the board of managers or equivalent body of each of Change Healthcare Intermediate Holdings, LLC and Change Healthcare Holdings, LLC to be identical to the Board. With respect to each board of directors or managers, as applicable, of the direct and indirect Subsidiaries of the Company (other than Change Healthcare Intermediate Holdings, LLC and Change Healthcare Holdings, LLC), (a) to the extent a Subsidiary board includes one or more MCK Directors or other designee(s) of MCK, the Company shall take all action necessary to cause such Subsidiary board to also include a number of members designated by Echo such that such Subsidiary board is comprised of MCK designated directors and Echo designated directors in the same proportion as their respective representation on the Board and (b) to the extent a Subsidiary board includes one or more Echo Directors or other designee(s) of Echo, the Company shall take all action necessary to cause such Subsidiary board to also include a number of members designated by Echo such that such Subsidiary board is comprised of MCK designated directors and Echo designated directors in the same proportion as their respective representation on the Board.

Section 5.10. Officers; Designation and Election of Officers; Duties.

(a) Subject to Section 5.05 , the Board shall delegate management of day-to-day operations of the Company to the Company’s leadership team, which shall be led by the Chief Executive Officer of the Company (the “ Chief Executive Officer ”).

(b) The Chief Executive Officer may, from time to time, employ and retain Persons as may be necessary or appropriate for the conduct of the Company’s business (subject to the supervision and control of the Board, and subject to the approval rights set forth in Section 5.05 ), including employees, agents and other Persons (any of whom may be a Member or Representative) who may be designated as officers of the Company, with titles including, but not limited to, “chief financial officer,” “chief operating officer,” “chief compliance officer,” “president,” “vice president,” “treasurer,” “secretary” and “general counsel,” as and to the extent authorized by the Board. Any number of offices may be held by the same Person. The Board may choose not to fill any office for any period as it may deem advisable. Officers need not be residents of the State of Delaware or Members. Any officers so designated shall have such authority and perform such duties as the Board and the Chief Executive Officer, from time to time, may delegate to them. The Chief Executive Officer may assign titles to particular officers. Each officer shall hold office until his successor shall be duly designated or until his or her death or until he or she shall resign or shall have been removed in the manner hereinafter provided.

(c) Any officer may resign as such at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time is specified, at the time of its receipt by the Board. The acceptance by the Board of a resignation of any officer shall not be necessary to make such resignation effective, unless otherwise specified in such resignation. Any officer may be removed as such, either with or without cause, at any time by the Board. Subject to Section 5.05 , vacancies may be filled by approval of the Board. Designation of any Person as an officer by the Board shall not in and of itself vest in such Person any contractual or employment rights with respect to the Company.

(d) The officers, to the extent of their powers set forth in this Agreement or in resolutions of the Board, shall be agents of the Company for the purpose of the Company’s business, and the actions of the officers taken in accordance with such powers shall bind the Company. Any Person dealing with the Company may rely upon a certificate signed by any officer as to: (A) the identity of any Member, Director or officer; (B) the existence or nonexistence of any fact or facts which constitute a condition precedent to acts by Members, the Board or officers or in any other manner germane to the affairs of the Company; (C) the Persons who are authorized to execute and deliver any instrument or document of or on behalf of the Company; (D) the authenticity of any copy of this Agreement and amendments hereto; (E) any act or failure to act by the Company or as to any other matter involving the Company or, solely with respect to the activities of the Company, any Member; and (F) the authority of the Board, any officer, employee or agent of the Company or the Tax Matters Member.

ARTICLE 6

D UTIES , E XCULPATION AND I NDEMNIFICATION

Section 6.01. Duties, Exculpation and Indemnification .

(a) Notwithstanding any duty otherwise existing at Law or in equity, to the fullest extent permitted by Law and except as expressly contemplated by this Agreement or any other agreement entered into between a Covered Person, and any Member or the Company or any of its Subsidiaries, no Covered Person shall have any duty (including any fiduciary duty) otherwise applicable at Law or in equity to the Company or to any other Member with respect to or in connection with the Company or the Company’s business or affairs.

(b) To the fullest extent permitted by Law, no Person made or threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such Person is or was a member, shareholder, partner, Director or executive officer of any Member, the Company or any of their respective Subsidiaries or Affiliates (collectively, “Covered Persons”) shall be liable to the Company or its Subsidiaries or to any other Person that is a party hereto or is otherwise bound hereby for any act or failure to act in such Person’s capacity as Covered Person, except, in the case of any Covered Person who is not an officer or other employee of the Company, willful misconduct or breach of this Agreement or any other agreement to which such Covered Person is a party and, in the case of any Covered Person who is an officer or other employee of the Company willful misconduct, gross negligence, bad faith or breach of this Agreement or any other agreement to which such Covered Person is a party. The Board shall also have the power to exculpate, to the same extent set forth in this Section 6.01(b) , employees of the Company or its Subsidiaries who are not Covered Persons and agents of the Company or its Subsidiaries.

(c) Except in the case of willful misconduct (with respect to any Covered Person who is not an officer or other employee of the Company) or willful misconduct, gross negligence or bad faith (with respect to any Covered Person who is an officer or other employee of the Company), or in the case of a breach of this Agreement or any other agreement with the Company or its Subsidiaries to which any such Covered Person is a party, each Person (and the heirs, executors or administrators of such Person) who was or is a party or is threatened to be made a party to, or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, in such Person’s capacity as a Covered Person, and such action, suit or proceeding relates to an act or omission of such Covered Person acting in its capacity as such, shall be indemnified and held harmless by the Company to the fullest extent permitted by the Laws of the State of Delaware (including indemnification for acts or omissions constituting negligence, gross negligence or breach of duty); provided , that the foregoing indemnification shall not be available to a Member in the case of an action, suit or proceeding brought by a Member or any other party to this Agreement against such Member. The right to indemnification conferred in this Section 6.01(c) shall also include the right to be paid by the Company the expenses incurred in connection with any such action, suit or proceeding in advance of its final disposition to the fullest extent authorized by the Laws of the State of Delaware; provided , that the payment of such expenses in advance of the final disposition of an action, suit or proceeding shall be made only upon delivery to the Company of an undertaking by or on behalf of the applicable Covered Person to repay all amounts so paid in advance if it shall ultimately be

determined that such Covered Person is not entitled to be indemnified under this Section 6.01(c) or otherwise. The rights to indemnification and advancement conferred in this Section 6.01(c) constitute contract rights. Notwithstanding the foregoing provisions of this Section 6.01 , the Company shall indemnify a Covered Person in connection with a proceeding (or part thereof) initiated by such Covered Person only if such proceeding (or part thereof) was authorized by the Board; provided , however , that a Covered Person shall be entitled to reimbursement of his or her reasonable counsel fees with respect to a proceeding (or part thereof) initiated by such Covered Person to enforce his or her right to indemnity or advancement of expenses under the provisions of this Section 6.01 to the extent that the Covered Person is successful on the merits in such proceeding (or part thereof). The Company shall also have the power to indemnify and hold harmless to the same extent set forth in this Section 6.01(c) employees of the Company or its Subsidiaries who are not Covered Persons and agents of the Company or its Subsidiaries.

No claim subject to the indemnification provisions hereunder shall be settled by any Covered Person without the consent of the Company, not to be unreasonably withheld.

(d) The Company may, by action of the Board, provide indemnification to such officers, employees and agents of the Company or other Persons who are or were serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise to such extent and to such effect as the Board shall determine to be appropriate.

(e) The Company shall, by action of the Board, have the power to purchase and maintain insurance on behalf of any Person who is or was a Covered Person or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss incurred by such Person in any such capacity or arising out of his status as such, whether or not the Company would have the power to indemnify him against such liability under the Laws of the State of Delaware.

(f) Notwithstanding any provision of this Agreement to the contrary, the provisions of this Section 6.01 shall survive the termination, voluntary or involuntary, of the status of a Member as such, the termination, voluntary or involuntary, of the status of any Covered Person or other Person as to whom the provisions of this Section 6.01 apply as such and the termination of this Agreement or dissolution of the Company.

(g) The provisions of this Section 6.01 shall be applicable to any action, suit or proceeding commenced after the date of this Agreement against any Covered Person arising from any act or omission of such Covered Person acting in its capacity as such, whether occurring before or after the date of this Agreement. No amendment to or repeal of this Section 6.01 , or, to the fullest extent permitted by Law, any amendment of Law, shall have any effect on the rights provided under this Section 6.01 with respect to any act or omission occurring prior to such amendment or repeal.

(h) The indemnification hereby provided and provided hereafter pursuant to the power hereby conferred by this Section 6.01 on the Board shall not be exclusive of any other rights to which any Person may be entitled, including any right under policies of insurance that may be purchased and maintained by the Company or others, with respect to claims, issues or matters in relation to which the Company would not have the power to indemnify such Person under the provisions of this Section 6.01 . Such rights shall not prevent or restrict the power of the Company to make or provide for any further indemnity, or provisions for determining entitlement to indemnity, pursuant to one or more indemnification agreements or other arrangements (including creation of trust funds or security interests funded by letters of credit or other means) approved by the Board (whether or not any of the Members, Directors or Company officers shall be a party to or beneficiary of any such agreements or arrangements); provided , however , that any provision of such agreements or other arrangements shall not be effective if and to the extent that it is determined to be contrary to this Section 6.01 or applicable Law.

(i) Nothing contained in this Section 6.01 is intended to relieve any Member or any other Person from any liability or other obligation of such Person relating to the Contribution Agreement or any other Transaction Document or any other agreement or to in any way impair the enforceability of any provision of such agreements against any party thereto. No Covered Person shall be indemnified, held harmless or have any right to advancement of expenses hereunder in any claim, action, suit or proceeding relating to the Contribution Agreement or any other Transaction Document.

(j) Any indemnity under this Section 6.01 shall be provided solely out of, and only to the extent of, the Company’s assets, and no Member or Affiliate of any Member shall be required directly to indemnify any Covered Person pursuant to this Section 6.01 . None of the provisions of this Section 6.01 shall be deemed to create any rights in favor of any Person other than Covered Persons and any other Person to whom the provisions of this Section 6.01 expressly apply.

(k) The Company hereby acknowledges that a Covered Person may have certain rights to indemnification, advancement of expenses and/or insurance provided by other sources. The Company hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations to a Covered Person are primary and any obligation of such other sources to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Covered Person are secondary) and (ii) that it shall be required to advance the full amount of expenses incurred by a Covered Person 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 the terms of this Agreement without regard to any rights a Covered Person may have against the such other sources. The Company further agrees that no advancement or payment by such other sources on behalf of a Covered Person with respect to any claim for which such Covered Person has sought indemnification from the Company shall affect the foregoing, and such other sources 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 such Covered Person against the Company.

Section 6.02. Other Activities; Business Opportunities.

(a) Notwithstanding any duty otherwise existing at Law or in equity, to the fullest extent permitted by Law, and subject only to Section 11.04 , no Member, Affiliate of any Member, Director or Company officer who is also an employee of a Member or an Affiliate of a Member (in each case only when acting on behalf of such Member or such Member’s Affiliate in connection with such Member’s or such Member’s Affiliate’s own business and operations) shall have any

obligation to refrain from, directly or indirectly, (i) engaging in the same or similar activities or lines of business as the Company or developing or marketing any products or services that compete, directly or indirectly, with those of the Company, (ii) investing or owning any interest, publicly or privately, in, developing a business relationship with, or serving as an employee, officer, director, consultant or agent of, any Person engaged in the same or similar activities or lines of business as, or otherwise in competition with, the Company or (iii) doing business with (directly or as an employee, officer, director, consultant or agent of a Person who does business with) the Company or any Person who conducts business with the Company; and neither the Company nor any Member (or Affiliate of any Member) shall have any right in or to, or to be offered any opportunity to participate or invest in, any business or venture engaged or to be engaged in by any other Member, Affiliate of any other Member, officer of the Company who is also an employee of any other Member (or an Affiliate of any other Member) or Director or shall have any right in or to any income or profits derived therefrom. It is understood and agreed by the Members that each Person referred to in this Section 6.02(a) shall be permitted to undertake any and all actions of the type referred to in this Section 6.02(a) without limitation (in each case acting on behalf of the applicable Member or Affiliate of a Member in connection with such Member’s or such Member’s Affiliate’s own business and operations) and that the taking of any such actions shall not violate any legal obligation or duty (including any fiduciary duty) to any Member or other Person under or in connection with this Agreement or the Company.

(b) Notwithstanding any duty otherwise existing at Law or in equity, to the fullest extent permitted by Law, if a Member, any Director designated by a Member, any Affiliate of such Member or any officer of the Company who is also an employee of such Member (or any of such Member’s Affiliates) acquires knowledge of a potential transaction or matter which may be a business opportunity for both such Member or an Affiliate of such Member, on the one hand, and the Company or another Member or another Member’s Affiliate, on the other hand, no such Member, Director, Affiliate or officer shall have a duty to communicate or offer such business opportunity to the Company or such other Member or such other Member’s Affiliate, and no such Person shall be liable to the Company, the other Members and their Affiliates in respect of any such matter (including for any breach of fiduciary or other duties) by reason of the fact that such Member or any Affiliate of such Member pursues or acquires such business opportunity for itself or by reason of the fact that such Member, Director, Affiliate or officer directs such opportunity to such Member or an Affiliate of such Member or does not communicate information regarding such opportunity to the Company. Notwithstanding the foregoing, the first sentence of this Section 6.02(b) shall not apply to any such knowledge or business opportunity acquired by any Director who is an officer or other employee of the Company in his or her capacity as an officer or other employee of the Company. For the avoidance of doubt, a Director shall not be considered to be an officer of the Company merely by virtue of holding the position of Chairman of the Board, Executive Vice Chairman of the Board or any other Board-level position.

ARTICLE 7

A CCOUNTING , T AX , F ISCAL AND L EGAL M ATTERS

Section 7.01. Fiscal Year. The fiscal year of the Company shall end on March 31 of each year or on such other day as may be fixed from time to time by resolutions of the Board, subject to Section 5.05 and applicable Law (each, a “ Fiscal Year ”).

Section 7.02. Bank Accounts. In the absence of instructions from the Board to the contrary, the Chief Executive Officer or another officer of the Company to whom the Chief Executive Officer has delegated such authority shall determine the institution or institutions at which the Company’s bank accounts will be opened and maintained, the types of accounts, and the Persons who will have authority with respect to the accounts and the funds therein.

Section 7.03. Books of Account and Other Information. The Company shall prepare and maintain, at its principal place of business, separate books of account for the Company that shall show a true and accurate record of all costs and expenses incurred, all charges made, all credits made and received and all income derived in connection with the operation of the Company’s business in accordance with GAAP and this Agreement. All questions of accounting shall be determined by the Board or a committee or officer authorized by the Board to make such determination.

Section 7.04. Certain Tax Matters.

(a) At all times during which the Company has two or more Members, the Members intend that the Company shall be treated as a partnership for U.S. federal, state and local tax purposes, and the Members shall take such actions and make such elections (or refrain from taking any actions or elections) as may be necessary to achieve the foregoing.

(b) The Company shall (i) timely (taking into account extensions) prepare and file, or cause to be prepared and filed, all tax returns of the Company (it being understood that the procedures for tax return preparation shall be governed by Section 7.04(d) ) and (ii) use commercially reasonable efforts to deliver Schedules K-1 to each Member as soon as practicable after the end of each Tax Year but not later than September 30 of the following Tax Year.

(c) The “tax matters partner” of the Company for purposes of Section 6231(a)(7) of the Code, and the “partnership representative” for purposes of the Partnership Tax Audit Rules, shall be appointed, and may be removed, by the Board from time to time (the “ Tax Matters Member ”). The Board shall initially designate an MCK Member as the Tax Matters Member. The Tax Matters Member shall take such action as may be necessary to cause, to the extent possible, each other Member to become a notice partner within the meaning of Code Section 6231(a)(8). The Tax Matters Member shall inform the Board and each other Member of all significant matters that come to its attention in its capacity as Tax Matters Member by giving notice thereof on or before the fifth day after becoming aware thereof and, within that time, shall forward to the Board and each such other Member copies of all significant written communications it may receive in that capacity.

(d) The Tax Matters Member shall: (i) supervise the timely preparation and filing of all tax returns of the Company (taking into account extensions); provided that the Board may (1) select from time to time the third-party tax return preparer (the “ Return Preparer ”) for the Company (or, if the Tax Matters Member does not engage an outside tax return preparer for any such tax return, the Return Preparer may be engaged to review such tax return on behalf of the Board) and (2) designate certain individuals or groups at the Return Preparer to act in such capacity. Initially, the Return Preparer shall be Deloitte LLP; provided , further that the Tax Matters Member shall be permitted to engage advisors other than the Return Preparer from time to time as

the Tax Matters Member reasonably determines to be necessary or helpful to the satisfaction of the Tax Matters Member’s responsibilities hereunder, subject in all events to the preparation and/or review of tax returns by the Return Preparer as set forth in clause (1) above; (ii) manage and control any administrative proceeding with the Internal Revenue Service or any other taxing authority or any judicial proceeding, in each case relating to the determination of any item of income, gain, loss, deduction or credit of the Company for U.S. federal, state, local or foreign income or franchise tax purposes; provided , the Tax Matters Member shall not enter into any settlement relating to income or franchise taxes that is binding on the Company without prior approval by the Board; (iii) cause the Company to make all tax elections required or permitted to be made by the Company under applicable Law; provided , that for each Tax Year ending on or after the date hereof, the Company shall have in effect a valid election under Section 754 of the Code; and (iv) use commercially reasonable efforts to keep the Board reasonably informed of all material matters that come to its attention in its capacity as Tax Matters Member;

(e) Except as expressly provided herein, the Tax Matters Member shall take no action on behalf of the Company without the authorization of the Board, other than such action as may be required by applicable Law, and shall take actions on behalf of the Company as directed by the Board. Any reasonable cost or expense incurred by the Tax Matters Member in connection with its duties, including the preparation for or pursuance of administrative or judicial proceedings, shall be paid by the Company.

(f) No Member shall file a request pursuant to Code Section 6227 for an administrative adjustment of Company items for any taxable year without first notifying the other Members and obtaining the approval of the Board. If the Board approves the requested adjustment, the Tax Matters Member shall file the request for the administrative adjustment on behalf of the Members. If such consent is not obtained within 30 days from such notice, or within the period required to timely file the request for administrative adjustment, if shorter, any Member, including the Tax Matters Member, may file a request for administrative adjustment on its own behalf. Any Member intending to file a petition under Code Sections 6226 or 6228 (or another Code Section) with respect to any item involving the Company shall notify the Board and the other Members of such intention and the nature of the contemplated proceeding. In the case where the Tax Matters Member is the Member intending to file such petition on behalf of the Company, such notice shall be given within a reasonable period of time to allow the Board and the other Members to participate in selecting the forum in which such petition will be filed.

(g) No Member shall file a notice of inconsistent treatment under Code Section 6222(b) with respect to any Company items for any taxable year without first notifying the Board and each other Member.

(h) The Company shall, if it is so eligible, make an election out of the Partnership Tax Audit Rules under Section 6221(b) (as in effect after December 31, 2017), and the Members shall provide the Company with such information as is reasonably necessary to make such election. The Company shall not make an election under Section 6231(a)(1)(B)(ii) of the Code (as in effect prior to December 31, 2017). In the event the Company has made an election out of the Partnership Tax Audit Rules under Section 6221(b) (as in effect after December 31, 2017), or is excluded from the definition of “partnership” under Section 6231(a)(1) (as in effect prior to January 1, 2018), and a Member becomes subject to an audit, examination, or other proceeding such Member shall notify

the other Members of such audit, examination or other proceeding insofar as it relates to or involves the Company and shall provide information to the other Members upon reasonable request in respect of significant matters that relate to or involve the Company. Notwithstanding anything to the contrary in this Agreement, in no event will any MCK Member or any of its Affiliates be required to provide any information relating to, or a copy of any consolidated, combined, affiliated or unitary tax return that includes McKesson Corporation or any of its Affiliates (other than pro forma information relating only to the Company’s operations).

(i) Each Member and former Member shall provide the Company with such information (and, if applicable, with certifications as to the filing of initial and amended tax returns) as the Tax Matters Member reasonably requests, in order to enable the Company (as determined by the Board and subject to Section 7.04(h) ) to (i) reduce the amount of any imputed underpayment under Section 6225 of the Partnership Tax Audit Rules, (ii) determine its eligibility to make, and make, an election under Section 6221(b) of the Partnership Tax Audit Rules, (iii) make an election under Section 6226(a) of the Partnership Tax Audit Rules, (iv) reasonably attribute to the Members their share of any income, gain, loss, deduction or credit for purposes of Section 6226(a) of the Partnership Tax Audit Rules, or (v) to comply with, or be eligible to invoke any aspect of, the Partnership Tax Audit Rules in any other respect. The Tax Matters Member shall not make any such elections, or take or fail to take any actions described in the Partnership Tax Audit Rules without the consent of the Board.

ARTICLE 8

A LLOCATIONS AND D ISTRIBUTIONS

Section 8.01. Allocations.

(a) Allocation of Profit and Loss. Except as set forth in Section 8.01(b) , Profit and Loss of the Company for each Tax Year of the Company shall be allocated among the Capital Accounts of the Members pro rata in accordance with the Members’ respective Membership Percentages, unless otherwise required by Section 704(b) of the Code and the Treasury Regulations thereunder; provided , that if the Membership Percentages of the Members are adjusted pursuant to Section 2.03, Section 6.03 or Section 8.06 of the Contribution Agreement, Profit and Loss of the Company shall be allocated so as to give effect to the adjusted Membership Percentages, such that the Capital Accounts of the Members equal the Capital Accounts that the Members would have had if all allocations under this Section 8.01(a) for prior Tax Years had been pro rata in accordance with the adjusted Membership Percentages.

(b) Special Allocations.

(i) Each item of Depreciation in respect of the MCK IPCo Owned Intellectual Property (as defined in the Contribution Agreement) for any Tax Year shall be specially allocated to MCK IPCo and/or any successor(s) in interest to MCK IPCo’s Initial Units (in proportion to the number of such Units then held by MCK IPCo and/or any such successor(s) in interest); provided , however , that no such allocation shall be made to the extent such allocation would result in aggregate Capital Account balances for the MCK Members that constitute less than 50.1% of the aggregate Capital Account balances of all Members, after giving effect to all allocations made for such Tax Year pursuant to this Section 8.01 .

(ii) All Unrealized Gain and Realized Gain for any Tax Year shall be allocated entirely to MCK IPCo and/or any successor(s) in interest to MCK IPCo’s Initial Units (in proportion to the number of such Units then held by MCK IPCo and/or any such successor(s) in interest) to the extent of the excess, if any, of (A) the cumulative amount of Depreciation allocated to all such Persons pursuant to Section 8.01(b)(i) for all prior Tax Years, over (B) the cumulative amount of Unrealized Gain and Realized Gain allocated to such Persons pursuant to this Section 8.01(b)(ii) for all prior Tax Years.

(iii) No allocation of Loss shall be made to any Member if, as a result of such allocation, such Member would have a negative balance in its Adjusted Capital Account, unless at the time of such allocation, all Adjusted Capital Accounts are equal to zero.

(iv) Member Nonrecourse Debt Minimum Gain Chargeback. Losses attributable to partner nonrecourse debt (as defined in Treasury Regulation Section 1.704-2(b)(4)) shall be allocated in the manner required by Treasury Regulation Section 1.704-2(i). If there is a net decrease during a Tax Year in Member Nonrecourse Debt Minimum Gain, Profits for such Tax Year (and, if necessary, for subsequent Tax Years) shall be allocated to the Members in the amounts and of such character as determined according to Treasury Regulation Section 1.704-2(i)(4). This Section 8.01(b)(iv) is intended to be a minimum gain chargeback provision that complies with the requirements of Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted in a manner consistent therewith.

(v) Minimum Gain Chargeback. Nonrecourse deductions (as determined according to Treasury Regulation Section 1.704-2(b)(1)) for any Tax Year shall be allocated to each Member ratably among such Members based upon the manner in which Profits (determined without regard to such non-recourse deductions) are allocated among the Members for such Tax Year. Except as otherwise provided in Section 8.01(b)(iv) , if there is a net decrease in the Minimum Gain during any Taxable Year, each Member shall be allocated Profits for such Tax Year (and, if necessary, for subsequent Tax Years) in the amounts and of such character as determined according to Treasury Regulation Section 1.704-2(f). This Section 8.01(b)(v) is intended to be a Minimum Gain chargeback provision that complies with the requirements of Treasury Regulation Section 1.704-2(f), and shall be interpreted in a manner consistent therewith.

(vi) Qualified Income Offset. If any Member that unexpectedly receives an adjustment, allocation or distribution described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6) has an Adjusted Capital Account Deficit as of the end of any Tax Year, computed after the application of Section 8.01 but before the application of this Section 8.01(b)(vi), then items of Company income and gain for such Tax Year shall be allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the Adjusted Capital Account Deficit of the Member as soon as possible (and, if two or more Members have such deficits, in proportion to their deficits). This Section 8.01(b)(vi) is intended to be a qualified income offset provision as described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted in a manner consistent therewith.

(vii) Allocation of Certain Profits and Losses. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Section 734(b) of the Code or Section 743(b) of the Code is required pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in accordance with their interests in the event Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such distribution was made in the event Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.

(viii) The allocations set forth in (iii)-(vi) of this Section 8.01(b) (the “ Regulatory Allocations ”) are intended to comply with certain requirements of Sections 1.704-1(b) and 1.704-2 of the Treasury Regulations. The Regulatory Allocations may not be consistent with the manner in which the Members intend to allocate Profit and Loss of the Company or make the Company’s distributions. Accordingly, notwithstanding the other provisions of this Section 8.01 , but subject to the Regulatory Allocations, income, gain, deduction, and loss shall be reallocated among the Members so as to eliminate the effect of the Regulatory Allocations and thereby cause the respective Capital Accounts of the Members to be in the amounts (or as close thereto as possible) they would have been if Profit and Loss (and such other items of income, gain, deduction and loss) had been allocated without reference to the Regulatory Allocations. In general, the Members anticipate that this will be accomplished by specially allocating other Profit and Loss (and such other items of income, gain, deduction and loss) among the Members so that the net amount of the Regulatory Allocations and such special allocations to each such Member is zero.

(i) Allocations Generally. The income, gains, losses and deductions of the Company will be allocated for federal, state and local income tax purposes among the Members in accordance with the allocation of such income, gains, losses, and deductions among the Members for computing their Capital Accounts pursuant to Section 8.01(a) and Section 8.01(b); except that if any such allocation is not permitted by the Code or other applicable Law, the Company’s income, gains, losses and deductions will be allocated among the Members so as to reflect as nearly as possible the allocation set forth herein in computing their Capital Accounts.

(ii) Code Section 704(c) Allocations. Items of the Company’s taxable income, gain, loss and deduction with respect to any property contributed to the capital of the Company shall be allocated among the Members in accordance with Section 704(c) of the Code so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its Gross Asset Value. In addition, if the Gross Asset Value of any asset of the Company is adjusted pursuant to the requirements of

Treasury Regulation Section 1.704-1(b)(2)(iv)(e) or (f), then subsequent allocations of items of taxable income, gain, loss and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its Gross Asset Value in the same manner as under Section 704(c) of the Code. The Board shall determine all allocations pursuant to this Section 8.01(c)(ii) using the “traditional method” under Treasury Regulation Section 1.704-3(b).

(iii) Allocation of Tax Credits, Tax Credit Recapture, Etc. Tax credits, tax credit recapture, and any items related thereto shall be allocated to the Members according to their interests in such items as determined by the Board, taking into account the principles of Treasury Regulation Section 1.704-1(b)(4)(ii).

(iv) Effect of Allocations. Allocations pursuant to this Section 8.01(c) are solely for purposes of federal, state and local taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of Profit, Loss, other items or distributions pursuant to any provision of this Agreement.

Section 8.02. Distributions.

(a) Tax Distributions.

(i) To the fullest extent permitted by Law, the Company shall distribute to the Members with respect to each Estimated Tax Distribution Period of each Tax Year, no later than five (5) days prior to the Estimated Tax Distribution Date that corresponds to such Estimated Tax Distribution Period, an amount of cash equal to the Estimated Tax Distribution Amount with respect to such Estimated Tax Distribution Period; provided that if a Member’s Annual Tax Distribution Amount for a Tax Year exceeds the total of the Estimated Tax Distribution Amounts for such Member with respect to all Estimated Tax Distribution Periods of such Tax Year, the Company shall, within 20 days after providing Schedules K-1 to the Members pursuant to Section 7.04(b)(ii) (and in no event later than five (5) days prior to the unextended due date for any Member’s U.S. federal income tax return), distribute to such Member an amount of cash equal to such excess.

(ii) If a Member has a Tax Distribution Deficit in respect of any Estimated Tax Distribution Period or any Tax Year, then promptly upon receipt by the Company from such Member of such documentation or other information as the Board determines in its reasonable discretion is sufficient to demonstrate the existence and amount of such Tax Distribution Deficit, the Company shall distribute to such Member an amount of cash such that, after giving effect to such distribution, such Member’s Tax Distribution Deficit is reduced to zero.

(iii) No later than ten (10) Business Days following an Adjustment Event, the Company shall distribute to each Member such Member’s Adjustment Tax Distribution Amount in respect of such Adjustment Event; provided , that if such Adjustment Event occurs after a Qualified MCK Exit, the amount distributed to each of Echo, on the one hand, and to the MCK Members and their Permitted Transferees as a group, on the other hand, pursuant to this Section 8.02(a)(iii) shall be at least equal to Echo’s, or the MCK Members’ and their Permitted Transferees’, on the other hand, Correlative Adjustment Amount for such Adjustment Event.

(iv) No later than ten (10) Business Days following each of (A) the date on which the Company files its original IRS Form 1065 for any Tax Year and (B) the extended due date for Echo’s U.S. federal income tax return for such Tax Year, the Company shall make a distribution to the Members, pro rata to the Members’ respective Pro Rata Tax Distribution Amounts. Such distribution shall not exceed the lesser of (x) the amount of cash available for distribution by the Company (as determined by the Board in its reasonable discretion and, for the avoidance of doubt, taking into account reasonably foreseeable obligations of the Company under Section 8.02(a)(i) ) (“Available Cash”) and (y) the amount needed to distribute to each Member such Member’s Pro Rata Tax Distribution Amount.

(v) Immediately following any distribution under Section 8.02(a)(iii) , the Company shall make a distribution to the Members, pro rata to the Members’ respective Adjustment Pro Rata Tax Distribution Amounts in respect of the Adjustment Event to which the distribution under Section 8.02(a)(iii) related. Such distribution shall not exceed the lesser of (x) the amount of Available Cash and (y) the amount needed to distribute to each Member such Member’s Adjustment Pro Rata Tax Distribution Amount.

(vi) If the Company does not have sufficient Available Cash (as determined by the Board in its reasonable discretion) to make the distributions described in Section 8.02(a)(i) , Section 8.02(a)(ii) or Section 8.02(a)(iii) to all Members entitled to distributions thereunder, such distributions shall be made first to Echo until Echo has received the full amount of distributions to which it is entitled thereunder, and then to all other Members pro rata to the amounts of distributions to which they are entitled thereunder.

(vii) If the Company fails to distribute an amount to which a Member is entitled under this Section 8.02(a) due to the Available Cash limitations in Section 8.02(a)(iv) , Section 8.02(a)(v) or Section 8.02(a)(vi) , the amount not so distributed shall be added to the Tax Distribution Arrearage for such Member, without duplication of amounts previously added to the Tax Distribution Arrearage for such Member.

(viii) A Member’s Tax Distribution Arrearage shall be compounded semiannually at the Tax Distribution Arrearage Return Rate.

(ix) As and to the extent that the Company has Available Cash (as determined by the Board in its reasonable discretion), until all Members’ Tax Distribution Arrearages are reduced to zero, the Company shall distribute such amount of cash to the Members pro rata to their respective Tax Distribution Arrearages, and each Member’s Tax Distribution Arrearage shall be reduced by the amount so distributed to such Member; provided that upon the occurrence of a Conversion Event with respect to one or more Units held by a Member or one of its Permitted Transferees, unless such Person waives the application of this proviso in respect of such Conversion Event by delivering notice of such waiver to the Company in writing prior to the occurrence of such Conversion Event, (x) the Company shall issue to such Person a number of new Units equal to the Conversion Number for such Conversion Event and (y) upon such issuance, the Tax Distribution Arrearage for such Person shall be reduced by the Conversion Amount for such Conversion Event.

(b) Any distributions to the Members other than the distributions specified in Section 8.02(a) , shall be made only if adopted by the Board as a dividend policy of the Company, subject to the rights of the Initial Members under Section 5.05 to approve any such distribution; provided , that the Board may authorize that cash be distributed to Echo (which distribution shall be made without pro rata distributions to the other Members) in exchange for the redemption, repurchase or other acquisition of Units held by Echo, where the redemption proceeds are to be used by Echo to acquire its outstanding Echo Shares (or other Equity Securities of Echo convertible, exchangeable into, exercisable for Echo Shares) in accordance with Section 3.03(c) ; and provided further that, to the extent any distribution is made to the Members, other than the distributions specified in Section 8.02(a) , the Board may authorize that an additional amount be set aside in respect of any Units that would be issued in accordance with Section 3.03(c) in respect of any Unvested Echo Shares (the “ Escrow Amounts ”) to be distributed to Echo (which distribution shall be made without pro rata distribution to the other Members) at the time such Equity Security of Echo ceases to be an Unvested Echo Share. To the extent that such Unvested Echo Share shall be forfeited by or repurchased from the holder without having ceased to be an Unvested Echo Share, such Escrowed Amounts corresponding to such forfeited Unvested Escrow Share shall revert to the Company.

(c) The Company is authorized to withhold from payments and distributions, or with respect to allocations to the Members, any amounts required to be withheld under Law. All amounts withheld with respect to a Member shall be treated as if such amounts were distributed to such Member under this Agreement. Provided the Company determined the amount of any required withholding reasonably and in good faith, the Company shall not be liable for any over-withholding in respect of any Member’s Units, and, in the event of any such over-withholding, a Member’s sole recourse shall be to apply for a refund from the appropriate Governmental Authority. The Company shall cooperate with a Member in the preparation and filing of such refund claims.

(d) No Member has any right to demand or receive property from the Company other than cash.

(e) Notwithstanding anything in this Agreement to the contrary: (A) no distribution shall be made in violation of the Act or other applicable Law; and (B) except as provided in Section 8.02(a) or Section 13.05 , all amounts distributed to the Members in respect of their equity interests in the Company shall be distributed to them pro rata in accordance with their respective Membership Percentages.

(f) The Members hereby consent and agree that, except as expressly provided herein or required by applicable Law, no Member shall have an obligation to return cash or other property paid or distributed to such Member under Section 18-502(b) of the Act or otherwise.

ARTICLE 9

T RANSFER R ESTRICTIONS

Section 9.01. Restrictions on Transfers.

(a) Until the consummation of a Qualified IPO, no Member may Transfer, or permit or suffer to be Transferred, all or any part of its Units; provided , that (i) any Member may Transfer Units if such Transfer is approved in writing by the Initial Members in their sole discretion, (ii) any Member may Transfer Units if such Transfer is made by a Member to its Permitted Transferees (in the case of a natural Person holding Echo Shares, solely for bona fide estate planning purposes), (iii) any Member may Transfer Units if such Transfer is made pursuant to equity adjustments set forth in Section 2.03, Section 6.03 or Section 8.06 of the Contribution Agreement, (iv) any Member may Transfer Units if such Transfer is in accordance with the provisions of Section 9.02 or Section 9.03 , as applicable; provided further that in the event a transferee ceases to be a Permitted Transferee of the transferor, the transferee shall promptly Transfer such Units back to the Member or to another Permitted Transferee of the Member.

(b) Following consummation of a Qualified IPO, no Member may Transfer, or permit or suffer to be Transferred, all or any part of its Units, except for the following Transfers:

(i) Transfers approved in writing by each of the Initial Members in their sole discretion;

(ii) Transfers by a Member to its Permitted Transferees (in the case of a natural Person holding Echo Shares, solely for bona fide estate planning purposes); provided , that in the event a transferee ceases to be a Permitted Transferee of the transferor, the transferee shall promptly Transfer such Units back to the Member or to another Permitted Transferee of the Member;

(iii) Transfers made pursuant to equity adjustments set forth in Section 2.03, Section 6.03 and Section 8.06 of the Contribution Agreement;

(iv) Transfers by the MCK Members (or their Permitted Transferees) during the MCK Exit Window (pursuant to a Qualified MCK Exit made in compliance with Section 10.05 or in compliance with the Registration Rights Agreement);

(v) Transfers by the Echo Shareholders (or their Permitted Transferees) of shares of Echo common stock (“ Echo Shares ”) in a Qualified Echo Sale made in compliance with Section 10.03 and the Registration Rights Agreement during the First Echo Sale Window or the Second Echo Sale Window;

(vi) Transfers by the MCK Members (or their Permitted Transferees) during the First Echo Sale Window or the Second Echo Sale Window pursuant to the exercise of Tag-Along Rights (as defined in, and subject to, the Registration Rights Agreement) or by the Echo Shareholders (or their Permitted Transferees) during the MCK Exit Window pursuant to the exercise of Tag-Along Rights or by MCK Members (or their Permitted Transferees) or Echo Shareholders (or their Permitted Transferees) pursuant to the exercise of registration rights under Section 2.2 of the Registration Rights Agreement;

(vii) Transfers (including pursuant to Exchanges pursuant to Section 11.04(e) or pursuant to the exercise of registration rights pursuant to the Registration Rights Agreement or in any other manner) by the Echo Shareholders (or their Permitted Transferees) and the MCK Members (or their Permitted Transferees) following expiration or termination of (i) the lockup period required by the underwriters in connection with the consummation of a Qualified IPO consummated after the IPO Preference Period or (ii) the Post-Echo Sale Lockup relating to the Second Echo Sale Window (or, if there is no underwriter lockup period in effect upon the expiration or termination of the Second Echo Sale Window, then upon the expiration or termination of the Second Echo Sale Window);

(viii) Transfers by the Echo Shareholders (or their Permitted Transferees) of Echo Shares after a period of 90 days following the consummation of a Qualified MCK Exit pursuant to the exercise of registration rights pursuant to the Registration Rights Agreement or in any other manner;

(ix) Transfers by any stockholder of Echo (other than the Sponsors (as defined in the Echo Shareholders Agreement) and any Other Investors (as defined in the Echo Shareholders Agreement) Affiliated with such Sponsors, MCK, the MCK Members or any of their respective Affiliates or Permitted Transferees) of Echo Shares at any time after a Qualified IPO;

(x) Transfers by Echo to MCK or its Affiliates pursuant to Section 10.06(e) .

(c) Notwithstanding anything to the contrary herein, (i) no Transfer shall be made except (1) in compliance with all applicable Laws, including the Securities Act, and (2) if all necessary regulatory approvals and third-party approvals, including any required approvals under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, shall have been obtained in respect of such Transfer and (ii) neither the MCK Members nor their Permitted Transferees shall be permitted to Transfer Units pursuant to Exchanges if it would result in MCK being required to consolidate the Company or Echo under Financial Accounting Standards Board Codification Topic 810, Consolidation (or any comparable successor standard).

(d) Notwithstanding anything to the contrary herein, no Transfers under this Agreement by Echo or the Echo Shareholders (with respect to any beneficial ownership in Echo) shall be permitted if (i) prior to the earlier to occur of the consummation of a Qualified MCK Exit and the expiration or termination of the MCK Exit Window, such Transfer would result in the Echo Shareholders (together with their Permitted Transferees who are subject to Section 3.4(b)(ii) of the Echo Shareholders Agreement) holding, directly or indirectly, less than 50.1% of any class and/or series of voting securities of Echo on a fully diluted basis (taking into account all securities of Echo convertible, exchangeable into or exercisable for Echo Shares) or (ii) prior to the earlier to occur of the consummation of a Qualified MCK Exit and the third (3 ^th ) anniversary of the Closing, the Membership Percentage of Echo falls to less than 17.5% (calculated on a fully-diluted basis taking into account any Units issuable upon (including pursuant to Section 3.03 ) the conversion, exercise, exchange, settlement or vesting of Echo Shares or other Equity Securities of Echo and, without duplication, any Equity Securities of the Company, Echo or any of their Subsidiaries authorized for issuance under any Approved Plan (each of the thresholds under (i) and (ii), the “ Echo Minimum Ownership ”).

Section 9.02. Right of First Offer.

(a) If, at any time after the expiry of the IPO Preference Period and prior to the consummation of a Qualified IPO or a Company Sale, (i) any Member desires to Transfer any Units to any third party (including through a sale of Echo Shares) or (ii) any of the MCK Members or Echo desires to initiate a sale or auction process to Transfer any Units (or Echo Shares) to a third party (whether or not such Transfer is a Company Sale) (a “ ROFO Sale ”, and any such Member, for the purposes of this Section 9.02 and Section 9.03 , the “ Offeror ”), then such Offeror shall give notice (an “ Initial Offer Notice ”) to each of the MCK Members and Echo (for the purposes of this Section 9.02 , the “ Significant Members ”) that such Offeror desires to make a ROFO Sale and that sets forth (i) the number of Units (or the number of Units equivalent to the Echo Shares (calculated based on the Echo Ratio)) proposed to be Transferred by the Offeror (the “ Offered Units ”), (ii) the price per Offered Unit (the value of any non-cash consideration being equal to the Fair Market Value of such non-cash consideration) at which such Offeror proposes to be paid for such Offered Units (the “ Offer Price ”), (iii) whether such ROFO Sale would be a Drag-Along Sale, and (iv) any other material terms and conditions sought by the Offeror.

(b) The giving of an Initial Offer Notice to each non-Offeror Significant Member shall constitute an offer (the “ Initial Offer ”) by such Offeror to Transfer the Offered Units to each such Significant Member for cash at the Offer Price and on the terms set forth in the Initial Offer Notice. Each Significant Member receiving such Initial Offer Notice shall have a 30-day period (the “ Initial Offer Period ”) in which to accept such Initial Offer as to all of such Significant Member’s Offer Pro Rata Portion of the Offered Units by giving a notice of acceptance to such Offeror (together with a copy thereof to the Company) prior to the expiration of such Initial Offer Period. For purposes of this Section 9.02 only, “ Offer Pro Rata Portion ” means, with respect to a non-Offeror Significant Member, that fraction that results from dividing (i) the Membership Percentage of such non-Offeror Significant Member by (ii) the Membership Percentage of all non-Offeror Significant Members.

(c) If one or more Significant Members accepts the Initial Offer, but any one or more Significant Members declines (or is deemed to decline) such Initial Offer, the Offeror shall not be required to sell any Offered Units accepted pursuant to the Initial Offer, but shall, within five (5) Business Days of the expiration of the Initial Offer Period, provide notice to the other Significant Members (if applicable) that did accept the Initial Offer, informing them that they have the right to increase the number of Offered Units that they accepted pursuant to the Initial Offer to up to the number of Offered Units not subscribed for pursuant to the Initial Offer (the “ Second Offer ”). The accepting Significant Members shall then have five (5) Business Days (the “ Second Offer Period ”) in which to accept such Second Offer, by giving notice of acceptance to the Offeror prior to the expiration of such period (together with a copy thereof to the Company), as to all of the portion of the Offered Units not accepted pursuant to the Initial Offer. If more than one Significant Member accepts such Second Offer, then the Offered Units included in such Second Offer shall be allocated pro rata among the Significant Members accepting the Second Offer based on their relative Membership Percentages.

(d) If any non-Offeror Significant Members fails to notify the Offeror or the Company prior to the expiration of the Initial Offer Period or the Second Offer Period, as applicable, referred to above, it shall be deemed to have declined the Initial Offer or Second Offer, as applicable.

(e) If the non-Offeror Significant Members elect to purchase all the Offered Units, the Significant Members that have accepted the Initial Offer and/or the Second Offer shall purchase and pay, by wire transfer of immediately available funds to an account designated by Offeror, for all Offered Units within twenty (20) Business Days after the date on which the offer for all such Offered Units has been accepted; provided , that if the Transfer of such Offered Units is subject to any prior regulatory approval, the time period during which such Transfer may be consummated shall be extended until the expiration of five (5) Business Days after all such approvals shall have been received, but in no event shall such period be extended for more than an additional sixty (60) days; provided , that the time period may be further extended by sixty (60) days to complete any required financing; provided further , that, to the extent Echo is the Offeror, the holders of Echo Shares will be entitled, in the sole discretion of Echo, to substitute for any Unit to be Transferred by Echo in such ROFO Sale a number of Echo Shares equal to the Echo Ratio for the same consideration that would have otherwise been payable in respect of such Unit.

(f) If the non-Offeror Significant Members elect to purchase all the Offered Units, no Offeror shall be required to make representations or warranties in connection with such sale of Offered Units (other than with respect to title to the Offered Units being sold and customary due authority, no conflict and enforceability representations and warranties relating only to such Offerors which shall be made individually by such Offerors on a several basis).

(g) Upon the earlier to occur of (i) full rejection of the Initial Offer and, if applicable, the Second Offer by all recipients thereof, (ii) the expiration of the Second Offer Period without Significant Members electing, in the aggregate, to purchase all of the Offered Units, and (iii) the failure to obtain any required consent or regulatory approval for the purchase of all of the Offered Units by the Significant Members within 80 days of full acceptance of the Initial Offer or, if applicable, the Second Offer, the Offeror shall have a 120-day period (or a 365 day period in the case of a Drag-Along Sale) (the “ Marketing Period ”) during which to effect a Transfer of any or all of the Offered Units on substantially the same or more favorable (as to the Offeror) terms and conditions as were set forth in the Initial Offer Notice at a price not less than the Offer Price; provided , that if the Transfer is subject to regulatory approval, the Marketing Period shall be extended until the expiration of five (5) Business Days after all such approvals shall have been received, but in no event shall such period be extended for more than an additional sixty (60) days. If the Offeror does not consummate the Transfer of the Offered Units in accordance with the foregoing time limitations, then the right of the Offeror to effect the Transfer of such Offered Units pursuant to this Section 9.02(g) shall terminate and the Offeror shall again comply with the procedures set forth in this Section 9.02 with respect to any proposed Transfer to a third party.

(h) The provisions of this Section 9.02 shall not apply to any Transfer of Units by a Member pursuant to Sections 9.01(a)(i) , 9.01(a)(ii) or 9.01(a)(iii) .

Section 9.03. Drag-Along Right.

(a) If at any time during a Marketing Period, the Offerors (for the purposes of this Section 9.03 , the “ Drag-Along Sellers ”) enter into a binding, definitive agreement complying with the terms of this Section 9.03 to Transfer all or substantially all of the Units (or Echo Shares) then outstanding (whether or not such Units (or Echo Shares) are held by the Drag-Along Sellers) to a third party (the “ Drag-Along Transferee ”) in connection with a Company Sale that was treated as a ROFO Sale and for which the Drag-Along Sellers had included in the Initial Offer Notice a statement that such ROFO Sale would be a Drag-Along Sale (whether structured as a sale of Units (or Echo Shares), merger or other business combination) (a “ Drag-Along Sale ”), the Drag-Along Sellers may at their option require each other Member (each, a “ Dragged Member ”) to, (x) Transfer all (but not less than all) Units held by such Member (or Echo Shares, which shall include, for all purposes of this Section 9.03 , any Equity Securities of Echo convertible, exchangeable into or exercisable for Echo Shares in connection with or upon consummation of such Drag-Along Sale as set forth in Section 9.03(g) ), in the case Echo is the Dragged Member to the Drag-Along Transferee for the same consideration (based on the pro rata Membership Percentages of the Members) and, (y) (1) vote such Dragged Member’s Units (and Echo Shares, in the case Echo is the Dragged Member) in favor thereof, and otherwise consent to and raise no objection to such Drag-Along Sale, and waive any dissenters’ rights, appraisal rights or similar rights that such Dragged Member may have in connection therewith and (2) be a party to the definitive agreement(s) governing the terms and conditions of such Drag-Along Sale on the same terms and conditions as the Drag-Along Sellers (except as provided in Section 9.03(c) ); provided , that to the extent Echo is the Dragged Member, the holders of Echo Shares will be entitled, in the sole discretion of Echo, to substitute for the Units to be Transferred by Echo in such Drag-Along Sale all of Echo’s capital stock for the same consideration that would have otherwise been payable in respect of such Units.

(b) The Drag-Along Sellers shall provide notice of such Drag-Along Sale to the Dragged Members (a “ Drag-Along Sale Notice ”) not later than fifteen (15) days prior to the consummation of the proposed Drag-Along Sale. The Drag-Along Sale Notice shall identify the Drag-Along Transferee, the consideration proposed to be paid in connection with the Drag-Along Sale (the “ Drag-Along Sale Price ”) and all other material terms and conditions of the Drag-Along Sale, which shall be no less favorable in the aggregate to the Dragged Members than as set forth in the Initial Offer Notice. The Drag-Along Sellers will promptly notify the Dragged Members in writing in connection with any change in the material terms and conditions of the Drag-Along Sale; provided , that without complying again with the procedures set forth in Section 9.02 with respect to any proposed Drag-Along Sale, such modified terms shall be no less favorable in the aggregate to the Dragged Members (or more favorable to the Drag-Along Sellers) then the terms set forth in the Initial Offer Notice.

(c) The Dragged Members shall be required to participate in the Drag-Along Sale on the same terms and conditions as the Drag-Along Sellers as set forth in the Drag-Along Sale Notice by entering into the agreement(s) governing the terms and conditions of such Drag-Along Sale (the terms and conditions of which shall be consistent with those provided in such Drag-Along Sale Notice as may be modified from time to time with notice as provided herein); provided , that (i) the Dragged Members shall not be required to agree to any non-compete, non-solicit, no hire or similar post-closing covenant that restricts the Dragged Members’ business and operations (but

shall, for the avoidance of doubt, be required to agree to customary confidentiality and further assurances covenants that do not restrict the Dragged Members’ business or operations in any material respect), (ii) the Dragged Members’ indemnification obligations in respect of the Company’s representations and warranties shall be (A) joint and several with each other and the Drag-Along Sellers, and (B) pro rata based on such Dragged Member’s Membership Percentage, (iii) the Dragged Members shall be required to bear their pro rata share (based on the aggregate consideration received in respect of the Units (or Unit equivalents based on the Echo Ratio) Transferred by such Member) of any escrow, holdback or adjustment in purchase price and any reasonable out-of-pocket transaction expenses incurred in connection with the Drag-Along Sale ( provided , that the Dragged Members and the Company shall only be required to bear the reasonable expenses of one counsel for the Dragged Members), to the extent such expenses are incurred for the benefit of the Members participating in the Drag-Along Sale, and are not otherwise paid by the Company or the purchaser and the Drag-Along Sale is consummated; (iv) (A) Dragged Members will be required to make individual representations, warranties, covenants and other agreements as to the unencumbered title to its Units (or Echo Shares) and the power, authority and legal right to Transfer such Units (or Echo Shares) and the absence of any adverse claim with respect to such Units and (B) be liable as to such representations, warranties, covenants and other agreements; (v) Echo shall not be required to participate in such Drag-Along Sale if such transaction involves, or could reasonably be expected to be treated in whole or in part for U.S. federal income tax purposes as, a disposition by Echo of any of its Equity Securities in the Company and (vi) Echo, on behalf of the Echo Shareholders, may substitute all of the Echo Shares in lieu of Units as described in Section 9.03(a) ; provided further that, no Dragged Member’s liability in connection with a Drag-Along Sale may exceed the proceeds payable to such Dragged Member in the Drag-Along Sale.

(d) In a Drag-Along Sale, the Dragged Members shall be required to tender their Units (or Echo Shares) as set forth below. The price payable in a Drag-Along Sale shall be the Drag-Along Sale Price. If the consideration being paid in such Drag-Along Sale includes any non-cash consideration then, at the election of the Drag-Along Sellers (or with respect to itself, Echo or the MCK Members, to the extent it is a Dragged Member), the Dragged Members shall receive either (i) their pro rata share of such non-cash consideration or (ii) cash (which cash may be paid by the Drag-Along Transferee or by the Drag-Along Sellers) in an amount equal to the Fair Market Value of their pro rata share of such non-cash consideration (in each case based on the aggregate consideration received by each of the Drag-Along Sellers in such Drag-Along Sale). Not later than five (5) Business Days after the date of the Drag-Along Sale Notice provided in connection with a Drag-Along Sale, each Dragged Member shall deliver to a representative of the Drag-Along Sellers designated in the Drag-Along Sale Notice (x) a limited power-of-attorney authorizing the Drag-Along Sellers or their representative to Transfer such Dragged Member’s Units (or Echo Shares) in accordance with the terms of this Agreement ( provided , that H&F shall not be obligated to deliver any power-of-attorney), the Drag-Along Sale Notice and the agreement(s) governing the terms and conditions of the Drag-Along Sale and (y) wire transfer or other instructions for payment or delivery of the consideration to be received by the Dragged Members in such Drag-Along Sale.

(e) Within one Business Day following the consummation of a Drag-Along Sale, the Drag-Along Sellers shall give notice thereof to the Dragged Members and shall furnish such other evidence of the completion and time of completion of such Transfer and the terms thereof as may be reasonably requested by such Dragged Member. In addition, within one Business Day following

the consummation of a Drag-Along Sale, the Drag-Along Sellers shall remit to each Dragged Member the total consideration (any cash portion of which is to be paid by wire transfer in accordance with each Dragged Member’s wire transfer instructions) for the Units (or Echo Shares) of such Dragged Member Transferred pursuant hereto.

(f) Notwithstanding anything contained in this Section 9.03 , there shall be no liability on the part of the Drag-Along Sellers to the Dragged Members (other than the obligation to return the limited power-of-attorney received by the Drag-Along Sellers (if applicable)) or any other Person if the Transfer of Units (or Echo Shares) pursuant to this Section 9.03 is not consummated for whatever reason, regardless of whether the Drag-Along Sellers have delivered a Drag-Along Sale Notice.

(g) In the event of any Drag-Along Sale, each holder of Equity Securities of Echo will be deemed to have exercised, converted or exchanged any vested and exercisable options, warrants or convertible securities immediately prior to the consummation of the Drag-Along Sale to the extent necessary to sell Echo Shares to the Drag-Along Buyer (the “ Drag-Along Buyer ”), except to the extent permitted under the terms of any such option, warrant or convertible security and agreed to by the Drag-Along Buyer. All Units issuable upon such exercise, conversion or exchange pursuant to Section 3.03(c) will be deemed issued and shall be included as “Echo Shares” for all purposes of this Section 9.03 . In the event that options, warrants or convertible securities are deemed exercised pursuant to the preceding sentence, payment of any purchase or exercise price, if applicable, and minimum statutory withholding tax amount, if any, shall be satisfied through payment of Echo Shares otherwise deliverable upon such exercise, conversion, or exchange. If any holder of Equity Securities of Echo sells options, warrants or convertible securities in any Drag-Along Sale, such holder of Equity Securities of Echo shall receive in exchange for such options, warrants or convertible securities consideration equal to the amount (if greater than zero) determined by multiplying (a) the same purchase price per share for Echo Shares as those Units sold to the Drag-Along Buyer and specified in the Drag-Along Sale Notice in such Transfer less the exercise, exchange or conversion price, if any, per share of such option, warrant or convertible security by (b) the number of Echo Shares issuable upon exercise, conversion or exchange of such option, warrant or convertible security (to the extent exercisable, convertible or exchangeable at the time of such Transfer), subject to reduction for any tax or other amounts required to be withheld under applicable law.

(h) The provisions of this Section 9.03 shall terminate upon the consummation of a Qualified IPO.

Section 9.04. Echo Stock Sales; No Asset or Unit Sales. Notwithstanding anything to the contrary in this Agreement, including but not limited to this Article 9 and Article 10 , in any circumstances prior to the occurrence of a Qualified IPO in which Echo is entitled, permitted or required to Transfer Units (other than pursuant to Section 2.03 , Section 6.03 or Section 8.06 of the Contribution Agreement), including, but not limited to, pursuant to Section 9.02 or Section 9.03 , Echo may require the proposed transferee and the other Members to structure such Transfer in a manner such that the Echo Shareholders transfer their Echo Shares (subject to Section 9.03(g) ) in lieu of the Transfer by Echo of its Units to the proposed transferee. If the Echo Shareholders transfer their Echo Shares as described in this Section 9.04 , each Echo Shareholder shall be entitled to substitute for any Unit a number of Echo Shares equal to the Echo Ratio for the same consideration that would have otherwise been payable in respect of such Unit.

Section 9.05. Valuation of Units.

(a) If the Members seek to determine the Fair Market Value of any Units (prior to a Qualified IPO) pursuant to the provisions of this Agreement referencing this Section 9.05 , then Echo ( provided , that H&F shall have the right to negotiate Fair Market Value on behalf of Echo in the event that (i) the Sponsor Shareholders are not participating in a Transfer giving rise to such Fair Market Value determination or (ii) H&F shall have the right to receive all cash or marketable securities as consideration in the Transfer giving rise to such Fair Market Value determination) and the MCK Members shall negotiate in good faith for fifteen (15) days to determine the Fair Market Value of such Units, as applicable. If Echo and the MCK Members are not able to agree on the applicable Fair Market Value prior to such 15 ^th day, each shall select an Appraiser within five (5) Business Days thereafter. Within thirty (30) days after the selection of such Appraisers, each Appraiser so selected shall independently determine the Fair Market Value of such Units as of the date of notice of any sale or issuance requiring such determination of Fair Market Value (each, an “ Initial Appraised Value ”). If the two Initial Appraised Values differ from each other by 10% or less (based on the lower Initial Appraised Value), then the Fair Market Value of such Units shall be deemed to be the average of such Initial Appraised Values. If the two Initial Appraised Values differ from each other by more than 10% (based on the lower Initial Appraised Value), then the two initial Appraisers shall, within five (5) Business Days following such calculation, jointly select a third Appraiser. Within twenty one (21) days after the selection of such third Appraiser, such third Appraiser shall determine the Fair Market Value of such Units as of the date of notice of any sale or issuance requiring such determination of Fair Market Value, as applicable (the “ Subsequent Appraised Value ”), which Subsequent Appraised Value shall not be more than the greater of the two Initial Appraised Values nor less than the lower of the two Initial Appraised Values. If a third Appraiser is selected pursuant to this Section 9.05 , the Fair Market Value of such Units shall be deemed to be the Subsequent Appraised Value.

(b) The Company shall provide each of the Appraisers with: (i) a copy of the pertinent sections of this Agreement, (ii) the Company’s most recent consolidated financial statements; (iii) financial forecasts (including documentation of the key assumptions used in such forecasts) for the Company and its Subsidiaries on a consolidated basis; and (iv) such other information as such Appraiser may reasonably request in connection with its appraisal. The Company shall provide each Appraiser with reasonable access to the Company’s management to discuss the financial information described in the preceding sub-clauses (ii) and (iii). In the event that the Company fails to comply with the obligations set forth in this Section 9.05(b) during the first fifteen (15) days of any applicable determination in this Section 9.05(b) , such period shall be tolled until the Company complies with the obligations set forth in this Section 9.05(b) .

(c) If the Members seek to determine the Fair Market Value of any Units following a Qualified IPO, then the Fair Market Value of such Units shall be determined by the Board based on the Echo Ratio and the arithmetic average of the VWAP of the Echo Shares over a thirty (30) consecutive trading day period immediately prior to the relevant determination date (or such shorter period of Trading Days following the date of determination and the occurrence of a Qualified IPO). “ VWAP ” means, for each of the thirty (30) consecutive trading days during the

30-day averaging period, the per share volume-weighted average price of the Echo Shares as displayed by Bloomberg (or its equivalent successor) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such trading day (or if such volume-weighted average price is unavailable, the market value of one share of the Echo Shares on such trading day determined, using a volume weighted average method, by a nationally recognized independent investment banking firm retained for this purpose by the Board). The volume weighted average price used for purposes of the VWAP will be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours.

Section 9.06. Additional Members.

(a) In connection with a Transfer of Units, each Person who becomes a record holder of Units in accordance with, and as permitted by, the terms of this Agreement, in each case who is not already a Member, shall, in addition to complying with the requirements of the last sentence of Section 14.06 , execute and deliver this Agreement or a counterpart of this Agreement and agree in writing to be bound by the terms and conditions of this Agreement that were applicable to the Transferor (including the restrictions on Transfer contained in this Article 9 ), and shall thereupon be admitted as an additional Member of the Company (an “ Additional Member ”).

(b) Each Person who is issued new Units or other Equity Securities of the Company in accordance with the terms of this Agreement and who is not already a Member shall execute and deliver this Agreement or a counterpart of this Agreement and agree in writing to be bound by the terms and conditions of this Agreement (including the restrictions on Transfer contained in this Article 9 ), and shall thereupon be admitted as an Additional Member.

(c) A Transferee of Units who is admitted as an Additional Member accepts, ratifies and agrees to be bound by all actions duly taken pursuant to the terms and provisions of this Agreement by the Company on or prior to the date on which such Transferee was admitted as an Additional Member and, without limiting the generality of the foregoing, specifically ratifies and approves all agreements and other instruments that may have been executed and delivered on behalf of the Company on or prior to such date that are in force and effect on such date.

(d) Each Additional Member shall be named as a Member on Exhibit A . Unless and until admitted as an Additional Member, a Transferee of any Units, or a recipient of any newly issued Units or other Equity Securities of the Company, shall have no powers, rights or privileges of a Member of the Company.

(e) Following any Transfer of record ownership of Units in accordance with this Article 9 , the Transferee thereof shall be treated as having made all of the Capital Contributions in respect of, and received all of the distributions received in respect of, such Units on or prior to the date of such Transfer, and shall receive allocations and distributions in respect of such Units as if such Transferee had been a Member from the date of such Transfer. The distributive share of the Company’s income, gains, losses, deductions, credits and other items of a Member whose interest is disposed of, in whole or in part, shall be determined by the Board using any permissible method under Section 706 of the Code and the Treasury Regulations thereunder.

(f) The Company shall maintain books for the purpose of registering the Transfer of Units. Upon a Transfer of any record ownership of Units, the Transferor thereof shall notify the Company so that such Transfer may be registered in the books of the Company. A Transfer of any record ownership of Units shall be effective upon registration of the Transfer in the books of the Company.

Section 9.07. Termination of Member Status. Any Member that Transfers all of its, and owns no, Units in the Company shall immediately cease to be a Member and shall no longer be a party to this Agreement (in its capacity as a Member) and Exhibit A shall be updated to eliminate such Person; provided , that such Member (a) shall not thereby be relieved of liability for any breach of this Agreement prior to such time or from any obligation under this Agreement other than its capacity as a Member; (b) shall retain any rights with respect to any breach of this Agreement by any other Person prior to such time; (c) shall retain the right to indemnification in accordance with the terms hereof; and (d) shall not thereby be relieved of any of its obligations under Section 7.04(h) and this Article 9 .

Section 9.08. Void Transfers. To the greatest extent permitted by the Act and other Law, any Transfer made or permitted by any Member of all or any portion of its equity interest in the Company (including, for the avoidance of doubt, any Transfer of any Units, or any equity interests in any Member or other Person that directly or indirectly owns Units) in contravention of this Agreement shall be ineffective and null and void ab initio , and shall not bind or be recognized by the Company or any other Person. In the event of any Transfer in contravention of this Agreement, to the greatest extent permitted by the Act and other Law, the purported Transferee shall have no right to any profits, losses or distributions of the Company or any other rights of a Member.

ARTICLE 10

E XIT P ROVISIONS

Section 10.01. Qualified IPO.

(a) As soon as practicable, but in any event within thirty (30) days after the Closing, the Company shall cause the Board to create a special committee which shall include an equal number of MCK Directors and Echo Directors (the “ IPO Committee ”) which shall oversee the conduct and consummation of a Qualified IPO. As promptly as practicable after its formation, but in no event later than six (6) months after Closing, the IPO Committee shall appoint one or more nationally recognized investment banks to act as underwriters of the Qualified IPO. The engagement of the underwriters shall be on financial and other terms customary in the industry, and all fees and expenses shall be borne by the Company (other than underwriting discounts and commissions which shall be payable by Echo). The Company agrees and acknowledges that it will be the indemnitor of first resort with respect to the Qualified IPO.

(b) In connection with the conduct and consummation of a Qualified IPO, the Company and each of the Initial Members shall cooperate in good faith and use their reasonable best efforts to consummate the Qualified IPO as promptly as practicable, but in no event later than eighteen (18) months from the Closing (“ QIPO Deadline ”), provided , that the QIPO Deadline may be extended by the IPO Committee based on the advice of the underwriters that prevailing market and/or industry conditions do not support the conduct and consummation of a Qualified

IPO and the Company and the Members shall use reasonable best efforts to consummate a Qualified IPO once such conditions are no longer in effect, but not longer than the Initial Period. In furtherance of the QIPO Deadline (and unless extended pursuant to the preceding sentence), Echo shall make an initial filing of a registration statement on Form S-1 relating to the Qualified IPO (the “ Registration Statement ”) on or prior to twelve (12) months from Closing and thereafter use its reasonable best efforts to prepare and file amendments to the Registration Statement that are reasonably required to (i) appropriately respond to comments received from the SEC relating to such Registration Statement and (ii) otherwise keep the Registration Statement current (including with respect to the financial statements and other financial and other information required by the rules and regulations of the SEC to be included therein). Echo and each of the parties agree they will reasonably consult, and keep each other reasonably informed, and that each party will have the right to participate in the drafting and preparation of any Registration Statement and any amendments thereto, including responses to any comments received from the SEC. Subject to Section 10.01(c) , each of the MCK Members and Echo shall have the right to participate equally in the preparation of the Registration Statement and any amendments thereto and otherwise to participate equally in the Qualified IPO process.

(c) If a Qualified IPO has not been consummated within twenty four (24) months following the Closing (such 24-month period, the “ Initial Period ”), then, notwithstanding any other provision to the contrary set forth herein, each of the MCK Members and Echo shall have the right to cause Echo, the Company and the other Members to conduct and consummate a Qualified IPO within the IPO Preference Period, and thereafter the MCK Members shall have the right to conduct a Qualified MCK Exit within the MCK Exit Window following such Qualified IPO. Following the IPO Preference Period, each of the MCK Members and Echo shall have the right to cause the Company and the other Members to conduct and consummate a Qualified IPO; provided , that if a Member has delivered an Initial Offer Notice for a ROFO Sale that constitutes a Drag-Along Sale, then neither the Company nor Echo shall conduct a Qualified IPO from the date of delivery of the Initial Offer Notice through the Marketing Period relating to such Drag-Along Sale without the consent of the Drag-Along Sellers. In order to exercise the right to cause or conduct a Qualified IPO pursuant to this Section 10.01(c) , the MCK Member or Echo, as the case may be (in either case, the “ IPO Demanding Party ”), shall be entitled, in its sole discretion, to deliver a written notice to the Company and to the other Initial Members (an “ IPO Demand ”) notifying the Company and the other Initial Members of the IPO Demanding Party’s exercise of an IPO Demand. Upon receipt of such IPO Demand (which, in the case of a Qualified IPO to be consummated during the IPO Preference Period, shall be delivered no later than on the date that is ten (10) Business Days following the expiration of the Initial Period), the Company and Echo shall effect a Qualified IPO as soon as practicable, but in any event within six (6) months after receipt of such IPO Demand (and in the case of a Qualified IPO to be consummated during the IPO Preference Period, prior to the expiration of such period). Upon receipt of an IPO Demand, the IPO Committee and each of the Initial Members and the Company shall cooperate with each other in the conduct and consummation of such Qualified IPO, including providing access to the documents, records and senior management of the Company, procuring the participation of senior management in investor road-shows and similar marketing efforts, and executing and delivering any documents reasonably requested by the IPO Committee or any underwriter to the Qualified IPO. Notwithstanding anything to the contrary contained herein, in the event of an IPO Demand, the Company shall cause the Board to appoint to the IPO Committee one additional Director designated by the IPO Demanding Party.

Section 10.02. Up-C Structure. Any Qualified IPO, unless the MCK Members and Echo shall mutually elect otherwise, shall be effected as an initial public offering through Echo. In connection with the consummation of a Qualified IPO, the number of outstanding Echo Shares and Units shall be adjusted as set forth in Section 3.03(c) to the extent necessary to cause (x) the Echo Ratio is maintained at one Unit to one Echo Share and (y) each of the number of Echo Shares sold to the public in the Qualified IPO and the price per share of such Echo Shares (calculated before giving effect to any underwriting discounts and commissions) to be within the range recommended to the Company by the underwriters, in the case of both (x) and (y), upon consummation of the Qualified IPO. Each of the Members and the Company shall cooperate with each other to implement such adjustments.

Section 10.03. Post-IPO Exit Rights.

(a) Following consummation of a Qualified IPO occurring at any time prior to the expiration of the IPO Preference Period, and upon the expiry of any customary lockup period required by the underwriters in connection with the consummation of a Qualified IPO, (i) each MCK Member and its Affiliates shall have the right to conduct and consummate a Qualified MCK Exit during the MCK Exit Window (in accordance with the process set forth in Section 10.05 below) and (ii) (a) the Echo Shareholders as determined by the Sponsor Shareholders shall have the right to conduct and consummate a Qualified Echo Sale during the First Echo Sale Window and (b) the Echo Shareholders shall have the right to consummate one or more Qualified Echo Sales during the Second Echo Sale Window, in each case pursuant to the Registration Rights Agreement and Section 10.03(b) hereof (the “ Echo Shareholder Sale Right ”), which Qualified Echo Sales shall be subject to the Tag-Along Rights of the MCK Members set forth in the Registration Rights Agreement. Each of the Company and each of the Initial Members shall use their reasonable best efforts to cooperate in good faith to consummate any Qualified MCK Exit and any Qualified Echo Sale as promptly as practicable.

(b) (i) In order for the Echo Shareholders to exercise the Echo Shareholder Sale Right in respect of the First Echo Sale Window, the Sponsor Shareholders shall, and, (ii) in order for the Echo Shareholders to exercise the Echo Shareholder Sale Right in respect of the Second Echo Sale Window, the Echo Shareholders entitled to exercise registration rights pursuant to a Holder Demand (as defined in the Registration Rights Agreement) shall, in each case deliver a written notice to Echo, the MCK Members and the Company (the “ Echo Shareholder Notice ”) no later than the expiration of the lockup period related to a Qualified IPO, in the case of the First Echo Sale Window, or within thirty (30) days following expiration or termination of the MCK Exit Window in which a Qualified MCK Exit does not occur, in the case of the Second Echo Sale Window (each, an “ Echo Sale Notice Deadline ”), which written notice shall: (i) confirm the intention of the Sponsor Shareholders or Echo Shareholders, as applicable, to conduct and consummate a Qualified Echo Sale in accordance with the Echo Shareholders Agreement and the Registration Rights Agreement and undertake to provide prompt notice of a change in such intention and to otherwise keep the Company and the MCK Members reasonably updated with respect to the status and other material information regarding the Qualified Echo Sale, (ii) state the number of Echo Shares anticipated to be sold by the Sponsor Shareholders (or the Echo Shareholders) in the Qualified Echo Sale (“ Echo Sale Shares ”), (iii) include a description of the expected manner and terms of the proposed offering and the anticipated aggregate number of shares, excluding the Echo Sale Shares, that, based on prevailing market and/or industry

conditions, the Company’s (and/or Echo’s) underwriters advise including in the proposed offering, (iv) provide indicative pricing terms (e.g., anticipated discount to prevailing market prices), and (v) the other material terms and conditions of the Qualified Echo Sale, including the form of the proposed agreement, if any. For the avoidance of doubt, failure to deliver an applicable Echo Shareholder Notice on or prior to the applicable Echo Sale Notice Deadline shall result in forfeiture and loss of the Echo Shareholder Sale Right.

Section 10.04. [Reserved]

Section 10.05. Qualified MCK Exit Process.

(a) During the MCK Exit Window, the MCK Members and their Affiliates shall have the right to consummate the following series of corporate actions (each such series upon the consummation of the Merger, the “ Qualified MCK Exit ”): (i) the formation by MCK of a new Delaware corporation (“ SpinCo ”) to hold all of the shares of the MCK Members (unless such corporation has been formed prior to such date) pursuant to a Separation Agreement substantially in the form of Exhibit C attached hereto (the “ Separation Agreement ”), (ii) (A) the commencement by MCK of one or more exchange offers pursuant to which MCK will exchange stock of SpinCo for stock of MCK held by the stockholders of MCK (the “ Exchange Offers ”), (B) the distribution of the stock of SpinCo to the shareholders of MCK as a dividend in kind (the “ Spin-Off ”), (C) one or more exchanges of the stock of SpinCo for debt securities of MCK (the “ Non-Stock Exchanges ”); provided , that, without the consent of Echo, MCK shall not conduct Non-Stock Exchanges or private exchanges of capital stock (exchanges of securities that do not require registration under the Exchange Act) with any Person that MCK knows or has reason to believe will be a holder of 5% or more of MCK’s common stock or the Echo Shares immediately after consummation of such Non-Stock Exchanges or (D) any combination thereof, provided , that in all cases the shareholders and debtholders of MCK receive 75% or more of the stock of SpinCo as a consequence thereof, and (iii) substantially contemporaneously with the consummation of the Exchange Offers, the Spin-Off and/or the Non-Stock Exchanges, SpinCo will be merged with and into Echo, with Echo as the surviving corporation in such merger (the “ Merger ”) pursuant to the Merger Agreement entered into as of December 20, 2016 by and between SpinCo and Echo (as such may be amended or supplemented by the parties thereto from time to time) (the “ Merger Agreement ”), pursuant to which each share of SpinCo stock outstanding immediately prior to the effective time of the Merger will be converted into the right to receive a number of Echo Shares (rounded to the nearest ten-thousandth of a share) (such number, the “ Exchange Ratio ”) determined by dividing the number of Units then held by the MCK Members or their Permitted Transferees by the number of outstanding shares of SpinCo common stock. In the event that the Merger Agreement is terminated or otherwise fails to be consummated other than as a result of a breach thereof by SpinCo, the parties shall use commercially reasonable efforts to cooperate with each other to agree upon and execute a mutually agreeable merger agreement to consummate the transactions contemplated by this Section 10.05 .

(b) In connection with a Qualified MCK Exit, the parties shall cooperate with each other to consummate such Qualified MCK Exit as promptly as reasonably practicable, including commencing the Exchange Offers pursuant to applicable securities laws, amending the Merger Agreement to the extent required or advisable pursuant to applicable Law, calling any applicable meeting of Echo’s stockholders to approve the Merger, obtaining any vote required in connection

with the Merger or Qualified MCK Exit required by the board of directors of Echo, preparing and filing any applicable proxy statement and/or registration statement with the SEC in relation to the Merger, and generally do, execute and perform all such other acts, deeds and documents as may be reasonably required to carry out the Qualified MCK Exit.

(c) Pursuant to the Echo Shareholders Agreement, the Echo Shareholders will vote all Echo Shares that they are entitled to vote to approve the issuance of Echo Shares pursuant to the Merger and/or approval of the Merger at any meeting of the stockholders of Echo, and at any adjournment thereof, at which the issuance of Echo Shares and/or approval of the Merger is submitted for the consideration and vote of the stockholders of Echo.

(d) In connection with the consummation of the transactions contemplated in Section 10.05(a)(ii) , each of MCK, Echo, the Company, Change Healthcare Holdings, LLC and SpinCo shall enter into a tax matters agreement substantially in the form attached hereto as Exhibit E (the “ Tax Matters Agreement ”) and the Separation Agreement substantially in the form attached hereto as Exhibit C hereto. In the event of a change in law or regulation following the date of signing of the Contribution Agreement that is or is believed by any of the parties hereto to be relevant to the interpretation or effect of the Tax Matters Agreement (including any change in law or regulation expressly referenced therein), the parties will use reasonable best efforts to agree upon such changes to such form as may be necessary or advisable so as to give effect to the original intent, purposes and effect of such form (based on law and regulation in effect as of the date of signing of the Contribution Agreement) as nearly as practicable without altering the respective rights or obligations of the parties, or otherwise adversely affecting any party in any non-de minimis respect.

(e) Echo will use commercially reasonable efforts to (A) twenty-one Business Days prior to the beginning of a Qualified MCK Exit, deliver to MCK a statement setting forth Echo’s good faith estimate of the aggregate number of shares of Echo expected to be received in the Merger (by virtue of having received shares of SpinCo stock in the Exchange Offers or the Spin-Off) by (i) Blackstone (as defined in the Tax Matters Agreement), (ii) any Person under the Control of Blackstone (as defined in the Tax Matters Agreement), (iii) any Person that has acquired or will acquire stock of MCK in one or more coordinated acquisitions or dispositions of the stock of MCK with any Person described in clauses (i) or (ii), (iv) H&F (as defined in the Tax Matters Agreement), (v) any Person under the Control of H&F (as defined in the Tax Matters Agreement) and (vi) any Person that has acquired or will acquire stock of MCK in one or more coordinated acquisitions or dispositions of the stock of MCK with any Person described in clauses (iv) or (v) and (B) update such schedule to reflect any changes between the date such schedule is delivered and the time of the Merger, it being understood that any failure of information included in such schedule, or any update thereto, to be accurate shall not constitute a breach of this Agreement or an Echo Disqualifying Action for purposes of the Tax Matters Agreement.

Section 10.06. MCK Top-up Option.

(a) The Company hereby grants to MCK and each of the MCK Members and their Affiliates an irrevocable option, exercisable at any time during the MCK Exit Window and prior to consummation of a Qualified MCK Exit, to purchase from the Company (whether directly or indirectly, including through the purchase of Units by SpinCo) additional Units (the “ Top-up

Units ”, and such option, the “ Top-up Option ”), such that following exercise of the Top-up Option, the shareholders of MCK shall be entitled to hold such number of Echo Shares that, when added to the number of Echo Shares that would be owned by the shareholders of MCK at the effective time of the Merger, constitutes at least one Echo Share more than 50% of the Echo Shares that would be outstanding immediately after the issuance and/or sale of all Echo Shares upon exercise of the Top-up Option, calculated on a fully-diluted basis. For the avoidance of doubt, the Top-up Option granted to MCK and each of the MCK Members is non-transferrable other than to Permitted Transferees.

(b) The Top-up Option may be exercised by the MCK Members or their Affiliates only during the MCK Exit Window, and only if the MCK shareholders would own, in the absence of exercise of the Top-up Option, at the effective time of the Merger, 50% or less of the Echo Shares outstanding on a fully-diluted, post-Merger basis. The aggregate purchase price payable for the Top-up Units being purchased by MCK, SpinCo or the MCK Members or their Affiliates pursuant to the Top-up Option shall be determined by multiplying the number of such Top-up Units by the Fair Market Value of each Top-up Unit, as determined in accordance with the valuation and appraisal process set forth in Section 9.04 , without interest. The purchase price must be paid by MCK (or its Affiliate) in cash.

(c) In the event MCK (or its Affiliates) wishes to exercise the Top-up Option, it shall deliver to the Company a notice (the “ Top-up Notice ”) setting forth (i) the number of Top-up Units that it intends to purchase pursuant to the Top-up Option and (ii) the place and time at which the closing of the purchase of such Top-up Units shall occur, which shall be no later than the effective time of the Merger.

(d) At the closing of the purchase of the Top-up Units, MCK or an Affiliate shall cause to be delivered to the Company the cash consideration required to be delivered in exchange for the Top-up Units, and the Company shall cause to be issued to MCK or such Affiliate a certificate representing the Top-up Units.

(e) Notwithstanding the foregoing, at any time during the MCK Exit Window, MCK, on the one hand, and Echo, on the other hand, may mutually agree to structure the Top-up Option to provide for all, or part, of the exercise of the Top-up Option through a Transfer of Units held by Echo to MCK, or any of its Affiliates designated by MCK; provided that the parties will mutually agree on a procedure for ensuring that the Echo Ratio is maintained at one Unit to one Echo Share.

Section 10.07. Registration Rights. The MCK Members and Echo (and certain holders of equity in such Members), shall have the registration rights set forth in, and the Company shall be subject to the requirements set forth in, Exhibit B hereto (the “ Registration Rights Agreement ”), which Exhibit B is an integral part of this Agreement.

Section 10.08. Exit Events Expenses. Subject to the Registration Rights Agreement, each of the Company, MCK, the MCK Members, Echo, and the Echo Shareholders shall bear their own costs and expenses in connection with any Qualified IPO, Qualified MCK Exit or Qualified Echo Sale; provided , that (i) the Company will bear all customary expenses relating to any registration of securities in connection with any Qualified IPO, Qualified Echo Sale or Qualified MCK Exit, and (ii) the Company will bear all expenses of the underwriters and/or other advisors in a Qualified IPO (where such Qualified IPO is structured entirely as a primary issuance of securities).

ARTICLE 11

C OVENANTS

Section 11.01. Business Opportunities. Notwithstanding any duty otherwise existing at Law or in equity, to the fullest extent permitted by Law, none of the Company, any of its Subsidiaries, any Member or any Affiliate of any Member shall have any right in or to, or to be offered any opportunity to participate or invest in, any business or venture engaged or to be engaged in by any other Member, Affiliate of any other Member, officer of the Company or any of its Subsidiaries who is also an employee of any other Member (or an Affiliate of any other Member) or Director or shall have any right in or to any income or profits derived therefrom.

Section 11.02. Confidentiality.

(a) Each of the Company and each Member agree that it shall hold strictly confidential and shall use, and shall cause any Person to which its discloses Confidential Information pursuant to clause (b) below, to hold strictly confidential and to use, the Confidential Information only in connection with its investment in the Company and not for any other purpose. The Company and each Member agrees that it shall be responsible for any breach of the provisions of this Section 11.02 by any Person to which it discloses Confidential Information.

(b) The Company and each Member agrees that it shall not disclose any Confidential Information to any Person (other than as may be necessary to monitor, increase or decrease its investment in the Company in accordance with applicable securities laws), except that Confidential Information may be disclosed as follows:

(i) to any of such Person’s Representatives, including to the extent necessary to obtain their services in connection with monitoring its investment in the Company;

(ii) to any financial institution providing credit to such Person or any of its Affiliates;

(iii) to the extent required by applicable Law or requested or required by any regulatory body (including complying with any oral or written questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process to which such Persons is subject); provided , that unless otherwise prohibited by Law, such Persons agrees to give the other parties hereto prompt notice of such request(s), to the extent practicable, so that such parties may seek an appropriate protective order or similar relief (and such Person shall cooperate with such efforts by such other parties, and shall in any event make only the minimum disclosure required by such Law);

(iv) in the case of any Member, to any Person to whom such Member is contemplating a Transfer of all or any portion of its Units; provided , that such Transfer (A) would not be in violation of the provisions of this Agreement, (B) the potential Transferee agrees in advance of any such disclosure to be bound by a confidentiality agreement consistent with the provisions hereof and (C) such Member shall be responsible for breaches of such confidentiality agreement by such potential Transferee, for so long as the Company does not have direct recourse against such potential Transferee for any such breaches;

(v) to any Governmental Authority or any rating agency with jurisdiction over such Person or any of its Affiliates or with which such Person or any of its Affiliates has regular dealings, as long as such Governmental Authority or rating agency is advised of the confidential nature of such information and such Person uses reasonable efforts to seek confidential treatment of such information to the extent available;

(vi) to the extent required by the rules and regulations of the SEC or stock exchange rules, including any disclosure contemplated under the Registration Rights Agreement; or

(vii) if the prior written consent of all of the Directors on the Board shall have been obtained.

Nothing contained herein shall prevent the use of Confidential Information in connection with the assertion or defense of any claim by or against the Company or any Member and nothing contained herein shall be deemed to restrict any stockholder’s ability to monetize its equity investment in compliance with applicable securities laws.

Notwithstanding the foregoing, the Company and each of the Members acknowledge that each of the Sponsor Shareholders and H&F and their fund Affiliates may provide Confidential Information to their existing and potential limited partners, members and other investors; provided that the Sponsor Shareholders and H&F or their fund Affiliates shall not provide any non-public financial information or competitively or strategically sensitive information about the Company or any of its Subsidiaries to (a) any limited partner that is not subject to customary confidentiality and non-use restrictions with respect to such information (subject to customary exceptions) or (b) to any other Person in the course of investing or fundraising activities that is not subject to customary confidentiality and non-use restrictions with respect to such information (subject to customary exceptions) and, in any of either (a) or (b), any non-public financial information shall be limited to the Sponsor Shareholders’, H&F’s or their fund Affiliates’ valuation of the Company and its Subsidiaries without providing underlying forecasted financial data or trends; provided that the Sponsor Shareholders and their fund Affiliates shall be permitted to disclose underlying forecasted financial data or trends to the two co-investors in Echo who have entered into confidentiality agreements which are reasonably acceptable to MCK; provided , further , that in any case the Sponsor Shareholders shall provide prompt written notice of such disclosure to MCK.

(c) “ Confidential Information ” means any information concerning the Members or any of their respective Affiliates, the Company or any of its Subsidiaries or the financial condition, business, operations or prospects of the Members or any of their respective Affiliates or the Company or any of its Subsidiaries in the possession of or furnished to the Company or any Member, as applicable (including by virtue of any Member’s present or former right to designate a Director); provided , that the term “Confidential Information” shall not include information that (i) is or becomes generally available to the public other than as a result of a disclosure by such Person or its Affiliates or any of their respective Representatives in violation of this Agreement,

(ii) was available to such Person on a non-confidential basis prior to its disclosure to such Person or its Representatives by the Company or the other Members or their Representatives or (iii) becomes available to such Person on a non-confidential basis from a source other than the Company or the other Members or their Representatives after the disclosure of such information to such Person or its Representatives by the Company or the Members or their Representatives, which source is (at the time of receipt of the relevant information) not, to such Person’s knowledge, bound by a confidentiality agreement with (or other confidentiality obligation to) the Company, the other Members or another Person; provided , that notwithstanding anything to the contrary contained herein, “Confidential Information” in the possession of any of the Initial Members or its Affiliates prior to the Closing shall not by virtue of the foregoing exceptions in clauses (ii) or (iii) be deemed not to be Confidential Information, and each of the Initial Members shall be obligated to keep or to cause to be kept such information confidential and to use or cause to be used such information in accordance with the provisions of this Section 11.02 as fully as if such Member did not have access to such information prior to the Closing but only received such information after the Closing. For the avoidance of doubt, the Company and each Member acknowledge and agree that each Member and the Echo Shareholders may incidentally develop or receive from third parties information not known by such recipient to have been obtained in violation of this Agreement that is the same as or similar to the Confidential Information, and that nothing in this Agreement restricts or prohibits any Member or the Echo Shareholders (by itself or through a third party) from developing, receiving or disclosing such information, or any products, services, concepts, ideas, systems or techniques that are similar to or compete with the products, services, concepts, ideas, systems or techniques contemplated by or embodied in the Confidential Information.

(d) Notwithstanding anything to the contrary in this Agreement, the Company, each Member, their respective Affiliates and their respective Representatives may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated hereby and all materials of any kind (including opinions and tax analysis) that are provided to the Company or the Member relating to such tax treatment and tax structure; provided , that the foregoing does not constitute authorization to disclose information identifying the Company, any Member (or its Representatives), any parties to transactions engaged in by the Company or (except to the extent relating to such tax structure or tax treatment) any nonpublic commercial or financial information.

Section 11.03. Compliance Matters.

(a) Each Member represents, warrants and agrees that such Member shall, and to the extent of such Member’s Units and governance and management rights, shall cause the Company to, comply with the applicable anti-corruption and compliance practices, as reflected in the Compliance Program. The Company shall implement policies and procedures for compliance with all applicable ethics, compliance and regulatory rules applicable to the Company and its Subsidiaries.

(b) Each Member shall, to the extent of such Member’s Units and governance and management rights, cause the Company to, at all times during the term of this Agreement, (i) conduct their activities in compliance with all, and shall not default with respect to or violate any anti-corruption Laws, (ii) not offer, promise, give or authorize the offering, promising or giving of

anything of value, directly or indirectly, to: (A) any Government Official or (B) any other Person with the knowledge that all or any portion of the thing of value will be offered, promised or given to a Government Official, for the purpose of influencing any action or decision of a Government Official in his or her official capacity, including a decision to fail to perform his or her official duties, or inducing the Government Official to use his or her influence with any Governmental Authority or any Government Official to affect or influence any official act, or otherwise obtain an improper advantage; and (iii) not make or authorize any other Person to make any payments or transfers of value which have the purpose or effect of commercial bribery, or acceptance or acquiescence in kickbacks or other unlawful or improper means of obtaining or retaining business in relation to the Company’s line of business and the matters contemplated by this Agreement.

(c) Each of the Members places the highest value on integrity in business dealings and the ethical conduct of companies in which it invests, and accordingly covenants, to the extent of such Member’s Units and governance and management rights, to cause each of the Company and its Subsidiaries to adopt as of Closing a compliance program and code of conduct (the “ Compliance Program ”). In implementing the Compliance Program, the Company shall follow the policies and procedures set forth in the Compliance Program including (i) all training, education and certification procedures,

(ii) all due diligence procedures related to agents of the Company and the Subsidiaries,

(iii) all audit and internal control procedures (including those applicable to the Company (as a Subsidiary or equity investment of MCK or otherwise) that are required by the Sarbanes-Oxley Act of 2002), (iv) adequate commitment of human and financial resources to ensure the capacity to carry out the programs required by the Compliance Program, and (v) appropriate procedures to ensure accurate books and records in accordance with GAAP and applicable Law, and other policies and procedures set forth in the Compliance Program, and will cause appropriate officers to be appointed by the Company (who shall be a suitable and competent person with relevant knowledge of and experience with applicable Laws applicable to the Company to carry out the compliance function of the Company), disciplinary procedures to be enforced and mechanisms for reporting suspected violations (including fraud) to be created for each such entity.

Section 11.04. Additional Covenants of Echo and the Company.

(a) Holding Company. Echo shall not at any time after its formation be an obligor or guarantor under, or otherwise be subject to, any indebtedness, shall conduct no operations or own any assets other than Units in the Company and other assets incidental to its status as a public or private (as the case may be) holding company of Units), shall not terminate, liquidate or dissolve Echo and shall not merge or consolidate Echo with or into any other Person, other than the Merger with SpinCo, or otherwise acquire or dispose of any other assets or entities (other than Units, other distributions as permitted herein, which shall be promptly distributed or set aside to pay reasonably foreseeable expenses.

(b) Tax Returns; Payment of Taxes. Except to the extent resulting from a failure by the Company to provide Echo with timely and correct tax information, including on Schedule K-1 and any applicable state, local or foreign equivalent form, Echo shall (i) timely file all tax returns required to be filed by it and (ii) timely pay all taxes required to be paid by it.

