UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): June 5, 2019

 

Health Insurance Innovations, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware   001-35811   46-1282634

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

15438 N. Florida Avenue, Suite 201

Tampa, Florida

  33613
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (813) 397-1187

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

Emerging growth company [  ]

 

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

 

 

 

   

 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

Membership Interest Purchase Agreement

 

On June 5, 2019, Health Insurance Innovations, Inc., (the “Company”) and its subsidiary Health Plan Intermediaries Holdings, LLC (“HPIH”) entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with RxHelpline, LLC (“RXH”), TogetherHealth PAP, LLC (“THP”), TogetherHealth Insurance, LLC (“THI” and, collectively with RXH and THP, the “Targets”), TogetherHealth Soup, L.P. (“Seller”) and certain principals of the Targets, pursuant to which HPIH purchased 100% of the outstanding limited liability company interests of the Targets (the “Interests”). The closing of the transactions contemplated by the Purchase Agreement occurred on June 5, 2019, simultaneous with the signing of the Purchase Agreement.

 

The purchase price for the Interests under the Purchase Agreement was approximately $50,000,000 in cash, subject to certain closing and post-closing adjustments (the “Cash Consideration”), the issuance of 630,000 shares of the Company’s Class A common stock, and an earn-out agreement pursuant to which the Seller will receive payments over a 5-year post closing period equal to a percentage of the Targets’ gross margin above specified thresholds. A portion of the Cash Consideration consisting of $2,500,000 is being held back by HPIH in order to fund payment in respect of post-closing adjustments to the Cash Consideration and post-closing indemnification obligations of the parties. The shares issued pursuant to the Purchase Agreement are subject to lock-up agreements pursuant to which the holders thereof are restricted from selling or transferring such shares for a three-year period, subject to a release from the lock-up of one-third of the subject shares on each of the first three anniversary dates of the Purchase Agreement and subject to other release-acceleration provisions and customary exceptions.

 

Each of HPIH and the Seller Parties (1) has made customary representations, warranties and covenants in the Purchase Agreement, including certain restrictive covenants with respect to non-competition and non-solicitation by the Seller Parties and (2) has agreed to customary mutual indemnification obligations regarding the breach of the representations, warranties and covenants in the Purchase Agreement.

 

The foregoing description of the Purchase Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Purchase Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference. The Purchase Agreement and related description are intended to provide you with information regarding the terms of the Purchase Agreement and are not intended to modify or supplement any factual disclosures about the Company in its reports filed with the United States Securities and Exchange Commission. In particular, the Purchase Agreement and related description are not intended to be, and should not be relied upon as, disclosures regarding any facts and circumstances relating to the Company. The assertions embodied in the representations and warranties made by the Seller Parties in the Purchase Agreement are qualified by information contained in confidential disclosure schedules that the Seller Parties have delivered to the Company in connection with the signing of the Purchase Agreement, and such representations and warranties are made for the purpose of allocating contractual risk between the parties to the Purchase Agreement rather than establishing these matters as facts. The representations and warranties may also be subject to a contractual standard of materiality different from those generally applicable under the securities laws. Stockholders of the Company are not third-party beneficiaries under the Purchase Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, the Seller Parties or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants of the Purchase Agreement may change after the date of the Purchase Agreement.

 

Credit Facility

 

The information set forth under Item 2.03, “Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant,” is incorporated herein by reference.

 

   

 

 

Item 2.01 Completion of Acquisition or Disposition of Assets.

 

The information contained in “Item 1.01 Entry into a Material Definitive Agreement” is incorporated herein by reference.

 

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

On June 5, 2019 (the “Closing Date”), the Company, through its subsidiary, HPIH, entered into a Credit Agreement (the “Credit Agreement”) among HPIH, as the Borrower, the Company, and certain of the Company’s affiliates as guarantors (the “Guarantors”), Bank of America, N.A., as Administrative Agent, Swingline Lender and L/C Issuer (the “Administrative Agent”), SunTrust Bank, as Syndication Agent, Royal Bank of Canada, as Co-Documentation Agent and the other parties identified therein as Lenders (the “Lenders”). The Credit Agreement provides for an aggregate principal amount of up to $215 million, which consists of: (i) a $65 million, three-year revolving credit facility (the “Revolving Credit Facility”), which includes a $10 million sublimit for the issuance of standby letters of credit (each, a “Letter of Credit”) and a $5 million sublimit for swingline loans (each, a “Swingline Loan”), and (ii) a $150 million term loan facility, all of which will be drawn on the Closing Date (the “Term Loan Facility” and, together with the Revolving Credit Facility, the “Senior Credit Facility”).