(d) Echo Reserved Matters. Following the Closing, Echo shall not take any of the following actions (including any action by the board of directors of Echo or any committee of the board of directors of Echo) without the prior written approval of the Board (or an authorized committee thereof):

(i) any change in either the name, the registered address or the fiscal year of Echo;

(ii) prior to a Qualified IPO, the appointment, removal or replacement of the auditor of Echo, approval of the annual financial report, adoption of any financial and accounting procedures or accounting policies, or any material changes thereto;

(iii) filing of any material litigation, arbitration or other legal proceedings or actions in relation to a claim (or a series of related claims), or any settlement of any material litigation, arbitration or other legal proceeding or actions, except for any legal action involving the Members and/or their Affiliates or for any claim based upon, or in respect of, or by reason of, the transactions contemplated by the Transaction Documents;

(iv) entry into any transactions between an Echo Shareholder or any of its Affiliates, on the one hand, and Echo, on the other hand, other than:

(A) the Transaction Documents (and any transactions or agreements contemplated by or ancillary to such Transaction Documents)

(B) customary agreements with directors and officers of Echo for indemnification; or

(C) agreements or transactions with portfolio companies of any Echo Shareholder that are entered into on arm’s length terms and in the ordinary course of business for the purchase of materials, supplies, goods, services (excluding any employment agreements), equipment or other assets that are generally available for purchase by business entities in the Company’s line of business on substantially similar terms from non-affiliated suppliers or providers;

(v) any declaration or payment of any dividends, the determination of any cash reserve or the making of any cash or non-cash distributions on, or any redemption and/or repurchase of, any Equity Securities of Echo, except as expressly contemplated in this Agreement and excluding the redemption or repurchase of any Equity Securities of Echo under any Approved Echo Plan;

(vi) any issuance, or authorization of issuance, of any Echo Shares or other Equity Securities of Echo or its Subsidiaries, except as expressly contemplated in this Agreement and excluding the issuance of any Equity Securities of Echo or its Subsidiaries pursuant to awards approved by the Board under any Approved Echo Plan;

(vii) the use of proceeds from a Qualified IPO or any other offering of Echo Shares by Echo other than as required pursuant to Section 3.03 and payment of fees and expenses incurred therewith;

(viii) adoption of, or changes to, equity incentive plans of Echo or any of its Subsidiaries, except any Approved Echo Plan, and any action of Echo under any Approved Echo Plan requiring action of the board of directors of Echo or any committee thereof;

(ix) any change of control of Echo other than as expressly contemplated under the Transaction Documents;

(x) any amendment to, modification of, or waiver under the Echo Shareholders Agreement which is adverse to MCK in any material respect; and

(xi) any amendment to, modification of, or waiver under Echo’s certificate of incorporation or bylaws; provided , that the Company’s consent to any amendment to Echo’s certificate of incorporation or bylaws in connection with an IPO Demand shall not be unreasonably withheld, delayed or conditioned; provided , that the Company’s right to approve the matters set forth in this Section 11.04(d) shall terminate concurrently with the termination of the rights of the parties to approve the Reserved Matters.

(e) Additional Tax Covenants. Except as expressly contemplated or permitted in this Agreement or the other Transaction Documents, from the date hereof until the first to occur of (x) a Qualified MCK Exit and (y) the expiration or termination of the MCK Exit Window and (z) the expiration or termination of the IPO Preference Period prior to the occurrence of a Qualified IPO (any event described in (x), (y) or (z), a “ Covenant Termination ”), each of Echo and the Company shall not (i) (I) enter into “an agreement, understanding, arrangement, or substantial negotiations” (within the meaning of Treasury Regulation Section 1.355-7(b)(2)) or (II) otherwise engage in any discussions in any form, in each case with respect to the acquisition, directly or indirectly, of Echo, SpinCo and/or the Company; or (ii) (I) sell or otherwise dispose of any assets of the Controlled Business (as defined in the form of Tax Matters Agreement attached hereto as Exhibit E); (II) contribute, or cause to be contributed, any Controlled Business assets to any subsidiary of the Company (other than a subsidiary that is treated as disregarded from the Company for U.S. federal income tax purposes); (III) distribute, or cause to be distributed, any Controlled Business assets; or (W) discontinue, or permit to be discontinued, any activities of the Controlled Business, other than, in each case in this clause (ii), in the ordinary course of business. Each of Echo and the MCK Members shall use its commercially reasonable efforts to prevent any Person who acquires the stock of MCK in a Tainting Acquisition (as defined in the Contribution Agreement) from participating in any Exchange Offer. This Section 11.04(e) shall be construed on the basis of the tax law and regulations in effect as of the date of this Agreement.

(f) Exchanges of Units.

(i) The MCK Members and their Permitted Transferees shall be entitled at any time and from time to time following a Qualified IPO and upon the terms and subject to the conditions of this Agreement, to surrender Units to Echo in exchange (each such exchange, an “Exchange”) for the delivery by Echo to such Member(s) of a number of Echo Shares that is equal to the number of Units requested to be Exchanged. Echo shall at all times cause a number of authorized Echo Shares to be authorized and held in reserve as will be sufficient to comply with any and all requests for Exchange that may be made pursuant to this Agreement.

(ii) The MCK Members shall be entitled to periodic payments from Echo equal to 85% of the tax savings to the Echo Group (as defined in the Tax Receivable Agreement) arising from the step-up in tax basis resulting from each Exchange. Prior to the first Exchange (if any), Echo and the Exchanging MCK Member shall negotiate in good faith the terms of a tax receivable agreement to govern the calculation of such payment, with it being understood that the terms of such agreement shall be substantially similar to the terms of the MCK Tax Receivable Agreement; provided that any such tax savings shall be determined using a “with and without” methodology (treating any deductions attributable to the step-up in tax basis resulting from the Exchanges as the last items claimed for any taxable year, including after the utilization of any carryforwards).

(iii) An MCK Member may exercise the right to effect an Exchange by delivering a written notice of exchange in respect of the Units to be Exchanged substantially in the form of Exhibit F hereto (the “Notice of Exchange”), duly executed by such Member or such Member’s duly authorized attorney, to Echo and the Company at the addresses set forth in Section 14.12 .

(iv) A Notice of Exchange from an MCK Member may specify that the Exchange is to be (A) contingent (including as to the timing) upon the consummation of a purchase by another Person (whether in a tender or exchange offer, an underwritten offering or otherwise) of Echo Shares into which the Units are exchangeable, or contingent (including as to timing) upon the closing of an announced merger, consolidation or other transaction or event in which the Echo Shares would be exchanged or converted or become exchangeable for or convertible into cash or other securities or property and/or (B) effective upon a specified future date. Notwithstanding anything herein to the contrary, an MCK Member may withdraw or amend a Notice of Exchange, in whole or in part, prior to the effectiveness of the Exchange, at any time prior to 5:00 p.m. New York City time, on the Business Day immediately preceding the Exchange date (or any such later time as may be required by applicable Law) by delivery of a written notice of withdrawal to Echo and the Company, specifying (1) the number of withdrawn Units, (2) if any, the number of Units as to which the Notice of Exchange remains in effect and (3) if the MCK Member so determines, a new Exchange date or any other new or revised information permitted in the Notice of Exchange.

(v) Each Exchange shall be deemed to be effective immediately prior to the close of business on the Exchange date (or, if applicable, immediately prior to the completion of the offering, tender or exchange offer or other transaction in connection with which the Exchange is made contingent), and the Exchanging holder shall be deemed to be a holder of Echo Shares from and after the effectiveness of the Exchange. Within three (3) Business Days of the Exchange date, Echo shall deliver or cause to be delivered to the

Exchanging holder the number of Echo Shares deliverable upon such Exchange, registered in the name of such holder. To the extent the Echo Shares are settled through the facilities of DTC, Echo will, upon the written instruction of an Exchanging holder, deliver or cause to be delivered the Echo Shares to such holder through the facilities of DTC, to the account of the participant of DTC designated by such holder.

(vi) If (i) any Echo Shares Exchanged hereunder may be sold pursuant to a registration statement that has been declared effective by the SEC, (ii) all of the applicable conditions of Rule 144 are met, or (iii) a restrictive legend (or a portion thereof) otherwise ceases to be applicable, Echo, upon the written request of the Exchanging holder thereof shall promptly provide such holder or its respective transferees, without any expense to such Persons (other than applicable transfer taxes and similar governmental charges, if any) with new certificates (or evidence of book-entry shares) for securities of like tenor not bearing the provisions of the legend with respect to which the restriction has terminated. In connection therewith, Echo may request, without any expense to Echo, an opinion of counsel to the effect that such legend can be removed, and such holder shall provide Echo with such information in its possession as Echo may reasonably request in connection with the removal of any such legend.

(vii) The Company and each Exchanging holder shall bear Echo’s and their own respective expenses in connection with the consummation of any Exchange by such holder, whether or not any such Exchange is ultimately consummated; provided , however , that Exchanging holder will pay any transfer taxes, stamp taxes or duties, or similar government charges in connection with, or arising by reason of, any Exchange.

(viii) If the Echo Shares are listed on a national securities exchange, Echo shall use its reasonable best efforts to cause all Echo Shares issued upon an Exchange to be listed on the same national securities exchange upon which the outstanding Echo Shares may be listed or traded at the time of such issuance.

(ix) When a Unit has been Exchanged in accordance with this Agreement, the Unit shall be deemed transferred from the Exchanging holder to Echo.

(x) No Exchange shall impair the right of the Exchanging holder to receive any distributions payable on the Units so exchanged in respect of a record date that occurs prior to the date of the Notice of Exchange for such Exchange.

(g) The provisions set forth in Section 11.04(a) , Section 11.04(b) and Section 11.04(e) shall terminate upon the earlier to occur of the consummation of a Qualified MCK Exit and the expiration or termination of the MCK Exit Window or the expiration or termination of the IPO Preference Period prior to the consummation of a Qualified IPO. The provisions set forth in Section 11.04(b) and Section 11.04(e) shall terminate when the MCK Members and their Permitted Transferees no longer hold any Units. The provisions set forth in Section 11.04(d) shall terminate when the parties’ rights to approve Reserved Matters under Section 5.05 terminate hereunder.

Section 11.05. Cooperation. Subject to Section 11.02 , each of the Members will cooperate in defending and pursuing, as appropriate, litigation and similar claims brought against

the Company or any of the MCK Members or Echo or their respective Affiliates, reasonably make available relevant employees and preserve and make reasonably available, to the extent legally and contractually permissible, all records reasonably necessary for such matters, subject, in the case of disputes, to the discovery rules otherwise applicable.

Section 11.06. Fees and Expenses of Echo Directors and Officers. The Company shall pay, promptly upon request, to Echo any costs incurred by Echo with respect to its obligation to pay fees and expenses of its officers and directors, and board observers.

ARTICLE 12

I NFORMATION R IGHTS ; F INANCIAL R EPORTING

Section 12.01. Financial and Other Information.

(a) As soon as available, and in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year, the Company shall prepare and furnish to each 5% Member an unaudited consolidated balance sheet of the Company and its Subsidiaries as at the end of such fiscal quarter and the related unaudited consolidated statements of income and cash flows for such fiscal quarter and for the period from the beginning of the then current fiscal year to the end of such fiscal quarter, setting forth in comparative form the corresponding figures for the corresponding periods of the previous fiscal year for the unaudited consolidated balance sheet and the unaudited consolidated statements of income and cash flows of the Company and its Subsidiaries, all prepared in accordance with GAAP. The financial statements delivered pursuant to this Section 12.01(a) shall be accompanied by a statement of members’ capital.

(b) As soon as available, and in any event within 120 days after the end of each fiscal year, the Company shall prepare and furnish to the Members an audited consolidated balance sheet of the Company and its Subsidiaries as at the end of such fiscal year and the related audited consolidated statements of income and cash flows for such fiscal year, prepared in accordance with GAAP. The financial statements delivered pursuant to this Section 12.01(b) shall be accompanied by a statement of members’ capital.

(c) The Company shall provide to each 5% Member (i) the annual operating plan, (ii) the Annual Operating and Capital Budget and (iii) subject to confidentiality obligations and similar restrictions that may be applicable to information furnished to the Company or any of its Subsidiaries by third parties that may be in the Company’s or any of its Subsidiaries’ possession from time to time, and except for any information that is subject to attorney-client privilege or other privilege from disclosure ( provided , that to the extent possible, the parties shall cooperate in good faith to permit disclosure of such information in a manner that preserves such privilege), any board packages or other information provided to any Director, in each case, promptly upon such information being made available. In addition, the Company shall provide to each 5% Member, upon such Member’s request, such financial information regarding the Company and its Subsidiaries as is reasonably requested for (A) such Member to comply with any obligations under applicable Laws or (B) any other reasonable business purpose.

(d) To the extent the financial and other information required to be delivered to any Member pursuant to this Section 12.01 is contained in a document or report Echo files with the SEC via the SEC’s EDGAR system, such financial and other information shall be deemed to be delivered to the Members for purposes of this Section 12.01 at the time such document or report is so filed with the SEC.

Section 12.02. Certain Other Provisions Regarding Financial Reporting. The Company shall, and shall cause each of its Subsidiaries to, (a) make and keep books, records and accounts, which, in the good faith judgment of the Company, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company and its consolidated Subsidiaries and (b) devise and maintain a system of internal accounting controls which, in the good faith judgment of the Company, is sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management’s general or specific authorization, (ii) transactions are recorded as necessary (A) to permit preparation of financial statements in conformity with GAAP and (B) to maintain accountability for assets and (iii) access to assets is permitted only in accordance with management’s general or specific authorization.

(a) As soon as available, and in any event within thirty (30) days after the end of each of the first two calendar months of each fiscal quarter, the Company shall prepare and furnish to each Member whose Membership Percentage is not less than 5% (a “ 5% Member ”) a current capitalization table of the Company and summary financial statements of the Company and its Subsidiaries as at the end of such calendar month, including the unaudited consolidated balance sheet as at the end of such calendar month and unaudited consolidated statements of income and members’ equity for such calendar month and for the period from the beginning of the then current fiscal year to the end of such calendar month.

Section 12.03. Access to Management Personnel and Information. Subject to confidentiality obligations and similar restrictions that may be applicable to information furnished to the Company or any of its Subsidiaries by third parties that may be in the Company’s or any of its Subsidiaries’ possession from time to time, and except for any information that is subject to attorney-client privilege or other privilege from disclosure ( provided , that to the extent possible, the parties shall cooperate in good faith to permit disclosure of such information in a manner that preserves such privilege), and, subject, in the case of disputes, to the discovery rules otherwise applicable, the Company agrees to permit any 5% Member (and such Member’s Representatives) to inspect, at such Member’s sole expense and upon such Member’s written request to the Company, all existing books, records contracts, commitments, Tax returns and financial statements and shall furnish such Member and its Representatives with all financial and operating data and other information (including documents and records relating to internal controls) concerning the affairs of the Company and its Subsidiaries as such Member may reasonably request. In addition to the foregoing, the Company agrees to provide a 5% Member and its Representatives reasonable access to (i) the management and other relevant personnel of the Company and its Subsidiaries reasonably related to such Member’s status as a holder of Units and (ii) any Director, officer, employee, agent supplier, vendor, third party representative or other intermediary of the Company, if such access is requested in order to enable such party to comply with applicable Law. Any inspection or access right pursuant to this Section 12.02(a) shall take place during regular business hours and the Company and its Subsidiaries shall not be required to cooperate with any inspection or access requests pursuant to this Section 12.02(a) that would unduly interfere with their business operations.

Section 12.04. Liability. No party shall have any liability to any other party in the event that any information exchanged or provided pursuant to this Agreement which is an estimate or forecast, or which is based on an estimate or forecast, is found to be inaccurate in the absence of gross negligence, bad faith or willful misconduct by the party providing such information.

ARTICLE 13

D ISSOLUTION , L IQUIDATION AND T ERMINATION

Section 13.01. No Dissolution. The Company shall not be dissolved by the withdrawal of any Member (subject to Section 13.02(d) ) or the admission of Additional Members in accordance with the terms of this Agreement.

Section 13.02. Events Causing Dissolution. The Company shall be dissolved and its affairs shall be wound up solely upon the first to occur of the following events:

(a) the unanimous determination of the Board to dissolve and terminate the Company (subject to Section 5.05 );

(b) the sale of all or substantially all of the Company’s assets;

(d) at any time when there are no Members, unless the Company is continued in accordance with the Act.

Section 13.03. Bankruptcy of a Member. The bankruptcy (including within the meaning of Sections 18-101 and 18-304 of the Act) of a Member shall cause such Member to cease to be a Member, but notwithstanding the occurrence of such event, the Company shall continue without dissolution. The receivership or dissolution of a Member shall not in and of itself cause the dissolution of the Company, and notwithstanding the occurrence of such event, the Company shall continue without dissolution under the management and control of the remaining Members, unless there are no remaining Members of the Company.

Section 13.04. Winding Up.

(a) In the event of the dissolution of the Company pursuant to Section 13.02 , the Company’s affairs shall be wound up by a liquidating trustee of the Company selected by the Board (in such capacity, the “ Liquidating Agent ”), which Liquidating Agent shall be an individual who is knowledgeable about the Company’s business and operations (to the extent possible) and has substantial experience in the purchase and sale of businesses.

(b) Upon dissolution of the Company and until the filing of a certificate of cancellation as provided in Section 18-203 of the Act, the Liquidating Agent may, in the name of, and for and on behalf of, the Company, prosecute and defend lawsuits, whether civil, criminal or administrative, settle and close the Company’s business, dispose of and convey the Company’s property or sell the Company (and its Subsidiaries) as a going concern, discharge or make reasonable provision for the Company’s liabilities, and distribute to the Members in accordance with Section 13.05 any remaining assets of the Company, all without affecting the liability of Members and without imposing any liability on any Liquidating Agent.

(c) Except as otherwise provided in this Agreement, the Members shall continue to share distributions and allocations during the period of liquidation in the same manner as before the dissolution.

(d) A reasonable time period shall be allowed for the orderly winding up and liquidation of the assets of the Company and the discharge of liabilities to creditors so as to enable the Liquidating Agent to seek to minimize potential losses upon such liquidation. Subject to the provisions of Section 13.05 and Section 13.06 , the Liquidating Agent shall have reasonable discretion to determine the time, manner and terms of any sale or sales of the Company’s property pursuant to such liquidation. The provisions of this Agreement shall remain in full force and effect during the period of winding up and until the filing of a certificate of cancellation of the Company with the Secretary of State of the State of Delaware.

(e) Upon the completion of the winding up of the Company, the Liquidating Agent or other duly designated representative shall file a certificate of cancellation of the Company with the Secretary of State of the State of Delaware as provided in Section 18203 of the Act.

Section 13.05. Distribution of Assets.

(a) Except as otherwise provided in Section 13.06 , as soon as practicable upon dissolution of the Company, the assets of the Company (or liquidation proceeds) shall be distributed in the following manner and order of priority (and ratably within each level of priority):

(i) first, to creditors of the Company; and

(ii) second, to the Members pro rata in accordance with their respective positive Capital Account balances (after giving effect to any allocations of income, gain, deduction or loss pursuant to Section 8.01(a) and Section 8.01(b) ).

(b) The Liquidating Agent shall have the power to establish any reserves that, in accordance with sound business judgment, it deems reasonably necessary to pay all claims and obligations, including all contingent, conditional or unmatured claims and obligations, which reserves may be paid over to an escrow agent selected by the Liquidating Agent to be held by such agent for the purpose of paying out such reserves in payment of the aforementioned contingencies and upon the expiration of such period as the Liquidating Agent may deem advisable, making a distribution of the balance thereof to the Members in the manner provided in this Section 13.05 .

Section 13.06. Distribution of Patents.

(a) In the event of the dissolution of the Company pursuant to Section 13.02 , prior to entering into any agreement providing for any sale or transfer of the Patent Rights owned by the Company or its Subsidiaries (the “ Company Owned Patent Rights ”), the Liquidating Agent shall deliver a written notice to MCK indicating (i) its desire to sell or transfer any such Company Owned Patent Rights, (ii) the cash price that the Liquidating Agent proposes to be paid for such Company Owned Patent Rights and in reasonable detail any other material terms and conditions sought by the Liquidating Agent. The delivery of such notice shall constitute an offer by the Liquidating Agent to transfer such Company Owned Patent Rights to MCK (or its designee) for cash at the price set forth in such notice and on any terms and conditions set forth therein.

(b) MCK may accept or reject any such offer delivered by the Liquidating Agent, in its sole discretion, by delivering a written notice of MCK’s acceptance or rejection, as the case may be, to the Liquidating Agent within thirty (30) calendar days after receipt of written notice thereof. If MCK accepts any such offer, then the Liquidating Agent and MCK (or its designee) shall promptly and in good faith enter into a written definitive agreement setting forth the terms of the transfer. In the event that MCK does not accept any such offer within such thirty (30) calendar day period, then the Liquidating Agent shall be free to negotiate an agreement with any other Person for the sale of any such Company Owned Patent Rights on substantially similar (or, from the perspective of the Company, better) terms and conditions as those contained in any offer delivered to MCK hereunder.

(c) If MCK fails to exercise its right to accept such offer as provided herein or if the Liquidating Agent fails to execute a definitive agreement with such other Person on the terms and conditions set forth in the aforementioned written offer delivered by the Liquidating Agent to MCK within three hundred and sixty (360) days of the date on which MCK rejected or failed to exercise its right to accept such offer as set forth in subsection (b) of this Section 13.06 , then the Liquidating Agent shall be required to submit a new offer to MCK (and repeat the process set forth in this Section 13.06(b) ) before entering into a definitive agreement with any other Person with respect to any such Company Owned Patent Rights.

(d) The provisions of this Section 13.06 shall only apply in the event of the dissolution of the Company pursuant to Section 13.02 prior to a Qualified MCK Exit and immediately upon consummation of a Qualified MCK Exit, the provisions of this Section 13.06 shall terminate.

Section 13.07. Distributions in Cash or in Kind. Upon the dissolution of the Company, the Liquidating Agent shall use all commercially reasonable efforts to liquidate all of the Company assets in an orderly manner and apply the proceeds of such liquidation as set forth in Section 13.05 ; provided , that if in the good faith judgment of the Liquidating Agent, a Company asset should not be liquidated, the Liquidating Agent shall distribute such asset, on the basis of its value (determined in good faith by the Liquidating Agent), in accordance with Section 13.05 , subject to the priorities set forth in Section 13.05 ; and provided , further , that the Liquidating Agent shall in good faith attempt to liquidate sufficient assets of the Company to satisfy in cash (or make reasonable provision for) the debts and liabilities referred to in Section 13.05(a)(i) .

Section 13.08. Claims of the Members. The Members and former Members shall look solely to the Company’s assets for the return of their Capital Contributions, and if the assets of the Company remaining after payment of or due provision for all debts, liabilities and obligations of the Company are insufficient to return such Capital Contributions, the Members and former Members shall have no recourse against the Company, any Director or any other Member. No Member shall have any obligation to make any Capital Contribution with respect to such insufficiency, and such insufficiency shall not be considered a debt owed to the Company or to any other Person.

ARTICLE 14

M ISCELLANEOUS

Section 14.01. Further Assurances. Subject to the terms and conditions contained herein, each Member shall, upon the request from time to time of the Company and without further consideration, do, execute and perform all such other acts, deeds and documents as may be reasonably requested by the Company to carry out fully the purposes and intent of this Agreement.

Section 14.02. Amendments.

(a) Subject to Section 5.05 , this Agreement may be amended or modified only with the written consent of Members holding a majority of the outstanding Units.

(b) In addition, any amendment or modification of (i) this Section 14.02(b) shall require the prior written consent of all the Members and (ii) this Agreement that (x) adversely affects a Member or any of its Affiliates disproportionately to its effect on the other Members and their Affiliates, (y) diminishes a Member’s express rights under the terms of this Agreement, or (z) increases the liabilities or obligations of a Member shall, in each case, require the prior written consent of such Member.

(c) Notwithstanding Sections Section 14.02(a) and 14.02(b) , the Board may, subject to Section 5.05 , amend, without the consent of the Members:

(i) this Agreement solely in order to reflect the fact that a new Member admitted in accordance with the terms of this Agreement has agreed to become bound by, and subject to, this Agreement;

(ii) this Agreement and the Certificate of Formation in order to change the name of the Company to the extent such change of name is permitted pursuant to this Agreement, including Section 5.05 ;

(iii) Exhibit A hereto to reflect changes required pursuant to changes in the Members (including the admission of additional Members), the number and ownership of Units, capital contributions and Membership Percentages in accordance with the terms of this Agreement; and

(iv) this Agreement, to reflect the terms of any Equity Securities in the Company and the issuance thereof as provided in, and to the extent issued in accordance with the terms of, this Agreement, provided , that such amendment does not have an effect on any Member set forth in Section 14.02(b) .

Section 14.03. Waiver; Cumulative Remedies. Except as otherwise specifically provided herein, any party may waive any right of such party under this Agreement by an instrument signed in writing by such party. Except as specifically provided herein, the failure or delay of any Member to enforce at any time any of the provisions of this Agreement shall in no way be construed to be

a waiver of any such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any Member thereafter to enforce each and every such provision. No waiver of any breach of or noncompliance with this Agreement shall be held to be a waiver of any other or subsequent breach or non-compliance. Except as specifically provided herein, all remedies, either under this Agreement or by Law or otherwise afforded, will be cumulative and not alternative.

Section 14.04. Entire Agreement. This Agreement, the Contribution Agreement, and the other Transaction Documents constitute the entire agreement between the parties hereto with respect to the subject matter hereof and thereof and supersede and cancel all prior agreements, understandings, representations and warranties, both oral and written, between the parties hereto with respect thereto, and there are no agreements, undertakings, representations or warranties of any of the parties hereto with respect to the transactions contemplated hereby and thereby other than those set forth herein or therein or made hereunder or thereunder.

Section 14.05. Third-Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to confer, nor shall anything herein confer, on any Person other than the parties hereto, and their respective successors or permitted assigns, any rights, remedies, obligations or liabilities, except that any Person who is entitled to exculpation, indemnification or advancement pursuant to Section 6.01 and is not party to this Agreement shall be an express third-party beneficiary of this Agreement to the extent required for purposes of Section 6.01 ; provided , that all claims for indemnification shall be made only in the name and on behalf of such Person by a Member; and provided further that the Sponsor Shareholders shall be an express third party beneficiary with respect to its rights hereunder. Notwithstanding the foregoing or anything to the contrary in this Agreement, H&F shall be an express third-party beneficiary of this Agreement with respect to Section 5.01(k) , Section 9.03(d) , Section 9.05 , Section 11.06 and this sentence.

Section 14.06. Non Assignability; Binding Effect. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided , that neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof may be assigned, delegated or otherwise transferred other than in connection with a Transfer of a Unit permitted pursuant to Article 9 .

Section 14.07. Severability. Every provision of this Agreement is intended to be severable. If any term or provision hereof is declared or held illegal or invalid, in whole or in part, for any reason whatsoever, such illegality or invalidity shall not affect the validity or enforceability of the remainder of the Agreement, and such provision shall be deemed amended or modified to the extent, but only to the extent, necessary to cure such illegality or invalidity. Upon such determination of illegality or invalidity, the parties hereto shall negotiate in good faith to amend this Agreement to effect the original intent of the parties. In any event, the invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of this Agreement, including that provision, in any other competent jurisdiction.

Section 14.08. Injunctive Relief The parties hereto hereby acknowledge and agree that a violation of any of the terms of this Agreement will cause the other parties and the Company irreparable injury for which an adequate remedy at law is not available. Accordingly, the parties hereto expressly agree that in addition to any other remedy that each of the parties and the Company may be entitled to in law or in equity, each of the parties hereto and the Company shall, except as specifically provided otherwise in this Agreement, be entitled to specific performance of the terms of this Agreement and any injunction, restraining order or other equitable relief that may be necessary to prevent any breach(es) thereof. Furthermore, the parties expressly agree that if any of the parties hereto, or the Company, institutes any action or proceeding to enforce the provisions hereof, any other party against whom such action or proceeding is brought shall be deemed to have expressly, knowingly, and voluntarily waived the claim or defense that an adequate remedy exists at law. Each party hereby waives any requirement of any posting of bond.

Section 14.09. Governing Law. THIS AGREEMENT AND ALL RELATED DISPUTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, AND OTHER APPLICABLE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ANY CHOICE OF LAW PROVISIONS THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANY OTHER STATE.

Section 14.10. Dispute Resolution.

(a) Subject to Section 14.10(b) below, for the purposes of any suit, action or other proceeding arising out of or relating to this Agreement, each party to this Agreement irrevocably consents and submits, to the fullest extent permitted by Law, to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or if unavailable, any federal court sifting in the State of Delaware or, if unavailable, the Delaware Superior Court) and the appellate courts having jurisdiction of appeals in such courts, and each party irrevocably and unconditionally waives, to the fullest extent permitted by Law, and agrees not to plead, claim or assert, any objection to the exercise of jurisdiction over any suit, action or other proceeding arising out of or relating to this Agreement by the Court of Chancery of the State of Delaware (or if unavailable, by any federal court sifting in the State of Delaware or, if unavailable, the Delaware Superior Court). For the purposes of any suit, action or other proceeding arising out of or relating to this Agreement, each party irrevocably and unconditionally waives, to the fullest extent permitted by Law, and agrees not to plead, claim or assert, any objection to the laying of venue in the Court of Chancery of the State of Delaware (or if unavailable, any federal court sifting in the State of Delaware or, if unavailable, the Delaware Superior Court), and hereby further irrevocably and unconditionally waives, to the fullest extent permitted by Law, and agrees not to plead, claim or assert in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Each party irrevocably consents, to the fullest extent permitted by Law, to service of process in connection with any suit, action or other proceeding arising out of or relating to this Agreement by registered mail to such party at its address set forth in this Agreement, in accordance with the provisions of Section 14.12 , and each party hereby designates such person as the party’s agent for service of process. The consent to jurisdiction set forth in this Section 14.10 shall not constitute a consent to general jurisdiction in the State of Delaware and shall not constitute consent to service of process for any purpose except as provided in this Section 14.10 . The parties hereto agree that a final, non-appealable judgment in any such suit, action 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.

(b) At any time prior to a Qualified MCK Exit, any dispute arising out of or relating to this Agreement shall first be submitted to the Ad Hoc Committee that will be formed upon notice by the party wishing to resolve the dispute. The Ad Hoc Committee shall meet (in person, by telephone or by audio-visual conference) within five (5) Business Days after receipt of notice from the party wishing to resolve the dispute and shall have thirty (30) days to resolve such matters. If such dispute is not fully and finally settled in accordance with the provisions of this Section 14.10(b) at the conclusion of such 30-day period, then the provisions of Section 14.10(a) shall apply. During such 30-day period only, neither party will commence, pursue or continue any legal proceeding based upon, arising out of or relating to such dispute; provided , however , that during such 30-day period, either party may commence and pursue a legal proceeding in the Delaware Court of Chancery seeking injunctive or other equitable relief under circumstances in which such party will be irreparably harmed if such party is not able to commence and pursue such legal proceeding during such 30-day period.

Section 14.11. Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY KNOWINGLY AND VOLUNTARILY WAIVES AND AGREES NOT TO ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTERS WITH RESPECT TO THIS AGREEMENT OR ANY ALL ACTIONS OR PROCEEDINGS (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR THE RELATIONSHIP ESTABLISHED HEREUNDER. A COPY OF THIS PARAGRAPH MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT IRREVOCABLY TO WAIVE THE RIGHT TO TRIAL BY JURY IN ANY SUCH ACTION AND THAT SUCH ACTION WILL INSTEAD BY TRIED BY A JUDGE SITTING WITHOUT A JURY.

Section 14.12. Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by email or facsimile with receipt confirmed (followed by delivery of an original via overnight courier service) or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses:

If to the Company :

Change Healthcare LLC

5995 Windward Parkway

Alpharetta, GA

Attention: Loretta Cecil, General Counsel

Facsimile: (404) 338-5145

with a copy (which shall not constitute notice) to:

Ropes & Gray LLP

The Prudential Tower

800 Boylston Street

Boston, Massachusetts 02119

Attention: R. Newcomb Stillwell

Facsimile: (617) 235 0213

and

Davis Polk & Wardwell LLP

1600 El Camino Real

Menlo Park, CA 94025

Attention: Alan F. Denenberg

Facsimile: (650) 752-2004

If to Echo :

c/o The Blackstone Group

345 Park Avenue

New York, New York 10154

Attention: John G. Finley

Facsimile: (212) 583-5749

with a copy (which shall not constitute notice) to:

Ropes & Gray LLP

The Prudential Tower

800 Boylston Street

Boston, Massachusetts 02119

Attention: R. Newcomb Stillwell

Facsimile: (617) 235 0213

and

Ropes & Gray LLP

Three Embarcadero Center

San Francisco, CA 94111-4006

Attention: Jason Freedman

Facsimile: (415) 315-4876

If to any MCK Member :

McKesson Corporation

One Post Street, 32 ^nd Floor

San Francisco, CA 94104

Attention: Assistant General Counsel

Facsimile: (415) 983-8457

And a copy (which copy shall not constitute notice) to:

Davis Polk & Wardwell LLP

1600 El Camino Real

Menlo Park, CA 94025

Attention: F. Denenberg

Facsimile: (650) 752-2004

If to any other Member :

To such addresses reflected in the books and records of the Company.

All notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a Business Day. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day. By written notice to the Company, any party may change the address or facsimile number to which notices shall be directed.

Section 14.13. Counterparts; Effectiveness. This Agreement may be executed in any number of counterparts, and delivered by facsimile, PDF or otherwise, each of which shall be deemed an original of this Agreement and all of which together shall constitute one and the same instrument. This Agreement shall become effective if and only upon the consummation of the Closing, so long as each party hereto shall have received a counterpart hereof signed by the other parties hereto prior to such time. Until and unless the Closing has been consummated, and each party has received a counterpart hereof signed by the other party hereto, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication). For the avoidance of doubt, this Agreement shall automatically terminate and be of no force or effect upon any termination of the Contribution Agreement prior to Closing.

Section 14.14. The Company Parties. The Company Parties hereby agree that each of the Company Parties will be jointly and severally liable for any payment obligations of the Company contained in this Agreement.

[Signature page follows]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.


PF2 IP LLC

By:		/s/ John G. Saia
		Name: John G. Saia
		Title: President

PF2 PST SERVICES INC.

By:		/s/ John G. Saia
		Name: John G. Saia
		Title: President

HCIT HOLDINGS, INC.

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: President and Treasurer

CHANGE HEALTHCARE LLC

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: Co-President and Co-Secretary

By:		/s/ John G. Saia
		Name: John G. Saia
		Title: Co-President and Co-Secretary

[Signature Page — Third Amended and Restated LLC Agreement of Change Healthcare LLC]


CHANGE HEALTHCARE INTERMEDIATE HOLDINGS, LLC

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: Co-President and Co-Secretary

By:		/s/ John G. Saia
		Name: John G. Saia
		Title: Co-President and Co-Secretary

CHANGE HEALTHCARE HOLDINGS, LLC

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: Co-President and Co-Secretary

By:		/s/ John G. Saia
		Name: John G. Saia
		Title: Co-President and Co-Secretary

CHANGE HEALTHCARE OPERATIONS, LLC

By:		/s/ Gregory T. Stevens
Name:		Gregory T. Stevens
Title:		Secretary

CHANGE HEALTHCARE SOLUTIONS, LLC

By:		/s/ Gregory T. Stevens
Name:		Gregory T. Stevens
Title:		Secretary

[Signature Page — Third Amended and Restated LLC Agreement of Change Healthcare LLC]


CHANGE HEALTHCARE INTERMEDIATE HOLDINGS, INC.

By:		/s/ Gregory T. Stevens
Name:		Gregory T. Stevens
Title:		General Counsel and Secretary

CHANGE HEALTHCARE HOLDINGS, INC.

By:		/s/ Gregory T. Stevens
Name:		Gregory T. Stevens
Title:		General Counsel and Secretary

CHANGE HEALTHCARE, INC.

By:		/s/ Gregory T. Stevens
Name:		Gregory T. Stevens
Title:		General Counsel and Secretary

CHANGE HEALTHCARE FINANCE, INC.

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: Co-President and Treasurer

By:		/s/ John G. Saia
		Name: John G. Saia
		Title: Co-President and Secretary

[Signature Page — Third Amended and Restated LLC Agreement of Change Healthcare LLC]


MCKESSON TECHNOLOGIES LLC

By:		/s/ John G. Saia
		Name: John G. Saia
		Title: Vice President and Secretary

PST SERVICES LLC

By:		/s/ John G. Saia
		Name: John G. Saia
		Title: Vice President and Secretary

[Signature Page — Third Amended and Restated LLC Agreement of Change Healthcare LLC]

EXHIBIT A

MEMBER INFORMATION


Name	Number of Units		Membership Percentages
PF2 IP LLC		660,976.52		33.23	%
PF2 PST Services Inc.		731,390.51		36.76	%
HCIT Holdings, Inc.		597,139.25		30.01	%

Number of units issuable upon conversion, exercise or exchange of any Equity Securities of Echo: 89,571

EXHIBIT B

REGISTRATION RIGHTS AGREEMENT

[See Attached]

Final Form

REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT (this “ Agreement ”), dated as of March 1, 2017, by and among Change Healthcare LLC (f/k/a PF2 NewCo LLC), a Delaware limited liability company (together with its successors and assigns, the “ Company ”), Change Healthcare Intermediate Holdings, LLC (f/k/a PF2 NewCo Intermediate Holdings, LLC), a Delaware limited liability company, Change Healthcare Holdings, LLC (f/k/a PF2 NewCo Holdings, LLC), a Delaware limited liability company, Change Healthcare Holdings, Inc., a Delaware corporation, Change Healthcare Operations, LLC, a Delaware limited liability company, Change Healthcare Solutions, LLC, a Delaware limited liability company, Change Healthcare Finance, Inc., a Delaware corporation, McKesson Technologies LLC, a Delaware limited liability company, PST Services LLC, a Georgia limited liability company (collectively, the “ Company Parties ”), the MCK Members (as defined below), the Sponsor Holders (as defined below), HCIT Holdings, Inc., a Delaware corporation (“ Echo ”) and any other Person who becomes a party hereto (the “ Echo Shareholders ”).

WITNESSETH:

WHEREAS, the Holders (as defined below) own Registrable Securities (as defined below); and WHEREAS, the parties desire to set forth certain registration rights applicable to the Registrable Securities.

NOW, THEREFORE, in consideration of the foregoing and the mutual promises, covenants and agreements of the parties hereto, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Section 1. Definitions. Capitalized terms used in this Agreement but not defined herein shall have the meanings ascribed to them in the Amended and Restated Limited Liability Company Agreement of the Company dated as of March 1, 2017 (the “ LLC Agreement ”). As used in this Agreement, the following terms have the following respective meanings, and for the avoidance of doubt the following respective meanings shall be used in the case of any conflicts with meanings ascribed in the LLC Agreement:

1.1. “ Blackstone Holders ” means any Holder identified under the caption “Blackstone Holders” on Exhibit A and their respective Permitted Transferees.

1.2. “ Board Resolution ” means a resolution of the board of directors of Echo that is approved by a resolution of the board of directors of the Company.

1.3. “ Common Stock ” means the common stock of Echo.

1.4. “ Company Indemnitees ” has the meaning set forth in Section 2.7(a).

1.5. “ Demand Exercise Notice ” has the meaning set forth in Section 2.1(a).

1.6. “ Demand Registration ” has the meaning set forth in Section 2.1(g).

1.7. “ Echo Shareholders ” has the meaning set forth in the preamble.

1.8. “ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time.

1.9. “ Exercise Window ” means, (a) as to Holders who are MCK Members (or their Permitted Transferees), any period of time during which the MCK Members (or their Permitted Transferees) may Transfer Units or Registrable Securities, as applicable, pursuant to the exercise of registration rights as set forth in Section 9.01(b) of the LLC Agreement and (b) as to Holders who are Echo Shareholders (or their Permitted Transferees) (including the Sponsor Holders), any period of time during which Echo Shareholders may Transfer Units or Registrable Securities, as applicable, pursuant to the exercise of registration rights as set forth in Section 9.01(b) of the LLC Agreement.

1.10. “ FINRA ” means The Financial Industry Regulatory Authority, Inc.

1.11. “ H&F Holders ” means any Holder identified under the caption “H&F Holders” on Exhibit A and their respective Permitted Transferees.

1.12. “ Holder ” means any MCK Member or Echo Shareholder holding Registrable Securities.

1.13. “ Holder Demand ” has the meaning set forth in Section 2.1(a).

1.14. “ indemnified party ” means any Person seeking indemnification pursuant to Section 2.7.

1.15. “ indemnifying party ” means any Person from whom indemnification is sought pursuant to Section 2.7.

1.16. “ Losses ” has the meaning set forth in Section 2.7(a).

1.17. “ MCK Member ” has the meaning set forth in the LLC Agreement; provided such MCK Member then holds Registrable Securities.

1.18. “ Majority Participating Holders ” means Participating Holders holding more than 50% of the Registrable Securities proposed to be included in any offering of Registrable Securities by such Participating Holders pursuant to Section 2.1 or Section 2.2; provided , that (a) during the First Echo Sale Window, “ Majority Participating Holders ” shall mean the Blackstone Holders, (b) during the MCK Exit Window, “ Majority Participating Holders ” shall mean the MCK Members, (c) during the Second Echo Sale Window, “ Majority Participating Holders ” shall be determined without reference to any MCK Members participating in such offering and (d) in the event that an H&F Holder is the Holder making a Holder Demand in any offering pursuant to Section 2.1 (including any Shelf Underwriting) initiated on or after the Restriction End Date, “ Majority Participating Holders ” shall mean the H&F Holders unless and until the H&F Holders have been the Majority Participating Holders in one (1) offering pursuant to this clause (d); provided , that if the H&F Holders have not yet had the opportunity to participate in any Holder Demand pursuant to Section 2.1(b) or any incidental registration pursuant to Section 2.2 prior to the Restriction End Date, in the event that an H&F Holder is the Holder making a Holder Demand in any offering pursuant to Section 2.1 (including any Shelf Underwriting) initiated on or after the Restriction End Date, “ Majority Participating Holders ” for purposes of this clause (d) shall mean the H&F Holders unless and until the H&F Holders have been the Majority Participating Holders in two (2) offerings pursuant to this clause (d).

1.19. “ Participating Holders ” means any Holder participating in any offering of Registrable Securities pursuant to Section 2.1 or Section 2.2.

1.20. “ Postponement Period ” has the meaning set forth in Section 2.1(i).

1.21. “ Registrable Securities ” means any of the following when held by an MCK Member or an Echo Shareholder (or their respective Permitted Transferees): (i) any Common Stock held by the MCK Members or the Echo Shareholders (or their respective Permitted Transferees) (including Common Stock acquired after the effective date of the Agreement, pursuant to an Exchange or otherwise) and (ii) any Common Stock into which Units held by the MCK Members (or their respective Permitted Transferees) are exchangeable pursuant to Section 2.3 hereof and Article 9 and Section 11.04(f) of the LLC Agreement. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (a) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (b) such securities shall have been sold pursuant to Rule 144 under the Securities Act or (c) the Holder of such securities is able to immediately sell such securities under Rule 144 under the Securities Act without any restrictions on transfer (including without application of paragraphs (c), (d), (e), (f) and (h) of Rule 144); provided , however , in the case of each of the Sponsor Holders and the MCK Members, such securities shall not cease to be Registrable Securities prior to the later of (i) the expiration of the Second Echo Sale Window and (ii) such time as such Sponsor Holder, together with its Affiliates, beneficially owns less than 2% of the outstanding shares of Common Stock, together with any Units exchangeable into Common Stock.

1.22. “ Registration Expenses ” means all fees and expenses incurred in connection with the Company’s and Echo’s performance of or compliance with Section 2 hereof, including, without limitation, (i) all registration, filing and applicable SEC fees, FINRA fees, listing fees, and fees and expenses of complying with state or foreign securities or blue sky laws (including fees and disbursements of counsel to the underwriters and the Participating Holders in connection with “blue sky” qualification of the Registrable Securities and determination of their eligibility for investment under the laws of the various jurisdictions), (ii) all printing (including printing certificates for the Registrable Securities in a form eligible for deposit with The Depository Trust Company and printing preliminary and final prospectuses), word processing, duplicating, telephone and facsimile expenses, and messenger and delivery expenses, (iii) all fees and disbursements of counsel for the Company and/or Echo and of their respective independent public accountants, including the expenses of “cold comfort” letters or any special audits required by, or incident to, such registration and the fees and expenses of any other independent public accountant that is requested to provide “cold comfort” on financial statements required to be included in the registration statement, (iv) all fees and expenses of counsel to Echo and to the Holders, including a local counsel if required, (v) all transfer taxes and (vi) all expenses incurred in connection with promotional efforts or “roadshows”; provided , however , that Registration Expenses shall exclude, and the Participating Holders shall pay, underwriting discounts and commissions in respect of the Registrable Securities being registered for such Participating Holders.

1.23. “ Restriction End Date ” means the first date on which either clause (vii) or clause (viii) of Section 9.01(b) of the LLC Agreement is applicable.

1.24. “ SEC ” means the Securities and Exchange Commission.

1.25. “ Section 2.2 Sale Amount ” has the meaning set forth in Section 2.2(c).

1.26. “ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time.

1.27. “ Shelf Registrable Securities ” has the meaning set forth in Section 2.1(j).

1.28. “ Shelf Registration Statement ” has the meaning set forth in Section 2.1(j).

1.29. “ Shelf Underwriting ” has the meaning set forth in Section 2.1(j).

1.30. “ Shelf Underwriting Notice ” has the meaning set forth in Section 2.1(j).

1.31. “ Shelf Underwriting Request ” has the meaning set forth in Section 2.1(j).

1.32. “ Sponsor Holders ” means, collectively, the Blackstone Holders and the H&F Holders.

1.33. “ WKSI ” means a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Section 2. Registration Under Securities Act.

2.1. Registration on Demand.

(a) Demand. Subject to the provisions of this Agreement and the LLC Agreement, at any time and from time to time during an Exercise Window, one or more Holders shall have the right to require Echo to effect the registration under the Securities Act of all or part of the Registrable Securities held by such Holders, including by means of a shelf registration statement pursuant to Rule 415 under the Securities Act if so requested and if Echo is then eligible to use such registration (any such demanded registration that is not an IPO Demand, a “ Demand Registration ”), by delivering a written request therefor to Echo that specifies the number of Registrable Securities held by such Holders to be registered and the intended method of distribution thereof (such a request, a “ Holder Demand ”). As promptly as practicable, but no later than two (2) Business Days after receipt of a Holder Demand, Echo shall give written notice (the “ Demand Exercise Notice ”) of the Holder Demand to the Company and all other Holders. Such Holders shall have the option, within five (5) Business Days after the receipt of the Demand Exercise Notice, to request, in writing, that Echo include in such registration any Registrable Securities held by such Holder (which request shall specify the maximum number of Registrable Securities intended to be disposed of by such Holder). If Echo is a WKSI on the date of the Holder

Demand, then the Holder Demand may request registration of an unspecified amount of Registrable Securities to be sold by the unspecified Holders. If Echo is not a WKSI on the date of the Holder Demand, then the Holder Demand shall specify the aggregate amount of Registrable Securities to be registered. Echo shall provide to a Holder the information necessary to determine Echo’s status as a WKSI upon request. To the extent Echo is a WKSI at the time any Holder Demand is made to Echo, and such Holder Demand requests that Echo file an automatic shelf registration statement (as defined in Rule 415 under the Securities Act) (an “ automatic shelf registration statement ”) on Form S-3, Echo shall file an automatic shelf registration statement that covers those Registrable Securities which are requested to be registered or, if requested, an unspecified amount of Registrable Securities. Echo shall use its reasonable best efforts to remain a WKSI (and not become an ineligible issuer (as defined in Rule 415 under the Securities Act)) during the period during which such automatic shelf registration statement is required to remain effective. If the automatic shelf registration statement has been outstanding for at least three (3) years, at the end of the third year Echo shall upon request refile a new automatic shelf registration statement covering the Registrable Securities. If at any time when Echo is required to reevaluate its WKSI status, Echo determines that it is not a WKSI, Echo shall use its reasonable best efforts to refile the shelf registration statement on Form S-3 and, if such form is not available, Form S-1, and keep such registration statement effective during the period during which such registration statement is required to be kept effective. Echo shall, as expeditiously as reasonably possible, file a registration statement (the “ Demand Registration Statement ”) with the SEC for the registration of the Registrable Securities which Echo has been requested by Holders to register pursuant to this Section 2.1 and to use its reasonable best efforts to cause the Demand Registration Statement to be promptly (and in any case within 60 days after filing such Demand Registration Statement) declared effective under the Securities Act. Echo shall use its reasonable best efforts to effect the registration of Registrable Securities for distribution in accordance with the intended method of distribution set forth in a written request delivered by the Majority Participating Holders or, in the case of a Shelf Registration Statement, any Holder.

(b) Limitations on the Holders During Specified Periods; Tag-Along Rights.

(i) For the avoidance of doubt, (A) no Holder may exercise registration rights hereunder in connection with a Qualified IPO (including any Tag-Along Right (as defined below)), (B) during the First Echo Sale Window: (i) only the Blackstone Holders shall be permitted to request any Demand Registration pursuant to this Agreement and (ii) the Echo Shareholders that are not Blackstone Holders and the MCK Members shall both be permitted to exercise rights under Section 2.1(b)(ii), (C) during an MCK Exit Window, the Echo Shareholders shall not be permitted to request any Demand Registration pursuant to this Agreement and the Echo Shareholders shall be permitted to exercise rights under Section 2.1(b)(iii), and (D) during the Second Echo Sale Window: (i) only the Sponsor Holders shall be permitted to request any Demand Registration pursuant to this Agreement and the MCK Members and any Echo Shareholders that do not participate in such demand shall be permitted to exercise rights under Section 2.1(b)(iv).

obligation (a “ Tag-Along Right ”), to require Echo to include in the Demand Registration up to an aggregate number of shares of Common Stock representing each Tagging Seller’s Tag-Along Portion (such shares, the “ Tag-Along Shares ”), subject to Section 2.1(h) and Section 2.1(k). For the purposes of this Agreement, subject to Section 2.1(k), “ Tag-Along Portion ” means, with respect to any Tagging Seller, a number of shares of Common Stock equal to (A) the number of Registrable Securities owned by such Tagging Seller at such time, multiplied by (B) a fraction, (1) the numerator of which is the number of shares of Common Stock proposed to be registered in the Demand Registration by the Blackstone Holders, and (2) the denominator of which is the aggregate number of shares of Registrable Securities held by all Blackstone Holders prior to giving effect to any Exchange associated with such Demand Registration or any sales of Registrable Securities pursuant to such Demand Registration.

(iii) During an Exercise Window that is within the MCK Exit Window, the MCK Members shall only be permitted to make a Holder Demand for one or more underwritten offerings and the Echo Shareholders (in this case, the “ Tagging Sellers ”) shall have the right, but not the obligation, to require Echo to include in the Demand Registration up to an aggregate number of shares of Common Stock representing each Tagging Seller’s Tag-Along Portion, subject to Section 2.1(h) and Section 2.1(k); provided , that the defined terms “ Tagging Seller ,” “ Tag-Along Right ” and “ Tag-Along Shares ” shall be used, as applicable, to refer to the Echo Shareholders and their Registrable Securities, mutatis mutandis. For the purposes of this Section 2.1(b)(iii), subject to Section 2.1(k), “ Tag-Along Portion ” means, with respect to any Tagging Seller, a number of shares of Common Stock equal to (A) the number of Registrable Securities owned by such Tagging Seller at such time, multiplied by (B) a fraction, (1) the numerator of which is the number of shares of Common Stock proposed to be registered in the Demand Registration by the MCK Members, and (2) the denominator of which is the aggregate number of shares of Registrable Securities held by all MCK Members prior to giving effect to any Exchange associated with such Demand Registration or any sales of Registrable Securities pursuant to such Demand Registration.

(iv) In any Holder Demand not described in Section 2.1(b)(ii) or Section 2.1(b)(iii) above, any Holder that did not participate in such Holder Demand (and their Permitted Transferees) (in this case, the “ Tagging Sellers ”) shall have the right, but not the obligation, to require Echo to include in the Demand Registration such number of shares of Common Stock as each such Holder may request in writing, subject to Section 2.1(h) and Section 2.1(k).

(c) Registration Statement Form. Registrations under this Section 2.1 shall be on such appropriate form of the SEC (i) as shall be selected by Echo and as shall be reasonably acceptable to the Majority Participating Holders and (ii) as shall permit the disposition of such Registrable Securities in accordance with the intended method or methods of disposition specified in such Participating Holders’ requests for such registration, including, without limitation, a continuous or delayed basis offering pursuant to Rule 415 under the Securities Act. Echo agrees to include in any such registration statement all information which, in the opinion of counsel to Echo, is necessary or desirable to be included therein.

(e) Selection of Underwriters. The underwriters of each underwritten offering of the Registrable Securities pursuant to this Section 2.1 shall be selected by the Majority Participating Holders; provided , that, except in the case of a “block trade,” such selection is subject to the consent of Echo (which is not to be unreasonably withheld).

(f) Right to Withdraw; Option to Participate in Shelf Takedowns. Subject to Section 2.1(j), any Participating Holder shall have the right to withdraw its request for inclusion of Registrable Securities in any registration statement pursuant to this Section 2.1 at any time prior to the effective date of such registration statement by giving written notice to Echo of its request to withdraw. Upon receipt of notices from each of the Participating Holders to withdraw their request for inclusion of Registrable Securities in any registration statement, Echo shall cease all efforts to obtain effectiveness of the applicable registration statement. In the event that any Holder has requested inclusion of Registrable Securities in a shelf registration, the Holder shall have the right, but, subject to Section 2.1(j), not the obligation, to participate in any offering of Registrable Securities under such shelf registration.

(g) Limitations on Registration on Demand. Following the Restriction End Date, Echo shall not be required to have a registration statement declared effective pursuant to a Demand Registration until at least 90 days after the effective date of any other registration statement filed by Echo pursuant to a previous Demand Registration. The aggregate offering value of the Registrable Securities to be registered pursuant to any such registration shall be at least $100 million (determined as of the date the Holder Demand is made), unless the registration demand is for the balance of the Registrable Securities held by the applicable Holder making a Holder Demand and its Affiliates.

(h) Priority in Registrations on Demand. Whenever Echo effects a registration pursuant to this Section 2.1 in connection with an underwritten offering by Holders, no securities other than Registrable Securities held by Holders shall be included among the securities covered by such registration unless the Majority Participating Holders consent in writing to the inclusion therein of such other securities and the inclusion of such other securities does not reduce the amount of Registrable Securities that may be included in such offering by the Participating Holders, which consent may be subject to terms and conditions determined by the consenting Holders in their sole discretion. If any registration pursuant to a Holder Demand involves an underwritten offering and the managing underwriter(s) of such offering shall inform Echo in writing of its belief that the number of Registrable Securities requested to be included in such registration pursuant to this Section 2.1, when added to the number of any such other securities permitted to be offered in such registration, would materially adversely affect such offering, or if, in the case of an offering during the First Echo Sale Window, an MCK Exit Window or the Second Echo Sale Window, the Majority Participating Holders in their sole discretion shall determine that the inclusion of such additional securities would materially adversely affect such offering, then, subject to the last sentence of this Section 2.1(h), the Participating Holders shall be entitled to participate only on a pro rata basis based on the number of Registrable Securities held by each

such Participating Holder; provided , that if such offering is conducted during the First Echo Sale Window, an MCK Exit Window (but only in respect of the first Demand Registration requested by any MCK Member during the MCK Exit Window) or the Second Echo Sale Window, then, subject to Section 2.1(k), the number of Registrable Securities included in such Demand Registration by the Tagging Sellers shall be reduced at the sole discretion of the Majority Participating Holders prior to any reduction in the number of Registrable Securities included in such Demand Registration by the Majority Participating Holders.

(i) Postponement. If the filing, initial effectiveness or continued use of a registration statement required to be prepared and filed by it pursuant to this Section 2.1 at any time would require Echo to make an Adverse Disclosure, Echo shall be entitled, pursuant to a Board Resolution, once in any twelve-month period, to postpone for a reasonable period of time (but not exceeding 90 days) (the “ Postponement Period ”) the filing, initial effectiveness or continued use of such registration statement;

provided , that no such Postponement Period shall extend the length of any Exercise Window. In such event, Echo shall immediately give the Participating Holders written notice of such determination, containing a specific statement of the reasons for such postponement and an approximation of the anticipated delay, and, after receipt of such notice, such Participating Holders agree to suspend use of the applicable registration statement until the end of the Postponement Period. Echo shall immediately notify such Participating Holders in writing upon the expiration of any Postponement Period, amend or supplement the registration statement (and the included prospectus), if necessary, so it does not contain any untrue statement or omission and furnish to the Participating Holders such numbers of copies of such registration statement as so amended or supplemented as the Participating Holders may reasonably request. “ Adverse Disclosure ” means public disclosure of material non-public information that, in the good faith judgment of Echo, upon advice of counsel and as authorized by a Board Resolution, would require premature disclosure of any material financing, material corporate reorganization or other material transaction, obligation, fact or event involving Echo or the Company, as the case may be.

(j) Shelf Takedowns. In the event that Echo files a shelf registration statement under Rule 415 of the Securities Act pursuant to a Holder Demand and such registration becomes effective (such registration statement, a “ Shelf Registration Statement ”), any Holder of Registrable Securities registered on such Shelf Registration Statement shall have the right at any time or from time to time to elect to sell Registrable Securities in an underwritten offering, including a “block trade” conducted as an underwritten offering, pursuant to such registration statement (“ Shelf Registrable Securities ”) or in any other manner contemplated by the “Plan of Distribution” in such registration statement. Any Holder making a Holder Demand may make such election by delivering to Echo a written request (a “ Shelf Underwriting Request ”) for such underwritten offering to Echo specifying the number of Shelf Registrable Securities that such Holder desires to sell pursuant to such underwritten offering (the “ Shelf Underwriting ”). As promptly as practicable, but no later than two (2) Business Days after receipt of a Shelf Underwriting Request (or, in the case of a “block trade,” such shorter period as is reasonably practicable), Echo shall give written notice (the “ Shelf Underwriting Notice ”) of such Shelf Underwriting Request to all Holders of Shelf Registrable Securities, and the Shelf Underwriting Notice shall offer each Holder the opportunity to include in the Shelf Underwriting that number of Registrable Securities as each such Holder may request in writing in accordance with this Section

2.1(j). Echo shall include in such Shelf Underwriting (x) the Shelf Registrable Securities of the Holders making the Shelf Underwriting Request and (y) the Shelf Registrable Securities of any other Holder of Shelf Registrable Securities which shall have made a written request to Echo for inclusion in such Shelf Underwriting (which request shall specify the maximum number of Shelf Registrable Securities intended to be disposed of by such Holder) (such persons, “ Potential Takedown Participants ”) within three (3) Business Days after the Shelf Underwriting Notice has been delivered (or, in the case of a “block trade,” one (1) Business Day). If such Shelf Underwriting is being conducted as a “block trade,” any Potential Takedown Participant’s request to participate in such Shelf Underwriting shall be binding on the Potential Takedown Participant; provided that each such Potential Takedown Participant that elects to participate may condition its participation on such Shelf Underwriting being completed within ten (10) Business Days and/or its acceptance at a price per share (after giving effect to any underwriters’ discounts or commissions) to such Potential Takedown Participant of not less than ninety two percent (92%) (or such lesser percentage specified by such Potential Takedown Participant) of the closing price for the shares of Common Stock on their principal trading market on the Business Day immediately prior to such Potential Takedown Participant’s election to participate. Echo shall, as expeditiously as possible, use its reasonable best efforts to facilitate such Shelf Underwriting. Once a Shelf Registration Statement has been declared effective, the Holders of Registrable Securities may request, and Echo shall be required to facilitate, an unlimited number of Shelf Underwritings with respect to such Shelf Registration Statement; provided , however , that Echo shall not be required to facilitate a Shelf Underwriting until at least 90 days after the later of the date of the underwriting agreement in any prior Shelf Underwriting effected pursuant to this Section 2.1(j) and the effective date of any previous Demand Registration Statement pursuant to this Section 2.1. Notwithstanding anything to the contrary in this Section 2.1(j), (A) each Shelf Underwriting must include, in the aggregate (based on the shares of Common Stock included in such Shelf Underwriting by all Holders participating in such Shelf Underwriting), shares of Common Stock having an aggregate market value of at least $100 million (determined as of the date the Shelf Underwriting Request is made), unless the Shelf Underwriting is of the balance of the Registrable Securities held by the applicable Holder making a Holder Demand and its Affiliates and (B) each Shelf Underwriting is subject to Section 2.1(k).

(k) H&F Priority Sale Right. Anything in this Agreement to the contrary notwithstanding, in any underwritten offering pursuant to this Section 2.1 or Section 2.2 in which the H&F Holders are participating and that is initiated prior to the two-year anniversary of the Restriction End Date (an “ H&F Priority Offering ”), the number of Registrable Securities that the Blackstone Holders, the H&F Holders and the other Holders shall be entitled to include in such offering (including any Shelf Underwriting) shall, subject to Section 2.1(h) or 2.2(c), as applicable (as modified by the immediately succeeding sentence), be determined as follows: (i) if the Blackstone Holders are the Holders making a Holder Demand, then (A) the Tag-Along Portion of the H&F Holders will be that percentage that would result in the H&F Holders being able to sell in such offering a number of Registrable Securities equal to (x) the number of Registrable Securities being sold by the Blackstone Holders in such offering or (y) if the H&F Holders own Registrable Securities with an aggregate market value of less than $100 million (determined as of the date the relevant Demand Exercise Notice, Shelf Underwriting Request or Incidental Registration Notice (as defined below), as applicable, is delivered), then all of the Registrable Securities owned by the H&F Holders and (B) the Tag-Along Portion of each other Tagging Seller will equal the greater of (x) the Tag-Along Portion of such Tagging Seller determined without

giving effect to this Section 2.1(k) and (y) a number of shares of Common Stock equal to (A) the aggregate number of shares of Registrable Securities owned by such Tagging Seller at such time multiplied by (B) a fraction, (1) the numerator of which is the aggregate number of shares of Common Stock proposed to be included in such offering by the Blackstone Holders and the H&F Holders and (2) the denominator of which is the aggregate number of Registrable Securities owned by the Blackstone Holders and the H&F Holders at such time, (ii) if the H&F Holders are the Holders making a Holder Demand, then (A) the Tag-Along Portion of the Blackstone Holders will be that percentage that would result in the Blackstone Holders being able to sell in such offering a number of Registrable Securities equal to the number of Registrable Securities being sold by the H&F Holders in such offering and (B) the Tag-Along Portion of each other Tagging Seller will equal a number of shares of Common Stock equal to (A) the aggregate number of shares of Registrable Securities owned by such Tagging Seller at such time multiplied by (B) a fraction, (1) the numerator of which is the aggregate number of shares of Common Stock proposed to be included in such offering by the H&F Holders and the Blackstone Holders and (2) the denominator of which is the aggregate number of Registrable Securities owned by the H&F Holders and the Blackstone Holders at such time and (iii) if the Holder making a Holder Demand is not an H&F Holder or a Blackstone Holder or the offering is pursuant to Section 2.2, then the number of Registrable Securities that the Blackstone Holders and the H&F Holders shall be entitled to include in such offering shall be aggregated for purposes of determining (A) the Tag-Along Portion for the Blackstone Holders and/or the H&F Holders, as applicable, and (B) for determining the number of Registrable Securities that may be sold by the Blackstone Holders and the H&F Holders under any circumstances when the proviso in Section 2.1(h) is applicable and (x) then allocated to the Blackstone Holders and the H&F Holders in accordance with their respective Allocation Percentages (as defined below) and (y) to the extent that the H&F Holders do not request the inclusion of all of the Registrable Securities they are entitled to include in such offering pursuant to clause (x), then the number of Registrable Securities the Blackstone Holders shall be entitled to include in such offering shall be increased by the amount that the H&F Holders could have included pursuant to clause (x) but chose not to, provided that under no circumstances will the Blackstone Holders be entitled to include pursuant to this clause (iii) a number of Registrable Securities that exceeds the number they could have included but for this Section 2.1(k). Anything in Section 2.1(h) or 2.2(c) to the contrary notwithstanding, in the event of any H&F Priority Offering in which the number of Registrable Securities offered by the Holders will be cut back pursuant to Section 2.1(h) or 2.2(c) then, (1) the aggregate amount of Registrable Securities that may be offered and sold by the Blackstone Holders and the H&F Holders for purposes of such Section shall be determined on an aggregate basis treating the Blackstone Holders as Participating Holders regardless of whether they are offering and selling any Registrable Securities in such offering and (2) to the extent that the aggregate amount that may be sold by the H&F Holders and the Blackstone Holders in accordance with clause (1) is less than the aggregate amount requested to be included by the H&F Holders and the Blackstone Holders, then the aggregate amount that may be sold in such offering as determined in accordance with clause (1) shall be allocated between the H&F Holders (in the aggregate) and the Blackstone Holders (in the aggregate) in accordance with their respective Allocation Percentages. The “ Allocation Percentages ” of (I) the H&F Holders shall equal 50%, provided that if the H&F Holders own Registrable Securities with an aggregate market value of less than $100 million (determined as of the date the relevant Demand Exercise Notice, Shelf Underwriting Request or Incidental Registration Notice, as applicable, is delivered), then the Allocation Percentage of the H&F Holders will equal the lesser of 100% and the percentage that results in the H&F Holders being able to sell in such offering all of their Registrable Securities and (II) the Allocation Percentage of the Blackstone Holders will equal 100% minus the H&F Allocation Percentage.

2.2. Incidental Registration.

(a) Right to Include Registrable Securities. If Echo at any time following the commencement of the Second Echo Sale Window proposes to register any of its equity securities under the Securities Act by registration on Form S-1 or Form S-3, or any successor or similar form(s) (except registrations (i) pursuant to Section 2.1, (ii) solely for registration of equity securities in connection with an employee benefit plan or dividend reinvestment plan on Form S-8 or any successor form thereto or (iii) in connection with any acquisition or merger on Form S-4 or any successor form thereto), whether or not for sale for its own account, it will each such time give prompt written notice to each of the Holders of its intention to do so (an “ Incidental Registration Notice ”) and such notice shall offer the Holders of Registrable Securities the opportunity to register under such registration statement such number of Registrable Securities as each such Holder may request in writing. Upon the written request of any such Holders (which request shall specify the maximum number of Registrable Securities intended to be registered by such Holder), made as promptly as practicable and in any event within three (3) Business Days after the receipt of any such notice, Echo shall include in such registration under the Securities Act all Registrable Securities which Echo has been so requested to register by each Holder (subject to Section 2.2(c)); provided , however , that if, at any time after giving written notice of its intention to register any equity securities and prior to the effective date of the registration statement filed in connection with such registration, Echo shall determine pursuant to a Board Resolution not to register or to delay registration of such equity securities, the Company and Echo shall give written notice of such determination and its reasons therefor to the Holders and (i) in the case of a determination not to register, Echo shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but the Company shall not be relieved from any obligation to pay the Registration Expenses in connection therewith as provided for in Section 2.2(d)) and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Registrable Securities for the same period as the delay in registering such other securities and, in the case of each of (i) and (ii) directly above, without prejudice to the rights of the Holders to request that such registration be effected as a registration under Section 2.1. No registration effected under this Section 2.2 shall relieve Echo of its obligation to effect any registration upon request under Section 2.1.

(b) Right to Withdraw; Option to Participate in Shelf Takedowns. Any Holder shall have the right to withdraw its request for inclusion of Registrable Securities in any registration statement pursuant to this Section 2.2 at any time prior to the effective date of such registration statement by giving written notice to Echo of its request to withdraw. In the event that the Holder has requested inclusion of Registrable Securities in a shelf registration, the Holder shall have the right, but, subject to Section 2.1(j), not the obligation, to participate in any offering of Registrable Securities under such shelf registration.

(c) Priority in Incidental Registrations. If any registration pursuant to this Section 2.2 involves an underwritten offering and the managing underwriter(s) of such offering shall inform Echo in writing of its belief that the number of Registrable Securities requested to be included in such registration or offering, when added to the number of other equity securities to be offered in such registration or offering, would materially adversely affect such offering, then Echo shall include in such registration or offering, to the extent of the number and type which Echo so advised can be sold in (or during the time of) such registration or offering without so materially adversely affecting such registration or offering (the “ Section 2.2 Sale Amount ”): (i) all of the securities proposed by Echo to be sold for its own account; and (ii) thereafter, to the extent the Section 2.2 Sale Amount is not exceeded, the Registrable Securities requested by the Participating Holders (provided that if all of the Registrable Securities requested by the Participating Holders may not be included, the Participating Holders shall, subject to Section 2.1(k), be entitled to participate on a pro rata basis based on the aggregate number of Registrable Securities held by the Participating Holders).

(d) Expenses. The Company shall pay, and shall be responsible for, all Registration Expenses in connection with any registration requested or offering effected pursuant to this Section 2.2 (other than underwriting discounts and commissions payable by Participating Holders with regard to shares of Common Stock sold by such Holders), including all expenses of the delivery of all documents required under Section 2.4(a)(vi).

(e) Selection of Underwriters. The underwriters of each underwritten offering of the Registrable Securities pursuant to this Section 2.2 shall be selected by a Board Resolution.

2.3. Exchanges of Units. Immediately prior to the consummation of any sale by an MCK Member (or its Permitted Transferees) of shares of Common Stock in an offering registered pursuant to Section 2.1 or Section 2.2, Echo shall issue to such MCK Member (or its Permitted Transferee) a number of shares of Common Stock equal to the number of Units to be exchanged and sold in such offering by such MCK Member (or its Permitted Transferee) in accordance with the Exchange procedures set forth in Section 11.04(f) of the LLC Agreement.

2.4. Registration Procedures.

(a) If and whenever Echo is required to effect a registration or offering of any Registrable Securities under the Securities Act pursuant to either Section 2.1 or Section 2.2 hereof (including without limitation any offering pursuant to Section 2.1(j) or 2.2(a) hereof), Echo shall, and shall cause the Company as necessary, as expeditiously as possible, to:

(i) prepare and file with the SEC as soon as practicable a registration statement on an appropriate registration form of the SEC for the disposition of such Registrable Securities in accordance with the intended method of disposition thereof, which registration statement shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith, and thereafter use its reasonable best efforts to cause such registration statement to become effective as soon thereafter as reasonably possible and in any event within 60 days and remain effective (A) with respect to an underwritten offering, for a period of at least 180 days or until all equity interests subject to such registration statement have been sold, and (B) with respect to a shelf registration, until the earlier of (1) the sale of all Registrable Securities thereunder and (2) the third anniversary of the effective date of such shelf registration;

(ii) prepare and file with the SEC any amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement in accordance with the intended methods of disposition by the Participating Holders set forth in such registration statement for such period as provided for in Section 2.4(a)(i) above;

(iii) furnish, without charge, to each Participating Holder and each underwriter such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus and summary prospectus) and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, and such other documents, as the Participating Holders and such underwriters may request (it being understood that Echo consents to the use of such prospectus or any amendment or supplement thereto by each Participating Holder and the underwriters in connection with the offering and sale of the Registrable Securities covered by such prospectus or any amendment or supplement thereto);

(iv) use its reasonable best efforts (A) to register or qualify all Registrable Securities and other securities covered by such registration statement under such foreign or state securities or “blue sky” laws where an exemption is not available and as the Participating Holders or any managing underwriter shall request, (B) to keep such registration or qualification in effect for so long as such registration statement remains in effect, and (C) to take any and all other actions which may be necessary or advisable to enable the Participating Holders or underwriters to consummate the disposition in such jurisdictions of the securities to be sold by the Participating Holders or Echo, except that Echo shall not for any such purpose be required to qualify generally to do business as a foreign company in any jurisdiction wherein it would not, but for the requirements of this Section 2.4(a)(iv), be obligated to be so qualified;

(v) use its reasonable best efforts to cause all Registrable

Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary in the opinion of counsel to Echo and counsel to the Participating Holders to consummate the disposition of such Registrable Securities;

Accounting Officer of Echo attesting to the material accuracy of any financial information not “comforted” by such independent public accountants; provided that, with respect to (B) above, if such accountants are prohibited from addressing such letters to a Participating Holder by applicable standards of the accounting profession, Echo shall cause an “agreed-upon procedures” letter to be furnished;

(vii) promptly notify each Participating Holder and each managing underwriter (A) when such registration statement, any pre-effective amendment, the prospectus or any prospectus supplement related thereto or post-effective amendment to such registration statement has been filed, and, with respect to such registration statement or any post-effective amendment, when the same has become effective; (B) of the receipt by Echo of any comments from the SEC or receipt of any request by the SEC for additional information with respect to any registration statement or the prospectus related thereto or any request by the SEC for amending or supplementing the registration statement and the prospectus used in connection therewith; (C) of the issuance by the SEC of any stop order suspending the effectiveness of such registration statement or the initiation of any proceedings for that purpose; (D) of the receipt by Echo of any notification with respect to the suspension of the qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction or the initiation of any proceeding for such purpose; and (E) at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the happening of any event as a result of which, the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, in the light of the circumstances under which they were made, and in the case of this clause (E), promptly prepare and furnish, at the Company’s expense, to each Participating Holder and each managing underwriter, and file with the SEC, a number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, 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 the light of the circumstances under which they were made; and (F) at any time when the representations and warranties of Echo or the Company contemplated by Section 2.5(a) or (b) hereof cease to be true and correct;

(viii) otherwise comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as practicable (and in any event within 16 months after the effective date of the registration statement), an earnings statement covering the period of at least twelve consecutive months beginning with the first full calendar month after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;

(ix) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by such registration statement from and after a date not later than the effective date of such registration statement;

(x) (A) use its reasonable best efforts to cause all Registrable Securities covered by such registration statement to be listed on the principal securities exchange on which shares of Common Stock are then listed (if any), if the listing of such Registrable Securities is then permitted under the rules of such exchange, or (B) if shares of Common Stock are not then so listed, use its reasonable best efforts to cause all such Registrable Securities to be listed on a national securities exchange in the U.S.;

(xi) deliver promptly to counsel to the Participating Holders and each underwriter, if any, participating in the offering of the Registrable Securities, copies of all correspondence between the SEC and Echo, its counsel or auditors and all memoranda relating to discussions with the SEC or its staff with respect to such registration statement;

(xii) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of the registration statement;

(xiii) provide a CUSIP number for all Registrable Securities, no later than the effective date of the registration statement, and provide the applicable transfer agents with printed certificates (if required) for the Registrable Securities which are in a form eligible for deposit with The Depository Trust Company;

(xiv) cause its officers and employees to participate in, and to otherwise facilitate and cooperate with the preparation of the registration statement and prospectus and any amendments or supplements thereto (including participating in meetings, drafting sessions, due diligence sessions and the marketing of the Registrable Securities covered by the registration statement (including, without limitation, participation in “road shows”)), taking into account the Company’s business needs and obligations;

(xv) enter into and perform its obligations under such customary agreements (including, without limitation, customary lock-up agreements for Echo, the Company and the directors and officers of the Company and, if applicable, an underwriting agreement as provided for in Section 2.5 herein) and take such other actions as the Participating Holders or managing underwriter(s) shall request in order to expedite or facilitate the disposition of such Registrable Securities, including appointing an agent for service of process in the U.S. on customary terms;

(xvi) promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter(s) or Participating Holders request to be included therein relating to the plan of distribution with respect to such Registrable Securities; and make all required filings of such prospectus supplement or post-effective amendment as soon as practicable after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment;

(xvii) cooperate with each Participating Holder and each underwriter, and their respective counsel, in connection with any filings or submissions required to be made with FINRA, the New York Stock Exchange, The NASDAQ Stock Market or any other securities exchange on which such Registrable Securities are traded or will be traded;

(xviii) include in any prospectus supplement, if requested by any managing underwriter, updated financial information for Echo’s (and/or the Company’s) most recent or current quarterly period (including estimated results or ranges of results) if required for purposes of marketing the offering in the view of the managing underwriter;

(xix) promptly prior to the filing of any document that is to be incorporated by reference into the registration statement or the prospectus contained therein (after the initial filing of such registration statement), provide copies of such document to counsel for the Participating Holders and to each managing underwriter, and make Echo’s representatives available for discussion of such document and make such changes in such document concerning the Participating Holders prior to the filing thereof as counsel for such Participating Holders or underwriters may request;

(xx) furnish to each Participating Holder and each managing underwriter(s), without charge, at least one signed copy of the registration statement and any post-effective amendments thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference);

(xxi) cooperate with the Participating Holders and the managing underwriter(s) to facilitate the timely preparation and delivery of certificates not bearing any restrictive legends representing the Registrable Securities to be sold, and cause such Registrable Securities to be issued in such denominations and registered in such names in accordance with the underwriting agreement prior to any sale of Registrable Securities to the underwriters or, if not an underwritten offering, in accordance with the instructions of the Participating Holders at least five business days prior to any sale of Registrable Securities, and instruct any transfer agent or registrar of Registrable Securities to release any stop transfer orders in respect thereof;

(xxii) to the extent required by the rules and regulations of FINRA, retain a Qualified Independent Underwriter (as defined by FINRA), which shall be acceptable to the Majority Participating Holders; and

(xxiii) take no direct or indirect action prohibited by Regulation M under the Exchange Act; provided , however , that to the extent that any prohibition is applicable to Echo, Echo will take such action as is necessary to make any such prohibition inapplicable.

(b) If and whenever Echo is required to effect a registration or offering of any Registrable Securities under the Securities Act pursuant to either Section 2.1 or Section 2.2 hereof (including without limitation any offering pursuant to Section 2.1(j) or 2.2(a) hereof), the Company shall as expeditiously as possible:

(i) cooperate with Echo to prepare any financial statements of the Company or any other entity required by the Securities Act to be included in the registration statement relating to the offer of such Registrable Securities; and

(ii) use its reasonable best efforts to take any and all other actions reasonably requested by Echo which may be necessary or advisable to enable the Participating Holders or underwriters to consummate the disposition in such jurisdictions of the securities to be sold by the Participating Holders or Echo, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign company in any jurisdiction wherein it would not, but for the requirements of this Section 2.4(b)(ii), be obligated to be so qualified.

(c) Each Participating Holder agrees that, upon receipt of any notice from Echo of the happening of any event of the kind described in Section 2.4(a)(vii)(C) or (E), each Participating Holder will, to the extent appropriate, discontinue its disposition of Registrable Securities pursuant to the registration statement relating to such Registrable Securities until, in the case of Section 2.4(a)(vii)(E), its receipt of the copies of the supplemented or amended prospectus contemplated by Section 2.4(a)(vii)(E) and, if so directed by Echo, will deliver to Echo (at the Company’s expense) all copies, other than permanent file copies, then in its possession, of the prospectus relating to such Registrable Securities at the time of receipt of such notice. If the disposition by a Participating Holder of its securities is discontinued pursuant to the foregoing sentence, Echo shall extend the period of effectiveness of the registration statement by the number of days during the period from and including the date of the giving of such notice to and including the date when the Participating Holder shall have received copies of the supplemented or amended prospectus contemplated by Section 2.4(a)(vii)(E). If for any other reason the effectiveness of any registration statement filed pursuant to Section 2.1 or Section 2.2 is suspended or interrupted prior to the expiration of the time period regarding the maintenance of the effectiveness of such Registration Statement required by Section 2.4(a)(i) so that Registrable Securities may not be sold pursuant thereto, the applicable time period shall be extended by the number of days equal to the number of days during the period beginning with the date of such suspension or interruption to and ending with the date when the sale of Registrable Securities pursuant to such registration statement may be resumed.

(d) If any such registration statement or comparable statement under “blue sky” laws refers to any Holder by name or otherwise as the Holder of any securities of Echo, then such Holder shall have the right to require (i) the insertion therein of language, in form and substance satisfactory to such Holder and Echo, to the effect that the holding by such Holder of such securities is not to be construed as a recommendation by such Holder of the investment quality of Echo’s securities covered thereby and that such holding does not imply that such Holder will assist in meeting any future financial requirements of the Company or Echo, or (ii) in the event that such reference to such Holder by name or otherwise is not in the judgment of Echo, as advised by counsel, required by the Securities Act or any similar federal statute or any state “blue sky” or securities law then in force, the deletion of the reference to such Holder.

2.5. Underwritten Offerings.

(a) Demanded Underwritten Offerings. If requested by the underwriters for any underwritten offering by the Participating Holders pursuant to a registration requested or offering effected under Section 2.1 (including without limitation an offering pursuant to Section 2.1(j)), Echo and the Company shall enter into a customary underwriting agreement with the managing underwriter(s) selected in accordance with Section 2.1(e) hereto. Such underwriting

agreement shall be reasonably satisfactory in form and substance to such Participating Holders and shall contain such representations and warranties by, and such other agreements on the part of, Echo and the Company and such other terms as are generally prevailing in agreements of that type, including, without limitation, customary provisions relating to indemnification and contribution which are no less favorable to the recipient than those provided in Section 2.7 hereof. Each Participating Holder shall be a party to such underwriting agreement and may, at their option, require that any or all of the representations and warranties by, and the other agreements on the part of, Echo or the Company to and for the benefit of such underwriters shall also be made to and for the benefit of each Participating Holder and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to the obligations of each Participating Holder. No Participating Holder shall be required to make any representations or warranties to or agreements with Echo, the Company or the underwriters other than representations, warranties or agreements regarding such Participating Holder, its ownership of and title to the Registrable Securities, and its intended method of distribution; and any liability of any Participating Holder to any underwriter or other Person under such underwriting agreement shall be limited to liability arising from information provided by such Participating Holder regarding itself to the managing underwriter of such offering and shall be limited to an amount equal to the proceeds (net of expenses and underwriting discounts and commissions) that it derives from such registration.

(b) Incidental Underwritten Offerings. In the case of a registration requested or offering effected pursuant to Section 2.2 hereof, if Echo shall have determined to enter into an underwriting agreement in connection therewith, all of the Registrable Securities to be included in such registration shall be subject to such underwriting agreement. The Participating Holders may, at their option, require that any or all of the representations and warranties by, and the other agreements on the part of, Echo or the Company to and for the benefit of such underwriters shall also be made to and for the benefit of the Participating Holders and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to the obligations of the Participating Holders. None of the Participating Holders shall be required to make any representations or warranties to or agreements with Echo, the Company or the underwriters other than representations, warranties or agreements regarding such Participating Holder, its ownership of and title to the Registrable Securities and its intended method of distribution; and any liability of any Participating Holder to any underwriter or other Person under such underwriting agreement shall be limited to liability arising from information provided by such Participating Holder regarding itself to the managing underwriter of such offering and shall be limited to an amount equal to the proceeds (net of expenses and underwriting discounts and commissions) that it derives from such registration.

(c) Participation in Underwritten Registrations. In the case of an underwritten registration pursuant to Section 2.1 or Section 2.2 hereof, as Echo may from time to time reasonably request in writing, Echo may require the Participating Holders (i) to furnish to Echo such information regarding such Participating Holders and the distribution of the Registrable Securities to enable Echo to comply with the requirements of applicable laws or regulations in connection with such registration and (ii) to complete and execute all customary questionnaires, powers of attorney, indemnitees, lock-up agreements, underwriting agreements and any other documents reasonably required under the terms of such underwriting arrangements. Echo shall not be obligated to effect the registration of any Registrable Securities of a particular Participating Holder unless such information and documents regarding such Participating Holder and the distribution of such Participating Holder’s Registrable Securities is provided to Echo.

2.6. Preparation; Reasonable Investigation. In connection with the preparation and filing of each registration statement, prospectus and prospectus supplement under the Securities Act pursuant to this Agreement, Echo (and the Company, as applicable) will give the Participating Holders, the managing underwriter(s), and their respective counsel, accountants and other representatives and agents the opportunity to participate in the preparation of such registration statement, each prospectus included therein or filed with the SEC, and each amendment thereof or supplement thereto or comparable statements under securities or “blue sky” laws of any jurisdiction, and give each of the foregoing parties access to its books and records, all financial and other records, pertinent corporate documents and properties of Echo and the Company and their respective subsidiaries, and such opportunities to discuss the business of the Company and Echo and their respective subsidiaries with their respective directors, officers and employees and the independent public accountants who have certified the Company’s and/or Echo’s financial statements, and supply all other information and respond to all inquiries requested by such Participating Holders, managing underwriter(s), or their respective counsel, accountants or other representatives or agents in connection with such registration statement, prospectus and prospectus supplement as shall be necessary or appropriate, in the opinion of counsel to such Participating Holder or managing underwriter(s), to conduct a reasonable investigation within the meaning of the Securities Act, and Echo shall not file any registration statement or amendment thereto or any prospectus or supplement thereto to which the Participating Holders or the managing underwriter(s) shall object.

2.7. Indemnification.

(a) Indemnification by the Company. The Company agrees that in the event of any registration or offering of any Registrable Securities under the Securities Act, the Company shall, and hereby does, indemnify and hold harmless, to the fullest extent permitted by law, (i) each of Echo, the Holders and their respective Affiliates, (ii) each of the Holders’ and their Affiliates’ respective direct and indirect officers, directors, successors, assigns, members, partners, shareholders, employees, advisors, representatives and agents, (iii) each other Person who participates as an underwriter or Qualified Independent Underwriter (as defined by FINRA) in the offering or sale of such securities, (iv) each Person who controls, directly or indirectly (within the meaning of the Securities Act or the Exchange Act), any of the Persons listed in clauses (i), (ii), (iii) or (iv) and (v) any representative (legal or otherwise) of any of the Persons listed in clauses (i), (ii), (iii) or (iv) (other than the Company) (collectively, the “ Company Indemnitees ”), from and against any losses, penalties, fines, liens, judgments, suits, claims, damages, liabilities, costs and expenses (including attorney’s fees and any amounts paid in any settlement effected in compliance with Section 2.7(e)) or liabilities, joint or several (or actions or proceedings, whether commenced or threatened, in respect thereof, and whether or not such Company Indemnitee is a party thereto) (“ Losses ”), to which such Company Indemnitee has become or may become subject under the Securities Act or otherwise, insofar as such Losses arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact regarding the Company or Echo for inclusion in any registration statement under which such securities were registered under the Securities Act, or any preliminary prospectus or final prospectus contained therein, any amendment or supplement thereto, or any documents incorporated by reference therein, or any

related free writing prospectus, (ii) any omission or alleged omission by the Company or Echo to state a material fact regarding the Company or Echo required to be stated therein or necessary to make the statements therein not misleading, or (iii) any violation by the Company or Echo of any federal, state or common law rule or regulation applicable to the Company or Echo and relating to action required of or inaction by the Company or Echo in connection with any such registration or offering, and the Company shall reimburse such Company Indemnitee for any legal or any other fees or expenses incurred by it in connection with investigating or defending any such Loss, as incurred; provided that the Company shall not be liable to a Company Indemnitee to the extent that any such Loss arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in such registration statements, any such preliminary prospectus, final prospectus, amendment or supplement, or document incorporated by reference therein, or any related free writing prospectus, in reliance upon and in conformity with information furnished by or to the Company or Echo by or on behalf of any Company Indemnitee.

(b) Indemnification by Participating Holders. As a condition to including any Registrable Securities in any registration statement or offering, the Company shall have received an undertaking reasonably satisfactory to them from each Participating Holder so including any Registrable Securities to, severally and not jointly, to the fullest extent permitted by law, indemnify and hold harmless (i) the Company Indemnitees and (ii) any underwriters of the Registrable Securities and each person who controls such underwriters (within the meaning of the Securities Act or the Exchange Act), with respect to any statement or alleged statement in or omission or alleged omission from such registration statement, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto, or any related free writing prospectus, but only to the extent such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished by such Participating Holder to the Company or Echo that specifically states that it is for use in the preparation of such registration statement, preliminary prospectus, final prospectus, amendment or supplement, or any related free writing prospectus, and such Participating Holder shall reimburse such indemnified party for any reasonable legal or any other fees or expenses reasonably incurred by them in connection with investigating or defending any such Loss; provided , however , that the liability of such indemnifying party under this Section 2.7(b) shall be limited to the amount of proceeds (net of expenses and underwriting discounts and commissions) received by such indemnifying party in the offering giving rise to such liability. Each Participating Holder shall also, severally and not jointly, indemnify and hold harmless all other prospective sellers and Participating Holders, their respective Affiliates, direct and indirect officers, directors, successors, assigns, members, partners, shareholders, employees, advisors, representatives, and agents, and each Person who controls, directly or indirectly (within the meaning of the Securities Act or the Exchange Act), any such seller or Participating Holder to the same extent as provided above with respect to indemnification of the Company Indemnitees.

(c) Notices of Claims. Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in Section 2.7(a) or Section 2.7(b), such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party, give written notice to such indemnifying party of the commencement of such action or proceeding; provided , however , that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under Section 2.7(a) or Section 2.7(b), except to the extent that the indemnifying party is actually and materially prejudiced by such failure to give notice, and shall not relieve the indemnifying party from any liability which it may have to the indemnified party otherwise than under this Section 2.7.

(d) Defense of Claims. In case any such action or proceeding is brought against an indemnified party, except as provided for in the next sentence, the indemnifying party shall be entitled to participate therein and assume the defense thereof, jointly with any other indemnifying party, 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 and approval by the indemnified party of such counsel, the indemnifying party shall not be liable to such indemnified party for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof, other than costs of investigation, and the indemnified party shall be entitled to participate in such defense at its own expense. If (i) the indemnifying party fails to notify the indemnified party in writing, within 15 days after the indemnified party has given notice of the action or proceeding, that the indemnifying party will indemnify the indemnified party from and against all Losses the indemnified party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the claim, (ii) the indemnifying party fails to provide the indemnified party with evidence acceptable to the indemnified party that the indemnifying party will have the financial resources to defend against the claim or proceeding and fulfill its indemnification obligations hereunder, (iii) the indemnifying party fails to defend diligently the action or proceeding within 10 days after receiving notice of such failure from such indemnified party; (iv) such indemnified party reasonably shall have concluded (upon advice of its counsel) that there may be one or more legal defenses available to such indemnified party or other indemnified parties which are different than those available to, or not available to, the indemnifying party; or (v) if such indemnified party reasonably shall have concluded (upon advice of its counsel) that, with respect to such claims, the indemnified party and the indemnifying party may have different, conflicting, or adverse legal positions or interests then, in any such case, the indemnified party shall have the right to assume or continue its own defense and the indemnifying party shall be liable for any fees and expenses therefor.

(e) Consent to Entry of Judgment and Settlements. No indemnifying party shall be liable for any settlement of any action or proceeding effected without its written consent, which consent shall not be unreasonably withheld; provided , that, in the case where the indemnifying party shall have failed to take any of the actions listed in clauses (i), (ii) or (iii) of the last sentence of Section 2.7(d), the indemnified party shall have the right to compromise or settle such action on behalf of and for the account, expense, and risk of the indemnifying party and the indemnifying party will remain responsible for any Losses the indemnified party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the action or proceeding to the fullest extent provided in this Section 2.7. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (A) includes an unconditional release of the indemnified party from all liability arising out of such action or claim, (B) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party and (C) does not require any action other than the payment of money by the indemnifying party.

(f) Contribution. If for any reason the indemnification provided for in Sections 2.7(a), (b) or (g) is unavailable to an indemnified party or insufficient in respect of any Losses referred to therein, then, in addition to the amount paid or payable under Sections 2.7(a), (b) or (g), the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such Loss (i) in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand, and the indemnified party on the other, with respect to the statements or omissions which resulted in such Loss, as well as any other relevant equitable considerations, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law or if the allocation provided in this clause (ii) provides a greater amount to the indemnified party than clause (i) above, in such proportion as shall be appropriate to reflect not only the relative fault but also the relative benefits received by the indemnifying party and the indemnified party from the offering of the securities covered by such registration statement as well as any other relevant equitable considerations. The relative fault 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 the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 2.7(f) were to be determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the preceding sentence of this Section 2.7(f). No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The amount paid or payable by an indemnified party as a result of the Losses referred to in Sections 2.7(a), (b) or (g) shall be deemed to include, subject to the limitations set forth in Sections 2.7(a), (b) or (g), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding anything in this Section 2.7(f) to the contrary, no Participating Holder shall be required to contribute (1) any amount in excess of the proceeds (net of expenses and underwriting discounts and commissions) received by such Participating Holder from the sale of the Registrable Securities in the offering to which the Losses of the indemnified parties relate or (2) any amount in excess of the amount of indemnification which such Participating Holder would be required to pay pursuant to this Agreement if such indemnification provision was enforceable or applicable.

(g) Other Indemnification. Indemnification and contribution similar to that specified in the preceding subsections of this Section 2.7 (with appropriate modifications) shall be given by the Company and the Participating Holders with respect to any required registration or other qualification of securities under foreign or state or “blue sky” law or regulation. The indemnification agreements contained in this Section 2.7 shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract and shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any indemnitee or other indemnified party and shall survive the transfer of any of the Registrable Securities by any such party.

(h) Indemnification Payments. The indemnification and contribution required by this Section 2.7 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or a Loss is incurred.

(i) The Company hereby acknowledges and agrees that a Company Indemnitee may have certain rights to indemnification, advancement of expenses and/or insurance provided by other sources. The Company hereby acknowledges and agrees (i) that it is the indemnitor of first resort ( i.e. , its obligations to a Company Indemnitee are primary and any obligation of such other sources to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Company Indemnitee are secondary) and (ii) that it shall be required to advance the full amount of expenses incurred by a Company Indemnitee 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 the terms of this Agreement without regard to any rights a Company Indemnitee may have against such other sources. The Company further agrees that no advancement or payment by such other sources on behalf of a Company Indemnitee with respect to any claim for which such Company Indemnitee has sought indemnification, advancement of expenses or insurance from the Company shall affect the foregoing, and that such other sources 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 such Company Indemnitee against the Company.

2.8. Limitation on Sale of Securities.

(a) For the Company and Echo and Others. If Echo receives a request for registration pursuant to an underwritten offering of Registrable Securities, or is notified of an underwritten offering of Registrable Securities, in each case pursuant to Section 2.1 or 2.2 hereof, and if such a request is being implemented or has not been withdrawn or abandoned, Echo agrees that (i) neither Echo nor the Company shall affect any public or private offer, sale, distribution or other disposition of any of its equity securities or of any security convertible into or exchangeable or exercisable for any equity security or effect any registration of any of such securities under the Securities Act (in each case, other than (x) equity incentive grants to employees pursuant to equity incentive plans, (y) as part of such registration and (z) as a registration using Form S-8 or any successor or similar form which is then in effect), whether or not for sale for its own account, during the period beginning on the date Echo and the Company receive such request until up to 180 days (90 days in any offering following a Qualified IPO) after the date of the prospectus or prospectus supplement related to the underwritten offering (or such shorter period as the managing underwriter(s) may require) and (ii) Echo shall use its reasonable best efforts (including by enforcing the Echo Shareholders’ Agreement) to cause its (and the Company’s, if different) officers and directors to enter into an agreement with the underwriters not to effect any public or private offer, sale, distribution or other disposition of equity interests, or any securities that are convertible or exchangeable or exercisable for equity interests, during the period referred to in clause (i) of this paragraph, including, without limitation, a sale pursuant to Rule 144 under the Securities Act on substantially the same terms as the Holders.

(b) For the Holders. If Echo receives a request for registration pursuant to an underwritten offering of Registrable Securities, or is notified of an underwritten offering of Registrable Securities, in each case pursuant to Section 2.1 or 2.2 hereof, and if such a request is being implemented or has not been withdrawn or abandoned, each Holder agrees that, to the extent requested in writing by the managing underwriter(s), it will not affect any public or private offer, sale, distribution or other disposition of any Registrable Securities, or any securities convertible into or exchangeable or exercisable for such Registrable Securities, including, without limitation, any sale pursuant to Rule 144 under the Securities Act, during a period of up to 180 days (90 days

in any offering following a Qualified IPO) beginning on the date of the prospectus or prospectus supplement related to the underwritten offering (or such shorter period as the managing underwriter(s) may require), provided that each Holder has received the written notice required by Sections 2.1(a) and 2.2(a); and provided further, that in connection with such underwritten offering each officer and director of the Company and Echo is subject to restrictions substantially equivalent to those imposed on the Holders.

2.9. No Required Sale. Subject to Section 2.1(j), nothing in this Agreement shall be deemed to create an independent obligation on the part of any of the Holders to sell any Registrable Securities pursuant to any effective registration statement.

2.10. Rule 144; Rule 144A; Regulation S. Echo covenants that, at the Company’s expense, Echo will file or furnish, as applicable, the reports required to be filed by it under the Securities Act and the Exchange Act, and it will take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rules 144, 144A or Regulation S under the Securities Act or (ii) any similar rule or regulation hereafter adopted by the SEC. Upon the request of a Holder, Echo will promptly deliver to such Holder (i) a written statement as to whether it has complied with such requirements (and such Holder shall be entitled to rely upon the accuracy of such written statement), (ii) a copy of the most recent annual or quarterly report of Echo and (iii) such other reports and documents as such Holder may reasonably request in order to avail itself of any rule or regulation of the SEC allowing it to sell any Registrable Securities without registration.

Section 3. Subsequent Registration Rights; No Inconsistent Agreements.

3.1. Limitations on Subsequent Registration Rights.

(a) From and after the date of this Agreement until the Holders and their respective assigns shall no longer hold any Registrable Securities, without the prior written consent of the Blackstone Holders, the H&F Holders and the MCK Members, neither the Company nor Echo shall enter into an agreement that grants a holder or prospective holder of any securities of the Company or Echo demand or incidental registration rights that by their terms are not subordinate to the registration rights granted to the Holders in this Agreement. Notwithstanding the foregoing, if after the date of this Agreement the Company or Echo enters into any other agreement with respect to the registration of any of its equity securities, and the terms contained therein are more favorable to, or less restrictive on, the other party thereto than the terms and conditions contained in this Agreement (insofar as they are applicable) with respect to the Holders, then the terms of this Agreement shall immediately be deemed to have been amended without further action by the Company or Echo or the Holders so that the Holders shall be entitled to the benefit of any such more favorable or less restrictive terms or conditions.

(b) None of the Blackstone Holders, H&F Holders or MCK Members will offer or sell any Registrable Securities in any offering registered under the Securities Act except pursuant to the registration rights granted pursuant to this Agreement.

3.2. No Inconsistent Agreements. Neither the Company nor Echo will, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in Section 2 or otherwise conflicts with the provisions of Section 2, other than any customary lock-up agreement with the underwriters in connection with any offering effected hereunder, pursuant to which neither the Company nor Echo shall agree to register for sale, and the Company and Echo shall agree not to sell or otherwise dispose of, Interests or any securities convertible into or exercisable or exchangeable for equity interest, for a specified period (not to exceed 90 days) following such offering. The Company and Echo warrants that the rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with any other agreements to which the Company and Echo is a party or by which it is bound. Neither the Company nor Echo has previously entered into any agreement with respect to its securities granting any registration rights to any Person.

Section 4. Miscellaneous.

4.1. Term. This Agreement shall terminate upon such time as there are no Registrable Securities, provided that each of (a) the provisions of Section 2.7 and Section 2.10 and all of this Section 4 and (b) any breach of this Agreement prior to termination shall survive any such termination.

4.2. Injunctive Relief It is hereby agreed and acknowledged that it will be impossible to measure in money the damage that would be suffered if the parties fail to comply with any of the obligations herein imposed on them and that in the event of any such failure, an aggrieved Person will be irreparably damaged and will not have an adequate remedy at law. Any such Person shall, therefore, be entitled (in addition to any other remedy to which it may be entitled in law or in equity) to injunctive relief, including specific performance, to enforce such obligations, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.

4.3. Notices. Any and all notices, designations, offers, acceptances or other communications provided for herein shall be given (a) when delivered personally by hand (with written confirmation of receipt), (b) when sent by facsimile (with written confirmation of transmission), (c) when received or rejected by the addressee if sent by registered or certified mail, postage prepaid, return receipt requested, or (d) one Business Day following the day sent by overnight courier (with written confirmation of receipt):

if to the Company or Echo, to:

c/o The Blackstone Group

New York, New York 10154

Attention: John G. Finley

E-mail: [Email Address]

Facsimile: (212) 583-5749

with a copy (which shall not constitute notice) to:

Ropes & Gray LLP

The Prudential Tower

800 Boylston Street

Boston, Massachusetts 02119

Attention: R. Newcomb Stillwell

E-mail: [Email Address]

Facsimile: (617) 235 0213

c/o McKesson Corporation

One Post Street, 32nd Floor

San Francisco, CA 94104

Attention: Assistant General Counsel

Facsimile: (415) 983-8457

with a copy (which shall not constitute notice) to:

Davis Polk & Wardwell LLP

1600 El Camino Real

Menlo Park, CA 94025

Attention: Alan F. Denenberg

Facsimile: (650) 752-2004

if to the MCK Members, to:

McKesson Corporation

One Post Street, 32nd Floor

San Francisco, CA 94104

Attention: Assistant General Counsel

Facsimile: (415) 983-8457

with a copy (which shall not constitute notice) to:

Davis Polk & Wardwell LLP

1600 El Camino Real

Menlo Park, CA 94025

Attention: Alan F. Denenberg Facsimile: (650) 752-2004

if to the Blackstone Holders, to:

c/o The Blackstone Group

New York, New York 10154

Attention: John G. Finley

E-mail: [Email Address]

Facsimile: (212) 583-5749

with a copy (which shall not constitute notice) to:

Ropes & Gray LLP

The Prudential Tower

800 Boylston Street

Boston, Massachusetts 02119

Attention: R. Newcomb Stillwell

E-mail: [Email Address]

Facsimile: (617) 235 0213

and

Ropes & Gray LLP

Three Embarcadero Center

San Francisco, CA 94111-4006

Attention: Jason Freedman

E-mail: [Email Address]

Facsimile: (415) 315-4876

if to the H&F Holders, to:

c/o Hellman & Friedman LLC

One Maritime Plaza 12th Floor

San Francisco, California 94111

Attention: Allen R. Thorpe

Arnie R. Park

Facsimile: (415) 788-0176

with a copy (which shall not constitute notice) to:

Simpson Thacher & Bartlett LLP

2475 Hanover Street Palo Alto, California 94304

Attention: Chad A Skinner

Facsimile: (650) 251-5002

If to any other Holder who becomes party to this agreement on or after the date hereof, to the address on the counterpart signature page to this Agreement executed by such Holder.

4.4. Amendment. Any provision of this Agreement may be amended if, and only if, such amendment is in writing and signed by both the MCK Members and the Echo Shareholders; provided , that this Section 4.4 may not be amended without the prior written consent of each of the Sponsor Holders and the MCK Members.

4.5. Successors, Assigns and Transferees. Each party may assign all or a portion of its rights hereunder to any Permitted Transferee and, prior to a Qualified IPO, to any Person that acquires Registrable Securities pursuant to the terms of the LLC Agreement.

4.6. Binding Effect. Except as otherwise provided in this Agreement, the terms and provisions of this Agreement shall be binding on and inure to the benefit of each of the parties hereto and their respective successors.

4.7. Third Parties. Nothing in this Agreement, express or implied, is intended or shall be construed to confer upon any Person not a party hereto (other than each other Person entitled to indemnity or contribution under Section 2.7) any right, remedy or claim under or by virtue of this Agreement.

4.8. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts entered into and performed entirely within such State.

4.9. Jurisdiction. Any claim, action, suit or proceeding (whether in contract or tort) seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be heard and determined in the Chancery Court of the State of Delaware and any state appellate court therefrom within the State of Delaware (or, if the Chancery Court of the State of Delaware declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware), and each of the parties hereto hereby consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom in any such claim, action, suit or proceeding) and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any such claim, action, suit or proceeding in any such court or that any such claim, action, suit or proceeding that is brought in any such court has been brought in an inconvenient forum. Notwithstanding the previous sentence, a party may commence any claim, action, suit or proceeding in a court other than the above-named courts solely for the purpose of enforcing an order or judgment issued by one of the above-named courts.

4.10. Waiver of Jury Trial. Subject to applicable Law, process in any such claim, action, suit or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing and subject to applicable Law, each party agrees that service of process on such party as provided in Section 4.3 shall be deemed effective service of process on such party. Nothing herein shall affect the right of any party to serve legal process in any other manner permitted by Law or at equity. WITH RESPECT TO ANY SUCH CLAIM, ACTION, SUIT OR PROCEEDING IN ANY SUCH COURT, TO THE EXTENT NO PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES AND RELEASES TO EACH OF THE OTHERS ITS RIGHT TO A TRIAL BY JURY, AND AGREES THAT IT WILL NOT SEEK A TRIAL BY JURY IN ANY SUCH PROCEEDING. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THIS SECTION 4.10 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 4.10 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

4.11. Severability. If any portion of this Agreement shall be declared void or unenforceable by any court or administrative body of competent jurisdiction, then, so long as no party is deprived of the benefits of this Agreement in any material respect, such portion shall be deemed severable from the remainder of this Agreement, which shall continue in all respects valid and enforceable.

4.12. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same agreement. Copies of executed counterparts transmitted by telecopy or other electronic transmission service shall be considered original executed counterparts for purposes of this Section 4.12.

4.13. Construction. The headings and subheadings in this Agreement are included for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereto. Definitions shall be equally applicable to both the singular and plural forms of the terms defined, and references to the masculine, feminine or neuter gender shall include each other gender. The word “including” means including without limitation. Any reference to “$” or “dollars” means United States dollars. References to a particular statute or regulation include all rules and regulations thereunder and any successor statute, rule or regulation, in each case as amended or otherwise modified from time to time. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any action to be taken by or any consent to be given by the “Blackstone Holders”, the “H&F Holders” or the “MCK Members”, unless otherwise specified herein, are to be taken or consented to upon the approval of the Person(s) holding a majority of the Registrable Securities beneficially owned by such group.

4.14. Entire Agreement. This Agreement is intended by the parties hereto as a final expression of their agreement and is intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior agreements and understandings between the parties hereto with respect to such subject matter.

4.15. The Company Parties. The Company Parties hereby agree that each of the Company Parties will be jointly and severally liable for any payment obligations of the Company contained in this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.

Company:


CHANGE HEALTHCARE LLC

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: Co-President and Co-Secretary

By:		/s/John G. Saia
		Name: John G. Saia
		Title: Co-President and Co-Secretary

Echo:


HCIT HOLDINGS, INC.

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: President and Treasurer

THE COMPANY PARTIES :


CHANGE HEALTHCARE
INTERMEDIATE HOLDINGS, LLC

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: Co-President and Co-Secretary

By:		/s/ John G. Saia
		Name: John G. Saia
		Title: Co-President and Co-Secretary

[Signature Page — Registration Rights Agreement]


CHANGE HEALTHCARE HOLDINGS, LLC

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: Co-President and Co-Secretary

By:		/s/ John G. Saia
		Name: John G. Saia
		Title: Co-President and Co-Secretary

CHANGE HEALTHCARE OPERATIONS, LLC

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: Secretary

CHANGE HEALTHCARE SOLUTIONS, LLC

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: Secretary

CHANGE HEALTHCARE INTERMEDIATE HOLDINGS, INC.

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: General Counsel and Secretary

[Signature Page — Registration Rights Agreement]


CHANGE HEALTHCARE HOLDINGS, INC.

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: General Counsel and Secretary

CHANGE HEALTHCARE, INC.

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: General Counsel and Secretary

CHANGE HEALTHCARE FINANCE, INC.

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: Co-President and Treasurer

By:		/s/ John G. Saia
		Name: John G. Saia
		Title: Co-President and Secretary

MCK Members:



MCKESSON TECHNOLOGIES LLC

By:		/s/ John G. Saia
		Name: John G. Saia
		Title: Vice President and Secretary

[Signature Page — Registration Rights Agreement]


PST SERVICES LLC

By:		/s/ John G. Saia
		Name: John G. Saia
		Title: Vice President and Secretary

Blackstone Holders:


BLACKSTONE CAPITAL PARTNERS VI L.P.

By: Blackstone Management Associates VI L.L.C., its general partner

By: BMA VI L.L.C., its sole member

By:		/s/ Neil Simpkins
		Name: Neil Simpkins
		Title: Senior Managing Director

BLACKSTONE FAMILY INVESTMENT PARTNERSHIP VI L.P.

By: BCP VI Side-By-Side GP L.L.C., its general partner

By:		/s/ Neil Simpkins
		Name: Neil Simpkins
		Title: Senior Managing Director

[Signature Page — Registration Rights Agreement]


BLACKSTONE FAMILY INVESTMENT PARTNERSHIP VI - ESC L.P.

By: BCP VI Side-By-Side GP L.L.C., its general partner

By:		/s/ Neil Simpkins
		Name: Neil Simpkins
		Title: Senior Managing Director

BLACKSTONE EAGLE PRINCIPAL TRANSACTION PARTNERS L.P.

By: Blackstone Management Associates VI L.L.C., its general partner

By: BMA VI L.L.C., its sole member

By:		/s/ Neil Simpkins
		Name: Neil Simpkins Title: Senior Managing Director


GSO COF FACILITY LLC

By: GSO Capital Partners LP, its Collateral Manager

By:		/s/ Marisa Beeney
		Name: Marisa Beeney
		Title: Authorized Person

[Signature Page — Registration Rights Agreement]

H&F Holders:


H&F HARRINGTON AIV II, L.P.

By: Hellman & Friedman Investors VI, L.P., its general partner

By: Hellman & Friedman LLC, its general partner

By:		/s/ P. Hunter Philbrick
		Name: P. Hunter Philbrick
		Title: Managing Director

HFCP VI DOMESTIC AIV, L.P.

By: Hellman & Friedman Investors VI, L.P., its general partner

By: Hellman & Friedman LLC, its general partner

By:		/s/ P. Hunter Philbrick
		Name: P. Hunter Philbrick
		Title: Managing Director

HELLMAN & FRIEDMAN INVESTORS VI, L.P.

By: Hellman & Friedman LLC, its general partner

By:		/s/ P. Hunter Philbrick
		Name: P. Hunter Philbrick
		Title: Managing Director

[Signature Page — Registration Rights Agreement]


HELLMAN & FRIEDMAN CAPITAL EXECUTIVES VI, L.P.

By: Hellman & Friedman Investors VI, L.P., its general partner

By: Hellman & Friedman LLC, its general partner

By:		/s/ P. Hunter Philbrick
		Name: P. Hunter Philbrick
		Title: Managing Director

HELLMAN & FRIEDMAN CAPITAL ASSOCIATES VI, L.P.

By: Hellman & Friedman Investors VI, L.P., its general partner

By: Hellman & Friedman LLC, its general partner

By:		/s/ P. Hunter Philbrick
		Name: P. Hunter Philbrick
		Title: Managing Director

MCK Members:


PF2 IP LLC

By:		/s/ John G. Saia
		Name: John G. Saia
		Title: President

[Signature Page — Registration Rights Agreement]


PF2 PST SERVICES INC.

By:		/s/ John G. Saia
		Name: John G. Saia
		Title: President

[Signature Page — Registration Rights Agreement]

EXHIBIT A


BLACKSTONE HOLDERS		Blackstone Capital Partners VI L.P.,
		Blackstone Family Investment Partnership VI L.P.
		Blackstone Family Investment Partnership VI-ESC L.P.
		GSO COF Facility LLC
		Blackstone Eagle Principal Transaction Partners L.P.

H&F HOLDERS		H&F Harrington AIV II, L.P.
		HFCP VI Domestic AIV, L.P.
		Hellman & Friedman Investors VI, L.P.
		Hellman & Friedman Capital Executives VI, L.P.
		Hellman & Friedman Capital Associates VI, L.P.

EXHIBIT C

FORM OF SEPARATION AND DISTRIBUTION AGREEMENT

[See Attached]

SEPARATION AND DISTRIBUTION AGREEMENT

by and between

McKesson Corporation

and

[PF2 SpinCo Inc.]

and

HCIT Holdings, Inc.

and

Change Healthcare LLC

and

Change Healthcare Intermediate Holdings, LLC

and

Change Healthcare Holdings, LLC

Dated as of [ ]

TABLE OF CONTENTS


	P AGE
ARTICLE 1
D EFINITIONS
Section 1.01. Definitions		2
Section 1.02. Other Definitional and Interpretative Provisions		8

ARTICLE 2
P RIOR TO THE D ISTRIBUTION

Section 2.01. Contribution		8
Section 2.02. Intercompany Accounts; Intercompany Contracts		8
Section 2.03. Financial Instruments		9
Section 2.04. Shared Employees		9
Section 2.05. Operations of SpinCo		9
Section 2.06. Further Assurances and Consents		10

ARTICLE 3
T HE D ISTRIBUTION

Section 3.01. Conditions Precedent to Distribution		10
Section 3.02. The [Exchange Offer and ]Distribution		11
Section 3.03. Applicable SEC Filings		12
Section 3.04. Plan of Reorganization		12
Section 3.05. NO REPRESENTATIONS OR WARRANTIES		13

ARTICLE 4
R ESERVED

ARTICLE 5
A CCESS TO I NFORMATION
Section 5.01. Access to Information		13
Section 5.02. Litigation Cooperation		14
Section 5.03. Reimbursement; Ownership of Information		14
Section 5.04. Retention of Records		15
Section 5.05. Confidentiality		15
Section 5.06. Privileged Information		18

ARTICLE 6
I NDEMNIFICATION

Section 6.01. Release of Pre-Distribution Claims		19
Section 6.02. SpinCo Indemnification of the Parent Group		20


Section 6.03. Parent Indemnification of SpinCo Group			20
Section 6.04. Procedures			21
Section 6.05. Calculation of Indemnification Amount			23
Section 6.06. Contribution			23
Section 6.07. Survival of Indemnities			23
Section 6.08. Exclusive Remedy			24

ARTICLE 7
M ISCELLANEOUS

Section 7.01. Notices			24
Section 7.02. Termination			25
Section 7.03. Amendments; No Waivers			25
Section 7.04. Expenses			25
Section 7.05. Successors and Assigns			25
Section 7.06. Governing Law			26
Section 7.07. Counterparts; Effectiveness; Third-Party Beneficiaries			26
Section 7.08. Entire Agreement			26
Section 7.09. Tax Matters			26
Section 7.10. Jurisdiction			26
Section 7.11. WAIVER OF JURY TRIAL			27
Section 7.12. Existing Agreements			27
Section 7.13. Captions			27
Section 7.14. Severability			27
Section 7.15. Further Assurances			27
Section 7.16. Specific Performance			28

Exhibit – A : Form of Tax Matters Agreement

Exhibit – B : Internal Restructuring Plan ¹

¹	NTD — List of exhibits to be updated to reflect any ancillary agreements and other Exhibits as needed.

SEPARATION AND DISTRIBUTION AGREEMENT ²

SEPARATION AGREEMENT (the “ Agreement ”) dated [ ] by and among McKesson Corporation, a Delaware corporation (“ Parent ”), (ii) [PF2 SpinCo Inc.] ³ , a Delaware corporation and wholly owned Subsidiary of Parent (“ SpinCo ”), and (iii) solely for the purposes of Articles 2, 3, 5, 6 and 7 herein, HCIT Holdings, Inc., a Delaware corporation (“ Acquiror ”) and (iv) Change Healthcare LLC (f/k/a PF2 NewCo LLC), a Delaware limited liability company (the “ JV ”), Change Healthcare Intermediate Holdings, LLC (f/k/a PF2 NewCo Intermediate Holdings, LLC), a Delaware limited liability company (“ NewCo Intermediate Holdings ”) and Change Healthcare Holdings, LLC (f/k/a PF2 NewCo Holdings, LLC), a Delaware limited liability company (“ NewCo Holdings ”).

W I T N E S S E T H :

WHEREAS, SpinCo is a wholly owned Subsidiary of Parent;

WHEREAS, (i) on June 28, 2016, Acquiror, Parent, Echo Holdco, Blackstone, H&F, NewCo Intermediate Holdings, NewCo Holdings and JV have entered into an Agreement of Contribution and Sale (as amended or otherwise modified from time to time, the “ JV Contribution Agreement ”), and (ii) at the closing of the JV Contribution Agreement, each of PF2 IP LLC, a Delaware limited liability company (“ IPCo ”), PF2 PST Services Inc., a Delaware corporation (“ PST Services ”), Acquiror and JV entered into the Third Amended and Restated Limited Liability Company Agreement dated as of March 1, 2017 (as amended or otherwise modified from time to time, the “ LLC Agreement ”);

WHEREAS, pursuant to the terms of the LLC Agreement, IPCo, PST Services and their Affiliates have determined that it is in the best interests of each such party and their stockholders to consummate the transactions set forth in this Agreement and effect the separation of SpinCo from Parent by [(i) consummating an offer to exchange 100% of the issued and outstanding shares of SpinCo Common Stock (as defined below) held directly or indirectly by Parent, for consideration as more particularly described under Section 3.02 below (such transaction, the “ Exchange Offer ”), and (ii) in the event that holders of outstanding shares of Parent Common Stock (as defined below) subscribe for less than all of the shares of SpinCo Common Stock owned by Parent in the Exchange Offer, then at the sole election of Parent,] distributing the [remaining] shares of SpinCo Common Stock owned by Parent by means of a pro rata dividend, to holders of Parent Common Stock as of the Record Date (as defined below) (the [transactions under (ii) if applicable, the “ Clean-up Distribution ”, and the transactions under (i) and (ii) together, the] “ Distribution ”);

WHEREAS, Parent has determined that, subject to the terms and conditions here, it would be desirable for Parent to transfer to SpinCo all of Parent’s direct and indirect equity interest in JV, which may include the transfer of all of the issued and outstanding equity of the MCK Members (as defined in the LLC Agreement), in exchange for Parent’s receipt of SpinCo Common Stock (such transfer, the “ Controlled Transfer ”);

²	NTD: Appropriate modifications to be made in the event the Distribution includes an exchange of SpinCo Common Stock for property other than Parent Common Stock, but such modifications shall not affect the liabilities of SpinCo.

³	NTD: SpinCo is currently a DE LLC, but will be converted to a DE corp.

WHEREAS, immediately following the Distribution Effective Time (as defined below), and pursuant to the Merger Agreement (as defined in the LLC Agreement), SpinCo will merge with and into Acquiror, with Acquiror as the surviving corporation in such merger (the “ Merger ”);

WHEREAS, for United States federal income tax purposes, (i) the Controlled Transfer, together with the Distribution, will qualify as a “reorganization” within the meaning of Section 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the “ Code ”), and that each of Parent and SpinCo will be a “party to the reorganization” within the meaning of Section 368(b) of the Code, (ii) the Distribution, as such, will qualify as a distribution of SpinCo Common Stock to Parent’s shareholders pursuant to Section 355 of the Code, (iii) the Merger will not cause Section 355(e) of the Code to apply to the Distribution, (iv) the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code and that each of Acquiror and SpinCo will be a “party to the reorganization” within the meaning of Section 368(b) of the Code and (v) this Agreement constitutes a “plan of reorganization” within the meaning of Treasury Regulation Section 1.368-2(g); and WHEREAS, the parties hereto have determined to set forth the principal actions required to effect the Distribution and to set forth certain agreements that will govern the relationship between the parties following the Distribution.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, the parties hereby agree as follows:

ARTICLE 1

D EFINITIONS

Section 1.01. Definitions. The following terms, as used herein, have the following meanings:

“ Acquiror ” has the meaning set forth in the preamble.

“ Acquiror Group ” means Acquiror and its Subsidiaries.

“ Action ” means any demand, claim, suit, action, arbitration, inquiry, audit, examination, investigation or other proceeding of any nature, whether administrative, civil, criminal, regulatory or otherwise, by or before any Governmental Authority or any arbitration or mediation tribunal.

“ Affiliate ” means, with respect to any Person, any Person directly or indirectly controlling, controlled by, or under common control with, such other Person; provided , however , that (notwithstanding any other provision of this Agreement), no member of the JV Group or the Acquiror Group shall be considered to be an Affiliate of any member of the Parent Group or, prior to the Merger Effective Time, the SpinCo Group, provided further that after the Merger Effective Time each member of the SpinCo Group shall be considered an Affiliate of the Acquiror Group and the JV Group. For the purposes of this definition, “ control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “ controlling ” and “ controlled ” have meanings correlative to the foregoing. For the avoidance of doubt, (a) prior to the Distribution Effective Time, Affiliates of Parent shall include SpinCo and its Affiliates and (b) after the Merger Effective Time, Affiliates of Acquiror shall include SpinCo and its Affiliates and the members of the JV Group.

“ Agreement ” has the meaning set forth in the preamble.

“ Ancillary Agreements ” means the JV Contribution Agreement and the LLC Agreement, Transition Services Agreements, MCK Tax Receivable Agreement, New Echo Tax Receivable Agreement, Intellectual Property Licensing Agreement, Echo Shareholders’ Agreement, Management Services Agreement, Principal Shareholder Letters, Echo Connect Option Agreement, Registration Rights Agreement and the Tax Matters Agreement (in each case, as defined in the JV Contribution Agreement); that certain Master Subcontract Agreement by and between McKesson Technologies Inc. and PF2 EIS LLC; and any other agreement entered into in writing in connection with the Controlled Transfer and/or the Distribution (to the extent the applicable party hereto is bound thereby) in each case, to the extent such Ancillary Agreements remain in effect pursuant to their terms.

“ Applicable SEC Filing ” has the meaning set forth in Section 3.01.

“ Blackstone ” means, Blackstone Capital Partners VI L.P., Blackstone Family Investment Partnership VI L.P. and Blackstone Family Investment Partnership VI-ESC L.P., collectively.

“ Business ” means, as the context requires, the Retained Business or the JV Business.

“ Business Transfer Time ” has the meaning set forth in Section 2.01(b). “ Claim ” has the meaning set forth in Section 6.04(a).

[ “ Clean-up Distribution ” has the meaning set forth in the recitals to this Agreement.]

“ Code ” has the meaning set forth in the recitals to this Agreement.

“ Commission ” means the U.S. Securities and Exchange Commission.

“ Contracts ” means any contract, agreement, lease, sublease, license, sales order, purchase order, loan, credit agreement, bond, debenture, note, mortgage, indenture, guarantee, undertaking, instrument, arrangement, understanding or other commitment, whether written or oral, that is binding on any Person or any part of its property under applicable Law.

“ Controlled Transfer ” has the meaning set forth in the recitals to this Agreement.

“ Convey ” has the meaning set forth in Section 2.01(b).

“ Disposing Party ” has the meaning set forth in Section 5.04.

“ Distribution ” has the meaning set forth in the recitals to this Agreement.

“ Distribution Agent ” means a distribution agent to be appointed by Parent on behalf of itself and SpinCo on or prior to the date hereof.

“ Distribution Date ” means the date selected by the board of directors of Parent or its designee for the consummation of the Distribution.

“ Distribution Effective Time ” means the time established by Parent as the effective time for the Distribution, New York time, on the Distribution Date.

“ Echo Holdco ” means Change Healthcare, Inc., a Delaware corporation.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

[ “ Exchange Agent ” means an exchange agent to be appointed by Parent on behalf of itself and SpinCo on or prior to the date hereof.]

[ “ Exchange Offer ” has the meaning set forth in the recitals to this Agreement.]

“ Financial Instruments ” means, with respect to any party, all credit facilities, guarantees, comfort letters, letters of credit and similar instruments related primarily to such party’s Business under which any member of such party’s Group has any primary, secondary, contingent, joint, several or other liability.

“ Group ” means, as the context requires, the Parent Group, the Acquiror Group, the SpinCo Group or the JV Group.

“ H&F ” means, H&F Harrington AIV II, L.P., HFCP VI Domestic AIV, L.P., Hellman & Friedman Investors VI, L.P., Hellman & Friedman Capital Executives VI, L.P. and Hellman & Friedman Capital Associates VI, L.P., collectively.

“ Indemnified Party ” has the meaning set forth in Section 6.04(a).

“ Indemnifying Party ” has the meaning set forth in Section 6.04(a).

“ Indemnitees ” means, as the context required, the Parent Indemnitees or the SpinCo Indemnitees.

“ Intercompany Accounts ” has the meaning set forth in Section 2.02.

“ Internal Restructuring ” has the meaning set forth in Exhibit [B]. ⁴

“ IPCo ” has the meaning set forth in the recitals.

“ IRS ” means the Internal Revenue Service.

“ JV ” has the meaning set forth in the preamble.

“ JV Business ” means, the business conducted by the JV Group (which, for clarity shall include the Core MTS Business and the Echo Business (each such term, as defined under the JV Contribution Agreement)), in each case from time to time, whether before, on or after the Distribution.

“ JV Contribution Agreement ” has the meaning set forth in the recitals.

“ JV Group ” means the W and each of its Subsidiaries.

“ Liabilities ” means all debts, liabilities, guarantees, assurances and commitments, whether fixed, contingent or absolute, asserted or unasserted, matured or unmatured, liquidated or unliquidated, accrued or not accrued, known or unknown, due or to become due, whenever or however arising (including whether arising out of any contract or tort based on negligence, strict liability or relating to Taxes payable by a Person in connection with compensatory payments to employees or independent contractors) and whether or not the same would be required by generally accepted principles and accounting policies to be reflected in financial statements or disclosed in the notes thereto.

“ LLC Agreement ” has the meaning set forth in the recitals.

“ Losses ” means, with respect to any Person, any and all damages, losses, liabilities and expenses incurred or suffered by such Person (including, without limitation, reasonable expenses of investigation and reasonable attorneys’ fees and expenses).

“ Merger ” has the meaning set forth in the recitals.

“ Merger Agreement ” has the meaning set forth in the LLC Agreement.

“ Merger Effective Time ” shall mean the time of the effectiveness of the Merger.

“ Parent ” has the meaning set forth in the preamble.

⁴	NTD: Plan for Internal Restructuring to be developed by Parent, if needed.

“ Parent Assumed Actions ” has the meaning set forth in Section 5.02(a).

“ Parent Common Stock ” means common stock, par value $0.01 per share, of Parent.

“ Parent Group ” means Parent and its Subsidiaries (other than, after the Distribution Effective Time, SpinCo and any member of the SpinCo Group).

“ Parent Indemnitees ” has the meaning set forth in Section 6.02(a).

“ Parent Liabilities ” means, except as otherwise specifically provided in this Agreement or any Ancillary Agreement, all Liabilities (whether arising before, on or after the Distribution Date and whether based on facts occurring before, on or after the Distribution Date) of or relating to, or arising from or in connection with, the Parent Group, the conduct of the Retained Business or the ownership or use of assets in connection therewith, but excluding any SpinCo Liabilities (and for clarity, “Parent Liabilities” shall include all Liabilities arising in connection with the Parent Assumed Actions, Internal Restructuring and Distribution (other than any expenses set forth under the Contribution Agreement or the LLC Agreement to be borne by any other party, including as set forth under Section 10.08 (Exit Events Expenses) of the LLC Agreement)).

“ Person ” means an individual, corporation, limited liability company, partnership, association, trust or other entity or organization, including a governmental or political subdivision or an agency or instrumentality thereof.

“ Prior Company Counsel ” has the meaning set forth in Section 5.06(c).

“ Privilege ” has the meaning set forth in Section 5.06.

“ Privileged Information ” has the meaning set forth in Section 5.06.

“ PST Services ” has the meaning set forth in the recitals.

“ Receiving Party ” has the meaning set forth in Section 5.04.

“ Record Date ” means the cut-off date to be established by the Parent for determination of the holders of Parent Common Stock entitled to receive the Distribution.

“ Released Parties ” has the meaning set forth in Section 6.01(a).

[ “ Remaining SpinCo Common Stock ” means the difference between (x) all of the issued and outstanding shares of SpinCo Common Stock held directly, or indirectly, by Parent and (y) such number of shares of SpinCo Common Stock that shall have been exchanged for shares of Parent Common Stock pursuant to the Exchange Offer.]

“ Representatives ” means, with respect to any Person, the Affiliates of such Person and the officers, directors, employees, attorneys, accountants, financial advisors, agents, consultants, professional advisors and other representatives of such person and its Affiliates.

“ Retained Business ” any business now, previously or hereafter conducted by Parent or any of its Subsidiaries or Affiliates (including the SpinCo Group prior to the Distribution Effective Time), other than the JV Business.

“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“ SpinCo ” has the meaning set forth in the preamble.

“ SpinCo Assumed Actions ” has the meaning set forth in Section 5.02(a).

“ SpinCo Common Stock ” means common stock, par value $0.01 per share, of SpinCo.

“ SpinCo Group ” means SpinCo and its Subsidiaries (which, for the avoidance of doubt, shall not include prior to the Merger Effective Time, any member of the JV Group).

“ SpinCo Indemnitees ” has the meaning set forth in Section 6.03(a).

“ SpinCo Liabilities ” means, except as otherwise specifically provided for in this Agreement or any Ancillary Agreement or any other contract or agreement to which any member of the Parent Group is party, all Liabilities (whether arising before, on or after the Distribution Date and whether based on facts occurring before, on or after the Distribution Date) of or relating to, or arising from or in connection with, the JV Group, the conduct of the JV Business, or the ownership or use of equity interests in the W in connection therewith, but excluding (i) any Parent Liabilities and (ii) any Liability to indemnify any employees of the Parent Group in connection with service as directors, officers or employees of the SpinCo Group at or prior to the Merger Effective Time (and for clarity, shall include all Liabilities arising in connection with the SpinCo Assumed Actions).

“ Subsidiary ” means, with respect to any Person, any other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person; provided that before the Merger Effective Time, no member of the JV Group shall be a Subsidiary of Parent, SpinCo or Acquiror, but after the Merger Effective Time, any member of the SpinCo Group and the JV Group shall be a Subsidiary of Acquiror.

“ Tax ” has the meaning set forth in the Tax Matters Agreement.

“ Tax Matters Agreement ” means the Tax Matters Agreement between Parent, SpinCo, Acquiror, the JV and the other parties thereto to be entered into as of the Distribution Date, substantially in the form of Exhibit A .

“ Tax-Related Losses ” has the meaning set forth in the Tax Matters Agreement.

“ Third Party ” or “ third party ” means a Person that is not an Affiliate of SpinCo or Parent.

“ Third Party Claim ” has the meaning set forth in Section 6.04(b).

Section 1.02. Other Definitional and Interpretative Provisions. The words “hereof’, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections and Exhibits are to Articles, Sections and Exhibits of this Agreement unless otherwise specified. All Exhibits annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit but not otherwise defined therein shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. Except as expressly set forth herein or in another Ancillary Agreement, references to “law”, “laws” or to a particular statute or law shall be deemed also to include any applicable Law.

ARTICLE 2

P RIOR TO THE D ISTRIBUTION

On or prior to the Distribution Date,

Section 2.01. Contribution.

(a) Prior to consummating the Distribution and Merger, to the extent not already completed, Parent shall, and shall cause, its Affiliates to, consummate the Internal Restructuring.

(b) Except as otherwise expressly provided herein or in any of the Ancillary Agreements, and except to the extent previously effected pursuant to the Internal Restructuring, upon the terms and conditions set forth in this Agreement, effective as of immediately prior to the Distribution on the anticipated Distribution Date (the “ Business Transfer Time ”), Parent shall assign, transfer, convey and deliver (“ Convey ”), and shall cause its Affiliates to Convey to SpinCo (i) all of the Parent Group’s right, title and interest in and to all of the issued and outstanding stock of IPCo and PST Services and (ii) if applicable, all of the Parent Group’s right, title and interest in and to any Units (as defined in the LLC Agreement) not held at such time by lPCo and PST Services.

Section 2.02. Intercompany Accounts; Intercompany Contracts.

(a) Each of SpinCo, on behalf of itself and each other member of the SpinCo Group, on the one hand, and Parent, on behalf of itself and each other member of the Parent Group, on the other hand, hereby terminates any and all Contracts between or among SpinCo or any member of the SpinCo Group, on the one hand, and Parent or any member of the Parent Group, on the other

hand, effective without further action as of the Business Transfer Time, other than this Agreement, the Merger Agreement and the Ancillary Agreements. No such Contract (including any provision thereof which purports to survive termination) shall be of any further force or effect after the Business Transfer Time and all parties shall be released from all Liabilities thereunder. Each party shall, at the reasonable request of any other party, take, or cause to be taken, such other actions as may be necessary to effect the foregoing.

(b) Parent shall cause all of the intercompany receivables, payables, loans and other accounts, rights and Liabilities between SpinCo and any other member of the SpinCo Group, on the one hand, and Parent or any other member of the Parent Group, on the other hand, in existence as of the Business Transfer Time (collectively, the “ Intercompany Accounts ”) to be (i) settled in full in cash or (ii) otherwise cancelled, terminated or extinguished, in which case the balance shall be treated as a contribution to capital or a dividend (in the case of each of clauses (i) and (ii), with no further liability or obligation thereunder), such that, as of the Business Transfer Time, there are no Intercompany Accounts outstanding.

Section 2.03. Financial Instruments. Parent shall use reasonable efforts to take or cause to be taken all actions, and enter into such agreements and arrangements as shall be necessary, to (i) terminate all obligations of SpinCo (and members of the SpinCo Group) under any of Parent’s Financial Instruments that is in existence immediately prior to the Distribution or (ii) cause itself (or another member of the Parent Group) to be substituted for SpinCo (and members of the SpinCo Group) in respect of their obligations under any of Parent’s Financial Instruments that is in existence immediately prior to the Distribution; provided that if such a termination or substitution is not effected by the Distribution (i) Parent shall indemnify and hold harmless SpinCo and each member of the SpinCo Group and, after the Merger Effective Time, the Acquiror Group (as successor to the SpinCo Group) from and against any Losses arising from or relating to its Financial Instruments in accordance with the applicable provisions of Article 6 and (ii) without the prior written consent of Acquiror, Parent shall not, and shall not permit any its Affiliates to, renew or extend the term of, increase the obligations or liabilities under, or transfer to a third party, any such Financial Instrument unless all obligations of SpinCo (and members of the SpinCo Group) and, after the Merger Effective Time, the Acquiror Group (as successor to the SpinCo Group) with respect thereto are thereupon terminated by documentation reasonably satisfactory in form and substance to Acquiror.

Section 2.04. Shared Employees. Each individual who is an officer, director or employee of any member of the Parent Group and any member of the SpinCo Group shall resign, effective at or prior to the Distribution, from all positions such individual holds with the SpinCo Group, such that following the Distribution such individual will not hold such positions in both Groups.

Section 2.05. Operations of SpinCo. Prior to the Distribution Effective Time, and except with respect to Parent’s Financial Instruments, which shall be subject to Section 2.03, Parent shall cause SpinCo and each member of the SpinCo Group, from and after the formation thereof, to, and prior to the Merger Effective Time SpinCo shall and shall cause each member of the SpinCo Group, from and after the formation thereof, to, not be an obligor or guarantor under, or otherwise be subject to, any indebtedness, or to conduct any operations or own any assets other than ownership of equity of the other members of the SpinCo Group and the JV Group, or otherwise acquire or dispose of any other assets or entities (other than in connection with the Internal Restructuring and other assets incidental to their status as holding companies of equity of the other members of the SpinCo Group and the JV Group).

Section 2.06 Further Assurances and Consents. In addition to the actions specifically provided for elsewhere in this Agreement, subject to all of the terms and conditions hereof, each of the parties hereto shall use its reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable Laws, regulations and agreements or otherwise to consummate and make effective the transactions contemplated by this Agreement, including but not limited to using its reasonable efforts to obtain any consents and approvals and to make any filings (including the Applicable SEC Filings) and applications necessary or desirable in order to consummate the transactions contemplated by this Agreement, and SpinCo shall, at Parent’s request, participate in any meetings, drafting sessions, due diligence sessions, management presentation sessions, and “road shows” (including any marketing efforts) relating to the Exchange Offer.

ARTICLE 3

T HE D ISTRIBUTION

Section 3.01. Conditions Precedent to Distribution. In no event shall the Distribution occur unless (i) each of the following conditions shall have been satisfied (or waived by Parent in its sole discretion), and (ii) the conditions set forth in sub-clause (iii) — (ix) shall have been satisfied (or waived by Acquiror in its sole discretion):

(i) [each of the conditions set forth in Annex I hereto (the “ Offer Conditions ”) shall have been satisfied or waived (other than those conditions that by their nature are to be satisfied or waived by the party entitled to the benefit thereto and other than the conditions that by their nature are to be satisfied contemporaneously with the Distribution);] ⁵

(ii) the board of directors of Parent shall be satisfied that any [Clean-up] Distribution[, if applicable,] can be made out of surplus within the meaning of Section 170 of the General Corporation Law of the State of Delaware and shall have received a solvency opinion in form and substance satisfactory to the board of directors of Parent to that effect;

(iii) the Controlled Transfer shall have been completed;

(iv) an applicable registration statement or form as determined by Parent in its sole discretion or as otherwise required by the Commission for [commencement of the Exchange Offer, and] consummating the Distribution shall have been filed with the Commission (the “ Applicable SEC Filings ”) and declared effective, if applicable, by the Commission, no stop order suspending the effectiveness of such Applicable SEC Filing shall be in effect, no proceedings for such purpose shall be pending before or threatened by the Commission, and the Applicable SEC Filing shall have been mailed to holders of Parent Common Stock (and the holders of Acquiror Common Stock, if applicable), as of the Record Date;

⁵	NTD: Exchange offer conditions, if any, to be included by Parent, if applicable

(v) all actions and filings necessary or appropriate under applicable federal, state or foreign securities or “blue sky” laws and the rules and regulations thereunder shall have been taken and, where applicable, become effective or been accepted;

(vi) each of the Ancillary Agreements shall have been duly executed and delivered by the parties thereto;

(vii) no applicable Law shall have been adopted, promulgated or issued that prohibits the consummation of the Distribution, the Merger or the other transactions contemplated hereby;

(viii) all material governmental approvals and consents and all material permits, registrations and consents from third parties, in each case, necessary to effect the Distribution and the Merger and to permit the operation of the JV Business after the Distribution Date substantially as it is conducted at the date hereof shall have been obtained; and

(ix) the Merger Agreement shall have been entered into by the parties thereto and shall be in full force and effect, and all conditions and obligations of the parties to the Merger Agreement to consummate the Merger and to effect the other transactions contemplated by the Merger Agreement (other than the filing of the certificate of merger) shall have been satisfied or waived, such that the Merger is consummated immediately following the Distribution.

Each of the foregoing conditions is for the sole benefit of Parent (other than the conditions in (iii) — (ix) above, which is also for the benefit of Acquiror) and shall not give rise to or create any duty on the part of Parent (or Acquiror, if applicable) or its board of directors to waive or not to waive any such condition. Any determination made by Parent on or prior to the Distribution concerning the satisfaction or waiver of any or all of the conditions set forth in clause (i) or (ii) of this Section 3.01 shall be conclusive and binding on the parties.

Section 3.02. The [Exchange Offer and ]Distribution.

(a) [Provided that this Agreement shall not have been terminated in accordance with Section 7.02, and nothing shall have occurred that, had the Exchange Offer been commenced, would give rise to a right to terminate the Exchange Offer pursuant to the Offer Conditions, as promptly as practicable after the date hereof, but in no event later than [ ] Business Days following the date of this Agreement (and subject to satisfaction and/or waiver of the conditions set forth in Section 3.01), Parent shall commence the Exchange Offer.]

(b) [Under the Exchange Offer, each outstanding share of Parent Common Stock shall be exchangeable for [ ] ⁶ shares of outstanding SpinCo Common Stock owned by Parent. The Exchange Agent shall hold the certificates for shares of SpinCo Common Stock delivered in the Exchange Offer for the account of the Parent shareholders whose shares of Parent Common Stock are tendered in the Exchange Offer pending the Merger.]

⁶	NTD : Exchange ratio to be inserted into draft following determination by an investment banker appointed pursuant to Section 3.02(d) by Parent

(c) [In the event that holders of Parent Common Stock subscribe for less than all of the shares of SpinCo Common Stock owned by Parent in the Exchange Offer, then] subject to the terms and conditions set forth in this Agreement, and provided that this Agreement shall not have been terminated in accordance with Section 7.02, (i) each holder of record of Parent Common Stock [after giving effect to the Exchange Offer] (“ Record Holder ”) shall be entitled to receive for each share of Parent Common Stock held by such Record Holder a number of shares of [Remaining] SpinCo Common Stock equal to the total number of shares of [Remaining] SpinCo Common Stock held by Parent on the Distribution Date, multiplied by a fraction, the numerator of which is the number of shares of Parent Common Stock held by such Record Holder [after giving effect to the Exchange Offer] and the denominator of which is the total amount of Parent Common Stock outstanding on the Distribution Date [after giving effect to the Exchange Offer] and (ii) at the Distribution Effective Time, Parent shall deliver to the Distribution Agent a global certificate representing the [Remaining] SpinCo Common Stock distributed in the [Clean-up] Distribution for the account of the Parent shareholders that are entitled thereto. The Distribution Agent shall hold such certificate for the account of the Parent shareholders pending the Merger.

(d) Parent shall, in its sole discretion, determine the Distribution Date and all terms of the Distribution, including the timing of the consummation of all or part of the Distribution, but which determination shall be made in compliance with the LLC Agreement. Parent shall, in its sole discretion, select any investment banker(s) and manager(s) in connection with the Distribution, as well as any other institutions providing services in connection with the Distribution, including the Distribution Agent[, the Exchange Agent], a financial printer, solicitation agent and financial, legal, accounting and other advisors.

Section 3.03. Applicable SEC Filings. In connection with the preparation of the Applicable SEC Filings, Parent and Acquiror shall cooperate with each other, and provide each other and their respective counsel a reasonable opportunity to review and comment on the material Applicable SEC Filings prior to filing with the Commission, and Parent and Acquiror, as the case may be, shall give reasonable and good faith consideration to any comments made by Acquiror or Parent, as the case may be, and their respective counsel, provided that nothing herein shall require a party to delay the making of any Applicable SEC Filing. Parent and Acquiror, as the case may be, shall provide each other and their respective counsel with (i) any comments or other communications, whether written or oral, that such party or its counsel may receive from time to time from the Commission or its staff with respect to any material Applicable SEC Filing promptly after receipt of those comments or other communications and (ii) a reasonable opportunity to participate in such party’s response to those comments and to provide comments on that response (to which reasonable and good faith consideration shall be given).

Section 3.04. Plan of Reorganization. This Agreement constitutes a “plan of reorganization” under Treasury Regulation Section 1.368-2(g) with respect to the transactions contemplated hereby.

Section 3.05. NO REPRESENTATIONS OR WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT OR IN CERTIFICATES FURNISHED THEREUNDER, NO MEMBER OF ANY GROUP MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, TO ANY MEMBER OF ANY OTHER GROUP OR ANY OTHER PERSON WITH RESPECT TO ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY, OR THE BUSINESS, ASSETS, CONDITION OR PROSPECTS (FINANCIAL OR OTHERWISE) OF, OR ANY OTHER MATTER INVOLVING, EITHER BUSINESS, OR THE SUFFICIENCY OF ANY ASSETS TRANSFERRED TO THE APPLICABLE GROUP, OR THE TITLE TO ANY SUCH ASSETS, OR THAT ANY REQUIREMENTS OF APPLICABLE LAW ARE COMPLIED WITH RESPECT TO THE CONTRIBUTION OR THE DISTRIBUTION.

ARTICLE 4

R ESERVED

ARTICLE 5

A CCESS TO I NFORMATION

Section 5.01. Access to Information.

(a) For a period of six years after the Distribution Date, each party shall, and shall cause its Affiliates to, afford promptly the other party’s Group and its agents and, to the extent required by applicable Law, authorized representatives of any Governmental Authority of competent jurisdiction, reasonable access during normal business hours to its books of account, financial and other records (including accountant’s work papers, to the extent consents have been obtained), information, employees and auditors to the extent necessary or reasonably useful for such other party’s Group in connection with any audit, investigation, dispute or litigation, complying with their obligations under this Agreement or any Ancillary Agreement, any regulatory proceeding, any regulatory filings, complying with reporting disclosure requirements or any other requirements imposed by any Governmental Authority or any other reasonable business purpose of the Group requesting such access; provided that any such access shall not unreasonably interfere with the conduct of the business of the party (and that of its Affiliates) providing such access; provided further that in the event any party reasonably determines that affording any such access to the other party would be commercially detrimental in any material respect or violate any applicable Law or agreement to which such party or member of its Group is a party, or waive any attorney-client privilege applicable to such party or any member of its Group, the parties shall use reasonable efforts to permit the compliance with such request in a manner that avoids any such harm or consequence. Notwithstanding anything to the contrary contained herein, in the event that there is any pending dispute between the SpinCo Group or Acquiror Group on one hand and the Parent Group on the other hand, no party shall be required to grant access or disclosure pursuant to this Section 5.02 in respect of such dispute, and any such access and disclosure in respect of such dispute shall be subject to the applicable discovery rules.

(b) Without limiting the generality of the foregoing, until the end of the first full SpinCo fiscal year and the first full Parent fiscal year occurring after the Distribution Date (and for a reasonable period of time afterwards as required for each party and the Acquiror to prepare consolidated financial statements or complete a financial statement audit for the fiscal year during

which the Distribution Date occurs), each party shall use reasonable efforts, to cooperate with the other party’s information requests to enable the other party and the Acquiror to meet its timetable for dissemination of its earnings releases, financial statements and enable such other party’s auditors to timely complete their audit of the annual financial statements and review of the quarterly financial statements.

Section 5.02. Litigation Cooperation.

(a) (1) From and after the Distribution Effective Time, the applicable member of the SpinCo Group shall assume and thereafter be responsible for all Losses that may result from the SpinCo Assumed Actions and all fees and costs (including attorneys’ fees) relating to the defense of the SpinCo Assumed Actions. “ SpinCo Assumed Actions ” means those Actions primarily relating to the JV Business in which any member of the Parent Group or any Affiliate of a member of the Parent Group is a defendant or the party against whom the claim or investigation is directed solely as a result of any member of the Parent Group being a beneficial owner of the JV or any other member of the JV Group (but shall exclude all Actions to the extent relating to contractual obligations of any member of the Parent Group); and (2) from and after the Distribution Effective Time, the applicable member of the Parent Group shall assume and thereafter be responsible for all Liabilities that may result from the Parent Assumed Actions and all fees and costs (including attorneys’ fees) relating to the defense of the Parent Assumed Actions. “ Parent Assumed Actions ” means those Actions primarily related to the Retained Business or the Distribution in which any member of the SpinCo Group or any Affiliate of a member of the SpinCo Group is a defendant or the party against whom the claim or investigation is directed (and shall include all Actions to the extent relating to contractual obligations of any member of the Parent Group).

(b) Each party shall, and shall cause its Affiliates to, use reasonable efforts to make available to the other Group and its accountants, counsel, and other designated representatives, upon written request, its directors, officers, employees and representatives as witnesses, and shall otherwise cooperate with the other Group, to the extent reasonably required in connection with any Action arising out of either Business prior to the Distribution Effective Time in which the requesting party may from time to time be involved. Notwithstanding anything to the contrary contained herein, in the event that there is any pending dispute between the SpinCo Group or Acquiror Group on one hand and the Parent Group on the other hand, no party shall be required to grant access or disclosure pursuant to this Section 5.02 in respect of such dispute, and any such access and disclosure in respect of such dispute shall be subject to the applicable discovery rules.

Section 5.03. Reimbursement; Ownership of Information.

(a) Each party (or any of such party’s Affiliates, as the case may be)

providing information or witnesses to the other Group, or otherwise incurring any expense in connection with cooperating, under Section 5.01 or Section 5.02 shall be entitled to receive from the recipient thereof, upon the presentation of invoices therefor, payment for all out-of-pocket costs and expenses (including attorney’s fees but excluding reimbursement for general overhead, salary and employee benefits) actually incurred in providing such access, information, witnesses or cooperation.

(b) All information owned by one party that is provided to the other party under Section 5.01 or Section 5.02 shall be deemed to remain the property of the providing party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed to grant or confer rights of license or otherwise in any such information.

Section 5.04. Retention of Records. Except as otherwise required by applicable Law or agreed to in writing, for a period of one year following the Distribution Date, each party shall, and shall cause its respective Affiliates to, retain any and all information in its possession or control relating to the other Group’s Business in accordance with the document retention practices of (i) Parent, with respect to any member of the Parent Group or (ii) the JV, with respect to any member of the SpinCo Group, in each case, as in effect as of the date hereof. Neither party shall destroy or otherwise dispose of any such information, subject to such retention practice, unless, prior to such destruction or disposal, the party proposing such destruction or disposal (the “ Disposing Party ”) provides not less than 30 days’ prior written notice to the other party (the “ Receiving Party ”), specifying the information proposed to be destroyed or disposed of and the scheduled date for such destruction or disposal. If the Receiving Party shall request in writing prior to the scheduled date for such destruction or disposal that any of the information proposed to be destroyed or disposed of be delivered to the Receiving Party, the Disposing Party shall promptly arrange for the delivery of such of the information as was requested at the expense of the Receiving Party; provided that in the event that the Disposing Party reasonably determines that any such provision of information would violate any applicable Law or agreement to which such party or member of its Group is a party, or waive any attorney-client privilege applicable to such party or any member of its Group, the parties shall use reasonable efforts to permit the compliance with such request in a manner that avoids any such harm or consequence. Any records or documents that were subject to a litigation hold prior to the Distribution Date must be retained by the applicable party until such party is notified by the other party that the litigation hold is no longer in effect.

Section 5.05. Confidentiality.

(a) Each party hereto agrees that they shall hold strictly confidential and shall use, and shall cause any Person to which its discloses Confidential Information pursuant to clause (b) below, to hold strictly confidential and to use, the Confidential Information only in connection with its investment in the JV and not for any other purpose. The JV and each Member agrees that it shall be responsible for any breach of the provisions of this Section 5.05 by any Person to which it discloses Confidential Information.

(b) The W and each Member agrees that it shall not disclose any Confidential Information to any Person (other than as may be necessary to monitor, increase or decrease its investment in the JV in accordance with applicable securities laws), except that Confidential Information may be disclosed as follows:

(i) to any of such Person’s Representatives, including to the extent necessary to obtain their services in connection with monitoring its investment in the Company;

(ii) to any financial institution providing credit to such Person or any of its Affiliates;

(iii) to the extent required by applicable Law or requested or required by any regulatory body (including complying with any oral or written questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process to which such Persons is subject); provided that, unless otherwise prohibited by Law, such Persons agrees to give the other parties hereto prompt notice of such request(s), to the extent practicable, so that such parties may seek an appropriate protective order or similar relief (and such Person shall cooperate with such efforts by such other parties, and shall in any event make only the minimum disclosure required by such Law);

(iv) in the case of any Member, to any Person to whom such Member is contemplating a Transfer of all or any portion of its Units; provided that such Transfer (1) would not be in violation of the provisions of the LLC Agreement, (2) the potential Transferee agrees in advance of any such disclosure to be bound by a confidentiality agreement consistent with the provisions hereof and (3) such Member shall be responsible for breaches of such confidentiality agreement by such potential Transferee, for so long as the JV does not have direct recourse against such potential Transferee for any such breaches;

(vi) to the extent required by the rules and regulations of the SEC or stock exchange rules, including any disclosure contemplated under the Registration Rights Agreement; or

(vii) if the prior written consent of all of the Directors on the Board shall have been obtained.

Nothing contained herein shall prevent the use of Confidential Information in connection with the assertion or defense of any claim by or against the JV or any Member and nothing contained herein shall be deemed to restrict any stockholder’s ability to monetize its equity investment in compliance with applicable securities laws.

Notwithstanding the foregoing, the JV and each of the Members acknowledge that each of the Blackstone and H&F and their Affiliates may provide Confidential Information to its existing and potential limited partners, members and other investors; provided that the Blackstone and H&F shall not provide any non-public financial information or competitively or strategically sensitive information about the W or any of its Subsidiaries to (a) any limited partner that is not subject to customary confidentiality and non-use restrictions with respect to such information (subject to customary exceptions) or (b) to any other Person in the course of investing or fundraising activities that is not subject to customary confidentiality and non-use restrictions with respect to such information (subject to customary exceptions) and, in any of either (a) or (b), any non-public financial information shall be limited to Blackstone’s and H&F ‘s or their fund Affiliates’ valuation of the JV and its Subsidiaries without providing underlying forecasted financial data or

trends; provided that t and its fund Affiliates shall be permitted to disclose underlying forecasted financial data or trends to the two co-investors in the Acquiror who have entered into confidentiality agreements; provided, further, that in any case Blackstone shall provide prompt written notice of such disclosure to Parent..

(c) “Confidential Information” means any information concerning the Members or any of their respective Affiliates, the JV or any of its Subsidiaries or the financial condition, business, operations or prospects of the Members or any of their respective Affiliates or the JV or any of its Subsidiaries in the possession of or furnished to the JV or any Member, as applicable (including by virtue of any Member’s present or former right to designate a Director); provided that the term “Confidential Information” shall not include information that (i) is or becomes generally available to the public other than as a result of a disclosure by such Person or its Affiliates or any of their respective Representatives in violation of this Agreement, (ii) was available to such Person on a non-confidential basis prior to its disclosure to such Person or its Representatives by the JV or the other Members or their Representatives or (iii) becomes available to such Person on a non-confidential basis from a source other than the JV or the other Members or their Representatives after the disclosure of such information to such Person or its Representatives by the W or the Members or their Representatives, which source is (at the time of receipt of the relevant information) not, to such Person’s knowledge, bound by a confidentiality agreement with (or other confidentiality obligation to) the JV, the other Members or another Person; provided that, notwithstanding anything to the contrary contained herein, “Confidential Information” in the possession of any of the Initial Members or its Affiliates prior to the Closing shall not by virtue of the foregoing exceptions in clauses (ii) or (iii) be deemed not to be Confidential Information, and each of the Initial Members shall be obligated to keep or to cause to be kept such information confidential and to use or cause to be used such information in accordance with the provisions of this Section 15(d) as fully as if such Member did not have access to such information prior to the Closing but only received such information after the Closing. For the avoidance of doubt, the JV and each Member (as defined in the LLC Agreement) acknowledge and agree that each Member and the Echo Shareholders (as defined in the LLC Agreement) may incidentally develop or receive from third parties information not known by such recipient to have been obtained in violation of this Agreement that is the same as or similar to the Confidential Information, and that nothing in this Agreement restricts or prohibits any Member or the Echo Shareholders (by itself or through a third party) from developing, receiving or disclosing such information, or any products, services, concepts, ideas, systems or techniques that are similar to or compete with the products, services, concepts, ideas, systems or techniques contemplated by or embodied in the Confidential Information.

(d) Notwithstanding anything to the contrary in this Agreement, the JV, each Member, their respective Affiliates and their respective Representatives may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated hereby and all materials of any kind (including opinions and tax analysis) that are provided to the JV or the Member relating to such tax treatment and tax structure; provided that the foregoing does not constitute authorization to disclose information identifying the JV, any Member (or its Representatives), any parties to transactions engaged in by the JV or (except to the extent relating to such tax structure or tax treatment) any nonpublic commercial or financial information.

(e) The capitalized terms contained in this Section 5.05 not otherwise defined in this Agreement or the Contribution Agreement have the meaning set forth in the LLC Agreement.

Section 5.06. Privileged Information.

(a) The parties acknowledge that members of the Parent Group, on the one hand, and members of the SpinCo Group, on the other hand, may possess documents or other information regarding the other Group that is or may be subject to the attorney-client privilege, the work product doctrine or common interest privilege (collectively, “Privileges”; and such documents and other information collectively, the “ Privileged Information ”). Each party agrees to use reasonable efforts to protect and maintain, and to cause their respective Affiliates to protect and maintain, any applicable claim to Privilege in order to prevent any of the other party’s Privileged Information from being disclosed or used in a manner inconsistent with such Privilege without the other party’s consent. Without limiting the generality of the foregoing, the parties shall not, and shall direct their respective Affiliates not to, without the other party’s prior written consent, (i) waive any Privilege with respect to any of the other party’s Privileged Information, (ii) fail to defend any Privilege with respect to any such Privileged Information, or (iii) fail to take any other actions necessary to preserve any Privilege with respect to any such Privileged Information.

(b) Upon receipt by either party of any subpoena, discovery or other request that calls for the production or disclosure of Privileged Information of the other party, such party shall promptly notify the other party of the existence of the request and shall provide the other party a reasonable opportunity to review the information and to assert any rights it may have under this Section 5.06 or otherwise to prevent the production or disclosure of such Privileged Information. Each party agrees that it shall not produce or disclose any information that may be covered by a Privilege of the party under this Section 5.06 unless (i) the other party has provided its written consent to such production or disclosure (which consent shall not be unreasonably withheld) or (ii) a court of competent jurisdiction has entered a final, non-appealable order finding that the information is not entitled to protection under any applicable Privilege.

(c) Each of the Parent Group and the SpinCo Group covenants and agrees that, following the Distribution Effective Time, any internal or external legal counsel currently representing SpinCo Group (each a “ Prior Company Counsel ”) may serve as counsel to Parent Group and its Affiliates in connection with any matters arising under or related to this Agreement or the transactions contemplated by this Agreement or any Ancillary Agreement, including with respect to any litigation, Claim or obligation arising out of or related to this Agreement or any Ancillary Agreement or the transactions contemplated by this Agreement or any Ancillary Agreement, notwithstanding any representation by the Prior Company Counsel prior to the Distribution Effective Time. Parent Group and SpinCo Group hereby irrevocably (i) waive any Claim they have or may have that a Prior Company Counsel has a conflict of interest or is otherwise prohibited from engaging in such representation and (ii) covenant and agree that, in the event that a dispute arises after the Distribution Effective Time between SpinCo and its Affiliates, on the one hand, and Parent and its Affiliates, on the other hand, Prior Company Counsel may represent any member of the Parent Group and any Affiliates thereof in such dispute even though the interests of such Person(s) may be directly adverse to the Parent Group or the SpinCo Group or their respective Affiliates and even though Prior Company Counsel may have represented the SpinCo Group in a matter substantially related to such dispute.

(d) For the avoidance of doubt, nothing in this Agreement shall constitute a waiver of, or obligate any Person to waive, any Privilege.

ARTICLE 6

I NDEMNIFICATION

Section 6.01. Release of Pre-Distribution Claims.

(a) Except (i) as provided in Section 6.01(b) and (ii) as otherwise expressly provided in this Agreement or any Ancillary Agreement, Parent does hereby, on behalf of itself and each member of the Parent Group, and each of their successors and assigns, release and forever discharge SpinCo and the other members of the SpinCo Group, and their respective successors and assigns, and all Persons who at any time prior to the Distribution Effective Time have been directors, officers, employees or attorneys serving as independent contractors of SpinCo or any member the SpinCo Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns (collectively, the “ Released Parties ”), from any and all demands, claims, Actions and liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise (and including for the avoidance of doubt, those arising as a result of the negligence, strict liability or any other liability under any theory of law or equity of, or any violation of law by any Released Party), existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Distribution Effective Time. Parent shall cause each of the other members of the Parent Group to, effective as of the Distribution Effective Time, release and forever discharge each of the SpinCo Indemnitees as and to the same extent as the release and discharge provided by Parent pursuant to the foregoing provisions of this Section 6.01(a).

(b) Notwithstanding anything to the contrary contained this Agreement or otherwise, nothing in Section 6.01(a) shall impair any right of any Person identified in Section 6.01(a) to enforce this Agreement or any Ancillary Agreement. Nothing in this Agreement shall release or discharge any Person from:

(i) any liability assumed, transferred, assigned, retained or allocated to that Person in accordance with, or any other liability of that Person under, this Agreement or any of the Ancillary Agreements;

(ii) any liability that is expressly specified in this Agreement to continue after the Distribution Effective Time, but subject to any limitation set forth in this Agreement relating specifically to such liability;

(iii) any liability that is expressly specified in any Ancillary Agreement to continue after the Distribution Effective Time, but subject to any limitation set forth in such Ancillary Agreement relating specifically to such liability; or

(iv) any liability the release of which would result in the release of any Person, other than a member of the SpinCo Group or any related Released Party; provided , however , that Parent agrees not to bring or allow its respective Affiliates to bring suit against SpinCo or any related Released Party with respect to any such liability.

In addition, nothing contained in Section 6.01(a) shall release any party or any member of its Group from honoring its existing obligations to indemnify, or advance expenses to, any Person who was a director, officer or employee of such party or any member of its Group, at or prior to the Distribution Effective Time, to the extent such Person was entitled to such indemnification or advancement of expenses pursuant to then-existing obligations.

(c) Parent shall not make, nor permit of its Affiliates to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or indemnification, against the other party, or any related Released Party, with respect to any liability released pursuant to Section 6.01(a).

(d) It is the intent of each of the parties hereto by virtue of the provisions of this Section 6.01 to provide for a full and complete release and discharge of all Liabilities set forth in Section 6.01(a) existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the Distribution Date between members of the Parent Group, on the one hand, and members of the SpinCo Group, on the other hand, (including any contractual agreements or arrangements existing or alleged to exist between the parties on or before the Distribution Date), except as expressly set forth in Section 6.01(b) or as expressly provided in this Agreement or any Ancillary Agreement. At any time, at the reasonable request of SpinCo, Parent shall execute and deliver (and cause its respective Subsidiaries to execute and deliver) releases reflecting the provisions hereof.

Section 6.02. SpinCo Indemnification of the Parent Group.

(a) Effective at and after the Distribution, SpinCo and (effective after the Merger Effective Time) the Acquiror (as successor of SpinCo) shall be obligated to indemnify, and JV and each other member of the JV Group shall jointly and severally be obligated to pay to Acquiror all amounts necessary for Acquiror to indemnify, defend and hold harmless the Parent Group and the respective directors, officers, employees and Affiliates of each Person in the Parent Group (the “ Parent Indemnitees ”) from and against any and all Losses incurred or suffered by any of the Parent Indemnitees arising out of or in connection with (i) any of the SpinCo Liabilities, or the failure of any member of the SpinCo Group or the JV Group to pay, perform or otherwise discharge any of the SpinCo Liabilities, (ii) any breach after the Merger Effective Time by SpinCo of this Agreement and (iii) notwithstanding any provisions of this Agreement, the Tax Matters Agreement, the Merger Agreement or otherwise, any Damages arising from or relating to, directly or indirectly, whether by operation of the provisions of this Agreement, the Tax Matters Agreement, the Merger Agreement or otherwise, any failure of the Merger Effective Time to occur immediately following the Distribution Effective Time primarily as a result of any failure by Acquiror to perform its obligation to close the Merger in accordance with the Merger Agreement.

Section 6.03. Parent Indemnification of SpinCo Group.

(a) Effective at and after the Distribution, Parent shall indemnify, defend and hold harmless the Acquiror Group as successor to the SpinCo Group and the respective directors, officers, employees and Affiliates of each Person in the Acquiror Group as successor to the SpinCo Group (the “ SpinCo Indemnitees ”) from and against any and all Losses incurred or suffered by any of the SpinCo Indemnitees and arising out of or in connection with (i) any of the Parent

Liabilities, or the failure of any member of the Parent Group to pay, perform or otherwise discharge any of the Parent Liabilities, (ii) any of Parent’s Financial Instruments, (iii) any breach by Parent (or prior to the Merger, SpinCo) of this Agreement (including any breach of the representation, warranty and covenant set forth in Section 2.05), (iv) any Liabilities of the SpinCo Group arising before the Merger Effective Time or based on facts occurring before the Merger Effective Time, or the failure of any member of the SpinCo Group (prior to Merger Effective Time) or the Parent Group (at any time) to pay, perform or otherwise discharge any such Liabilities of the SpinCo Group arising before the Merger Effective Time (whether arising under this Agreement or any Ancillary Agreement or otherwise), (v) any “ D&O ” Indemnification obligation to any employees of the Parent Group after the Merger Effective Time (with respect to “ D&O ” insurance policies in place prior to the Merger Effective Time) and (vi) notwithstanding any provisions of this Agreement, the Tax Matters Agreement, the Merger Agreement or otherwise, any Damages arising from or relating to, directly or indirectly, whether by operation of the provisions of this Agreement, the Tax Matters Agreement, the Merger Agreement or otherwise, any failure of the Merger Effective Time to occur immediately following the Distribution Effective Time primarily as a result of any failure by MCK or SpinCo to perform its obligation to close the Merger in accordance with the Merger Agreement.

(b) Parent shall indemnify, defend and hold harmless each of the SpinCo Indemnitees and each Person, if any, who controls any SpinCo Indemnitee within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all Losses caused by any untrue statement or alleged untrue statement of a material fact contained in any Applicable SEC Filing (as amended or supplemented), or caused by any omission or alleged omission to state therein a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that such Losses are caused otherwise than solely by any such untrue statement or omission or alleged untrue statement or omission based on, and in conformity with, information furnished by the Acquiror solely in respect of the Acquiror Group or the JV Group.

Section 6.04. Procedures.

(a) The party seeking indemnification under Section 6.02 or Section 6.03 (the “ Indemnified Party ”) agrees to give prompt notice to the party against whom indemnity is sought (the “ Indemnifying Party ”) of the assertion of any claim, or the commencement of any suit, action or proceeding (each, a “ Claim ”) in respect of which indemnity may be sought hereunder and shall provide the Indemnifying Party such information with respect thereto that the Indemnifying Party may reasonably request. The failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder, except to the extent such failure shall have prejudiced the Indemnifying Party.

(b) The Indemnifying Party shall be entitled to participate in the defense of any Claim asserted by any Third Party (“ Third Party Claim ”) and, subject to the limitations set forth in this Section 6.04, if it so notifies the Indemnified Party no later than 30 days after receipt of the notice described in Section 6.04(a), shall be entitled to control and appoint lead counsel for such defense, in each case at its expense; provided that (i) the Indemnifying Party states in such notice that the Indemnifying Party will, and thereby covenants to, indemnify, defend and hold harmless the Indemnified Party from and against the entirety of any and all Losses the Indemnified Party may

suffer resulting from, arising out of, relating to, in the nature of, or caused by such Third Party Claim, (ii) such Third Party Claim involves only money damages and does not seek an injunction or other equitable relief against the Indemnified Party, (iii) the Indemnified Party has not been advised by counsel that an actual or potential conflict exists between the Indemnified Party and the Indemnifying Party in connection with the defense of such Third Party Claim and (iv) such Third Party Claim does not relate to or otherwise arise in connection with Taxes or any criminal or regulatory enforcement action. If the Indemnifying Party does not so notify the Indemnified Party, the Indemnified Party shall have the right to defend or contest such Third Party Claim through counsel chosen by the Indemnified Party that is reasonably acceptable to the Indemnifying Party, subject to the provisions of this Section 6.04. The Indemnified Party shall provide the Indemnifying Party and such counsel with such information regarding such Third Party Claim as either of them may reasonably request (which request may be general or specific).

(c) If the Indemnifying Party shall assume the control of the defense of any Third Party Claim in accordance with the provisions of Section 6.04(b), (i) the Indemnifying Party shall obtain the prior written consent of the Indemnified Party (which shall not be unreasonably withheld) before entering into any settlement of such Third Party Claim, if the settlement does not release the Indemnified Party from all liabilities and obligations with respect to such Third Party Claim, involves a finding or admission of any violation of applicable Law or rights of any Person or the settlement imposes injunctive or other equitable relief against the Indemnified Party or any of its related Indemnitees or is otherwise materially prejudicial to any such Person and (ii) the Indemnified Party shall be entitled to participate in (but not control) the defense of such Third Party Claim and, at its own expense, to employ separate counsel of its choice for such purpose; provided that in the event of a conflict of interest between the Indemnifying Party and the applicable Indemnified Party, the reasonable and documented fees and expenses of such separate counsel shall be at the Indemnifying Party’s expense.

(d) Each party shall reasonably cooperate, and cause their respective Affiliates to reasonably cooperate, in the defense or prosecution of any Third Party Claim and shall furnish or cause to be furnished such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials or appeals, as may be reasonably requested in connection therewith.

(e) The parties hereby acknowledge that an Indemnified Party may have certain rights to indemnification, advancement of expenses and/or insurance provided by other sources. Each Indemnifying Party hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations to an Indemnified Party are primary and any obligation of such other sources to advance expenses or to provide indemnification or insurance for the same expenses or liabilities incurred by such Indemnified Party are secondary) and (ii) that it shall be required to advance the full amount of expenses incurred by an Indemnified Party 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 the terms of this Agreement without regard to any rights an Indemnified Party may have against such other sources. The Indemnifying Party further agrees that no advancement or payment of indemnification or insurance by such other sources on behalf of an Indemnified Party with respect to any claim for which such Indemnified Party has sought indemnification from an Indemnifying Party shall affect the foregoing, and any other sources of indemnification shall have a right of contribution and/or be subrogated to the extent of such advancement or indemnification payment to all of the rights of recovery of such Indemnified Party against the Indemnifying Party.

(f) If any Third Party Claim shall be brought against a member of each party’s Group, then such Action shall be deemed to be a SpinCo Assumed Action or a Parent Assumed Action in accordance with Section 5.02, to the extent applicable, and the party as to which the Action primarily relates shall be deemed to be the Indemnifying Party for the purposes of this Article 6. In the event of any Action in which the Indemnifying Party is not also named defendant, at the request of either the Indemnified Party or the Indemnifying Party, the parties will use reasonable efforts to substitute the Indemnifying Party or its applicable Affiliate for the named defendant in the Action.

(g) Notwithstanding the foregoing, this Agreement shall not apply to indemnification, or responsibility for Losses, related to Tax matters. The procedures for such indemnification, and the allocation of such responsibility, shall be governed by the Tax Matters Agreement.

Section 6.05. Calculation of Indemnification Amount. Any indemnification amount pursuant to Section 6.03 shall, subject to Section 6.04(e), be paid (i) net of any amounts actually recovered by the Indemnified Party under applicable insurance policies or from any other Person alleged to be responsible therefor, and (ii) taking into account any Tax Benefit (as defined in the Tax Matters Agreement) actually realized by the Indemnified Party (using the methodology set forth in Section 12(d) of the Tax Matters Agreement to determine the amount of any such Tax Benefit) arising from the incurrence or payment of the relevant Losses. Subject to Section 6.04(e), if the Indemnified Party receives any amounts under applicable insurance policies from any other Person alleged to be responsible for any Losses, subsequent to an indemnification payment by the Indemnifying Party in respect thereof, then such Indemnified Party shall promptly reimburse the Indemnifying Party for any payment made by such Indemnifying Party in respect thereof up to the amount received by the Indemnified Party from such insurance policy or Person, as applicable. The Indemnifying Party shall not be liable for any Losses under Section 6.02 or Section 6.03 to the extent such Losses are punitive or exemplary damages (other than any such Losses actually paid to Third Parties).

Section 6.06. Contribution. If for any reason the indemnification provided for in Section 6.02 or Section 6.03 is unavailable to any Indemnified Party, or insufficient to hold it harmless, then the Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Parent Group, on the one hand, and the SpinCo Group, on the other hand, in connection with the conduct, statement or omission that resulted in such Losses.

Section 6.07. Survival of Indemnities. The rights and obligations of any Indemnified Party or Indemnifying Party under this Article 6 shall survive the sale or other transfer of any party of any of its assets, business or liabilities, including the Merger.

Section 6.08. Exclusive Remedy.

(a) From and after the Distribution Effective Time , the sole and exclusive remedy of a party with respect to any and all claims relating to this Agreement or the transactions contemplated hereby (other than claims of, or causes of action arising from, fraud and except for seeking specific performance or other equitable relief to require a party to perform its obligations under this Agreement to the extent permitted hereunder and except as otherwise provided herein or in any Ancillary Agreement or other contract or agreement) will be pursuant to the indemnification provisions set forth in this Article 6 or, in the case of indemnification claims for Tax and Tax Related Losses addressed in the Tax Matters Agreement, the Tax Matters Agreement. In furtherance of the foregoing, each party hereby waives, from and after the Distribution Effective Time , any and all rights, claims and causes of action (other than pursuant to the indemnification provisions set forth in this Article 6 and the Tax Matters Agreement and other than claims of, or causes of action arising from, fraud and except for seeking specific performance or other equitable relief to require a party to perform its obligations under this Agreement to the extent permitted hereunder and except as otherwise provided herein or in any Ancillary Agreement or other contract or agreement) that such party or its Affiliates may have against the other party or any of its Affiliates, or their respective directors, officers and employees, arising under or based upon any applicable Laws and arising out of the transactions contemplated by this Agreement.

(b) Notwithstanding any other provision hereof, from and after the Distribution Effective Time , except for [•] ⁷ the sole and exclusive remedy of the Parent Group and the SpinCo Group with respect to any and all indemnification claims for Taxes and Tax-Related Losses addressed in the Tax Matters Agreement shall be as set forth in the Tax Matters Agreement.

ARTICLE 7

MISCELLANEOUS

Section 7.01. Notices. Any notice, instruction, direction or demand under the terms of this Agreement required to be in writing shall be duly given upon delivery, if delivered by hand, facsimile transmission, or mail, to the following addresses:

If to Parent to:

McKesson Corporation

One Post Street, 32 ^nd Floor

San Francisco, CA 94104

Attention: Assistant General Counsel

Facsimile: (415) 983-8457

with a copy (which copy shall not constitute notice) to:

Davis Polk & Wardwell LLP

1600 El Camino Real

Menlo Park, CA 94025

Attention: Alan F. Denenberg

Facsimile: (650) 752-2004

⁷	[Insert tax provisions of Ancillary Agreement intended to survive.]

If to SpinCo to:

[______________]

If to Acquiror to:

[______________]

or to such other addresses or telecopy numbers as may be specified by like notice to the other party. All such notices, requests and other communications shall be deemed given, (a) when delivered in person or by courier or a courier services, (b) if sent by facsimile transmission (receipt confirmed) on a Business Day prior to 5 p.m. in the place of receipt, on the date of transmission (or, if sent after 5 p.m., on the following Business Day) or (c) if mailed by certified mail (return receipt requested), on the date specified on the return receipt.

Section 7.02. Termination. This Agreement shall terminate without further action at any time before the Distribution upon the termination of the Merger Agreement. In the event of a termination pursuant to the preceding sentence, neither party nor any of its Subsidiaries or Affiliates shall have any liability or further obligation to the other party or any of the other party’s Subsidiaries or Affiliates under this Agreement.

Section 7.03. Amendments; No Waivers.

(a) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Parent and SpinCo and Acquiror, or in the case of a waiver, by the party against whom the waiver is to be effective.

(b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

Section 7.04. Expenses. Except as specifically provided otherwise in this Agreement or any Ancillary Agreement, all costs and expenses incurred by the Parent Group in connection with the Distribution and related transactions shall be paid by Parent, and all costs and expenses incurred by the SpinCo Group in connection with the Distribution and related transactions prior to the Distribution Effective Time shall be paid by SpinCo in accordance with Section 10.08 (Exit Events Expenses) of the LLC Agreement.

Section 7.05. Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided that neither party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other parties hereto. If any party or any of its successors or permitted assigns (i) shall consolidate with or merge into any other Person (including pursuant to the Merger) and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) shall transfer all or substantially all of its properties and assets to any Person, then, and in each such case, proper provisions shall be made such that the successors and assigns of such party shall assume all of the obligations of such party under the Agreement and any Ancillary Agreement.

Section 7.06. Governing Law. This Agreement and any related dispute shall be construed in accordance with and governed by the laws of the State of Delaware, without regard to the conflicts of laws rules thereof.

Section 7.07. Counterparts; Effectiveness; Third-Party Beneficiaries. This Agreement may be signed in any number of counterparts, and delivered by facsimile, PDF or otherwise, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other party hereto. Until and unless each party has received a counterpart hereof signed by the other party hereto, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication). Except for the indemnification and release provisions of Article 7, neither this Agreement nor any provision hereof is intended to confer any rights, benefits, remedies, obligations, or liabilities hereunder upon any Person other than the parties hereto and their respective successors and permitted assigns.

Section 7.08. Entire Agreement. This Agreement and the Ancillary Agreements constitute the entire understanding of the parties with respect to the subject matter hereof and thereof and supersedes all prior agreements, understandings and negotiations, both written and oral, between the parties with respect to the subject matter hereof and thereof. No representation, inducement, promise, understanding, condition or warranty not set forth herein or in the other Ancillary Agreements has been made or relied upon by any party hereto or any member of their Group with respect to the transactions contemplated by the Ancillary Agreements. To the extent that the provisions of this Agreement are inconsistent with the provisions of any other Ancillary Agreements other than the Tax Matters Agreement, the provisions of this Agreement shall prevail.

Section 7.09. Tax Matters. Except as otherwise expressly provided herein, this Agreement shall not govern Tax matters (including any administrative, procedural and related matters thereto), which shall be exclusively governed by the Tax Matters Agreement and [•]8. In the case of any conflict between this Agreement and the Tax Matters Agreement, in relation to any matters addressed by the Tax Matters Agreement, the Tax Matters Agreement shall prevail.

Section 7.10. Jurisdiction. For the purposes of any suit, action or other proceeding arising out of or relating to this Agreement, each party to this Agreement irrevocably submits, to the fullest extent permitted by applicable Law, to the exclusive jurisdiction of the Chancery Court of the State of Delaware (or if unavailable, any federal court sitting in the State of Delaware or, if unavailable, the Delaware Superior Court) and the appellate courts having jurisdiction of appeals in such courts. For the purposes of any suit, action or other proceeding arising out of or relating to this Agreement, each party irrevocably and unconditionally waives, to the fullest extent permitted by applicable Law, any objection to the laying of venue in the Chancery Court of the State of Delaware (or if unavailable, any federal court sitting in the State of Delaware or, if unavailable, the Delaware Superior Court), and hereby further irrevocably and unconditionally waives, to the fullest extent permitted by applicable Law, and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Each party irrevocably consents, to the fullest extent permitted by applicable Law, to service of

⁸	[Insert Tax Provisions of Ancillary Agreements intended to survive.]

process in connection with any such suit, action or other proceeding by registered mail to such party at its address set forth in this Agreement, in accordance with the provisions of Section 7.01. The consent to jurisdiction set forth in this Section 7.10 shall not constitute a general consent to service of process in the State of Delaware and shall have no effect for any purpose except as provided in this Section 7.10. The parties hereto agree that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law.

Section 7.11. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HEREBY KNOWINGLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTERS (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR THE RELATIONSHIP ESTABLISHED HEREUNDER.

Section 7.12. Existing Agreements. Except as otherwise contemplated hereby or by the other Ancillary Agreements, all prior agreements or arrangements between (or relating to) any member(s) of the SpinCo Group or the JV Business, on the one hand, and any member(s) of the Parent Group or the Retained Business, on the other hand (other than any agreement to which any Person other than the parties hereto and the members of their respective Groups is also a party, including, for the avoidance of doubt, the LLC Agreement) shall be terminated effective as of the Distribution, if not theretofore terminated, and shall be of no further force or effect (including any provision thereof that purports to survive termination). ⁹

Section 7.13. Captions. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof.

Section 7.14. Severability. Every provision of this Agreement is intended to be severable. If any term or provision hereof is declared or held illegal or invalid, in whole or in part, for any reason whatsoever, such illegality or invalidity shall not affect the validity or enforceability of the remainder of the Agreement, and such provision shall be deemed amended or modified to the extent, but only to the extent, necessary to cure such illegality or invalidity. Upon such determination of illegality or invalidity, the parties hereto shall negotiate in good faith to amend this Agreement to effect the original intent of the parties. In any event, the invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of this Agreement, including that provision, in any other competent jurisdiction.

Section 7.15. Further Assurances. Each party agrees to execute, acknowledge, deliver, file, record and publish such further certificates, amendments to certificates, instruments and documents, and do all such other acts and things as may be required by Law, or as may be required to carry out the intent and purposes of this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby.

⁹	NTD : To confirm list of continuing agreements post separation. These will be listed here or under Ancillary Agreements.

Section 7.16. Specific Performance. The parties hereto hereby acknowledge and agree that a violation of any of the terms of this Agreement will cause the other parties irreparable injury for which an adequate remedy at law is not available. Accordingly, the parties hereto expressly agree that in addition to any other remedy that each of the parties may be entitled to in law or in equity, each of the parties hereto shall, except as specifically provided otherwise in this Agreement, be entitled to specific performance of the terms of this Agreement and any injunction, restraining order or other equitable relief that may be necessary to prevent any breach(es) thereof. Furthermore, the parties expressly agree that if any of the parties hereto institutes any action or proceeding to enforce the provisions hereof, any other party against whom such action or proceeding is brought shall be deemed to have expressly, knowingly, and voluntarily waived the claim or defense that an adequate remedy exists at law. Each party hereby waives any requirement of any posting of bond.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.


MCKESSON CORPORATION

By:
		Name:
		Title:

PF2 SPINCO LLC

By:
		Name:
		Title:

HCIT HOLDINGS, INC.

By:
		Name:
		Title:

CHANGE HEALTHCARE LLC

By:
		Name:
		Title:

CHANGE HEALTHCARE INTERMEDIATE HOLDINGS, LLC

By:
		Name:
		Title:

[Signature Page – Separation and Distribution Agreement]


CHANGE HEALTHCARE
HOLDINGS, LLC

By:
		Name:
		Title:

[Signature Page – Separation and Distribution Agreement]

EXHIBIT D

MERGER AGREEMENT

EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

PF2 SPINCO LLC

(A DELAWARE LIMITED LIABILITY COMPANY)

WITH AND INTO

HCIT HOLDINGS, INC.

(A DELAWARE CORPORATION)

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of December 20, 2016 by and between PF2 SpinCo LLC, a Delaware limited liability company to be converted to a Delaware corporation following the date hereof (“SpinCo”), HCIT Holdings, Inc., a Delaware corporation (“Echo”), and McKesson Corporation, a Delaware corporation (“MCK”).