 

The proceeds of the Senior Credit Facility shall be used for: (i) general corporate purposes, including to fund ongoing working capital needs, capital expenditures and other lawful corporate purposes, (ii) to refinance that certain Credit Agreement, dated as of July 17, 2017, by and among HPIH, the Company, the guarantors party thereto and SunTrust Bank, as lender (as amended or otherwise modified from time to time, the “Existing Credit Agreement”), and (iii) to finance permitted acquisitions. On June 5, 2019, the Company used approximately $65 million of the proceeds to refinance the prior credit facility with SunTrust and approximately $50 million to fund the cash portion of the purchase price under the above-described Purchase Agreement.

 

The Revolving Credit Facility matures on the third anniversary of the Closing Date, June 5, 2022 (the “Maturity Date”), and the Term Loan Facility is subject to quarterly amortization of principal, with 5% of the initial aggregate term loan to be payable in the first year, 7.5% of the initial aggregate term loan to be payable in the second year, 10% of the initial aggregate term loan to be payable in the final year, and final payment of all amounts outstanding, plus accrued interest, due on the Maturity Date.

 

Borrowings under the Senior Credit Facility (other than in respect of Swingline Loans) can either be, at HPIH’s election: (i) at the Base Rate (which is the highest of the Bank of America prime rate, the federal funds rate plus 0.50%, and LIBOR index rate plus 1.00%) plus the Applicable Margin or (ii) at LIBOR (as defined in the Credit Agreement) plus the Applicable Margin. The “Applicable Margin” as defined under the Credit Agreement means, (a) until receipt by the Administrative Agent of the compliance certificate for the fiscal quarter ending September 30, 2019, 2.00% per annum, in the case of LIBOR loans, and 1.00% per annum, in the case of Base Rate loans, and (b) thereafter, a percentage determined based upon HPIH’s Consolidated Total Leverage Ratio (as defined in the Credit Agreement) ranging from 1.50% to 2.00%, in the case of LIBOR loans, and .50% to 1.00%, in the case of Base Rate loans. Interest accrued on each Base Rate Loan (as defined in the Credit Agreement) is payable in arrears on the last day of each calendar quarter and on the Maturity Date. Interest accrued on each Eurodollar Loan (as defined in the Credit Agreement) is payable on the last day of the applicable interest period, or every three months, whichever comes sooner, and on the Maturity Date.

 

The Credit Facility is secured by a valid and perfected first priority lien and security interest in each of the following: (i) all present and future shares of capital stock of (or other ownership or profits interests in) each of HPIHs’ present and future subsidiaries (subject to certain exceptions), (ii) all present and future intercompany debt of HPIH and each Guarantor, (iii) all of the present and future personal property and assets of HPIH and each Guarantor and (iv) all proceeds and products of the property and assets described in clauses (i), (ii) and (iii) above.

 

   

 

 

The Credit Agreement contains customary covenants, including, but not limited to, (i) a minimum consolidated interest coverage ratio and a maximum consolidated leverage ratio and (ii) restrictions on the incurrence of debt, investments, fundamental changes, sale and leaseback transactions, transactions with affiliates, hedging transactions, restrictive agreements, mergers, consolidations and sales of assets. The Credit Agreement also includes customary representations and warranties and events of default, substantially similar to those in the Existing Credit Agreement.

 

The foregoing description of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the Credit Agreement filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated into this Item 2.03 by reference.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

The information contained in “Item 1.01 Entry into a Material Definitive Agreement” is incorporated herein by reference.

 

The issuance of the shares constituting the Equity Consideration under the Purchase Agreement was exempt from the registration requirements of Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof, based upon appropriate representations and certifications that the Company obtained from each of the Seller Parties receiving shares of the Company’s Class A common stock constituting Equity Consideration under the Purchase Agreement.

 

Item 7.01. Regulation FD Disclosure.

 

On June 6, 2019, the Company issued a press release announcing its entry into the Purchase Agreement and the Credit Agreement, a copy of which is furnished as Exhibit 99.1 and incorporated herein by reference.