WITNESSETH:

WHEREAS, on June 28, 2016, MCK, Echo, Change Healthcare, Inc., a Delaware corporation, PF2 NewCo LLC, a Delaware limited liability company (the “JAL”) and the other parties thereto entered into an Agreement of Contribution and Sale (the “ Contribution Agreement ”);

WHEREAS, upon the closing of the transactions contemplated by the Contribution Agreement (the “Contribution-Closing”), PF2 IP LLC, a Delaware limited liability company (“WC-4 ^- .1”), PF2 PST Services Inc., a Delaware corporation (“ New PST ”, and together with IPCo, the “MCK-Members”), Echo and the W shall enter into an Amended and Restated Limited Liability Company Agreement of the JV, a final form of which has been made available to the parties hereto (the “ LLC Agreement ”);

WHEREAS, following the Contribution Closing, and in accordance with the LLC Agreement, MCK and SpinCo shall enter into a Separation and Distribution Agreement substantially in the form set forth on Exhibit A (the “Separation-Agreement”), pursuant to which (i) MCK shall contribute all of the limited liability company interests in IPCo and all of the shares of New PST to SpinCo (the “ Controlled Transfer ”) and (ii) MCK shall (A) commence exchange offers pursuant to which MCK will exchange stock of SpinCo for stock of MCK held by the stockholders of MCK, (B) distribute stock of SpinCo to the stockholders of MCK as a dividend in kind, (C) commence one or more exchange offers pursuant to which MCK will exchange stock of SpinCo for debt securities of MCK (subject to limitations described under the LLC Agreement) or (D) any combination of the foregoing clauses (A) through (C), resulting in the stockholders and debtholders of MCK receiving at least 75% of the stock of SpinCo (such transactions described in clause (ii), the “Distribution”);

WHEREAS, the board of directors of Echo has adopted resolutions (i) approving, adopting and declaring advisable this Agreement, (ii) approving, adopting and declaring advisable the Merger, (iii) recommending that the stockholders of Echo approve and adopt this Agreement and the Merger and (iv) submitting the Agreement to the stockholders of Echo for approval and adoption, each in accordance with General Corporation Law of the State of Delaware (the “DGCL”);

WHEREAS, MCK, as the sole member of SpinCo, has adopted resolutions approving this Agreement and the Merger, each in accordance with the Limited Liability Company Act of the State of Delaware and the limited liability company agreement of SpinCo dated August 22, 2016 (the “ SpinCo LLC Agreement ”);

WHEREAS, the parties hereto acknowledge and agree that a significant interval of time (including more than one year) will likely elapse before the Effective Time;

WHEREAS, prior to the Effective Time, SpinCo shall convert to a Delaware corporation, and the parties acknowledge and agree that the Merger shall be effected in accordance with, and the parties have entered into this Agreement pursuant to, Section 251 of the DGCL;

WHEREAS, it is intended, for U.S. federal income tax purposes, that (i) the Controlled Transfer, together with the Distribution, will qualify as a “reorganization” within the meaning of Section 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the “Code”), and that each of MCK and SpinCo will be a “party to the reorganization” within the meaning of Section 368(b) of the Code, (ii) the Distribution, as such, will qualify as a distribution of stock of SpinCo to MCK’s shareholders pursuant to Section 355 of the Code, (iii) the Merger (as defined below) will not cause Section 355(e) of the Code to apply to the Distribution, (iv) the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code and that each of Echo and SpinCo will be a “party to the reorganization” within the meaning of Section 368(b) of the Code, and (v) this Agreement constitutes a “plan of reorganization” within the meaning of Treasury Regulation Section 1.368-2(g);

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, Echo and SpinCo hereby agree as follows:

ARTICLE 1

MERGER

SECTION 1.1 Merger. In accordance with the provisions of this Agreement and the DGCL: (a) SpinCo shall be merged with and into Echo (the “ Merger ”); (b) the separate existence of SpinCo shall cease; and (c) Echo shall survive the Merger and shall continue to be governed by the laws of the State of Delaware. Echo shall be, and is herein sometimes referred to as, the “ Surviving Entity .” The name of the Surviving Entity shall be the name of Echo as of immediately prior to the Effective Time.

SECTION 1.2 Filing and Effectiveness. Immediately following the consummation of the Distribution, subject to the terms and conditions of this Agreement, the parties hereto shall cause a certificate of merger to be filed with the Secretary of State of the State of Delaware (the “ Certificate of Merger ”). The Merger shall become effective when the executed Certificate of Merger shall have been filed with the Secretary of State of the State of Delaware or such later time as shall be agreed upon in writing by the parties hereto and stated in such Certificate of Merger. The date and time when the Merger shall become effective shall be referred to in this Agreement as the “ Effective Time .”

SECTION 1.3 Effect of the Merger. Upon the Effective Time, the separate existence of SpinCo shall cease, the Surviving Entity shall possess all properties, rights, privileges, powers and franchises of SpinCo and Echo, and all claims, obligations, liabilities, debts and duties of SpinCo and Echo shall become the claims, obligations, liabilities, debts and duties of the Surviving Entity. The Merger shall otherwise have the effects provided for in the DGCL, including Section 259 of the DGCL.

ARTICLE 2

CHARTER DOCUMENTS, DIRECTORS AND OFFICERS

SECTION 2.1 Certificate of Incorporation. The certificate of incorporation of Echo as in effect immediately prior to the Effective Time shall be the certificate of incorporation of the Surviving Entity until duly amended in accordance with applicable law, and applicable provisions of the LLC Agreement, if any.

SECTION 2.2 Bylaws. The bylaws of Echo as in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Entity (the “ Bylaws ”) until duly amended in accordance with applicable law, and applicable provisions of the LLC Agreement, if any.

SECTION 2.3 Directors and Officers. The directors of Echo immediately prior to the Effective Time shall be the directors of the Surviving Entity from and after the Effective Time and will hold office from and after the Effective Time until their respective successors are duly elected or appointed and qualified in the manner provided in the Bylaws, or as otherwise provided by applicable law. The officers of Echo immediately prior to the Effective Time shall be the officers of the Surviving Entity from and after the Effective Time and will hold office from the Effective Time until their respective successors are duly elected or appointed and qualified in the manner provided in the Bylaws, or as otherwise provided by applicable law.

ARTICLE 3

MANNER OF CONVERSION OF STOCK

SECTION 3.1 Merger Consideration. Upon the Effective Time, (a) each share of SpinCo common stock issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action by or on behalf of the parties hereto, be converted into one share of Echo Common Stock (and, if applicable, cash in lieu of fractional shares of Echo Common Stock payable in accordance with Section 3.3); and (b) each share of capital stock of Echo issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding upon and immediately after the Effective Time. “ Echo Common Stock ” means shares of common stock of Echo having such terms and such powers, preferences and rights, and qualifications, limitations or restrictions, as provided by the Certificate of Incorporation of Echo or by applicable law, in each case as of immediately prior to the Effective Time.

SECTION 3.2 Exchange of Certificates.

(a) Pursuant to Section 3.02 of the Separation Agreement, the Exchange Agent (as defined in the Separation Agreement), if any, and the Distribution Agent (as defined in the Separation Agreement) shall hold, for the account of the relevant SpinCo shareholders, the global certificate(s) representing all of the outstanding shares of SpinCo common stock transferred in the Distribution.

(b) Prior to or at the Effective Time, or as otherwise reasonably requested by SpinCo, Echo shall deposit with the Exchange Agent, if any, and the Distribution Agent, as applicable, for the benefit of the holders of shares of SpinCo common stock, for exchange in accordance with this Article 3 through the Exchange Agent or Distribution Agent, as the case may be, evidence in book entry form representing the shares of Echo Common Stock issuable pursuant to this Article 3 in exchange for outstanding shares of SpinCo common stock (such shares of Echo Common Stock, together with any dividends or distributions with respect thereto, being hereafter referred to as the “ Exchange Fund ”). For the purposes of such deposit, Echo shall assume that there will not be any fractional shares of Echo Common Stock. The Exchange Agent, if any, and the Distribution Agent shall, pursuant to irrevocable instructions, deliver the Echo Common Stock to be issued pursuant to this Article 3 out of the Exchange Fund. The Exchange Fund shall not be used for any other purpose.

(c) None of the parties hereto, the Exchange Agent and the Distribution Agent shall be liable to any Person in respect of any shares of SpinCo common stock or Echo Common Stock (in either case for any dividends or distributions with respect thereto) or cash from the Exchange Fund delivered to a public official pursuant to any abandoned property, escheat or similar law.

SECTION 3.3 No Fractional Shares.

(a) No certificates or scrip representing fractional shares of Echo Common Stock shall be issued upon the conversion of SpinCo common stock pursuant to Section 3.1 , and such fractional share interests shall not entitle the owner thereof to vote or to any rights of a holder of Echo Common Stock. For purposes of this Section 3.3 , all fractional shares to which a single record holder would be entitled shall be aggregated.

(b) Fractional shares of Echo Common Stock that would otherwise be allocable to any former holders of SpinCo common stock in the Merger shall be aggregated, and no holder of SpinCo common stock shall receive cash equal to or greater than the value of one full share of Echo Common Stock. The Exchange Agent, if any, and the Distribution Agent shall cause the whole shares obtained from aggregating fractional shares that would otherwise remain across all holders of SpinCo common stock to be sold, in the open market or otherwise as reasonably directed by MCK, and in no case later than 20 business days after the Effective Time. The Exchange Agent, if any, and the Distribution Agent, as the case may be, shall make available the net proceeds thereof, after deducting any required withholding Taxes and brokerage charges, commissions and transfer Taxes, on a pro rata basis, without interest, as soon as practicable to the holders of SpinCo common stock entitled to receive such cash. Payment of cash in lieu of fractional shares of Echo Common Stock shall be made solely for the purpose of avoiding the expense and inconvenience to Echo of issuing fractional shares of Echo Common Stock and shall not represent separately

bargained-for consideration. Provided that Echo issues to the relevant agent the number of shares required to be issued by Echo to such agent pursuant to Section 3.3, Echo shall have no liability whatsoever to any holders of SpinCo common stock with respect to cash delivered in lieu of fractional shares. As used herein, the term “Tax” has the meaning set forth in the Tax Matters Agreement (substantially in the form set forth on Exhibit B) to be entered into by and among Echo, MCK and SpinCo prior to the Distribution (the “Tax Matters Agreement ”).

SECTION 3.4 Withholding Rights. Echo, the Distribution Agent and the Exchange Agent (if any), as the case may be, shall deduct and withhold from the consideration otherwise required to be paid pursuant to this Agreement such amounts as may be required to be deducted and withheld under the Code or any provision of state, local or foreign Tax Law, and shall remit such amounts to the relevant governmental authority. Any withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Persons otherwise entitled thereto.

ARTICLE 4

COVENANTS

SECTION 4.1 SpinCo Capital Stock. Immediately prior to the Distribution, and through the Effective Time, SpinCo may take any actions necessary to provide that the number of outstanding shares of SpinCo common stock shall equal the number of Units (as defined in the LLC Agreement) to be held by SpinCo (directly or indirectly) immediately prior to the Effective Time.

SECTION 4.2 Echo Stockholder Approval.

(a) Echo shall take all actions necessary under applicable law and the Certificate of Incorporation and Bylaws of Echo to call, give notice of and hold a special meeting of the holders of capital stock of Echo (the “ Echo Stockholders Meeting ”) to vote on a proposal to approve and adopt this Agreement and shall submit such proposal to such holders at the Echo Stockholders Meeting. Echo shall take such actions as are necessary to ensure that the notice of the Echo Stockholders Meeting complies with Sections 251(c) and 262(d)(1) of the DGCL. Echo shall use its best efforts to obtain the approval and adoption of this Agreement by the holders of all of the outstanding capital stock of Echo entitled to vote as of the record date fixed for purposes of determining the stockholders entitled to vote on the approval and adoption of this Agreement (the “ Echo Stockholder Approval ”).

(b) Unless prohibited by law, Echo shall cause the Echo Stockholders Meeting to be held within 30 days of the date of this Agreement.

SECTION 4.3 SpinCo Stockholder Approval.

(a) Following the Contribution Closing and prior to the Distribution, SpinCo shall convert from a Delaware limited liability company to a Delaware corporation (the “ SpinCo Conversion ”).

(b) Following the SpinCo Conversion, the board of directors of SpinCo shall adopt resolutions (i) approving, adopting and declaring advisable this Agreement, (ii) approving, adopting and declaring advisable the Merger, (iii) recommending that the sole stockholder of SpinCo approve and adopt the Agreement and the Merger and (iv) submitting the Agreement to the sole stockholder of SpinCo for approval and adoption, each in accordance with the DGCL (the “ SpinCo Board Approvals ”).

(d) Following SpinCo’s execution of this Agreement, SpinCo shall take all actions necessary under applicable law and the Certificate of Incorporation and Bylaws of SpinCo to call, give notice of and hold a special meeting of the holder or holders of capital stock of SpinCo (the “ SpinCo Stockholders Meeting ”) to vote on a proposal to approve and adopt this Agreement and shall submit such proposal to such holder or holders at the SpinCo Stockholders Meeting. SpinCo shall take such actions as are necessary to ensure that the notice of the SpinCo Stockholders Meeting complies with Sections 251(c) and 262(d)(1) of the DGCL. SpinCo shall obtain the approval and adoption of this Agreement by the holders of all of the outstanding capital stock of SpinCo entitled to vote as of the record date fixed for purposes of determining the stockholders entitled to vote on the approval and adoption of this Agreement (the “ SpinCo Stockholder Approval ”).

(e) Unless prohibited by law, SpinCo shall cause the SpinCo Stockholders Meeting to be held before the effectiveness of the Distribution.

SECTION 4.4 Tax Matters.

(a) Echo and SpinCo shall cooperate, and shall cause their respective subsidiaries to cooperate, to the extent reasonably requested by the other party in order for (i) Echo to obtain the Echo Tax Opinion, (ii) MCK to obtain the MCK Tax Opinions and (iii) any Tax opinions required to be filed with the Commission (as defined in the Separation Agreement) in connection with the filing of any Applicable SEC Filing (as defined in the Separation Agreement).

(b) As a condition precedent to the rendering of the MCK Tax Opinions and the Echo Tax Opinion, Echo, MCK and SpinCo shall execute and deliver to (i) each MCK Tax Advisor and Echo Tax Counsel, the applicable Tax Representation Letters (Merger) (as defined in the Tax Matters Agreement) and (ii) each MCK Tax Advisor, the Tax Representation Letters (Distribution), to the extent renderable, in each case as of (x) the date for filing any Tax opinion required to be filed with the Commission (as defined in the Separation Agreement) in connection with the filing of any Applicable SEC Filing (as defined in the Separation Agreement) and (y) the Effective Time.

(c) This Agreement constitutes a “plan of reorganization” under Treasury Regulations Section 1.368-2(g) with respect to the transactions contemplated hereby.

(d) Except as otherwise expressly provided herein, this Agreement will not govern any Tax matters (including any administrative, procedural and related matters thereto), which will be exclusively governed by the Tax Matters Agreement. In the case of any conflict between this Agreement and the Tax Matters Agreement, in relation to any matters addressed by the Tax Matters Agreement, the Tax Matters Agreement will prevail.

ARTICLE 5

CONDITIONS TO THE MERGER

SECTION 5.1 Conditions to the Obligations of Each Party to Effect the Merger. The respective obligations of each party hereto to effect the Merger shall be subject to the satisfaction or (to the extent permitted by applicable law), waiver by SpinCo and Echo, at or prior to the closing of the Merger, of the following conditions:

(a) no governmental authority of competent jurisdiction shall have enacted, issued or promulgated any law that is in effect and has the effect of making the Merger illegal or which has the effect of prohibiting or otherwise preventing the consummation of the Merger;

(b) no governmental authority of competent jurisdiction shall have issued or granted any order that is in effect and has the effect of making the Merger illegal or which has the effect of prohibiting or otherwise preventing the consummation of the Merger;

(c) there shall be no legal action or suit pending against Echo or SpinCo by or before any governmental authority of competent jurisdiction seeking to prohibit or otherwise prevent the consummation of the Merger;

(d) the Contribution Closing shall have occurred;

(e) the Echo Stockholder Approval shall have been obtained;

(f) the SpinCo Stockholder Approval shall have been obtained;

(g) the Qualified IPO (as defined in the LLC Agreement) shall have occurred; and

(h) the Distribution shall have been consummated.

SECTION 5.2 Conditions to the Obligations of SpinCo to Effect the Merger. The obligations of SpinCo to effect the Merger shall be subject to the satisfaction or (to the extent permitted by applicable law), waiver by SpinCo, at or prior to the closing of the Merger, of the following conditions:

(a) there shall have been no material breach of this Agreement on the part of Echo;

(b) MCK shall have received a written opinion, dated as of the date on which the Effective Time occurs, from Davis Polk & Wardwell LLP or Ernst & Young LLP, tax advisors to MCK (each, an “ MCK Tax Advisor ”), to the effect that the Merger will be treated for U.S. federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code and that each of Echo and SpinCo will be a party to the reorganization within the meaning of Section 368(b) of the Code (the “ MCK Merger Tax Opinion ”). In rendering the foregoing opinion, counsel shall be permitted to rely upon and assume the accuracy of the Tax Representation Letters; and

(c) MCK shall have received a written opinion, dated as of the date on which the Effective Time occurs, from an MCK Tax Advisor, to the effect that (i) the Controlled Transfer, together with the Distribution, will qualify as a “reorganization” within the meaning of Section 368(a)(1)(D) of the Code, and that each of MCK and SpinCo will be a “party to the reorganization” within the meaning of Section 368(b) of the Code, (ii) the Distribution, as such, will qualify as a distribution of stock of SpinCo to MCK’s shareholders pursuant to Section 355 of the Code and (iii) the Merger should not cause Section 355(e) of the Code to apply to the Distribution (the “ MCK Separation Tax Opinion ,” and together with the MCK Merger Tax Opinion, the “ MCK Tax Opinions ”). In rendering the foregoing opinion, an MCK Tax Advisor shall be permitted to rely upon and assume the accuracy of the Tax Representation Letters.

SECTION 5.3 Conditions to the Obligations of Echo to Effect the Merger. The obligations of Echo to effect the Merger shall be subject to the satisfaction or (to the extent permitted by applicable law), waiver by Echo, at or prior to the closing of the Merger, of the following conditions:

(a) there shall have been no material breach of this Agreement on the part of SpinCo or MCK; and

(b) Echo shall have received a written opinion, dated as of the date on which the Effective Time occurs, from Ropes & Gray LLP, tax counsel to Echo (“ Echo Tax Counsel ”), to the effect that the Merger will be treated for U.S. federal income Tax purposes as a reorganization within the meaning of Section 368(a) of the Code and that each of Echo and SpinCo will be a party to the reorganization within the meaning of Section 368(b) of the Code (the “ Echo Tax Opinion ”); provided , however that if Echo’s Tax Counsel shall have notified Echo that such Tax Opinion Advisor will be unable to render an Echo Tax Opinion Echo shall use its reasonable best efforts to obtain an Echo Tax Opinion from an Alternative Tax Opinion Advisor within 60 days of such notification, and if Echo obtains an Echo Tax Opinion from an Alternative Tax Opinion Advisor within such period (or if Echo fails to obtain an Echo Tax Opinion from an Alternative Tax Opinion Advisor within such period by reason of failure to use its reasonable best efforts to do so) this Section 5.3(b) shall be deemed satisfied. For purposes of this Agreement, “ Alternative Tax Opinion Advisor ” shall mean a law or accounting firm that is nationally recognized as an expert in federal income Tax matters and reasonably acceptable to Echo and SpinCo, it being understood that it shall not be unreasonable for a party to not accept an Alternative Tax Advisor that has an advisory relationship with the other party or their affiliates. In rendering the foregoing opinion, Echo Tax Counsel and any Alternative Tax Opinion Advisor shall be permitted to rely upon and assume the accuracy of the applicable Tax Representation Letters (Merger).

ARTICLE 6

REPRESENTATIONS AND WARRANTIES

SECTION 6.1 SpinCo Representations and Warranties. SpinCo represents and warrants to Echo and MCK that as of the date hereof and at the Effective Time (except for such representations and warranties made as of different time as set forth below):

(a) Corporate Existence and Power. SpinCo is a limited liability company validly formed and existing under the laws of the State of Delaware, and prior to the Effective Time will have been validly converted into a corporation, which is validly existing and in good standing under the laws of the State of Delaware and has all corporate powers and all material licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted. As of the Effective Time, SpinCo is not engaged in any operating or business activities, holds any assets or has any liabilities of any nature, except for its ownership of equity of any of its subsidiaries and the JV.

(b) Corporate Authorization. The execution, delivery and performance by SpinCo of this Agreement and the consummation by SpinCo of the transactions contemplated hereby are within SpinCo’s corporate powers and, subject to obtaining the SpinCo Stockholder Approval, has been duly authorized by all necessary corporate action on the part of SpinCo.

(c) Governmental Authorization. The execution, delivery and performance by SpinCo of this Agreement and the consummation by SpinCo of the transactions contemplated hereby require no action by or in respect of, or filing with, any governmental authority other than the filing of the Certificate of Merger with the Delaware Secretary of State, the filing of a certificate of conversion and certificate of incorporation in connection with the SpinCo Conversion and compliance with any applicable requirements of any securities laws.

(d) Non-contravention. The execution, delivery and performance by the SpinCo of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) contravene, conflict with, or result in any violation or breach of any provision of the certificate of incorporation or bylaws of SpinCo as in effect as of the Effective Time, (ii) assuming compliance with the matters referred to in Section 6.1(c) above, contravene, conflict with or result in a violation or breach by SpinCo of any provision of any applicable law, (iii) require any consent or other action by any person under, constitute a default under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which SpinCo is entitled under any provision of any agreement or other instrument binding upon SpinCo, or (iv) result in the creation or imposition of any lien on any asset of SpinCo, with only such exceptions, in the case of each of clauses (ii) through (iv), as would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on SpinCo.

(e) Valid Issuance. Following the SpinCo Conversion, all outstanding shares of common stock of SpinCo will have been duly authorized and validly issued, fully paid and nonassessable and free of preemptive rights.

SECTION 6.2 Echo Representations and Warranties. Echo represents and warrants to SpinCo and MCK that:

(a) Corporate Existence and Power. Echo is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all corporate powers and all material licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted.

(b) Corporate Authorization. The execution, delivery and performance by Echo of this Agreement and the consummation by Echo of the transactions contemplated hereby are within Echo’s corporate powers and, subject to obtaining the Echo Stockholder Approval, has been duly authorized by all necessary corporate action on the part of Echo.

(c) Governmental Authorization. The execution, delivery and performance by Echo of this Agreement and the consummation by Echo of the transactions contemplated hereby require no action by or in respect of, or filing with, any governmental authority other than the filing of the Certificate of Merger with the Delaware Secretary of State and compliance with any applicable requirements of any securities laws.

(d) Non-contravention. The execution, delivery and performance by the Echo of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) contravene, conflict with, or result in any violation or breach of any provision of the certificate of incorporation or bylaws of Echo, (ii) assuming compliance with the matters referred to in Section 6.2(c) above, contravene, conflict with or result in a violation or breach by Echo of any provision of any applicable law, (iii) require any consent or other action by any person under, constitute a default under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which Echo is entitled under any provision of any agreement or other instrument binding upon Echo, or (iv) result in the creation or imposition of any lien on any asset of Echo, with only such exceptions, in the case of each of clauses (ii) through (iv), as would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Echo.

(e) Valid Issuance. All outstanding shares of Echo Common Stock have been duly authorized and validly issued, fully paid and nonassessable and free of preemptive rights.

SECTION 6.3 MCK Representations and Warranties. MCK represents and warrants to Echo and SpinCo that:

(a) Corporate Existence and Power. MCK is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all corporate powers and all material licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted.

(b) Corporate Authorization. The execution, delivery and performance by MCK of this Agreement and the consummation by MCK of the transactions contemplated hereby are within MCK’s corporate powers and has been duly authorized by all necessary corporate action on the part of MCK.

(c) Governmental Authorization. The execution, delivery and performance by MCK of this Agreement and the consummation by MCK of the transactions contemplated hereby require no action by or in respect of, or filing with, any governmental authority other than the filing of the Certificate of Merger with the Delaware Secretary of State and compliance with any applicable requirements of any securities laws.

under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which MCK is entitled under any provision of any agreement or other instrument binding upon MCK, or (iv) result in the creation or imposition of any lien on any asset of MCK, with only such exceptions, in the case of each of clauses (ii) through (iv), as would not reasonably be expected to have, a material adverse impact on the ability of MCK to consummate the transactions contemplated by this Agreement.

ARTICLE 7

GENERAL

SECTION 7.1 Further Assurances. From time to time, as and when required by Echo or by its successors or assigns, there shall be executed and delivered on behalf of SpinCo such deeds and other instruments, and there shall be taken or caused to be taken by SpinCo and Echo such further and other actions as shall be appropriate or necessary in order to vest or perfect in or conform of record or otherwise by Echo or the Surviving Corporation the title to and possession of all the property, interests, assets, rights, privileges, immunities, powers, franchises and authority of SpinCo and otherwise to carry out the purposes of this Agreement, and the officers and directors of Echo and the Surviving Corporation are fully authorized in the name and on behalf of SpinCo or otherwise to take any and all such action and to execute and deliver any and all such deeds and other instruments.

SECTION 7.2 Termination. At any time before the Effective Time and notwithstanding approval of this Agreement by the stockholders of Echo or the member and/or stockholders of SpinCo, this Agreement may be terminated by either Echo or SpinCo following the occurrence of any of the following events: (a) the termination of the Contribution Agreement pursuant to its terms, (b) the consummation of a Company Sale (as defined in the LLC Agreement), (c) termination or expiration of the MCK Exit Window in the event a Qualified MCK Exit (as each term is defined in the LLC Agreement) has not occurred, (d) expiration of the IPO Preference Period if a Qualified IPO (as each term is defined in the LLC Agreement) has not occurred prior to such date, (e) material breach by the other party of any representation, warranty or covenant of such party set forth herein not cured after thirty (30) days’ notice of an opportunity to cure, and (f) the delivery, prior to the Distribution, of written notice by the MCK Members to the JV of their intention to abandon or terminate the Merger. This Agreement may also be terminated at any time before the Effective Time and notwithstanding approval of this Agreement by the stockholders of Echo or the member and/or stockholders of SpinCo by mutual written consent of SpinCo and Echo (with such consent approved, (i) in the case of Echo, by the board of directors of Echo; (ii) in the case of SpinCo prior to the SpinCo Conversion, by the member of SpinCo; and (iii) in the case of SpinCo after the SpinCo Conversion, by the board of directors of SpinCo). In the event of termination pursuant to this Section 7.2, other than the provisions of Article 7, this Agreement shall then be null and void and have no further force and effect and all other rights and liabilities of the parties hereto shall terminate without any liability of any party hereto to any other party hereto other than liability with respect to breaches of this Agreement occurring prior to such termination.

SECTION 7.3 Amendment; Waiver. This Agreement may be amended at any time before the Effective Time by the parties hereto ((a) in the case of Echo, by action taken or authorized by the board of directors of Echo; (b) in the case of SpinCo prior to the SpinCo Conversion, by the member of SpinCo; and (c) in the case of SpinCo after the SpinCo Conversion, by the board of directors of SpinCo), whether before or after the adoption of this Agreement by the stockholders of Echo or SpinCo; provided however that after any such stockholder adoption of this Agreement, no amendment shall be made to this Agreement that by law requires further approval or authorization by the stockholders of Echo or SpinCo without such further approval or authorization. Each amendment to this Agreement must be set forth in a writing signed by all the parties hereto. Any provision of this Agreement may be waived (and thereby rendered inoperative in accordance with such waiver) but only if such waiver is in writing and signed by the party hereto against whom the waiver is to be effective. No waiver by any party hereto of any breach or violation of, default under or inaccuracy in any representation, warranty, covenant or agreement hereunder, whether intentional or not, will be deemed to extend to any prior or subsequent breach, violation, default of or inaccuracy in any representation, warranty, covenant or agreement hereunder or affect in any way any rights arising by virtue of any prior or subsequent occurrence. No delay or omission on the part of any party hereto in exercising any right, power or remedy under this Agreement will operate as a waiver thereof.

SECTION 7.4 No Assignment. No party hereto will have the right to sell, transfer, assign or pledge all or any portion of its interest in this Agreement without the prior written approval of the other parties hereto. For the avoidance of doubt, the rights and obligations of SpinCo under this Agreement shall continue, and shall not be affected by, the SpinCo Conversion, and the SpinCo Conversion shall not be deemed an assignment or transfer of this Agreement.

SECTION 7.5 No Third Party Beneficiaries. Nothing expressed or implied herein is intended, or shall be construed, to confer upon or give any individual, corporation, partnership, joint venture, limited liability company, trust, unincorporated corporation, other entity or governmental authority (each a “ Person ”) other than the parties hereto, and their successors and permitted assigns, any right, remedy, obligation or liability under or by reason of this Agreement, or result in such Person being deemed a third-party beneficiary hereof.

SECTION 7.6 Specific Performance. Each of the parties hereto acknowledges and agrees that each of the other parties hereto would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached or violated. Accordingly, each of the parties hereto agrees that, without posting bond or other undertaking, each of the other parties hereto will be entitled to an injunction or injunctions to prevent breaches or violations of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any claim instituted in any court specified in clause (a) of Section 7.9 in addition to any other remedy to which he, she or it may be entitled, at law or in equity. Each of the parties hereto further agrees that, in the event of any action for specific performance in respect of such breach or violation, he, she or it will not assert the defense that a remedy at law would be adequate.

SECTION 7.7 Entire Agreement. This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings and agreements, whether written or oral, with respect thereto.

SECTION 7.8 Governing Law. This Agreement and any related disputes or claims arising hereunder or with respect hereto shall in all respects be construed, interpreted and enforced in accordance with and governed by the laws of the State of Delaware, without regard to its conflicts of law principles.

SECTION 7.9 Jurisdiction; Venue; Services of Process. Each party to this Agreement, by its execution hereof, (a) hereby irrevocably submits to the exclusive jurisdiction and venue of the Court of Chancery of the State of Delaware (unless the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, in which case, in any state courts of the State of Delaware or the United States District Court located in the State of Delaware) for the purpose of any dispute between any of the parties hereto arising in whole or in part under or in connection with this Agreement, (b) hereby waives to the extent not prohibited by applicable legal requirements, and agrees not to assert, by way of motion, as a defense or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such action brought in one of the above-named courts should be dismissed on grounds of forum non conveniens , should be transferred or removed to any court other than one of the above-named courts, should be stayed by reason of the pendency of some other proceeding in any other court other than one of the above-named courts, or that this agreement or the subject matter hereof may not be enforced in or by such court and (c) hereby agrees not to commence any such action other than before one of the above-named courts. Notwithstanding the previous sentence, a party hereto may commence any action in a court other than those described in this Section 7.9 above for the purpose of enforcing an order or judgment issued by one of the above-named courts. Each party hereto hereby (a) consents to service of process in any action between the parties arising in whole or in part under or in connection with this Agreement in any manner permitted by Delaware law, (b) agrees that service of process made in accordance with clause (a) will constitute good and valid service of process in any such action and (c) waives and agrees not to assert (by way of motion, as a defense, or otherwise) in any such action any claim that service of process made in accordance with clause (a) or (b) does not constitute good and valid service of process.

SECTION 7.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute but one and the same instrument.

SECTION 7.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE PARTIES HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (W) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.11.

Section 7.12. Severability. To the extent that any provision of this Agreement (including without limitation any provision of this paragraph) is found to be invalid or unenforceable: (a) such invalidity or unenforceability shall not affect the validity or enforceability of any other provision of this Agreement; (b) such provision found to be invalid or unenforceable shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent manifested by such provision; and (c) to the fullest extent possible, the provisions of this Agreement not found to be invalid or unenforceable shall be construed so as to give effect to the intent manifested thereby.

Section 7.13. Miscellaneous. Each reference in this Agreement to any other agreement or document (including without limitation each exhibit to this Agreement) shall be deemed a reference to such other agreement or document as amended from time to time, and no such amendment of any such agreement or document (including without limitation that no such amendment to any exhibit to this Agreement) shall be deemed an amendment to this Agreement.

[Signatures Pages Follow]

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.


ECHO

HCIT Holdings, Inc.

By:		/s/ Denise Ceule
		Name: Denise Ceule
		Its: VP – Secretary

PF2 SpinCo LLC

By:		/s/ John G. Saia
		Name: John G. Saia Its: President and Secretary

MCK

McKesson Corporation

By:		/s/ John G. Saia
		Name: John G. Saia
		Its: Corporate Secretary

[Signature page to Merger Agreement]

EXHIBIT E

FORM OF TAX MATTERS AGREEMENT

[See Attached]

CONFIDENTIAL

FORM OF TAX MATTERS AGREEMENT

TAX MATTERS AGREEMENT

between

[McKesson],

on behalf of itself

and the members

of the Parent Group,

and

[SpinCo],

on behalf of itself

and the members

of the [ SpinCo Group],

and

[HCIT Holdings],

on behalf of itself

and the members

of the Acquiror Group.

and

[PF2 NewCo],

on behalf of itself

and the members

of the Acquiror Group

(solely to the extent

set forth herein),

and

[PF2 Newco Holdings LLC]

Dated as of [ ], 20[ ]

Table of Contents


		Page
SECTION 1.	Definitions		1
SECTION 2.	Sole Tax Sharing Agreement		11
SECTION 3.	Certain Pre-Closing Matters		12
SECTION 4.	Allocation of Taxes		12
SECTION 5.	Preparation and Filing of Tax Returns		14
SECTION 6.	Apportionment of Earnings and Profits and Tax Attributes		17
SECTION 7.	Utilization of Tax Attributes		18
SECTION 8.	Tax Benefits		18
SECTION 9.	Certain Representations and Covenants		19
SECTION 10.	Procedures Relating to Opinions and Rulings		24
SECTION 11.	Protective Section 336(e) Elections		24
SECTION 12.	Indemnities		25
SECTION 13.	Acquiror Shareholders Not Parties		27
SECTION 14.	Payments		27
SECTION 15.	Communication and Cooperation		28
SECTION 16.	Audits and Contest		31
SECTION 17.	Notices		32
SECTION 18.	Costs and Expenses		33
SECTION 19.	Effectiveness; Termination and Survival		34
SECTION 20.	Specific Performance		34
SECTION 21.	Construction		34
SECTION 22.	Entire Agreement; Amendments and Waivers		35
SECTION 23.	Governing Law and Interpretation		35
SECTION 24.	Dispute Resolution		36
SECTION 25.	Counterparts		36
SECTION 26.	Successors and Assigns; Third Party Beneficiaries		36
SECTION 27.	Authorization, Etc.		36
SECTION 28.	Change in Tax Law		37
SECTION 29.	Principles		37

TAX MATTERS AGREEMENT

This TAX MATTERS AGREEMENT (the “ Agreement ”) is entered into as of [•] between McKesson Corporation (“ Parent ”), a Delaware corporation, on behalf of itself and the members of the Parent Group, PF2 SpinCo Inc. ¹ (“ SpinCo ”), a Delaware corporation, on behalf of itself and the members of the SpinCo Group, HCIT Holdings, Inc. (“ Acquiror ”), a Delaware corporation, on behalf of itself and the members of the Acquiror Group, Change Healthcare LLC (f/k/a PF2 NewCo LLC) (“ JV ”), a Delaware limited liability company, on behalf of itself and the members of the Acquiror Group (solely for purposes of Section 2, Section 4(c), Section 5(f), Section 12, Section 15(d) and Section 19), and Change Healthcare Holdings, LLC (f/k/a PF2 NewCo Holdings, LLC) (“ OpCo ”), a Delaware limited liability company.

WITNESSETH:

WHEREAS, Parent, SpinCo and Acquiror have entered into a Separation Agreement, dated as of the date hereof (the “ Separation Agreement ”) and Parent, SpinCo and Acquiror have entered into an Agreement and Plan of Merger, dated as of December 20, 2016 (the “ Merger Agreement ”), pursuant to which the Internal Restructuring, the Controlled Transfer, the Distribution and the Merger and other related transactions will be consummated;

WHEREAS, the Controlled Transfer, the Distribution and the Merger are intended to qualify for the Intended Tax-Free Treatment; and WHEREAS, Parent, SpinCo and Acquiror desire to set forth their agreement on the rights and obligations of Parent, SpinCo, Acquiror and the members of the Parent Group, the SpinCo Group and the Acquiror Group respectively, with respect to (a) the administration and allocation of federal, state, local and foreign Taxes incurred in Taxable periods beginning prior to the Distribution Date, as defined below, (b) Taxes resulting from the Distribution and transactions effected in connection with the Distribution and (c) various other Tax matters.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the parties agree as follows:

SECTION 1. Definitions.

(a) As used in this Agreement:

“ Acquiror ” has the meaning set forth in the preamble.

“ Acquiror Capital Stock ” means, to the extent issued by Acquiror, any shares of common stock (including Acquiror Common Stock), preferred stock, restricted stock, restricted stock units, stock appreciation rights, stock-based performance units, phantom units, capital stock equivalents, mandatorily convertible instruments or similar synthetic instruments or other capital stock or nominal interests in Acquiror, including any stock, other securities or interests that are treated as equity for purposes of Section 355 of the Code, or that are treated as an option under Treasury regulations Section 1.355-7(e).

¹	NTD: SpinCo is currently a Delaware LLC, but will be converted to a Delaware corporation.

“ Acquiror Common Stock ” means the common stock, par value [•] per share, of Acquiror.

“ Acquiror Compensatory Equity Interests ” means any options, stock appreciation rights, restricted stock, stock units or other rights with respect to Acquiror Capital Stock that are granted on or prior to the Effective Time by any member of the Acquiror Group in connection with employee, independent contractor or director compensation or other employee benefits (including, for the avoidance of doubt, options, stock appreciation rights, restricted stock, restricted stock units, performance share units or other rights issued in respect of any of the foregoing by reason of the Merger).

“ Acquiror Group ” means Acquiror and each of its Subsidiaries, including, after the Closing, the SpinCo Group and the JV Group.

“ Acquiror Shareholder Acquisition ” means any acquisition of shares of Parent common stock on or after January 1, 2016 (in the case of clauses (i) and (ii) below) or on or after June 22, 2016 (in the case of clauses (iii) and (iv) below) and prior to the Distribution (which shares continue to be held at the time of the Distribution and in respect of which shares SpinCo stock is received in the Distribution) by (i) Blackstone Capital Partners VI L.P., Blackstone Family Investment Partnership VI L.P., or Blackstone Family Investment Partnership VI — ESC L.P., (each, a “ BX Investor ”), (ii) H&F Harrington AIV II, L.P., HFCP VI Domestic AIV, L.P., Hellman & Friedman Investors VI, L.P., Hellman & Friedman Capital Executives VI, L.P. or Hellman & Friedman Capital Associates VI, L.P. each, an “ H&F Investor ”), (iii) any Person Under the Control of Blackstone and any Person Under the Control of H&F or (iv) any Person that is part of a coordinating group (within the meaning of Section 1.355-7(h)(4) of the Treasury regulations) with any Person described in clause (i), (ii) or (iii) above.

“ Acquiror Tax Proceeding ” has the meaning set forth in Section 16(d).

“ Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such other Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made; provided , however , that (notwithstanding any other provision of this Agreement) prior to the Closing no member of the JV Group shall be considered to be a member of the Acquiror Group, Parent Group or SpinCo Group or to be an Affiliate of Parent, Acquiror or SpinCo prior to the Closing. For purposes of this definition, the term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by Contract or otherwise. For the avoidance of doubt, (a) prior to the Closing, Affiliates of Parent will include SpinCo and its Affiliates and (b) after the Closing, Affiliates of Acquiror will include SpinCo and its Affiliates and the members of the JV Group.

“ Agreement ” has the meaning set forth in the preamble.

“ Applicable Law ” (or “ Applicable Tax Law ,” as the case may be) means, with respect to any Person, any federal, state, county, municipal, local, multinational or foreign statute, treaty, law, common law, ordinance, rule, regulation, order, writ, injunction, judicial decision, decree, permit or other legally binding requirement of any Governmental Authority applicable to such Person or any of its respective properties, assets, officers, directors, employees, consultants or agents (in connection with such officer’s, director’s, employee’s, consultant’s or agent’s activities on behalf of such Person).

“ Business ” means the Retained Business or the Controlled Business, as the case may be.

“ Business Day ” means any day that is not a Saturday, a Sunday or other day that is a statutory holiday under the federal Laws of the United States.

“ Closing ” means the consummation of the Merger.

“ Closing of the Books Method ” means the apportionment of items between portions of a Taxable period based on a closing of the books and records at the close of the Distribution Date (and for purposes of such apportionment, the Taxable year of any partnership or other pass-through entity or any controlled foreign corporation within the meaning of Section 957(a) of the Code or passive foreign investment company within the meaning of Section 1297 of the Code shall be deemed to terminate at the close of the Distribution Date); and in the event that the Distribution Date is not the last day of the Taxable period, as if the Distribution Date were the last day of the Taxable period), subject to adjustment for items accrued on the Distribution Date that are properly allocable to the Taxable period following the Distribution, as determined by agreement among Acquiror, SpinCo, and Parent, with any dispute among them to be resolved by the Tax Arbiter in accordance with Section 24; provided that Taxes not susceptible to such apportionment shall be apportioned between the Pre- and Post-Distribution Periods on a pro rata basis in accordance with the number of days in each Taxable period.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Combined Group ” means any group that filed or was required to file (or will file or be required to file) a Tax Return on an affiliated, consolidated, combined, unitary, fiscal unity or other group basis (including as permitted by Section 1501 of the Code) that includes at least one member of the Parent Group and at least one member of the SpinCo Group.

“ Combined Tax Return ” means a Tax Return filed or required to be filed in respect of federal, state, local or foreign income Taxes for a Combined Group, or any other affiliated, consolidated, combined, unitary, fiscal unity or other group basis (including as permitted by Section 1501 of the Code) Tax Return of a Combined Group.

“ Company ” means Parent, SpinCo, Acquiror, or a Group, as appropriate.

“ Contribution Agreement ” means the Agreement of Contribution and Sale, dated as of June 28, 2016, by and among JV, Parent, Acquiror, Change Healthcare, Inc., Change Aggregator, L.P., H&F Echo Holdings, L.P. and the other parties thereto, as amended from time to time.

“ Controlled Business ” means the Parent Group’s business known as the MHS business, which is engaged in the provision of services, and the manufacture, marketing, distribution and sale of software products, designed to manage the cost and quality of care for payers, providers, hospitals and government organizations, provided that, for the avoidance of doubt, the Controlled Business shall not include the Imaging and Workflow Solutions (the “ IWS Business ”).

“ Controlled Transfer ” means the transfer by Parent to SpinCo of all of Parent’s direct and indirect interest in the JV, which may include the transfer of all of the issued and outstanding equity of the MCK Members (as defined in the LLC Agreement), solely in exchange for Parent’s receipt of shares of SpinCo Common Stock.

“ Covered Tax Distribution ” means any distribution to which any member of the SpinCo Group is (or, but for an amendment to the LLC Agreement after the Distribution, would have been) entitled to receive pursuant to Section 8.02(a) of the LLC Agreement after the Distribution to the extent attributable to Tax Items allocated to such member of the SpinCo Group for any Pre-Distribution Period, including as a result of an adjustment to any such Tax Items.

“ Disqualifying Action ” means a Parent Disqualifying Action or Echo Disqualifying Action.

“ Distribution ” means a transaction in which Parent will dispose of all of the shares of SpinCo Common Stock through (1) one or more exchange offers pursuant to which Parent will redeem shares of Parent Common Stock for shares of SpinCo Common Stock (each, a “ Split-Off Exchange ”), (2) a distribution to Parent shareholders of shares of SpinCo Common Stock to Parent shareholders without consideration on a pro rata basis (a “ Spin-Off’) (3) one or more exchanges of SpinCo Common Stock for debt of Parent (each, a “ Debt Exchange ”) or (4) any combination of the foregoing; provided that more than 80% of the SpinCo Common Stock shall be disposed of under a combination of the preceding clauses (1) and (2).

“ Distribution Date ” means the first date on or after the date of the consummation of the first event described in clause (1) or clause (2) of the definition of “Distribution” on which more than 80% of the SpinCo Common Stock has been disposed of under a combination of clause (1) or clause (2) of the definition of “Distribution.”

“ Distribution Effective Time ” means the first time on or after the consummation of the first event described in clause (1) or clause (2) of the definition of “Distribution” at which more than 80% of the SpinCo Common Stock has been disposed of under a combination of clause (1) or clause (2) of the definition of “Distribution.”

“ Distribution Taxes ” means any Taxes incurred as a result of the failure of the Intended Tax-Free Treatment of the Internal Restructuring, the Controlled Transfer or the Distribution.

“ Echo Cushion Amount ” means an amount of Acquiror Capital Stock equal to 50% of the difference between (x) 49.99% of the total Acquiror Capital Stock outstanding and (y) the amount of Acquiror Capital Stock held immediately after the Merger by Persons who held such stock by reason of having held Acquiror Capital Stock prior to the Merger, in each case as determined following the Merger.

“ Echo Disqualifying Action ” means (i) any Acquiror Shareholder Acquisition, (ii) from and after the Effective Time, any action (or the failure to take any action) within Acquiror’s control by any member of the Acquiror Group (including entering into any agreement, understanding or arrangement or any negotiations with respect to any transaction or series of transactions), (iii) from and after the Effective Time, any event (or series of events) involving a transfer of the capital stock of Acquiror, (iv) any breach by any member of the Acquiror Group of any representation, warranty or covenant made by them in this Agreement, (v) from and after the Effective Time, any coordinated acquisition of the stock of Acquiror by (x) any Person Under the Control of Blackstone with any BX Excluded Person or by (y) any Person Under the Control of H&F with any H&F Excluded Person; (vi) from and after the Effective Time, the issuance by Acquiror (other than in a public offering) of its newly issued capital stock to any fund or other managed investment vehicle of Blackstone that is not a Person under the Control of Blackstone or to any fund or other managed investment vehicle of H&F that is not a Person under the Control of H&F (vii) from and after the Effective Time, any acquisition (other than in a public offering) of the capital stock of Acquiror by any fund or other managed investment vehicle of Blackstone that is not a Person under the Control of Blackstone, which acquisition is consummated, facilitated or otherwise executed due to the efforts or pursuant to the instructions of any Person under the Control of Blackstone or (viii) from and after the Effective Time, any acquisition (other than in a public offering) of the capital stock of Acquiror by any fund or other managed investment vehicle of H&F that is not a Person under the Control of H&F, which acquisition is consummated, facilitated or otherwise executed due to the efforts or pursuant to the instructions of any Person under the Control of H&F that, in each case, is not a Parent Disqualifying Action and would affect the Intended Tax-Free Treatment; provided , however , that the term “Echo Disqualifying Action” shall not include any action or event entered into pursuant to any Transaction Document or that is undertaken pursuant to the Internal Restructuring, the Controlled Transfer, the Distribution (including a Debt Exchange) or the Merger. For the avoidance of doubt, a sale of Acquiror stock by any BX Investor or any H&F Investor (or their Permitted Transferees) shall not constitute an Echo Disqualifying Action.

“ Echo Tainted Stock ” means Acquiror Equity Interests the issuance, acquisition or disposition of which was consummated in a manner that did not constitute a breach of Section 9(a)(i)(E) solely because of the proviso thereto.

“ Effective Time ” means the date and time of the filing with the Secretary of State of the State of Delaware of the certificate of merger consummating the Merger, or such later time as is specified in such certificate of merger and as is agreed to by Parent and Acquiror.

“ Equity Interests ” means any stock or other securities treated as equity for Tax purposes, options, warrants, rights, convertible debt or any other instrument or security that affords any Person the right, whether conditional or otherwise, to acquire stock or to be paid an amount determined by reference to the value of stock.

“ Escheat Payment ” means any payment required to be made to a Governmental Authority pursuant to an abandoned property, escheat or similar law.

“ Exit Transaction Documents ” means, collectively, this Agreement, the Merger Agreement, the Separation Agreement, [the Transition Services Agreement, the Reverse Transition Services Agreement and [•]].

“ Final Determination ” means (i) with respect to federal income Taxes, (A) a “determination” as defined in Section 1313(a) of the Code (including, for the avoidance of doubt, an executed IRS Form 906) or (B) the execution of an IRS Form 870-AD (or any successor form thereto), as a final resolution of Tax liability for any Taxable period, except that a Form 870-AD (or successor form thereto) that reserves the right of the taxpayer to file a claim for refund or the right of the IRS to assert a further deficiency shall not constitute a Final Determination with respect to the item or items so reserved; (ii) with respect to Taxes other than federal income Taxes, any final determination of liability in respect of a Tax that, under Applicable Tax Law, is not subject to further appeal, review or modification through proceedings or otherwise; or (iii) with respect to any Tax, any final disposition by reason of the expiration of the applicable statute of limitations (giving effect to any extension, waiver or mitigation thereof).

“ Governmental Authority ” means any federal, state, local, provincial, foreign or international court, tribunal, judicial or arbitral body, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority or any national securities exchange.

“ Group ” means the Parent Group, the Acquiror Group, the SpinCo Group or the JV Group, as the context requires.

“ Historic Acquiror Stock ” means unregistered or restricted stock of Acquiror that was held by shareholders of Acquiror immediately prior to the Merger.

“ Indemnifying Party ” means the party from which another party is entitled to seek indemnification pursuant to the provisions of Section 12.

“ Indemnitee ” means the party which is entitled to seek indemnification from another party pursuant to the provisions of Section 12.

“ Intended Tax-Free Treatment ” means the qualification of (i) the Controlled Transfer, together with the Distribution as a reorganization described in Section 368(a)(1)(D) of the Code, pursuant to which neither Parent nor SpinCo recognizes any gain or loss for U.S. federal income Tax purposes, and of each of Parent and SpinCo as a “party to the reorganization” within the meaning of Section 368(b) of the Code, (ii) the Distribution, as such, as a distribution of SpinCo Common Stock to Parent’s shareholders and creditors pursuant to Section 355 of the Code (and, as applicable, Section 361 of the Code), pursuant to which neither Parent nor SpinCo nor any of Parent’s shareholders recognizes any gain or loss for U.S. federal income Tax purposes, (iii) the Merger as a “reorganization” within the meaning of Section 368(a) of the Code pursuant to which neither Acquiror nor SpinCo nor any of Acquiror’s or SpinCo’s shareholders recognizes any gain or loss for U.S. federal income Tax purposes, and of each of Acquiror and SpinCo as a “party to the reorganization” within the meaning of Section 368(b) of the Code and (iv) the transactions described on Schedule A as being free from Tax to the extent set forth therein.

“ Internal Restructuring ” has the meaning set forth in Exhibit [•]. ²

“ IRS ” means the United States Internal Revenue Service.

“ JV ” has the meaning ascribed thereto in the preamble.

“ JV Group ” means the W and each of its Subsidiaries.

“ JV Group Tax ” means any Tax of a member of the JV Group.

“ LLC Agreement ” means the Third Amended and Restated Limited Liability Company Agreement of Change Healthcare LLC, dated as of March 1, 2017, as amended from time to time.

“ Merger ” has the meaning set forth in the Merger Agreement.

“ Merger Agreement ” has the meaning set forth in the recitals.

“ MCK Cushion Amount ” means an amount of Acquiror Capital Stock equal to 50% of the difference between (x) 49.99% of the total Acquiror Capital Stock outstanding and (y) the amount of Acquiror Capital Stock held immediately after the Merger by Persons who held such stock by reason of having held Acquiror Capital Stock prior to the Merger, in each case as determined following the Merger.

“ Parent ” has the meaning ascribed thereto in the preamble.

“ Parent Disqualifying Action ” means (i) any action (or the failure to take any action) within Parent’s control by any member of the Parent Group (or, to the extent the action is taken prior to the Effective Time, any member of the SpinCo Group) (including entering into any agreement, understanding or arrangement or any negotiations with respect to any transaction or series of transactions), (ii) any event (or series of events) involving the transfer of the capital stock of Parent other than an Acquiror Shareholder Acquisition or (iii) any breach by any member of the Parent Group (or, to the extent occurring prior to the Effective Time, by any member of the SpinCo Group) of any representation, warranty or covenant made by them in this Agreement, that, in each case, would affect the Intended Tax-Free Treatment; provided , however , that the term “Parent Disqualifying Action” shall not include any action (or event otherwise described in clause (ii) above) undertaken pursuant to any Transaction Document or pursuant to the Controlled Transfer, the Distribution (other than a Debt Exchange) or the Merger.

“ Parent Group ” means Parent and each of its Subsidiaries, but excluding any member of the SpinCo Group.

“ Parent Separate Tax Return ” means any Tax Return that is required to be filed by, or with respect to, a member of the Parent Group that is not a Combined Tax Return.

²	NTD: Plan for Internal Restructuring to be developed by Parent.

“ Person ” has the meaning set forth in Section 7701(a)(1) of the Code.

“ Person Under the Control of Blackstone ” means (i) the private side businesses controlled by The Blackstone Group L.P. (“ Blackstone ”), which businesses are currently comprised of the Private Equity Business, the Tactical Opportunities Business, and the Real Estate Business (collectively, the “ Existing Private Businesses ”), and which businesses shall include such other businesses that Blackstone may hereafter form or acquire and that are, at the time of any determination as to whether any such business is a Person Under the Control of Blackstone, managed within the same ethical wall as the Existing Private Businesses and (ii) the employees, directors and officers of Blackstone or the businesses described in clause (i). For the avoidance of doubt, a Person Under the Control of Blackstone shall not include (each of the following, a “ BX Excluded Person ”): (A) the public side businesses controlled by Blackstone (e.g. BAAM and GSO) and other businesses on the other side of the ethical wall from the private businesses described in clause (i), (B) limited partners of any fund affiliated with Blackstone, (other than individuals who are limited partners that are described in clause (ii) or to the extent such individuals are acting in concert with a co-investment with a person described in clause (i) with respect to a co-investment), (C) portfolio companies of the businesses described in clause (i), except to the extent such portfolio company is controlled by the applicable Blackstone business, and Blackstone actively participates in or approves of the applicable acquisition of Parent common stock, (D) any company or business in which any business described in clause (A) of this sentence invests (other than a portfolio company described in the exception to clause (C)), (E) with regard to any fund of funds controlled by Blackstone, any pooled investment vehicle or discretionary separate account in which such fund of funds invests, (F) any employee, director or officer referenced in clause (ii) prior to or after such person has held such role, or (G) any investment accounts, estate planning or investment vehicles for the benefit of family members of Blackstone professionals or other employees or nonprofit organizations, with respect to which the applicable Blackstone professional or employee does not have investment discretion.

“ Person Under the Control of H&F ” means (i) the business entities controlled or managed by Hellman & Friedman LLC (“ H&F ”), which business entities consist of certain private equity investment funds formed for the purpose of investing capital contributed by investors and that is affiliated with H&F (each, an “H&F Fund”), the general partners of such H&F Funds, and any entities formed or acquired by H&F in connection with any other business that H&F may hereafter form or acquire, and (ii) employees, directors and officers of H&F or the business entities described in clause (i). For the avoidance of doubt, a Person Under the Control of H&F shall not include (each of the following, an “ H&F Excluded Person ”) (A) limited partners of any H&F Fund (other than individuals who are limited partners and are described in clause (ii) or limited partners to the extent they are acting in concert with an H&F Fund with respect to a co-investment), (B) portfolio companies of any H&F Fund except to the extent such portfolio company is controlled by the applicable H&F Fund, and H&F actively participates in or approves of such portfolio company’s acquisition of Parent common stock, (C) any employee, director or officer referenced above prior to or after such person has held such role, and (D) any investment accounts, estate planning or investment vehicles for the benefit of family members of H&F professionals or other employees or nonprofit organizations, with respect to which the applicable H&F professional or employee does not have investment discretion.

“ Post-Distribution Period ” means any Taxable period (or portion thereof) beginning after the Distribution Date.

“ Pre-Distribution Period ” means any Taxable period (or portion thereof) ending on or before the Distribution Date.

“ Principal Shareholder Letter ” means the letters addressed to Parent by Blackstone and H&F in the form of Exhibit [•] and Exhibit [•], respectively.

“ Retained Business ” means any business now, previously or hereafter conducted by Parent or any of its Subsidiaries or Affiliates other than the Controlled Business and any other constituent business of the Core MTS Business (as defined in the Contribution Agreement).

“ Separation Agreement ” has the meaning set forth in the recitals.

“ SpinCo ” has the meaning set forth in the preamble.

“ SpinCo Common Stock ” means common stock, par value $[•] per share, of SpinCo.

“ SpinCo Group ” means SpinCo and each of its Subsidiaries.

“ SpinCo SAG ” means a group made up of one or more chains of includible corporations (including SpinCo) connected through stock ownership if SpinCo owns directly stock meeting the Stock Ownership Requirement in at least one other includible corporation and stock meeting the Stock Ownership Requirement in each of the includible corporations (except SpinCo) is owned directly by one or more of the other includible corporations.

“ SpinCo Separate Tax Return ” means any Tax Return that is filed or required to be filed by, or with respect to, any member of the SpinCo Group that is not a Combined Tax Return.

“ Stock Ownership Requirement ” means, with respect to a corporation, stock owned representing at least 80% of the total voting power and at least 80% of the total value of the stock of such corporation.

“ Subsidiary ” means, with respect to any specified Person, any other Person a majority of whose equity interests (whether by voting power or by economic interest) are at the time directly or indirectly owned by such specified Person; provided that before the Effective Time, no member of the JV Group shall be a Subsidiary of Parent, SpinCo or Acquiror.

“ Tax ” (and the correlative meaning, “ Taxes ,” “ Taxing ” and “ Taxable ”) means (i) any tax, including any net income, gross income, gross receipts, recapture, alternative or add-on minimum, sales, use, business and occupation, value-added, trade, goods and services, ad valorem, franchise, profits, license, business royalty, withholding, payroll, employment, capital, excise, transfer, recording, severance, stamp, occupation, premium, property, asset, real estate acquisition, environmental, custom duty, impost, obligation, assessment, levy, tariff or other tax, governmental fee or other like assessment or charge of any kind whatsoever (including, but not limited to, any Escheat Payment), together with any interest and any penalty, addition to tax or additional amount imposed by a Taxing Authority; or (ii) any liability of any member of the Parent Group, the SpinCo Group or the Acquiror Group for the payment of any amounts described in clause (i) as a result of any express or implied obligation to indemnify any other Person (other than under the Transaction Documents).

“ Tax Advisor ” means Davis Polk & Wardwell LLP and Ropes & Gray LLP, or another nationally recognized tax advisor reasonably acceptable to Acquiror, Parent, and SpinCo.

“ Tax Attribute ” means a net operating loss, net capital loss, unused investment credit, unused foreign tax credit, excess charitable contribution, unused general business credit, alternative minimum tax credit or any other Tax Item that could reduce a Tax liability.

“ Tax Benefit ” means any refund, credit, offset or other reduction in otherwise required Tax payments.

“ Tax Item ” means any item of income, gain, loss, deduction, credit, recapture of credit or any other item that can increase or decrease Taxes paid or payable.

“ Tax Proceeding ” means any Tax audit, dispute, examination, contest, litigation, arbitration, action, suits, claim, cause of action, review, inquiry, assessment, hearing, complaint, demand, investigation or proceeding (whether administrative, judicial or contractual).

“ Tax Receivable Agreements ” means the MCK Tax Receivable Agreement and the New Echo Tax Receivable Agreement.

“ Tax-Related Losses ” means, with respect to any Taxes imposed pursuant to any settlement, determination, or judgment, (i) all accounting, legal and other professional fees, and court costs incurred in connection with such settlement, determination, or judgment, as well as any other out-of-pocket costs incurred in connection with such settlement, determination, or judgment and (ii) all Damages, costs and expenses associated with stockholder litigation or controversies and any amount paid by any member of the Parent Group, any member of the SpinCo Group or any member of the Acquiror Group in respect of the liability of shareholders, whether paid to shareholders or to the IRS or any other Taxing Authority, in each case, resulting from the failure of the Intended Tax-Free Treatment of the Internal Restructuring, the Controlled Transfer or the Distribution.

“ Tax Representation Letters (Distribution) ” means the representations provided by Acquiror, SpinCo and Parent as contemplated by Section 4.4(b)(ii) of the Merger Agreement, which will be substantially in the form of Exhibits [•],[•] and [•], respectively.

“ Tax Representation Letters (Merger) ” means the representations provided by Acquiror and SpinCo as contemplated by Section 4.4(b)(i) of the Merger Agreement, which will be in substantially the form of Exhibits [•] and [•], respectively.

“ Tax Representation Letters ” means, collectively, the Tax Representation Letters (Distribution) and the Tax Representation Letters (Merger).

“ Tax Return ” means any Tax return, statement, report, form, election, certificate, claim or surrender (including estimated Tax returns and reports, extension requests and forms, and information returns and reports), or statement or other document or written information filed or required to be filed with any Taxing Authority, including any amendment thereof (solely for purposes of Section 4), appendix, schedule or attachment thereto.

“ Taxing Authority ” means any Governmental Authority (domestic or foreign), including, without limitation, any state, municipality, political subdivision or governmental agency responsible for the imposition, assessment, administration, collection, enforcement or determination of any Tax.

“ Transaction Documents ” has the meaning set forth in the LLC Agreement.

“ Transfer Taxes ” means all U.S. federal, state, local or foreign sales, use, privilege, transfer, documentary, stamp, duties, real estate transfer, controlling interest transfer, recording and similar Taxes and fees (including any penalties, interest or additions thereto) imposed upon any member of the Parent Group, any member of the SpinCo Group, any member of the Acquiror Group or any member of the JV Group in connection with the Internal Restructuring, the Controlled Transfer the Distribution or the Merger.

(b) Each of the following terms is defined in the Section set forth opposite such term:


Term		Section
Due Date		Section 14(a)
Final Allocation		Section 6(b)
Internal Tax-Free Transactions		Schedule A
Parent Tax Proceeding		Section 16(b)
Past Practices		Section 5(e)(i)
Proposed Allocation		Section 6(b)
Section 336(e) Election		Section 11(a)
Tax Arbiter		Section 24
Tax Benefit Recipient		Section 8(b)

(c) All capitalized terms used but not defined herein shall have the same meanings as in the Contribution Agreement. Any term used in this Agreement which is not defined in this Agreement or the Contribution Agreement shall, to the extent the context requires, have the meaning assigned to it in the Code or the applicable Treasury regulations thereunder (as interpreted in administrative pronouncements and judicial decisions) or in comparable provisions of Applicable Tax Law.

SECTION 2. Sole Tax Sharing Agreement. Except for the Tax Receivable Agreements, the Letter Agreement, Section 11.04(e) of the LLC Agreement and Section 5.15 of the Contribution Agreement, any and all existing Tax sharing agreements or arrangements, written or unwritten, between any member of the Parent Group, on the one hand, and any member of the SpinCo Group, the Acquiror Group or the JV Group, on the other hand, if not previously terminated, shall be terminated as of the Distribution Date without any further action by the parties thereto. Following the Distribution, no member of the SpinCo Group, the Acquiror Group, the JV Group or the Parent Group shall have any further rights or liabilities thereunder, and, except for the Tax Receivable Agreements, the Letter Agreement, Section 11.04(e) of the LLC Agreement and Section 5.15 of the Contribution Agreement, this Agreement shall be the sole Tax sharing agreement between the members of the SpinCo Group, the Acquiror Group or the JV Group, on the one hand, and the members of the Parent Group, on the other hand.

SECTION 3. Certain Pre-Closing Matters. From the date hereof until the Distribution Effective Time, Acquiror shall cooperate in good faith with any request by Parent to obtain a private letter ruling, closing agreement or similar determination to the effect that, in whole or in part, the Controlled Transfer, the Distribution and/or the Merger will receive the Intended Tax-Free Treatment.

SECTION 4. Allocation of Taxes.

(a) General Allocation Principles. Except as provided in Section 4(c) , all Taxes shall be allocated as follows:

(i) Allocation of Taxes for Combined Tax Returns. Parent shall be allocated all Taxes reported, or required to be reported, on any Combined Tax Return that any member of the Parent Group files or is required to file under the Code or other Applicable Tax Law; provided , however , that (A) to the extent any such Combined Tax Return includes any Tax Item attributable to any member of the SpinCo Group or the Controlled Business in respect of any Post-Distribution Period, SpinCo shall be allocated all Taxes attributable to such Tax Items and (B) to the extent any such Combined Tax Return includes any Tax Item in respect of any Pre-Distribution Period, SpinCo shall be allocated such Taxes to the extent a member of the SpinCo Group is (or, but for an amendment to, or waiver under, the LLC Agreement occurring after the Distribution, would be) entitled to a Covered Tax Distribution (for the avoidance of doubt, other than a Covered Tax Distribution that has already been made) in respect of the Tax Items giving rise to such Taxes.

(ii) Allocation of Taxes for Separate Tax Returns.

(A) Except for Taxes allocated to SpinCo pursuant to Section 4(a)(ii)(B), Parent shall be allocated all Taxes reported, or required to be reported, on a Parent Separate Tax Return or a SpinCo Separate Tax Return.

(B) SpinCo shall be allocated all Taxes reported, or required to be reported, on (x) a Parent Separate Tax Return with respect to a Pre-Distribution Period to the extent a member of the SpinCo Group is (or would be) entitled to a Covered Tax Distribution (for the avoidance of doubt, other than a Covered Tax Distribution that has already been made) in respect of the Tax Item(s) giving rise to such Taxes, (y) a SpinCo Separate Tax Return with respect to a Post-Distribution Period or (z) a SpinCo Separate Tax Return with respect to a Pre-Distribution Period, but in the case of this clause (z), only to the extent a member of the SpinCo Group is (or, but for an amendment to, or waiver under, the LLC Agreement occurring after the Distribution, would be) entitled to a Covered Tax Distribution (for the avoidance of doubt, other than a Covered Tax Distribution that has already been made) in respect of the Tax Item(s) giving rise to such Taxes.

(b) Allocation Conventions.

(i) All Taxes allocated pursuant to Section 4(a) shall be allocated in accordance with the Closing of the Books Method; provided , however , that if Applicable Tax Law does not permit a SpinCo Group member to close its Taxable year on the Distribution Date, the Tax attributable to the operations of the members of the SpinCo Group for any Pre-Distribution Period shall be the Tax computed using a hypothetical closing of the books consistent with the Closing of the Books Method.

(ii) Any Tax Item of SpinCo, Acquiror or any member of their respective Groups arising from a transaction engaged in outside the ordinary course of business on the Distribution Date after the Distribution Effective Time shall be properly allocable to SpinCo and any such transaction by or with respect to SpinCo, Acquiror or any member of their respective Groups occurring after the Distribution Effective Time shall be treated for all Tax purposes (to the extent permitted by Applicable Tax Law) as occurring at the beginning of the day following the Distribution Date in accordance with the principles of Treasury regulations Section 1.1502-76(b) (assuming no election is made under Section 1.1502-76(b)(2)(ii) of the Treasury regulations (relating to a ratable allocation of a year’s Tax Items)); provided that the foregoing shall not include any action that is undertaken pursuant to the Internal Restructuring, the Controlled Transfer, the Distribution, the Merger or the Transaction Documents.

(c) Special Allocation Rules. Notwithstanding any other provision in this Section 4 , the following Taxes shall be allocated as follows:

(i) Transfer Taxes. Transfer Taxes (other than those attributable to the Internal Restructuring) shall be allocated to SpinCo. Any Transfer Taxes attributable to the Internal Restructuring shall be allocated to Parent.

(ii) JV Group Taxes. JV Group Taxes shall be allocated to (A) SpinCo, if paid by a member of the Parent Group pursuant to Section 5(f) and (B) the JV, otherwise.

(iii) Distribution Taxes and Tax-Related Losses.

(A) Any liability for Distribution Taxes (and any associated Tax-Related Losses) which would not have been incurred but for one or more Echo Disqualifying Actions (as determined by treating any acquisition of capital stock of Parent, SpinCo or Acquiror that constitutes a Parent Disqualifying Action as if such acquisition did not occur) shall be allocated to SpinCo, subject to Section 4(c)(iii)(B) and Section 4(c)(iii)(C) .

(B) Any liability for Distribution Taxes (and any associated Tax-Related Losses) solely by reason of the application of Section 355(e) which would not have been incurred if, instead of the occurrence of one or more Debt Exchanges that exceeds the MCK Cushion Amount, 100% of the SpinCo Common Stock had been distributed in a Split-Off Exchange or Spin-Off on the Distribution Date to Persons whose acquisitions of such SpinCo Common Stock were disregarded by reason of Section 355(e)(3)(A) of the Code, shall be allocated to Parent.

(C) Any liability for Distribution Taxes (and any associated Tax-Related Losses) not described in Section 4(c)(iii)(B) which (x) would not have been incurred but for the occurrence of both one or more Echo Disqualifying Actions and one or more Parent Disqualifying Actions, or which (y) both (I) would not have been incurred but for the occurrence of one or more Echo Disqualifying Actions (as determined by treating any Parent Disqualifying Actions as if such Parent Disqualifying Actions did not occur) and (II) would not have been incurred but for the incurrence of one or more Parent Disqualifying Actions (as determined by treating any Echo Disqualifying Actions as if such Echo Disqualifying Actions did not occur), shall be allocated to Parent.

(D) Any liability for Distribution Taxes (and any associated Tax-Related Losses) not described in Section 4(c)(iii)(A) , Section 4(c)(iii)(B) or Section 4(c)(iii)(C) shall be allocated to Parent.

(iv) Internal Restructuring Taxes. Notwithstanding any other provision in this Section 4 , all Taxes with respect to the Internal Restructuring shall be allocated to Parent, except that any Taxes with respect to the Internal Restructuring to the extent attributable to the failure by the SpinCo Group to preserve the Intended Tax-Free Treatment of the transaction described in clause (iv) of the definition of Intended Tax-Free Treatment, as a result of the failure of the SpinCo Group to observe after the Effective Time the requirements of Revenue Procedure 86-42 or Revenue Procedure 90-52 (without giving effect to subsequent modifications made in Revenue Procedure 2013-32) shall be allocated to SpinCo.

SECTION 5. Preparation and Filing of Tax Returns.

(a) Parent Group Combined Tax Returns.

(i) Parent shall prepare and file, or cause to be prepared and filed, Combined Tax Returns for which a member of the Parent Group is required or, subject to Section 5(e)(iv) , permitted, to file a Combined Tax Return. Each member of any such Combined Group shall execute and file such consents, elections and other documents as may be required or requested by Parent in connection with the filing of such Combined Tax Returns. Items of income, gain, loss, deduction and credit of the W for the taxable year which includes the Distribution Date shall be allocated to the Pre-Distribution Period and the Post-Distribution Period in accordance with Treasury regulations Section 1.1502-76(b)(2)(vi) (and any similar state or local provision of Applicable Tax Law). Parent and Acquiror shall cooperate in determining the allocation described in the preceding sentence.

(ii) The parties and their respective Affiliates shall elect to close the Taxable year of each SpinCo Group member on the Distribution Date, to the extent permitted by Applicable Tax Law.

(b) SpinCo Separate Tax Returns.

(i) Tax Returns to Be Prepared by Parent. Parent shall prepare (or cause to be prepared) and, to the extent permitted by Applicable Law, file (or cause to be filed) all SpinCo Separate Tax Returns that relate in whole or in part to any Pre-Distribution Period for which Parent is liable for any Taxes; provided , however , that with respect to any such Tax Return that is prepared by Parent but required to be filed by a member of the Acquiror Group under Applicable Law, Parent shall provide such Tax Returns to Acquiror at least thirty (30) days prior to the due date for filing such Tax Returns (taking into account any applicable extension periods) with the amount of any Taxes shown as due thereon, and Acquiror shall execute and file (or cause to be executed and filed) the Tax Returns.

(ii) Tax Returns to be Prepared by Acquiror. Acquiror shall prepare and file (or cause to be prepared and filed) all SpinCo Separate Tax Returns that are not described in Section 5(b)(i) .

(c) Provision of Information; Timing. SpinCo and Acquiror shall maintain all necessary information for Parent (or any of its Affiliates) to file any Tax Return that Parent is required or permitted to file under this Section 5, and shall provide to Parent, upon reasonable request, all such necessary information to which it has access in accordance with the Parent Group’s past practice. Parent shall maintain all necessary information for Acquiror (or any of its Affiliates) to file any Tax Return that Acquiror is required or permitted to file under this Section 5, and shall provide Acquiror with all such necessary information in accordance with the SpinCo Group’s past practice.

(d) Review of SpinCo Separate Tax Returns. The party that is required to prepare a SpinCo Separate Tax Return (other than a SpinCo Separate Tax Return that relates solely to a Post-Distribution Period) that is required to be filed after the Distribution Date shall submit a draft of such Tax Return to the non-preparing party at least sixty (60) days prior to the earlier of (i) the due date for the filing of such Tax Return (taking into account any applicable extensions), or (ii) if applicable, the date on which such Tax Return must be provided by Parent to Acquiror under Section 5(b)(i). The non-preparing party shall have the right to review such Tax Return, and to submit to the preparing party any reasonable changes to such Tax Return no later than thirty (30) days prior to the earlier of (i) the due date for the filing of such Tax Return or (ii) if applicable, the date on which such Tax Return must be provided by Parent to Acquiror under Section 5(b)(i) (and the preparing party agrees to consider in good faith any such changes submitted). The parties agree to consult and to attempt to resolve in good faith any issues arising as a result of the review of any such Tax Return. If the parties are unable to resolve any such issues, the matter shall be submitted to the Tax Arbiter pursuant to Section 24.

(e) Special Rules Relating to the Preparation of Tax Returns.

(i) General Rule. Except as otherwise required by law, Parent shall prepare (or cause to be prepared) any Tax Return for which it is responsible under this Section 5 in accordance with past practices, permissible accounting methods, elections or conventions (“ Past Practices ”) used by the members of the Parent Group and the members of the SpinCo Group prior to the Distribution Date with respect to such Tax Return, and to the extent any items, methods or positions are not covered by Past Practices, in accordance with reasonable Tax accounting practices selected by Parent. With respect to any Tax Return that Acquiror has the obligation and right to prepare, or cause to be prepared, under this Section 5, except as otherwise required by law, such Tax Return shall be prepared in accordance with Past Practices used by the members of the Parent Group and the members of the SpinCo Group prior to the Distribution Date with respect to such Tax Return, and to the extent any items, methods or positions are not covered by Past Practices, in accordance with reasonable Tax accounting practices selected by Acquiror.

(ii) Consistency with Intended Tax-Free Treatment.

(A) The parties shall report the Internal Restructuring in the manner determined by Parent; provided that (x) Parent communicates its treatment of the Internal Restructuring to Acquiror no fewer than thirty (30) days prior to the due date (taking into account any applicable extensions) for filing an applicable Tax Return that reflects the Internal Restructuring (y) such treatment is supported by substantial authority (within the meaning of Section 6662 of the Code), as determined by Acquiror in its reasonable discretion, in each case, unless, and then only to the extent, an alternative position is required pursuant to a Final Determination, and (z) a member of the Acquiror Group may book reserves or make disclosures relating to the Internal Restructuring if required to do so under applicable accounting principles or Tax law.

(B) The parties shall report the Controlled Transfer, the Distribution and the Merger for all Tax purposes in a manner consistent with the Intended Tax-Free Treatment unless, and then only to the extent, an alternative position is required pursuant to a Final Determination.

(iii) SpinCo Separate Tax Returns. With respect to any SpinCo Separate Tax Return for which Acquiror is responsible pursuant to this Agreement, Acquiror and the other members of the Acquiror Group shall include such Tax Items in such SpinCo Separate Tax Return in a manner that is consistent with the inclusion of such Tax Items in any related Tax Return for which Parent is responsible to the extent such Tax Items are allocated in accordance with this Agreement.

(iv) Election to File Combined Tax Returns. Parent shall have sole discretion to file any Combined Tax Return if the filing of such Tax Return is elective under Applicable Tax Law.

(v) Preparation of Transfer Tax Returns. The Company required under Applicable Tax Law to file any Tax Returns in respect of Transfer Taxes shall prepare and file (or cause to be prepared and filed) such Tax Returns. If required by Applicable Tax Law, Parent, SpinCo and Acquiror shall, and shall cause their respective Subsidiaries to, cooperate in preparing and filing, and join the execution of, any such Tax Returns.

(f) Payment of Taxes. Parent shall pay (or cause to be paid) to the proper Taxing Authority (or to Acquiror with respect to any SpinCo Separate Tax Return prepared by Parent but required to be filed by a member of the Acquiror Group under Applicable Tax Law) the Tax shown as due on any Tax Return for which a member of the Parent Group is responsible under this Section 5 , and the members of the JV Group shall be jointly and severally liable to pay to Acquiror, and Acquiror shall pay (or cause to be paid) to the proper Taxing Authority the Tax shown as due on any Tax Return for which a member of the Acquiror Group is responsible under this Section 5. If any member of the Parent Group is required to make a payment to a Taxing Authority for JV Group Taxes, Acquiror shall pay the amount of such Taxes to Parent in accordance with Section 12 and Section 13. If any member of the Acquiror Group is required to make a payment to a Taxing Authority for Taxes allocated to Parent under Section 4, Parent shall pay the amount of such Taxes to Acquiror in accordance with Section 12 and Section 13.

SECTION 6. Apportionment of Earnings and Profits and Tax Attributes.

(a) Tax Attributes arising in a Pre-Distribution Period will be allocated to (and the benefits and burdens of such Tax Attributes will inure to) the members of the Parent Group and the members of the SpinCo Group in accordance with the Code, Treasury regulations and any other Applicable Tax Law, and, in the absence of controlling legal authority or unless otherwise provided under this Agreement, Tax Attributes shall be allocated to the legal entity that created such Tax Attributes.

(b) On or before the earlier of (i) eighteen (18) months after the Distribution Date or (ii) sixty (60) days prior to the extended due date for the first U.S. federal income Tax Return of the Acquiror Group following the Distribution Date, Parent shall deliver to Acquiror its determination in writing of the portion, if any, of any earnings and profits, Tax Attributes, overall foreign loss or other affiliated, consolidated, combined, unitary, fiscal unity or other group basis Tax Attribute which is allocated or apportioned to the members of the SpinCo Group under Applicable Tax Law and this Agreement (“ Proposed Allocation ”). Acquiror shall have forty-five (45) days to review the Proposed Allocation and provide Parent any comments with respect thereto, and Parent agrees to consider such comments in good faith. If Acquiror either provides no comments or provides comments to which Parent agrees in writing, such resulting determination will become final (“ Final Allocation ”). If Acquiror provides comments to the Proposed Allocation and Parent does not agree with such comments, the Final Allocation will be determined in accordance with Section 24 . All members of the Parent Group and Acquiror Group shall prepare all Tax Returns in accordance with the Final Allocation. In the event of an adjustment to the earnings and profits, any Tax Attributes, overall foreign loss or other affiliated, consolidated, combined, unitary, fiscal unity or other group basis Tax Attribute, Parent shall promptly notify Acquiror in writing of such adjustment. For the avoidance of doubt, Parent shall not be liable to any member of the Acquiror Group for any failure of any determination under this Section 6(b) to be accurate under Applicable Tax Law; provided that such determination was made in good faith.

(c) Except as otherwise provided herein, to the extent that the amount of any Tax Attribute is later reduced or increased by a Taxing Authority or as a result of a Tax Proceeding, such reduction or increase shall be allocated to the Company to which such Tax Attribute was allocated pursuant to this Section 6, as agreed by the parties.

SECTION 7. Utilization of Tax Attributes.

(a) Amended Returns. Any amended Tax Return or claim for a refund with respect to any member of the SpinCo Group may be made only by the party responsible for preparing the original Tax Return with respect to such member of the SpinCo Group pursuant to Section 5. Such party shall not file or cause to be filed any such amended Tax Return or claim for a refund without the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned or delayed, if such filing, assuming it is accepted, could reasonably be expected to change the Tax liability of such other party (or any Affiliate of such other party) for any Taxable period (including, for the avoidance of doubt, the amount of any Tax Attributes allocable under Section 6 to such other party (or any Affiliate of such other party)).

(b) Carryback of Tax Attributes.

(i) To the extent permitted by Applicable Tax Law, Acquiror shall cause the SpinCo Group to elect to forego carrybacks of any Tax Attributes of the SpinCo Group to a Pre-Distribution Period.

(ii) If Acquiror is unable to forego carrybacks of any Tax Attributes of the SpinCo Group to a Pre-Distribution Period, the Parent Group shall, at the request of Acquiror and at Acquiror’s sole expense, file any amended Tax Returns reflecting such carryback (unless such filing, assuming it is accepted, could reasonably be expected to increase by more than a de minimis amount, the Tax liability of Parent or any of its Affiliates for any Taxable period). If the Parent Group (or any member thereof) receives (or realizes) a refund as a result of such a carryback, Parent shall promptly remit the amount of such refund to Acquiror in accordance with Section 8(b) .

(c) Carryforwards to Separate Tax Returns. If a portion or all of any Tax Attribute is allocated to a member of a Combined Group pursuant to Section 6, and is carried forward to a SpinCo Separate Tax Return, any Tax Benefits arising from such carryforward shall be retained by the Acquiror Group. If a portion or all of any Tax Attribute is allocated to a member of a Combined Group pursuant to Section 6, and is carried forward to a Parent Separate Tax Return, any Tax Benefits arising from such carryforward shall be retained by the Parent Group.

SECTION 8. Tax Benefits.

(a) Parent Tax Benefits. Parent shall be entitled to any Tax Benefits (including, in the case of any refund received, any interest thereon actually received) received by any member of the Parent Group or any member of the SpinCo Group, other than any Tax Benefits (or any amounts in respect of Tax Benefits) to which SpinCo or Acquiror is entitled pursuant to Section 8(b). Neither SpinCo nor Acquiror shall be entitled to any Tax Benefits received by any member of the Parent Group or the SpinCo Group, except as set forth in Section 8(b).

(b) SpinCo and Acquiror Tax Benefits. SpinCo or Acquiror, as the case may be, shall be entitled to any Tax Benefits (including, in the case of any refund received, any interest thereon actually received) received (i) by any member of the Parent Group or any member of the SpinCo Group after the Distribution Date with respect to any Tax allocated to the JV or a member of the SpinCo Group under this Agreement (including, for the avoidance of doubt, any amounts allocated to the W pursuant to Section 4(c)(iii)), or (ii) by a member of the SpinCo Group in respect of a Post-Distribution Period.

(c) A Company receiving (or realizing) a Tax Benefit (a “ Tax Benefit Recipient ”) to which another Company is entitled hereunder shall pay over the amount of such Tax Benefit (including interest received from the relevant Taxing Authority, but net of any Taxes imposed with respect to such Tax Benefit and any other reasonable costs) within thirty (30) days of receipt thereof (or from the due date for payment of any Tax reduced thereby); provided , however , that the other Company, upon the request of such Tax Benefit Recipient, shall repay the amount paid to the other Company (plus any penalties, interest or other charges imposed by the relevant Taxing Authority) in the event that, as a result of a subsequent Final Determination, a Tax Benefit that gave rise to such payment is subsequently disallowed.

SECTION 9. Certain Representations and Covenants.

(a) Representations.

(i) Acquiror and each other member of the Acquiror Group represents that as of the date hereof, and covenants that as of immediately after the Closing, except as expressly described in the Exit Transaction Documents, Acquiror has no plan or intention:

(A) to liquidate or merge or consolidate with any other Person any member of the SpinCo Group or the JV Group subsequent to the Closing, in each case, except as provided for under the Merger Agreement;

(B) to sell or otherwise dispose of any material asset of (i) the Controlled Business held by any member of the SpinCo Group to a Person other than a member of the SpinCo SAG or (ii) the Controlled Business held by any member of the JV Group to a Person other than another member of the JV Group that is a direct or indirect wholly owned Subsidiary of the JV, in each case, subsequent to the Closing and except for (w) sales or dispositions in the ordinary course of business, (x) any cash paid to acquire assets in arm’s length transactions, (y) transactions that are disregarded for U.S. federal Tax purposes and (z) mandatory or optional repayment or prepayment of indebtedness;

(C) to take or fail to take any action in a manner that is inconsistent with the written information and representations furnished by SpinCo or Acquiror to the Tax Advisors in connection with the Tax Representation Letters; provided that , in the case of SpinCo, to the extent the Tax Representation Letter provided by SpinCo differs from the letter attached hereto as Exhibit [•], this clause (C) shall only apply to such difference to the extent such difference has been consented to by Acquiror, which consent shall not be unreasonably withheld, delayed or conditioned;

(D) to repurchase stock of Acquiror (except for Historic Acquiror Stock) other than in a manner that satisfies the requirements of Section 4.05(1)(b) of IRS Revenue Procedure 96-30 (as in effect prior to the amendment of such Revenue Procedure by IRS Revenue Procedure 2003-48) and consistent with any representations made to the Tax Advisors in connection with the Tax Representation Letters; provided that , in the case of SpinCo, to the extent the Tax Representation Letter provided by SpinCo differs from the letter attached hereto as Exhibit [•], this clause (D) shall only apply to such difference to the extent such difference has been consented to by Acquiror, which consent shall not be unreasonably withheld, delayed or conditioned; or

(E) to enter into any negotiations, agreements or arrangements with respect to transactions or events (including stock issuances, pursuant to the exercise of options or otherwise, option grants, the adoption of, or authorization of shares under, a stock option plan, capital contributions, or acquisitions, but not including any action expressly contemplated by the Transaction Documents) that could reasonably be expected (assuming no Parent Disqualifying Action occurs) to cause the Distribution to be treated as part of a plan (within the meaning of Section 355(e) of the Code) pursuant to which one or more Persons acquire directly or indirectly SpinCo stock representing a 50% or greater interest within the meaning of Section 355(d)(4) of the Code; provided that no negotiations, agreements or arrangements with respect to transactions or events by Acquiror or any Member of Acquiror Group shall result in a breach of this Section 9(a)(i)(E) if the amount of SpinCo stock that is, or could be, directly or indirectly acquired as a result of all such negotiations, agreements or arrangements would not, in the aggregate, exceed the Echo Cushion Amount.

(ii) Each member of the Acquiror Group represents that:

(A) as of the date hereof, the only outstanding Acquiror Capital Stock is N _. , in number equal to[•]; ³

(B) from the date hereof to the Effective Time, no other Acquiror Capital Stock will be issued[, other than Acquiror Compensatory Equity Interests described in paragraph (C) of this Section 9(a)(ii) ; and

NTD: If the Merger is ultimately consummated pursuant to a merger agreement that includes representations in respect of Acquiror capitalization, this representation will take the following form (and the representation in clause (B) will reference the date of the long-form merger agreement: “as of the date of the [long-form merger agreement], the only outstanding Acquiror Capital Stock is the Acquiror Capital Stock described in the [sentences and sections of the long-form merger agreement], in each case in a number equal to the number of shares of Acquiror Capital Stock set forth in [section of the long-form merger agreement].”

(C) all Acquiror Capital Stock issued pursuant to the Acquiror Compensatory Equity Interests will satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) of Treasury regulations Section 1.355-7(d)]. ⁴

(iii) Each member of the Parent Group represents that:

(A) as of the date hereof, and as of the Effective Time, neither Parent nor SpinCo has had “substantial negotiations” (within the meaning of Treasury regulations Section 1.355-7(h)(1)(iv)) during the two-year period ending on the Effective Time with any Person (other than Acquiror or its Affiliates and their respective financial, legal and tax advisors, consultants, accountants, and other representatives and agents, in each case in their capacity as advisors, representatives, or agents of Acquiror or its Affiliates) regarding any acquisition of SpinCo stock or of a significant portion of the assets of the JV Group.

(B) The Distribution is not and never has been motivated to any extent by a desire on the part of any member of the Parent Group to facilitate a sale or other disposition of SpinCo, other than the Merger.

(C) The Distribution is not and never has been motivated to any extent by a desire on the part of any member of the Parent Group to facilitate acquisitions of any stock of SpinCo, other than (i) the Merger, (ii) issuing stock of SpinCo to management and employees as incentive compensation, (iii) the use of stock of SpinCo in Debt Exchanges, or (iv) enhancing the ability of SpinCo to use SpinCo stock as an acquisition currency.

(D) At the time members of the Parent Group entered into the Contribution Agreement, (i) Parent intended to effect the Distribution, and (ii) Parent was not aware of any Person having a plan or intention to effect a transaction (other than the Distribution or the Merger) that would involve a change of control of SpinCo.

(b) Covenants. In each case from and after the Effective Time:

(i) Each of Parent, SpinCo and Acquiror agrees that it shall not, and it will not permit any member of its respective Group to, take or fail to take, as applicable, any action that constitutes a Disqualifying Action described in the definitions of Parent Disqualifying Action (in the case of Parent and the Parent Group) and Echo Disqualifying Action (in the case of Acquiror for itself and as a successor to SpinCo and for the Acquiror Group), as applicable.

(ii) Each of SpinCo and Acquiror will not, and will not permit any other member of their respective Groups to, take or fail to take any action that is inconsistent with the information and representations furnished by SpinCo or Acquiror to the Tax Advisors in connection with the Tax Representation Letters.

⁴	NTD: Subject to revision based on final plan for employee incentive equity matters, including Echo management roll-over and a customary go-forward management equity plan.

(iii) No Person Under the Control of Blackstone will join with any BX Excluded Person in making one or more coordinated acquisitions or dispositions of the stock of Acquiror, except for coordinated dispositions of Acquiror stock (i) consisting solely of Historic Acquiror Stock and (ii) resulting from public offerings by Acquiror or other issuances by Acquirer otherwise permitted by this Agreement.

(iv) No Person Under the Control of H&F will join with any H&F Excluded Person in making one or more coordinated acquisitions or dispositions of the stock of Acquiror, except for coordinated dispositions of Acquiror stock (i) consisting solely of Historic Acquiror Stock and (ii) resulting from public offerings by Acquiror or other issuances by Acquiror otherwise permitted by this Agreement.

(v) Each of SpinCo, Acquiror and each other member of their respective Groups covenants to Parent that, without the prior written consent of Parent, during the two-year period following the Effective Time, except as described in the Exit Transaction Documents:

(A) SpinCo will (w) maintain its status as a company engaged in the Controlled Business for purposes of Section 355(b)(2) of the Code, (x) not engage in any transaction that would result in it ceasing to be a company engaged in the Controlled Business for purposes of Section 355(b)(2) of the Code, (y) cause each other member of the SpinCo Group whose activities are relied upon for purposes of qualifying the Distribution for the Intended Tax-Free Treatment to take such actions as may be required to maintain SpinCo’s status as a company engaged in such Controlled Business for purposes of Section 355(b)(2) of the Code and any such other Applicable Tax Law and (z) not engage in any transaction or permit any other member of the SpinCo Group to engage in any transaction that would result in SpinCo ceasing to be a company engaged in the relevant Controlled Business for purposes of Section 355(b)(2) of the Code or such other Applicable Tax Law, taking into account Section 355(b)(3) of the Code for purposes of each of clauses (w) through (z) hereof;

(B) neither SpinCo nor Acquiror will repurchase stock of Acquiror (except for Historic Acquiror Stock) in a manner contrary to the requirements of Section 4.05(1)(b) of IRS Revenue Procedure 96-30 (as in effect prior to the amendment of such Revenue Procedure by IRS Revenue Procedure 2003-48) or inconsistent with any representations made by SpinCo to the Tax Advisors in connection with the Tax Representation Letters;

(C) neither Acquiror nor SpinCo will, or will agree to, merge, consolidate or amalgamate with any other Person (except as provided for under the Merger Agreement), unless, in the case of a merger or consolidation, Acquiror or SpinCo is the survivor of the merger, consolidation or amalgamation;

(D) no member of the Acquiror Group will, or will agree to, sell or otherwise issue to any Person except as provided for under the Merger Agreement, any Equity Interests of Acquiror or of any member of the Acquiror Group; provided , however , that (i) Acquiror may issue an unlimited amount of Equity Interests that satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury regulations Section 1.355-7(d), and (ii) Acquiror may issue Equity Interests to the extent such issuances would not, when taken together in the aggregate with all Echo Tainted Stock, exceed the Echo Cushion Amount;

(E) no member of the Acquiror Group will agree to enter into (i) any transaction or series of transactions, as a result of which one or more persons would directly or indirectly acquire, within the meaning of Section 355(e), a number of shares of Acquiror and/or SpinCo capital stock that would, when combined with (ii) any other direct or indirect acquisitions of SpinCo capital stock pertinent for purposes of Section 355(e) of the Code (including the Merger) that have already occurred or will occur simultaneously with the transaction described in clause (i), reasonably be expected to result in Distribution Taxes; provided that, notwithstanding the foregoing, SpinCo and/or Acquiror shall be permitted to (x) adopt, or issue stock pursuant to, a stockholder rights plan or (y) issue securities that satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury regulations Section 1.355-7(d); provided further that any clarification of, or change in, the statute or regulations promulgated under Section 355(e) of the Code shall be incorporated in the restrictions in this clause (E) and the interpretation thereof; as of the date of issuance or promulgation of such clarification or change (or, if later, the effective date thereof); and

(F) no member of the Acquiror Group will amend its certificate of incorporation (or other organizational documents), or take any other action, whether through a stockholder vote or otherwise, affecting the voting rights of the Equity Interests of SpinCo or Acquiror (including, without limitation, through the conversion of one class of Equity Interests of SpinCo or Acquiror into another class of Equity Interests of SpinCo or Acquiror).

(c) Acquiror Covenants Exceptions. Notwithstanding the provisions of Section 9(b), SpinCo, Acquiror and the other members of their respective Groups may:

(i) pay cash to acquire assets in arm’s length transactions, engage in transactions that are disregarded for U.S. federal Tax purposes, and make mandatory or optional repayments or prepayments of indebtedness;

(ii) dispose of assets (other than those described in Section 9(c)(i)) that could otherwise be subject to Section 9(b)(i) , (b)(ii) or (b)(v) if the aggregate fair value of all such assets does not exceed $[ ] ⁵ million; or

(iii) in the case of any other action that would reasonably be expected to be inconsistent with the covenants contained in (b) , if either: (A) SpinCo or Acquiror notifies Parent of its proposal to take such action and Acquiror and Parent obtain a ruling from the IRS to the effect that such action will not affect the Intended Tax-Free Treatment (a “ Favorable Tax Ruling ”), provided that Acquiror agrees in writing to bear any expenses associated with obtaining such a ruling and, provided further that the Acquiror Group shall not be relieved of any liability under Section 12(a) of this Agreement by reason of seeking or having obtained such a ruling; or (B) SpinCo or Acquiror notifies Parent of its proposal to take such action and obtains an unqualified opinion of counsel or from a “Big Four” accounting firm (x) from a Tax advisor recognized as an expert in federal income Tax matters and reasonably acceptable to Parent, (y) on which Parent may rely and (z) to the effect that such action will not affect the Intended Tax-Free Treatment (assuming that the Internal Restructuring, the Controlled Transfer, the Distribution and the Merger would otherwise qualify for the Intended Tax-Free Treatment) (a “ Favorable Tax Opinion ”), provided further that the Acquiror Group shall not be relieved of any liability under Section 12(a) of this Agreement by reason of having obtained a Favorable Tax Opinion.

SECTION 10. Procedures Relating to Opinions and Rulings. If a member of the Acquiror Group notifies Parent that it desires to take an action that would reasonably be expected to be inconsistent with the covenants contained in Section 9(b) , then the Parent Group shall cooperate in good faith with the Acquiror Group to obtain the Favorable Tax Ruling and/or a Favorable Tax Opinion. The Acquiror Group shall reimburse Parent for all reasonable out-of-pocket expenses incurred by the Parent Group in connection with such cooperation within fifteen (15) Business Days of receipt of an invoice from Parent therefor.

SECTION 11. Protective Section 336(e) Elections.

(a) Section 336(e) Election. Pursuant to Treasury regulations Sections 1.336-2(h)(1)(i) and 1.336-2(j), Parent, Acquiror and SpinCo agree that (if and to the extent determined by Parent) Parent shall make a timely protective election under Section 336(e) of the Code and the Treasury regulations issued thereunder for any member of the SpinCo Group that is a domestic corporation for U.S. federal income Tax purposes with respect to the Distribution (a “ Section 336(e) Election ”). It is intended that a Section 336(e) Election will have no effect unless the Distribution is a “qualified stock disposition,” as defined in Treasury regulations Section 1.336(e)-1(b)(6), by reason of the application of Treasury regulations Section 1.336-1(b)(5)(i)(B) or Treasury regulations Section 1.336-1(b)(5)(ii).

(b) Parent TRA. If and to the extent that there is a Disqualifying Action and the resulting Taxes (including any Taxes attributable to the Section 336(e) Election) are allocated to Parent pursuant to Section 4, (i) Parent shall be entitled to periodic payments from SpinCo equal

⁵	NTD: Amount equal to 5% of the equity value of SpinCo.

to the product of (x) 85% of the tax savings arising from the step-up in tax basis resulting from the Section 336(e) Election and (y) the percentage of such Taxes that are allocated to Parent pursuant to Section 4, and (ii) the Parties shall negotiate in good faith the terms of a tax receivable agreement to govern the calculation of such payments, with it being agreed that the terms of such agreement shall be substantially similar to the terms of the MCK Tax Receivable Agreement; provided that any such tax saving in clause (i) shall be determined using a “with and without” methodology (treating any deductions or amortization attributable to the step-up in tax basis resulting from the Section 336(e) Election as the last items claimed for any taxable year, including after the utilization of any carryforwards). ⁶

SECTION 12. Indemnities.

(a) Acquiror Indemnity to Parent. The Acquiror as successor to SpinCo shall be obligated to indemnify (and the JV and each other member of the JV Group shall jointly and severally be obligated to pay to Acquiror all amounts necessary to allow Acquiror to indemnify) Parent and the other members of the Parent Group against, and hold them harmless, without duplication, from (i) any payments by Parent of any Tax liability and any associated Tax-Related Losses allocated to SpinCo pursuant to Section 4; provided that , the amount of such indemnity shall be limited to the amount of any payment of Tax or Tax Related Losses required to be made by Parent or any member of the Parent Group and, for the avoidance of doubt, shall be calculated without regard to any harm to Parent or any member of the Parent Group relating to any equity or other interests in Parent or any other member of the Parent Group directly or indirectly in the JV Group or in the Acquiror Group and (ii) notwithstanding any provisions of this Agreement, the Separation Agreement, the Merger Agreement, or otherwise, any Damages arising from or relating to, directly or indirectly, whether by operation of the provisions of this Agreement, the Separation Agreement, the Merger Agreement or otherwise, any failure of the Effective Time to occur immediately following the Distribution Effective Time primarily as a result of any failure by Acquiror to perform its obligation to close the Merger in accordance with the Merger Areement.

(b) Parent Indemnity to Acquiror. Except in the case of any liabilities described in Section 12(a) , Parent and each other member of the Parent Group will jointly and severally indemnify Acquiror and the other members of the Acquiror Group against, and hold them harmless, without duplication, from:

(i) any Tax liability and any associated Tax-Related Losses allocated to Parent pursuant to Section 4;

(ii) any Taxes imposed on any member of the SpinCo Group or Acquiror Group under Treasury regulations Section 1.1502-6 (or similar or analogous provision of state, local or foreign law) as a result of any such member being or having been a member of a Combined Group; and

⁶	NTD: Parent reserves the right to omit this Section 11(b) from the executed Tax Matters Agreement.

(iii) notwithstanding any provisions of this Agreement, the Separation Agreement, the Merger Agreement, or otherwise, any Damages arising from or relating to, directly or indirectly, whether by operation of the provisions of this Agreement, the Separation Agreement, the Merger Agreement or otherwise, any failure of the Effective Time to occur immediately following the Distribution Effective Time primarily as a result of any failure by MCK or SpinCo to perform its obligation to close the Merger in accordance with the Merger Agreement.

(c) Discharge of Indemnity. Acquiror, the JV, Parent and the members of their respective Groups shall discharge their obligations under Section 12(a) or Section 12(b) hereof, respectively, by paying the relevant amount in accordance with Section 13, within 30 Business Days of demand therefor. Any such demand shall include a statement showing the amount due under Section 12(a) or Section 12(b), as the case may be. Notwithstanding the foregoing, if any member of the Acquiror Group or any member of the Parent Group disputes in good faith the fact or the amount of its obligation under Section 12(a) or Section 12(b), then no payment of the amount in dispute shall be required until any such good faith dispute is resolved in accordance with Section 24 hereof; provided , however , that any amount not paid within thirty (30) Business Days of demand therefor shall bear interest as provided in Section 14.

(d) Tax Benefits. If an indemnification obligation of any Indemnifying Party under this Section 12 arises in respect of an adjustment that makes allowable to an Indemnitee any Tax Benefit (other than a Tax Benefit resulting from a Section 336(e) Election, which shall be governed exclusively by Section 11) which would not, but for such adjustment, be allowable, then any such indemnification obligation shall be an amount equal to (i) the amount otherwise due but for this Section 12(d) minus (ii) the reduction in actual cash Taxes payable by the Indemnitee in the taxable year such indemnification obligation arises and the two taxable years following such year, determined on a “with and without” basis.

(e) Sole Remedy. Parent (on behalf of itself and each member of the Parent Group) covenants and agrees that the remedies provided for in Section 12(a) shall constitute the sole and exclusive remedy for all Damages, including any Tax liabilities and any associated Tax-Related Losses, that Parent or any member of the Parent Group may suffer or incur arising from, or directly or indirectly relating to any breach or violation of any of the representations, warranties, covenants and agreements contained in this Agreement, the various Tax Representation Letters, under Section 11.04(e) of the LLC Agreement, or Section 5.15 of the Contribution Agreement by the Acquiror, the JV, SpinCo, and any member of the Acquiror Group, JV Group or SpinCo Group, or otherwise relating to the failure of the Controlled Transfer, the Distribution, or the Merger to occur or receive the Intended Tax Treatment, and the Parent (on behalf of itself and each member of the Parent Group) hereby irrevocably waives any other rights or remedies (whether at law or in equity and whether based on contract, tort, statute or otherwise) that it may otherwise have had, now have or may in the future have against the Acquiror, the JV, SpinCo, and any member of the Acquiror Group, JV Group or SpinCo Group or any of their respective direct or indirect Affiliates, officers, managers, directors, employees, advisors, stockholders, members, consultants, investment bankers, brokers, controlling persons, partners or other representatives or agents thereof arising from, or directly or indirectly relating to any breach or violation of any of the representations, warranties, covenants and agreements contained in this Agreement, the various Tax Representation Letters, under Section 11.04(e) of the LLC Agreement, or Section 5.15 of the Contribution Agreement by the Acquiror, the JV, SpinCo, and any member of the Acquiror Group, JV Group or SpinCo Group and covenants not to sue or otherwise assert any claim (or assist any Person in suing or otherwise asserting any claims) encompassed by the foregoing covenant, agreement and waiver; provided that the foregoing shall not apply to any party’s right to seek specific performance pursuant to Section 20 hereof.

SECTION 13. Acquiror Shareholders Not Parties. For the avoidance of doubt, and notwithstanding any provision of this Agreement or any other Transaction Document to the contrary, (i) no Person who is a direct or indirect shareholder, member, or interest holder in Acquiror is a party to, or is bound by, or makes any representations, warranties, or covenants, or indemnities pursuant to, this Agreement (unless such Person is Parent, SpinCo, Acquiror, or any of their respective Subsidiaries), and (ii) notwithstanding that certain Persons described in the foregoing sentence make the representations, warranties, and covenants in the Principal Shareholder Letter, such Persons shall not be liable thereunder, under any Transaction Document, or otherwise by reason of having breached such representations, warranties, or covenants.

SECTION 14. Payments.

(a) Timing. All payments to be made under this Agreement (excluding, for the avoidance of doubt, any payments to a Taxing Authority described herein) shall be made in immediately available funds. Except as otherwise provided, all such payments will be due thirty (30) Business Days after the receipt of notice of such payment or, where no notice is required, thirty (30) Business Days after the fixing of liability or the resolution of a dispute (the “ Due Date ”). Payments shall be deemed made when received. Any payment that is not made on or before the Due Date shall bear interest at the rate equal to the “prime” rate as published on such Due Date in the Wall Street Journal, Eastern Edition, for the period from and including the date immediately following the Due Date through and including the date of payment. With respect to any payment required to be made under this Agreement, Parent has the right to designate, by written notice to Acquiror, which member of the Parent Group will make or receive such payment; and Acquiror has the right to designate, by written notice to Parent, which member of the Acquiror Group will make or receive such payment.

(b) Treatment of Payments. To the extent permitted by Applicable Tax Law, any payment made by Parent or any member of the Parent Group to Acquiror or any member of the Acquiror Group, or by Acquiror or any member of the Acquiror Group to Parent or any member of the Parent Group, pursuant to this Agreement, the Separation Agreement, the Merger Agreement or any other Exit Transaction Document that relates to Taxable periods (or portions thereof) ending on or before the Distribution Date shall be treated by the parties hereto for all Tax purposes as a distribution by SpinCo to Parent, or capital contribution from Parent to SpinCo, as the case may be; provided , however , that any payment made pursuant to [ ] ⁷ shall instead be treated as if the party required to make a payment of received amounts had received such amounts as agent for the other party; provided further that any payment made pursuant to [ ] ⁸ shall instead be treated as a payment for services. In the event that a Taxing Authority asserts

that a party’s treatment of a payment described in this Section 14(b) should be other than as required herein, such party shall use its commercially reasonable efforts to contest such assertion in a manner consistent with Section 16 of this Agreement.

⁷	NTD: Insert cross-references to provisions in other Transaction Agreements under which payments will be made between the parties that are not treated as contributions or distributions.

⁸	NTD: Insert cross-references to provisions in other Transaction Agreements under which payments will be made between the parties that are not treated as contributions or distributions.

(c) No Duplicative Payment. It is intended that the provisions of this Agreement shall not result in a duplicative payment of any amount required to be paid under the Separation Agreement, the Merger Agreement or any other Exit Transaction Document, and this Agreement shall be construed accordingly.

SECTION 15. Communication and Cooperation.

(a) Consult and Cooperate. SpinCo, Parent and Acquiror shall consult and cooperate (and shall cause each other member of their respective Groups to consult and cooperate) fully at such time and to the extent reasonably requested by the other party in connection with all matters subject to this Agreement. Such cooperation shall include, without limitation:

(i) the retention, and provision on reasonable request, of any and all information including all books, records, documentation or other information pertaining to Tax matters relating to the SpinCo Group (or, in the case of any Tax Return of the Parent Group, the portion of such return that relates to Taxes for which the SpinCo Group or the Acquiror Group may be liable pursuant to this Agreement), any necessary explanations of information, and access to personnel, until one year after the expiration of the applicable statute of limitation (giving effect to any extension, waiver or mitigation thereof);

(ii) the execution, to the extent commercially reasonable, of any document that may be necessary (including to give effect to Section 16) or helpful in connection with any required Tax Return or in connection with any audit, proceeding, suit or action; and

(iii) the use of the parties’ commercially reasonable efforts to obtain any documentation from a Governmental Authority or a third party that may be necessary or helpful in connection with the foregoing.

(b) Provide Information. Except as set forth in Section 16, Parent, SpinCo and Acquiror shall keep each other reasonably informed with respect to any material development relating to the matters subject to this Agreement.

(c) Tax Attribute Matters. Parent, SpinCo and Acquiror shall promptly advise each other with respect to any proposed Tax adjustments that are the subject of an audit or investigation, or are the subject of any proceeding or litigation, and that may affect any Tax liability or any Tax Attribute (including, but not limited to, basis in an asset or the amount of earnings and profits) of any member of the Acquiror Group or any member of the Parent Group, respectively.

(d) Confidentiality

(i) Each party hereto agrees that they shall hold strictly confidential and shall use, and shall cause any Person to which its discloses Confidential Information pursuant to clause (b) below, to hold strictly confidential and to use, the Confidential Information only in connection with its investment in the JV and not for any other purpose. The JV and each Member agrees that it shall be responsible for any breach of the provisions of this Section 15 (d) by any Person to which it discloses Confidential Information.

(ii) The JV and each Member agrees that it shall not disclose any Confidential Information to any Person (other than as may be necessary to monitor, increase or decrease its investment in the JV in accordance with applicable securities laws), except that Confidential Information may be disclosed as follows:

(A) to any of such Person’s Representatives, including to the extent necessary to obtain their services in connection with monitoring its investment in the Company;

(B) to any financial institution providing credit to such Person or any of its Affiliates;

(D) to the extent required by applicable Law or requested or required by any regulatory body (including complying with any oral or written questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process to which such Persons is subject); provided that, unless otherwise prohibited by Law, such Persons agrees to give the other parties hereto prompt notice of such request(s), to the extent practicable, so that such parties may seek an appropriate protective order or similar relief (and such Person shall cooperate with such efforts by such other parties, and shall in any event make only the minimum disclosure required by such Law);

(E) in the case of any Member, to any Person to whom such Member is contemplating a Transfer of all or any portion of its Units; provided that such Transfer (1) would not be in violation of the provisions of the LLC Agreement, (2) the potential Transferee agrees in advance of any such disclosure to be bound by a confidentiality agreement consistent with the provisions hereof and (3) such Member shall be responsible for breaches of such confidentiality agreement by such potential Transferee, for so long as the W does not have direct recourse against such potential Transferee for any such breaches;

(F) to any Governmental Authority or any rating agency with jurisdiction over such Person or any of its Affiliates or with which such Person or any of its Affiliates has regular dealings, as long as such Governmental Authority or rating agency is advised of the confidential nature of such information and such Person uses reasonable efforts to seek confidential treatment of such information to the extent available;

(G) to the extent required by the rules and regulations of the SEC or stock exchange rules, including any disclosure contemplated under the Registration Rights Agreement; or

(H) if the prior written consent of all of the Directors on the Board shall have been obtained.

Nothing contained herein shall prevent the use of Confidential Information in connection with the assertion or defense of any claim by or against the JV or any Member and nothing contained in this Section 15(d) shall be deemed to restrict any stockholder’s ability to monetize its equity investment in compliance with applicable securities laws.

Notwithstanding the foregoing, the JV and each of the Members acknowledge that each of the BX Investors and the H&F Investors and their Affiliates may provide Confidential Information to its existing and potential limited partners, members and other investors; provided that no BX Investor and no H&F Investor shall provide any non-public financial information or competitively or strategically sensitive information about the JV or any of its Subsidiaries to (a) any limited partner that is not subject to customary confidentiality and non-use restrictions with respect to such information (subject to customary exceptions) or (b) to any other Person in the course of investing or fundraising activities that is not subject to customary confidentiality and non-use restrictions with respect to such information (subject to customary exceptions) and, in any of either (a) or (b), any non-public financial information shall be limited to the BX Investors’ and the H&F Investors’ or their fund Affiliates’ valuation of the JV and its Subsidiaries without providing underlying forecasted financial data or trends; provided that each BX Investor and its fund Affiliates shall be permitted to disclose underlying forecasted financial data or trends to the two co-investors in the Acquiror who have entered into confidentiality agreements; provided , further , that in any case each applicable BX Investor shall provide prompt written notice of such disclosure to Parent.

(iii) “ Confidential Information ” means any information concerning the Members or any of their respective Affiliates, the JV or any of its Subsidiaries or the financial condition, business, operations or prospects of the Members or any of their respective Affiliates or the JV or any of its Subsidiaries in the possession of or furnished to the JV or any Member, as applicable (including by virtue of any Member’s present or former right to designate a Director); provided that the term “Confidential Information” shall not include information that (i) is or becomes generally available to the public other than as a result of a disclosure by such Person or its Affiliates or any of their respective Representatives in violation of this Agreement, (ii) was available to such Person on a non-confidential basis prior to its disclosure to such Person or its Representatives by the W or the other Members or their Representatives or (iii) becomes available to such Person on a non-confidential basis from a source other than the JV or the other Members or their Representatives after the disclosure of such information to such Person or its Representatives by the JV or the Members or their Representatives, which source is (at the time of receipt of the relevant information) not, to such Person’s knowledge, bound by a confidentiality agreement with (or other confidentiality obligation to) the JV, the other Members or another Person; provided that, notwithstanding anything to the contrary contained herein, “Confidential Information” in the possession of any of the Initial

Members or its Affiliates prior to the Closing shall not by virtue of the foregoing exceptions in clauses (ii) or (iii) be deemed not to be Confidential Information, and each of the Initial Members shall be obligated to keep or to cause to be kept such information confidential and to use or cause to be used such information in accordance with the provisions of this Section 15(d) as fully as if such Member did not have access to such information prior to the Closing but only received such information after the Closing. For the avoidance of doubt, the JV and each Member (as defined in the LLC Agreement) acknowledge and agree that each Member and the Echo Shareholders (as defined in the LLC Agreement) may incidentally develop or receive from third parties information not known by such recipient to have been obtained in violation of this Agreement that is the same as or similar to the Confidential Information, and that nothing in this Agreement restricts or prohibits any Member or the Echo Shareholders (by itself or through a third party) from developing, receiving or disclosing such information, or any products, services, concepts, ideas, systems or techniques that are similar to or compete with the products, services, concepts, ideas, systems or techniques contemplated by or embodied in the Confidential Information.

(iv) Notwithstanding anything to the contrary in this Agreement, the JV, each Member, their respective Affiliates and their respective Representatives may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated hereby and all materials of any kind (including opinions and tax analysis) that are provided to the JV or the Member relating to such tax treatment and tax structure; provided that the foregoing does not constitute authorization to disclose information identifying the JV, any Member (or its Representatives), any parties to transactions engaged in by the JV or (except to the extent relating to such tax structure or tax treatment) any nonpublic commercial or financial information.

(e) The capitalized terms contained in this Section 15 not otherwise defined in this Agreement or the Contribution Agreement have the meaning set forth in the LLC Agreement.

SECTION 16. Audits and Contest.

(a) Notice. Each of Parent, SpinCo and Acquiror shall promptly notify the other parties in writing upon the receipt from a relevant Taxing Authority of any notice of a Tax Proceeding that may give rise to an indemnification obligation under this Agreement; provided that a party’s right to indemnification under this Agreement shall not be limited in any way by a failure to so notify, except to the extent that the Indemnifying Party is prejudiced by such failure.

(b) Parent Control. Notwithstanding anything in this Agreement to the contrary, but subject to Section 16(c) , Parent shall have the right to control any Tax Proceeding with respect to any Tax matters of (i) a Combined Group or any member of a Combined Group (as such), (ii) any member of the Parent Group and (iii) any member of the SpinCo Group relating solely to a Pre-Distribution Period (a “ Parent Tax Proceeding ”). Parent shall have absolute discretion with respect to any decisions to be made, or the nature of any action to be taken, with respect to any Parent Tax Proceeding; provided , however , that to the extent that any Parent Tax Proceeding is reasonably likely to give rise to an indemnity obligation of SpinCo or Acquiror under Section 12 hereof, materially increase the Taxes payable by or allocated to any member of the Acquiror

Group pursuant to Section 4 or materially affect the Tax Attributes allocated to any member of the SpinCo Group pursuant to Section 6 , (i) Parent shall keep Acquiror informed of all material developments and events relating to any such Parent Tax Proceeding, (ii) at its own cost and expense, Acquiror shall have the right to participate in (but not to control) the defense of any such Parent Tax Proceeding, and (iii) Parent shall not settle or compromise any such contest without Acquiror’s written consent, which consent may not be unreasonably withheld, conditioned or delayed. If the Parent Group acknowledges in writing that it is liable for the Taxes at issue in any Parent Tax Proceeding subject to the proviso in the previous sentence, the rights of Acquiror in such proviso shall not apply to such Parent Tax Proceeding to the extent such Parent Tax Proceeding relates to the Taxes that are the subject of such acknowledgment.

(c) Distribution Taxes. If any Parent Tax Proceeding relating to Distribution Taxes is reasonably likely to give rise to an indemnity obligation of the Acquiror as successor to SpinCo or the JV Group under Section 12 hereof, Acquiror and Parent shall exercise joint control over the disposition of such Parent Tax Proceeding (and, for the avoidance of doubt, shall keep each other informed of all material developments with respect to such Parent Tax Proceeding to the extent the other party is not otherwise informed thereof). Parent shall otherwise have the right to elect to control any Parent Tax Proceeding relating to Distribution Taxes; provided that Parent shall keep Acquiror informed of all material developments.

(d) Acquiror Control. Acquiror shall have the right to control any Tax Proceeding with respect to SpinCo or any member of the SpinCo Group relating to one or more members of the SpinCo Group and to any Post-Distribution Period (an “ Acquiror Tax Proceeding ”). Acquiror shall have absolute discretion with respect to any decisions to be made, or the nature of any action to be taken, with respect to any Acquiror Tax Proceeding; provided , however , that to the extent any such matter is reasonably likely to give rise to a claim for indemnity by SpinCo or Acquiror against Parent under Section 12(b) of this Agreement, (i) Acquiror shall keep Parent informed of all material developments and events relating to such Acquiror Tax Proceeding, (ii) at its own cost and expense, Parent shall have the right to participate in (but not to control) the defense of any such Acquiror Tax Proceeding and (iii) Acquiror shall not settle or compromise any such tax claim without the prior written consent of Parent (which shall not be unreasonably withheld, conditioned or delayed). If the Acquiror Group acknowledges in writing that it is liable for the Taxes at issue in any Acquiror Tax Proceeding subject to the proviso in the previous sentence, the rights of Parent in such proviso shall not apply to such Acquiror Tax Proceeding to the extent such Acquiror Tax Proceeding relates to the Taxes that are the subject of such acknowledgment.

SECTION 17. Notices. All notices, requests, permissions, waivers and other communications hereunder will be in writing and will be deemed to have been duly given (a) when sent, if sent by telecopy, (b) when delivered, if delivered personally to the intended recipient and (c) one Business Day following sending by overnight delivery via an international courier service and, in each case, addressed to a Company at the following address for such Company,

if to Parent or the Parent Group, to:

[ ]

Attention: [ ]

Telecopy: [ ]

with a copy (which shall not constitute notice) to:

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, New York 10017

Attention: Neil Barr

Telecopy: (212) 450-5581

if to SpinCo or the SpinCo Group, to:

[ ]

Telecopy: ( ) -

with a copy (which shall not constitute notice) to:

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, New York 10017

Attention: Neil Barr

Telecopy: (212) 450-5581

if to Acquiror or the Acquiror Group, to:

[ ]

Attention: [ ]

Telecopy: [ ]

with a copy (which shall not constitute notice) to:

[•]

or to such other address(es) as may be furnished in writing by any such Company to the other Companies in accordance with the provisions of this Section 17 .

SECTION 18. Costs and Expenses. Except as expressly set forth in this Agreement, each party shall bear its own costs and expenses incurred pursuant to this Agreement. For purposes of this Agreement, costs and expenses shall include, but not be limited to, reasonable attorneys’ fees, accountants’ fees and other related professional fees and disbursements. For the avoidance of doubt, unless otherwise specifically provided in the Exit Transaction Documents, all liabilities, costs and expenses incurred in connection with this Agreement by or on behalf of SpinCo or any member of the SpinCo Group with respect to actions taken at or prior to the Effective Time shall be the responsibility of Parent and shall be assumed in full by Parent.

SECTION 19. Effectiveness; Termination and Survival. Except as expressly set forth in this Agreement, as between Parent, SpinCo Acquiror, and the JV Group, this Agreement shall become effective upon the consummation of the Merger. All rights and obligations arising hereunder shall survive until they are fully effectuated or performed; provided that, notwithstanding anything in this Agreement to the contrary, this Agreement shall remain in effect and its provisions shall survive for one year after the full period of all applicable statutes of limitation (giving effect to any extension, waiver or mitigation thereof) and, with respect to any claim hereunder initiated prior to the end of such period, until such claim has been satisfied or otherwise resolved. This agreement shall terminate without any further action at any time before the Closing upon termination of the Merger Agreement.

SECTION 20. Specific Performance. Each party hereto agrees that irreparable damage would occur if any provision of this Agreement was not performed in accordance with its specific terms or was otherwise breached. It is accordingly agreed that the parties hereto will be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the performance of the terms and provisions of this Agreement without proof of actual Damages, this being in addition to any other remedy to which any such party is entitled at Law or in equity. Each party hereto further agrees that no other party or any other Person will be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 20, and each party hereto irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument.

SECTION 21. Construction. The descriptive headings herein are inserted for convenience of reference only and are not intended to be a substantive part of or to affect the meaning or interpretation of this Agreement. Reference to any agreement, document, or instrument means such agreement, document, or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof. References to any document, instrument or agreement (including this Agreement) includes and incorporates all exhibits, disclosure letters, schedules and other attachments thereto. Unless the context otherwise requires, any references to a “Section” or “Schedule” will be to a Section or Schedule to or of this Agreement. The use of the words “include” or “including” in this Agreement will be deemed to be followed by the words “without limitation.” The use of the word “covenant” will mean “covenant and agreement.” The use of the words “or,” “either” or “any” will not be exclusive. Days means calendar days unless specified as Business Days. References to statutes will include all regulations promulgated thereunder, and references to statutes or regulations will be construed to include all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation, in each case, as of the date hereof. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Except as otherwise expressly provided elsewhere in this Agreement or any other Exit Transaction Document, any provision herein which contemplates the agreement, approval or consent of, or exercise of any right of, a party, such party may give or withhold such agreement, approval or consent, or exercise such right, in its sole and absolute discretion, the parties hereby expressly disclaiming any implied duty of good faith and fair dealing or similar concept.

SECTION 22. Entire Agreement; Amendments and Waivers.

(a) Entire Agreement.

(i) This Agreement and the other Transaction Documents, including any related annexes, schedules and exhibits, as well as any other agreements and documents referred to herein and therein, together constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all prior negotiations, agreements and understandings of the parties of any nature, whether oral or written, with respect to such subject matter. If there is a conflict between any provision of this Agreement and a provision of any other Transaction Document, the provision of this Agreement will control unless specifically provided otherwise in this Agreement.

(ii) THE PARTIES ACKNOWLEDGE AND AGREE THAT NO REPRESENTATION, WARRANTY, PROMISE, INDUCEMENT, UNDERSTANDING, COVENANT OR AGREEMENT HAS BEEN MADE OR RELIED UPON BY ANY PARTY OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT AND IN THE OTHER TRANSACTION DOCUMENTS, INCLUDING ANY CERTIFICATE ISSUED IN ACCORDANCE THEREWITH.

(b) Amendments and Waivers.

(i) This Agreement may be amended, and any provision of this Agreement may be waived, if and only if such amendment or waiver, as the case may be, is in writing and signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom the waiver is to be effective.

(ii) No failure or delay by either party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. Except as otherwise provided herein, no action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained in this Agreement. Any term, covenant or condition of this Agreement may be waived at any time by the party that is entitled to the benefit thereof, but only by a written notice signed by such party expressly waiving such term, covenant or condition. The waiver by any party of a breach of any provision hereunder shall not operate or be construed as a waiver of any prior or subsequent breach of the same or any other provision hereunder.

SECTION 23. Governing Law and Interpretation. The validity, interpretation and enforcement of this Agreement will be governed by the Laws of the State of Delaware, without regard to the conflict of Laws provisions thereof that would cause the Laws of another state to apply.

SECTION 24. Dispute Resolution. In the event of any dispute relating to this Agreement, including but not limited to whether a Tax liability is a liability of the Parent Group, the SpinCo Group or the Acquiror Group, the parties shall work together in good faith to resolve such dispute within thirty (30) days. In the event that such dispute is not resolved, upon written notice by a party after such thirty (30)-day period, the matter shall be referred to a U.S. Tax counsel or other Tax advisor of recognized national standing (the “ Tax Arbiter ”) that will be jointly chosen by the Parent and Acquiror; provided , however , that, if the Parent and the Acquiror do not agree on the selection of the Tax Arbiter after five (5) days of good faith negotiation, the Tax Arbiter shall consist of a panel of three U.S. Tax counsel or other Tax advisor of recognized national standing with one member chosen by the Parent, one member chosen by the Acquiror, and a third member chosen by mutual agreement of the other members within the following ten (10)-day period. Each decision of a panel Tax Arbiter shall be made by majority vote of the members. The Tax Arbiter may, in its discretion, obtain the services of any third party necessary to assist it in resolving the dispute. The Tax Arbiter shall furnish written notice to the parties to the dispute of its resolution of the dispute as soon as practicable, but in any event no later than ninety (90) days after acceptance of the matter for resolution. Any such resolution by the Tax Arbiter shall be binding on the parties, and the parties shall take, or cause to be taken, any action necessary to implement such resolution. All fees and expenses of the Tax Arbiter shall be shared equally by the parties to the dispute.

SECTION 25. Counterparts. This Agreement may be executed in multiple counterparts (any one of which need not contain the signatures of more than one party), each of which will be deemed to be an original but all of which taken together will constitute one and the same agreement. This Agreement, and any amendments hereto, to the extent signed and delivered by means of a facsimile machine or other electronic transmission, will be treated in all manner and respects as an original agreement and will be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person. At the request of any party hereto, the other parties hereto will re-execute original forms thereof and deliver them to the requesting party.

SECTION 26. Successors and Assigns; Third Party Beneficiaries. Except as provided below, this Agreement shall be binding upon and shall inure only to the benefit of the parties hereto and their respective successors and assigns, by merger, acquisition of assets or otherwise (including but not limited to any successor of a party hereto succeeding to the Tax Attributes of such party under Applicable Tax Law). This Agreement is not intended to benefit any Person other than the parties hereto and such successors and assigns, and no such other Person shall be a third party beneficiary hereof. Upon the Closing, this Agreement shall be binding on Acquiror and Acquiror shall be subject to the obligations and restrictions imposed on SpinCo hereunder, including, without limitation, the indemnification obligations of SpinCo under Section 12.

SECTION 27. Authorization, Etc. Each of the parties hereto hereby represents and warrants that it has the power and authority to execute, deliver and perform this Agreement, that this Agreement has been duly authorized by all necessary corporate action on the part of such party, that this Agreement constitutes a legal, valid and binding obligation of each such party, and that the execution, delivery and performance of this Agreement by such party does not contravene or conflict with any provision or law or of its charter or bylaws or any agreement, instrument or order binding on such party.

SECTION 28. Change in Tax Law. ⁹

SECTION 29. Principles. This Agreement is intended to calculate and allocate certain Tax liabilities of the members of the SpinCo Group and the members of the Parent Group to SpinCo, Parent and Acquiror (and their respective Groups), and any situation or circumstance concerning such calculation and allocation that is not specifically contemplated by this Agreement shall be dealt with in a manner consistent with the underlying principles of calculation and allocation in this Agreement.

[SIGNATURE PAGE FOLLOWS]

⁹

NTD: In the event of a change in law or regulation following the date of signing of the Contribution Agreement that is or is believed by any of the parties hereto to be relevant to the interpretation or effect of this form of Tax Matters Agreement (including any change in any law or regulations expressly referenced herein), the parties will use reasonable best efforts to agree upon such changes to this form as may be necessary or advisable so as to give effect to the original intent, purposes and effect of such form (based on law and regulation in effect as of the date of signing of the Contribution Agreement) as nearly as practicable without altering the respective rights or obligations of the parties, or otherwise adversely effecting any party in any non-de minimis respect.

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the day and year first written above.


Parent on its own behalf and on behalf of the members of the Parent Group

By:
		Name:
		Title:

SpinCo on its own behalf and on behalf of the members of the [SpinCo Group]

By:
		Name:
		Title:

Acquiror on its own behalf and on behalf of the members of the Acquiror Group

By:
		Name:
		Title:

CHANGE HEALTHCARE, LLC

By:
		Name:
		Title:

CHANGE HEALTHCARE HOLDINGS, LLC

By:
		Name:
		Title:

[SIGNATURE PAGE TO TAX MATTERS AGREEMENT]

SCHEDULE A

The following transactions occurring pursuant to the Internal Restructuring are hereby identified as being free from Tax to the extent set forth herein (the “ Internal Tax-Free Transactions ”), any:

(A) transfer intended to qualify as a reorganization described in Section 368(a)(1)(A) of the Code; and

(B) transaction intended to qualify as the distribution of property in complete liquidation of a corporation pursuant to Section 332 of the Code.

provided , Parent may add to or modify the list of Internal Tax-Free Transactions from time to time prior to the Closing, so long as (x) such addition or modification does not impose any material incremental cost on any member of the Acquiror Group or otherwise impose obligations on Acquiror that differ materially in kind from the obligations otherwise imposed on Acquiror under this Agreement with respect to the Internal Tax-Free Transactions prior to such addition or modification, (y) the intended Tax treatment of such additional or modified Internal Tax-Free Transaction is supported by substantial authority (within the meaning of Section 6662 of the Code) and (z) it promptly informs Acquiror of such proposed addition to or modification.

Exhibit [ ]

Internal Restructuring

Exhibit [ ]

Blackstone Principal Shareholder Letter

Exhibit [ ]

H&F Principal Shareholder Letter

Exhibit A

Acquiror Tax Representation Letter (Distribution)

[See Attached]

[LETTERHEAD OF ECHO]

[Date]

[Tax Advisor]

Ladies and Gentlemen:

In connection with the MCK Separation Tax Opinion to be delivered by MCK Tax Advisor , pursuant to Section 5.2(c) of the Agreement and Plan of Merger (the “ Merger Agreement ”), ¹ dated as of June [6], 2016, between McKesson Corporation, a Delaware corporation (“ McKesson ”), [•], a Delaware corporation (“ SpinCo ”) and HCIT Holdings, Inc., a Delaware corporation (“ Echo ”), you have requested certain representations from Echo. This officer’s certificate (“ Officer’s Certificate ”) is being provided to you in response to that request.

General

The facts relating to the Controlled Transfer, the Distribution and the Merger pursuant to the Separation Agreement, the other Transaction Documents and the Applicable SEC Filings, insofar as those facts pertain to Echo and its Affiliates, are true, correct and complete in all material respects, and insofar as those facts pertain to McKesson and its Affiliates and, with respect to facts that pertain to the period prior to the Distribution Effective Time, SpinCo, are, to the knowledge of Echo, true, correct and complete in all material respects. The Merger and, to the knowledge of Echo, the Controlled Transfer and the Distribution will be consummated in accordance with the Transaction Documents (without waiver or modification of any provision thereof) and the descriptions contained in the Applicable SEC Filings.

Other than with respect to (i) the Controlled Transfer, the Distribution and the Merger and those agreements described or referred to in the Transaction Documents and the Applicable SEC Filings and (ii) ordinary course commercial arrangements that were not entered into in contemplation of, or in connection with, the Controlled Transfer, the Distribution and the Merger, there are no agreements, arrangements or understandings, either written or oral, between or among (a) McKesson and Echo or (b) SpinCo and Echo. For purposes of this representation, “Echo” refers to Echo, its Affiliates, its shareholders that will hold 10% or more of the voting power or value of all Echo shares (“ 10% Holders ”), and, to the knowledge of Echo, its shareholders that are not 10% Holders, and “McKesson” and “SpinCo” each refers to such Person, its Affiliates and, to the knowledge of Echo with respect to McKesson, its shareholders.

None of Echo and its Affiliates will take any position on any federal, state, or local income or franchise tax return or take any other tax or financial reporting position that is inconsistent with the Intended Tax-Free Treatment (as defined in the Tax Matters Agreement) or any of the representations contained herein.

Except where noted, each capitalized term used and not otherwise defined herein has the meaning ascribed to it in the Merger Agreement, Separation and Distribution Agreement (the “ Separation Agreement ”) and other “ Transaction Documents ” (as defined in the Amended and Restated Limited Liability Company Agreement (the “ LLC Agreement ”)).

4.	The undersigned is authorized to make all of the representations and certifications set forth herein on behalf of Echo and its Affiliates.

Active Trade or Business

Following the Merger, the Echo SAG ² intends to continue the active conduct of the Controlled Business (as defined in the Tax Matters Agreement), independently and with its separate employees. There is no planned or intended substantial reduction in business activity relating to the Controlled Business.

There is no plan or intention, following the Merger, to liquidate any member of the Echo SAG, to merge any member of the Echo SAG with any other entity outside the Echo SAG or to sell or otherwise dispose of the assets or shares of any member of the Echo SAG to an extent that would cause the Echo SAG to cease to be engaged in the Controlled Business.

Device

There will be no plan or intention by Echo, directly or through any of its Subsidiaries, to redeem or purchase any Echo Common Stock after the Merger, other than (a) unregistered or restricted Echo Common Stock that was held by shareholders of Echo immediately prior to the Merger, or (b) through Echo Common Stock purchases meeting the following requirements: (i) there is a sufficient business purpose for the Echo Common Stock purchase; (ii) the Echo Common Stock to be purchased is widely held; (iii) the Echo Common Stock purchases will be made in the open market; and (iv) the aggregate amount of Echo Common Stock purchased will not equal or exceed 20% of the outstanding Echo Common Stock.

Code Section 355(e) ³

To the knowledge of Echo, none of the Controlled Transfer, the Distribution or the Merger is, or will be, part of a plan or series of related transactions (within the meaning of Treasury Regulations Section 1.355-7) pursuant to which one or more persons will acquire directly or indirectly common stock representing a 50% or greater interest (within the meaning of Section 355(d)(4)) in McKesson or SpinCo (including any predecessor or successor to any such corporation).

For purposes of this representation letter, a corporation’s “ SAG ” or “ separate affiliated group ” refers to a group made up of one or more chains of includible corporations connected through stock ownership if such corporation owns directly stock meeting the Stock Ownership Requirement (as defined below) in at least one other includible corporation, and stock meeting the Stock Ownership Requirement in each of the includible corporations (except the parent) is owned directly by one or more of the other includible corporations. The “Stock Ownership Requirement” is met if the stock owned represents at least 80% of the total voting power and at least 80% of the total value of the stock of such corporation.

³	Unless otherwise noted, all Section references herein refer to the Internal Revenue Code of 1986, as amended (the “ Code ”), or to the Treasury Regulations promulgated thereunder.

The undersigned is authorized to make all the representations and certifications set forth herein on behalf of Echo and the management thereof, and is familiar with the matters set forth herein and has made such investigations of factual matters as the undersigned has deemed reasonably necessary for purposes of making the representations and statements herein. We understand that you will rely on this letter in rendering your opinion as to certain U.S. federal income tax consequences of the Controlled Transfer, the Distribution and the Merger. As of the date hereof, we believe that all of the facts, representations and assumptions stated or referred to herein are consistent with the state of facts that will exist as of the Distribution Effective Time. We will immediately inform you if, after signing this letter, we have reason to believe that any of the facts described herein, in the Merger Agreement, the Transaction Documents or the Applicable SEC Filings or any of the representations made in this letter are or have become untrue, incorrect or incomplete in any respect. We understand that your opinion will be subject to certain limitations and qualifications, including that it may not be relied upon if any such facts or representations are not correct in all material respects.


Very truly yours,

[Echo]

By:
		Name:
		Title:

Exhibit B

SpinCo Tax Representation Letter (Distribution)

[See Attached]

[LETTERHEAD OF SPINCO]

[Date]

[Tax Advisor]

Ladies and Gentlemen:

In connection with the MCK Separation Tax Opinion to be delivered by MCK Tax Advisor , pursuant to Section 5.2(c) of the Agreement and Plan of Merger (the “ Merger Agreement ”), ¹ dated as of [•], between McKesson Corporation, a Delaware corporation (“ McKesson ”), [•], a Delaware corporation (“ SpinCo ”) and HCIT Holdings, Inc., a Delaware corporation (“ Echo ”), you have requested certain representations from SpinCo. This officer’s certificate (“ Officer’s Certificate ”) is being provided to you in response to that request.

General

SpinCo will not take any position on any federal, state or local income or franchise tax return or take any other tax or financial reporting position that is inconsistent with the Intended Tax-Free Treatment (as defined in the Tax Matters Agreement) or any of the representations contained herein.

The undersigned is authorized to make all of the representations and certifications set forth herein on behalf of SpinCo.

Active Trade or Business

Following the MCK Contributions (as defined in the Contribution Agreement) and continuing after the Distribution, PF2 Newco LLC, a Delaware limited liability company (“ JV ”), directly and through disregarded entities (“DREs”) of JV, continued and will continue the active conduct of the Controlled Business (as defined in the Tax Matters Agreement), independently and with its separate employees.

There is no planned or intended substantial reduction in business activity relating to the Controlled Business.

Other than pursuant to the Merger, there is no plan or intention to liquidate any member of the SpinCo SAG, ² to merge any member of the SpinCo SAG with any entity outside the SpinCo SAG, to sell or otherwise dispose of the assets or shares of any member of the SpinCo SAG, to liquidate JV, to merge JV with any entity, to sell or otherwise dispose of the assets of JV (including any assets held through a DRE of JV), in each case, if such action would cause the SpinCo SAG to cease to be engaged in the Controlled Business.

Transfer and Distribution

SpinCo will pay its own expenses, if any, incurred in connection with the Controlled Transfer and the Distribution.

Immediately after the Distribution, SpinCo will not be a disqualified investment corporation (within the meaning of Section 355(g)(2)).

SpinCo is not a real estate investment trust (within the meaning of Section 355(h)(1)).

SpinCo was not a “United States real property holding corporation” (within the meaning of Section 897(c)(2)) at any time during the five-year period ending on the Distribution Effective Time, and SpinCo will not be such a “United States real property holding corporation” immediately after the Distribution.

10.

SpinCo is not the subject of an insolvency proceeding under applicable local law, or a receivership, foreclosure or similar proceeding in a local court.

Corporate Business Purpose

11.

Immediately after the Distribution, no director, officer or employee of McKesson or any of its direct or indirect subsidiaries will also be a director, officer or employee of SpinCo or any of its direct or indirect subsidiaries, and there will be no plan or intention to cause (i) any director, officer or employee of McKesson or any of its direct or indirect subsidiaries to also be a director, officer or employee of SpinCo or any of its direct or indirect subsidiaries or (ii) any director, officer or employee of SpinCo or any of its direct or indirect subsidiaries to also be a director, officer or employee of McKesson or any of its direct or indirect subsidiaries.

12.

⁴	Unless otherwise noted, all Section references herein refer to the Internal Revenue Code of 1986, as amended (the “ Code ”), or to the Treasury Regulations promulgated thereunder.

any member of the McKesson SAG and any member of the SpinCo SAG at the time of, or subsequent to, the Distribution. Other than pursuant to (a) the Transaction Documents and (b) arrangements described in clause (i) of the preceding sentence, no contractual or other arrangements between the McKesson SAG, on the one hand, and the SpinCo SAG or Echo and its subsidiaries, on the other hand, will survive the Distribution.

Device

13.

There is no plan or intention by SpinCo, or any party related to SpinCo, and SpinCo has no knowledge of any plan or intention by Echo, to issue, redeem or purchase any stock of McKesson or SpinCo, other than (i) redemptions of McKesson stock pursuant to the Exchange Offer and (ii) purchases by McKesson of its stock meeting the following requirements: (a) there is a sufficient business purpose for the stock purchase; (b) the stock to be purchased will be widely held; (c) the stock purchases will be made in the open market; and (d) the aggregate amount of stock purchased will not to equal or exceed 20% of the outstanding stock of McKesson.

14.

To the knowledge of SpinCo, (i) other than, in the case of stock or securities of McKesson or Echo, pursuant to the ordinary course of public trading and (ii) other than, in the case of stock or securities of SpinCo, pursuant to the Merger, there is no plan or intention by any shareholder of McKesson or Echo to dispose of any of stock or securities of McKesson or SpinCo.

Code Sections 355(d), 355(e) and 355(g)

15.

To the knowledge of SpinCo, none of the Controlled Transfer, the Distribution or the Merger is, or will be, part of a plan or series of related transactions (within the meaning of Treasury Regulations Section 1.355-7) pursuant to which one or more persons will acquire directly or indirectly equity representing a 50% or greater interest (within the meaning of Section 355(d)(4)) in McKesson or SpinCo (or any predecessor or successor to any such corporation).

The undersigned is authorized to make all the representations and certifications set forth herein on behalf of SpinCo and the management thereof, and is familiar with the matters set forth herein and has made such investigations of factual matters as the undersigned has deemed reasonably necessary for purposes of making the representations and statements herein. We understand that you will rely on this letter in rendering your opinion as to certain U.S. federal income tax consequences of the Controlled Transfer, the Distribution and the Merger. As of the date hereof, we believe that all of the facts, representations and assumptions stated or referred to herein are consistent with the state of facts that will exist as of the Distribution Effective Time. We will immediately inform you if, after signing this letter, we have reason to believe that any of the facts described herein, in the Merger Agreement, the Transaction Documents or the Applicable SEC Filings or any of the representations made in this letter are or have become untrue, incorrect or incomplete in any respect. We understand that your opinion will be subject to certain limitations and qualifications, including that it may not be relied upon if any such facts or representations are not correct in all material respects.


Very truly yours,

[SpinCo]

By:
		Name: [ ] Title: [ ]

Exhibit C

Parent Tax Representation Letter (Distribution)

[See Attached]

[LETTERHEAD OF MCKESSON CORPORATION]

[Date]

[Tax Advisor]

Ladies and Gentlemen:

In connection with the MCK Separation Tax Opinion to be delivered by MCK Tax Advisor, pursuant to Section 5.2(c) of the Agreement and Plan of Merger (the “ Merger Agreement ”), ¹ dated as of [•], between McKesson Corporation, a Delaware corporation (“ McKesson ”), [•], a Delaware corporation (“ SpinCo ”) and HOT Holdings, Inc., a Delaware corporation (“ Echo ”), you have requested certain representations from McKesson. This officer’s certificate (“ Officer’s Certificate ”) is being provided to you in response to that request.

General

The facts relating to the Controlled Transfer, the Distribution and the Merger pursuant to the Separation Agreement, the other Transaction Documents and the Applicable SEC Filings, insofar as those facts pertain to McKesson, its Affiliates and, with respect to facts that pertain to the period prior to the Distribution Effective Time, SpinCo, are true, correct and complete in all material respects, and, insofar as those facts pertain to Echo and its Affiliates, are, to the knowledge of McKesson, true, correct and complete in all material respects. The Controlled Transfer, the Distribution and the Merger will be consummated in accordance with the Transaction Documents, as amended (without waiver or modification of any provision thereof), and the descriptions contained in the Applicable SEC Filings.

Other than with respect to (i) the Controlled Transfer, the Distribution and the Merger and those agreements described or referred to in the Transaction Documents and the Applicable SEC Filings, and (ii) ordinary course commercial arrangements that were not entered into in contemplation of, or in connection with, the Controlled Transfer, the Distribution and the Merger, there are no agreements, arrangements, or understandings, either written or oral, between or among (a) McKesson and SpinCo, (b) McKesson and Echo or (c) SpinCo and Echo. For purposes of this representation, “McKesson” refers to McKesson, its Affiliates, its shareholders that will hold 10% or more of the voting power or value of all McKesson shares (“ 10% Holders ”), and, to the knowledge of McKesson, its shareholders that are not 10% Holders, and “SpinCo” and “Echo” each refers to such Person, its Affiliates and, to the knowledge of McKesson with respect to Echo, its shareholders.

None of McKesson and its Affiliates will take any position on any federal, state, or local income or franchise tax return or take any other tax or financial reporting position that is inconsistent with the Intended Tax-Free Treatment (as defined in the Tax Matters Agreement) or any of the representations contained herein.

The undersigned is authorized to make all of the representations and certifications set forth herein on behalf of McKesson and its Affiliates.

Active Trade or Business

Throughout the five-year period ending on the Distribution Effective Time (the “ Five-Year Period ”), the [•] Business (the “ MCK Business ”) conducted by McKesson (directly and through members of the McKesson SAG ² ) generated revenues and expenses and had both operational and managerial employees.

Throughout the Five-Year Period, the Controlled Business (as defined in the Tax Matters Agreement) directly conducted by McKesson Technologies, Inc. (“ MTI ”) and MTI LLC prior to the MCK Contributions, and by PF2 Newco LLC, a Delaware limited liability company (“ JV ”), directly and through MTI LLC, following the MCK Contributions, generated revenues and expenses and had both operational and managerial employees.

The McKesson SAG neither acquired the MCK Business nor acquired control (as defined in Section 368(c) ³ ) of an entity conducting the MCK Business during the Five-Year Period in a transaction in which gain or loss was recognized (or treated as recognized within the meaning of Proposed Treasury Regulations Section 1.355-3(b)(4)) in whole or in part, excluding in each case acquisitions that constitute expansions, as contemplated by Treasury Regulations Section 1.355-3(b)(3)(ii), of the MCK Business. Throughout the Five-Year Period, the McKesson SAG will have been the principal owner of the goodwill and significant assets of the MCK Business and it will continue to be the principal owner following the Distribution.

Neither the McKesson SAG nor the SpinCo SAG, directly or through JV, will have acquired the Controlled Business or acquired control (as defined in Section 368(c)) of an entity conducting the Controlled Business during the Five-Year Period in a transaction in which gain or loss is recognized (or treated as recognized within the meaning of Proposed Treasury Regulations Section 1.355-3(b)(4)) in whole or in part, excluding in each case (a) transactions occurring in

For purposes of this document, the term “SAG,” within the meaning of Section 355(b)(3)(B), means the affiliated group that consists of the common parent of a chain of one or more corporations in which the common parent directly owns at least 80% of the total voting power and value of the stock of one other corporation and 80% of the total voting power and value of the stock of each other corporation in the group is owned directly by one or more other group members.

³	Unless otherwise noted, all Section references herein refer to the Internal Revenue Code of 1986, as amended (the “ Code ”), or to the Treasury Regulations promulgated thereunder.

connection with the Contribution Agreement, (b) the MCK Contributions, (c) the Controlled Transfer and (d) acquisitions that constitute expansions, as contemplated by Treasury Regulations Section 1.355-3(b)(3)(ii), of the Controlled Business. Throughout the portion of the Five-Year Period beginning after the MCK Contributions, JV (directly or through disregarded entities (“DREs”) of JV) will have been the principal owner of the goodwill and significant assets of the Controlled Business and it will continue to be the principal owner following the Distribution.

MCK IPCo Owned Intellectual Property included intellectual property that was essential to the production of copyrighted articles that MTI purchased from a DRE of IP3 and resold to customers as part of the conduct of the Controlled Business and, more broadly, the Core MTS Business.

10.

Throughout the five-year period ending immediately before MCK IPCo Owned Intellectual Property was sold to McKesson (the “ IP3 Asset Sale ”), the intellectual property acquired by McKesson pursuant to the IP3 Asset Sale will have been owned by a member of the McKesson SAG.

11.

The five years of financial information that McKesson provided on behalf of the MCK Business is representative of the operations of the MCK Business, and there were no substantial operational changes to the MCK Business from the date of the last financial statements submitted as Appendix A hereto.

12.

The five years of financial information that McKesson provided on behalf of the Controlled Business is representative of the operations of the Controlled Business, and there were no substantial operational changes to the Controlled Business from the date of the last financial statements submitted as Appendix A hereto.

13.

Following the Distribution, the McKesson SAG will continue the active conduct of the MCK Business, independently and with its separate employees.

14.

Following the MCK Contributions and continuing after the Distribution, JV (directly and through DREs of JV) will continue the active conduct of the Controlled Business, independently and with its separate employees.

15.

From the MCK Contributions and until the Merger, (i) MCK IPCo and PST together owned Units representing, in aggregate, more than 50% of JV’s total value, capital and profits interests and at least 50% of the total voting interests in JV and (ii) the combined balances of the Capital Accounts (as defined in the LLC Agreement) maintained in respect of MCK IPCo and PST constituted more than 50% of the combined balances of the Capital Accounts maintained in respect of all members of JV. At all times from and after the MCK Contributions to and until the Distribution, MCK IPCo and PST were members (or Affiliates of members) of the McKesson SAG.

16.

At no time prior to the Merger did W issue any equity interests other than Units.

17.

The MCK Business experienced no substantial changes during the Five-Year Period in the type of business activity conducted or its method of conducting business, such as its products or services offered, production capacity, assets owned or used, technology employed, sales, or distribution channels or locations, other than technological, operational, and managerial changes in the ordinary course of business. At no time during the Five-Year Period was there a time in which no business activity was conducted, or a significant amount of time during which there was a substantial reduction in business activity. There is no planned or intended substantial reduction in business activity relating to the MCK Business.

18.

The Controlled Business experienced no substantial changes during the Five-Year Period in the type of business activity conducted or its method of conducting business, such as its products or services offered, production capacity, assets owned or used, technology employed, sales, or distribution channels or locations, other than technological, operational and managerial changes in the ordinary course of business. At no time during the Five-Year Period was there a time in which no business activity was conducted, or a significant amount of time during which there was a substantial reduction in business activity. There is no planned or intended substantial reduction in business activity relating to the Controlled Business.

19.

The IP3 Asset Sale and MCK Contributions did not result in the Controlled Business experiencing a substantial change in the type of business activity conducted or its method of conducting business, such as its products or services offered, production capacity, assets owned or used, technology employed, sales, or distribution channels or locations, other than technological, operational, and managerial changes in the ordinary course of business.

20.

There is not any plan or intention to liquidate any member of the McKesson SAG, to merge any member of the McKesson SAG with any entity outside the McKesson SAG or to sell or otherwise dispose of the assets or shares of any member of the McKesson SAG, in each case, if such action would cause the McKesson SAG to cease to be engaged in the MCK Business.

21.

Other than pursuant to the Merger, there is not any plan or intention to liquidate any member of the SpinCo SAG, to merge any member of the SpinCo SAG with any entity outside the SpinCo SAG, to sell or otherwise dispose of the assets or shares of any member of the SpinCo SAG, to liquidate JV, to merge JV with any entity, to sell or otherwise dispose of the assets of JV (including any assets held through a DRE of JV), in each case, if such action would cause the SpinCo SAG to cease to be engaged in the Controlled Business.

22.

Immediately after the Distribution, the fair market value of the gross assets of the MCK Business will be at least [•]% of the fair market value of the total gross assets of the McKesson SAG. For purposes of this representation, in determining the fair market value of the total gross assets of the McKesson SAG and the MCK Business, all members of the McKesson SAG are treated as one corporation.

23.

Immediately after the Distribution, the fair market value of the gross assets of the Controlled Business will be at least 25% of the fair market value of the total gross assets of the SpinCo SAG. For purposes of this representation, in determining the fair market value of the total gross assets of the SpinCo SAG and the Controlled Business (i) all members of the SpinCo SAG are treated as one corporation; and (ii) the SpinCo SAG is treated as owning a ratable share of the gross assets of JV, in proportion to the combined ownership of MCK IPCo and PST of equity in JV.

The Controlled Transfer and the Distribution

24.

The Controlled Transfer and the Distribution were consummated under a single, integrated plan to be formulated, approved and adopted by the boards of directors of each of McKesson and SpinCo.

25.

SpinCo was formed solely to effect the Distribution and did not conduct any business or other activities prior to the Controlled Transfer.

26.

From the time of the formation of SpinCo, and throughout the period before and including the Distribution: (i) the outstanding equity of SpinCo consisted solely of a single class of common stock that possessed, in the aggregate, 100% of the voting power, dividend rights, redemption rights, and liquidation rights with respect to the equity of SpinCo (the “SpinCo Common Stock”); and (ii) other than the SpinCo Common Stock, there were no instruments or arrangements that could be treated as equity of SpinCo for U.S. federal income tax purposes.

27.

Other than the SpinCo Common Stock, the Separation Agreement and the Merger Agreement, at no time prior to or including the Controlled Transfer were there any outstanding warrants, options, convertible securities, or other type of interest or arrangement (i) pursuant to which any person may acquire equity in SpinCo, (ii) the entitlements of which are determined in whole or in part by reference to the value of the SpinCo Common Stock or the profits or income of SpinCo or (iii) which otherwise bears economic entitlements similar to those of the SpinCo Common Stock.

28.

Other than the Separation Agreement and the Merger Agreement, from the time of the formation of SpinCo, and throughout the period ending with the Distribution, there were no existing, planned, or intended agreements, such as a voting trust, affecting the rights of any shareholder owning directly, or beneficially as a result of any agreement, any common stock of McKesson or SpinCo.

29.

From the time of the formation of SpinCo, and throughout the period ending with the Distribution, McKesson owned 100% of the SpinCo Common Stock, beneficially and as of record.

30.

Immediately following the Distribution, McKesson will retain no equity interest in SpinCo.

31.

No indebtedness currently exists or will exist between the McKesson SAG, on the one hand, and the SpinCo SAG, on the other.

32.

McKesson has not received and will not receive any cash or other property from SpinCo pursuant to the plan of reorganization that includes the Controlled Transfer and the Distribution (excluding, for the avoidance of doubt, SpinCo Common Stock).

33.

The aggregate gross fair market value of the assets McKesson transferred to SpinCo in the Controlled Transfer approximately equaled the sum of (i) the fair market value of SpinCo Common Stock that McKesson received, (ii) the liabilities (whether indebtedness or other forms of obligations, including contingent obligations), assumed by SpinCo pursuant to the Controlled Transfer (within the meaning of Section 357(d)) and (iii) the amount of liabilities, if any, to which the transferred assets were subject.

34.

Other than liabilities of MCK lPCo, if any, under the Contribution Agreement, SpinCo did not (i) assume any liabilities of McKesson (within the meaning of Section 357(d)) or (ii) discharge or extinguish any liabilities owed to SpinCo by McKesson.

35.

Each of the total basis and the total fair market value of the assets transferred to SpinCo by McKesson in the Controlled Transfer equaled or exceeded the sum of (i) the total amount of any liabilities assumed (within the meaning of Section 357(d)) by SpinCo in connection with the Controlled Transfer; (ii) the total amount of any liabilities to which the assets transferred in the Controlled Transfer were subject (including, for this purpose, McKesson’s share of any W liabilities (within the meaning of Section 752)); and (iii) the total amount of any liabilities owed to SpinCo by McKesson that were discharged or extinguished in connection with the Controlled Transfer. The fair market value of the assets of SpinCo exceeded the amount of its liabilities immediately after the Controlled Transfer.

36.

Other than the obligations of MCK lPCo, if any, under the Contribution Agreement, the liabilities of McKesson assumed by SpinCo pursuant to the Controlled Transfer, if any, and the liabilities to which the assets transferred pursuant to the Controlled Transfer were subject, if any, were incurred by McKesson in the ordinary course of business and were associated with the assets transferred.

37.

No part of the SpinCo Common Stock that was distributed in the Distribution was received by any of the McKesson shareholders as a creditor, employee, or in any capacity other than that of a shareholder of McKesson.

38.

Each of McKesson, SpinCo and their respective shareholders paid or will pay its respective expenses, if any, incurred in connection with the Controlled Transfer and the Distribution.

39.

Immediately before the Controlled Transfer, McKesson was not an investment company as defined in Section 368(a)(2)(F)(iii) and (iv).

40.

McKesson was not a “United States real property holding corporation” (within the meaning of Section 897(c)(2)) at any time during the Five-Year Period, and McKesson will not be a “United States real property holding corporation” immediately after the Distribution.

41.

Immediately before the Distribution, neither SpinCo, nor any of its domestic corporate subsidiaries, if any, was a party to a deferred intercompany transaction under Treasury Regulations Section 1.1502-13 (or predecessor provisions) other than [•].

42.

Immediately before the Distribution, there was not any excess loss account in the SpinCo Common Stock, or in the stock of any of its domestic subsidiaries, under Treasury Regulations Section 1.1502-19.

43.

McKesson neither accumulated its receivables outside the ordinary course of business nor made extraordinary payment of its payables in anticipation of the Distribution.

44.

If an investment credit determined under Section 46 was claimed with respect to any property transferred by McKesson to SpinCo, the income tax liability for the taxable year in which investment credit property (including any building to which Section 47(d) applies) was transferred was or will be adjusted pursuant to Section 50(a)(1) or (a)(2) (or Section 47, as in effect before amendment by Public Law 101-508, Title 11, 104 Stat. 1388, 536 (1990), if applicable) to reflect an early disposition of the property).

45.

Immediately after the Distribution, the aggregate fair market value of the assets of SpinCo will exceed the sum of the liabilities of SpinCo (whether indebtedness or other forms of obligations, including contingent obligations), plus the other liabilities, if any, to which the assets of SpinCo will be subject.

Immediately after the Distribution, the aggregate fair market value of the assets of McKesson will exceed the sum of the liabilities of McKesson (whether indebtedness or other forms of obligations, including contingent obligations), plus the other liabilities, if any, to which the assets of McKesson will be subject.

47.

McKesson is not the subject of an insolvency proceeding under applicable local law, or a receivership, foreclosure or similar proceeding in a local court.

48.

No portion of the real property, intellectual property or other intangible property historically used by the MCK Business will be separated from the MCK Business in the transaction.

49.

No portion of the real property, intellectual property or other intangible property historically used by the Controlled Business will be separated from the Controlled Business in the transaction.

50.

At the time of the Distribution, McKesson will not be a real estate investment trust (within the meaning of Section 355(h)(1)).

51.

McKesson did not and will not render any services to, or for the benefit of, SpinCo in connection with the Distribution.

52.

Both immediately before and immediately after each of the Distribution and the Merger, McKesson was and will be widely held and publicly traded.

53.

Immediately after the Merger, Echo will be widely held and publicly traded.

Corporate Business Purpose and Device

54.

The Distribution will be carried out, in whole or substantial part, for the corporate business purposes described in [•] (the “ Business Purpose ”).

55.

The Business Purpose motivating the Distribution cannot be achieved through an alternative nontaxable transaction that does not involve the distribution of stock of a SpinCo corporation and that is neither impractical nor unduly expensive.

56.

57.

No material reduction in the U.S. federal income tax liability of McKesson or SpinCo is reasonably expected to result from the Distribution (other than as a result of the application of Sections 355 and 361).

58.

The Distribution is not intended to be used principally as a device for the distribution of the earnings and profits of McKesson, SpinCo or both (e.g., converting dividend income to capital gain, effecting a recovery of basis to reduce the amount of income taken into account).

59.

Other than, in the case of SpinCo with respect to the Merger, there is no plan or intention to liquidate McKesson or SpinCo, to merge McKesson or SpinCo, or to sell or otherwise dispose of the assets of McKesson or SpinCo after the Distribution, except in the ordinary course of business.

60.

There will be no plan or intention by McKesson or SpinCo, or any party related to McKesson or SpinCo, to issue, redeem or purchase any common stock of McKesson or SpinCo, other than (a) redemptions of McKesson common stock pursuant to the Exchange Offer and (b) purchases by McKesson of its common stock meeting the following requirements: (i) there is a sufficient business purpose for the common stock purchase; (ii) the common stock to be purchased will be widely held; (iii) the common stock purchases will be made in the open market; and (iv) the aggregate amount of common stock purchased will not to equal or exceed 20% of the outstanding common stock of McKesson.

61.

Other than the Merger, the Distribution is not motivated in whole or in part by a business purpose to facilitate the acquisition of common stock or assets of McKesson or SpinCo.

62.

Other than (i) in the case of common stock or securities of McKesson or Echo, pursuant to the ordinary course of public trading and (ii) in the case of common stock or securities of SpinCo, pursuant to the Merger, there is no plan or intention by any shareholder of McKesson or Echo to dispose of any of common stock or securities of McKesson or SpinCo.

63.

To the extent that any member of the McKesson SAG or SpinCo SAG will hold cash or other liquid or inactive assets immediately following the Distribution, the amount of such assets so held will not exceed the reasonable needs of their respective businesses, and will be within industry norms.

64.

No business conducted by the McKesson SAG, on the one hand, or by the SpinCo SAG, on the other hand, has or will have as its principal function serving a business conducted by the other SAG.

65.

The Distribution was not effected for the purpose of permitting any of the McKesson shareholders to avoid the dividend provisions of the Code by the subsequent disposition of the common stock of McKesson or SpinCo and the retention of the common stock of the other.

66.

Other than (i) trade account indebtedness created in the ordinary course of business through any continuing transactions at terms comparable to those which could be obtained in an arm’s-length transaction and (ii) payables that arose or may arise under any of the Transaction Documents (including for the avoidance of doubt, the Contribution Agreement), no intercorporate debt will exist between any member of the McKesson SAG and any member of the SpinCo SAG at the time of, or subsequent to, the Distribution. Other than pursuant to (a) the Transaction Documents and (b) arrangements described in clause (i) of the preceding sentence, no contractual or other arrangements between the McKesson SAG, on the one hand, and the SpinCo SAG or Echo and its subsidiaries, on the other hand, will survive the Distribution.

67.

The receipt, if any, by McKesson shareholders of cash in lieu of fractional shares of Echo Common Stock in the Merger will be solely for the purpose of avoiding the expense and inconvenience to Echo of issuing fractional shares and will not represent separately bargained-for consideration. It is intended that the total cash consideration received by McKesson shareholders in the Merger will not exceed 1% of the total consideration that will be distributed to SpinCo shareholders in the Merger. It is intended that no McKesson shareholder will receive cash in lieu of fractional shares in the Merger in an amount equal to or greater than the value of one full share of Echo Common Stock.

Code Sections 355(d), 355(e) and 355(g)

68.

McKesson has and will have no actual knowledge of any less-than-5% shareholder of McKesson having acquired McKesson common stock by purchase (within the meaning of Section 355(d)(5)) during the Five-Year Period.

69.

[Throughout the Five-Year Period, other than pursuant to the ordinary course of public trading, there were no acquisitions of shares of McKesson common stock, including an acquisition resulting from an issuance of shares by McKesson, and there were no transfers to McKesson of equity interests in an entity (including a DRE), cash or cash items, marketable stock or securities, debt of the transferor, or debt of the transferee not evidenced by a “security” as described in Section 351(d).]

70.

For purposes of Section 355(d), immediately after the Distribution and the Merger, no person (determined after applying Section 355(d)(7)) will hold common stock possessing 50% or more of the total combined voting power of all classes of McKesson common stock entitled to vote, or 50% or more of the total value of shares of all classes of McKesson common stock, that will have been either (i) acquired by purchase (as defined in Section 355(d)(5) and (8), and by application of Treasury Regulations Section 1.355-6), or (ii) attributable to distributions on McKesson common stock or securities that will have been acquired by purchase (as defined in Section 355(d)(5) and (8), and by application of Treasury Regulations Section 1.355-6), in each case during the Five-Year Period (determined after applying Section 355(d)(6)).

71.

(determined after applying Section 355(d)(6)), or (ii) attributable to distributions on McKesson common stock that will have been acquired by purchase (as defined in Section 355(d)(5) and (8), and by application of Treasury Regulations Section 1.355-6), in each case during the Five-Year Period (determined after applying Section 355(d)(6)).

72.

[Other than McKesson common stock acquired in the ordinary course of public trading, there will have been no direct or indirect acquisition of an interest in the stock of McKesson or SpinCo during the two-year period prior to the Distribution.]

73.

None of the Controlled Transfer, the Distribution or the Merger is, or will be, part of a plan or series of related transactions (within the meaning of Treasury Regulations Section 1.355-7) pursuant to which one or more persons will acquire directly or indirectly equity representing a 50% or greater interest (within the meaning of Section 355(d)(4)) in McKesson or SpinCo (or any predecessor or successor to any such corporation).

74.

Immediately following the Merger, owners and former owners of McKesson Common Stock will, by reason of their ownership of SpinCo Common Stock after the Distribution, own more than 50% of the issued and outstanding Common Stock of Echo, by vote and value. There is and, at the time of the Distribution, will be no plan or intention to reduce or otherwise dilute the ownership interest in Echo (by voting power or value) of such owners and former owners of McKesson Common Stock.

75.

Immediately after the Distribution, McKesson will not be a disqualified investment corporation (within the meaning of Section 355(g)(2)).

The undersigned is authorized to make all the representations and certifications set forth herein on behalf of McKesson and the management thereof, and is familiar with the matters set forth herein and has made such investigations of factual matters as the undersigned has deemed reasonably necessary for purposes of making the representations and statements herein. We understand that you will rely on this letter in rendering your opinion as to certain U.S. federal income tax consequences of the Controlled Transfer, the Distribution and the Merger. As of the date hereof, we believe that all of the facts, representations and assumptions stated or referred to herein are consistent with the state of facts that will exist as of the Distribution Effective Time. We will immediately inform you if, after signing this letter, we have reason to believe that any of the facts described herein, in the Merger Agreement, the Transaction Documents or the Applicable SEC Filings or any of the representations made in this letter are or have become untrue, incorrect or incomplete in any respect. We understand that your opinion will be subject to certain limitations and qualifications, including that it may not be relied upon if any such facts or representations are not correct in all material respects.


Very truly yours,

McKesson Corporation

By:
		Name: [ ]
		Title: [ ]

Exhibit D

Acquiror Tax Representation Letter (Merger)

[LETTERHEAD OF ECHO]

[Date]

[Tax Advisor]

Ladies and Gentlemen:

In connection with the MCK Merger Tax Opinion and the Echo Tax Opinion (the “ Opinions ”) to be delivered by MCK Tax Advisor and Echo Tax Counsel, pursuant to Section 5.2(b) and Section 5.3(b) of the Agreement and Plan of Merger (the “ Merger Agreement ”), ¹ dated as of [•], between McKesson Corporation, a Delaware corporation (“ McKesson ”), [•], a Delaware corporation (“ SpinCo ”) and HCIT Holdings, Inc., a Delaware corporation (“ Echo ”), you have requested certain representations from Echo. This officer’s certificate (“ Officer’s Certificate ”) is being provided to you in response to that request.

Recognizing and acknowledging that [MCK Tax Advisor/Echo Tax Counsel] will rely on the representations and covenants set forth in this Officer’s Certificate in delivering their respective Opinions, and that such Opinions will be based upon an assumption that all of the representations set forth herein are true, accurate and complete without regard to any qualification for knowledge, belief, or otherwise, the undersigned officer of Echo hereby certifies and represents, on behalf of Echo (and its Affiliates, including, at all times after the Effective Time, SpinCo), that the statements and representations contained herein are true, correct and complete in all respects as of the date hereof, and will be true, correct and complete in all material respects at the Effective Time (as if made as of the Effective Time) and through the subsequent periods specified herein:

1. The facts relating to the Merger pursuant to the Merger Agreement as described in the Applicable SEC Filings, insofar as those facts pertain to Echo and its Affiliates, are true, correct and complete in all material respects, and, insofar as those facts pertain to McKesson and its Affiliates and to SpinCo and its Subsidiaries, are, to the knowledge of Echo, true, correct and complete in all material respects. The Merger will be consummated in accordance with the Merger Agreement, as amended (without waiver or modification of any provision thereof), and the descriptions contained in the Applicable SEC Filings.

2. Other than with respect to (i) the Controlled Transfer, the Distribution and the Merger and those agreements described or referred to in the Separation Agreement, the Merger Agreement and the Applicable SEC Filings and (ii) ordinary course commercial arrangements that were not entered into in contemplation of, or in connection with, the Controlled Transfer, the Distribution or the Merger, there are no agreements, arrangements or understandings, either written or oral, between or among (a) Echo, its Affiliates or shareholders, on the one hand, and (b) McKesson, its Affiliates or shareholders, on the other hand, concerning the Merger or otherwise.

Except where noted, each capitalized term used and not otherwise defined herein has the meaning ascribed to it in the Merger Agreement, Separation and Distribution Agreement (the “ Separation Agreement ”) and other “Transaction Documents” (as defined in the Amended and Restated Limited Liability Company Agreement (the “ LLC Agreement ”)).

3. The consideration to be received in the Merger by SpinCo’s shareholders was determined by arm’s length negotiations between the Echo Shareholders and the management of McKesson.

4. The Merger will be effected for the bona fide business purposes set forth in the Applicable SEC Filings.

5. The Merger will be consummated in compliance with the Merger Agreement. Pursuant to, and in connection with, the Merger, at the Effective Time, (i) SpinCo will merge with and into Echo and (ii) no holder of SpinCo Common Stock will receive in exchange for SpinCo Common Stock, directly or indirectly, any consideration other than Echo Common Stock, and cash in lieu of fractional shares of Echo Common Stock, as described in Section 3.3(b) of the Merger Agreement.

6. The fair market value of the Echo Common Stock and cash in lieu of fractional shares received by each SpinCo shareholder will be approximately equal to the fair market value of the SpinCo Common Stock surrendered in exchange therefor.

7. The receipt, if any, by SpinCo shareholders of cash in lieu of fractional shares of Echo Common Stock in the Merger will be solely for the purpose of avoiding the expense and inconvenience to Echo of issuing fractional shares and will not represent separately bargained-for consideration. It is intended that the total cash consideration received by SpinCo shareholders in the Merger will not exceed 1% of the total consideration that will be distributed to SpinCo shareholders in the Merger. It is intended that no SpinCo shareholder will receive cash in lieu of fractional shares in the Merger in an amount equal to or greater than the value of one full share of Echo Common Stock.

8. Neither Echo nor any person related to Echo as defined in Treasury Regulations Section 1.368-1(e)(4) ² (an “ Echo Related Person ”) has any plan, intention, obligation, agreement or understanding to, and will not in connection with the Merger, directly or indirectly, for its own account, redeem or repurchase (including by derivative transactions such as an equity swap which would have the economic effect of an acquisition) any of the Echo Common Stock issued to shareholders of SpinCo in the Merger except to the extent permitted by the Tax Matters Agreement.

9. There is no plan or intention to pay dividends or distributions after the consummation of the Merger to the former shareholders of SpinCo by Echo other than dividends or distributions made to all holders of Echo Common Stock.

10. The holders of SpinCo Common Stock will have no dissenters’ or appraisal or similar rights in the Merger.

²	Unless otherwise noted, all Section references herein refer to the Internal Revenue Code of 1986, as amended (the “ Code ”), or to the Treasury Regulations promulgated thereunder.

11. Following the consummation of the Merger, Echo will continue the conduct of SpinCo’s historic business or use a significant portion of SpinCo’s historic business assets in a business. For this purpose, Echo will be treated as holding all of the businesses and assets of (i) SpinCo and (ii) its Qualified Group. ³

12. Except for transactions or transfers described in Section 368(a)(2)(C) or Treasury Regulations Section 1.368-2(k), Echo has no plan or intention to (in each case following the consummation of the Merger): (i) liquidate; (ii) cause itself to be treated other than as a corporation for U.S. federal income tax purposes; (iii) merge with or into another corporation; or (iv) sell, exchange, distribute or otherwise dispose of any of its assets except for dispositions in the ordinary course of its business.

13. Except as otherwise provided in the Merger Agreement, Echo will bear its own expenses, if any, incurred in connection with or as part of the Merger. Echo has not paid and will not pay, directly or indirectly, any expenses (including transfer taxes) incurred by any shareholder of SpinCo in connection with or as part of the Merger or any related transactions. Except as contemplated by the Separation Agreement, Echo has not agreed to assume, nor will it directly or indirectly assume, any other expense or other liability, whether fixed or contingent, of any shareholder of SpinCo.

14. As of the Effective Time, there will be no indebtedness (other than intercompany receivables arising in the ordinary course of business) existing between Echo (or any of its Subsidiaries) and SpinCo (or any of its Subsidiaries).

15. On the date of the Merger, the fair market value of the assets of Echo will exceed the sum of its liabilities plus the liabilities, if any, to which its assets are subject.

16. Echo is not a regulated investment company, a real estate investment trust or a corporation fifty percent (50%) or more of the value of whose assets are common stock and securities and eighty percent (80%) or more of the value of whose total assets are assets held for investment (each, an “ Investment Company ”). For purposes of this representation, in making the 50% and 80% determinations under the preceding sentence: (i) stock and securities in any subsidiary corporation shall be disregarded and the parent corporation shall be deemed to own its ratable share of the subsidiary’s assets and (ii) a corporation shall be considered a subsidiary if the parent owns fifty percent (50%) or more of the combined voting power of all classes of stock entitled to vote or fifty percent (50%) or more of the total value of all classes of stock outstanding. In determining total assets there shall be excluded cash and cash items (including receivables), government securities and assets acquired (through incurring indebtedness or otherwise) for purposes of ceasing to be an Investment Company.

A “ Qualified Group ” is one or more chains of corporations connected through stock ownership with Echo but only if Echo is in control of at least one other corporation and each of the corporations (other than Echo) is controlled directly by one or more of the other corporations. If Echo’s Qualified Group owns an interest in a partnership, Echo will be treated as owning a proportionate share of SpinCo business assets used in a business of that partnership. Echo will be treated as conducting a business of any partnership in which members of Echo’s Qualified Group own, in the aggregate, at least a twenty percent (20%) interest in profits and capital and have active and substantial management functions as a partner with respect to that partnership business.

17. None of the compensation received or to be received by any employee or independent contractor of SpinCo who is also a shareholder of SpinCo is or will be separate consideration for any of their SpinCo Common Stock to be surrendered in the Merger. None of the Echo Common Stock (or cash in lieu of fractional shares of Echo Common Stock) to be received in connection with the Merger by any shareholder of SpinCo who is also an employee or independent contractor of SpinCo is or will be separate consideration for any employment, consulting or similar arrangement. Any compensation paid or to be paid to any shareholder of SpinCo who will be an employee or independent contractor of or perform advisory services for Echo, SpinCo or any affiliate thereof after the consummation of the Merger, will be determined by bargaining at arm’s length.

18. Echo is not under the jurisdiction of a court in a title 11 or similar case within the meaning of Section 368(a)(3)(A).

19. Neither Echo nor, after the Merger, SpinCo, will take any position on any federal, state or local income or franchise tax return or take any other tax reporting position that is inconsistent with the treatment of the Merger as a reorganization within the meaning of Section 368 or any of the foregoing representations.

20. Neither Echo nor any of its Subsidiaries is or has been a United States real property holding corporation within the meaning of Section 897(c)(2).

The undersigned is authorized to make all the representations and certifications set forth herein on behalf of Echo and the management thereof, and is familiar with the matters set forth herein and has made such investigations of factual matters as the undersigned has deemed reasonably necessary for purposes of making the representations and statements herein. We understand that you will rely on this letter in rendering your opinion as to certain U.S. federal income tax consequences of the Controlled Transfer, the Distribution and the Merger. As of the date hereof, we believe that all of the facts, representations and assumptions stated or referred to herein are consistent with the state of facts that will exist as of the Effective Time. We will immediately inform you if, after signing this letter, we have reason to believe that any of the facts described herein, in the Merger Agreement, the Transaction Documents or the Applicable SEC Filings or any of the representations made in this letter are or have become untrue, incorrect or incomplete in any respect. We understand that your opinion will be subject to certain limitations and qualifications, including that it may not be relied upon if any such facts or representations are not correct in all material respects.


Very truly yours,

[Echo]

By:
		Name: [ ] Title: [ ]

Exhibit E

SpinCo Tax Representation Letter (Merger)

[See Attached]

[LETTERHEAD OF MCKESSON CORPORATION]

[Date]

[Tax Advisor]

Ladies and Gentlemen:

In connection with the MCK Merger Tax Opinion and the Echo Tax Opinion (the “ Opinions ”) to be delivered by MCK Tax Advisor and Echo Tax Counsel, pursuant to Section 5.2(b) and Section 5.3(b) of the Agreement and Plan of Merger (the “ Merger Agreement ”), ¹ dated as of [•], between McKesson Corporation, a Delaware corporation (“ McKesson ”), [•], a Delaware corporation (“ SpinCo ”) and HCIT Holdings, Inc., a Delaware corporation (“ Echo ”), you have requested certain representations from McKesson. This officer’s certificate (“ Officer’s Certificate ”) is being provided to you in response to that request.

Recognizing and acknowledging that [MCK Tax Advisor/Echo Tax Counsel] will rely on the representations and covenants set forth in this Officer’s Certificate in delivering their respective Opinions, and that such Opinions will be based upon an assumption that all of the representations set forth herein are true, accurate and complete without regard to any qualification for knowledge, belief, or otherwise, the undersigned officer of McKesson hereby certifies and represents, on behalf of McKesson (and its Affiliates, including, at all times prior to the Distribution Effective Time, SpinCo), that the statements and representations contained herein are true, correct and complete in all respects as of the date hereof, and will be true, correct and complete in all material respects at the Effective Time (as if made as of the Effective Time) and through the subsequent periods specified herein:

1. The facts relating to the Merger pursuant to the Merger Agreement as described in the Applicable SEC Filings, insofar as those facts pertain to McKesson and its Affiliates and to SpinCo and its Subsidiaries, are true, correct and complete in all material respects, and, insofar as those facts pertain to Echo and its Subsidiaries, are, to the knowledge of McKesson, true, correct and complete in all material respects. The Merger will be consummated in accordance with the Merger Agreement, as amended (without waiver or modification of any provision thereof), and the descriptions contained in the Applicable SEC Filings.

2. Other than with respect to (i) the Controlled Transfer, the Distribution and the Merger and those agreements described or referred to in the Separation Agreement, the Merger Agreement and the Applicable SEC Filings and (ii) ordinary course commercial arrangements that were not entered into in contemplation of, or in connection with, the Controlled Transfer, the Distribution or the Merger, there are no agreements, arrangements or understandings, either written or oral, between or among (a) Echo, its Affiliates or shareholders, on the one hand and (b) McKesson, its Affiliates or shareholders, on the other hand, concerning the Merger or otherwise.

Except where noted, each capitalized term used and not otherwise defined herein has the meaning ascribed to it in the Merger Agreement, Separation and Distribution Agreement (the “ Separation Agreement ”) and other “Transaction Documents” (as defined in the Amended and Restated Limited Liability Company Agreement (the “ LLC Agreement ”)).

3. The consideration to be received in the Merger by SpinCo’s shareholders was determined by arm’s length negotiations between the Echo Shareholders and the management of McKesson.

4. The Merger will be effected for the bona fide business purposes set forth in the Applicable SEC Filings.

8. To the knowledge of McKesson, neither Echo nor any person related to Echo as defined in Treasury Regulations Section 1.368-1(e)(4) ² (an “ Echo Related Person ”) has any plan, intention, obligation, agreement or understanding to, nor will in connection with the Merger, directly or indirectly, for its own account, redeem or repurchase (including by derivative transactions such as an equity swap which would have the economic effect of an acquisition) any of the Echo Common Stock issued to shareholders of SpinCo in the Merger except to the extent permitted by the Tax Matters Agreement.

9. To the knowledge of McKesson, there is no plan or intention to pay dividends or distributions after the consummation of the Merger to the former shareholders of SpinCo by Echo other than dividends or distributions made to all holders of Echo Common Stock.

10. The holders of SpinCo Common Stock will have no dissenters’ or appraisal or similar rights in the Merger.

²	Unless otherwise noted, all Section references herein refer to the Internal Revenue Code of 1986, as amended (the “ Code ”), or to the Treasury Regulations promulgated thereunder.

11. To the knowledge of McKesson, following the consummation of the Merger, Echo will continue the conduct of SpinCo’s historic business or use a significant portion of SpinCo’s historic business assets in a business. For this purpose, Echo will be treated as holding all of the businesses and assets of (i) SpinCo and (ii) its Qualified Group. ³

12. To the knowledge of McKesson, except for transactions or transfers described in Section 368(a)(2)(C) or Treasury Regulations Section 1.368-2(k), Echo has no plan or intention to (in each case following the consummation of the Merger): (i) liquidate; (ii) cause itself to be treated other than as a corporation for U.S. federal income tax purposes; (iii) merge with or into another corporation; or (iv) sell, exchange, distribute or otherwise dispose of any of its assets except for dispositions in the ordinary course of its business.

13. Except as otherwise provided in the Merger Agreement, SpinCo will bear its own expenses, if any, incurred in connection with or as part of the Merger. SpinCo has not paid and will not pay, directly or indirectly, any expenses (including transfer taxes) incurred by any shareholder of SpinCo in connection with or as part of the Merger or any related transactions. Except as contemplated by the Separation Agreement, SpinCo has not agreed to assume, nor will it directly or indirectly assume, any other expense or other liability, whether fixed or contingent, of any shareholder of SpinCo.

15. On the date of the Merger, the fair market value of the assets of SpinCo will exceed the sum of its liabilities plus the liabilities, if any, to which its assets are subject.

16. SpinCo is not a regulated investment company, a real estate investment trust or a corporation fifty percent (50%) or more of the value of whose assets are common stock and securities and eighty percent (80%) or more of the value of whose total assets are assets held for investment (each, an “ Investment Company ”). For purposes of this representation, in making the 50% and 80% determinations under the preceding sentence: (i) stock and securities in any subsidiary corporation shall be disregarded and the parent corporation shall be deemed to own its ratable share of the subsidiary’s assets and (ii) a corporation shall be considered a subsidiary if the parent owns fifty percent (50%) or more of the combined voting power of all classes of stock entitled to vote or fifty percent (50%) or more of the total value of all classes of stock outstanding. In determining total assets there shall be excluded cash and cash items (including receivables), government securities and assets acquired (through incurring indebtedness or otherwise) for purposes of ceasing to be an Investment Company.

18. SpinCo is not under the jurisdiction of a court in a title 11 or similar case within the meaning of Section 368(a)(3)(A).

19. McKesson will not take any position on any federal, state or local income or franchise tax return or take any other tax reporting position that is inconsistent with the treatment of the Merger as a reorganization within the meaning of Section 368 or any of the foregoing representations.

20. Neither Echo nor any of its Subsidiaries is or has been a United States real property holding corporation within the meaning of Section 897(c)(2).

The undersigned is authorized to make all the representations and certifications set forth herein on behalf of McKesson and the management thereof, and is familiar with the matters set forth herein and has made such investigations of factual matters as the undersigned has deemed reasonably necessary for purposes of making the representations and statements herein. We understand that you will rely on this letter in rendering your opinion as to certain U.S. federal income tax consequences of the Controlled Transfer, the Distribution and the Merger. As of the date hereof, we believe that all of the facts, representations and assumptions stated or referred to herein are consistent with the state of facts that will exist as of the Effective Time. We will immediately inform you if, after signing this letter, we have reason to believe that any of the facts described herein, in the Merger Agreement, the Transaction Documents or the Applicable SEC Filings or any of the representations made in this letter are or have become untrue, incorrect or incomplete in any respect. We understand that your opinion will be subject to certain limitations and qualifications, including that it may not be relied upon if any such facts or representations are not correct in all material respects.