 

Item 9.01(d). Financial Statements and Exhibits

 

  (a) Financial Statements of Business Acquired.
     
    The financial statements required by Item 9.01(a) of Form 8-K will be filed by amendment within 71 calendar days after the date upon which this Current Report on Form 8-K must be filed.
     
  (b) Pro Forma Financial Information.
     
    The pro forma financial information required by Item 9.01(b) of Form 8-K will be filed by amendment within 71 calendar days after the date upon which this Current Report on Form 8-K must be filed.

 

   

 

 

  (c) Shell Company Transactions.
     
    Not applicable.
     
  (d) Exhibits.

 

Exhibit No.   Description
     
2.1   Membership Interest Purchase Agreement dated June 5, 2019 by and among Health Insurance Innovations, Inc., Health Plan Intermediaries Holdings, LLC, RxHelpline, LLC, TogetherHealth PAP, LLC, TogetherHealth Insurance, LLC, TogetherHealth Soup, L.P. and solely for the purposes specified herein, Mark Longaro, Robert Gregg and Jason Buchwald.*
     
10.1   Credit Agreement dated June 5, 2019 among Health Plan Intermediaries Holdings, LLC, as the Borrower, Health Insurance Innovations, Inc., as the Parent, the subsidiaries of Parent identified therein, as the Guarantors, Bank of America, N.A., as Administrative Agent, Swingline Lender and L/C Issuer, SunTrust Bank as Syndication Agent, Royal Bank of Canada as Co-Documentation Agent and the other lenders party thereto.*
     
10.2   Security and Pledge Agreement dated June 5, 2019 among the parties identified as Obligors hereunder and Bank of America, N.A., in its capacity as Administrative Agent.*
     
99.1   Press Release dated June 6, 2019.

 

* Certain schedules and attachments have been omitted from this exhibit pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule or attachment to the Securities and Exchange Commission upon its request.

 

Forward-Looking Statements

 

This Current Report on Form 8-K contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements other than historical fact, and may include statements relating to goals, plans and projections regarding new markets, products, services, growth strategies, anticipated trends in the Company’s business and anticipated changes and developments in the United States health insurance system and laws. Forward-looking statements are based on the Company’s current assumptions, expectations and beliefs and are generally identifiable by use of the words “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or similar expressions and involve significant risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by these statements. These risks and uncertainties include, among other things, the Company’s ability to maintain relationships and develop new relationships with health insurance carriers and distributors, the Company’s ability to retain its members, the demand for products offered through the Company’s platform, regulatory oversight and examinations of the Company and its carriers and distributors, legal and regulatory compliance by the Company’s carriers and distributors, the amount of commissions paid to the Company or changes in health insurance plan pricing practices, competition, changes and developments in the United States health insurance system and laws, and the Company’s ability to adapt to them, the ability to maintain and enhance the Company’s name recognition, difficulties arising from acquisitions or other strategic transactions, and the Company’s ability to build the necessary infrastructure and processes to maintain effective controls over financial reporting. These and other risk factors that could cause actual results to differ materially from those expressed or implied in the Company’s forward-looking statements will be discussed in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission, which are available at www.sec.gov. Any forward-looking statement made by the Company in this Current Report on Form 8-K is based only on information currently available to the Company and speaks only as of the date on which it is made. You should not rely on any forward-looking statement as representing the Company’s views in the future. The Company undertakes no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

 

   

 

 

SIGNATURES

 

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

 

  HEALTH INSURANCE INNOVATIONS, INC.
     
  By: /s/ Michael D. Hershberger
  Name: Michael D. Hershberger
  Title: Chief Financial Officer
     
Date: June 6, 2019    

 

   

 

 

 

Execution Version

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

by and among

 

Health Insurance Innovations, Inc.

 

(the “Buyer’s Parent”)

 

Health Plan Intermediaries Holdings, LLC

 

(the “Buyer”)

 

RxHelpline, LLC

 

(a “Company”)

 

TogetherHealth PAP, LLC

 

(a “Company”)

 

TogetherHealth Insurance, LLC

 

(a “Company”)

 

TogetherHealth Soup, L.P.