Very truly yours,

McKesson Corporation

By:
		Name: Title:

EXHIBIT F

FORM OF NOTICE OF EXCHANGE

[See Attached]

[FORM OF]

NOTICE OF EXCHANGE

[Echo] (“Echo”)

[•]

Attention: [•]

Facsimile: [•]

Reference is hereby made to the Amended and Restated Limited Liability Company Agreement, dated as of , 2016 ( as amended from time to time, the “ LLC Agreement ”) of Change Healthcare LLC, a Delaware limited liability company (the “ Company ”). Capitalized terms used but not defined herein shall have the meanings given to them in the Exchange Agreement.

The undersigned holder (the “ Holder ”) of Units of the Company hereby transfers to Echo effective as of the Exchange Date and, in the case of a contingent exchange, subject to the occurrence of the contingency set forth below, the number of Units set forth below in Exchange for Echo Shares (the “ Deliverable Common Stock ”) to be issued in its name as set forth below, in accordance with the terms of the LLC Agreement.

Legal Name of Holder: [ ]

Address: [ ]

[ ]

Number of Units to be Exchanged: [ ]

Timing / Contingent Exchanges (complete either (a) or (b))

(a) Exchange Date (if other than close of business on the date of receipt by Echo and the Company): [ ]

(b) If Exchange is contingent upon the occurrence of any event pursuant to the LLC Agreement, please describe such contingency: [ ]

The undersigned hereby irrevocably constitutes and appoints any officer of Echo or the Company as the attorney of the undersigned, with full power of substitution and resubstitution in the premises, to do any and all things and to take any and all actions that may be necessary to transfer to Echo the Units subject to this Notice of Exchange and to deliver to the undersigned the shares of Deliverable Common Stock to be delivered in Exchange therefor.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice of Exchange to be executed and delivered by the undersigned or by its duly authorized attorney.

By:

Name:

Title:

SCHEDULE I

INITIAL CAPITAL CONTRIBUTIONS


Name	Capital Contributions
PF2 IP LLC	$	1,586,343,648
PF2 PST Services Inc.	$	1,755,337,224
HCIT Holdings, Inc.	$	1,432,148,928

Exhibit 10.2

EXECUTION VERSION

TAX RECEIVABLE AGREEMENT

among

Change Healthcare LLC (f/k/a PF2 Newco LLC),

PF2 IP LLC,

PF2 PST Services, Inc.,

McKesson Corporation

and

HCIT Holdings, Inc.,

Dated as of March 1, 2017

TABLE OF CONTENTS


		Page

ARTICLE 1 Definitions			2

Section 1.01.	Definitions		2

ARTICLE 2 Determination of Certain Realized Tax Benefits			10

Section 2.01.	Tax Basis		10
Section 2.02.	Timing of Tax Benefit Payments		10
Section 2.03.	Tax Benefit Schedule		10
Section 2.04.	Procedures; Amendments		11

ARTICLE 3 Tax Benefit Payments			12

Section 3.01.	Payments		12
Section 3.02.	No Duplicative Payments		13
Section 3.03.	Pro Rata Payments		13

ARTICLE 4 Termination			15

Section 4.01.	Early Termination and Breach of Agreement		15
Section 4.02.	Early Termination Notice		17
Section 4.03.	Payment upon Early Termination		17

ARTICLE 5 Subordination and Late Payments			18

Section 5.01.	Subordination		18
Section 5.02.	Late Payments by the Company		18

ARTICLE 6 No Disputes; Consistency; Cooperation			18

Section 6.01.	Participation in the Echo Group’s and the Company’s Tax Matters		18
Section 6.02.	Consistency		18
Section 6.03.	Reporting		18
Section 6.04.	Cooperation		19

ARTICLE 7 Miscellaneous			19

Section 7.01.	Applicability to New PST		19
Section 7.02.	Notices		19
Section 7.03.	Counterparts		21
Section 7.04.	Entire Agreement; No Third Party Beneficiaries		21
Section 7.05.	Governing Law		21
Section 7.06.	Severability		21
Section 7.07.	Successors; Assignment; Amendments; Waivers		21
Section 7.08.	Titles and Subtitles		22
Section 7.09.	Resolution of Disputes		22
Section 7.10.	Reconciliation		23
Section 7.11.	Withholding		24
Section 7.12.	Admission of Echo into a Consolidated Group; Transfer of Assets		24
Section 7.13.	Confidentiality		24

This TAX RECEIVABLE AGREEMENT (this “ Agreement ”), dated as of March 1, 2017, is hereby entered into by and among (i) Change Healthcare LLC (f/k/a PF2 Newco LLC), a Delaware limited liability company (the “ Company ”), (ii) PF2 IP LLC, a Delaware limited liability (“ IPCo ”), (iii) PF2 PST Services, Inc., a Delaware corporation (“ New PST ”), each of the other persons from time to time party hereto (the “ TRA Parties ”), (iv) McKesson Corporation, a Delaware corporation (“ MCK ”), in its capacity as MCK Representative, (v) solely for purposes of Sections 2.03, 2.04, Section 7.07 and 7.10 and Article 6 hereof, HCIT Holdings, Inc., a Delaware corporation (“ Echo ”) and (vi) Change Healthcare Intermediate Holdings, LLC (f/k/a PF2 NewCo Intermediate Holdings, LLC), a Delaware limited liability company (“ Intermediate Holdings ”), Change Healthcare Holdings, LLC (f/k/a PF2 NewCo Holdings, LLC), a Delaware limited liability company (“ Holdings ”), Change Healthcare Holdings, Inc., a Delaware corporation, Change Healthcare Intermediate Holdings, Inc., a Delaware corporation, Change Healthcare, Inc. (“ Change ”), a Delaware corporation, Change Healthcare Operations, LLC, a Delaware limited liability company, Change Healthcare Solutions, LLC, a Delaware limited liability company, Change Healthcare Finance, Inc., a Delaware corporation, McKesson Technologies LLC, a Delaware limited liability company, PST Services LLC, a Georgia limited liability company (collectively and together with the Company, the “ Company Parties ”).

RECITALS

WHEREAS, the Company was formed on June 17, 2016;

WHEREAS, pursuant to an Agreement of Contribution and Sale dated as of June 28, 2016 (as amended or otherwise modified from time to time, the “ Contribution Agreement ”) by and among MCK, Change, the Echo Shareholders (as defined in the Contribution Agreement), Holdings, Intermediate Holdings and the Company, each of MCK and the Echo Shareholders agreed to contribute or sell (or agreed to cause to be contributed or sold) certain equity interests, assets, properties and businesses to the Company, and to take the other actions set forth therein;

WHEREAS, pursuant to the Contribution Agreement, MCK agreed to cause (a) IPCo to transfer to the Company the MCK IPCo Owned Intellectual Property (as defined in the Contribution Agreement) and the equity interests of the MCK DRE Contributed Entities (as defined in the Contribution Agreement) (the “ IPCo Transfer ”) and (b) New PST to transfer to the Company the Non-IP Contribution (as defined in the Contribution Agreement) (the “ New PST Transfer ”);

WHEREAS, in connection with the closing (the “ Closing ”) of the Contribution Agreement, the Company, IPCo, New PST and Echo entered into an Amended and Restated Limited Liability Company Agreement of the Company (as amended from time to time, the “ LLC Agreement ”) ; and

WHEREAS, the parties to the Contribution Agreement and this Agreement desire the execution of this Agreement, and payments made hereunder to IPCo, to be treated for U.S. federal income tax purposes as consideration delivered by the Company to MCK for a portion of the property transferred in the IPCo Transfer (the “ Sold Portion ”) in a taxable exchange.

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.01. Definitions . As used in this Agreement, the terms set forth in this Article 1 shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined).

“ Accelerated ” or “ Acceleration ” is defined in Section 4.01(b) of this Agreement.

“ Actual Consolidation Period ” is defined in Section 3.03(d) of this Agreement.

“ Actual Tax Liability ” means, with respect to any Taxable Year, the actual liability for U.S. federal, state and local income Taxes of the Echo Group.

“ Additional Amount ” is defined in Section 3.01(b) of this Agreement.

“ Affiliate ” means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such first Person.

“ Agreed Rate ” means LIBOR plus 100 basis points.

“ Agreement ” is defined in the Recitals of this Agreement.

“ Amended Schedule ” is defined in Section 2.04(b) of this Agreement.

“ Basis Adjustment ” means an adjustment to the tax basis of a Reference Asset transferred in the New PST Transfer as the direct or indirect result of the failure (in whole or part) of the New PST Transfer to qualify under Section 721(a) as a contribution of property in exchange for the Units set forth in Section 3.02(a)(v) of the Contribution Agreement (including an adjustment to the tax basis of a Reference Asset with respect to a Member pursuant to Section 743), other than to the extent the New PST Transfer is taxable by reason of entering into this Agreement or due to the adjustment payments under Section 2.03 of the Contribution Agreement.

A “ Beneficial Owner ” of a security, is a Person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares: (a) voting power, which includes the power to vote, or to direct the voting of, such security and/or (b) investment power, which includes the power to dispose of, or to direct the disposition of, such security. The terms “ Beneficially Own ” and “ Beneficial Ownership ” shall have correlative meanings.

“ Board ” means the board of directors of Echo.

“ Business Day ” means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States of America or the State of New York shall not be regarded as a Business Day.

“ Change of Control ” means the occurrence of any of the following events:

(a)

prior to an IPO, (i) any acquisition, merger or consolidation of Company by, with or into any other entity or any other similar transaction (including through an acquisition of shares of Echo), whether in a single transaction or series of related transactions, in which (A) the Members and their Affiliates immediately prior to such transaction in the aggregate cease to Beneficially Own more than 50% of the general voting power of the entity surviving or resulting from such transaction (or its equity holders) or (B) any Person or any group of Persons acting together which would constitute a “group” for purposes of Section 13(d) of the Securities and Exchange Act of 1934, or any successor provisions thereto (a “ Group ”) (other than a Group composed solely of members of the Company and their respective Affiliates) becomes the Beneficial Owner of more than 50% of the general voting power of the entity surviving or resulting from such transaction (or its equity holders), (ii) any transaction or series of related transactions in which more than 50% of the Company’s general voting power is transferred to or acquired by any Person or Group (other than a Group composed solely of members of the Company and their respective Affiliates), including through an acquisition of shares of Echo or (iii) the sale or transfer by the Company of all or substantially all of its assets; provided, however , that, in determining whether a Change of Control under this clause (a) has occurred, transfers to any Permitted Transferee (as defined in the LLC Agreement) shall not be taken into account;

(b)

following an IPO and excluding stockholders who become stockholders pursuant to the Qualified MCK Exit, any Person or any Group, excluding a corporation or other entity owned, directly or indirectly, by the stockholders of Echo in substantially the same proportions as their ownership of stock in Echo, is or becomes the Beneficial Owner, directly or indirectly, of securities of Echo representing more than 50% of the combined voting power of Echo’s then outstanding voting securities immediate prior to such Person or Group becoming a Beneficial Owner;

(c)

following an IPO, the following individuals cease for any reason to constitute a majority of the number of directors of Echo then serving: individuals who, immediately following the Qualified MCK Exit, constitute the Board and any new director whose appointment or election by the Board or nomination for election by Echo’s shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors immediately following the Qualified MCK Exit or whose appointment, election or nomination for election was previously so approved or recommended by the directors referred to in this clause (c);

(d)

following an IPO, there is consummated a merger or consolidation of Echo with any other corporation or other entity, and, immediately after the consummation of such merger or consolidation, either (i) the Board immediately prior to the merger or consolidation does not constitute at least a majority of the board of directors of the company surviving the merger or consolidation or, if the surviving company is a Subsidiary, the ultimate parent thereof, or (ii) the voting securities of Echo immediately prior to such merger or consolidation do not continue to represent or are not converted or exchanged into more than 50% of the combined voting power of the then outstanding voting securities of the Person resulting from such merger or consolidation or, if the surviving company is a Subsidiary, the ultimate parent thereof; or

(e)

the shareholders of Echo approve a plan of complete liquidation or dissolution of Echo or there is consummated an agreement or series of related agreements for the sale, lease or other disposition, directly or indirectly, by Echo of all or substantially all of Echo’s assets, other than such sale or other disposition by Echo of all or substantially all of its assets to an entity, at least 50% of the combined voting power of the voting securities of which are Beneficially Owned by shareholders of Echo in substantially the same proportions as their ownership of Echo immediately prior to such sale.

Notwithstanding the foregoing, (i) a “Change of Control” shall be deemed not to have occurred by reason of an Exchange (as defined in the LLC Agreement) and (ii) except with respect to clause (c) and clause (d)(i) above, a “Change of Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the shares of Echo immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in, and own substantially all of the shares of, an entity which owns all or substantially all of the assets of Echo immediately following such transaction or series of transactions. For the avoidance of doubt, neither an IPO nor a Qualified MCK Exit shall constitute a “Change of Control.”

“ Change of Control Termination Rate ” means, (i) in the case of Change of Control that occurs prior to the second anniversary of a Qualified MCK Exit, 10% per annum, compounded annually and (ii) otherwise, the lesser of (a) 6.5% per annum, compounded annually, and (b) LIBOR plus 200 basis points.

“ Change TRA ” means the Tax Receivable Agreement dated as of February 28, 2017 among Change, Echo, the Company, the Blackstone Representatives (as defined therein), the H&F Representatives (as defined therein), the other Change Shareholders (as defined therein) and the Company Parties.

“ Closing ” is defined in the Recitals of this Agreement.

“ Code ” means the United States Internal Revenue Code of 1986, as amended.

“ Company ” is defined in the Recitals of this Agreement.

“ Contribution Agreement ” is defined in the Recitals of this Agreement.

“ Control ” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. The term “Controlled” shall have the correlative meaning.

“ Cumulative Net Realized Tax Benefit ” for a Taxable Year means the cumulative amount of Realized Tax Benefits for all Taxable Years of the Echo Group, up to and including such Taxable Year, net of the cumulative amount of Realized Tax Detriments for the same period. The Realized Tax Benefit and Realized Tax Detriment for each Taxable Year shall be determined based on the most recent Tax Benefit Schedules or Amended Schedules, if any, in existence at the time of such determination.

“ Default Rate ” means LIBOR plus 500 basis points.

“ Determination ” shall have the meaning ascribed to such term in Section 1313(a) of the Code or similar provision of state and local tax law, as applicable, or any other event (including the execution of IRS Form 870-AD) that finally and conclusively establishes the amount of any liability for Tax and shall also include the acquiescence of the Echo Group to the amount of any assessed liability for Tax.

“ Dispute ” is defined in Section 7.09(a) of this Agreement.

“ Early Termination Date ” means the date of an Early Termination Notice for purposes of determining the Early Termination Payment Amount.

“ Early Termination Effective Date ” is defined in Section 4.02 of this Agreement.

“ Early Termination Notice ” is defined in Section 4.02 of this Agreement.

“ Early Termination Schedule ” is defined in Section 4.02 of this Agreement.

“ Early Termination Payment ” is defined in Section 4.03(a) of this Agreement.

“ Early Termination Payment Amount ” is defined in Section 4.03(b) of this Agreement.

“ Early Termination Rate ” means the lesser of (a) 6.5% per annum, compounded annually, and (b) LIBOR plus 200 basis points.

“ Echo ” is defined in the Recitals of this Agreement.

“ Echo Group ” means (a) the consolidated U.S. federal income tax group of which Echo is the common parent (or any successor to any such group), (b) if Echo is not the common parent of a consolidated U.S. federal income tax group, each person (other than MCK and its affiliates) that owns an interest in the Company (e.g., Echo, to the extent that Echo is not the parent of a consolidated group), (c) for purposes of determining Realized Tax Benefits and Realized Tax Detriments for applicable state or local purposes, a group of companies owned directly or indirectly by Echo that together file a state or local Tax Return on an affiliated, consolidated, combined or unitary basis and (d) any Person that holds any Reference Asset and is Controlled by Echo.

“ Echo Return ” means the federal and/or state and/or local Tax Return, as applicable, of the Echo Group filed with respect to Taxes of any Taxable Year.

“ Expert ” is defined in Section 7.10 of this Agreement.

“ Hypothetical Consolidation Period ” is defined in Section 3.03(e) of this Agreement.

“ Hypothetical Tax Liability ” means, with respect to any Taxable Year, subject to Section 3.03, the liability for Taxes of the Echo Group but using the Non-Stepped Up Tax Basis and excluding any deduction attributable to Imputed Interest for the Taxable Year. Hypothetical Tax Liability shall be determined without taking into account the carryover or carryback of any Tax item (or portions thereof) that is attributable to a Reference Asset.

“ Imputed Interest ” in respect of a TRA Party shall mean any interest imputed under Section 1272, 1274 or 483 or other provision of the Code and any similar provision of state and local Tax law with respect to the payment obligations of the Company in respect of such TRA Party under this Agreement.

“ IPCo ” is defined in the Recitals of this Agreement.

“ IPCo TRA Payment ” means, with respect to a New PST TRA Period, the difference between (i) the Tax Benefit Payment with respect to such New PST TRA Period and (ii) the New PST TRA Payment with respect to such New PST TRA Period.

“ IPCo Transfer ” is defined in the Recitals of this Agreement.

“ IPO ” means (a) a Qualified IPO or (b) if a Qualified IPO has not yet occurred, a public offering registered under the Securities Act (or any successor federal statute, and the rules and regulations thereunder, which shall be in effect at the time) of Echo Shares (as defined in the LLC Agreement) pursuant to which Echo Shares are listed for trading on The New York Stock Exchange, the NASDAQ Stock Market, or any other securities exchange or quotation system in any jurisdiction that has been agreed to by the Initial Members (as defined in the LLC Agreement) in writing.

“ IPO Preference Period ” shall have the meaning set forth in the LLC Agreement as in effect on the date hereof.

“ IRS ” means the United States Internal Revenue Service.

“ LIBOR ” means during any period, an interest rate per annum equal to the one-year LIBOR reported, on the date two days prior to the first day of such period, on the Telerate Page 3750 (or if such screen shall cease to be publicly available, as reported on Reuters Screen page “LIBOR01” or by any other publicly available source of such market rate) for London interbank offered rates for United States dollar deposits for such period.

“ LLC Agreement ” is defined in the Recitals of this Agreement.

“ Material Objection Notice ” is defined in Section 4.02 of this Agreement.

“ MCK ” is defined in the Recitals of this Agreement.

“ MCK Exit Window ” shall have the meaning set forth in the LLC Agreement as in effect on the date hereof.

“ MCK IPCo Owned Intellectual Property ” shall have the meaning set forth in the Contribution Agreement.

“ MCK Representative ” means MCK.

“ Member ” has the meaning set forth in the LLC Agreement as in effect on the date hereof.

“ Merger ” shall have the meaning set forth in the Merger Agreement.

“ Merger Agreement ” means the Agreement and Plan of Merger of PF2 SpinCo LLC, a Delaware limited liability company, and Echo.

“ Net Tax Benefit ” is defined in Section 3.01(b) of this Agreement.

“ New PST TRA Payment ” means, with respect to a New PST TRA Period, the product of (i) the Tax Benefit Payment with respect to such New PST TRA Period and (ii) the New PST TRA Ratio with respect to such New PST TRA Period.

“ New PST Period ” is defined in Section 7.01 of this Agreement.

“ New PST TRA Ratio ” means, with respect to a New PST TRA Period, the quotient of (i) the Tax Benefit Payment with respect to such New PST TRA Period if the Transferred Basis were not taken into account in determining such Tax Benefit Payment and (ii) the Tax Benefit Payment with respect to such New PST TRA Period.

“ Non-IP Contribution ” has the meaning set forth in the Contribution Agreement.

“ Non-Stepped Up Tax Basis ” means, with respect to any Reference Asset at any time, (a) if the Reference Asset was transferred in the IPCo Transfer (or any asset that is “substituted basis property” under Section 7701(a)(42) of the Code with respect thereto), a Tax basis of zero dollars and (b) with respect to any other Reference Asset, the Tax basis that such Reference Asset would have had at such time if there had been no Basis Adjustment with respect to such Reference Asset.

“ Objection Notice ” is defined in Section 2.04(a) of this Agreement.

“ Overpaid Party ” is defined in Section 3.03(g).

“ Payment Date ” means any date on which a payment is required to be made pursuant to this Agreement.

“ Person ” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity.

“ Qualified IPO ” shall have the meaning set forth in the LLC Agreement as in effect on the date hereof.

“ Qualified MCK Exit ” shall have the meaning set forth in the LLC Agreement as in effect on the date hereof.

“ Realized Tax Benefit ” means, for a Taxable Year, the excess, if any, of the Hypothetical Tax Liability over the Actual Tax Liability. If all or a portion of the actual liability for such Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Benefit unless and until there has been a Determination.

“ Realized Tax Detriment ” means, for a Taxable Year, the excess, if any, of the Actual Tax Liability over the Hypothetical Tax Liability. If all or a portion of the actual liability for such Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Detriment unless and until there has been a Determination.

“ Reconciliation Dispute ” is defined in Section 7.10 of this Agreement.

“ Reconciliation Procedures ” is defined in Section 2.04(a) of this Agreement.

“ Reference Asset ” means (a) any asset transferred to the Company in the IPCo Transfer or the New PST Transfer and (b) any asset that is “substituted basis property” under Section 7701(a)(42) of the Code with respect to an asset described in clause (a).

“ Schedule ” means any of the following: (a) a Tax Basis Schedule, (b) a Tax Benefit Schedule or (iii) the Early Termination Schedule.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Senior Obligations ” is defined in Section 5.01 of this Agreement.

“ Sold Portion ” is defined in the Recitals of this Agreement.

“ Subsidiaries ” means, with respect to any Person, as of any date of determination, any other Person as to which such Person, owns, directly or indirectly, or otherwise controls more than 50% of the voting power or other similar interests or the sole general partner interest or managing member or similar interest of such Person.

“ Tax Basis Schedule ” is defined in Section 2.01 of this Agreement.

“ Tax Benefit Payment ” is defined in Section 3.01(a) of this Agreement.

“ Tax Benefit Payment Amount ” is defined in Section 3.01(b) of this Agreement.

“ Tax Benefit Schedule ” is defined in Section 2.03(a) of this Agreement.

“ Tax Receivable Agreements ” means this Agreement and the Change TRA.

“ Tax Return ” means any return, declaration, report or similar statement required to be filed with respect to Taxes (including any attached schedules), including, without limitation, any information return, claim for refund, amended return and declaration of estimated Tax.

“ Taxable Year ” means a taxable year of the Echo Group as defined in Section 441(b) of the Code or comparable section of state or local tax law, as applicable (and, therefore, for the avoidance of doubt, may include a period of less than 12 months for which a Tax Return is made), ending on or after the first date on which MCK ceases to own, directly or indirectly, at least 20% of the total outstanding Units.

“ Taxes ” means any and all taxes, assessments or similar charges that are based on or measured with respect to net income or profits, and any interest related to such Tax.

“ Taxing Authority ” means any domestic, federal, national, state, county or municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi- governmental body exercising any taxing authority or any other authority exercising Tax regulatory authority.

“ TRA Parties ” is defined in the Recitals of this Agreement.

“ Transferred Basis ” means, with respect to any Reference Asset transferred in the IPCo Transfer (or any asset that is “substituted basis property” under Section 7701(a)(42) of the Code with respect to any such Reference Asset), the Tax basis of such Reference Asset from time to time, taking into account any increase in such basis by reason of a payment under this Agreement.

“ Treasury Regulations ” means the final, temporary and proposed regulations under the Code promulgated from time to time (including corresponding provisions and succeeding provisions) as in effect for the relevant taxable period.

“ Underpaid Party ” is defined in Section 3.03(g).

“ Units ” shall have the meaning set forth in the LLC Agreement as in effect on the date hereof.

“ Valuation Assumptions ” shall mean, as of an Early Termination Date, the assumptions that in each Taxable Year ending on or after such Early Termination Date:

(a)

the Echo Group will have taxable income sufficient to fully utilize (i) the deductions arising from Transferred Basis, the Basis Adjustments (if any) and the Imputed Interest during such Taxable Year or future Taxable Years (including, for the avoidance of doubt, Transferred Basis, Basis Adjustments and Imputed Interest that would result from future Tax Benefit Payments that would be paid in accordance with the Valuation Assumptions) in which such deductions would become available and (ii) any loss or credit carryovers generated by deductions arising from Transferred Basis, Basis Adjustments or Imputed Interest that are available as of the date of such Early Termination Date that have not been previously utilized in determining a Tax Benefit Payment Amount as of the date of such Early Termination Date, subject to all applicable limitations on the use of such loss or credit carryovers,

(b)

the United States federal income tax rates and state and local income tax rates that will be in effect for each such Taxable Year will be those specified for each such Taxable Year by the Code and other law as in effect on the Early Termination Date, and

(c)

any loss or credit carry carryovers described in clause (a)(ii) available as of the date of the Early Termination Date will be utilized by the Echo Group on a pro rata basis from the Early Termination Date through the scheduled expiration date of such loss or credit carryovers.

ARTICLE 2

DETERMINATION OF CERTAIN REALIZED TAX BENEFITS

Section 2.01. Tax Basis . Within ninety (90) calendar days after the filing of the IRS Form 1065 for the Company for the taxable year of the Company that includes the Closing, the Company shall deliver to each TRA Party a schedule (the “ Tax Basis Schedule ”) that provides the information necessary to perform the calculations required by this Agreement, including (a) the Transferred Basis and Basis Adjustment in each Reference Asset in respect of such TRA Party and (b) the period (or periods) over which each Reference Asset is amortizable and/or depreciable.

Section 2.02. Timing of Tax Benefit Payments . For the avoidance of doubt, no Tax Benefit Payments shall be payable hereunder for any period that is not a Taxable Year.

Section 2.03. Tax Benefit Schedule . (a) Tax Benefit Schedule. Within ninety (90) calendar days after the filing of the Echo Return for any Taxable Year, Echo and the Company shall provide to each TRA Party a schedule showing, in reasonable detail, the calculation of the Tax Benefit Payment Amount in respect of such TRA Party for such Taxable Year and the calculation of the Realized Tax Benefit or Realized Tax Detriment, as the case may be, and components thereof (a “ Tax Benefit Schedule ”). Each Tax Benefit Schedule shall include a statement from the chief financial officer of Echo to the effect that the computations reflected in the Tax Benefit Schedule have been made without regard to any transaction a significant purpose of which is to reduce or defer any Tax Benefit Payment (including any rates of interest

hereunder). If the chief financial officer of Echo determines that it is necessary to adjust any computations reflected in a Tax Benefit Schedule in order to provide the certification required by the preceding sentence, then the chief financial officer will be permitted to make such adjustments in a manner reasonably acceptable to the TRA Party for which the Tax Benefit Schedule is being prepared (and, for the avoidance of doubt, the Tax Benefit Payment Amount reflected on this adjusted Tax Benefit Schedule shall be used for purposes of determining the corresponding Tax Benefit Payment and shall ignore any such transactions a significant purpose of which was to reduce or defer any Tax Benefit Payment). Each Tax Benefit Schedule will become final as provided in Section 2.04(a) and may be amended as provided in Section 2.04(b) (subject to the procedures set forth in Section 2.04(b)).

(b) Applicable Principles. Subject to Section 3.03, the Realized Tax Benefit or Realized Tax Detriment for each Taxable Year is intended to measure the decrease or increase in the actual liability for Taxes of the Echo Group for such Taxable Year attributable to the Transferred Basis, the Basis Adjustments and Imputed Interest determined using a “with and without” methodology. Deductions, carryovers or carrybacks of any Tax item attributable to Transferred Basis, the Basis Adjustments and Imputed Interest shall be considered to be subject to the rules of the Code and the Treasury Regulations or the appropriate provisions of U.S. state and local income and franchise tax laws, as applicable, governing the use, limitation and expiration of the deductions, carryovers or carrybacks of the relevant type. The parties agree that (i) all Tax Benefit Payments and other payments under this Agreement (to the extent permitted by law and other than amounts accounted for as interest under the Code) shall (A)(x) be treated as subsequent upward purchase price adjustments that give rise to further Basis Adjustments to Reference Assets and (y) to the extent attributable to the use or deemed use of items of loss or deduction arising from Transferred Basis, be treated as a subsequent upward purchase price adjustment in respect of the Sold Portion that give rise to further Transferred Basis for the Company, and (B) have the effect of creating additional Basis Adjustments to Reference Assets or additional Transferred Basis, as the case may be, for members of the Echo Group in the year of payment, and (ii) as a result, such additional Basis Adjustments or Transferred Basis, as the case may be, will be incorporated into the current year calculation and into future year calculations, as appropriate. If a deduction, carryover or carryback of any Tax item includes a portion that is attributable to the Transferred Basis, the Basis Adjustments, and Imputed Interest and another portion that is not, such portions shall be considered to be used in accordance with the “with and without” methodology.

Section 2.04. Procedures; Amendments . (a) Procedure. Every time Echo and the Company deliver to a TRA Party an applicable Schedule under this Agreement, including any Amended Schedule delivered pursuant to Section 2.04(b), and any Early Termination Schedule or amended Early Termination Schedule, Echo and the Company shall also (x) deliver to such TRA Party schedules, valuation reports, if any, and work papers, as determined by Echo and the Company or requested by such TRA Party, providing reasonable detail regarding the preparation of the Schedule and (y) allow such TRA Party reasonable access at no cost to the appropriate representatives at Echo and the Company, as determined by Echo and the Company or requested by such TRA Party, in connection with a review of such Schedule. Without limiting the application of the preceding sentence, each time Echo and the Company deliver to a TRA Party a Tax Benefit Schedule, in addition to the Tax Benefit Schedule duly completed, Echo and the Company shall deliver to such TRA Party the applicable Echo Return, a reasonably detailed

calculation by the Company of the applicable Hypothetical Tax Liability and a reasonably detailed calculation by the Company of the applicable Actual Tax Liability, as well as any other work papers as determined by Echo and the Company or requested by such TRA Party. An applicable Schedule or amendment thereto shall become final and binding on all parties thirty (30) calendar days after the first date on which the TRA Party has received the applicable Schedule or amendment thereto unless the MCK Representative (i) within thirty (30) calendar days after receiving an applicable Schedule or amendment thereto, provides the Company and Echo with notice of a material objection to such Schedule (“ Objection Notice ”) made in good faith or (ii) provides a written waiver of such right of any Objection Notice within the period described in clause (i) above, in which case such Schedule or amendment thereto becomes binding on the date the waiver is received by the Company and Echo. If the Company and Echo, on the one hand, and the MCK Representative, for any reason, are unable to successfully resolve the issues raised in the Objection Notice within thirty (30) calendar days after receipt by the Company of an Objection Notice, the Company and Echo, on the one hand, and the MCK Representative shall employ the reconciliation procedures as described in Section 7.10 of this Agreement (the “ Reconciliation Procedures ”).

(b) Amended Schedule. The applicable Schedule for any Taxable Year may be amended from time to time by the Company and Echo (i) in connection with a Determination affecting such Schedule, (ii) to correct inaccuracies in the Schedule identified as a result of the receipt of additional factual information relating to a Taxable Year after the date the Schedule was provided to a TRA Party, (iii) to comply with the Expert’s determination under the Reconciliation Procedures, (iv) to reflect a change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to a carryback or carryforward of a loss or other tax item to such Taxable Year, (v) to reflect a change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to an amended Tax Return filed for such Taxable Year, or (vi) to adjust an applicable Tax Basis Schedule to take into account payments made pursuant to this Agreement (any such Schedule, an “ Amended Schedule ”). Echo and the Company shall provide an Amended Schedule to each TRA Party within ninety (90) calendar days of the occurrence of an event referenced in clauses (i) through (vi) of the preceding sentence.

ARTICLE 3

TAX BENEFIT PAYMENTS

Section 3.01. Payments . (a) Payments. Within five (5) calendar days after a Tax Benefit Schedule delivered to a TRA Party becomes final in accordance with Section 2.04(a), the Company shall pay such TRA Party, for the Taxable Year to which such Tax Benefit Schedule relates, an aggregate amount equal to the Tax Benefit Payment Amount in respect of such TRA Party for such Taxable Year as determined pursuant to Section 3.01(b) (each, a “ Tax Benefit Payment ”). Each such Tax Benefit Payment shall be made by wire transfer of immediately available funds to the bank account previously designated by such TRA Party to the Company, or as otherwise agreed by the Company and such TRA Party. For the avoidance of doubt, no Tax Benefit Payment shall be made in respect of estimated tax payments, including, without limitation, federal estimated income tax payments.

(b) A “ Tax Benefit Payment Amount ” in respect of a TRA Party for a Taxable Year means an amount, not less than zero, equal to the sum of the portion of the Net Tax Benefit to which such TRA Party is entitled (it being understood and agreed that, subject to Section 7.01 and prior to any assignment of its rights under this Agreement pursuant to 7.07, IPCo shall be entitled to the entire Net Tax Benefit for each Taxable Year) and the Additional Amount with respect thereto. For the avoidance of doubt, for Tax purposes, the Additional Amount shall not be treated as interest but instead shall be treated as described in Section 2.03(b)(i)(A), unless otherwise required by law. The “ Net Tax Benefit ” for a Taxable Year shall be an amount equal to the excess, if any, of 85% of the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year, over the total amount of payments previously made under Section 3.01(a) of this Agreement (excluding payments attributable to Additional Amounts); provided , for the avoidance of doubt, that no TRA Party shall be required to return any portion of any previously made Tax Benefit Payment. The “ Additional Amount ” in respect of a TRA Party shall equal the additional amount on the amount of the unpaid Net Tax Benefit to which such TRA Party is entitled for a Taxable Year, which interest shall accrue on any unpaid Net Tax Benefit from and after the due date (without extensions) for filing the Echo Return for such Taxable Year, calculated at the Agreed Rate, until the date such unpaid amounts are paid. Notwithstanding anything to the contrary in this Agreement, (i) after any lump-sum payment under Article 4 of this Agreement in respect of present or future Tax attributes subject to this Agreement, the Tax Benefit Payment Amount, Net Tax Benefit and components thereof shall be calculated without taking into account any such attributes with respect to which such a lump sum payment has been made or any such lump-sum payment. Notwithstanding the foregoing, for each Taxable Year ending on or after the date of a Change of Control, all Tax Benefit Payments shall be calculated by utilizing Valuation Assumptions (a) and (c), substituting in each case the terms “the closing date of a Change of Control” for an “Early Termination Date.”

Section 3.02. No Duplicative Payments . It is intended that the provisions of this Agreement will not result in duplicative payment of any amount (including interest) required under this Agreement. The provisions of this Agreement shall be construed in the appropriate manner to ensure such intentions are realized.

Section 3.03. Pro Rata Payments . (a) Notwithstanding anything in Section 3.01 to the contrary, to the extent that the aggregate amount of the Echo Group’s tax benefit from the reduction in Tax liability as a result of the Transferred Basis, the Basis Adjustments or Imputed Interest under this Agreement is limited in a particular Taxable Year because the Echo Group does not have sufficient taxable income to fully utilize available deductions and other attributes, the limitation on the tax benefit for the Echo Group shall be allocated among the TRA Parties in proportion to the respective amounts of Tax Benefit Payments that would have been determined under this Agreement if the Echo Group had sufficient taxable income so that there were no such limitation.

(b) After taking into account Section 3.03(a), if for any reason the Company does not fully satisfy its payment obligations to make all Tax Benefit Payments due under this Agreement in respect of a particular Taxable Year, then the Company and the TRA Parties agree that (i) the Company shall pay the same proportion of each Tax Benefit Payment due to each Person due a payment under this Agreement in respect of such Taxable Year, without favoring one obligation over the other, and (ii) no Tax Benefit Payment shall be made in respect of any Taxable Year until all Tax Benefit Payments in respect of prior Taxable Years have been made in full.

(c) To the extent the Company makes a payment to a TRA Party in respect of a particular Taxable Year under Section 3.01(a) of this Agreement (taking into account Section 3.03(a) and (b), but excluding payments attributable to Additional Amounts) in an amount in excess of the amount of such payment that should have been made to such TRA Party in respect of such Taxable Year, then (i) such TRA Party shall not receive further payments under Section 3.01(a) until such TRA Party has foregone an amount of payments equal to such excess and (ii) the Company shall pay the amount of such TRA Party’s foregone payments to the other TRA Parties in a manner such that each of the other TRA Parties, to the maximum extent possible, shall have received aggregate payments under Section 3.01(a) of this Agreement (excluding payments attributable to Additional Amounts) in the amount it would have received if there had been no excess payment to such TRA Party.

(d) Notwithstanding anything in Section 3.01 to the contrary, during any Taxable Period in which Change is a member of the Echo Group (an “ Actual Consolidation Period ”), to the extent that the aggregate tax benefit of the Echo Group resulting from (x) the Transferred Basis, the Basis Adjustments or Imputed Interest and (y) Tax Assets or Payment Deductions (as defined in the Change TRA), is limited in a particular Taxable Year because the Echo Group does not have sufficient taxable income, the limitation on the tax benefit for the Echo Group shall be allocated among this Agreement and the Change TRA (and among all parties eligible for payments under each) in proportion to the respective amounts of Tax Benefit Payments (as defined in this Agreement and the Change TRA) that would have been determined under the this Agreement and the Change TRA (and allocated among such parties) if the Echo Group had sufficient taxable income so that there were no such limitation.

(e) Notwithstanding anything in Section 3.01 to the contrary, during any taxable period in which Change is not a member of the Echo Group (a “ Hypothetical Consolidation Period ”), if the amount of the Tax Benefit Payment (as defined in this Agreement and the Change TRA) that would have been determined either under this Agreement or the Change TRA, as the case may be, would have been larger if such taxable period were an Actual Consolidation Period (as determined after the application of Section 3.03(d)), then the Tax Benefit Payments to be made under this Agreement and the Change TRA shall be determined by (i) the Echo Group and Change determining the Tax Benefit Payments (as defined in this Agreement and the Change TRA) that would have been payable if Change were a member of the Echo Group for such Hypothetical Consolidation Period and (ii) then applying Section 3.03(d) in respect of such Tax Benefit Payments such that the Echo Group and Change are not required to pay, collectively, an amount in excess of the amount they would pay, collectively, absent this Section 3.03(e).

(f) If for any reason the Company does not fully satisfy its payment obligations to make all Tax Benefit Payments due under the Tax Receivable Agreements in respect of a particular Taxable Year, (i) Change and the Company, respectively, shall pay the same proportion of each Tax Benefit Payment due under each of this Agreement and the Change TRA in respect of such Taxable Year, without favoring one obligation over the other, and (ii) no Tax Benefit Payment shall be made in respect of any Taxable Year under either this Agreement or the Change TRA until all Tax Benefit Payments in respect of prior Taxable Years have been made in full under both this Agreement and the Change TRA.

(g) To the extent the Company or Change makes a payment to a TRA Party under this Agreement or to the Change Shareholders (as defined in the Change TRA) under the Change TRA, respectively, in an amount in excess of the amount of such payment that should have been made to such Person (an “ Overpaid Party ”) in respect of such Taxable Year, then (i) the Overpaid Party shall not receive further payments under this Agreement or the Change TRA, as applicable, until the Overpaid Party has foregone an amount of payments equal to such excess and (ii) the Company or Change, as applicable, shall cause the amount of the Overpaid Party’s foregone payments to be paid to the other Person (the “ Underpaid Party ”), to the maximum extent possible, until the Underpaid Party shall have received aggregate payments under this Agreement in the amount it would have received if there had been no excess payment to the Overpaid Party.

(h) The parties hereto agree that the parties to the Change TRA are expressly made third party beneficiaries of the provisions of this Section 3.03.

ARTICLE 4

TERMINATION

Section 4.01. Early Termination and Breach of Agreement . (a) From and after the first to occur of (x) Qualified MCK Exit, (y) the termination of the MCK Exit Window and (z) the termination of the IPO Preference Period prior to the occurrence of a Qualified IPO, the Company may terminate this Agreement with respect to all amounts payable by the Company to the TRA Parties by paying to each TRA Party an aggregate amount equal to the Early Termination Payment Amount in respect of such TRA Party as provided in Section 4.03(a); provided, however , that if the Company, Echo and the MCK Representative agree, the Company may terminate this Agreement with respect to some or all of the amounts payable to less than all of the TRA Parties; provided, further that the Company may not terminate this Agreement pursuant to this Section 4.01(a) with respect to any TRA Party unless MCK no longer owns, directly or indirectly, any Units or the MCK Representative has waived the application of this proviso; provided, further that this Agreement shall terminate pursuant to this Section 4.01(a) with respect to a TRA Party only upon the receipt by such TRA Party of its Early Termination Payment, and the Company and Echo shall deliver an Early Termination Notice only if the Company is able to make all required Early Termination Payments under this Agreement at the time required by Section 4.03; and provided, further, that the Company may withdraw any notice to exercise its termination rights under this Section 4.01(a) prior to the time at which any Early Termination Payment has been paid. Upon payment of the Early Termination Payments by the Company in accordance with Section 4.03(a), the Company shall not have any further payment obligations under this Agreement with respect to each TRA Party that has received its Early Termination Payment in accordance with Section 4.03(a), other than for any (i) Tax Benefit Payment agreed to by the Company, on one hand, and the applicable TRA Party, on the other, as due and payable but unpaid as of the Early Termination Notice and (ii) Tax Benefit Payment due for the Taxable Year ending with or including the date of the Early Termination Notice (except to the extent that the amount described in clause (ii) is included in the Early Termination Payment). At any time that the Company is permitted to terminate this Agreement pursuant to this Section 4.01, the Company shall so terminate this Agreement upon the request of Echo (and shall withdraw any notice to terminate upon the request of Echo).

(b) In the event that a Senior Obligation of the Company or any of its Subsidiaries is accelerated (or deemed accelerated) in connection with an event of default (other than an event of default triggered upon a change in control) (“ Accelerated ” and such event, an “ Acceleration ”), then all obligations hereunder shall be Accelerated and such obligations shall (i) be calculated as if an Early Termination Notice had been delivered on the date of such Acceleration and the Early Termination Payments shall be calculated (x) as if an Early Termination Notice had been delivered on the date of the Acceleration and (y) applying the Valuation Assumptions as if all tax attributes described therein are fully utilized in the year of such Acceleration, (ii) include any Tax Benefit Payments in respect of a TRA Party agreed to by the Company and such TRA Party as due and payable but unpaid as of the date of an Acceleration, and (iii) include any Tax Benefit Payment in respect of any TRA Party due for the Taxable Year ending with or including the date of an Acceleration; provided that procedures similar to the procedures of Section 4.02 shall apply with respect to the determination of the amount payable by the Company pursuant to this sentence.

(c) In the event that the Company breaches any of its material obligations under this Agreement, whether as a result of failure to make any payment when due, failure to honor any other material obligation required hereunder or by operation of law as a result of the rejection of this Agreement in a case commenced under the Bankruptcy Code or otherwise, then all obligations hereunder shall be accelerated and such obligations shall be calculated as if an Early Termination Notice had been delivered on the date of such breach and shall include (without duplication), but not be limited to, (i) the Early Termination Payments calculated as if an Early Termination Notice had been delivered on the date of a breach, (ii) any Tax Benefit Payments in respect of a TRA Party agreed to by the Company and such TRA Party as due and payable but unpaid as of the date of a breach, and (iii) any Tax Benefit Payment in respect of any TRA Party due for the Taxable Year ending with or including the date of a breach; provided that procedures similar to the procedures of Section 4.02 shall apply with respect to the determination of the amount payable by the Company pursuant to this sentence. Notwithstanding the foregoing, in the event that the Company breaches this Agreement, each TRA Party shall be entitled to elect to receive the amounts set forth in clauses (i), (ii) and (iii) above or to seek specific performance of the terms hereof. The parties agree that the failure to make any payment due pursuant to this Agreement within three months of the date such payment is due shall be deemed to be a breach of a material obligation under this Agreement for all purposes of this Agreement, and that it will not be considered to be a breach of a material obligation under this Agreement to make a payment due pursuant to this Agreement within three months of the date such payment is due. Notwithstanding anything in this Agreement to the contrary, it shall not be a breach of this Agreement if the Company fails to make any Tax Benefit Payment when due to the extent that the Company has insufficient funds to make such payment; provided that the interest provisions of Section 5.02 shall apply to such late payment, unless the Company does not have sufficient cash to make such payment as a result of limitations imposed by any credit agreement with respect to which the Company or any of its Subsidiaries is a party if such limitations are no more onerous than the corresponding limitations imposed by the credit agreements to which the Company is a party at the Closing, in which case Section 5.02 shall apply, but the Default Rate shall be replaced by LIBOR plus 300 basis points.

Section 4.02. Early Termination Notice . (a) If the Company chooses to exercise its right of early termination under Section 4.01 above, other than in connection with a Change of Control, the Company shall deliver to each TRA Party notice of such intention to exercise such right (“ Early Termination Notice ”) and a schedule (the “ Early Termination Schedule ”) specifying the Company’s intention to exercise such right and showing in reasonable detail the calculation of the Early Termination Payment due for each TRA Party. Each Early Termination Schedule shall become final and binding on all parties thirty (30) calendar days after the first date on which the TRA Party has received such Schedule or amendment thereto unless the MCK Representative (a) within thirty (30) calendar days after receiving the Early Termination Schedule, provides the Company with notice of a material objection to such Schedule made in good faith (“ Material Objection Notice ”) or (b) provides a written waiver of such right of a Material Objection Notice within the period described in clause (a) above, in which case such Schedule becomes binding on the date the waiver is received by the Company (such thirty (30) calendar day date as modified, if at all by clauses (a) or (b), the “ Early Termination Effective Date ”). If the Company and the MCK Representative, for any reason, are unable to successfully resolve the issues raised in such notice within thirty (30) calendar days after receipt by the Company of the Material Objection Notice, the Company and the MCK Representative shall employ the Reconciliation Procedures in which case such Schedule becomes binding ten (10) days after the conclusion of the Reconciliation Procedures.

(b) If the Company chooses to exercise its right of early termination under Section 4.01 above in connection with a Change of Control, any reference to 30 calendar days in Section 4.02 above shall instead be deemed to be 10 calendar days.

Section 4.03. Payment upon Early Termination . (a) Within three (3) calendar days after an Early Termination Effective Date, the Company shall pay each TRA Party an aggregate amount equal to the Early Termination Payment Amount in respect of such TRA Party (each, an “ Early Termination Payment ”). Each Early Termination Payment shall be made by wire transfer of immediately available funds to a bank account or accounts designated by the TRA Party or as otherwise agreed by the Company and such TRA Party.

(b) The “ Early Termination Payment Amount ” in respect of a TRA Party shall equal the present value, discounted at the Early Termination Rate (using a mid-year convention) as of the applicable Early Termination Effective Date, of all Tax Benefit Payments in respect of such TRA Party that would be required to be paid by the Company beginning from the Early Termination Date and assuming that the Valuation Assumptions in respect of such TRA Party are applied, provided that the Change of Control Termination Rate (instead of the Early Termination Rate) shall be used to determine the Early Termination Payment in the case of an early termination in connection with a Change of Control.

ARTICLE 5

SUBORDINATION AND LATE PAYMENTS

Section 5.01. Subordination . Notwithstanding any other provision of this Agreement to the contrary, any Tax Benefit Payment, Early Termination Payment or any other payment required to be made by the Company to the TRA Parties under this Agreement shall rank subordinate and junior in right of payment to any principal, interest or other amounts due and payable in respect of any obligations in respect of indebtedness for borrowed money of the Company and its Subsidiaries (such obligations, “ Senior Obligations ”) and shall rank pari passu with all current or future unsecured obligations of the Company that are not Senior Obligations. For the avoidance of doubt, any amounts owed by the Company under this Agreement are not Senior Obligations.

Section 5.02. Late Payments by the Company . The amount of all or any portion of any Tax Benefit Payment, Early Termination Payment or other payment under this Agreement not made to the TRA Parties when due under the terms of this Agreement shall be payable together with any interest thereon, computed at the Default Rate and commencing from the date on which such Tax Benefit Payment, Early Termination Payment or other payment was due and payable, subject to Section 4.01(c).

ARTICLE 6

NO DISPUTES; CONSISTENCY; COOPERATION

Section 6.01. Participation in the Echo Group ’ s and the Company ’ s Tax Matters . Except as otherwise provided herein, the Echo shall have full responsibility for, and sole discretion over, all Tax matters concerning the Echo Group and the Company, including without limitation the preparation, filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to Taxes. Notwithstanding the foregoing, Echo and the Company shall notify a TRA Party of, and keep the TRA Party reasonably informed with respect to, the portion of any audit of the Echo Group and/or the Company by a Taxing Authority the outcome of which is reasonably expected to affect the rights and obligations of such TRA Party under this Agreement, and shall provide to each such TRA Party reasonable opportunity to provide information and other input to the Echo, the Company and their respective advisors concerning the conduct of any such portion of such audit.

Section 6.02. Consistency . Echo, the Company and the TRA Parties agree to report and cause to be reported for all purposes, including federal, state and local tax purposes and financial reporting purposes, all tax-related items (including, without limitation, the Transferred Basis, the Basis Adjustments and each Tax Benefit Payment) in a manner consistent with that specified by the Company in any Schedule required to be provided by or on behalf of the Company under this Agreement unless otherwise required by law.

Section 6.03. Reporting . The Company shall treat the MCK IPCo Owned Intellectual Property as amortizable for U.S. federal income tax purposes and shall not take a position inconsistent with such treatment unless required by reason of a final determination by a court of competent jurisdiction as to U.S. federal income tax matters to the contrary.

Section 6.04. Cooperation . Each of Echo, the Company and the TRA Parties shall (a) furnish to the other party in a timely manner such information, documents and other materials as the other party may reasonably request for purposes of making any determination or computation necessary or appropriate under this Agreement, preparing any Tax Return or contesting or defending any audit, examination or controversy with any Taxing Authority, (b) make itself available to the other party and its representatives to provide explanations of documents and materials and such other information as the other party or its representatives may reasonably request in connection with any of the matters described in clause (a) above, and (c) reasonably cooperate in connection with any such matter. The Company shall reimburse each such TRA Party for any reasonable third-party costs and expenses incurred pursuant to this Section.

ARTICLE 7

MISCELLANEOUS

Section 7.01. Applicability to New PST . Notwithstanding anything to the contrary in this Agreement, with respect to any Taxable Year in which any portion of a Tax Benefit Payment Amount results from a Basis Adjustment (a “ New PST TRA Period ”), the Company shall pay (i) to New PST (or its assigns pursuant to Section 7.07) the New PST TRA Payment (or its assigns pursuant to Section 7.07) and (ii) to IPCo the IPCo TRA Payment. A Tax Benefit Schedule provided to New PST, and a Tax Benefit Schedule provided to IPCo in a New PST TRA Period, shall show, in reasonable detail, the calculation of the New PST TRA Payment (along with all other information required pursuant to Section 2.03(a)). New PST shall be a TRA Party for all purposes of this Agreement, mutatis mutandis.

Section 7.02. Notices . All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed duly given and received (a) on the date of delivery if delivered personally, or by facsimile or email with confirmation of transmission by the transmitting equipment or (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

If to the Company, to:

Change Healthcare LLC

5995 Windward Parkway

Alpharetta, GA

Attention: Loretta Cecil, General Counsel

Facsimile: (404) 338-5145

with a copy (which shall not constitute notice to the Company) to:

Ropes & Gray LLP

The Prudential Tower

800 Boylston Street

Boston, MA 02119

Attention: R. Newcomb Stillwell

Facsimile: (617) 235 0213

and

Davis Polk & Wardwell LLP

1600 El Camino Real

Menlo Park, CA 94025

Attention: Alan F. Denenberg

Facsimile: (650) 752-2004

If to Echo, to:

c/o The Blackstone Group

345 Park AvenueNew York,

New York 10154

Attention: John G. Finley

Facsimile: (212) 583-5749

with a copy (which shall not constitute notice to the Company) to:

Ropes & Gray LLP

The Prudential Tower

800 Boylston Street

Boston, MA 02119

Attention: R. Newcomb Stillwell

Facsimile: (617) 235 0213

and

Ropes & Gray LLP

Three Embarcardero Center

San Francisco, CA 94111-4006

Attention: Jason Freedman

Facsimile: (415) 315-4876

If to IPCo:

McKesson Corporation

One Post Street, 32 ^nd Floor

San Francisco, CA 94104

Attention: Assistant General Counsel

Facsimile: (415) 983-8457

with a copy (which shall not constitute notice to IPCo) to:

Davis Polk & Wardwell LLP

1600 El Camino Real

Menlo Park, CA 94025

Attention: Alan F. Denenberg

Facsimile: (650) 752-2004

If to a TRA Party other than IPCo, the address, fax number and email address set forth in the applicable joinder.

Any party may change its address, fax number or email by giving the other party written notice of its new address, fax number or email in the manner set forth above.

Section 7.03. Counterparts . This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

Section 7.04. Entire Agreement; No Third Party Beneficiaries . This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and their respective successors and permitted assigns, and, other than as provided in Section 3.03(h), nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 7.05. Governing Law . This Agreement shall be governed by, and construed in accordance with, the law of the State of New York, without regard to the conflicts of laws principles thereof that would mandate the application of the laws of another jurisdiction.

Section 7.06. Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

Section 7.07. Successors; Assignment; Amendments; Waivers . (a) Each TRA Party and the MCK Representative may assign any of its rights under this Agreement in whole or in part to any Person as long as such transferee has executed and delivered, or, in connection with such transfer, executes and delivers, a joinder to this Agreement, in the form of Exhibit A, agreeing to become a TRA Party for all purposes of this Agreement, except as otherwise provided in such joinder.

(b) No provision of this Agreement may be amended or waived unless such amendment or waiver is approved in writing by the Company, Echo and the MCK Representative.

(c) All of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and their respective successors, assigns, heirs, executors, administrators and legal representatives. Each of Echo and the Company shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of Echo or the Company, as the case may be, by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that Echo or the Company, as the case may be, would be required to perform if no such succession had taken place. Echo (and any of its successors) shall not transfer any equity interest in the Company.

Section 7.08. Titles and Subtitles . The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

Section 7.09. Resolution of Disputes . (a) Any and all disputes which are not governed by Section 7.10 and cannot be settled amicably, including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement (including the validity, scope and enforceability of this arbitration provision) (each a “ Dispute ”) shall be finally settled by arbitration conducted by a single arbitrator in New York in accordance with the then-existing Rules of Arbitration of the International Chamber of Commerce. If the parties to the Dispute fail to agree on the selection of an arbitrator within ten (10) calendar days of the receipt of the request for arbitration, the International Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer admitted to the practice of law in the State of New York and shall conduct the proceedings in the English language. Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings.

(b) Notwithstanding the provisions of paragraph (a), a party may bring an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each TRA Party (i) expressly consents to the application of paragraph (c) of this Section 7.09 to any such action or proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate, and (iii) irrevocably appoints the Company as agent of the TRA Party for service of process in connection with any such action or proceeding and agrees that service of process upon such agent, who shall promptly advise the TRA Party of any such service of process, shall be deemed in every respect effective service of process upon the TRA Party in any such action or proceeding.

(c) EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 7.09, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial relief in aid of arbitration, or to confirm an arbitration award. The parties acknowledge that this paragraph (c) has a reasonable relation to this Agreement, and to the parties’ relationship with one another. The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter may have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in the preceding paragraph of this Section 7.09 and such parties agree not to plead or claim the same.

Section 7.10. Reconciliation . In the event that the Company, Echo and the MCK Representative are unable to resolve a disagreement with respect to the matters governed by Sections Section 2.04, 3.01, 4.02 or 6.02 within the relevant period designated in this Agreement (“ Reconciliation Dispute ”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “ Expert ”) in the particular area of disagreement mutually acceptable to both parties. The Expert shall be a partner or principal in a nationally recognized accounting or law firm, and unless the Company and the MCK Representative agree otherwise, the Expert shall not, and the firm that employs the Expert shall not, have any material relationship with the Company or the MCK Representative or other actual or potential conflict of interest. If the Company and the MCK Representative are unable to agree on an Expert within fifteen (15) calendar days of receipt by the respondent(s) of written notice of a Reconciliation Dispute, the Expert shall be appointed by the International Chamber of Commerce Centre for Expertise. The Expert shall resolve any matter relating to the Tax Basis Schedule or an amendment thereto or the Early Termination Schedule or an amendment thereto within thirty (30) calendar days and shall resolve any matter relating to a Tax Benefit Schedule or an amendment thereto within fifteen (15) calendar days or as soon thereafter as is reasonably practicable, in each case after the matter has been submitted to the Expert for resolution. Notwithstanding the preceding sentence, if the matter is not resolved before any payment that is the subject of a disagreement would be due (in the absence of such disagreement) or any Tax Return reflecting the subject of a disagreement is due, the undisputed amount shall be paid on the date prescribed by this Agreement and such Tax Return may be filed as prepared by Echo, subject to adjustment or amendment upon resolution. The costs and expenses relating to the engagement of such Expert or amending any Tax Return shall be borne by the Company except as provided in the next sentence. The Company and the MCK Representative shall bear their own costs and expenses of such proceeding, unless (i) the Expert adopts the MCK Representative’s position, in which case the Company shall reimburse the MCK Representative for any reasonable out-of-pocket costs and expenses in such proceeding, or (ii) the Expert adopts the Company’s position, in which case the MCK Representative shall reimburse the Company for any reasonable out-of-pocket costs and expenses in such proceeding. Any dispute as to whether a dispute is a Reconciliation Dispute within the meaning of this Section 7.10 shall be decided by the Expert. The Expert shall finally determine any Reconciliation Dispute and the determinations of the Expert pursuant to this Section 7.10 shall be binding on Echo, the Company and the TRA Parties and may be entered and enforced in any court having jurisdiction.

Section 7.11. Withholding . The Company shall be entitled to deduct and withhold from any payment payable pursuant to this Agreement such amounts as the Company is required to deduct and withhold with respect to the making of such payment under the Code or any provision of state, local or foreign tax law, provided, however, that the Company shall notify the MCK Representative (which shall notify the applicable TRA Parties) in advance before applying any such withholding to allow such applicable payee a reasonable opportunity to provide any applicable certificates, forms or other certificates that would eliminate or reduce such withholding, and the Company will otherwise reasonably cooperate with the applicable payee to eliminate or reduce such withholding. To the extent that amounts are so withheld and paid over to the appropriate Taxing Authority by the Company, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of whom such withholding was made.

Section 7.12. Admission of Echo into a Consolidated Group; Transfer of Assets . (a) If Echo is or becomes a member of an affiliated or consolidated group of corporations that files a consolidated income Tax Return pursuant to Sections 1501 et seq. of the Code or any corresponding provisions of state or local law, then: (i) the provisions of this Agreement shall be applied with respect to the group as a whole; and (ii) Tax Benefit Payments, Early Termination Payments and other applicable items hereunder shall be computed with reference to the consolidated taxable income of the group as a whole.

(b) If the Company, any of its Subsidiaries or any member of the Echo Group transfers one or more assets to a corporation (or a Person classified as a corporation for U.S. federal income tax purposes) with which the Echo Group (or such successor group) does not file a consolidated Tax Return pursuant to Section 1501 of the Code, then, for purposes of calculating the amount of any Tax Benefit Payment or Early Termination Payment (e.g., calculating the gross income of the Echo Group and determining the Realized Tax Benefit of the Echo Group (or such successor group)) due hereunder, such Person shall be treated as having disposed of such asset in a fully taxable transaction on the date of such contribution. The consideration deemed to be received by such Person shall be equal to the gross fair market value of the contributed asset. For purposes of this Section 7.13, a transfer of an interest in an entity treated as a partnership or disregarded entity for U.S. federal income tax purposes shall be treated as a transfer of the transferor’s share of each of the assets and liabilities of that entity allocated to such transferor.

Section 7.13. Confidentiality . (a) Each TRA Party and each of their assignees acknowledge and agree that the information of the Company and their Affiliates is confidential and, except in the course of performing any duties as necessary for the Company and its Affiliates, as required by law or legal process or to enforce the terms of this Agreement, such person shall keep and retain in the strictest confidence and not disclose to any Person any confidential matters, acquired pursuant to this Agreement, of the Company and its Affiliates and successors, concerning the Company and its Affiliates and successors or the TRA Parties, learned by the TRA Party heretofore or hereafter. This Section 7.13 shall not apply to (i) any information that has been made publicly available by the Company or any of its Affiliates, becomes public knowledge (except as a result of an act of the TRA Party in violation of this Agreement) or is generally known to the business community, (ii) the disclosure of information to the extent necessary for the TRA Party to prepare and file its Tax Returns, to respond to any inquiries regarding the same from any Taxing Authority or to prosecute or defend any action, proceeding or audit by any Taxing Authority with respect to such returns and (iii) any

information a TRA Party discloses to a potential transferee pursuant to Section 7.07 under the terms of a confidential agreement the form of which is reasonably acceptable to Echo and the Company. Notwithstanding anything to the contrary herein, each TRA Party and each of their assignees (and each employee, representative or other agent of the TRA Party or its assignees, as applicable) may disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure of the Company and its Affiliates, and any of their transactions, and all materials of any kind (including opinions or other tax analyses) that are provided to the TRA Party relating to such tax treatment and tax structure.

(b) If a TRA Party or an assignee commits a breach, or threatens to commit a breach, of any of the provisions of this Section 7.13, the Company shall have the right and remedy to have the provisions of this Section 7.13 specifically enforced by injunctive relief or otherwise by any court of competent jurisdiction without the need to post any bond or other security, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to the Company or any of its Affiliates or the TRA Parties and that money damages alone shall not provide an adequate remedy to such Persons. Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available at law or in equity.

Section 7.14. The Company Parties hereby agree that each of the Company Parties will be jointly and severally liable for any payment obligations of the JV or the Corporate Taxpayer contained in this Agreement.

[ The remainder of this page is intentionally blank ]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.


CHANGE HEALTHCARE LLC

By:	/s/ Gregory T. Stevens
	Name:	Gregory T. Stevens
	Title:	Co-President and Co-Secretary

By:	/s/ John. G. Saia
	Name:	John. G. Saia
	Title:	Co-President and Co-Secretary

PF2 IP LLC

By:	/s/ John. G. Saia
	Name:	John. G. Saia
	Title:	President

PF2 PST SERVICES INC.

By:	/s/ John. G. Saia
	Name:	John. G. Saia
	Title:	President

MCKESSON CORPORATION

By:	/s/ Paul Smith
	Name:	Paul Smith
	Title:	SVP, Taxes

HCIT HOLDINGS, INC.

By:	/s/ Gregory T. Stevens
	Name:	Gregory T. Stevens
	Title:	President and Treasurer

[Signature Page – MCK Tax Receivable Agreement]


CHANGE HEALTHCARE INTERMEDIATE HOLDINGS, LLC

By:	/s/ Gregory T. Stevens
	Name:	Gregory T. Stevens
	Title:	Co-President and Co-Secretary

By:	/s/ John. G. Saia
	Name:	John. G. Saia
	Title:	Co-President and Co-Secretary


CHANGE HEALTHCARE HOLDINGS, LLC

By:	/s/ Gregory T. Stevens
	Name:	Gregory T. Stevens
	Title:	Co-President and Co-Secretary

By:	/s/ John. G. Saia
	Name:	John. G. Saia
	Title:	Co-President and Co-Secretary

CHANGE HEALTHCARE FINANCE INC.

By:	/s/ Gregory T. Stevens
	Name:	Gregory T. Stevens
	Title:	Co-President and Treasurer

By:	/s/ John. G. Saia
	Name:	John. G. Saia
	Title:	Co-President and Secretary

MCKESSON TECHNOLOGIES LLC

By:	/s/ John. G. Saia
	Name:	John. G. Saia
	Title:	Vice President and Secretary

[Signature Page – MCK Tax Receivable Agreement]


PST SERVICES LLC

By:	/s/ John. G. Saia
	Name:	John. G. Saia
	Title:	Vice President and Secretary

CHANGE HEALTHCARE OPERATIONS, LLC

By:	/s/ Gregory T. Stevens
	Name:	Gregory T. Stevens
	Title:	Secretary

CHANGE HEALTHCARE SOLUTIONS, LLC

By:	/s/ Gregory T. Stevens
	Name:	Gregory T. Stevens
	Title:	Secretary

CHANGE HEALTHCARE INTERMEDIATE HOLDINGS, INC.

By:	/s/ Gregory T. Stevens
	Name:	Gregory T. Stevens
	Title:	General Counsel and Secretary

CHANGE HEALTHCARE HOLDINGS, INC.

By:	/s/ Gregory T. Stevens
	Name:	Gregory T. Stevens
	Title:	General Counsel and Secretary

[Signature Page – MCK Tax Receivable Agreement]


CHANGE HEALTHCARE, INC.

By:	/s/ Gregory T. Stevens
	Name:	Gregory T. Stevens
	Title:	General Counsel and Secretary

[Signature Page – MCK Tax Receivable Agreement]

Exhibit 10.3

Final Form

TAX RECEIVABLE AGREEMENT

among

Change Healthcare, Inc.,

HCIT Holdings, Inc.,

Change Healthcare LLC,

and

the other parties named herein

Dated as of February 28, 2017

TABLE OF CONTENTS


		Page

ARTICLE I DEFINITIONS			2

Section 1.1.	Definitions		2

ARTICLE II DETERMINATION OF CERTAIN REALIZED TAX BENEFIT			9

Section 2.1.	Pre-IPO Basis Adjustment		9

Section 2.2.	Tax Benefit Schedule		9

Section 2.3.	Procedures, Amendments		10

ARTICLE III TAX BENEFIT PAYMENTS			11

Section 3.1.	Payments		11

Section 3.2.	No Duplicative Payments		12

ARTICLE IV TERMINATION			13

Section 4.1.	Early Termination and Breach of Agreement		13

Section 4.2.	Early Termination Notice		15

Section 4.3.	Payment upon Early Termination		15

ARTICLE V SUBORDINATION AND LATE PAYMENTS			16

Section 5.1.	Subordination		16

Section 5.2.	Late Payments by the Corporate Taxpayer		16

ARTICLE VI NO DISPUTES; CONSISTENCY; COOPERATION			16

Section 6.1.	Participation in the Corporate Taxpayer’s and EBS’s Tax Matters		16

Section 6.2.	Consistency		16

Section 6.3.	Cooperation		16

Section 6.4.	Medifax Restructuring		17

ARTICLE VII MISCELLANEOUS			17

Section 7.1.	Notices		17

Section 7.2.	Counterparts		18

Section 7.3.	Entire Agreement; No Third Party Beneficiaries		19

Section 7.4.	Governing Law		19

Section 7.5.	Severability		19

Section 7.6.	Successors; Assignment; Amendments; Waivers		19

Section 7.7.	Titles and Subtitles		20

Section 7.8.	Resolution of Disputes		20

Section 7.9.	Reconciliation		21

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Section 7.10.	Withholding	22

Section 7.11.	Admission of the Corporate Taxpayer into a Consolidated Group; Transfers of Corporate Assets	22

Section 7.12.	Confidentiality	22

Section 7.13.	Change Shareholder Representatives	23

Section 7.14.	Joint and Several Liability	25

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TAX RECEIVABLE AGREEMENT

This TAX RECEIVABLE AGREEMENT (this “ Agreement ”), dated as of February 28, 2017, is hereby entered into by and among Change Healthcare, Inc., a Delaware corporation (the “ Corporate Taxpayer ”), HCIT Holdings, Inc., a Delaware corporation (“ Echo ”), Change Healthcare LLC (f/k/a PF2 NewCo LLC), a Delaware limited liability company (the “ JV ”), Blackstone Capital Partners VI L.P., Blackstone Family Investment Partnership VI L.P., Blackstone Family Investment Partnership VI-ESC L.P. (the “ Blackstone Representatives ”), H&F Harrington AIV II, L.P., HFCP VI Domestic AIV, L.P., Hellman & Friedman Investors VI, L.P., Hellman & Friedman Capital Executives VI, L.P., Hellman & Friedman Capital Associates VI, L.P. (the “ H&F Representatives ” and, collectively, the “ Change Shareholder Representatives ”), the shareholders of the Corporate Taxpayer who become a party hereto by executing a joinder hereto in the form of Exhibit A hereto (collectively, and together with the H&F Representatives and the Blackstone Representatives, the “ Change Shareholders ”), Change Healthcare Intermediate Holdings, LLC (f/k/a PF2 NewCo Intermediate Holdings, LLC), a Delaware limited liability company, Change Healthcare Holdings, LLC (f/k/a PF2 NewCo Holdings, LLC), a Delaware limited liability company, Change Healthcare Holdings, Inc., a Delaware corporation, Change Healthcare Operations, LLC, a Delaware limited liability company, Change Healthcare Solutions, LLC, a Delaware limited liability company, Change Healthcare Finance, Inc., a Delaware corporation, McKesson Technologies LLC, a Delaware limited liability company, PST Services LLC, a Georgia limited liability company (collectively the “ Company Parties ”), and each of the successors and assigns thereof.

RECITALS

WHEREAS, the Change Shareholders listed on Schedule I hereto, in the aggregate, hold 100% of the capital stock of the Corporate Taxpayer (the “ Change Shares ”);

WHEREAS, pursuant to an Agreement of Contribution and Sale dated as of June 28, 2016 (as amended or otherwise modified from time to time, the “ Contribution Agreement ”) by and among McKesson Corporation, a Delaware corporation (“ MCK ”), the Corporate Taxpayer, certain Change Shareholders, the JV, the Company Parties (as defined in the Contribution Agreement) and Echo, (i) the Change Shareholders will contribute a portion of the Change Shares to Echo in exchange for shares of Echo, (ii) Echo will contribute such Change Shares to the JV in exchange for equity interests of the JV, (iii) the Change Shareholders will sell the remaining portion of the Change Shares to the JV in exchange for cash and (iv) MCK will contribute or cause to be contributed certain equity interests, assets, properties and businesses to the JV (collectively, with the other transactions contemplated by the Contribution Agreement, the “ Transactions ”);

WHEREAS, this Agreement will be effective with respect to the Company Parties upon and following consummation of the Transactions;

WHEREAS, after the Transactions, the Corporate Taxpayer and its Subsidiaries will have Tax Assets (as defined below) that may reduce the liability for Taxes that the Corporate Taxpayer and its Subsidiaries might otherwise be required to pay;

WHEREAS, the parties desire to make certain arrangements with respect to the effect of the Tax Assets on the liability for Taxes of the Corporate Taxpayer;

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1. Definitions . As used in this Agreement, the terms set forth in this Article I shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined).

“ Accelerated ” or “ Acceleration ” is defined in Section 4.01(b) of this Agreement.

“ Actual Consolidation Period ” is defined in Section 3.3(a).

“ Additional Amount ” is defined in Section 3.1(b).

“ Affiliate ” means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such first Person.

“ Agreed Rate ” means LIBOR plus 100 basis points.

“ Agreement ” is defined in the Recitals of this Agreement.

“ Amended Schedule ” is defined in Section 2.3(b) of this Agreement.

A “ Beneficial Owner ” of a security is a Person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares: (i) voting power, which includes the power to vote, or to direct the voting of, such security and/or (ii) investment power, which includes the power to dispose of, or to direct the disposition of, such security. The terms “Beneficially Own” and “Beneficial Ownership” shall have correlative meanings.

“ Board ” shall mean the board of directors of Echo.

“ Business Day ” means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States of America or the State of New York shall not be regarded as a Business Day.

“ Change of Control ” means the occurrence of any of the following events:

(i)

prior to an IPO, (1) any acquisition, merger or consolidation of the JV by, with or into any other entity or any other similar transaction (including through an acquisition of shares of Echo), whether in a single transaction or series of related transactions, in which (A) the Members and their Affiliates immediately prior to

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such transaction in the aggregate cease to Beneficially Own more than 50% of the general voting power of the entity surviving or resulting from such transaction (or its equityholders) or (B) any Person or any group of Persons acting together which would constitute a “group” for purposes of Section 13(d) of the Securities and Exchange Act of 1934, or any successor provisions thereto (a “ Group ”) (other than a Group composed solely of the Members and their respective Affiliates) becomes the Beneficial Owner of more than 50% of the general voting power of the entity surviving or resulting from such transaction (or its equityholders), (2) any transaction or series of related transactions in which more than 50% of the JV’s general voting power is transferred to or acquired by any Person or Group (other than a Group composed solely of the Members and their respective Affiliates), including through an acquisition of shares of Echo or (3) the sale or transfer by the JV of all or substantially all of its assets; provided , however , that, in determining whether a Change of Control under this clause (i) has occurred, transfers to any Permitted Transferee (as defined in the LLC Agreement) shall not be taken into account;

(ii)

following an IPO and excluding stockholders who become stockholders pursuant to the Qualified MCK Exit, any Person or any Group, excluding a corporation or other entity owned, directly or indirectly, by the stockholders of Echo in substantially the same proportions as their ownership of stock in Echo, is or becomes the Beneficial Owner, directly or indirectly, of securities of Echo representing more than 50% of the combined voting power of Echo’s then outstanding voting securities immediately prior to such Person or Group becoming a Beneficial Owner;

(iii)

(iv)

following an IPO, there is consummated a merger or consolidation of Echo with any other corporation or other entity, and, immediately after the consummation of such merger or consolidation, either (x) the Board immediately prior to the merger or consolidation does not constitute at least a majority of the board of directors of the company surviving the merger or consolidation or, if the surviving company is a Subsidiary, the ultimate parent thereof, or (y) the voting securities of Echo immediately prior to such merger or consolidation do not continue to represent or are not converted or exchanged into more than 50% of the combined voting power of the then outstanding voting securities of the Person resulting from such merger or consolidation or, if the surviving company is a Subsidiary, the ultimate parent thereof; or

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(v)

Notwithstanding the foregoing, (i) a “Change of Control” shall not be deemed to have occurred by reason of an Exchange (as defined in the LLC Agreement) and (ii) except with respect to clause (iii) and clause (iv)(x) above, a “Change of Control” shall be deemed not to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the shares of Echo immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in, and own substantially all of the shares of, an entity which owns all or substantially all of the assets of Echo immediately following such transaction or series of transactions. For the avoidance of doubt, neither an IPO nor a Qualified MCK Exit shall constitute a “Change of Control.”

“ Change of Control Termination Rate ” means, (i) in the case of Change of Control that occurs prior to the second anniversary of a Qualified MCK Exit, 10% per annum, compounded annually and (ii) otherwise, the lesser of (a) 6.5% per annum, compounded annually, and (b) LIBOR plus 200 basis points.

“ Change Shareholders ” is defined in the Recitals of this Agreement.

“ Change Shareholder Representatives ” is defined in the Recitals of this Agreement.

“ Closing Date ” is defined in the Contribution Agreement.

“ Code ” means the United States Internal Revenue Code of 1986, as amended.

“ Contribution Agreement ” is defined in the Recitals of this Agreement.

“ Closing Date Tax Asset Disclosure Letter ” is defined in Section 2.1 of this Agreement.

“ Control ” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. The term “Controlled” shall have the correlative meaning.

“ Corporate Taxpaye r” is defined in the Recitals of this Agreement.

“ Corporate Taxpayer Return ” means the federal and/or state and/or local Tax Return, as applicable, of the Corporate Taxpayer filed with respect to Taxes of any Taxable Year.

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“ Cumulative Net Realized Tax Benefit ” for a Taxable Year means the cumulative amount of Realized Tax Benefits for all Taxable Years of the Corporate Taxpayer, up to and including such Taxable Year, net of the cumulative amount of Realized Tax Detriments for the same period. The Realized Tax Benefit and Realized Tax Detriment for each Taxable Year shall be determined based on the most recent Tax Benefit Schedule or Amended Schedule, if any, in existence at the time of such determination.

“ Default Rate ” means LIBOR plus 500 basis points.

“ Determination ” shall have the meaning ascribed to such term in Section 1313(a) of the Code or similar provision of state and local tax law, as applicable, or any other event (including the execution of IRS Form 870-AD) that finally and conclusively establishes the amount of any liability for Tax and shall also include the acquiescence of the Corporate Taxpayer to the amount of any assessed liability for Tax.

“ Dispute ” is defined in Section 7.8(a) of this Agreement.

“ Early Termination Date ” means the date of an Early Termination Notice for purposes of determining the Early Termination Payment.

“ Early Termination Effective Date ” is defined in Section 4.2(a) of this Agreement.

“ Early Termination Notice ” is defined in Section 4.2(a) of this Agreement.

“ Early Termination Schedule ” is defined in Section 4.2(a) of this Agreement.

“ Early Termination Payment ” is defined in Section 4.3(b) of this Agreement.

“ Early Termination Rate ” means the lesser of (i) 6.5% per annum, compounded annually, and (ii) LIBOR plus 200 basis points.

“ Echo ” is defined in the Recitals of this Agreement.

“ Echo Connect Payment ” is defined in Section 3.1(c) of this Agreement.

“ Echo Connect Separation ” has the meaning set forth in the Contribution Agreement.

“ Echo Group ” shall have the meaning set forth in the MCK TRA.

“ Existing Change TRAs ” means, collectively (i) that certain Amended and Restated Investors Tax Receivable Agreement (Reorganizations), dated as of November 2, 2011, entered into between Emdeon Inc. (a predecessor to the Corporate Taxpayer), GA-H&F ITR Holdco, L.P., and certain other parties thereto, (ii) that certain Amended and Restated Investors Tax Receivable Agreement (Exchanges), dated as of November 2, 2011, entered into between Emdeon Inc. (a predecessor to the Corporate Taxpayer), GA-H&F ITR Holdco, L.P., and certain other parties thereto, and (iii) that certain Tax Receivable Agreement (Management), dated as of August 17, 2009, entered into between Emdeon Inc. (a predecessor to the Corporate Taxpayer) and the Equity Plan Members (as defined therein), as amended by that First Amendment thereto, dated as of November 2, 2011.

“ Expert ” is defined in Section 7.9 of this Agreement.

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“ Hypothetical Consolidation Period ” is defined in Section 3.3(b) of this Agreement.

“ Hypothetical Tax Liability ” means, with respect to any Taxable Year, subject to Section 3.3(b), the liability for Taxes of the Corporate Taxpayer and its Subsidiaries without taking into account the use of available Tax Assets and excluding any Payment Deduction. For the avoidance of doubt, Hypothetical Tax Liability shall be determined without taking into account the carryover or carryback of any Tax item (or portions thereof) that is attributable to a Tax Asset or Payment Deduction.

“ Imputed Interest ” shall mean any interest imputed under Section 1272, 1274 or 483 or other provision of the Code and any similar provision of state and local Tax law with respect to the payment obligations of the Corporate Taxpayer under this Agreement.

“ IPO ” means (a) a Qualified IPO or (b) if a Qualified IPO has not yet occurred, a public offering registered under the Securities Act (or any successor federal statute, and the rules and regulations thereunder, which shall be in effect at the time) of Echo Shares (as defined in the LLC Agreement) pursuant to which Echo Shares (as defined in the LLC Agreement) are listed for trading on The New York Stock Exchange, the NASDAQ Stock Market, or any other securities exchange or quotation system in any jurisdiction that has been agreed to by the Initial Members (as defined in the LLC Agreement) in writing.

“ IRS ” means the United States Internal Revenue Service.

“ LIBOR ” means during any period, an interest rate per annum equal to the one-year LIBOR reported, on the date two days prior to the first day of such period, on the Telerate Page 3750 (or if such screen shall cease to be publicly available, as reported on Reuters Screen page “LIBOR01” or by any other publicly available source of such market rate) for London interbank offered rates for United States dollar deposits for such period.

“ LLC Agreement ” means the Amended and Restated Limited Liability Company Agreement of JV, dated as of March 1, 2017, as amended from time to time.

“ Material Objection Notice ” is defined in Section 4.2(a) of this Agreement.

“ MCK ” is defined in the Recitals of this Agreement.

“MCK TRA ” means the Tax Receivable Agreement dated as of March 1, 2017 among the JV, IPCo (as defined therein), New PST (as defined therein), the TRA Parties (as defined therein), McKesson Corporation in its capacity as MCK Representative, solely for purposes of Sections 2.03, 2.04 and 7.09 and Article 6 thereof, Echo, and the Company Parties.

“ Member ” shall have the meaning set forth in the LLC Agreement.

“ Merger ” shall have the meaning set forth in the Merger Agreement.

“ Merger Agreement ” means the Agreement and Plan of Merger of PF2 SpinCo LLC, a Delaware limited liability company, and Echo.

“ NOLs ” shall have the meaning set forth in the definition of Tax Assets.

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“ Objection Notice ” is defined in Section 2.3(a) of this Agreement.

“ Overpaid Party ” is defined in Section 3.3(d) of this Agreement.

“ Payment Date ” means any date on which a payment is required to be made pursuant to this Agreement.

“ Payment Deduction ” means a deduction, if any, attributable to (x) a payment to a Change Shareholder pursuant to this Agreement (or any loss carryover (or portion thereof) attributable to any such deductions) or (y) Imputed Interest.

“ Person ” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity.

“ Qualified IPO ” has the meaning set forth in the LLC Agreement.

“ Qualified MCK Exit ” has the meaning set forth in the LLC Agreement.

“ Realized Tax Benefit ” means, for a Taxable Year, the excess, if any, of the Hypothetical Tax Liability over the actual liability for Taxes of the Corporate Taxpayer and its Subsidiaries. If all or a portion of the actual liability for such Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Benefit unless and until there has been a Determination.

“ Realized Tax Detriment ” means, for a Taxable Year, the excess, if any, of the actual liability for Taxes of the Corporate Taxpayer and its Subsidiaries over the Hypothetical Tax Liability for such Taxable Year. If all or a portion of the actual liability for such Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Detriment unless and until there has been a Determination.

“ Reconciliation Dispute ” is defined in Section 7.9 of this Agreement.

“ Reconciliation Procedures ” is defined in Section 2.3(a) of this Agreement.

“ Schedule ” means any of the following: (i) the Closing Date Tax Asset Disclosure Letter, (ii) a Tax Benefit Schedule, or (iii) the Early Termination Schedule.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Senior Obligations ” is defined in Section 5.1.

“ Subsidiaries ” means, with respect to any Person, as of any date of determination, any other Person as to which such Person, owns, directly or indirectly, or otherwise controls more than 50% of the voting power or other similar interests or the sole general partner interest or managing member or similar interest of such Person.

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“ Tax Assets ” means the net operating losses, credit carryforwards and capital loss carryforwards of the Corporate Taxpayer and its Subsidiaries that relate to taxable periods (or portions thereof) ending on or before the Closing Date, excluding net operating losses that are the subject of an Existing Change TRA (collectively, “ NOLs ”). For the Taxable Year that includes the Closing Date, the Tax Assets that relate to taxable periods ending on or before the Closing Date shall be determined based on a closing of the books method as of the end of the Closing Date, provided that the Change Shareholder Representatives and the Corporate Taxpayer shall, acting reasonably, together determine the amount of any such Tax Assets. The Tax Assets shall be based on the Closing Date Tax Asset Disclosure Letter.

“ Tax Benefit Payment ” is defined in Section 3.1(b) of this Agreement.

“ Tax Benefit Schedule ” is defined in Section 2.2(a) of this Agreement.

“ Tax Receivable Agreements ” means this Agreement and the MCK TRA.

“ Tax Return ” means any return, declaration, report or similar statement filed with respect to Taxes (including any attached schedules), including, without limitation, any information return, claim for refund, amended return and declaration of estimated Tax.

“ Taxable Year ” means a taxable year of the Corporate Taxpayer as defined in Section 441(b) of the Code or comparable section of state or local tax law, as applicable (and, therefore, for the avoidance of doubt, may include a period of less than 12 months for which a Tax Return is made), ending on or after the Closing Date.

“ Taxes ” means any and all taxes, assessments or similar charges that are based on or measured with respect to net income or profits, and any interest related to such Tax.

“ Taxing Authority ” means any domestic, federal, national, state, county or municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising any taxing authority or any other authority exercising Tax regulatory authority.

“ Transaction Tax Deductions ” means any Tax deduction attributable to the payment of the Echo Holdco Transaction Expenses (as defined in the Contribution Agreement), the Debt Breakage Costs (as defined in the Contribution Agreement), amounts in respect of Echo Holdco Options (as defined in the Contribution Agreement) and payroll taxes paid thereon, and any current tax deduction resulting from payments on the Closing Date of any unamortized financing costs of the Corporate Taxpayer or any of its Subsidiaries.

“ Transactions ” is defined in the Recitals of this Agreement.

“ Treasury Regulations ” means the final, temporary and proposed regulations under the Code promulgated from time to time (including corresponding provisions and succeeding provisions) as in effect for the relevant taxable period.

“ Underpaid Party ” is defined in Section 3.3(d) of this Agreement.

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“ Valuation Assumptions ” shall mean, as of an Early Termination Date, the assumptions that (1) in each Taxable Year ending on or after such Early Termination Date, the Corporate Taxpayer will have taxable income sufficient to fully utilize (i) the NOLs or loss carryovers generated by Payment Deductions or deductions in respect of Imputed Interest that have not been previously utilized in determining a Tax Benefit Payment under this Agreement, subject to all applicable limitations on the use of such loss carryovers and to assumption (3) below, and (ii) deductions arising from the Payment Deductions during such Taxable Year or future Taxable Years in which such deductions would become available, (2) the United States federal income tax rates and state and local income tax rates that will be in effect for each such Taxable Year will be those specified for each such Taxable Year by the Code and other law as in effect on the Early Termination Date and (3) any NOLs or loss carryovers generated by the deductions in respect of a Payment Deduction available as of the date of the Early Termination Schedule will be utilized by the Corporate Taxpayer and its Subsidiaries on a pro rata basis from the date of the Early Termination Schedule through the scheduled expiration date of such NOLs or loss carryovers.

ARTICLE II

DETERMINATION OF CERTAIN REALIZED TAX BENEFIT

Section 2.1. Schedule of Tax Assets . The letter to be delivered from the Change Shareholder Representatives to the Corporate Taxpayer (the “ Closing Date Tax Asset Disclosure Letter ”) shows, in reasonable detail necessary to perform the calculations required by this Agreement, including (i) an estimate of the NOLs as of the end of the Closing Date, using a closing of the books methodology and (ii) the scheduled expiration dates of such NOLs. As promptly as practicable, the Change Shareholder Representatives and the Corporate Taxpayer shall agree on a replacement Closing Date Tax Asset Disclosure Letter to the extent necessary to reflect the actual amount of the items described in clauses (i), using a closing of the books methodology.

Section 2.2. Tax Benefit Schedule.

(a) Tax Benefit Schedule . Within 90 calendar days after the filing of the United States federal income Tax Return of the Corporate Taxpayer for any Taxable Year in which there is a Realized Tax Benefit or Realized Tax Detriment, the Corporate Taxpayer shall provide to the Change Shareholder Representatives a schedule showing, in reasonable detail, the calculation of the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year (a “ Tax Benefit Schedule ”). Each Tax Benefit Schedule shall include a statement from (i) if an initial public offering of Echo has not occurred, the chief financial officer of the Corporate Taxpayer or (ii) if an initial public offering of Echo has occurred, the chief financial officer of Echo, to the effect that the computations reflected in the Tax Benefit Schedule have been made without regard to any transaction a significant purpose of which is to reduce or defer any Tax Benefit Payment (including any rates of interest hereunder). If the chief financial officer of the Corporate Taxpayer or Echo, as the case may be, determines that it is necessary to adjust any computations reflected in a Tax Benefit Schedule in order to provide the certification required by the preceding sentence, then such chief financial officer will be permitted to make such adjustments in a manner reasonably acceptable to the Change Shareholder Representatives (and, for the avoidance of doubt, the Tax Benefit Payment reflected on this adjusted Tax Benefit Schedule shall be used for purposes of the determining the Tax Benefit Payment and shall ignore any such transactions a significant purpose of which was to reduce or defer any Tax Benefit Payment). The Tax Benefit Schedule will become final as provided in Section 2.3(a) and may be amended as provided in Section 2.3(b) (subject to the procedures set forth in Section 2.3(b)).

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(b) Applicable Principles . Subject to Section 3.3, the Realized Tax Benefit or Realized Tax Detriment for each Taxable Year is intended to measure the decrease or increase in the actual liability for Taxes of the Corporate Taxpayer and its Subsidiaries for such Taxable Year attributable to the Tax Assets and Payment Deductions determined using a “with and without” methodology. Deductions, carryovers or carrybacks of any Tax item attributable to the Tax Assets and the Payment Deductions shall be considered to be subject to the rules of the Code and the Treasury Regulations or the appropriate provisions of U.S. state and local income and franchise tax law, as applicable, governing the use, limitation and expiration of the deductions, carryovers or carrybacks of the relevant type. The parties agree that all Tax Benefit Payments and other payments under this Agreement with respect to any shares of the Corporate Taxpayer redeemed in connection with the execution of this Agreement (to the extent permitted by law and other than amounts accounted for as interest under the Code) shall be treated as subsequent upward purchase price adjustments with respect to such redeemed shares that give rise to further deductions of Imputed Interest which such additional deductions in respect of Imputed Interest will be incorporated into the current year calculation and into future year calculations, as appropriate. If a deduction, carryover or carryback of any Tax item includes a portion that is attributable to the Tax Assets or Payment Deductions and another portion that is not, such portions shall be considered to be used in accordance with the “with and without” methodology. For the Taxable Year that includes the Closing Date, (i) any NOLs that would arise upon treating Closing Date as the last day of the Corporate Taxpayer’s Taxable Year shall be treated as Tax Assets and (ii) and Realized Tax Benefits or Realized Tax Detriments shall be determined for the period beginning the day after the Closing Date and ending on the last day of the Corporate Taxpayer’s Taxable Year.

Section 2.3. Procedures, Amendments.

(a) Procedure . Every time the Corporate Taxpayer delivers to the Change Shareholder Representatives an applicable Schedule under this Agreement, including any Amended Schedule delivered pursuant to Section 2.3(b), but excluding any Early Termination Schedule or amended Early Termination Schedule, the Corporate Taxpayer shall also (x) deliver to the Change Shareholder Representatives schedules, valuation reports and work papers, as determined by the Corporate Taxpayer or requested by the Change Shareholder Representatives, providing reasonable detail regarding the preparation of the Schedule and (y) allow the Change Shareholder Representatives reasonable access at no cost to the appropriate representatives at the Corporate Taxpayer, as determined by the Corporate Taxpayer or requested by the Change Shareholder Representatives, in connection with a review of such Schedule. Without limiting the application of the preceding sentence, each time the Corporate Taxpayer delivers to the Change Shareholder Representatives a Tax Benefit Schedule, in addition to the Tax Benefit Schedule duly completed, the Corporate Taxpayer shall deliver to the Change Shareholder Representatives the Corporate Taxpayer Return, the reasonably detailed calculation by the Corporate Taxpayer of the Hypothetical Tax Liability, the reasonably detailed calculation by the Corporate Taxpayer of the actual Tax liability, as well as any other work papers as determined by the Corporate Taxpayer or requested by the Change Shareholder Representatives. An applicable Schedule or amendment thereto shall become final and binding on all parties 30 calendar days from the first date on which

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the Change Shareholder Representatives have received the applicable Schedule or amendment thereto unless the Change Shareholder Representatives (i) within 30 calendar days after receiving an applicable Schedule or amendment thereto, provides the Corporate Taxpayer with notice of a material objection to such Schedule (“ Objection Notice ”) made in good faith or (ii) provides a written waiver of such right of any Objection Notice within the period described in clause (i) above, in which case such Schedule or amendment thereto becomes binding on the date the waiver is received by the Corporate Taxpayer. If the parties, for any reason, are unable to successfully resolve the issues raised in the Objection Notice within 30 calendar days after receipt by the Corporate Taxpayer of an Objection Notice, the Corporate Taxpayer and the Change Shareholder Representatives shall employ the reconciliation procedures as described in Section 7.9 of this Agreement (the “ Reconciliation Procedures ”).