 

(the “Seller”) and as (the “Seller Parties’ Representative”)

 

and

 

solely for purposes specified herein, Mark Longaro, Robert Gregg, and Jason Buchwald (collectively, the “Principals”)

 

June 5, 2019

 

   
 

 

TABLE OF CONTENTS

 

      Page
ARTICLE I DEFINITIONS 1
   
ARTICLE II PURCHASE AND SALE 12
   
  Section 2.01 Purchase and Sale 12
       
  Section 2.02 Purchase Price 12
       
  Section 2.03 Payment of Purchase Price. 12
       
  Section 2.04 Purchase Price Adjustment. 13
       
  Section 2.05 Allocation of Purchase Price. 15
       
  Section 2.06 Withholding Tax. 15
       
ARTICLE III CLOSING 15
   
  Section 3.01 Closing. 15
       
  Section 3.02 Closing Deliverables. 15
       
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES 17
   
  Section 4.01 Organization and Qualification of Seller and the Companies; Capitalization; No Subsidiaries. 17
       
  Section 4.02 Authorization 18
       
  Section 4.03 No Conflicts; Consents. 19
       
  Section 4.04 Financial Statements 19
       
  Section 4.05 No Undisclosed Liabilities 19
       
  Section 4.06 Absence of Certain Changes, Events and Conditions 20
       
  Section 4.07 Material Contracts. 22
       
  Section 4.08 Title to Assets. 24
       
  Section 4.09 Condition and Sufficiency of Assets. 24
       
  Section 4.10 Real Property. 25
       
  Section 4.11 Intellectual Property. 26
       
  Section 4.12 Accounts Receivable. 28

 

 i 
 

 

TABLE OF CONTENTS

(Continued)

 

      Page
  Section 4.13 Customers and Suppliers. 28
       
  Section 4.14 Insurance 28
       
  Section 4.15 Legal Proceedings; Governmental Orders; Anti-Bribery. 29
       
  Section 4.16 Compliance With Laws; Permits. 29
       
  Section 4.17 Regulatory Matters. 30
       
  Section 4.18 Environmental Matters 30
       
  Section 4.19 Employee Benefit Matters. 31
       
  Section 4.20 Employment Matters. 32
       
  Section 4.21 Taxes. 33
       
  Section 4.22 Brokers. 35
       
  Section 4.23 Related Party Arrangements. 35
       
  Section 4.24 Investment Representations. 35
       
  Section 4.25 No Other Representations or Warranties. 37
       
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER’S PARENT 37
   
  Section 5.01 Organization of Buyer and Buyer’s Parent. 37
       
  Section 5.02 Authority of Buyer and Buyer’s Parent. 37
       
  Section 5.03 Issuance of Buyer’s Parent’s Shares 37
       
  Section 5.04 No Conflicts; Consents. 38
       
  Section 5.05 Public Filings. 38
       
  Section 5.06 Brokers. 38
       
  Section 5.07 No Other Representations or Warranties. 38
       
ARTICLE VI COVENANTS 39
   
  Section 6.01 Confidentiality 39

 

 ii 
 

 

TABLE OF CONTENTS

(Continued)

 

      Page
  Section 6.02 Non-competition; Non-solicitation. 39
       
  Section 6.03 Access to Books and Records. 41
       
  Section 6.04 Termination of Rights to Name and Marks. 41
       
  Section 6.05 Intentionally Omitted. 41
       
  Section 6.06 Director and Officer Liability and Indemnification 41
       
  Section 6.07 Public Announcements. 41
       
  Section 6.08 Tax Matters. 42
       
  Section 6.09 Further Assurances. 44
       
  Section 6.10 Termination of Related Party Arrangements 44
       
  Section 6.11 Resignations 44
       
  Section 6.12 Payment of Holdback Amount. 44
       
  Section 6.13 Seller Parties’ Representative 45
       
  Section 6.14 Equity Consideration 46
       
ARTICLE VII INDEMNIFICATION 46
   
  Section 7.01 Survival. 46
       
  Section 7.02 Indemnification By Seller Parties 47
       
  Section 7.03 Indemnification By Buyer. 47
       
  Section 7.04 Certain Limitations. 47
       
  Section 7.05 Indemnification Procedures. 49
       
  Section 7.06 Tax Treatment of Indemnification Payments. 51
       
  Section 7.07 Effect of Investigation. 51
       
  Section 7.08 Clawback; Setoff. 52
       
  Section 7.09 Exclusive Remedies. 52

 

 iii 
 

 

TABLE OF CONTENTS

(Continued)

 

      Page
ARTICLE VIII MISCELLANEOUS 52
       
  Section 8.01 Expenses. 52
       
  Section 8.02 Notices. 53
       
  Section 8.03 Interpretation; Disclosure Schedules. 54
       
  Section 8.04 Headings. 54
       
  Section 8.05 Severability. 54
       
  Section 8.06 Entire Agreement. 54
       
  Section 8.07 Successors and Assigns. 55
       
  Section 8.08 No Third-party Beneficiaries. 55
       
  Section 8.09 Amendment and Modification; Waiver. 55
       
  Section 8.10 Governing Law/Venue. 55
       
  Section 8.11 Waiver of Jury Trial. 56
       
  Section 8.12 Attorneys’ Fees. 56
       
  Section 8.13 Specific Performance. 56
       
  Section 8.14 Counterparts. 56
       
  Section 8.15 Release 56

 

 iv 
 

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

This Membership Interest Purchase Agreement (this “Agreement”), dated as of June 5, 2019 (the “Closing Date”), is entered into by and among Health Insurance Innovations, Inc., a Delaware corporation (“Buyer’s Parent”), Health Plan Intermediaries Holdings, LLC, a Delaware limited liability company (“Buyer”), RxHelpline, LLC, a Florida limited liability company (“RxH”), TogetherHealth PAP, LLC, a Delaware limited liability company (“THP”), TogetherHealth Insurance, LLC, a Delaware limited liability company (“THI,” and together with RxH and THP, each a “Company” and collectively, “Companies”), TogetherHealth Soup, L.P., a Delaware limited partnership (“Seller”), and Seller solely in its capacity as representative of the Seller Parties pursuant to Section 6.12 hereof, as Seller Parties’ Representative, and solely for purposes specified herein, Mark Longaro, an individual, Robert Gregg, an individual, and Jason Buchwald, an individual (collectively, the “Principals”). Buyer’s Parent, Buyer, the Companies, Seller and the Seller Parties’ Representative are sometimes individually referred to as a “Party” or collectively as the “Parties” herein.

 

RECITALS

 

WHEREAS, RxH is engaged in the RxH Business, THP is engaged in the THP Business, and THI is engaged in the THI Business (the RxH Business, the THP Business and the THI Business may be collectively referred to herein as the “Business”); and

 

WHEREAS, Seller is the owner of all of the issued and outstanding limited liability company membership interests of each of the Companies (collectively, the “Interests”);

 

WHEREAS, Seller desires to sell, and Buyer desires to purchase, the Interests in accordance with the terms set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

Article I
DEFINITIONS

 

The following terms have the meanings specified or referred to in this Article I:

 

100-day Trailing VWAP” means, as of any determination date, the volume-weighted average price per share of the Buyer’s Parent’s Stock on the NASDAQ as published by Bloomberg during the regular trading session (and excluding pre-market and after-hours trading) over the one hundred (100) consecutive trading days prior to and including such determination date.

 

18-Month Anniversary” has the meaning set forth in Section 6.12.

 

Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at Law or in equity.

 

 1 
 

 

Adjustment Amount” means an amount equal to (a) the amount of initial commissions and payments for leads actually received by the Companies following the Effective Time and on or prior to June 30, 2019 for newly issued Insurance Contracts first sold by the Companies, or leads first sold by the Companies, during calendar month May 2019 (“May Commissions Received”) minus (b) the accounts payable of the Companies as of the Effective Time (excluding Indebtedness and Seller Parties’ Transaction Expenses which are to be deducted from the Purchase Price pursuant to Section 2.03(a)) (“Effective Time Accounts Payable”) plus (c) the amount of the undistributed Cash as of the Effective Time.

 

Adjustment Holdback Amount” means $500,000.

 

Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) 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.

 

Agreement” has the meaning set forth in the Preamble.

 

Annual Financial Statements” has the meaning set forth in Section 4.04.

 

Basket” has the meaning set forth in Section 7.04(a).

 

Benefit Plan” has the meaning set forth in Section 4.19(a).

 

Business” means has the meaning set forth in the Recitals.

 

Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in Tampa, Florida are authorized or required by Law to be closed for business.

 

Buyer” has the meaning set forth in the Preamble.

 

Buyer Indemnitees” has the meaning set forth in Section 7.02.

 

Buyer Released Parties” has the meaning set forth in Section 8.15.