(b) Amended Schedule . The applicable Schedule for any Taxable Year may be amended from time to time by the Corporate Taxpayer (i) in connection with a Determination affecting such Schedule, (ii) to correct inaccuracies in the Schedule identified as a result of the receipt of additional factual information relating to a Taxable Year after the date the Schedule was provided to the Change Shareholder Representatives, (iii) to comply with the Expert’s determination under the Reconciliation Procedures, (iv) to reflect a change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to a carryback or carryforward of a loss or other tax item to such Taxable Year, or (v) to reflect a change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to an amended Tax Return filed for such Taxable Year (any such Schedule, an “ Amended Schedule ”). The Corporate Taxpayer shall provide an Amended Schedule to the Change Shareholders within ninety (90) calendar days of the occurrence of an event referenced in clauses (i) through (v) of the preceding sentence. The Closing Date Tax Asset Disclosure Letter shall be appropriately amended by the Change Shareholder Representatives and the Corporate Taxpayer to the extent that, as a result of a Determination the Corporate Taxpayer is required to calculate its Tax liability in a manner inconsistent with the Closing Date Tax Asset Disclosure Letter.

ARTICLE III

TAX BENEFIT PAYMENTS

Section 3.1. Payments .

(a) Payments . Within five (5) calendar days after a Tax Benefit Schedule delivered to the Change Shareholder Representatives becomes final in accordance with Section 2.3(a), the Corporate Taxpayer shall pay to the Change Shareholders for such Taxable Year the Tax Benefit Payment determined pursuant to Section 3.1(b) in accordance with the percentages set forth on Schedule I . Each such Tax Benefit Payment shall be made by wire transfer of immediately available funds to the bank accounts previously designated by the Change Shareholder Representatives to the Corporate Taxpayer or as otherwise agreed by the Corporate Taxpayer and the Change Shareholder Representatives. For the avoidance of doubt, no Tax Benefit Payment shall be made in respect of estimated tax payments, including, without limitation, federal estimated income tax payments.

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(b) A “ Tax Benefit Payment ” means an amount, not less than zero, equal to the sum of the Net Tax Benefit and the Additional Amount. The “ Net Tax Benefit ” for a Taxable Year shall be an amount equal to the excess, if any, of 85% of the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year over the total amount of payments previously made under this Section 3.1 (excluding payments attributable to Additional Amounts and the Echo Connect Payment); provided , for the avoidance of doubt, that the Change Shareholders shall not be required to return any portion of any previously made Tax Benefit Payment. The “ Additional Amount” shall equal the additional amount on the Net Tax Benefit calculated at the Agreed Rate from the due date (without extensions) for filing the Corporate Taxpayer return with respect to Taxes for such Taxable Year until the Payment Date. Notwithstanding the foregoing, for each Taxable Year ending on or after the date of a Change of Control, all Tax Benefit Payments shall be calculated by utilizing Valuation Assumptions (1) and (3), substituting in each case the terms “the closing date of a Change of Control” for an “Early Termination Date.”

(c) The Tax Benefit Payment payable to the Change Shareholders with respect to the first Taxable Year of the Corporate Taxpayer that ends after the Closing Date shall be increased by the Echo Connect Payment. The “ Echo Connect Payment ” shall mean an amount equal to (i) the amount of Tax the Corporate Taxpayer and its Subsidiaries would have paid as a result of the Echo Connect Separation without taking into account the Transaction Tax Deductions or the Tax Assets over (ii) the actual amount of Tax paid in respect of the Echo Connect Separation, taking into account the use of the Transaction Tax Deductions and the Tax Assets that reduce the gain resulting from the Echo Connect Separation. The Tax Benefit Schedule for the first Taxable Year of the Corporate Taxpayer that ends after the Closing Date shall include in reasonable detail, the calculation of the Echo Connect Payment.

Section 3.3. Pro Rata Payments; Coordination with MCK Tax Receivable Agreement

(a) Notwithstanding anything in Section 3.1 to the contrary, during any taxable period in which the Corporate Taxpayer is a member of the Echo Group (an “ Actual Consolidation Period ”), to the extent that the aggregate tax benefit of the Echo Group resulting from (x) the Transferred Basis, the Basis Adjustments or Imputed Interest (each as defined in the MCK TRA) and (y) the Tax Assets and the Payment Deductions is limited in a particular Taxable Year because the Echo Group does not have sufficient taxable income, the limitation on the tax benefit for the Echo Group shall be allocated among this Agreement and the MCK TRA (and among all parties eligible for payments under each) in proportion to the respective amounts of Tax Benefit Payments (as defined in this Agreement and the MCK TRA) that would have been determined under the this Agreement and the MCK TRA (and allocated among such parties) if the Echo Group had sufficient taxable income so that there were no such limitation.

(b) Notwithstanding anything in this Agreement to the contrary, during any taxable period in which the Corporate Taxpayer is not a member of the Echo Group (a “ Hypothetical Consolidation Period ”), if the amount of the Tax Benefit Payment (as defined in this Agreement and the MCK TRA) that would have been determined either under this Agreement or the MCK TRA, as the case may be, would have been larger if such taxable period were an Actual

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Consolidation Period (as determined after the application of Section 3.3(a)), the Tax Benefit Payments to be made under this Agreement and the MCK TRA shall be determined by (i) the Echo Group and the Corporate Taxpayer determining the Tax Benefit Payments (as defined in this Agreement and the MCK TRA) that would have been payable if the Corporate Taxpayer were a member of the Echo Group for such Hypothetical Consolidation Period and (ii) then applying Section 3.3(a) in respect of such Tax Benefit Payments such that the Echo Group and the Corporate Taxpayer are not required to pay, collectively, an amount in excess of the amount they would pay, collectively, absent this Section 3.3(b).

(c) If for any reason the Corporate Taxpayer does not fully satisfy its payment obligations to make all Tax Benefit Payments due under the Tax Receivable Agreements in respect of a particular Taxable Year, (i) the Corporate Taxpayer and the JV, respectively, shall pay the same proportion of each Tax Benefit Payment due under each of this Agreement and the MCK TRA in respect of such Taxable Year, without favoring one obligation over the other, and (ii) no Tax Benefit Payment shall be made in respect of any Taxable Year under either this Agreement or the MCK TRA until all Tax Benefit Payments in respect of prior Taxable Years have been made in full under both this Agreement and the MCK TRA.

(d) To the extent the Corporate Taxpayer or the JV makes a payment to a Change Shareholder under this Agreement or TRA Party (as defined in the MCK TRA) under the MCK TRA, respectively, in an amount in excess of the amount of such payment that should have been made to such Person (an “ Overpaid Party ”) in respect of such Taxable Year, then (i) the Overpaid Party shall not receive further payments under this Agreement or the MCK TRA, as applicable, until the Overpaid Party has foregone an amount of payments equal to such excess and (ii) the Corporate Taxpayer or the JV, as applicable, shall cause the amount of the Overpaid Party’s foregone payments to be paid to the other Person(s) (the “ Underpaid Party ”), to the maximum extent possible, until the Underpaid Party shall have received aggregate payments under this Agreement in the amount it would have received if there had been no excess payment to the Overpaid Party.

(e) The parties hereto agree that the parties to the MCK TRA are expressly made third party beneficiaries of the provisions of this Section 3.3.

ARTICLE IV

TERMINATION

Section 4.1. Early Termination and Breach of Agreement .

(a) The Corporate Taxpayer may terminate this Agreement with respect to all amounts payable to the Change Shareholders at any time by paying to the Change Shareholders the Early Termination Payment; provided , that this Agreement shall terminate pursuant to this Section 4.1(a) with respect to a Change Shareholder only upon the receipt by such Change Shareholder of its Early Termination Payment, and the Corporate Taxpayer shall deliver an Early Termination Notice only if the Corporate Taxpayer is able to make all required Early Termination Payments under this Agreement at the time required by Section 4.3; and provided , further , that the Corporate Taxpayer may withdraw any notice to execute its termination rights under this Section 4.1(a) prior to the time at which any Early Termination Payment has been paid. Upon payment of the Early

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Termination Payment by the Corporate Taxpayer, the Corporate Taxpayer shall not have any further payment obligations under this Agreement, other than for any (a) Tax Benefit Payment agreed to by the Corporate Taxpayer and the Change Shareholder Representatives as due and payable but unpaid as of the Early Termination Notice and (b) Tax Benefit Payment due for the Taxable Year ending with or including the date of the Early Termination Notice (except to the extent that the amount described in this clause (b) is included in the Early Termination Payment).

(b) In the event that a Senior Obligation of the Corporate Taxpayer, Echo or any of their Subsidiaries is accelerated (or deemed accelerated) in connection with an event of default (other than an event of default triggered upon a change in control) (“ Accelerated ” and such event, an “ Acceleration ”), then all obligations hereunder shall be Accelerated and such obligations shall (i) be calculated as if an Early Termination Notice had been delivered on the date of such acceleration and the Early Termination Payments shall be calculated (x) as if an Early Termination Notice had been delivered on the date of the Acceleration and (y) applying the Valuation Assumptions as if all tax attributes described therein are fully utilized in the year of such Acceleration, (ii) include any Tax Benefit Payments agreed to by the Change Shareholder Representatives and the Corporate Taxpayer as due and payable but unpaid as of the date of an Acceleration, and (iii) include any Tax Benefit Payment due for the Taxable Year ending with or including the date of an Acceleration; provided that procedures similar to the procedures of Section 4.2 shall apply with respect to the determination of the amount payable by the Corporate Taxpayer pursuant to this sentence.

(c) In the event that the Corporate Taxpayer breaches any of its material obligations under this Agreement, whether as a result of failure to make any payment when due, failure to honor any other material obligation required hereunder or by operation of law as a result of the rejection of this Agreement in a case commenced under the Bankruptcy Code or otherwise, then all obligations hereunder shall be accelerated and such obligations shall (i) be calculated as if an Early Termination Notice had been delivered on the date of such breach and the Early Termination Payments shall be calculated as if an Early Termination Notice had been delivered on the date of the breach, (ii) include any Tax Benefit Payments agreed to by the Change Shareholder Representatives and the Corporate Taxpayer as due and payable but unpaid as of the date of a breach, and (iii) include any Tax Benefit Payment due for the Taxable Year ending with or including the date of a breach; provided that procedures similar to the procedures of Section 4.2 shall apply with respect to the determination of the amount payable by the Corporate Taxpayer pursuant to this sentence. Notwithstanding the foregoing, in the event that the Corporate Taxpayer breaches this Agreement, each Change Shareholder shall be entitled to elect to receive the amounts set forth in clauses (i), (ii) and (iii) above or to seek specific performance of the terms hereof.

(d) The parties agree that the failure to make any payment due pursuant to this Agreement within three months of the date such payment is due shall be deemed to be a breach of a material obligation under this Agreement for all purposes of this Agreement, and that it will not be considered to be a breach of a material obligation under this Agreement to make a payment due pursuant to this Agreement within three months of the date such payment is due. Notwithstanding anything in this Agreement to the contrary, it shall not be a breach of this Agreement if the Corporate Taxpayer fails to make any payment under this Agreement when due to the extent that the Corporate Taxpayer has insufficient funds to make such payment; provided that the interest provisions of Section 5.2 shall apply to such late payment (unless the Corporate Taxpayer does

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not have sufficient cash to make such payment as a result of limitations imposed by any credit agreement to which the Corporate Taxpayer or any of its Subsidiaries is a party if such limitations are no more onerous than the corresponding limitations imposed by the credit agreements to which the Corporate Taxpayer is a party at the Closing Date, in which case Section 5.2 shall apply, but the Default Rate shall be replaced by LIBOR plus 300 basis points).

Section 4.2. Early Termination Notice .

(a) If the Corporate Taxpayer chooses to exercise its right of early termination under Section 4.1 above other than in connection with a Change of Control, the Corporate Taxpayer shall deliver to the Change Shareholder Representatives notice of such intention to exercise such right (“ Early Termination Notice ”) and a schedule (the “ Early Termination Schedule ”) specifying the Corporate Taxpayer’s intention to exercise such right and showing in reasonable detail the calculation of the Early Termination Payment for the Change Shareholder Representatives. The Early Termination Schedule shall become final and binding on all parties 30 calendar days from the first date on which the Change Shareholder Representatives has received such Schedule or amendment thereto unless the Change Shareholder Representatives (i) within 30 calendar days after receiving the Early Termination Schedule, provides the Corporate Taxpayer with notice of a material objection to such Schedule made in good faith (“ Material Objection Notice ”) or (ii) provides a written waiver of such right of a Material Objection Notice within the period described in clause (i) above, in which case such Schedule becomes binding on the date the waiver is received by the Corporate Taxpayer (such thirty (30) calendar day date as modified, if at all by clauses (i) or (ii), the “ Early Termination Effective Date ”). If the parties, for any reason, are unable to successfully resolve the issues raised in such notice within 30 calendar days after receipt by the Corporate Taxpayer of the Material Objection Notice, the Corporate Taxpayer and the Change Shareholder Representatives shall employ the Reconciliation Procedures in which case such Schedule becomes binding ten (10) days after the conclusion of the Reconciliation Procedures.

(b) If the Corporate Taxpayer chooses to exercise its right of early termination under Section 4.1 above in connection with a Change of Control, any reference to 30 calendar days in Section 4.2(a) above shall instead be deemed to be 10 calendar days.

Section 4.3. Payment upon Early Termination .

(a) Within three calendar days after the Early Termination Effective Date, the Corporate Taxpayer shall pay to the Change Shareholders an amount equal to the Early Termination Payment. Such payment shall be made by wire transfer of immediately available funds to a bank account or accounts designated by the Change Shareholder Representatives or as otherwise agreed by the Corporate Taxpayer and the Change Shareholder Representatives.

(b) “ Early Termination Payment ” shall equal the present value, discounted at the Early Termination Rate as of the Early Termination Effective Date, of all Tax Benefit Payments that would be required to be paid by the Corporate Taxpayer to the Change Shareholders beginning from the Early Termination Date and assuming that the Valuation Assumptions are applied, provided , that the Change of Control Termination Rate (instead of the Early Termination Rate) shall be used to determine the Early Termination Payment in the case of an early termination in connection with a Change of Control.

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ARTICLE V

SUBORDINATION AND LATE PAYMENTS

Section 5.1. Subordination . Notwithstanding any other provision of this Agreement to the contrary, any payment required to be made by the Corporate Taxpayer under this Agreement shall rank subordinate and junior in right of payment to any principal, interest or other amounts due and payable in respect of any obligations in respect of indebtedness for borrowed money of the Corporate Taxpayer and its Subsidiaries (“ Senior Obligations ”) and shall rank pari passu with all current or future unsecured obligations of the Corporate Taxpayer that are not Senior Obligations. For the avoidance of doubt, any amounts owed by the Corporate Taxpayer under this Agreement are not Senior Obligations.

Section 5.2. Late Payments by the Corporate Taxpayer . The amount of all or any portion of any Tax Benefit Payment or Early Termination Payment not made to the Change Shareholders when due under the terms of this Agreement shall be payable together with any interest thereon, computed at the Default Rate and commencing from the date on which such Tax Benefit Payment or Early Termination Payment was due and payable.

ARTICLE VI

NO DISPUTES; CONSISTENCY; COOPERATION

Section 6.1. Participation in the Corporate Taxpayer’s Tax Matters . Except as otherwise provided herein, the Corporate Taxpayer shall have full responsibility for, and sole discretion over, all Tax matters concerning the Corporate Taxpayer, including without limitation the preparation, filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to Taxes. Notwithstanding the foregoing, the Corporate Taxpayer shall notify the Change Shareholder Representatives of, and keep the Change Shareholder Representatives reasonably informed with respect to, the portion of any audit of the Corporate Taxpayer by a Taxing Authority the outcome of which is reasonably expected to affect the rights and obligations of the Change Shareholder Representatives under this Agreement, and shall provide to the Change Shareholder Representatives reasonable opportunity to provide information and other input to the Corporate Taxpayer and its respective advisors concerning the conduct of any such portion of such audit.

Section 6.2. Consistency . The Corporate Taxpayer and the Change Shareholder Representatives agree to report and cause to be reported for all purposes, including federal, state and local Tax purposes and financial reporting purposes, all Tax-related items (including, without limitation, each Tax Benefit Payment) in a manner consistent with that specified by the Corporate Taxpayer in any Schedule required to be provided by or on behalf of the Corporate Taxpayer under this Agreement unless otherwise required by law.

Section 6.3. Cooperation . The Change Shareholder Representatives shall (a) furnish to the Corporate Taxpayer in a timely manner such information, documents and other materials as the Corporate Taxpayer may reasonably request for purposes of making any determination or computation necessary or appropriate under this Agreement, preparing any Tax Return or contesting or defending any audit, examination or controversy with any Taxing Authority, (b) make itself available to the Corporate Taxpayer and its representatives to provide explanations of documents and materials and such other information as the Corporate Taxpayer or its

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representatives may reasonably request in connection with any of the matters described in clause (a) above, and (c) reasonably cooperate in connection with any such matter, and the Corporate Taxpayer shall reimburse the Change Shareholder Representatives for any reasonable third-party costs and expenses incurred pursuant to this Section.

ARTICLE VII

MISCELLANEOUS

Section 7.1. Notices . All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed duly given and received (a) on the date of delivery if delivered personally, by facsimile, or email upon confirmation of transmission by transmitting equipment or (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

If to the Corporate Taxpayer, to:

Change Healthcare, Inc.

3055 Lebanon Pike, Suite 1000

Nashville, Tennessee 37214

Attention: General Counsel

Facsimile: (615) 340-6153

with a copy (which shall not constitute notice to the Corporate Taxpayer) to:

Ropes & Gray LLP

The Prudential Tower

800 Boylston Street

Boston, Massachusetts 02119

Attention: R. Newcomb Stillwell

Facsimile: (617) 235 0213

and

Davis Polk & Wardwell LLP

1600 El Camino Real

Menlo Park, CA 94025

Attention: Alan F. Denenberg

Facsimile: (650) 752-2004

If to the Change Shareholder Representatives, to:

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c/o The Blackstone Group

345 Park Avenue

New York, New York 10154

Attention: John G. Finley

Facsimile: (212) 583-5749

and

c/o Hellman & Friedman LLC

One Maritime Plaza

12th Floor

San Francisco, California 94111

Attention: Allen R. Thorpe

Arrie R. Park

Facsimile: (415) 788-0176

with a copy (which shall not constitute notice to the Change Shareholder Representatives) to:

Ropes & Gray LLP

The Prudential Tower

800 Boylston Street

Boston, Massachusetts 02119

Attention: R. Newcomb Stillwell

Facsimile: (617) 235 0213

and

Simpson Thacher & Bartlett LLP

2475 Hanover Street

Palo Alto, California 94304

Attention: Chad A. Skinner

Facsimile: (650) 251-5002

Any party may change its address, fax number, or email by giving the other party written notice of its new address, fax number, or email in the manner set forth above.

Section 7.2. Counterparts . This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

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Section 7.3. Entire Agreement; No Third Party Beneficiaries . This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and their respective successors and permitted assigns. The parties hereto agree that the Change Shareholders are expressly made third party beneficiaries to this Agreement. Other than as provided in the preceding sentence and Section 3.3(e), nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 7.4. Governing Law . This Agreement and any related dispute shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to any choice of law provisions that would result in the application of the laws of any other state.

Section 7.5. Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

Section 7.6. Successors; Assignment; Amendments; Waivers .

(a) The Change Shareholder Representatives may assign any of its rights under this Agreement to any Person as long as such transferee has executed and delivered, or, in connection with such transfer, executes and delivers, a joinder to this Agreement, in form and substance reasonably satisfactory to the Corporate Taxpayer, agreeing to become the Change Shareholder Representatives for all purposes of this Agreement, except as otherwise provided in such joinder.

(b) No provision of this Agreement may be amended unless such amendment is approved in writing by both the Corporate Taxpayer and the Change Shareholder Representatives. No provision of this Agreement may be waived unless such waiver is in writing and signed by the party against whom the waiver is to be effective.

(c) All of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and their respective successors, assigns, heirs, executors, administrators and legal representatives. The Corporate Taxpayer shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Corporate Taxpayer, by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporate Taxpayer would be required to perform if no such succession had taken place.

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Section 7.7. Titles and Subtitles . The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. The words “hereof”, “herein”, “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and any subsection and section references are to this Agreement unless otherwise specified. The term “including” is not limiting and means “including without limitation.” References to Articles, Sections and Exhibits are to Articles, Sections and Exhibits of this Agreement unless otherwise specified. Whenever the context requires, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

Section 7.8. Resolution of Disputes .

(a) Any and all disputes which are not governed by Section 7.9 cannot be settled amicably, including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement (including the validity, scope and enforceability of this arbitration provision) (each a “ Dispute ”) shall be finally settled by arbitration conducted by a single arbitrator in New York in accordance with the then-existing Rules of Arbitration of the International Chamber of Commerce. If the parties to the Dispute fail to agree on the selection of an arbitrator within ten (10) days of the receipt of the request for arbitration, the International Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer admitted to the practice of law in the State of New York and shall conduct the proceedings in the English language. Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings.

(b) Notwithstanding the provisions of paragraph (a), the Corporate Taxpayer may bring an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), the Change Shareholder Representatives (i) expressly consents to the application of paragraph (c) of this Section 7.8 to any such action or proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate, and (iii) irrevocably appoints the Corporate Taxpayer as agent of the Change Shareholder Representatives for service of process in connection with any such action or proceeding and agrees that service of process upon such agent, who shall promptly advise the Change Shareholder Representatives of any such service of process, shall be deemed in every respect effective service of process upon the Change Shareholder Representatives in any such action or proceeding.

(c) (i) EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN STATE OF DELAWARE FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 7.8, OR ANY JUDICIAL PROCEEDING ANCILLARY TO

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AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial relief in aid of arbitration, or to confirm an arbitration award. Notwithstanding the previous sentence, a party may commence any claim, action, suit or proceeding in a court other than the above-named courts solely for the purpose of enforcing an order or judgment issued by one of the above-named courts. The parties acknowledge that this paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another; and

(ii) The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter may have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in the preceding paragraph of this Section 7.8 and such parties agree not to plead or claim the same.

Section 7.9. Reconciliation . In the event that the Corporate Taxpayer and the Change Shareholder Representatives are unable to resolve a disagreement with respect to the matters governed by Sections 2.3, 4.2 and 6.2 within the relevant period designated in this Agreement (“ Reconciliation Dispute ”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “ Expert ”) in the particular area of disagreement mutually acceptable to both parties. The Expert shall be a partner or principal in a nationally recognized accounting or law firm, and unless the Corporate Taxpayer and the Change Shareholder Representatives agree otherwise, the Expert shall not, and the firm that employs the Expert shall not, have any material relationship with the Corporate Taxpayer or the Change Shareholder Representatives or other actual or potential conflict of interest. If the parties are unable to agree on an Expert within fifteen (15) days of receipt by the respondent(s) of written notice of a Reconciliation Dispute, the Expert shall be appointed by the International Chamber of Commerce Centre for Expertise. The Expert shall resolve any matter relating to the Closing Date Tax Asset Disclosure Letter or an amendment thereto or the Early Termination Schedule or an amendment thereto within 30 calendar days and shall resolve any matter relating to a Tax Benefit Schedule or an amendment thereto within 15 calendar days or as soon thereafter as is reasonably practicable, in each case after the matter has been submitted to the Expert for resolution. Notwithstanding the preceding sentence, if the matter is not resolved before any payment that is the subject of a disagreement would be due (in the absence of such disagreement) or any Tax Return reflecting the subject of a disagreement is due, the undisputed amount shall be paid on the date prescribed by this Agreement and such Tax Return may be filed as prepared by the Corporate Taxpayer, subject to adjustment or amendment upon resolution. The costs and expenses relating to the engagement of such Expert or amending any Tax Return shall be borne by the Corporate Taxpayer except as provided in the next sentence. The Corporate Taxpayer and the Change Shareholder Representatives shall bear their own costs and expenses of such proceeding, unless (i) the Expert adopts the Change Shareholder Representatives’ position, in which case the Corporate Taxpayer shall reimburse the Change Shareholder Representatives for any reasonable out-of-pocket costs and expenses in such proceeding, or (ii) the Expert adopts the Corporate Taxpayer’s position, in which case the Change Shareholder Representatives shall reimburse the Corporate Taxpayer for any reasonable out-of-pocket costs and expenses in such proceeding. Any dispute as to whether a dispute is a Reconciliation Dispute within the meaning of this Section 7.9 shall be decided by the Expert. The Expert shall finally determine any Reconciliation Dispute and the determinations of the Expert pursuant to this Section 7.9 shall be binding on the Corporate Taxpayer and the Change Shareholder Representatives and may be entered and enforced in any court having jurisdiction.

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Section 7.10. Withholding . The Corporate Taxpayer shall be entitled to deduct and withhold from any payment payable pursuant to this Agreement such amounts as the Corporate Taxpayer is required to deduct and withhold with respect to the making of such payment under the Code or any provision of state, local or foreign tax law, provided, however, that the Corporate Taxpayer shall notify the Change Shareholder Representatives (who shall notify the applicable Change Shareholder) in advance before applying any such withholding to allow such applicable payee a reasonable opportunity to provide any applicable certificates, forms or other certificates that would eliminate or reduce such withholding, and the Corporate Taxpayer will otherwise reasonably cooperate with the applicable payee to eliminate or reduce such withholding. To the extent that amounts are so withheld and paid over to the appropriate Taxing Authority by the Corporate Taxpayer, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Change Shareholders.

Section 7.11. Admission of the Corporate Taxpayer into a Consolidated Group; Transfers of Corporate Assets .

(a) If the Corporate Taxpayer is or becomes a member of an affiliated or consolidated group of corporations that files a consolidated income Tax Return pursuant to Sections 1501 et seq. of the Code or any corresponding provisions of state or local law, then: (i) the provisions of this Agreement shall be applied with respect to the group as a whole; and (ii) Tax Benefit Payments, Early Termination Payments and other applicable items hereunder shall be computed with reference to the consolidated taxable income of the group as a whole.

(b) If any entity that is obligated to make a Tax Benefit Payment or Early Termination Payment hereunder transfers one or more assets to a corporation (or a Person classified as a corporation for U.S. income tax purposes) with which such entity does not file a consolidated Tax Return pursuant to Section 1501 of the Code, such entity, for purposes of calculating the amount of any Tax Benefit Payment or Early Termination Payment (e.g., calculating the gross income of the entity and determining the Realized Tax Benefit of such entity) due hereunder, shall be treated as having disposed of such asset in a fully taxable transaction on the date of such contribution. The consideration deemed to be received by such entity shall be equal to the fair market value of the contributed asset. For purposes of this Section 7.11, a transfer of a partnership interest shall be treated as a transfer of the transferring partner’s share of each of the assets and liabilities of that partnership.

Section 7.12. Confidentiality .

(a) The Change Shareholder Representatives and each of its assignees acknowledge and agree that the information of the Corporate Taxpayer is confidential and, except in the course of performing any duties as necessary for the Corporate Taxpayer and its Affiliates, as required by law or legal process or to enforce the terms of this Agreement, such person shall keep and retain in the strictest confidence and not disclose to any Person any confidential matters, acquired pursuant to this Agreement, of the Corporate Taxpayer and its Affiliates and successors learned by the Change Shareholder Representatives heretofore or hereafter. This Section 7.12 shall not

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apply to (i) any information that has been made publicly available by the Corporate Taxpayer or any of its Affiliates, becomes public knowledge (except as a result of an act of the Change Shareholder Representatives in violation of this Agreement) or is generally known to the business community, (ii) the disclosure of information to the extent necessary for the Change Shareholder Representatives to prepare and file its Tax Returns, to respond to any inquiries regarding the same from any taxing authority or to prosecute or defend any action, proceeding or audit by any taxing authority with respect to such returns, and (iii) any information a Change Shareholder discloses to a potential transferee pursuant to Section 7.7 under the terms of a confidential agreement to the extent that that such potential transferee agrees to be bound by customary confidentiality provisions with respect to any confidential information of the Corporate Taxpayer. Notwithstanding anything to the contrary herein, the Change Shareholder Representatives and each of their assignees (and each employee, representative or other agent of the Change Shareholder Representatives or its assignees, as applicable) may disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure of the Corporate Taxpayer, the Change Shareholder Representatives and their Affiliates, and any of their transactions, and all materials of any kind (including opinions or other tax analyses) that are provided to the Change Shareholder Representatives relating to such tax treatment and tax structure.

(b) If the Change Shareholder Representatives or an assignee commits a breach, or threatens to commit a breach, of any of the provisions of this Section 7.12, the Corporate Taxpayer shall have the right and remedy to have the provisions of this Section 7.12 specifically enforced by injunctive relief or otherwise by any court of competent jurisdiction without the need to post any bond or other security, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to the Corporate Taxpayer or any of its Subsidiaries and the accounts and funds managed by the Corporate Taxpayer and that money damages alone shall not provide an adequate remedy to such Persons. Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available at law or in equity.

Section 7.13. Change Shareholder Representatives .

(a) Each Change Shareholder hereby irrevocably appoints the Change Shareholder Representatives as the sole and exclusive agent, proxy and attorney-in-fact for such Change Shareholder for all purposes of this Agreement, with full and exclusive power and authority to act on such Change Shareholder’s behalf; provided that the Blackstone Representatives are not appointing the H&F Representatives and the H&F Representatives are not appointing the Blackstone Representatives for purposes of Section 7.13(b). The appointment of the Change Shareholder Representatives hereunder is coupled with an interest, shall be irrevocable and shall not be affected by the death, incapacity, insolvency, bankruptcy, illness or other inability to act of any Change Shareholder. Without limiting the generality of the foregoing, the Change Shareholder Representatives are hereby authorized and acting by mutual consent as set forth in Section 7.13(b) below, on behalf of the Change Shareholders, to:

(i) execute and receive all documents, instruments, certificates, statements and agreements on behalf of and in the name of each Change Shareholder necessary to effectuate this Agreement;

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(ii) receive and give all notices and service of process, make all filings, enter into all contracts, make all decisions, bring, prosecute, defend, settle, compromise or otherwise resolve all claims, disputes and actions, authorize payments in respect of any such claims, disputes or actions, and take all other actions, in each case, as set forth in Section 7.8 and Section 7.9 or any other actions directly or indirectly arising out of or relating to this Agreement;

(iii) execute and deliver, should it elect to do so in its good faith discretion, on behalf of the Change Shareholders, any amendment to, or waiver of, any term or provision of this Agreement, or any consent, acknowledgment or release relating to this Agreement; and

(iv) take all other actions permitted or required to be taken by or on behalf of the Change Shareholders under this Agreement and exercise any and all rights that the Change Shareholders and the Change Shareholder Representatives are permitted or required to do or exercise under this Agreement.

(b) The Change Shareholder Representatives will have full and complete authority, power and discretion to take all actions permitted or required by the Change Shareholders or the Change Shareholder Representatives under this Agreement; provided , that such actions may only be taken by mutual consent of the Blackstone Representatives and the H&F Representatives (each of Blackstone Representatives and H&F Representatives acting upon the approval of the person(s) that hold a majority of the Change Shares beneficially owned by such group as of the date hereof) and the Blackstone Representatives and H&F Representatives shall have the power to act only collectively as the Change Shareholder Representatives under this Agreement.

(c) The Change Shareholder Representatives shall not be held liable by any of the Change Shareholders for actions or omissions in exercising or failing to exercise all or any of the power and authority of the Change Shareholder Representatives pursuant to this Agreement, except in the case of the Change Shareholder Representatives’ willful misconduct. The Change Shareholder Representatives shall be entitled to rely on the advice of counsel, public accountants or other independent experts that it reasonably determines to be experienced in the matter at issue, and will not be liable to any Change Shareholder for any action taken or omitted to be taken in good faith based on such advice.

(d) The Corporate Taxpayer and the JV may rely on the appointment and authority of the Change Shareholder Representatives granted pursuant to this Section 7.13 until receipt of written notice of the appointment of a successor Change Shareholder Representatives made in accordance with this Section 7.13. In so doing, the Corporate Taxpayer and the JV may rely on any and all actions taken by and decisions of the Change Shareholder Representatives under this Agreement notwithstanding any dispute or disagreement among any of the Change Shareholders and the Change Shareholder Representatives with respect to any such action or decision without any liability to, or obligation to inquire of, any Change Shareholder, the Change Shareholder Representatives or any other Person. Subject to Section 7.13(b), any decision, act, consent or instruction of the Change Shareholder Representatives shall constitute a decision of all the Change Shareholders and shall be final and binding upon each of the Change Shareholders.

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Section 7.14. Joint and Several Liability . The Company Parties (as defined in the Contribution Agreement) hereby agree that each of the Company Parties will be jointly and severally liable for any payment obligations of the JV or the Corporate Taxpayer contained in this Agreement.

[remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Corporate Taxpayer, Echo, the JV and the Change Shareholder Representatives have duly executed this Agreement as of the date first written above.


HCIT HOLDINGS, INC.

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens Title: President and Treasurer

CHANGE HEALTHCARE, INC.

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens Title: General Counsel and Secretary

CHANGE HEALTHCARE LLC

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens Title: Co-President and Co-Secretary

By:		/s/ John G. Saia
		Name: John G. Saia Title: Co-President and Co-Secretary

CHANGE HEALTHCARE INTERMEDIATE HOLDINGS, LLC

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens Title: Co-President and Co-Secretary

By:		/s/ John G. Saia
		Name: John G. Saia Title: Co-President and Co-Secretary

CHANGE HEALTHCARE HOLDINGS, LLC

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens Title: Co-President and Co-Secretary

By:		/s/ John G. Saia
		Name: John G. Saia Title: Co-President and Co-Secretary

[Signature Page – Echo Tax Receivable Agreement]


BLACKSTONE CAPITAL PARTNERS VI L.P.

By: Blackstone Management Associates VI L.L.C., its general partner

By:		BMA VI L.L.C., its sole member

By:		/s/ Neil Simpkins
		Name: Neil Simpkins Title: Senior Managing Director

BLACKSTONE FAMILY INVESTMENT PARTNERSHIP VI L.P.

By: BCP VI Side-By-Side GP L.L.C., its general partner

By:		/s/ Neil Simpkins
		Name: Neil Simpkins Title: Senior Managing Director

BLACKSTONE FAMILY INVESTMENT PARTNERSHIP VI - ESC L.P.

By: BCP VI Side-By-Side GP L.L.C., its general partner

By:		/s/ Neil Simpkins
		Name: Neil Simpkins Title: Senior Managing Director

[Signature Page – Echo Tax Receivable Agreement]


H&F HARRINGTON AIV II, L.P.

By: Hellman & Friedman Investors VI, L.P., its general partner

By: Hellman & Friedman LLC, its general partner

By:		P. Hunter Philbrick
		Name: P. Hunter Philbrick Title: Managing Director

HFCP VI DOMESTIC AIV, L.P.

By: Hellman & Friedman Investors VI, L.P., its general partner

By: Hellman & Friedman LLC, its general partner

By:		P. Hunter Philbrick
		Name: P. Hunter Philbrick Title: Managing Director

HELLMAN & FRIEDMAN INVESTORS VI, L.P.

By: Hellman & Friedman LLC, its general partner

By:		P. Hunter Philbrick
		Name: P. Hunter Philbrick Title: Managing Director

[Signature Page – Echo Tax Receivable Agreement]


HELLMAN & FRIEDMAN CAPITAL EXECUTIVES VI, L.P.

By: Hellman & Friedman Investors VI, L.P., its general partner

By: Hellman & Friedman LLC, its general partner

By:		P. Hunter Philbrick
		Name: P. Hunter Philbrick Title: Managing Director

HELLMAN & FRIEDMAN CAPITAL ASSOCIATES VI, L.P.

By: Hellman & Friedman Investors VI, L.P., its general partner

By: Hellman & Friedman LLC, its general partner

By:		P. Hunter Philbrick
		Name: P. Hunter Philbrick Title: Managing Director

[Signature Page – Echo Tax Receivable Agreement]

JOINDER AGREEMENT TO ECHO TAX RECEIVABLE AGREEMENT

This Joinder Agreement (the “ Joinder ”) is entered into as of February 28 , 2017 by the undersigned, an equityholder (the “ Stockholder ”) in Change Healthcare, Inc., a Delaware corporation (“ Echo Holdco ”) and is being delivered by the Stockholder pursuant to that certain Tax Receivable Agreement, dated February 28, 2017 (the “ TRA ”), Change Healthcare, Inc., a Delaware corporation (the “ Corporate Taxpayer ”), HCIT Holdings, Inc., a Delaware corporation (“ Echo ”), Change Healthcare LLC (f/k/a PF2 NewCo LLC), a Delaware limited liability company (the “ JV ”), Blackstone Capital Partners VI L.P., Blackstone Family Investment Partnership VI L.P., Blackstone Family Investment Partnership VI-ESC L.P. (the “ Blackstone Representatives ”), H&F Harrington AIV II, L.P., HFCP VI Domestic AIV, L.P., Hellman & Friedman Investors VI, L.P., Hellman & Friedman Capital Executives VI, L.P., Hellman & Friedman Capital Associates VI, L.P. (the “ H&F Representatives ” and, collectively, the “ Change Shareholder Representatives ”), the shareholders of the Corporate Taxpayer who become a party thereto (collectively, and together with H&F and Blackstone, the “ Change Shareholders ”), Change Healthcare Intermediate Holdings, LLC (f/k/a PF2 NewCo Intermediate Holdings, LLC), a Delaware limited liability company, Change Healthcare Holdings, LLC (f/k/a PF2 NewCo Holdings, LLC), a Delaware limited liability company, Change Healthcare Holdings, Inc., a Delaware corporation, Change Healthcare Operations, LLC, a Delaware limited liability company, Change Healthcare Solutions, LLC, a Delaware limited liability company, Change Healthcare Finance, Inc., a Delaware corporation, McKesson Technologies LLC, a Delaware limited liability company, PST Services LLC, a Georgia limited liability company (collectively the “ Company Parties ”), and each of the successors and assigns thereof. All capitalized terms used herein and not otherwise defined in this Joinder shall have the meanings assigned thereto in the TRA.

RECITALS:

WHEREAS, the Stockholder is a Change Shareholder and, as a result of the transactions contemplated by the TRA, shall be entitled to receive a portion of the consideration as specified therein;

WHEREAS, the undersigned is hereby agreeing to become a party to the TRA as a Change Shareholder.

NOW THEREFORE, in consideration of the premises and mutual promises made herein, such Change Shareholder hereby agrees as follows:

1. The Change Shareholder acknowledges that it has received a copy of the TRA and agrees to become a party to and bound by the TRA as a “Change Shareholder” as if an original signatory thereto effective as of the date hereof. The Change Shareholder acknowledges and agrees that it is subject to the provisions, terms, conditions and restrictions set forth in the TRA, including but not limited to Section 7.13 regarding the Change Shareholder Representatives.

2. This Joinder shall be governed by and construed in accordance with the substantive laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule that cause the application of the domestic substantive laws of any other jurisdiction.

3. This Joinder shall be deemed to be a part of the TRA and shall be governed by all of the terms and provisions of the TRA, which terms are incorporated herein by reference, are ratified and confirmed, and shall continue in full force and effect.

[Signature page follows]

IN WITNESS WHEREOF , the Stockholder has executed this Joinder Agreement on the day and year first above written.


By:		/s/ Lisa M DiSalvo
Name:		Lisa M DiSalvo

By:		/s/ Kriten Joshi
Name:		Kriten Joshi

By:		/s/ Philip M. Pead
Name:		Philip M. Pead

By:		/s/ Gregory Cohen
Name:		Gregory Cohen

By:		/s/ Sophia G. Kim
Name:		Sophia G. Kim

By:		/s/ James Dalen
Name:		James Dalen

By:		/s/ Derek C. Woo
Name:		Derek C. Woo

By:		/s/ Jared Sokolsky
Name:		Jared Sokolsky

By:		/s/ Howard Lance
Name:		Howard Lance

By:		/s/ Kevin C. Barrett
Name:		Kevin C. Barrett

By:		/s/ Daniel Lieber
Name:		Daniel Lieber

By:		/s/ Gregory Luff
Name:		Gregory Luff

By:		/s/ Neil de Crescenzo
Name:		Neil de Crescenzo

[Signature Page – Joinder to TRA]


BLACKSTONE EAGLE PRINCIPAL TRANSACTION PARTNERS L.P.

By: Blackstone Management Associates VI L.L.C., its general partner

By: BMA VI L.L.C., its sole member

By:		/s/ Neil Simpkins
		Name: Neil Simpkins Title: Senior Managing Director

CHANGE HEALTHCARE FINANCE, INC.

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens Title: Co-President and Treasurer

By:		/s/ John G. Saia
		Name: John G. Saia Title: Co-President and Secretary

PST SERVICES LLC

By:		/s/ John G. Saia
		Name: John G. Saia Title: Vice President and Secretary

MCKESSON TECHNOLOGIES LLC

By:		/s/ John G. Saia
		Name: John G. Saia Title: Vice President and Secretary

GSO COF FACILITY LLC

By: GSO Capital Partners LP, its Collateral Manager

By:		/s/ Marrisa Beeny
		Name: Marrisa Beeny Title: Authorized Person

[Signature Page – Joinder to TRA]


CHANGE HEALTHCARE OPERATIONS, LLC

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens Title: Secretary

CHANGE HEALTHCARE SOLUTIONS, LLC

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens Title: Secretary

CHANGE HEALTHCARE HOLDINGS, INC.

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens Title: General Counsel and Secretary

CHANGE HEALTHCARE INTERMEDIATE HOLDINGS, INC.

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens Title: General Counsel and Secretary

[Signature Page – Joinder to TRA]

Exhibit 10.4

EXECUTION VERSION

AMENDED AND RESTATED

TAX RECEIVABLE AGREEMENT (REORGANZATIONS)

among

EMDEON INC.,

H&F ITR HOLDCO, L.P.,

BEAGLE PARENT LLC,

and

GA-H&F ITR HOLDCO, L.P.

Dated as of November 2, 2011

TABLE OF CONTENTS


		Page
ARTICLE I DEFINITIONS			2

Section 1.1.	Definitions		2

ARTICLE II DETERMINATION OF CERTAIN REALIZED TAX BENEFIT			9

Section 2.1.	Pre-IPO Basis Adjustment		9

Section 2.2.	Tax Benefit Schedule		10

Section 2.3.	Procedures, Amendments		10

ARTICLE III TAX BENEFIT PAYMENTS			11

Section 3.1.	Payments		11

Section 3.2.	No Duplicative Payments		12

Section 3.3.	Pro Rata Payments; Coordination of Benefits With Other Tax Receivable Agreements		12

ARTICLE IV TERMINATION			13

Section 4.1.	Early Termination and Breach of Agreement		13

Section 4.2.	Early Termination Notice		14

Section 4.3.	Payment upon Early Termination		14

ARTICLE V SUBORDINATION AND LATE PAYMENTS			15

Section 5.1.	Subordination		15

Section 5.2.	Late Payments by the Corporate Taxpayer		15

ARTICLE VI NO DISPUTES; CONSISTENCY; COOPERATION			15

Section 6.1.	Participation in the Corporate Taxpayer’s and EBS’s Tax Matters		15

Section 6.2.	Consistency		15

Section 6.3.	Cooperation		15

Section 6.4.	Medifax Restructuring		16

ARTICLE VII MISCELLANEOUS			17

Section 7.1.	Notices		17

Section 7.2.	Counterparts		18

Section 7.3.	Entire Agreement; No Third Party Beneficiaries		18

Section 7.4.	Governing Law		18

Section 7.5.	Severability		18

Section 7.6.	Successors; Assignment; Amendments; Waivers		18

Section 7.7.	Titles and Subtitles		19

Section 7.8.	Resolution of Disputes		19

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Section 7.9.	Reconciliation	20

Section 7.10.	Withholding	21

Section 7.11.	Admission of the Corporate Taxpayer into a Consolidated Group; Transfers of Corporate Assets	21

Section 7.12.	Confidentiality	22

Section 7.13.	Representations	22

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AMENDED AND RESTATED

TAX RECEIVABLE AGREEMENT (REORGANIZATIONS)

This AMENDED AND RESTATED TAX RECEIVABLE AGREEMENT (REORGANIZATIONS) (this “ Agreement ”), dated as of November 2, 2011, is hereby entered into by and among Emdeon Inc., a Delaware corporation (the “ Corporate Taxpayer ”), H&F ITR Holdco, L.P., a Delaware limited partnership (the “ HF ITR Entity ”), Beagle Parent LLC, a Delaware limited liability company (the “ BX ITR Entity ”), GA-H&F ITR Holdco, L.P., a Delaware limited partnership (the “ ITR Entity ”), and each of the successors and assigns thereto.

RECITALS

WHEREAS, the Members (as defined below) hold or held member interests in EBS Master LLC, a Delaware limited liability company (“ EBS ”), which is classified as a partnership for United States federal income tax purposes;

WHEREAS, the Corporate Taxpayer is the managing member of EBS, and holds and will hold, directly and/or indirectly, member interests in EBS;

WHEREAS, EBS Acquisition II LLC, a Delaware limited liability company (the “ GA Corporate Member ”) and H&F Harrington Inc., a Delaware corporation (the “ HF Corporate Member ”) were classified as associations taxable as corporations for U.S. federal income tax purposes;

WHEREAS, pursuant to that certain Reorganization Agreement, dated as of August 4, 2009, among the Corporate Taxpayer and the parties named therein, the GA Corporate Member and the HF Corporate Member merged with and into wholly owned subsidiaries of the Corporate Taxpayer (the “ Reorganization ”);

WHEREAS, as a result of the Reorganization, the GA Corporate Member and the HF Corporate Member merged with members of the consolidated group of which the Corporate Taxpayer is the parent and the Corporate Taxpayer became entitled to utilize certain net operating losses and capital losses of the GA Corporate Member and the HF Corporate Member generated before the IPO (as defined below) (the “ NOLs ”);

WHEREAS, the income, gain, loss, expense and other Tax (as defined below) items of the Corporate Taxpayer may be affected by (i) adjustments to the tax basis of the IPO Date Assets (as defined below) attributable to the purchase of interests in EBS in connection with the transactions described in the Purchase Agreement (as defined below) or the HLTH Merger Agreement (as defined below) (the “ Pre-IPO Basis Adjustments ”), (ii) NOLs, and (iii) the Imputed Interest (as defined below);

WHEREAS, the Corporate Taxpayer, the ITR Entity, the HF ITR Entity and GA ITR Holdco, L.P., a Delaware limited partnership (the “ GA ITR Entity ”) entered into that certain Tax Receivable Agreement (Reorganizations), dated as of August 17, 2009 (the “ Original Agreement ”) in order to make certain arrangements with respect to the effect of the NOLs, the Pre-IPO Basis Adjustments and Imputed Interest on the liability for Taxes of the Corporate Taxpayer;

WHEREAS, the shareholders of the Corporate Taxpayer and the shareholders of the GA Corporate Member before the Reorganization (the “ Existing GA Owners ”), HFCP VI Domestic MV, L.P., a Delaware limited partnership (“ HFCP ”), Hellman & Friedman Capital Associates VI, L.P., a Delaware limited partnership (“ HFCA ”), Hellman & Friedman Capital Executives VI, L.P., a Delaware limited partnership (“ HFCE ”), Hellman & Friedman Investors VI, L.P., a Delaware limited partnership (“ H&F G P” and together with HFCP, HFCA and HFCE, the “ HF Non-Corporate Members ”), and H&F Harrington MV II, L.P., a Delaware limited partnership (“ HF Harrington ” and together with HF Non-Corporate Members, the “ HF Members ”) engaged in certain transactions that have resulted or will result in various tax benefits to the Corporate Taxpayer, and the Existing GA Owners and the HF Members previously agreed that any and all payments in respect of such tax benefits will be made 50% to the Existing GA Owners and 50% to the HF Members (such agreement being reflected in the Fourth Amended and Restated Limited Liability Company Agreement of EBS dated as of May 21, 2008);

WHEREAS, the Existing GA Owners have contributed all of their rights to receive payments of Tax savings related to the effect of the NOLs, the Pre-IPO Basis Adjustments and Imputed Interest attributable to the Corporate Taxpayer and the GA Corporate Member to the GA ITR Entity in exchange for ownership interests in the GA ITR Entity, and HF Harrington has contributed all of its rights to receive payments of Tax savings related to the effect of the NOLs, the Pre-IPO Basis Adjustments and Imputed Interest attributable to the HF Corporate Member to the HF ITR Entity in exchange for ownership interests in the HF ITR Entity;

WHEREAS, the GA ITR Entity and the HF ITR Entity have contributed all of their rights (including their rights under this Agreement) to receive such payments of Tax savings attributable to the effect of the NOLs, the Pre-IPO Basis Adjustments and Imputed Interest from the Corporate Taxpayer to the ITR Entity in exchange for ownership interests in the ITR Entity;

WHEREAS, as a result of such contributions, the ITR Entity was a party to the Original Agreement and shall be a party to this Agreement;

WHEREAS, the BX ITR Entity acquired all of the GA ITR Entity’s ownership interests in the ITR Entity on the Closing Date (as defined below) pursuant to a Transfer Agreement dated as of August 3, 2011, and a result of such acquisition the BX ITR Entity shall be a party to this Agreement; and

WHEREAS, the parties to this Agreement desire to amend and restate the Original Agreement in its entirety pursuant to Section 7.6(b) thereof.

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

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“ Agreed Rate ” means LIBOR plus 100 basis points.

“ Agreement ” is defined in the Recitals of this Agreement.

“ Amended Schedule ” is defined in Section 2.3(b) of this Agreement.

“ Beagle Merger Agreement ” means the Agreement and Plan of Merger, dated as of August 3, 2011, by and among Parent, Beagle Acquisition Corp. and the Corporate Taxpayer.

“ Board ” means the Board of Directors of Parent.

“ BX ITR Entity ” is defined in the Recitals of this Agreement.

“ Change of Control ” means the occurrence of any of the following events:

(i)

any Person or any group of Persons acting together which would constitute a “group” for purposes of Section 13(d) of the Securities and Exchange Act of 1934, or any successor provisions thereto (excluding a group of Persons which includes one or more Affiliates of Hellman & Friedman LLC, one or more Affiliates of The Blackstone Group, L.P. and Persons who acquire an ownership interest in Parent pursuant to Section 2.7(d) of the Interim Investors Agreement, dated as of August 3, 2011, by and among Parent and the Investors named therein, and such Persons’ Affiliates), is or becomes the Beneficial Owner, directly or indirectly, of securities of Parent representing more than 50% of the combined voting power of Parent’s then outstanding voting securities; or

(ii)

the following individuals cease for any reason to constitute a majority of the number of directors of Parent then serving: individuals who, on the Closing Date, constitute the Board and any new director whose appointment or election by the Board or nomination for election by Parent’s shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the Closing Date or whose appointment, election or nomination for election was previously so approved or recommended by the directors referred to in this clause (ii); or

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(iii)

there is consummated a merger or consolidation of Parent with any other corporation or other entity, and, immediately after the consummation of such merger or consolidation, either (x) the Board immediately prior to the merger or consolidation does not constitute at least a majority of the board of directors of the company surviving the merger or, if the surviving company is a Subsidiary, the ultimate parent thereof, or (y) the voting securities of Parent immediately prior to such merger or consolidation do not continue to represent or are not converted into more than 50% of the combined voting power of the then outstanding voting securities of the Person resulting from such merger or consolidation or, if the surviving company is a Subsidiary, the ultimate parent thereof; or

(iv)

the shareholders of Parent approve a plan of complete liquidation or dissolution of Parent or there is consummated an agreement or series of related agreements for the sale or other disposition, directly or indirectly, by Parent of all or substantially all of Parent’s assets, other than such sale or other disposition by Parent, of all or substantially all of Parent’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by shareholders of Parent in substantially the same proportions as their ownership of Parent immediately prior to such sale.

Notwithstanding the foregoing, (A) except with respect to clause (ii) and clause (iii)(x) above, a “Change of Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the shares of Parent immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in, and own substantially all of the shares of, an entity which owns all or substantially all of the assets of Parent immediately following such transaction or series of transactions and (B) a “Change of Control” shall not be deemed to have occurred upon the consummation of the transactions contemplated by the Beagle Merger Agreement.

“ Change of Control Termination Rate ” means 10% per annum, compounded annually.

“ Closing Date ” has the meaning set forth in the Beagle Merger Agreement.

“ Code ” means the United States Internal Revenue Code of 1986, as amended.

“ Corporate Taxpaye r” is defined in the Recitals of this Agreement.

“ Corporate Taxpayer Return ” means the federal and/or state and/or local Tax Return, as applicable, of the Corporate Taxpayer filed with respect to Taxes of any Taxable Year.

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“ Default Rate ” means LIBOR plus 500 basis points.

“ Dispute ” has the meaning set forth in Section 7.8(a) of this Agreement.

“ Early Termination Date ” means the date of an Early Termination Notice for purposes of determining the Early Termination Payment.

“ Early Termination Effective Date ” is defined in Section 4.2 of this Agreement.

“ Early Termination Notice ” is defined in Section 4.2 of this Agreement.

“ Early Termination Schedule ” is defined in Section 4.2 of this Agreement.

“ Early Termination Payment ” is defined in Section 4.3(b) of this Agreement.

“ Early Termination Rate ” means the lesser of (i) 6.5% per annum, compounded annually, and (ii) LIBOR plus 100 basis points.

“ Existing GA Owners ” is defined in the Recitals of this Agreement.

“ Expert ” is defined in Section 7.9 of this Agreement.

“ GA Corporate Member ” is defined in the Recitals of this Agreement.

“ GA ITR Entity ” is defined in the Recitals of this Agreement.

“ HF Corporate Member ” is defined in the Recitals of this Agreement.

“ H&F GP ” is defined in the Recitals of this Agreement.

“ HF Harrington ” is defined in the Recitals of this Agreement.

“ HF ITR Entity ” is defined in the Recitals of this Agreement. “HF Members” is defined in the Recitals of this Agreement.

“ HF Non-Corporate Members ” is defined in the Recitals of this Agreement.

“ HLTH Merger Agreement ” means the Amended and Restated Agreement and Plan of Merger, dated as of November 15, 2006, among Emdeon Corporation (now known as HLTH), EBS, EBS Acquisition LLC (the predecessor of the Corporate Taxpayer) and certain other parties.

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“ Hypothetical Tax Liability ” means, with respect to any Taxable Year, the liability for Taxes of (i) the Corporate Taxpayer and (ii) without duplication, EBS, but only with respect to Taxes imposed on EBS and allocable to the Corporate Taxpayer or to the other members of the consolidated group of which the Corporate Taxpayer is the parent, in each case using the same methods, elections, conventions and similar practices used on the relevant Corporate Taxpayer Return, but (i) using the Non-Stepped Up Tax Basis, (ii) without taking into account the use of available NOLs, if any, and (iii) excluding any deduction attributable to Imputed Interest; provided , that the Non-Stepped Up Tax Basis and NOLs shall be based on the IPO Date Asset Disclosure Letter including amendments thereto. For the avoidance of doubt, Hypothetical Tax Liability shall be determined without taking into account the carryover or carryback of any Tax item (or portions thereof) that is attributable to the NOLs, the Pre-IPO Basis Adjustment or Imputed Interest.

“ Imputed Interest ” shall mean any interest imputed under Section 1272, 1274 or 483 or other provision of the Code and any similar provision of state and local tax law with respect to the Corporate Taxpayer’s payment obligations under this Agreement.

“ Investors Tax Receivable Agreement (Exchanges) ” means the Amended and Restated Tax Receivable Agreement (Exchanges), dated as of November 2, 2011, by and among the Corporate Taxpayer, HF ITR Entity, BX ITR Entity and the ITR Entity.

“ IPO ” means the initial public offering of Class A common stock by the Corporate Taxpayer that occurred on the IPO Date.

“ IPO Date ” means August 11, 2009.

“ IPO Date Asset ” means an asset that was held by EBS, or by any of its direct or indirect subsidiaries treated as a partnership or disregarded entity for purposes of the applicable Tax, immediately prior to the IPO Date (“ IPO Date Asset ”). An IPO Date Asset also includes any asset that is “substituted basis property” under Section 7701(a)(42) of the Code with respect to an IPO Date Asset.

“ IPO Date Asset Disclosure Letter ” is defined in Section 2.1 of this Agreement.

“ IRS ” means the United States Internal Revenue Service.

“ ITR Entity ” is defined in the Recitals of this Agreement.

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“ LLC Agreement ” means, with respect to EBS, the Sixth Amended and Restated Limited Liability Company Agreement of EBS, as amended from time to time.

“ Management Tax Receivable Agreement ” means the Tax Receivable Agreement (Management), dated as of August 17, 2009, by and among the Corporate Taxpayer and certain members of the senior management of EBS, as amended , restated, supplemented or modified.

“ Material Objection Notice ” has the meaning set forth in Section 4.2 of this Agreement.

“ Medifax Restructuring ” means the distribution of the stock of Medifax-EDI Holding Company by Emdeon Business Services LLC to EBS followed by the distribution of such stock by EBS to the Corporate Taxpayer.

“ Members ” means the HF Non-Corporate Members, the HF Corporate Member and the GA Corporate Member.

“ NOLs ” is defined in the Recitals of this Agreement.

“ Non-Stepped Up Tax Basis ” means, with respect to any IPO Date Asset at any time, the Tax basis that such asset would have had at such time if no Pre-IPO Basis Adjustments had been made.

“ Objection Notice ” has the meaning set forth in Section 2.3(a) of this Agreement.

“ Parent ” means Beagle Parent Corp.

“ Payment Date ” means any date on which a payment is required to be made pursuant to this Agreement.

“ Person ” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity.

“ Purchase Agreement ” means the Securities Purchase Agreement, dated as of February 8, 2008, by and among I-ILTH, EBS, the GA Corporate Member, H&F Harrington MV I, L.P., HFCP, HFCA, HFCE and certain other parties.

“ Realized Tax Benefit ” means, for a Taxable Year, the excess, if any, of the Hypothetical Tax Liability over the actual liability for Taxes of (i) the Corporate Taxpayer and (ii) without duplication, EBS, but only with respect to Taxes imposed on EBS and allocable to the Corporate Taxpayer or to the other members of the consolidated group of which the Corporate Taxpayer is the parent for such Taxable Year. If all or a portion of the actual liability for such Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Benefit unless and until there has been a Determination.

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“ Realized Tax Detriment ” means, for a Taxable Year, the excess, if any, of the actual liability for Taxes of (i) the Corporate Taxpayer and (ii) without duplication, EBS, but only with respect to Taxes imposed on EBS and allocable to the Corporate Taxpayer or to the other members of the consolidated group of which the Corporate Taxpayer is the parent for such Taxable Year, over the Hypothetical Tax Liability for such Taxable Year. If all or a portion of the actual liability for such Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Detriment unless and until there has been a Determination.

“ Reconciliation Dispute ” has the meaning set forth in Section 7.9 of this Agreement.

“ Reconciliation Procedures ” has the meaning set forth in Section 2.3(a) of this Agreement.

“ Reorganization ” is defined in the Recitals of this Agreement.

“ Schedule ” means any of the following: (i) the IPO Date Asset Disclosure Letter, (ii) a Tax Benefit Schedule, or (iii) the Early Termination Schedule.

“ Senior Obligations ” is defined in Section 5.1 of this Agreement.

“ Subsequent IPO ” means the initial public offering and sale of the common stock of the Corporate Taxpayer, Parent or any other direct or indirect parent company of the Corporate Taxpayer (or any of their successors) that occurs subsequent to the transactions contemplated by the Beagle Merger Agreement.

“ Subsidiary Stock ” means any stock or other equity interest in any subsidiary entity of EBS that is treated as a corporation for United States federal income tax purposes.

“ Tax Benefit Payment ” is defined in Section 3.1(b) of this Agreement.

“ Tax Benefit Schedule ” is defined in Section 2.2 of this Agreement.

“ Tax Receivable Agreements ” shall mean this Agreement, the Investors Tax Receivable Agreement (Exchanges) and the Management Tax Receivable Agreement.

“ Tax Return ” means any return, declaration, report or similar statement required to be filed with respect to Taxes (including any attached schedules), including, without limitation, any information return, claim for refund, amended return and declaration of estimated Tax.

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“ Taxes ” means any and all United States federal, state and local taxes, assessments or similar charges that are based on or measured with respect to net income or profits, and any interest related to such Tax.

“ Taxing Authority ” shall mean any domestic, federal, national, state, county or municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising any taxing authority or any other authority exercising Tax regulatory authority.

“ Valuation Assumptions ” shall mean, as of an Early Termination Date, the assumptions that (1) in each Taxable Year ending on or after such Early Termination Date, the Corporate Taxpayer will have taxable income sufficient to fully utilize (i) the NOLs that have not been previously utilized in determining a Tax Benefit Payment under this Agreement, subject to all applicable limitations on the use of such NOLs and to assumption (3) below, and (ii) deductions arising from the Pre-IPO Basis Adjustments and the Imputed Interest during such Taxable Year or future Taxable Years in which such deductions would become available, (2) the United States federal income tax rates and state and local income tax rates that will be in effect for each such Taxable Year will be those specified for each such Taxable Year by the Code and other law as in effect on the Early Termination Date, and (3) any NOLs or loss carryovers generated by any Pre-IPO Basis Adjustment or Imputed Interest and available as of the date of the Early Termination Schedule will be utilized by the Corporate Taxpayer on a pro rata basis from the date of the Early Termination Schedule through the scheduled expiration date of such NOLs or loss carryovers.

ARTICLE II

DETERMINATION OF CERTAIN REALIZED TAX BENEFIT

Section 2.1. Pre-IPO Basis Adjustment . The letter dated August 17, 2009 from the ITR Entity to the Corporate Taxpayer shows, in reasonable detail necessary to perform the calculations required by this Agreement, including a breakdown by each party to which Pre-IPO Basis Adjustments or NOLs are attributable, for purposes of Taxes, estimates of (i) the Non-Stepped Up Tax Basis, (ii) the Pre-IPO Basis Adjustments, calculated in the aggregate, (iii) the period (or periods) over which the IPO Date Assets are amortizable and/or depreciable, (iv) the period (or periods) over which each Pre-IPO Basis Adjustment is amortizable and/or depreciable, (v) the NOLs that are attributable to the Corporate Taxpayer, the GA Corporate Member and the HF Corporate Member as of the date of the Reorganization or the IPO Date, as the case may be, using the closing-the-books methodology, and (vi) the scheduled expiration date (or dates) of the NOLs (the “ IPO Date Asset Disclosure Letter ”). As promptly as practicable, the ITR Entity and the Corporate Taxpayer shall agree on a replacement IPO Date Asset Disclosure Letter that reflects any adjustments necessary as a result of the IPO.

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Section 2.2. Tax Benefit Schedule.

(a) Tax Benefit Schedule . Within 90 calendar days after the filing of the United States federal income tax return of the Corporate Taxpayer for any Taxable Year in which there is a Realized Tax Benefit or Realized Tax Detriment, the Corporate Taxpayer shall provide to the ITR Entity a schedule showing, in reasonable detail, the calculation of the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year (a “ Tax Benefit Schedule ”). The Tax Benefit Schedule will become final as provided in Section 2.3(a) and may be amended as provided in Section 2.3(b) (subject to the procedures set forth in Section 2.3(b)).

(b) Applicable Principles . Subject to Section 3.3(a), the Realized Tax Benefit or Realized Tax Detriment for each Taxable Year is intended to measure the decrease or increase in the actual liability for Taxes of the Corporate Taxpayer for such Taxable Year attributable to the NOLs, the Pre-IPO Basis Adjustments and Imputed Interest, determined using a “with and without” methodology. For the avoidance of doubt, the actual liability for Taxes will take into account the deduction of the portion of the Tax Benefit Payment that must be accounted for as interest under the Code based upon the characterization of Tax Benefit Payments as additional consideration payable by the Corporate Taxpayer for the acquisition of the shares or assets of the GA Corporate Member or the HF Corporate Member in connection with the Reorganization. Carryovers or carrybacks of any Tax item attributable to the NOLs, the Pre-IPO Basis Adjustment and Imputed Interest shall be considered to be subject to the rules of the Code and the Treasury Regulations or the appropriate provisions of U.S. state and local income and franchise tax law, as applicable, governing the use, limitation and expiration of carryovers or carrybacks of the relevant type. If a carryover or carryback of any Tax item includes a portion that is attributable to the NOLs, the Pre-IPO Basis Adjustment or Imputed Interest and another portion that is not, such portions shall be considered to be used in accordance with the “with and without” methodology.

Section 2.3. Procedures, Amendments.

(a) Procedure . Every time the Corporate Taxpayer delivers to the ITR Entity an applicable Schedule under this Agreement, including any Amended Schedule delivered pursuant to Section 2.3(b), but excluding any Early Termination Schedule or amended Early Termination Schedule, the Corporate Taxpayer shall also (x) deliver to the ITR Entity schedules and work papers, as determined by the Corporate Taxpayer or requested by the ITR Entity, providing reasonable detail regarding the preparation of the Schedule and (y) allow the ITR Entity reasonable access at no cost to the appropriate representatives at the Corporate Taxpayer, as determined by the Corporate Taxpayer or requested by the ITR Entity, in connection with a review of such Schedule. Without limiting the application of the preceding sentence, each time the Corporate Taxpayer delivers to the ITR Entity a Tax Benefit Schedule, in addition to the Tax Benefit Schedule duly completed, the Corporate Taxpayer shall deliver to the ITR Entity the Corporate Taxpayer Return, the reasonably detailed calculation by the Corporate Taxpayer of the Hypothetical Tax Liability, the reasonably detailed calculation by the Corporate Taxpayer of the actual Tax liability, as well as any other work papers as determined by the Corporate Taxpayer or requested by the ITR Entity. An applicable Schedule or amendment thereto shall become final and binding on all parties 30 calendar days from the first date on which the ITR Entity has received the applicable Schedule or amendment thereto unless the ITR Entity (i) within 30 calendar days after receiving an applicable Schedule or amendment thereto, provides the Corporate Taxpayer with notice of a material objection to such Schedule (“ Objection Notice ”)

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made in good faith or (ii) provides a written waiver of such right of any Objection Notice within the period described in clause (i) above, in which case such Schedule or amendment thereto becomes binding on the date the waiver is received by the Corporate Taxpayer. If the parties, for any reason, are unable to successfully resolve the issues raised in the Objection Notice within 30 calendar days after receipt by the Corporate Taxpayer of an Objection Notice, the Corporate Taxpayer and the ITR Entity shall employ the reconciliation procedures as described in Section 7.9 of this Agreement (the “ Reconciliation Procedures ”).

(b) Amended Schedule . The applicable Schedule for any Taxable Year may be amended from time to time by the Corporate Taxpayer (i) in connection with a Determination affecting such Schedule, (ii) to correct inaccuracies in the Schedule identified as a result of the receipt of additional factual information relating to a Taxable Year after the date the Schedule was provided to the ITR Entity, (iii) to comply with the Expert’s determination under the Reconciliation Procedures, (iv) to reflect a change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to a carryback or carryforward of a loss or other tax item to such Taxable Year, or (v) to reflect a change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to an amended Tax Return filed for such Taxable Year (any such Schedule, an “ Amended Schedule ”). The IPO Date Asset Disclosure Letter shall be appropriately amended by the ITR Entity and the Corporate Taxpayer to the extent that, as a result of a Determination the Corporate Taxpayer is required to calculate its Tax liability in a manner inconsistent with the IPO Date Asset Disclosure Letter.

ARTICLE III

TAX BENEFIT PAYMENTS

Section 3.1. Payments .

(a) Payments . Within five (5) calendar days after a Tax Benefit Schedule delivered to the ITR Entity becomes final in accordance with Section 2.3(a), the Corporate Taxpayer shall pay to the ITR Entity for such Taxable Year the Tax Benefit Payment determined pursuant to Section 3.1(b). Each such Tax Benefit Payment shall be made by wire transfer of immediately available funds to the bank account previously designated by the ITR Entity to the Corporate Taxpayer or as otherwise agreed by the Corporate Taxpayer and the ITR Entity. For the avoidance of doubt, no Tax Benefit Payment shall be made in respect of estimated tax payments, including, without limitation, federal estimated income tax payments. Notwithstanding anything herein to the contrary, in no event shall the aggregate Tax Benefit Payments (including Tax Benefit Payments previously made pursuant to the Original Agreement) (excluding any amount accounted for as interest under the Code) exceed $96,000,000 in respect of the Corporate Taxpayer, $63,000,000 in respect of the GA Corporate Member, and $53,000,000 in respect of the HF Corporate Member.

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equal to the excess, if any, of 85% of the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year over the total amount of payments previously made under this Section 3.1 (excluding payments attributable to Interest Amounts); provided , for the avoidance of doubt, that the ITR Entity shall not be required to return any portion of any previously made Tax Benefit Payment. The “ Interest Amount ” shall equal the interest on the Net Tax Benefit calculated at the Agreed Rate from the due date (without extensions) for filing the Corporate Taxpayer Return with respect to Taxes for such Taxable Year until the Payment Date. Notwithstanding the foregoing, for each Taxable Year ending on or after the date of a Change of Control, all Tax Benefit Payments shall be calculated by utilizing Valuation Assumptions (1) and (3), substituting in each case the terms “the closing date of a Change of Control” for an “Early Termination Date.”

Section 3.2. No Duplicative Payments . It is intended that the provisions of this Agreement will not result in duplicative payment of any amount (including interest) required under this Agreement. It is also intended that the provisions of this Agreement provide that Tax Benefit Payments are paid to the ITR Entity pursuant to this Agreement. The provisions of this Agreement shall be construed in the appropriate manner to ensure such intentions are realized.

Section 3.3. Pro Rata Payments; Coordination of Benefits With Other Tax Receivable Agreements .

(a) Notwithstanding anything in Section 3.1 to the contrary, to the extent that the aggregate tax benefit of the Corporate Taxpayer’s deduction with respect to the NOLs, the Pre-IPO Basis Adjustments, the Basis Adjustments or Imputed Interest under the Tax Receivable Agreements (as such terms are defined in each Tax Receivable Agreement) is limited in a particular Taxable Year because the Corporate Taxpayer does not have sufficient taxable income, the limitation on the tax benefit for the Corporate Taxpayer shall be allocated among the Tax Receivable Agreements (and among all parties eligible for payments thereunder) in proportion to the respective amounts of Realized Tax Benefits that would have been determined under the Tax Receivable Agreements if the Corporate Taxpayer had sufficient taxable income so that there were no such limitation.

(b) If for any reason the Corporate Taxpayer does not fully satisfy its payment obligations to make all Tax Benefit Payments due under the Tax Receivable Agreements in respect of a particular Taxable Year, then the Corporate Taxpayer and the ITR Entity agree that (i) the Corporate Taxpayer shall pay the same proportion of each Tax Benefit Payment due under each of the Tax Receivable Agreements in respect of such Taxable Year, without favoring one obligation over the other, and (ii) no Tax Benefit Payment shall be made in respect of any Taxable Year until all Tax Benefit Payments in respect of prior Taxable Years have been made in full.

(c) To the extent that the Corporate Taxpayer makes payments to the ITR Entity in respect of a particular Taxable Year in an amount greater than the payments that should have been made in accordance with Section 3.3(b), then the ITR Entity shall be obligated to make payments to the parties to the other Tax Receivable Agreements (other than the Corporate Taxpayer) in the amounts necessary so that each party to the Tax Receivable Agreements shall have received the amount that it would have received if all payments by the Corporate Taxpayer had been in accordance with Section 3.3(b); provided , that the ITR Entity’s obligation to pay over to the parties to the other Tax Receivable Agreements amounts received from the Corporate Taxpayer pursuant to this Section 3.3(c) shall terminate on the one year anniversary of the receipt by the ITR Entity of such amounts.

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(d) The parties hereto agree that the parties to the Investors Tax Receivable Agreement (Exchanges) and the parties to the Management Tax Receivable Agreement are expressly made third party beneficiaries of the provisions of this Section 3.3.

ARTICLE IV

TERMINATION

Section 4.1. Early Termination and Breach of Agreement .

(a) The Corporate Taxpayer may terminate this Agreement with respect to all amounts payable to the ITR Entity at any time by paying to the ITR Entity the Early Termination Payment; provided , that the Corporate Taxpayer may withdraw any notice to execute its termination rights under this Section 4.1(a) prior to the time at which any Early Termination Payment has been paid. Upon payment of the Early Termination Payment by the Corporate Taxpayer, neither the ITR Entity nor the Corporate Taxpayer shall have any further payment obligations under this Agreement, other than for any (a) Tax Benefit Payment agreed to by the Corporate Taxpayer and the ITR Entity as due and payable but unpaid as of the Early Termination Notice and (b) Tax Benefit Payment due for the Taxable Year ending with or including the date of the Early Termination Notice (except to the extent that the amount described in this clause (b) is included in the Early Termination Payment).

(b) In the event that the Corporate Taxpayer breaches any of its material obligations under this Agreement, whether as a result of failure to make any payment when due, failure to honor any other material obligation required hereunder or by operation of law as a result of the rejection of this Agreement in a case commenced under the Bankruptcy Code or otherwise, then all obligations hereunder shall be accelerated and such obligations shall be calculated as if an Early Termination Notice had been delivered on the date of such breach and shall include, but not be limited to, (1) the Early Termination Payment calculated as if an Early Termination Notice had been delivered on the date of a breach, (2) any Tax Benefit Payment agreed to by the Corporate Taxpayer and the ITR Entity as due and payable but unpaid as of the date of a breach with respect to any Taxable Year prior to the Taxable Year ending with or including the date of a breach, and (3) any Tax Benefit Payment due for the Taxable Year ending with or including the date of a breach but reduced by any amount with respect to the portion of such Taxable Year beginning after the date of such breach taken into account for purposes of determining the amount due under clause (1) of this sentence. Notwithstanding the foregoing, in the event that the Corporate Taxpayer breaches this Agreement, the ITR Entity shall be entitled to elect to receive the amounts set forth in clauses (1), (2) and (3) above or to seek specific performance of the terms hereof. The parties agree that the failure to make any payment due pursuant to this Agreement within three months of the date such payment is due shall be deemed to be a breach of a material obligation under this Agreement for all purposes of this Agreement, and that it will not be considered to be a breach of a material obligation under this Agreement to make a payment due pursuant to this Agreement within three months of the date such payment is due.

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Notwithstanding anything in this Agreement to the contrary, it shall not be a breach of this Agreement if the Corporate Taxpayer fails to make any Tax Benefit Payment when due to the extent that the Corporate Taxpayer has insufficient funds to make such payment; provided that the interest provisions of Section 5.2 shall apply to such late payment (unless the Corporate Taxpayer does not have sufficient cash to make such payment as a result of limitations imposed by any credit agreement to which the Corporate Taxpayer or any of its Subsidiaries is a party, in which case Section 5.2 shall apply, but the Default Rate shall be replaced by LIBOR plus 300 basis points).

Section 4.2. Early Termination Notice .

(a) If the Corporate Taxpayer chooses to exercise its right of early termination under Section 4.1 above other than in connection with a Change of Control or Subsequent IPO, the Corporate Taxpayer shall deliver to the ITR Entity notice of such intention to exercise such right (“ Early Termination Notice ”) and a schedule (the “ Early Termination Schedule ”) specifying the Corporate Taxpayer’s intention to exercise such right and showing in reasonable detail the calculation of the Early Termination Payment for the ITR Entity. The Early Termination Schedule shall become final and binding on all parties 30 calendar days from the first date on which the ITR Entity has received such Schedule or amendment thereto unless the ITR Entity (i) within 30 calendar days after receiving the Early Termination Schedule, provides the Corporate Taxpayer with notice of a material objection to such Schedule made in good faith (“ Material Objection Notice ”) or (ii) provides a written waiver of such right of a Material Objection Notice within the period described in clause (i) above, in which case such Schedule becomes binding on the date the waiver is received by the Corporate Taxpayer (the “ Early Termination Effective Date ”). If the parties, for any reason, are unable to successfully resolve the issues raised in such notice within 30 calendar days after receipt by the Corporate Taxpayer of the Material Objection Notice, the Corporate Taxpayer and the ITR Entity shall employ the Reconciliation Procedures.

(b) If the Corporate Taxpayer chooses to exercise its right of early termination under Section 4.1 above in connection with a Change of Control or Subsequent IPO, any reference to 30 calendar days in Section 4.2(a) above shall instead be deemed to be 10 calendar days.

Section 4.3. Payment upon Early Termination .

(a) Within three calendar days after the Early Termination Effective Date, the Corporate Taxpayer shall pay to the ITR Entity an amount equal to the Early Termination Payment. Such payment shall be made by wire transfer of immediately available funds to a bank account or accounts designated by the ITR Entity or as otherwise agreed by the Corporate Taxpayer and the ITR Entity.

(b) “ Early Termination Payment ” shall equal the present value, discounted at the Early Termination Rate as of the Early Termination Effective Date, of all Tax Benefit Payments that would be required to be paid by the Corporate Taxpayer to the ITR Entity beginning from the Early Termination Date and assuming that the Valuation Assumptions are applied, provided , that the Change of Control Termination Rate (instead of the Early Termination Rate) shall be used to determine the Early Termination Payment in the case of an early termination in connection with a Change of Control or Subsequent IPO.

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ARTICLE V

SUBORDINATION AND LATE PAYMENTS

Section 5.2. Late Payments by the Corporate Taxpayer . The amount of all or any portion of any Tax Benefit Payment or Early Termination Payment not made to the ITR Entity when due under the terms of this Agreement shall be payable together with any interest thereon, computed at the Default Rate and commencing from the date on which such Tax Benefit Payment or Early Termination Payment was due and payable.

ARTICLE VI

NO DISPUTES; CONSISTENCY; COOPERATION

Section 6.1. Participation in the Corporate Taxpayer’s and EBS’s Tax Matters . Except as otherwise provided herein, the Corporate Taxpayer shall have full responsibility for, and sole discretion over, all Tax matters concerning the Corporate Taxpayer and EBS, including without limitation the preparation, filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to Taxes. Notwithstanding the foregoing, the Corporate Taxpayer shall notify the ITR Entity of, and keep the ITR Entity reasonably informed with respect to, the portion of any audit of the Corporate Taxpayer and EBS by a Taxing Authority the outcome of which is reasonably expected to affect the rights and obligations of the ITR Entity under this Agreement, and shall provide to the ITR Entity reasonable opportunity to provide information and other input to the Corporate Taxpayer, EBS and their respective advisors concerning the conduct of any such portion of such audit; provided , however , that the Corporate Taxpayer and EBS shall not be required to take any action that is inconsistent with any provision of the LLC Agreement.

Section 6.2. Consistency . The Corporate Taxpayer and the ITR Entity agree to report and cause to be reported for all purposes, including federal, state and local Tax purposes and financial reporting purposes, all Tax-related items (including, without limitation, the Pre-IPO Basis Adjustments and each Tax Benefit Payment) in a manner consistent with that specified by the Corporate Taxpayer in any Schedule required to be provided by or on behalf of the Corporate Taxpayer under this Agreement unless otherwise required by law.

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and such other information as the Corporate Taxpayer or its representatives may reasonably request in connection with any of the matters described in clause (a) above, and (c) reasonably cooperate in connection with any such matter, and the Corporate Taxpayer shall reimburse the ITR Entity for any reasonable third-party costs and expenses incurred pursuant to this Section.

Section 6.4. Medifax Restructuring .

(a) The Corporate Taxpayer shall promptly seek a legal opinion from a qualified firm mutually agreeable to the H&F ITR Entity and the BX ITR Entity regarding the federal income tax consequences of the Medifax Restructuring, such restructuring to be in the form proposed by the BX ITR Entity and mutually agreeable to the H&F ITR Entity. If such opinion is at least “more likely than not” that the Medifax Restructuring would have the intended federal income tax consequences (“Medifax Opinion”), the Corporate Taxpayer shall proceed to effectuate the Medifax Restructuring.

(b) If a tax reserve relating to the intended income tax consequences of the Medifax Restructuring is established or increased subsequent to the consummation thereof, any Tax Benefit Payment attributable to the Medifax Restructuring will be reduced by an amount equal to such Tax Benefit Payment attributable to the Medifax Restructuring (without regard to this provision) multiplied by the ratio of (i) the tax reserve attributable to the Medifax Restructuring divided by (ii) the total amount of Tax Benefit Payments reasonably projected to be made attributable to the Medifax Restructuring resulting from the reallocation among assets of previous adjustments made under Section 743(b) of the Code (the “743(b) Reallocation”). To the extent that the tax reserve attributable to the Medifax Restructuring is decreased, the Tax Benefit Payments attributable to the Medifax Restructuring will be increased as of the time Tax Benefit Payments are next made by the amount of additional Tax Benefit Payments that would have been made previously had such decreased amount of the reserve never been recorded as a reserve, together with interest at a rate of LIBOR plus 300 basis points, calculated from the time such additional Tax Benefit Payments would have been paid in the absence of such decreased reserve to the time that such Tax Benefit Payments are actually paid. In the event that a tax reserve is recorded with respect to the Medifax Restructuring, the deductions attributable to the 743(b) Reallocation shall be deemed for purposes of this Agreement to be, among those deductions that produce Tax Benefit Payments under this Agreement, to be the last such deductions used to offset taxable income. The cumulative, net amount of Tax Benefit Payments reduced pursuant to this provision shall not exceed the amount of tax reserves attributable to the Medifax Restructuring.

(c) In the event that the Internal Revenue Service issues an Information Document Request (“IDR”) relating to, or a 30-day letter, 90-day letter or other form of written communication identifying as an issue, the 743(b) Reallocation (any such written communication, a “Written IRS Notice”), the obligation of the Corporate Taxpayer to make Tax Benefit Payments with respect to the 743(b) Reallocation shall be suspended indefinitely as of Parent or Corporate Taxpayer’s receipt of such Written IRS Notice. To the extent that the request or issue relating to such 743(b) Reallocation is resolved in favor of Parent and the Corporate Taxpayer, Tax Benefit Payments attributable to the 743(b) Reallocation will be resumed and will be increased as of the time that Tax Benefit Payments are next made by the amount of additional Tax Benefit Payments that would have been made previously had the Tax

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Benefit Payments attributable to the 743(b) Reallocation never been suspended, together with interest at a rate of LIBOR plus 300 basis, calculated from the time any such additional Tax Benefit Payment would have been paid in the absence of such suspension to the time that such Tax Benefit Payment is actually paid.

(d) Payments under Article III of the Tax Receivable Agreements shall be reduced, pro rata, by 85% of any tax cost (such as state and local taxes) resulting from the Medifax Restructuring, provided , that such reduction shall in no event exceed the amounts payable under the Tax Receivable Agreements solely as a result of the Medifax Restructuring.

(e) In the event that the Medifax Restructuring occurs, Parent and the Corporate Taxpayer will not liquidate Medifax-EDI Holding Company for a period of at least 24 months after the Medifax Restructuring is consummated.

ARTICLE VII

MISCELLANEOUS

Section 7.1. Notices . All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed duly given and received (a) on the date of delivery if delivered personally, or by facsimile upon confirmation of transmission by the sender’s fax machine if sent on a Business Day (or otherwise on the next Business Day) or (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

If to the Corporate Taxpayer, to:

3055 Lebanon Pike, Suite 1000

Nashville, TN 37214

Telephone: [Phone Number]

Facsimile: (615) 340-6153

Attention: General Counsel

with a copy (which shall not constitute notice to the Corporate Taxpayer) to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas New York, NY 10019-6064

Telephone: [Phone Number]

Facsimile: (212) 757-3990

Attention: John C. Kennedy, Esq.

If to the ITR Entity, to:

c/o The Blackstone Group

345 Park Avenue

New York, NY 10154

Facsimile: (212) 583-5749

Attention: John G. Finley, General Counsel

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c/o Hellman & Friedman LLC

One Maritime Plaza

12th Floor

San Francisco, CA 94111

Telephone: [Phone Number]

Facsimile: (415) 788-0176

Attention: Arrie Park, General Counsel

Any party may change its address or fax number by giving the other party written notice of its new address or fax number in the manner set forth above.

Section 7.3. Entire Agreement; No Third Party Beneficiaries . This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. Except to the extent provided under Section 3.3, this Agreement shall be binding upon and inure solely to the benefit of each party hereto and their respective successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 7.4. Governing Law . This Agreement shall be governed by, and construed in accordance with, the law of the State of New York, without regard to the conflicts of laws principles thereof that would mandate the application of the laws of another jurisdiction.

Section 7.6. Successors; Assignment; Amendments; Waivers .

(a) The ITR Entity may assign any of its rights under this Agreement to any Person as long as such transferee has executed and delivered, or, in connection with such transfer, executes and delivers, a joinder to this Agreement, in form and substance reasonably satisfactory to the Corporate Taxpayer, agreeing to become an ITR Entity for all purposes of this Agreement, except as otherwise provided in such joinder.

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(b) No provision of this Agreement may be amended unless such amendment is approved in writing by both the Corporate Taxpayer and the ITR Entity. No provision of this Agreement may be waived unless such waiver is in writing and signed by the party against whom the waiver is to be effective.

(c) All of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and their respective successors, assigns, heirs, executors, administrators and legal representatives. The Corporate Taxpayer shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Corporate Taxpayer, by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporate Taxpayer would be required to perform if no such succession had taken place. For the avoidance of doubt, Parent shall expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Corporate Taxpayer would be required to perform.

Section 7.7. Titles and Subtitles . The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

Section 7.8. Resolution of Disputes .

(a) Any and all disputes which cannot be settled amicably, including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement (including the validity, scope and enforceability of this arbitration provision) (each a “ Dispute ”) shall be finally settled by arbitration conducted by a single arbitrator in New York in accordance with the then-existing Rules of Arbitration of the International Chamber of Commerce. If the parties to the Dispute fail to agree on the selection of an arbitrator within ten (10) days of the receipt of the request for arbitration, the International Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer admitted to the practice of law in the State of New York and shall conduct the proceedings in the English language. Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings.

(b) Notwithstanding the provisions of paragraph (a), the Corporate Taxpayer may bring an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), the ITR Entity (i) expressly consents to the application of paragraph (c) of this Section 7.8 to any such action or proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate, and (iii) irrevocably appoints the Corporate Taxpayer as agent of the ITR Entity for service of process in connection with any such action or proceeding and agrees that service of process upon such agent, who shall promptly advise the ITR Entity of any such service of process, shall be deemed in every respect effective service of process upon the ITR Entity in any such action or proceeding.

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(c) (i) EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 7.8, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial relief in aid of arbitration, or to confirm an arbitration award. The parties acknowledge that the for a designated by this paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another; and

Section 7.9. Reconciliation . In the event that the Corporate Taxpayer and the ITR Entity are unable to resolve a disagreement with respect to the matters governed by Sections 2.3, 4.2 and 6.2 within the relevant period designated in this Agreement (“ Reconciliation Dispute ”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “ Expert ”) in the particular area of disagreement mutually acceptable to both parties. The Expert shall be a partner or principal in a nationally recognized accounting or law firm, and unless the Corporate Taxpayer and the ITR Entity agree otherwise, the Expert shall not, and the firm that employs the Expert shall not, have any material relationship with the Corporate Taxpayer or the ITR Entity or other actual or potential conflict of interest. If the parties are unable to agree on an Expert within fifteen (15) days of receipt by the respondent(s) of written notice of a Reconciliation Dispute, the Expert shall be appointed by the International Chamber of Commerce Centre for Expertise. The Expert shall resolve any matter relating to the IPO Date Asset Disclosure Letter or an amendment thereto or the Early Termination Schedule or an amendment thereto within 30 calendar days and shall resolve any matter relating to a Tax Benefit Schedule or an amendment thereto within 15 calendar days or as soon thereafter as is reasonably practicable, in each case after the matter has been submitted to the Expert for resolution. Notwithstanding the preceding sentence, if the matter is not resolved before any payment that is the subject of a disagreement would be due (in the absence of such disagreement) or any Tax Return reflecting the subject of a disagreement is due, the undisputed amount shall be paid on the date prescribed by this Agreement and such Tax Return may be filed as prepared by the Corporate Taxpayer, subject to adjustment or amendment upon resolution. The costs and expenses relating to the engagement of such Expert or amending any Tax Return shall be borne by the Corporate Taxpayer except as provided in the next sentence. The Corporate Taxpayer and the ITR Entity shall bear their own costs and expenses of such proceeding, unless (i) the Expert adopts the ITR Entity’s position, in which case the Corporate Taxpayer shall reimburse the ITR Entity for any reasonable out-of-pocket costs and expenses in such proceeding, or (ii) the Expert adopts the Corporate Taxpayer’s position, in which case the ITR Entity shall reimburse the

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Corporate Taxpayer for any reasonable out-of-pocket costs and expenses in such proceeding. Any dispute as to whether a dispute is a Reconciliation Dispute within the meaning of this Section 7.9 shall be decided by the Expert. The Expert shall finally determine any Reconciliation Dispute and the determinations of the Expert pursuant to this Section 7.9 shall be binding on the Corporate Taxpayer and the ITR Entity and may be entered and enforced in any court having jurisdiction.

Section 7.11. Admission of the Corporate Taxpayer into a Consolidated Group; Transfers of Corporate Assets .

(a) If the Corporate Taxpayer is or becomes a member of an affiliated or consolidated group of corporations that files a consolidated income tax return pursuant to Sections 1501 et seq. of the Code or any corresponding provisions of state or local law, then: (i) the provisions of this Agreement shall be applied with respect to the group as a whole; and (ii) Tax Benefit Payments, Early Termination Payments and other applicable items hereunder shall be computed with reference to the consolidated taxable income of the group as a whole. Parent shall file a consolidated income tax return that includes the Corporate Taxpayer and each other member of the federal consolidated income group of which the Corporate Taxpayer was the common parent prior to Parent’s acquisition of the Corporate Taxpayer, and, after the Medifax Restructuring, Parent’s federal consolidated income group is intended to include Medifax-EDI Holding Company and its subsidiaries.

(b) If any entity that is obligated to make a Tax Benefit Payment or Early Termination Payment hereunder transfers one or more assets to a corporation (or a Person classified as a corporation for U.S. income tax purposes) with which such entity does not file a consolidated tax return pursuant to Section 1501 of the Code, such entity, for purposes of calculating the amount of any Tax Benefit Payment or Early Termination Payment (e.g., calculating the gross income of the entity and determining the Realized Tax Benefit of such entity) due hereunder, shall be treated as having disposed of such asset in a fully taxable transaction on the date of such contribution. The consideration deemed to be received by such entity shall be equal to the fair market value of the contributed asset. For purposes of this Section 7.11, a transfer of a partnership interest shall be treated as a transfer of the transferring partner’s share of each of the assets and liabilities of that partnership.