 

Buyer Return” has the meaning set forth in Section 6.08(a).

 

Buyer’s Parent 2019 Audit Date” has the meaning set forth in Section 6.12.

 

Buyer’s Parent’s Shares” means newly issued shares of Buyer’s Parent’s Stock.

 

Buyer’s Parent’s Stock” means Buyer’s Parent’s Class A common stock, $0.001 par value per share.

 

Cap” has the meaning set forth in Section 7.04(a).

 

 2 
 

 

Cash” means the aggregate amount of cash and cash equivalents of the Companies on a consolidated basis as determined in accordance with Seller’s Accounting Principles including, solely for the sake of clarity, checks held for deposit or deposited that have not yet cleared, other wire transfers and drafts deposited or received and available for deposit but excluding issued or outstanding checks which have not yet cleared, but only to the extent that the amounts payable in respect of such outstanding checks are not included in the final calculation of Effective Time Accounts Payable, but excluding, solely for the sake of clarity, cash and cash equivalents where usage of such cash and equivalents are restricted by Law or Contract.

 

CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.

 

Claim Notice” has the meaning set forth in Section 7.05(a).

 

Closing” has the meaning set forth in Section 3.01.

 

Closing Date” has the meaning set forth in the Preamble.

 

Closing Date Payment” has the meaning set forth in Section 2.04(a)(ii).

 

Closing Statement” has the meaning set forth in Section 2.04(b)(i).

 

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

 

Company” and “Companies” have the respective meanings set forth in the Preamble.

 

Company Return” has the meaning set forth in Section 6.08(b).

 

Contracts” means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral.

 

Defined Benefit Plan” means a Benefit Plan that is a “defined benefit plan” (as defined in ERISA §3(35)).

 

Direct Claim” has the meaning set forth in Section 7.05(d).

 

Disclosure Schedules” means the Disclosure Schedules delivered by Seller concurrently with the execution and delivery of this Agreement.

 

Dispute Notice” has the meaning set forth in Section 2.04(b)(ii).

 

Dollars or $” means the lawful currency of the United States.

 

Earn Out Consideration” means a portion of the Purchase Price to be paid by Buyer to Seller which is calculated and paid in accordance with Section 2.03(b) and Schedule 2.03.

 

Earn Out Payment” has the meaning set forth in Schedule 2.03.

 

 3 
 

 

Earn Out Period” has the meaning set forth in Schedule 2.03.

 

Effective Time” has the meaning set forth in Section 3.01.

 

Employment Agreements” has the meaning set forth in Section 3.02(a)(viii).

 

Encumbrance” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

 

Environmental Law” means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any hazardous materials. The term “Environmental Law” includes the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.

 

Equity Consideration” has the meaning set forth in Section 2.02.

 

ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

 

ERISA Affiliate” means all employers (whether or not incorporated) that would be treated together with the Companies or any of their Subsidiaries (individually or together) as a “single employer” within the meaning of Section 414 of the Code.

 

Estimated Adjustment Amount” has the meaning set forth in Section 2.04(a)(i).

 

Estimated Closing Statement” has the meaning set forth in Section 2.04(a)(i).

 

Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor federal statute thereto and the rules and regulations of the SEC promulgated thereunder.

 

Financial Statements” has the meaning set forth in Section 4.04.

 

 4 
 

 

Fundamental Representations” means the representations and warranties in Section 4.01(b), (c), and (d), Section 4.02, Section 4.03(a), Section 4.22, Section 5.02, Section 5.03, Section 5.04(a)(i), and Section 5.06.

 

Funds Flow Memo” means that certain memorandum and spreadsheet delivered by the Seller Parties’ Representative to Buyer pursuant to Section 2.03(a) which includes any amounts required to be withheld on the payments made to such Persons and the wiring instructions for such Persons. For clarity, it is contemplated that the Funds Flow Memo will provide an irrevocable direction by Seller to Buyer to make certain payments directly to certain third parties (e.g., lenders), if applicable, for administrative convenience, but that such payments shall be deemed to have been made first to Seller and then subsequently distributed or paid by Seller to such recipients.

 

GAAP” means generally accepted accounting principles as in effect in the United States.