(c) Until twelve months following the consummation of the Medifax Restructuring, Parent shall not cause (i) EBS Holdco I, LLC, (“Holdco I”) or EBS Holdco II, LLC (“Holdco II”) to merge, liquidate or change its current election to be treated as a corporation for federal income tax purposes or (ii) either of Holdco I or Holdco II to distribute their respective interests in EBS, provided, that this Section 7.11(c) shall not apply if the Corporate Taxpayer is unable to obtain the legal opinion referred to in Section 6.4(a) within a reasonable period of time not to be less than nine months from the Closing Date.

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Section 7.12. Confidentiality . The ITR Entity and each of its assignees acknowledge and agree that the information of the Corporate Taxpayer is confidential and, except in the course of performing any duties as necessary for the Corporate Taxpayer and its Affiliates, as required by law or legal process or to enforce the terms of this Agreement, such person shall keep and retain in the strictest confidence and not disclose to any Person any confidential matters, acquired pursuant to this Agreement, of the Corporate Taxpayer and its Affiliates and successors, concerning EBS and its Affiliates and successors or the Members, learned by the ITR Entity heretofore or hereafter. This Section 7.12 shall not apply to (i) any information that has been made publicly available by the Corporate Taxpayer or any of its Affiliates, becomes public knowledge (except as a result of an act of the ITR Entity in violation of this Agreement) or is generally known to the business community and (ii) the disclosure of information to the extent necessary for the ITR Entity to prepare and file its Tax Returns, to respond to any inquiries regarding the same from any taxing authority or to prosecute or defend any action, proceeding or audit by any taxing authority with respect to such returns. Notwithstanding anything to the contrary herein, the ITR Entity and each of its assignees (and each employee, representative or other agent of the ITR Entity or its assignees, as applicable) may disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure of the Corporate Taxpayer, EBS, the ITR Entity, the Members and their Affiliates, and any of their transactions, and all materials of any kind (including opinions or other tax analyses) that are provided to the ITR Entity relating to such tax treatment and tax structure.

If the ITR Entity or an assignee commits a breach, or threatens to commit a breach, of any of the provisions of this Section 7.12, the Corporate Taxpayer shall have the right and remedy to have the provisions of this Section 7.12 specifically enforced by injunctive relief or otherwise by any court of competent jurisdiction without the need to post any bond or other security, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to the Corporate Taxpayer or any of its Subsidiaries or the Members and the accounts and funds managed by the Corporate Taxpayer and that money damages alone shall not provide an adequate remedy to such Persons. Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available at law or in equity.

Section 7.13. Representations .

(a) The HF ITR Entity hereby represents that the HF Members have contributed to the HF ITR Entity, and the HF ITR Entity has received, all of the HF Members’ rights to receive payments in respect of the Corporate Taxpayer’s cash Tax savings attributable to various tax benefits that are subject to this Agreement (including their rights under this Agreement).

(b) The HF ITR Entity and the ITR Entity hereby represent that the HF ITR Entity has contributed to the ITR Entity, and the ITR Entity has received, all of the HF ITR Entity’s rights to receive payments in respect of the Corporate Taxpayer’s cash Tax savings attributable to various tax benefits that are subject to this Agreement (including their rights under this Agreement).

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[remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Corporate Taxpayer, the HF ITR Entity, the BX ITR Entity and the ITR Entity have duly executed this Agreement as of the date first written above.


EMDEON INC.

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: Executive Vice President, General
		Counsel and Secretary

BEAGLE PARENT LLC

By:		/s/ Neil P. Simpkins
		Name: Neil P. Simpkins
		Title: President

H&F ITR HOLDCO, L.P.

By:		Hellman & Friedman Investors VI, L.P.,
		its General Partner

By:		Hellman & Friedman LLC,
		its General Partner

By:		/s/ Allen R. Thorpe
		Name: Allen R. Thorpe
		Title: Managing Director

GA-H&F ITR HOLDCO, L.P.

By: ITR Holdco GP LLC, its General Partner

By:		/s/ Neil P. Simpkins
		Name: Neil P. Simpkins
		Title: Manager

By:		/s/ Allen R. Thorpe
		Name: Allen R. Thorpe
		Title: Manager

Signature Page to Tax Receivable Agreement (Reorganizations)

Exhibit 10.5

EXECUTION VERSION

AMENDED AND RESTATED

TAX RECEIVABLE AGREEMENT (EXCHANGES)

among

EMDEON INC.,

H&F ITR HOLDCO, L.P.,

BEAGLE PARENT LLC,

and

GA-H&F ITR HOLDCO, L.P.

Dated as of November 2, 2011

Table of Contents


		Page
ARTICLE I DEFINITIONS			3

Section 1.1.	Definitions		3

ARTICLE II DETERMINATION OF CERTAIN REALIZED TAX BENEFIT			10

Section 2.1.	Basis Adjustment		10

Section 2.2.	Tax Benefit Schedule		10

Section 2.3.	Procedures, Amendments		11

ARTICLE III TAX BENEFIT PAYMENTS			12

Section 3.1.	Payments		12

Section 3.2.	No Duplicative Payments		12

Section 3.3.	Pro Rata Payments; Coordination of Benefits With Other Tax Receivable Agreements		12

ARTICLE IV TERMINATION			13

Section 4.1.	Early Termination and Breach of Agreement		13

Section 4.2.	Early Termination Notice		14

Section 4.3.	Payment upon Early Termination		15

ARTICLE V SUBORDINATION AND LATE PAYMENTS			15

Section 5.1.	Subordination		15

Section 5.2.	Late Payments by the Corporate Taxpayer		15

ARTICLE VI NO DISPUTES; CONSISTENCY; COOPERATION			16

Section 6.1.	Participation in the Corporate Taxpayer’s and EBS’s Tax Matters		16

Section 6.2.	Consistency		16

Section 6.3.	Cooperation		16

Section 6.4.	Medifax Restructuring		16

ARTICLE VII MISCELLANEOUS			17

Section 7.1.	Notices		17

Section 7.2.	Counterparts		18

Section 7.3.	Entire Agreement; No Third Party Beneficiaries		19

Section 7.4.	Governing Law		19

Section 7.5.	Severability		19

Section 7.6.	Successors; Assignment; Amendments; Waivers		19

Section 7.7.	Titles and Subtitles		20

Section 7.8.	Resolution of Disputes		20

Section 7.9.	Reconciliation		21

Section 7.10.	Withholding		21

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Table of Contents (continued)


		Page
Section 7.11.	Admission of the Corporate Taxpayer into a Consolidated Group; Transfers of Corporate Assets		22

Section 7.12.	Confidentiality		22

Section 7.13.	Representations		23

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AMENDED AND RESTATED

TAX RECEIVABLE AGREEMENT (EXCHANGES)

This AMENDED AND RESTATED TAX RECEIVABLE AGREEMENT (EXCHANGES) (this “ Agreement ”), dated as of November 2, 2011, is hereby entered into by and among Emdeon Inc., a Delaware corporation (the “ Corporate Taxpayer ”), H&F ITR Holdco, L.P., a Delaware limited partnership (the “ HF ITR Entity ”), Beagle Parent LLC, a Delaware limited liability company (the “ BX ITR Entity ”), GA-H&F ITR Holdco, L.P., a Delaware limited partnership (the “ ITR Entity ”), and each of the successors and assigns thereto.

RECITALS

WHEREAS, the Members (as defined below) hold or held member interests (the “ Units ”) in EBS Master LLC, a Delaware limited liability company (“ EBS ”), which is classified as a partnership for United States federal income tax purposes;

WHEREAS, the Corporate Taxpayer is the managing member of EBS, and holds and will hold, directly and/or indirectly, Units;

WHEREAS, the Units held by HFCP VI Domestic MV, L.P., a Delaware limited partnership (“ HFCP ”), Hellman & Friedman Capital Associates VI, L.P., a Delaware limited partnership (“ HFCA ”), Hellman & Friedman Capital Executives VI, L.P., a Delaware limited partnership (“ HFCE ”) and Hellman & Friedman Investors VI, L.P., a Delaware limited partnership (“ H&F GP ” and together with HFCP, HFCA and HFCE, the “ HF Non-Corporate Members ”), may be exchanged for cash or Class A common stock (the “ Class A Shares ”) of the Corporate Taxpayer, subject to the provisions of the LLC Agreement (as defined below);

WHEREAS, EBS and each of its direct and indirect subsidiaries treated as a partnership for United States federal income tax purposes currently have and will have in effect an election under Section 754 of the United States Internal Revenue Code of 1986, as amended (the “ Code ”), for each Taxable Year in which a taxable acquisition of Units by the Corporate Taxpayer, EBS, EBS Holdco I, LLC, a Delaware limited liability company (“ Holdco I ”) or EBS Holdco II, LLC, a Delaware limited liability company (“ Holdco II ”) from the HF Non-Corporate Members for cash, Class A Shares or shares of Parent (as defined below) (an “ Exchange ”) occurs;

WHEREAS, the income, gain, loss, expense and other Tax (as defined below) items of the Corporate Taxpayer may be affected by (i) the Basis Adjustments (as defined below) and (ii) the Imputed Interest (as defined below);

WHEREAS, the Corporate Taxpayer, the ITR Entity, the HF ITR Entity and GA ITR Holdco, L.P., a Delaware limited partnership (the “ GA ITR Entity ”) entered into that certain Tax Receivable Agreement (Exchanges), dated as of August 17, 2009 (the “ Original Agreement ”) in order to make certain arrangements with respect to the effect of the Basis Adjustments and Imputed Interest on the liability for Taxes of the Corporate Taxpayer;

WHEREAS, the shareholders of the Corporate Taxpayer and the shareholders of the GA Corporate Member before the Reorganization (the “ Existing GA Owners ”), and the HF Non-Corporate Members and H&F Harrington MV II, L.P., a Delaware limited partnership (“ HF Harrington ” and together with HF Non-Corporate Members, the “ HF Members ”) engaged in certain transactions that have resulted or will result in various tax benefits to the Corporate Taxpayer;

WHEREAS, the Existing GA Owners and the HF Members previously agreed that any and all payments in respect of such tax benefits will be made 50% to the Existing GA Owners and 50% to the HF Members (such agreement being reflected in the Fourth Amended and Restated Limited Liability Company Agreement of EBS dated as of May 21, 2008);

WHEREAS, Exchanges by the HF Non-Corporate Members and payments in respect of Tax savings related to such Exchanges will result in Tax savings for the Corporate Taxpayer;

WHEREAS, the sale of Units by the HF Non-Corporate Members to Holdco II in exchange for cash and shares of Parent stock, as contemplated by the Unit Purchase Agreement between the HF Non-Corporate Members and Holdco II, dated as of November 2, 2011, will be treated as a taxable Exchange that results in a Basis Adjustment hereunder;

WHEREAS, the HF Non-Corporate Members have contributed all of their rights to receive payments of Tax savings related to the Exchanges from the Corporate Taxpayer to the HF ITR Entity in exchange for ownership interests in the HF ITR Entity;

WHEREAS, the HF ITR Entity has contributed all of its rights to receive such payments of Tax savings generated by the Exchanges from the Corporate Taxpayer to the ITR Entity in exchange for ownership interests in the ITR Entity;

WHEREAS, as a result of such contributions, the ITR Entity was a party to the Original Agreement and shall be a party to this Agreement;

WHEREAS, the parties to this Agreement desire to amend and restate the Original Agreement in its entirety pursuant to Section 7.6(b) thereof.

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NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

“ Agreed Rate ” means LIBOR plus 100 basis points.

“ Agreement ” is defined in the Recitals of this Agreement.

“ Amended Schedule ” is defined in Section 2.3(b) of this Agreement.

“ Basis Adjustment ” means the adjustment to the tax basis of a Reference Asset under Sections 732, 734(b) and 1012 of the Code (in situations where, as a result of one or more Exchanges, EBS becomes an entity that is disregarded as separate from its owner for tax purposes) or under Sections 734(b), 743(b) and 754 of the Code (in situations where, following an Exchange, EBS remains in existence as an entity for U.S. federal income tax purposes) and, in each case, comparable sections of state and local tax laws, as a result of an Exchange with respect to Units held by the HF Non-Corporate Members and the payments made to the ITR Entity pursuant to this Agreement. For the avoidance of doubt, the amount of any Basis Adjustment resulting from an Exchange of one or more Units shall be determined without regard to any Pre-Exchange Transfer of such Units and as if any such Pre-Exchange Transfer had not occurred.

“ Beagle Merger Agreement ” means the Agreement and Plan of Merger, dated as of August 3, 2011, by and among Parent, Beagle Acquisition Corp. and the Corporate Taxpayer.

A “ Beneficial Owner ” of a security is a Person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares: (i) voting power, which includes the power to vote, or to direct the voting of, such security and/or (ii) investment power, which includes the power to dispose of, or to direct the disposition of, such security. The terms “ Beneficially Own ” and “ Beneficial Ownership ” shall have correlative meanings.

“ Board ” means the Board of Directors of Parent.

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“ BX ITR Entity ” is defined in the Recitals of this Agreement.

“ Change of Control ” means the occurrence of any of the following events:

(i)

any Person or any group of Persons acting together which would constitute a “group” for purposes of Section 13(d) of the Securities and Exchange Act of 1934, or any successor provisions thereto (excluding a group of Persons which includes one or more Affiliates of Hellman & Friedman LLC, one or more Affiliates of The Blackstone Group L.P. and Persons who acquire an ownership interest in Parent pursuant to Section 2.7(d) of the Interim Investors Agreement, dated as of August 3, 2011, by and among Parent and the Investors named therein, and such Persons’ Affiliates), is or becomes the Beneficial Owner, directly or indirectly, of securities of Parent representing more than 50% of the combined voting power of Parent’s then outstanding voting securities; or

(ii)

(iii)

(iv)

the shareholders of Parent approve a plan of complete liquidation or dissolution of Parent or there is consummated an agreement or series of related agreements for the sale or other disposition, directly or indirectly, by Parent of all or substantially all of Parent’s assets, other than such sale or other disposition by Parent of all or substantially all of Parent’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by shareholders of Parent in substantially the same proportions as their ownership of Parent immediately prior to such sale.

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“ Change of Control Termination Rate ” means 10% per annum, compounded annually.

“ Class A Shares ” is defined in the Recitals of this Agreement.

“ Closing Date ” has the meaning set forth in the Beagle Merger Agreement.

“ Code ” is defined in the Recitals of this Agreement.

“ Corporate Taxpayer ” is defined in the Recitals of this Agreement.

“ Corporate Taxpayer Return ” means the federal and/or state and/or local Tax Return, as applicable, of the Corporate Taxpayer filed with respect to Taxes of any Taxable Year.

“ Default Rate ” means LIBOR plus 500 basis points.

“ Dispute ” has the meaning set forth in Section 7.8(a) of this Agreement.

“ Early Termination Date ” means the date of an Early Termination Notice for purposes of determining the Early Termination Payment.

“ Early Termination Effective Date ” is defined in Section 4.2 of this Agreement.

“ Early Termination Notice ” is defined in Section 4.2 of this Agreement.

“ Early Termination Schedule ” is defined in Section 4.2 of this Agreement.

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“ Early Termination Payment ” is defined in Section 4.3(b) of this Agreement.

“ Early Termination Rate ” means the lesser of (i) 6.5% per annum, compounded annually, and (ii) LIBOR plus 100 basis points.

“ Exchange ” is defined in the Recitals of this Agreement.

“ Exchange Basis Schedule ” is defined in Section 2.1 of this Agreement.

“ Exchange Date ” means the date of any Exchange.

“ Existing GA Owners ” is defined in the Recitals of this Agreement.

“ Expert ” is defined in Section 7.9 of this Agreement.

“ GA Corporate Member ” is defined in the Recitals of this Agreement.

“ GA ITR Entity ” is defined in the Recitals of this Agreement.

“ HF Corporate Member ” is defined in the Recitals of this Agreement.

“ H&F GP ” is defined in the Recitals of this Agreement.

“ HF Harrington ” is defined in the Recitals of this Agreement.

“ HF ITR Entity ” is defined in the Recitals of this Agreement.

“ HF Members ” is defined in the Recitals of this Agreement.

“ HF Non-Corporate Members ” is defined in the Recitals of this Agreement.

“ Hypothetical Tax Liability ” means, with respect to any Taxable Year, the liability for Taxes of (i) the Corporate Taxpayer and (ii) without duplication, EBS, but only with respect to Taxes imposed on EBS and allocable to the Corporate Taxpayer or to the other members of the consolidated group of which the Corporate Taxpayer is the parent, in each case using the same methods, elections, conventions and similar practices used on the relevant Corporate Taxpayer Return, but (i) using the Non-Stepped Up Tax Basis as reflected on the Exchange Basis Schedule including amendments thereto for the Taxable Year and (ii) excluding any deduction attributable to Imputed Interest for the Taxable Year. For the avoidance of doubt, Hypothetical Tax Liability shall be determined without taking into account the carryover or carryback of any Tax item (or portions thereof) that is attributable to the Basis Adjustment or Imputed Interest.

“ Investors Tax Receivable Agreement (Reorganizations) ” means the Amended and Restated Tax Receivable Agreement (Reorganizations), dated as of November 2, 2011, by and among the Corporate Taxpayer, HF ITR Entity, BX ITR Entity and the ITR Entity.

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“ IPO ” means the initial public offering of Class A Shares by the Corporate Taxpayer that occurred on the IPO Date.

“ IPO Date ” means August 11, 2009.

“ IRS ” means the United States Internal Revenue Service.

“ ITR Entity ” is defined in the Recitals of this Agreement.

“ LLC Agreement ” means, with respect to EBS, the Sixth Amended and Restated Limited Liability Company Agreement of EBS, as amended from time to time.

“ Management Tax Receivable Agreement ” means the Amended and Restated Tax Receivable Agreement (Management), dated as of August 17, 2009, by and among the Corporate Taxpayer and certain members of the senior management of EBS, as amended , restated, supplemented or modified.

“ Material Objection Notice ” has the meaning set forth in Section 4.2 of this Agreement.

“ Members ” means the HF Non-Corporate Members, the HF Corporate Member and the GA Corporate Member.

“ Non -Stepped Up Tax Basis ” means, with respect to any Reference Asset at any time, the Tax basis that such asset would have had at such time if no Basis Adjustments had been made.

“ Objection Notice ” has the meaning set forth in Section 2.3(a) of this Agreement.

“ Parent ” means Beagle Parent Corp.

“ Payment Date ” means any date on which a payment is required to be made pursuant to this Agreement.

“ Person ” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity.

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“ Pre -Exchange Transfer ” means any transfer (including upon the death of a Member) or distribution in respect of one or more Units (i) that occurs prior to an Exchange of such Units, and (ii) to which Section 743(b) or 734(b) of the Code applies.

“ Reconciliation Dispute ” has the meaning set forth in Section 7.9 of this Agreement.

“ Reconciliation Procedures ” has the meaning set forth in Section 2.3(a) of this Agreement.

“ Reference Asset ” means an asset that is held by EBS, or by any of its direct or indirect subsidiaries treated as a partnership or disregarded entity for purposes of the applicable Tax, at the time of an Exchange or at the time of the Medifax Restructuring. A Reference Asset also includes any asset that is “substituted basis property” under Section 7701(a)(42) of the Code with respect to a Reference Asset.

“ Reorganization ” is defined in the Recitals of this Agreement.

“ Schedule ” means any of the following: (i) an Exchange Basis Schedule, (ii) a Tax Benefit Schedule, or (iii) the Early Termination Schedule.

“ Senior Obligations ” is defined in Section 5.1 of this Agreement.

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“ Subsidiary Stock ” means any stock or other equity interest in any subsidiary entity of EBS that is treated as a corporation for United States federal income tax purposes.

“ Tax Benefit Payment ” is defined in Section 3.1(b) of this Agreement.

“ Tax Benefit Schedule ” is defined in Section 2.2 of this Agreement.

“ Tax Receivable Agreements ” shall mean this Agreement, the Investors Tax Receivable Agreement (Reorganizations) and the Management Tax Receivable Agreement.

“ Units ” is defined in the Recitals of this Agreement.

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ARTICLE II

DETERMINATION OF CERTAIN REALIZED TAX BENEFIT

Section 2.1. Basis Adjustment . Within 90 calendar days after the filing of the United States federal income tax return of the Corporate Taxpayer for each Taxable Year in which any Exchange has been effected, the Corporate Taxpayer shall deliver to the ITR Entity a schedule (the “ Exchange Basis Schedule ”) that shows, in reasonable detail necessary to perform the calculations required by this Agreement, including with respect to each Exchanging party, for purposes of Taxes, (i) the Non-Stepped Up Tax Basis of the Reference Assets as of each applicable Exchange Date, (ii) the Basis Adjustment with respect to the Reference Assets as a result of the Exchanges effected in such Taxable Year, calculated in the aggregate, (iii) the period (or periods) over which the Reference Assets are amortizable and/or depreciable and (iv) the period (or periods) over which each Basis Adjustment is amortizable and/or depreciable.

Section 2.2. Tax Benefit Schedule .

(a) Tax Benefit Schedule . Within 90 calendar days after the filing of the United States federal income tax return of the Corporate Taxpayer for any Taxable Year in which there is a Realized Tax Benefit or Realized Tax Detriment, the Corporate Taxpayer shall provide to the ITR Entity a schedule showing, in reasonable detail and, at the request of the ITR Entity, with respect to each separate Exchange, the calculation of the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year (a “ Tax Benefit Schedule ”). The Tax Benefit Schedule will become final as provided in Section 2.3(a) and may be amended as provided in Section 2.3(b) (subject to the procedures set forth in Section 2.3(b)).

(b) Applicable Principles . Subject to Section 3.3(a), the Realized Tax Benefit or Realized Tax Detriment for each Taxable Year is intended to measure the decrease or increase in the actual liability for Taxes of the Corporate Taxpayer for such Taxable Year attributable to the Basis Adjustments and Imputed Interest, determined using a “with and without” methodology. For the avoidance of doubt, the actual liability for Taxes will take into account the deduction of the portion of the Tax Benefit Payment that must be accounted for as interest under the Code based upon the characterization of Tax Benefit Payments as additional consideration payable by the Corporate Taxpayer for the Units acquired in an Exchange. Carryovers or carrybacks of any Tax item attributable to the Basis Adjustment and Imputed Interest shall be considered to be subject to the rules of the Code and the Treasury Regulations or the appropriate provisions of U.S. state and local income and franchise tax law, as applicable, governing the use, limitation and expiration of carryovers or carrybacks of the relevant type. If a carryover or carryback of any Tax item includes a portion that is attributable to the Basis Adjustment or Imputed Interest and another portion that is not, such portions shall be considered to be used in accordance with the “with and without” methodology. The parties agree that (i) all Tax Benefit Payments attributable to the Basis Adjustments (other than amounts accounted for as interest under the Code) will (A) be treated as subsequent upward purchase price adjustments that give rise to further Basis Adjustments to Reference Assets for the Corporate Taxpayer and (B) have the effect of creating additional Basis Adjustments to Reference Assets for the Corporate Taxpayer in the year of payment, and (ii) as a result, such additional Basis Adjustments will be incorporated into the current year calculation and into future year calculations, as appropriate.

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Section 2.3. Procedures, Amendments .

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ARTICLE III

TAX BENEFIT PAYMENTS

Section 3.1. Payments .

(a) Payments . Within five (5) calendar days after a Tax Benefit Schedule delivered to the ITR Entity becomes final in accordance with Section 2.3(a), the Corporate Taxpayer shall pay to the ITR Entity for such Taxable Year the Tax Benefit Payment determined pursuant to Section 3.1(b). Each such Tax Benefit Payment shall be made by wire transfer of immediately available funds to the bank account previously designated by the ITR Entity to the Corporate Taxpayer or as otherwise agreed by the Corporate Taxpayer and the ITR Entity. For the avoidance of doubt, no Tax Benefit Payment shall be made in respect of estimated tax payments, including, without limitation, federal estimated income tax payments. Notwithstanding anything herein to the contrary, unless the parties agree otherwise in writing upon request by the ITR Entity, in no event shall the aggregate Tax Benefit Payments in respect of any Exchange (other than amounts accounted for as interest under the Code) exceed 50% of the purchase price for the Units exchanged.

(b) A “ Tax Benefit Payment ” means an amount, not less than zero, equal to the sum of the Net Tax Benefit and the Interest Amount. For the avoidance of doubt, for Tax purposes, the Interest Amount shall not be treated as interest but instead shall be treated as additional consideration for the acquisition of Units in Exchanges, unless otherwise required by law. Subject to Section 3.3(a), the “ Net Tax Benefit ” for a Taxable Year shall be an amount equal to the excess, if any, of 85% of the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year over the total amount of payments previously made under this Section 3.1 (excluding payments attributable to Interest Amounts); provided , for the avoidance of doubt, that the ITR Entity shall not be required to return any portion of any previously made Tax Benefit Payment. The “ Interest Amount ” shall equal the interest on the Net Tax Benefit calculated at the Agreed Rate from the due date (without extensions) for filing the Corporate Taxpayer Return with respect to Taxes for such Taxable Year until the Payment Date. Notwithstanding the foregoing, for each Taxable Year ending on or after the date of a Change of Control, all Tax Benefit Payments, whether paid with respect to the Units that were Exchanged (i) prior to the date of such Change of Control or (ii) on or after the date of such Change of Control, shall be calculated by utilizing Valuation Assumptions (1) and (3), substituting in each case the terms “the closing date of a Change of Control” for an “Early Termination Date.”

Section 3.3. Pro Rata Payments; Coordination of Benefits With Other Tax Receivable Agreements .

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income, the limitation on the tax benefit for the Corporate Taxpayer shall be allocated among the Tax Receivable Agreements (and among all parties eligible for payments thereunder) in proportion to the respective amounts of Realized Tax Benefits that would have been determined under the Tax Receivable Agreements if the Corporate Taxpayer had sufficient taxable income so that there were no such limitation.

(d) The parties hereto agree that the parties to the Investors Tax Receivable Agreement (Reorganizations) and the parties to the Management Tax Receivable Agreement are expressly made third party beneficiaries of the provisions of this Section 3.3.

ARTICLE IV

TERMINATION

Section 4.1. Early Termination and Breach of Agreement .

(a) The Corporate Taxpayer may terminate this Agreement with respect to all amounts payable to the ITR Entity and with respect to all of the Units held by HF Non-Corporate Members at any time by paying to the ITR Entity the Early Termination Payment; provided , that the Corporate Taxpayer may withdraw any notice to execute its termination rights under this Section 4.1(a) prior to the time at which any Early Termination Payment has been paid. Upon payment of the Early Termination Payment by the Corporate Taxpayer, neither the ITR Entity nor the Corporate Taxpayer shall have any further payment obligations under this Agreement, other than for any (a) Tax Benefit Payment agreed to by the Corporate Taxpayer and the ITR Entity as due and payable but unpaid as of the Early Termination Notice and (b) Tax Benefit Payment due for the Taxable Year ending with or including the date of the Early Termination Notice (except to the extent that the amount described in this clause (b) is included in the Early Termination Payment). If an Exchange occurs after the Corporate Taxpayer exercises its termination rights under this Section 4.1(a), the Corporate Taxpayer shall have no obligations under this Agreement with respect to such Exchange.

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Section 4.2. Early Termination Notice .

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Section 4.3. Payment upon Early Termination .

(b) “ Early Termination Payment ” shall equal the present value, discounted at the Early Termination Rate as of the Early Termination Effective Date, of all Tax Benefit Payments that would be required to be paid by the Corporate Taxpayer to the ITR Entity beginning from the Early Termination Date and assuming that the Valuation Assumptions are applied, provided , that the Change of Control Termination Rate (instead of the Early Termination Rate) shall be used to determine the Early Termination Payment in the case of an early termination in connection with a Change of Control or Subsequent IPO.

ARTICLE V

SUBORDINATION AND LATE PAYMENTS

Section 5.1. Subordination . Notwithstanding any other provision of this Agreement to the contrary, any payment required to be made by the Corporate Taxpayer under this Agreement shall rank subordinate and junior in right of payment to any principal, interest or other amounts due and payable in respect of any obligations in respect of indebtedness for borrowed money of the Corporate Taxpayer and its Subsidiaries (“Senior Obligations”) and shall rank pari passu with all current or future unsecured obligations of the Corporate Taxpayer that are not Senior Obligations.

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ARTICLE VI

NO DISPUTES; CONSISTENCY; COOPERATION

Section 6.1. Participation in the Corporate Taxpayer’s and EBS’s Tax Matters . Except as otherwise provided herein, the Corporate Taxpayer shall have full responsibility for, and sole discretion over, all Tax matters concerning the Corporate Taxpayer and EBS, including without limitation the preparation, filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to Taxes. Notwithstanding the foregoing, the Corporate Taxpayer shall notify the ITR Entity of, and keep the ITR Entity reasonably informed with respect to, the portion of any audit of the Corporate Taxpayer and EBS by a Taxing Authority the outcome of which is reasonably expected to affect the rights and obligations of the ITR Entity under this Agreement, and shall provide to the ITR Entity reasonable opportunity to provide information and other input to the Corporate Taxpayer, EBS and their respective advisors concerning the conduct of any such portion of such audit; provided, however, that the Corporate Taxpayer and EBS shall not be required to take any action that is inconsistent with any provision of the LLC Agreement.

Section 6.2. Consistency . The Corporate Taxpayer and the ITR Entity agree to report and cause to be reported for all purposes, including federal, state and local Tax purposes and financial reporting purposes, all Tax-related items (including, without limitation, the Basis Adjustments and each Tax Benefit Payment) in a manner consistent with that specified by the Corporate Taxpayer in any Schedule required to be provided by or on behalf of the Corporate Taxpayer under this Agreement unless otherwise required by law.

Section 6.3. Cooperation . The ITR Entity shall (a) furnish to the Corporate Taxpayer in a timely manner such information, documents and other materials as the Corporate Taxpayer may reasonably request for purposes of making any determination or computation necessary or appropriate under this Agreement, preparing any Tax Return or contesting or defending any audit, examination or controversy with any Taxing Authority, (b) make itself available to the Corporate Taxpayer and its representatives to provide explanations of documents and materials and such other information as the Corporate Taxpayer or its representatives may reasonably request in connection with any of the matters described in clause (a) above, and (c) reasonably cooperate in connection with any such matter, and the Corporate Taxpayer shall reimburse the ITR Entity for any reasonable third-party costs and expenses incurred pursuant to this Section.

Section 6.4. Medifax Restructuring .

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the extent that the tax reserve attributable to the Medifax Restructuring is decreased, the Tax Benefit Payments attributable to the Medifax Restructuring will be increased as of the time Tax Benefit Payments are next made by the amount of additional Tax Benefit Payments that would have been made previously had such decreased amount of the reserve never been recorded as a reserve, together with interest at a rate of LIBOR plus 300 basis points, calculated from the time such additional Tax Benefit Payments would have been paid in the absence of such decreased reserve to the time that such Tax Benefit Payments are actually paid. In the event that a tax reserve is recorded with respect to the Medifax Restructuring, the deductions attributable to the 743(b) Reallocation shall be deemed for purposes of this Agreement to be, among those deductions that produce Tax Benefit Payments under this Agreement, to be the last such deductions used to offset taxable income. The cumulative, net amount of Tax Benefit Payments reduced pursuant to this provision shall not exceed the amount of tax reserves attributable to the Medifax Restructuring.

ARTICLE VII

MISCELLANEOUS

Section 7.1. Notices . All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed duly given and received (a) on the date of delivery if delivered personally, or by facsimile upon confirmation of transmission by the sender’s fax machine if sent on a Business Day (or otherwise on the next Business Day) or (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

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If to the Corporate Taxpayer, to:

3055 Lebanon Pike, Suite 1000

Nashville, TN 37214

Telephone: [Phone Number]

Facsimile: (615) 340-6153

Attention: General Counsel

with a copy (which shall not constitute notice to the Corporate Taxpayer) to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, NY 10019-6064

Telephone: [Phone Number]

Facsimile: (212) 757-3990

Attention: John C. Kennedy, Esq.

If to the ITR Entity, to:

c/o The Blackstone Group

345 Park Avenue

New York, NY 10154

Facsimile: (212) 583-5749

Attention: John G. Finley, General Counsel

c/o Hellman & Friedman LLC

One Maritime Plaza

12th Floor

San Francisco, CA 94111

Telephone: [Phone Number]

Facsimile: (415) 788-0176

Attention: Arrie Park, General Counsel

Any party may change its address or fax number by giving the other party written notice of its new address or fax number in the manner set forth above.

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Section 7.3. Entire Agreement; No Third Party Beneficiaries . This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. Except to the extent provided under Section 3.3, this Agreement shall be binding upon and inure solely to the benefit of each party hereto and their respective successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 7.6. Successors; Assignment; Amendments; Waivers .

(c) All of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and their respective successors, assigns, heirs, executors, administrators and legal representatives. The Corporate Taxpayer shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Corporate Taxpayer, by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporate Taxpayer would be required to perform if no such succession had taken place. For the avoidance of doubt, Parent shall expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Corporate Taxpayer would be required to perform.

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Section 7.7. Titles and Subtitles . The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

Section 7.8. Resolution of Disputes .

(b) Notwithstanding the provisions of paragraph (a), the Corporate Taxpayer may bring an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), the ITR Entity (i) expressly consents to the application of paragraph (c) of this Section 7.8 to any such action or proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate, and (iii) irrevocably appoints the Corporate Taxpayer as agent of the ITR Entity for service of process in connection with any such action or proceeding and agrees that service of process upon such agent, who shall promptly advise the ITR Entity of any such service of process, shall be deemed in every respect effective service of process upon the ITR Entity in any such action or proceeding.

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Section 7.9. Reconciliation . In the event that the Corporate Taxpayer and the ITR Entity are unable to resolve a disagreement with respect to the matters governed by Sections 2.3, 4.2 and 6.2 within the relevant period designated in this Agreement (“ Reconciliation Dispute ”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “ Expert ”) in the particular area of disagreement mutually acceptable to both parties. The Expert shall be a partner or principal in a nationally recognized accounting or law firm, and unless the Corporate Taxpayer and the ITR Entity agree otherwise, the Expert shall not, and the firm that employs the Expert shall not, have any material relationship with the Corporate Taxpayer or the ITR Entity or other actual or potential conflict of interest. If the parties are unable to agree on an Expert within fifteen (15) days of receipt by the respondent(s) of written notice of a Reconciliation Dispute, the Expert shall be appointed by the International Chamber of Commerce Centre for Expertise. The Expert shall resolve any matter relating to the Exchange Basis Schedule or an amendment thereto or the Early Termination Schedule or an amendment thereto within 30 calendar days and shall resolve any matter relating to a Tax Benefit Schedule or an amendment thereto within 15 calendar days or as soon thereafter as is reasonably practicable, in each case after the matter has been submitted to the Expert for resolution. Notwithstanding the preceding sentence, if the matter is not resolved before any payment that is the subject of a disagreement would be due (in the absence of such disagreement) or any Tax Return reflecting the subject of a disagreement is due, the undisputed amount shall be paid on the date prescribed by this Agreement and such Tax Return may be filed as prepared by the Corporate Taxpayer, subject to adjustment or amendment upon resolution. The costs and expenses relating to the engagement of such Expert or amending any Tax Return shall be borne by the Corporate Taxpayer except as provided in the next sentence. The Corporate Taxpayer and the ITR Entity shall bear their own costs and expenses of such proceeding, unless (i) the Expert adopts the ITR Entity’s position, in which case the Corporate Taxpayer shall reimburse the ITR Entity for any reasonable out-of-pocket costs and expenses in such proceeding, or (ii) the Expert adopts the Corporate Taxpayer’s position, in which case the ITR Entity shall reimburse the Corporate Taxpayer for any reasonable out-of-pocket costs and expenses in such proceeding. Any dispute as to whether a dispute is a Reconciliation Dispute within the meaning of this Section 7.9 shall be decided by the Expert. The Expert shall finally determine any Reconciliation Dispute and the determinations of the Expert pursuant to this Section 7.9 shall be binding on the Corporate Taxpayer and the ITR Entity and may be entered and enforced in any court having jurisdiction.

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Section 7.11. Admission of the Corporate Taxpayer into a Consolidated Group; Transfers of Corporate Assets .

(b) If any entity that is obligated to make a Tax Benefit Payment or Early Termination Payment hereunder transfers one or more assets to a corporation (or a Person classified as a corporation for U.S. income tax purposes) with which such entity does not file a consolidated tax return pursuant to Section 1501 of the Code, such entity, for purposes of calculating the amount of any Tax Benefit Payment or Early Termination Payment (e.g., calculating the gross income of the entity and determining the Realized Tax Benefit of such entity) due hereunder, shall be treated as having disposed of such asset in a fully taxable transaction on the date of such contribution. The consideration deemed to be received by such entity shall be equal to the fair market value of the contributed asset. For purposes of this Section 7.11, a transfer of a partnership interest shall be treated as a transfer of the transferring partner’s share of each of the assets and liabilities of that partnership.

(c) Until twelve months following the consummation of the Medifax Restructuring, Parent shall not cause (i) Holdco I or Holdco II to merge, liquidate or change its current election to be treated as a corporation for federal income tax purposes or (ii) either of Holdco I or Holdco II to distribute their respective interests in EBS, provided, that this Section 7.11(c) shall not apply if the Corporate Taxpayer is unable to obtain the legal opinion referred to in Section 6.4(a) within a reasonable period of time not to be less than nine months from the Closing Date.

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Section 7.13. Representations .

(a) The HF ITR Entity hereby represents that the HF Members have contributed to the HF ITR Entity, and the HF ITR Entity has received, all of the HF Members’ rights to receive payments in respect of the Corporate Taxpayer’s cash Tax savings attributable to various tax benefits generated by the Exchanges (including their rights under this Agreement).

(b) The HF ITR Entity and the ITR Entity hereby represent that the HF ITR Entity has contributed to the ITR Entity, and the ITR Entity has received, all of the HF ITR Entity’s rights to receive payments in respect of the Corporate Taxpayer’s cash Tax savings attributable to various tax benefits generated by the Exchanges (including their rights under this Agreement).

[remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Corporate Taxpayer, the HF ITR Entity, the BX ITR Entity and the ITR Entity have duly executed this Agreement as of the date first written above.


EMDEON INC.

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: Executive Vice President, General
		Counsel and Secretary

GA-H&F ITR HOLDCO, L.P.

By: ITR Holdco GP LLC its General Partner

By:		/s/ Neil P. Simpkins
		Name: Neil P. Simpkins
		Title: Manager

By:		/s/ Allen R. Thorpe
		Name: Allen R. Thorpe
		Title: Manager

BEAGLE PARENT LLC

By:		/s/ Neil P. Simpkins
		Name: Neil P. Simpkins
		Title: President

H&F ITR HOLDCO, L.P.

By:		Hellman & Friedman Investors VI, L.P.,
		its General Partner

By:		Hellman & Friedman LLC,
		its General Partner

By:		/s/ Allen R. Thorpe
		Name: Allen R. Thorpe
		Title: Managing Director

Signature Page to Tax Receivable Agreement (Exchanges)

Exhibit 10.6

TAX RECEIVABLE AGREEMENT (MANAGEMENT)

among

EMDEON INC.

and

THE PERSONS NAMED HEREIN

Dated as of August 17, 2009

TABLE OF CONTENTS


		Page
ARTICLE I DEFINITIONS			1

Section 1.1.	Definitions		1

ARTICLE II DETERMINATION OF CERTAIN REALIZED TAX BENEFIT			8

Section 2.1.	Basis Adjustment		8

Section 2.2.	Tax Benefit Schedule		8

Section 2.3.	Procedures, Amendments		9

ARTICLE III TAX BENEFIT PAYMENTS			10

Section 3.1.	Payments		10

Section 3.2.	No Duplicative Payments		11

Section 3.3.	Pro Rata Payments; Coordination of Benefits With Other Tax Receivable Agreements		11

ARTICLE IV TERMINATION			12

Section 4.1.	Early Termination and Breach of Agreement		12

Section 4.2.	Early Termination Notice		13

Section 4.3.	Payment upon Early Termination		13

ARTICLE V SUBORDINATION AND LATE PAYMENTS			14

Section 5.1.	Subordination		14

Section 5.2.	Late Payments by the Corporate Taxpayer		14

ARTICLE VI NO DISPUTES; CONSISTENCY; COOPERATION			14

Section 6.1.	Participation in the Corporate Taxpayer’s and EBS’s Tax Matters		14

Section 6.2.	Consistency		14

Section 6.3.	Cooperation		14

ARTICLE VII MISCELLANEOUS			15

Section 7.1.	Notices		15

Section 7.2.	Counterparts		15

Section 7.3.	Entire Agreement; No Third Party Beneficiaries		16

Section 7.4.	Governing Law		16

Section 7.5.	Severability		16

Section 7.6.	Successors; Assignment; Amendments; Waivers		16

Section 7.7.	Titles and Subtitles		17

Section 7.8.	Resolution of Disputes		17

Section 7.9.	Reconciliation		18

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Section 7.10.	Withholding	18

Section 7.11.	Admission of the Corporate Taxpayer into a Consolidated Group: Transfers of Corporate Assets	19

Section 7.12.	Confidentiality	19

Section 7.13.	Change in Law	20

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TAX RECEIVABLE AGREEMENT (MANAGEMENT)

This TAX RECEIVABLE AGREEMENT (MANAGEMENT) (this “ Agreement ”), dated as of August 17, 2009, is hereby entered into by and among Emdeon Inc., a Delaware corporation (the “ Corporate Taxpayer ”), and each of the persons from time to time party hereto.

RECITALS

WHEREAS, the Equity Plan Members (as defined below) hold member interests (the “ Units ”) in EBS Master LLC, a Delaware limited liability company (“ EBS ”), which is classified as a partnership for United States federal income tax purposes;

WHEREAS, the Corporate Taxpayer is the managing member of EBS, and holds and will hold, directly and/or indirectly, Units;

WHEREAS, the Units held by the Equity Plan Members may be exchanged for cash or Class A common stock (the “ Class A Shares ”) of the Corporate Taxpayer, subject to the provisions of the LLC Agreement (as defined below);

WHEREAS, EBS and each of its direct and indirect subsidiaries treated as a partnership for United States federal income tax purposes currently have and will have in effect an election under Section 754 of the United States Internal Revenue Code of 1986, as amended (the “ Code ”), for each Taxable Year in which a taxable acquisition of Units by the Corporate Taxpayer or EBS from an Equity Plan Member for cash or Class A Shares (an “ Exchange ”) occurs;

WHEREAS, the parties to this Agreement desire to make certain arrangements with respect to the effect of the Basis Adjustments and Imputed Interest on the liability for Taxes of the Corporate Taxpayer.

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

“ Agreed Rate ” means LIBOR plus 100 basis points.

“ Agreement ” is defined in the Recitals of this Agreement.

“ Amended Schedule ” is defined in Section 2.3(b) of this Agreement.

“ Basis Adjustment ” means the adjustment to the tax basis of a Reference Asset under Sections 732, 734(b) and 1012 of the Code (in situations where, as a result of one or more Exchanges, EBS becomes an entity that is disregarded as separate from its owner for tax purposes) or under Sections 734(b), 743(b) and 754 of the Code (in situations where, following an Exchange, EBS remains in existence as an entity for U.S. federal income tax purposes) and, in each case, comparable sections of state and local tax laws, as a result of an Exchange with respect to Units held by the Equity Plan Members and the payments made to the Equity Plan Members pursuant to this Agreement. For the avoidance of doubt, the amount of any Basis Adjustment resulting from an Exchange of one or more Units shall be determined without regard to any Pre-Exchange Transfer of such Units and as if any such Pre-Exchange Transfer had not occurred.

A “ Beneficial Owner ” of a security is a Person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares: (i) voting power, which includes the power to vote, or to direct the voting of, such security and/or (ii) investment power, which includes the power to dispose of, or to direct the disposition of, such security. The terms “ Beneficially Own ” and “ Beneficial Ownership ” shall have correlative meanings.

“ Board ” means the Board of Directors of the Corporate Taxpayer.

“ Change in Tax Law ” is defined in Section 7.13 of this Agreement.

“ Change of Control ” means the occurrence of any of the following events:

(i) any Person or any group of Persons acting together which would constitute a “group” for purposes of Section 13(d) of the Securities and Exchange Act of 1934, or any successor provisions thereto, excluding a group of Persons which includes one or more Affiliates of Hellman & Friedman LLC and one or more Affiliates of GA LLC, is or becomes the Beneficial Owner, directly or indirectly, of securities of the Corporate Taxpayer representing more than 50% of the combined voting power of the Corporate Taxpayer’s then outstanding voting securities; or

(ii) the following individuals cease for any reason to constitute a majority of the number of directors of the Corporate Taxpayer then serving: individuals who, on the IPO Date, constitute the Board and any new director whose appointment or election by the Board or nomination for election by the Corporate Taxpayer’s shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the IPO Date or whose appointment, election or nomination for election was previously so approved or recommended by the directors referred to in this clause (ii); or

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(iii) there is consummated a merger or consolidation of the Corporate Taxpayer with any other corporation or other entity, and, immediately after the consummation of such merger or consolidation, either (x) the Board immediately prior to the merger or consolidation does not constitute at least a majority of the board of directors of the company surviving the merger or, if the surviving company is a Subsidiary, the ultimate parent thereof, or (y) the voting securities of the Corporate Taxpayer immediately prior to such merger or consolidation do not continue to represent or are not converted into more than 50% of the combined voting power of the then outstanding voting securities of the Person resulting from such merger or consolidation or, if the surviving company is a Subsidiary, the ultimate parent thereof; or

(iv) the shareholders of the Corporate Taxpayer approve a plan of complete liquidation or dissolution of the Corporate Taxpayer or there is consummated an agreement or series of related agreements for the sale or other disposition, directly or indirectly, by the Corporate Taxpayer of all or substantially all of the Corporate Taxpayer’s assets, other than such sale or other disposition by the Corporate Taxpayer of all or substantially all of the Corporate Taxpayer’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by shareholders of the Corporate Taxpayer in substantially the same proportions as their ownership of the Corporate Taxpayer immediately prior to such sale.

Notwithstanding the foregoing, except with respect to clause (ii) and clause (iii)(x) above, a “Change of Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the shares of the Corporate Taxpayer immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in, and own substantially all of the shares of, an entity which owns all or substantially all of the assets of the Corporate Taxpayer immediately following such transaction or series of transactions.

“ Class A Shares ” is defined in the Recitals of this Agreement.

“ Code ” is defined in the Recitals of this Agreement.

“ Corporate Taxpayer ” is defined in the Recitals of this Agreement.

“ Corporate Taxpayer Return ” means the federal and/or state and/or local Tax Return, as applicable, of the Corporate Taxpayer filed with respect to Taxes of any Taxable Year.

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“ Default Rate ” means LIBOR plus 500 basis points.

“ Dispute ” has the meaning set forth in Section 7.8(a) of this Agreement.

“ Early Termination Date ” means the date of an Early Termination Notice for purposes of determining the Early Termination Payment.

“ Early Termination Effective Date ” is defined in Section 4.2 of this Agreement.

“ Early Termination Notice ” is defined in Section 4.2 of this Agreement.

“ Early Termination Schedule ” is defined in Section 4.2 of this Agreement.

“ Early Termination Payment ” is defined in Section 4.3(b) of this Agreement.

“ Early Termination Rate ” means the lesser of (i) 6.5% per annum, compounded annually, and (ii) LIBOR plus 100 basis points.

“ Equity Plan Members ” means the parties hereto other than the Corporate Taxpayer and each other individual who from time to time executes a joinder agreement in accordance with Section 7.6 of this Agreement.

“ Exchange ” is defined in the Recitals of this Agreement.

“ Exchange Basis Schedule ” is defined in Section 2.1 of this Agreement.

“ Exchange Date ” means the date of any Exchange.

“ Expert ” is defined in Section 7.9 of this Agreement.

“ Hypothetical Tax Liability ” means, with respect to any Taxable Year, the liability for Taxes of (i) the Corporate Taxpayer and (ii) without duplication, EBS, but only with respect to Taxes imposed on EBS and allocable to the Corporate Taxpayer or to the other members of the consolidated group of which the Corporate Taxpayer is the parent, in each case using the same methods, elections, conventions and similar practices used on the relevant Corporate Taxpayer Return, but (i) using the Non-Stepped Up Tax Basis as reflected on the Exchange Basis Schedule including amendments thereto for the Taxable Year and (ii) excluding any deduction attributable to Imputed Interest for the Taxable Year. For the avoidance of doubt, Hypothetical Tax Liability shall be determined without taking into account the carryover or carryback of any Tax item (or portions thereof) that is attributable to the Basis Adjustment or Imputed Interest.

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“ Independent Director ” means Dinyar S. Devitre, Jim D. Kever, Philip M. Pead and any other member of the Board who is not affiliated with any of the principal stockholders of the Corporate Taxpayer and who is neither a current officer nor a former officer of the Corporate Taxpayer or any of its Subsidiaries.

“ Investors Tax Receivable Agreement (Reorganizations) ” means the Tax Receivable Agreement (Reorganizations), dated as of August 17, 2009, by and among the Corporate Taxpayer, H&F ITR Holdco, L.P., GA ITR Holdco, L.P. and GA-H&F ITR Holdco, L.P.

“ Investors Tax Receivable Agreement (Exchanges) ” means the Tax Receivable Agreement (Exchanges), dated as of August 17, 2009, by and among the Corporate Taxpayer, H&F ITR Holdco, L.P., GA ITR Holdco, L.P. and GA-H&F ITR Holdco, L.P.

“ IPO ” means the initial public offering of Class A Shares by the Corporate Taxpayer.

“ IPO Date ” means the closing date of the IPO.

“ IRS ” means the United States Internal Revenue Service.

“ LLC Agreement ” means, with respect to EBS, the Sixth Amended and Restated Limited Liability Company Agreement of EBS.

“ Market Value ” shall mean the closing price of the Class A Shares on the applicable Exchange Date on the national securities exchange or interdealer quotation system on which such Class A Shares are then traded or listed, as reported by the Wall Street Journal ; provided , that if the closing price is not reported by the Wall Street Journal for the applicable Exchange Date, then the Market Value shall mean the closing price of the Class A Shares on the Business Day immediately preceding such Exchange Date on the national securities exchange or interdealer quotation system on which such Class A Shares are then traded or listed, as reported by the Wall Street Journal ; provided , further , that if the Class A Shares are not then listed on a national securities exchange or interdealer quotation system, “Market Value” shall mean the cash consideration paid for Class A Shares, or the fair market value of the other property delivered for Class A Shares, as determined by the Board in good faith.

“ Material Objection Notice ” has the meaning set forth in Section 4.2 of this Agreement.

“ Non-Stepped Up Tax Basis ” means, with respect to any Reference Asset at any time, the Tax basis that such asset would have had at such time if no Basis Adjustments had been made.

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“ Objection Notice ” has the meaning set forth in Section 2.3(a) of this Agreement.

“ Original Members ” means the members of EBS on the date of, but immediately preceding, the IPO.

“ Payment Date ” means any date on which a payment is required to be made pursuant to this Agreement.

“ Person ” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity.

“ Pre-Exchange Transfer ” means any transfer (including upon the death of an Equity Plan Member) or distribution in respect of one or more Units (i) that occurs prior to an Exchange of such Units, and (ii) to which Section 743(b) or 734(b) of the Code applies.

“ Qualified Tax Advisor ” means Paul, Weiss, Rifkind, Wharton & Garrison LLP, Simpson Thacher & Bartlett LLP, Deloitte Tax LLP, or any other law or accounting firm that is nationally recognized as being expert in Tax matters and that is reasonably acceptable to the Corporate Taxpayer.

“ Reconciliation Dispute ” has the meaning set forth in Section 7.9 of this Agreement.

“ Reconciliation Procedures ” has the meaning set forth in Section 2.3(a) of this Agreement.

“ Reference Asset ” means an asset that is held by EBS, or by any of its direct or indirect subsidiaries treated as a partnership or disregarded entity for purposes of the applicable Tax, at the time of an Exchange. A Reference Asset also includes any asset that is “substituted basis property” under Section 7701(a)(42) of the Code with respect to a Reference Asset.

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“ Schedule ” means any of the following: (i) an Exchange Basis Schedule, (ii) a Tax Benefit Schedule, or (iii) the Early Termination Schedule.

“ Senior Obligations ” is defined in Section 5.1 of this Agreement.

“ Subsidiary Stock ” means any stock or other equity interest in any subsidiary entity of EBS that is treated as a corporation for United States federal income tax purposes.

“ Tax Benefit Payment ” is defined in Section 3.1(b) of this Agreement.

“ Tax Benefit Schedule ” is defined in Section 2.2 of this Agreement.

“ Tax Receivable Agreements ” shall mean this Agreement, the Investors Tax Receivable Agreement (Reorganizations) and the Investors Tax Receivable Agreement (Exchanges).

“ Units ” is defined in the Recitals of this Agreement.

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“ Valuation Assumptions ” shall mean, as of an Early Termination Date, the assumptions that (1) in each Taxable Year ending on or after such Early Termination Date, the Corporate Taxpayer will have taxable income sufficient to fully utilize the deductions arising from the Basis Adjustments and the Imputed Interest during such Taxable Year or future Taxable Years (including, for the avoidance of doubt, Basis Adjustments and Imputed Interest that would result from future Tax Benefit Payments that would be paid in accordance with the Valuation Assumptions) in which such deductions would become available, (2) the United States federal income tax rates and state and local income tax rates that will be in effect for each such Taxable Year will be those specified for each such Taxable Year by the Code and other law as in effect on the Early Termination Date, (3) any loss carryovers generated by any Basis Adjustment or Imputed Interest and available as of the date of the Early Termination Schedule will be utilized by the Corporate Taxpayer on a pro rata basis from the date of the Early Termination Schedule through the scheduled expiration date of such loss carryovers, (4) any non-amortizable assets (other than any Subsidiary Stock) will be disposed of on the fifteenth anniversary of the applicable Basis Adjustment; provided , that in the event of a Change of Control, such non-amortizable assets shall be deemed disposed of at the time of sale of the relevant asset (if earlier than such fifteenth anniversary), (5) any Subsidiary Stock will be deemed never to be disposed of; provided , that, except in respect of a termination payment pursuant to Section 7.13(b), if (i) the ITR Entity delivers to the Corporate Taxpayer a written opinion of a Qualified Tax Advisor to the effect that as a result of a certain transaction (or series of transactions), it is more likely than not that the tax basis in the amortizable or depreciable assets of the Corporate Taxpayer will be increased by reference to the tax basis in such Subsidiary Stock and the tax basis in such Subsidiary Stock will decrease accordingly, and (ii) the Corporate Taxpayer determines that it is commercially reasonable to effectuate such transaction (or series of transactions), then the Valuation Assumptions will take into account such increased tax basis in the amortizable or depreciable assets of the Corporate Taxpayer, and (6) if, at the Early Termination Date, there are Units that have not been Exchanged, then each such Unit shall be deemed to be Exchanged for the Market Value of the Class A Shares and the amount of cash that would be transferred if the Exchange occurred on the Early Termination Date.

ARTICLE II

DETERMINATION OF CERTAIN REALIZED TAX BENEFIT

Section 2.1. Basis Adjustment . Within 90 calendar days after the filing of the United States federal income tax return of the Corporate Taxpayer for each Taxable Year in which any Exchange has been effected, the Corporate Taxpayer shall deliver to each applicable Equity Plan Member a schedule (the “ Exchange Basis Schedule ”) that shows, in reasonable detail necessary to perform the calculations required by this Agreement, including with respect to each Exchanging party, for purposes of Taxes, (i) the Non-Stepped Up Tax Basis of the Reference Assets as of each applicable Exchange Date, (ii) the Basis Adjustment with respect to the Reference Assets as a result of the Exchanges effected by such Equity Plan Member *in such Taxable Year, calculated in the aggregate, (iii) the period (or periods) over which the Reference Assets are amortizable and/or depreciable and (iv) the period (or periods) over which each Basis Adjustment is amortizable and/or depreciable.

Section 2.2. Tax Benefit Schedule .

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of the applicable Equity Plan Member, with respect to each separate Exchange, the calculation of the Realized Tax Benefit or Realized Tax Detriment attributable to such Equity Plan Member for such Taxable Year (a “ Tax Benefit Schedule ”). The Tax Benefit Schedule will become final as provided in Section 2.3(a) and may be amended as provided in Section 2.3(b) (subject to the procedures set forth in Section 2.3(b)).

(b) Applicable Principles . Subject to Section 3.3(a), the Realized Tax Benefit or Realized Tax Detriment for each Taxable Year is intended to measure the decrease or increase in the actual liability for Taxes of the Corporate Taxpayer for such Taxable Year attributable to the Basis Adjustments and Imputed Interest, determined using a “with and without” methodology. For the avoidance of doubt, the actual liability for Taxes will take into account the deduction of the portion of the Tax Benefit Payment that must be accounted for as interest under the Code based upon the characterization of Tax Benefit Payments as additional consideration payable by the Corporate Taxpayer for the Units acquired in an Exchange. Carryovers or carrybacks of any Tax item attributable to the Basis Adjustment and Imputed Interest shall be considered to be subject to the rules of the Code and the Treasury Regulations or the appropriate provisions of U.S. state and local income and franchise tax law, as applicable, governing the use, limitation and expiration of carryovers or carrybacks of the relevant type. If a carryover or carryback of any Tax item includes a portion that is attributable to the Basis Adjustment or Imputed Interest and another portion that is not, such portions shall be considered to be used in accordance with the “with and without” methodology. The parties agree that (i) all Tax Benefit Payments attributable to the Basis Adjustments (other than amounts accounted for as interest under the Code) will (A) be treated as subsequent upward purchase price adjustments that give rise to further Basis Adjustments to Reference Assets for the Corporate Taxpayer and (B) have the effect of creating additional Basis Adjustments to Reference Assets for the Corporate Taxpayer in the year of payment, and (ii) as a result, such additional Basis Adjustments will be incorporated into the current year calculation and into future year calculations, as appropriate.

Section 2.3. Procedures, Amendments .

(a) Procedure . Every time the Corporate Taxpayer delivers to an Equity Plan Member an applicable Schedule under this Agreement, including any Amended Schedule delivered pursuant to Section 2.3(b), but excluding any Early Termination Schedule or amended Early Termination Schedule, the Corporate Taxpayer shall also (x) deliver to the Equity Plan Member schedules and work papers, as determined by the Corporate Taxpayer or requested by the Equity Plan Member, providing reasonable detail regarding the preparation of the Schedule and (y) allow the Equity Plan Member reasonable access at no cost to the appropriate representatives at the Corporate Taxpayer, as determined by the Corporate Taxpayer or requested by the Equity Plan Member, in connection with a review of such Schedule. Without limiting the application of the preceding sentence, each time the Corporate Taxpayer delivers to an Equity Plan Member a Tax Benefit Schedule, in addition to the Tax Benefit Schedule duly completed, the Corporate Taxpayer shall deliver to the Equity Plan Member the Corporate Taxpayer Return, the reasonably detailed calculation by the Corporate Taxpayer of the Hypothetical Tax Liability, the reasonably detailed calculation by the Corporate Taxpayer of the actual Tax liability, as well as any other work papers as determined by the Corporate Taxpayer or requested by the Equity Plan Member. An applicable Schedule or amendment thereto shall become final and binding on all parties 30 calendar days from the first date on which the Equity Plan Member has received

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the applicable Schedule or amendment thereto unless the Equity Plan Member (i) within 30 calendar days after receiving an applicable Schedule or amendment thereto, provides the Corporate Taxpayer with notice of a material objection to such Schedule (“ Objection Notice ”) made in good faith or (ii) provides a written waiver of such right of any Objection Notice within the period described in clause (i) above, in which case such Schedule or amendment thereto becomes binding on the date the waiver is received by the Corporate Taxpayer. If the parties, for any reason, are unable to successfully resolve the issues raised in the Objection Notice within 30 calendar days after receipt by the Corporate Taxpayer of an Objection Notice, the Corporate Taxpayer and the Equity Plan Member shall employ the reconciliation procedures as described in Section 7.9 of this Agreement (the “ Reconciliation Procedures ”).

ARTICLE III

TAX BENEFIT PAYMENTS

Section 3.1. Payments .

(a) Payments . Within five (5) calendar days after a Tax Benefit Schedule delivered to an Equity Plan Member becomes final in accordance with Section 2.3(a), the Corporate Taxpayer shall pay to the Equity Plan Member for such Taxable Year the Tax Benefit Payment for such Equity Plan Member determined pursuant to Section 3.1(b). Each such Tax Benefit Payment shall be made by wire transfer of immediately available funds to the bank account previously designated by the Equity Plan Member to the Corporate Taxpayer or as otherwise agreed by the Corporate Taxpayer and the Equity Plan Member. For the avoidance of doubt, no Tax Benefit Payment shall be made in respect of estimated tax payments, including, without limitation, federal estimated income tax payments. Notwithstanding anything herein to the contrary, in no event shall the aggregate Tax Benefit Payments in respect of any Exchange (other than amounts accounted for as interest under the Code) exceed 50% of the purchase price for the Units exchanged.

(b) A “ Tax Benefit Payment ” for an Equity Plan Member means an amount, not less than zero, equal to the sum of the Net Tax Benefit attributable to the Exchanges by such Equity Plan Member and the corresponding Interest Amount. For the avoidance of doubt, for Tax purposes, the Interest Amount shall not be treated as interest but instead shall be treated as additional consideration for the acquisition of Units in Exchanges, unless otherwise required by law. Subject to Section 3.3(a), the “ Net Tax Benefit ” for a Taxable Year shall be an amount

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equal to the excess, if any, of 85% of the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year over the total amount of payments previously made under this Section 3.1 to such Equity Plan Member (excluding payments attributable to Interest Amounts); provided , for the avoidance of doubt, that no Equity Plan Member shall be required to return any portion of any previously made Tax Benefit Payment. The “ Interest Amount ” shall equal the interest on the Net Tax Benefit attributable to Exchanges by such Equity Plan Member calculated at the Agreed Rate from the due date (without extensions) for filing the Corporate Taxpayer Return with respect to Taxes for such Taxable Year until the Payment Date. Notwithstanding the foregoing, for each Taxable Year ending on or after the date of a Change of Control, all Tax Benefit Payments, whether paid with respect to the Units that were Exchanged (i) prior to the date of such Change of Control or (ii) on or after the date of such Change of Control, shall be calculated by utilizing Valuation Assumptions (1), (3), (4) and (5), substituting in each case the terms “the closing date of a Change of Control” for an “Early Termination Date.”

Section 3.2. No Duplicative Payments . It is intended that the provisions of this Agreement will not result in duplicative payment of any amount (including interest) required under this Agreement. It is also intended that the provisions of this Agreement provide that Tax Benefit Payments are paid to the Equity Plan Members pursuant to this Agreement. The provisions of this Agreement shall be construed in the appropriate manner to ensure such intentions are realized.

Section 3.3. Pro Rata Payments; Coordination of Benefits With Other Tax Receivable Agreements .

(b) If for any reason the Corporate Taxpayer does not fully satisfy its payment obligations to make all Tax Benefit Payments due under the Tax Receivable Agreements in respect of a particular Taxable Year, then the Corporate Taxpayer and the Equity Plan Members agree that (i) the Corporate Taxpayer shall pay the same proportion of each Tax Benefit Payment due under each of the Tax Receivable Agreements in respect of such Taxable Year, without favoring one obligation over the other, and (ii) no Tax Benefit Payment shall be made in respect of any Taxable Year until all Tax Benefit Payments in respect of prior Taxable Years have been made in full.

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(c) To the extent that the Corporate Taxpayer makes payments to any Equity Plan Member in respect of a particular Taxable Year in an amount greater than the payments that should have been made in accordance with Section 3.3(b), then such Equity Plan Member shall be obligated to make payments to the ITR Entity (as defined in the Investors Tax Receivable Agreement (Reorganizations) and the Investors Tax Receivable Agreement (Exchanges)) in the amounts necessary so that each party to the Tax Receivable Agreements (other than the Corporate Taxpayer) shall have received the amount that it would have received if all payments by the Corporate Taxpayer had been in accordance with Section 3.3(b); provided that an Equity Plan Member’s obligation to pay over to the parties to the other Tax Receivable Agreements amounts received from the Corporate Taxpayer pursuant to this Section 3.3(c) shall terminate on the one year anniversary of the receipt by the Equity Plan Member of such amounts.

(d) The parties hereto agree that the parties to the Investors Tax Receivable Agreement (Reorganizations) and the Investors Tax Receivable Agreement (Exchanges) are expressly made third party beneficiaries of the provisions of this Section 3.3.

ARTICLE IV

TERMINATION

Section 4.1. Early Termination and Breach of Agreement .

(a) With the written approval of a majority of the Independent Directors, the Corporate Taxpayer may terminate this Agreement with respect to all amounts payable to the Equity Plan Members and with respect to all of the Units held by all Equity Plan Members at any time by paying to all of the Equity Plan Members the Early Termination Payment; provided , however , that this Agreement shall only terminate upon the receipt of the Early Termination Payment by the Equity Plan Members, and provided , further , that the Corporate Taxpayer may withdraw any notice to execute its termination rights under this Section 4.1(a) prior to the time at which any Early Termination Payment has been paid. Upon payment of the Early Termination Payments by the Corporate Taxpayer, neither the Equity Plan Member nor the Corporate Taxpayer shall have any further payment obligations under this Agreement, other than for any (a) Tax Benefit Payment agreed to by the Corporate Taxpayer and the Equity Plan Member as due and payable but unpaid as of the Early Termination Notice and (b) Tax Benefit Payment due for the Taxable Year ending with or including the date of the Early Termination Notice (except to the extent that the amount described in clause (b) is included in the Early Termination Payment). If an Exchange occurs after the Corporate Taxpayer exercises its termination rights under this Section 4.1(a), the Corporate Taxpayer shall have no obligations under this Agreement with respect to such Exchange.

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breaches this Agreement, the Equity Plan Members shall be entitled to elect to receive the amounts set forth in clauses (1), (2) and (3) above or to seek specific performance of the terms hereof. The parties agree that the failure to make any payment due pursuant to this Agreement within three months of the date such payment is due shall be deemed to be a breach of a material obligation under this Agreement for all purposes of this Agreement, and that it will not be considered to be a breach of a material obligation under this Agreement to make a payment due pursuant to this Agreement within three months of the date such payment is due. Notwithstanding anything in this Agreement to the contrary, it shall not be a breach of this Agreement if the Corporate Taxpayer fails to make any Tax Benefit Payment when due to the extent that the Corporate Taxpayer has insufficient funds to make such payment; provided that the interest provisions of Section 5.2 shall apply to such late payment (unless the Corporate Taxpayer does not have sufficient cash to make such payment as a result of limitations imposed by existing credit agreements to which EBS is a party, in which case Section 5.2 shall apply, but the Default Rate shall be replaced by the Agreed Rate).

Section 4.2. Early Termination Notice . If the Corporate Taxpayer chooses to exercise its right of early termination under Section 4.1 above, the Corporate Taxpayer shall deliver to the Equity Plan Member notice of such intention to exercise such right (“ Early Termination Notice ”) and a schedule (the “ Early Termination Schedule ”) specifying the Corporate Taxpayer’s intention to exercise such right and showing in reasonable detail the calculation of the Early Termination Payment for the Equity Plan Member. The Early Termination Schedule shall become final and binding on all parties 30 calendar days from the first date on which the Equity Plan Member has received such Schedule or amendment thereto unless the Equity Plan Member (i) within 30 calendar days after receiving the Early Termination Schedule, provides the Corporate Taxpayer with notice of a material objection to such Schedule made in good faith (“ Material Objection Notice ”) or (ii) provides a written waiver of such right of a Material Objection Notice within the period described in clause (i) above, in which case such Schedule becomes binding on the date the waiver is received by the Corporate Taxpayer (the “ Early Termination Effective Date ”). If the parties, for any reason, are unable to successfully resolve the issues raised in such notice within 30 calendar days after receipt by the Corporate Taxpayer of the Material Objection Notice, the Corporate Taxpayer and the Equity Plan Member shall employ the Reconciliation Procedures.

Section 4.3. Payment upon Early Termination .

(a) Within three calendar days after the Early Termination Effective Date, the Corporate Taxpayer shall pay to the Equity Plan Member an amount equal to the Early Termination Payment. Such payment shall be made by wire transfer of immediately available funds to a bank account or accounts designated by the Equity Plan Member or as otherwise agreed by the Corporate Taxpayer and the Equity Plan Member.

(b) “ Early Termination Payment ” shall equal, with respect to the applicable Equity Plan Member, the present value, discounted at the Early Termination Rate as of the Early Termination Effective Date, of all Tax Benefit Payments that would be required to be paid by the Corporate Taxpayer to such Equity Plan Member beginning from the Early Termination Date and assuming that the Valuation Assumptions are applied.

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ARTICLE V

SUBORDINATION AND LATE PAYMENTS

Section 5.1. Subordination . Notwithstanding any other provision of this Agreement to the contrary, any Tax Benefit Payment or Early Termination Payment required to be made by the Corporate Taxpayer to the Equity Plan Member under this Agreement shall rank subordinate and junior in right of payment to any principal, interest or other amounts due and payable in respect of any obligations in respect of indebtedness for borrowed money of the Corporate Taxpayer and its Subsidiaries (“ Senior Obligations ”) and shall rank pari passu with all current or future unsecured obligations of the Corporate Taxpayer that are not Senior Obligations.

Section 5.2. Late Payments by the Corporate Taxpayer . The amount of all or any portion of any Tax Benefit Payment or Early Termination Payment not made to the applicable Equity Plan Member when due under the terms of this Agreement shall be payable together with any interest thereon, computed at the Default Rate and commencing from the date on which such Tax Benefit Payment or Early Termination Payment was due and payable.

ARTICLE VI

NO DISPUTES; CONSISTENCY; COOPERATION

Section 6.1. Participation in the Corporate Taxpayer’s and EBS’s Tax Matters . Except as otherwise provided herein, the Corporate Taxpayer shall have full responsibility for, and sole discretion over, all Tax matters concerning the Corporate Taxpayer and EBS, including without limitation the preparation, filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to Taxes. Notwithstanding the foregoing, the Corporate Taxpayer shall notify the Equity Plan Members of, and keep the Equity Plan Members reasonably informed with respect to, the portion of any audit of the Corporate Taxpayer and EBS by a Taxing Authority the outcome of which is reasonably expected to affect the rights and obligations of the Equity Plan Members under this Agreement, and shall provide to the Equity Plan Members reasonable opportunity to provide information and other input to the Corporate Taxpayer, EBS and their respective advisors concerning the conduct of any such portion of such audit; provided , however , that the Corporate Taxpayer and EBS shall not be required to take any action that is inconsistent with any provision of the LLC Agreement.

Section 6.2. Consistency . The Corporate Taxpayer and the applicable Equity Plan Member agree to report and cause to be reported for all purposes, including federal, state and local Tax purposes and financial reporting purposes, all Tax-related items (including without limitation the Basis Adjustments and each Tax Benefit Payment) in a manner consistent with that specified by the Corporate Taxpayer in any Schedule required to be provided by or on behalf of the Corporate Taxpayer under this Agreement unless otherwise required by law.

Section 6.3. Cooperation . The applicable Equity Plan Members shall (a) furnish to the Corporate Taxpayer in a timely manner such information, documents and other materials as the Corporate Taxpayer may reasonably request for purposes of making any determination or computation necessary or appropriate under this Agreement, preparing any Tax Return or contesting or defending any audit, examination or controversy with any Taxing Authority, (b) make itself available to the Corporate Taxpayer and its representatives to provide explanations of

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documents and materials and such other information as the Corporate Taxpayer or its representatives may reasonably request in connection with any of the matters described in clause (a) above, and (c) reasonably cooperate in connection with any such matter, and the Corporate Taxpayer shall reimburse the applicable Equity Plan Member for any reasonable third-party costs and expenses incurred pursuant to this Section.

ARTICLE VII

MISCELLANEOUS

Section 7.1. Notices . All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed duly given and received (a) on the date of delivery if delivered personally, or by facsimile upon confirmation of transmission by the sender’s fax machine if sent on a Business Day (or otherwise on the next Business Day) or (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

If to the Corporate Taxpayer, to:

3055 Lebanon Pike, Suite 1000

Nashville, TN 37214

Telephone: [Phone Number]

Facsimile: (615) 340-6153

Attention: General Counsel

with a copy (which shall not constitute notice to the Corporate Taxpayer) to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, NY 10019-6064

Telephone: [Phone Number]

Facsimile: (212) 757-3990

Attention: John C. Kennedy, Esq.

If to the Equity Plan Members, to:

The address and facsimile number set forth in the records of EBS.

Any party may change its address or fax number by giving the other party written notice of its new address or fax number in the manner set forth above.

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Section 7.3. Entire Agreement; No Third Party Beneficiaries . This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. Except to the extent provided under Section 3.3, this Agreement shall be binding upon and inure solely to the benefit of each party hereto and their respective successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 7.6. Successors; Assignment; Amendments; Waivers .

(a) An Equity Plan Member may assign any of his or her or its rights under this Agreement to any Person as long as such transferee has executed and delivered, or, in connection with such transfer, executes and delivers, a joinder to this Agreement, in form and substance reasonably satisfactory to the Corporate Taxpayer, agreeing to become an Equity Plan Member for all purposes of this Agreement, except as otherwise provided in such joinder.

(b) No provision of this Agreement may be amended unless such amendment is approved in writing by the Corporate Taxpayer and all Equity Plan Members; provided , that, the definition of Change of Control cannot be amended without the written approval of a majority of the Independent Directors. No provision of this Agreement may be waived unless such waiver is in writing and signed by the party against whom the waiver is to be effective.

(c) All of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and their respective successors, assigns, heirs, executors, administrators and legal representatives. The Corporate Taxpayer shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Corporate Taxpayer, by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporate Taxpayer would be required to perform if no such succession had taken place.

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Section 7.7. Titles and Subtitles . The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

Section 7.8. Resolution of Disputes .

(b) Notwithstanding the provisions of paragraph (a), the Corporate Taxpayer may bring an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Equity Plan Member (i) expressly consents to the application of paragraph (c) of this Section 7.8 to any such action or proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate, and (iii) irrevocably appoints the Corporate Taxpayer as agent of such Equity Plan Member for service of process in connection with any such action or proceeding and agrees that service of process upon such agent, who shall promptly advise such Equity Plan Member of any such service of process, shall be deemed in every respect effective service of process upon the Equity Plan Member in any such action or proceeding.

(c) (i) EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 7.8, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial relief in aid of arbitration, or to confirm an arbitration award. The parties acknowledge that the fora designated by this paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another; and

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Section 7.9. Reconciliation . In the event that the Corporate Taxpayer and an Equity Plan Member are unable to resolve a disagreement with respect to the matters governed by Sections 2.3, 4.2 and 6.2 within the relevant period designated in this Agreement (“ Reconciliation Dispute ”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “ Expert ”) in the particular area of disagreement mutually acceptable to both parties. The Expert shall be a partner or principal in a nationally recognized accounting or law firm, and unless the Corporate Taxpayer and the Equity Plan Member agree otherwise, the Expert shall not, and the firm that employs the Expert shall not, have any material relationship with the Corporate Taxpayer or the Equity Plan Member or other actual or potential conflict of interest. If the parties are unable to agree on an Expert within fifteen (15) days of receipt by the respondent(s) of written notice of a Reconciliation Dispute, the Expert shall be appointed by the International Chamber of Commerce Centre for Expertise. The Expert shall resolve any matter relating to the Exchange Basis Schedule or an amendment thereto or the Early Termination Schedule or an amendment thereto within 30 calendar days and shall resolve any matter relating to a Tax Benefit Schedule or an amendment thereto within 15 calendar days or as soon thereafter as is reasonably practicable, in each case after the matter has been submitted to the Expert for resolution. Notwithstanding the preceding sentence, if the matter is not resolved before any payment that is the subject of a disagreement would be due (in the absence of such disagreement) or any Tax Return reflecting the subject of a disagreement is due, the undisputed amount shall be paid on the date prescribed by this Agreement and such Tax Return may be filed as prepared by the Corporate Taxpayer, subject to adjustment or amendment upon resolution. The costs and expenses relating to the engagement of such Expert or amending any Tax Return shall be borne by the Corporate Taxpayer except as provided in the next sentence. The Corporate Taxpayer and the Equity Plan Member shall bear their own costs and expenses of such proceeding, unless (i) the Expert adopts the Equity Plan Member’s position, in which case the Corporate Taxpayer shall reimburse the Equity Plan Member for any reasonable out-of-pocket costs and expenses in such proceeding, or (ii) the Expert adopts the Corporate Taxpayer’s position, in which case the Equity Plan Member shall reimburse the Corporate Taxpayer for any reasonable out-of-pocket costs and expenses in such proceeding. Any dispute as to whether a dispute is a Reconciliation Dispute within the meaning of this Section 7.9 shall be decided by the Expert. The Expert shall finally determine any Reconciliation Dispute and the determinations of the Expert pursuant to this Section 7.9 shall be binding on the Corporate Taxpayer and the Equity Plan Member and may be entered and enforced in any court having jurisdiction.

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Section 7.11. Admission of the Corporate Taxpayer into a Consolidated Group: Transfers of Corporate Assets .

(b) If any entity that is obligated to make a Tax Benefit Payment or Early Termination Payment hereunder transfers one or more assets to a corporation (or a Person classified as a corporation for U.S. income tax purposes) with which such entity does not file a consolidated tax return pursuant to Section 1501 of the Code, such entity, for purposes of calculating the amount of any Tax Benefit Payment or Early Termination Payment (e.g., calculating the gross income of the entity and determining the Realized Tax Benefit of such entity) due hereunder, shall be treated as having disposed of such asset in a fully taxable transaction on the date of such contribution. The consideration deemed to be received by such entity shall be equal to the fair market value of the contributed asset. For purposes of this Section 7.11, a transfer of a partnership interest shall be treated as a transfer of the transferring partner’s share of each of the assets and liabilities of that partnership.

Section 7.12. Confidentiality . Each Equity Plan Member and each assignee acknowledge and agree that the information of the Corporate Taxpayer is confidential and, except in the course of performing any duties as necessary for the Corporate Taxpayer and its Affiliates, as required by law or legal process or to enforce the terms of this Agreement, such person shall keep and retain in the strictest confidence and not disclose to any Person any confidential matters, acquired pursuant to this Agreement, of the Corporate Taxpayer and its Affiliates and successors, concerning EBS and its Affiliates and successors, the Original Members, or the other Equity Plan Members, learned by the Equity Plan Member heretofore or hereafter. This Section 7.12 shall not apply to (i) any information that has been made publicly available by the Corporate Taxpayer or any of its Affiliates, becomes public knowledge (except as a result of an act of such Equity Plan Member in violation of this Agreement) or is generally known to the business community and (ii) the disclosure of information to the extent necessary for an Equity Plan Member to prepare and file his or her or its Tax Returns, to respond to any inquiries regarding the same from any taxing authority or to prosecute or defend any action, proceeding or audit by any taxing authority with respect to such returns. Notwithstanding anything to the contrary herein, each Equity Plan Member and each assignee (and each employee, representative or other agent of such Equity Plan Member or assignee, as applicable) may disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure of the Corporate Taxpayer, EBS, the Original Members, the Equity Plan Members and their Affiliates, and any of their transactions, and all materials of any kind (including opinions or other tax analyses) that are provided to the Equity Plan Members relating to such tax treatment and tax structure.

If an Equity Plan Member or an assignee commits a breach, or threatens to commit a breach, of any of the provisions of this Section 7.12, the Corporate Taxpayer shall have the right and remedy to have the provisions of this Section 7.12 specifically enforced by injunctive relief or otherwise by any court of competent jurisdiction without the need to post any bond or other security, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to the Corporate Taxpayer or any of its Subsidiaries, the Original Members, or the other Equity Plan Members and the accounts and funds managed by the Corporate Taxpayer and that money damages alone shall not provide an adequate remedy to such Persons. Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available at law or in equity.

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Section 7.13. Change in Law .

(a) Notwithstanding anything herein to the contrary, if, in connection with an actual or proposed change in law, an Equity Plan Member reasonably believes that the existence of this Agreement could cause income (other than income arising from receipt of a payment under this Agreement) recognized by such Equity Plan Member upon any Exchange to be treated as ordinary income rather than capital gain (or otherwise taxed at ordinary income rates) for United States federal income tax purposes or would have other material adverse tax consequences to the Equity Plan Member (a “ Change in Tax Law ”), then at the election of such Equity Plan Member and to the extent specified by such Equity Plan Member, this Agreement (i) shall cease to have further effect, (ii) shall not apply to an Exchange occurring after a date specified by the Equity Plan Member, or (iii) shall otherwise be amended in a manner determined by the Equity Plan Member provided that such amendment shall not result in an increase in payments under this Agreement at any time as compared to the amounts and times of payments that would have been due in the absence of such amendment (assuming that no payment is due under Section 7.13(b)).

(b) If an Equity Plan Member delivers to the Corporate Taxpayer a notice of acceleration accompanied by an opinion of a Qualified Tax Advisor to the effect that based upon such Change in Tax Law (taking into account any applicable administrative pronouncements or rulings, formal or informal Congressional actions or statements, or otherwise) (i) the existence of this Agreement will more likely than not cause income (other than income arising from receipt of a payment under this Agreement) recognized by such Equity Plan Member upon any Exchange to be treated as ordinary income rather than capital gain (or otherwise taxed at ordinary income rates) for United States federal income tax purposes or would have other material adverse tax consequences to such Equity Plan Member, and (ii) substantially all of such income described in Section 7.13(b)(i) above would be more likely than not taxable at capital gain rates or such other material adverse tax consequences would be avoided as a result of making the election described in this Section 7.13(b), then such Equity Plan Member may elect to cause the Corporate Taxpayer to make a lump sum payment in lieu of the Tax Benefit Payments otherwise provided in this Agreement in accordance with the procedures described in Article IV, in an amount equal to the sum of the present values of all such Tax Benefits Payments, substituting in each case “70%” for “85%” in the calculation of Net Tax Benefit, discounted at the Early Termination Rate as of the effective date specified in the notice of acceleration, and assuming the Valuation Assumptions (1) through (5) are applied; provided , that no amount shall be payable under this Section 7.13(b) unless, with respect to at least 50% of the Units held by such Equity Plan Member at the time of execution of this Agreement, all rights to payments under this Agreement shall have been terminated pursuant to Section 7.13(a) (and for the avoidance of doubt, no payments pursuant to this Section 7.13(b) shall be made in respect of such Units); provided , further , that if such payment would be due on or after the effective date of the applicable Change in Tax Law, at the election of the Equity Plan Member, such payment shall to the extent reasonably practicable instead be made no later than the date prior to the effective date of the applicable Change in Tax Law (using the best available estimates and information at such time).

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(c) The Corporate Taxpayer shall have the right to satisfy its obligation to make a lump sum payment under Section 7.13(b) by issuing a subordinated debt instrument of the Corporate Taxpayer, with a maturity date seven years after issuance, with interest payment required to be made quarterly, and bearing interest at a rate equal to the lesser of (i) 6% per annum and (ii) LIBOR plus 200 basis points.

(d) Notwithstanding anything herein to the contrary, Section 3.3(b) and Section 3.3(c) of the Tax Receivable Agreements shall not apply to payments made by the Corporate Taxpayer pursuant to this Section 7.13.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the Corporate Taxpayer and each Equity Plan Member have duly executed this Agreement as of the date first written above.


EMDEON INC.

By:		/s/ Gregory T. Stevens
		Name: Gregory T. Stevens
		Title: Executive Vice President, General Counsel and Secretary

[Signature Page to Tax Receivable Agreement (Management)]

EQUITY PLAN MEMBERS:

/s/ Tracy L. Bahl

Name: Tracy L. Bahl

/s/ Edward Caldwell

Name: Edward Caldwell

/s/ Patrick Coughlin

Name: Patrick Coughlin

/s/ Damien Creavin

Name: Damien Creavin

/s/ Dinyar S. Devitre

Name: Dinyar S. Devitre

/s/ J. Philip Hardin

Name: J. Philip Hardin

/s/ Jim D. Kever

Name: Jim D. Kever

/s/ Sajid A. Khan

Name: Sajid A. Khan

/s/ George I. Lazenby, IV

Name: George I. Lazenby, IV

/s/ Frank J. Manzella

Name: Frank J. Manzella

/s/ Bob A. Newport, Jr.

Name: Bob A. Newport, Jr.

[Signature Page to Tax Receivable Agreement (Management)]

/s/ Philip M. Pead

Name: Philip M. Pead

/s/ Ben Scully

Name: Ben Scully

/s/ Ryan L. Smith

Name: Ryan L. Smith

/s/ Gregory Stevens

Name: Gregory Stevens

/s/ Gary D. Stuart

Name: Gary D. Stuart

[Signature Page to Tax Receivable Agreement (Management)]

Exhibit 10.7

FIRST AMENDMENT TO

TAX RECEIVABLE AGREEMENT (MANAGEMENT)

This First Amendment (the “ Amendment ”) dated as of November 2, 2011 to the Tax Receivable Agreement (Management) dated as of August 17, 2009 (the “ Tax Receivable Agreement ”), is by and among Emdeon, Inc., a Delaware corporation (the “ Corporate Taxpayer ”) and the Equity Plan Members (as defined in the Tax Receivable Agreement). Capitalized terms used herein and not defined shall have their respective meanings as defined in the Tax Receivable Agreement.

WHEREAS, the Equity Plan Members desire to sell Units to EBS Holdco I, LLC (“ Holdco I ”) in exchange for cash;

WHEREAS, the Corporate Taxpayer and the Equity Plan Members desire that certain tax benefits resulting from such sale of Units to Holdco I be covered under the Tax Receivable Agreement;

WHEREAS, in accordance with Section 7.6(b) of the Tax Receivable Agreement, the Corporate Taxpayer and the Equity Plan Members desire to amend the Tax Receivable Agreement;

NOW THEREFORE, the Corporate Taxpayer and each Equity Plan Member hereby agree as follows:

1. Amendment . The Tax Receivable Agreement is amended as follows:

(a) The definition of “ Exchange ” in the Recitals to the Tax Receivable Agreement shall include a taxable acquisition of Units by EBS Holdco I, LLC or EBS Holdco II, LLC from an Equity Plan Member for cash or shares of Beagle Parent Corp.

(b) A sale of Units by an Equity Plan Member to EBS Holdco I, LLC or EBS Holdco II, LLC in exchange for cash or shares of Beagle Parent Corp. will be treated as a taxable Exchange that results in a Basis Adjustment under the Tax Receivable Agreement.

“No amendment to this Agreement shall be effective against a party hereto unless such amendment is approved in writing by such party. No provision of this Agreement may be waived unless such waiver is in writing and signed by the party against whom the waiver is to be effective.”

(d) Item (5) in the definition of “Valuation Assumptions” in Article I of the Tax Receivable Agreement shall be amended to add “, Emdeon Business Services LLC and EBS in the aggregate” after the phrase “tax basis in the amortizable or depreciable assets of the Corporate Taxpayer” each time such phrase appears therein.

2. Miscellaneous . This Amendment may be executed in one or more counterparts, all of which shall be considered one and the same agreement. Except as provided in this Amendment, the provisions of the Tax Receivable Agreement remain unchanged and in full force and effect.

[Signature pages follow]

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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date first written above.


EMDEON INC.

By:	/s/ Gregory T. Stevens
	Name:	Gregory T. Stevens
	Title:	Executive Vice President, General Counsel and Secretary

[Signature Page to First Amendment to Tax Receivable Agreement (Management)]

EQUITY PLAN MEMBERS:

/s/ Tracy L. Bahl

Name: Tracy L. Bahl

/s/ Edward Caldwell

Name: Edward Caldwell

/s/ Patrick Coughlin

Name: Patrick Coughlin

/s/ Damien Creavin

Name: Damien Creavin

/s/ Dinyar S. Devitre

Name: Dinyar S. Devitre

/s/ J. Philip Hardin

Name: J. Philip Hardin

/s/ Jim D. Kever

Name: Jim D. Kever

/s/ Sajid A. Khan

Name: Sajid A. Khan

/s/ George I. Lazenby, IV

Name: George I. Lazenby, IV

/s/ Frank J. Manzella

Name: Frank J. Manzella

/s/ Bob A. Newport, Jr.

Name: Bob A. Newport, Jr.

[Signature Page to First Amendment to Tax Receivable Agreement (Management)]

/s/ Philip M. Pead

Name: Philip M. Pead

/s/ Ben Scully

Name: Ben Scully

/s/ Ryan L. Smith

Name: Ryan L. Smith

/s/ Gregory Stevens

Name: Gregory Stevens

/s/ Gary D. Stuart

Name: Gary D. Stuart

[Signature Page to First Amendment to Tax Receivable Agreement (Management)]

Exhibit 10.8

Final Form

REGISTRATION RIGHTS AGREEMENT

WITNESSETH:

WHEREAS, the Holders (as defined below) own Registrable Securities (as defined below); and

WHEREAS, the parties desire to set forth certain registration rights applicable to the Registrable Securities.

Section 1. Definitions . Capitalized terms used in this Agreement but not defined herein shall have the meanings ascribed to them in the Amended and Restated Limited Liability Company Agreement of the Company dated as of March 1, 2017 (the “ LLC Agreement ”). As used in this Agreement, the following terms have the following respective meanings, and for the avoidance of doubt the following respective meanings shall be used in the case of any conflicts with meanings ascribed in the LLC Agreement:

1.1. “ Blackstone Holders ” means any Holder identified under the caption “Blackstone Holders” on Exhibit A and their respective Permitted Transferees.

1.2. “ Board Resolution ” means a resolution of the board of directors of Echo that is approved by a resolution of the board of directors of the Company.

1.3. “ Common Stock ” means the common stock of Echo.

1.4. “ Company Indemnitees ” has the meaning set forth in Section 2.7(a).

1.5. “ Demand Exercise Notice ” has the meaning set forth in Section 2.1(a).

1.6. “ Demand Registration ” has the meaning set forth in Section 2.1(g).

1.7. “ Echo Shareholders ” has the meaning set forth in the preamble.

1.8. “ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time.

1.9. “Exercise Window” means, (a) as to Holders who are MCK Members (or their Permitted Transferees), any period of time during which the MCK Members (or their Permitted Transferees) may Transfer Units or Registrable Securities, as applicable, pursuant to the exercise of registration rights as set forth in Section 9.01(b) of the LLC Agreement and (b) as to Holders who are Echo Shareholders (or their Permitted Transferees) (including the Sponsor Holders), any period of time during which Echo Shareholders may Transfer Units or Registrable Securities, as applicable, pursuant to the exercise of registration rights as set forth in Section 9.01(b) of the LLC Agreement.