 

Government Official” means (i) any officer, employee, or representative (including anyone elected, nominated, or appointed to be an officer, employee, or representative) of any Governmental Authority, or anyone otherwise acting in an official capacity on behalf of a Governmental Authority; (ii) any political party, political party official, or political party employee; (iii) any candidate for public office; (iv) any royal or ruling family member; or (v) any agent or representative of any of those persons listed in subcategories (i) through (iv).

 

Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

 

Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

 

Holdback Amount” means $2,000,000.

 

Indebtedness” means, with respect to any Person at any date, without duplication: (a) all indebtedness of such Person for borrowed money (including lines of credit, credit card or payment card facilities, term loans, mortgage loans, bonds, debentures, notes and other debt securities); (b) all obligations to pay the deferred purchase price of property or services (including any obligations relating to any earnout or bonus payments), except trade accounts payable and other current liabilities (i) arising in the ordinary course of business, and (ii) which do not constitute intercompany payables owing to an Affiliate of such Person or Indebtedness of the type described in the foregoing clause (a); (c) all liabilities of such Person in respect of capital leases; (d) all obligations of such Person in respect of letters of credit and acceptances (or instruments serving a similar function) issued or created for the account of such Person, but in each case only to the extent drawn; (e) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to acquired property; (f) all obligations under commodity swap agreements, commodity cap agreements, interest rate cap agreements, interest rate swap agreements, foreign currency exchange agreements and other similar agreement, (g) all guaranties of any of the foregoing and (h) all accrued but unpaid interest, redemption or prepayment premiums or penalties and any other fees and expenses relating to any of the foregoing.

 

 5 
 

 

Indemnified Party” has the meaning set forth in Section 7.05.

 

Indemnifying Party” has the meaning set forth in Section 7.05.

 

Independent Accountant” means an independent certified public accounting firm of national standing and reputation jointly selected and retained by Buyer’s and Seller’s respective accountants that is not an independent accountant for either Buyer or any Seller Party and is otherwise neutral and impartial; provided, however, that if Buyer’s and Seller’s respective accountants are unable to select such other accounting firm within ten (10) Business Days after the date upon which the Parties are to submit any dispute to the Independent Accountant as provided in this Agreement, each of Buyer and the Seller Parties’ Representative shall provide to the other a list of three independent certified public accounting firms of national standing and reputation, and (x) if any firm appears on both lists, such firm shall be the accountant, unless more than one firm appears on both lists, in which case the accountant shall be selected at random from among the firms on both lists, and (y) otherwise Buyer and Seller Parties’ Representative shall eliminate the names of two firms from the list provided by the other and the accountant shall be selected at random from among the remaining two firms.

 

Insurance Contract” means any all insurance Contracts, binders, slips, certificates, endorsements, riders, treaties, policies, products or other arrangements, sold, issued, entered into, serviced or administered by any Company in connection with the Business, in each case as such Contract, binder, slip, certificate, endorsement, rider, treaty, policy, product or other arrangement may have been amended, modified or supplemented.

 

Insurance Policies” has the meaning set forth in Section 4.14.

 

Insurance Regulator” means any insurance supervisory department or officials having jurisdiction over any part of the operations, business, assets, liabilities, products and services of the Companies.

 

Intellectual Property” means all intellectual property and industrial property rights and assets, and all rights, interests and protections that are associated with, similar to, or required for the exercise of, any of the foregoing, however arising, pursuant to the Laws of any jurisdiction throughout the world, whether registered or unregistered, including any and all: (a) trademarks, (including, with respect to the Companies, the trade names “RxHelpline,” “TogetherHealth” and any other trade name used in connection with the Business), service marks, trade names, brand names, logos, trade dress, design rights and other similar designations of source, sponsorship, association or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications and renewals for, any of the foregoing; (b) internet domain names, whether or not trademarks, registered in any top-level domain by any authorized private registrar or Governmental Authority, web addresses, web pages, websites (including, with respect to the Companies, any web address, web page or website used in connection with the Business), uniform resource locators and related content, accounts with Twitter, Facebook, Instagram and other social media properties and the content found thereon and related thereto; (c) works of authorship, expressions, designs and design registrations, whether or not copyrightable, including copyrights, author, performer, moral and neighboring rights, and all registrations, applications for registration and renewals of such copyrights; (d) inventions, discoveries, trade secrets, business and technical information and know-how, databases, data collections and other confidential and proprietary information and all rights therein; (e) patents (including all reissues, divisionals, provisionals, continuations and continuations-in-part, re-examinations, renewals, substitutions and extensions thereof), patent applications, and other patent rights and any other Governmental Authority-issued indicia of any invention ownership (including inventor’s certificates, petty patents and patent utility models); (f) software and firmware, including data files, source code, object code, application programming interfaces, architecture, files, records, schematics, computerized databases and other related specifications and documentation; (g) semiconductor chips and mask works; (h) royalties, fees, income, payments and other proceeds now or hereafter due or payable with respect to any and all of the foregoing; and (i) all rights to any Actions of any nature available to or being pursued by a Seller to the extent related to the foregoing, whether accruing before, on or after the date hereof, including all rights to and claims for damages, restitution and injunctive relief for infringement, dilution, misappropriation, violation, misuse, breach or default, with the right but no obligation to sue for such legal and equitable relief, and to collect, or otherwise recover, any such damages.

 

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Intellectual Property Agreements” means all licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to sue, permissions and other Contracts (including any right to receive or obligation to pay royalties or any other consideration), whether written or oral, relating to any Intellectual Property that is used in or necessary for the conduct of the Business as currently conducted (x) by which any of the Companies or the Business are bound or affected or (y) to which a Company is a party or beneficiary or by which any Company or any of their properties or assets are bound or affected.

 

Intellectual Property Assets” means all Intellectual Property that is owned by a Company and used in the conduct of the Business as currently conducted.

 

Intellectual Property Registrations” means all Intellectual Property Assets that are subject to any issuance, registration, application or other filing by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including registered trademarks, domain names and copyrights, issued and reissued patents and pending applications for any of the foregoing.

 

Interests” has the meaning set forth in the Recitals.

 

Interim Balance Sheet Date” has the meaning set forth in Section 4.04.

 

Interim Financial Statements” has the meaning set forth in Section 4.04.

 

Inventions Assignment Agreement” has the meaning set forth in Section 3.02(a)(x).

 

Key Employee” or “Key Employees” has the meaning set forth in Section 3.02(a)(viii).

 

Knowledge of Seller” means, with respect to Seller, the current actual knowledge of Mark Longaro, Robert Gregg, or Jason Buchwald, in each case after reasonable due inquiry, which, solely for the sake of clarity, shall include due inquiry of Miguel Ponce for any areas of operations the Companies for which he has responsibility.

 

 7 
 

 

Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

 

Leased Real Property” has the meaning set forth in Section 4.10(b).

 

Leases” has the meaning set forth in Section 4.10(b).

 

Liabilities” means liabilities, Taxes, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise.

 

Lock-Up Agreement” has the meaning set forth in Section 3.02(a)(i).

 

Losses” means losses, damages, Liabilities, Taxes, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including, without limitation, reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers; provided, however, that “Losses” shall not include (a) punitive damages, except in the case of fraud or to the extent actually awarded to a Governmental Authority or other third party, or (b) damages based on a theory of a valuation multiple, including EBITDA, income, revenue, or any derivation thereof.

 

Material Adverse Effect” means any effect, event, occurrence, fact, condition, development or change that has or would reasonably be expected to have a material adverse effect upon the assets, liabilities, condition (financial or otherwise) or results of operations of the Companies or the Business taken as a whole; provided, that none of the following, either alone or in combination, shall be deemed to constitute, or be taken into account in determining whether there has been, a Material Adverse Effect: (a) changes affecting generally the industry or markets in which the Companies operate; (b) changes in general local, domestic, foreign or international economic, business, regulatory or political conditions; (c) acts of war, sabotage, terrorism, military action or the escalation thereof, or other force majeure events; (d) changes in accounting principles or requirements or changes in applicable Law, or the interpretation or enforcement thereof; (e) the taking of any action approved or consented to by Buyer; (f) the announcement or disclosure of the transactions set forth in this Agreement or the compliance with the terms and conditions of this Agreement (it being understood that this clause (f) shall not apply with respect to a representation or warranty contained in this Agreement to the extent that the purpose of such representation or warranty is to address the consequences resulting from the execution and delivery of this Agreement or the consummation of the transactions or the performance of obligations under this Agreement); (g) any failure by the Companies to meet any internal or published projections, forecasts or revenue or earnings predictions (it being understood that the underlying facts giving rise or contributing to such failure or change may be taken into account in determining whether there has been a Material Adverse Effect if such facts are not otherwise excluded under this definition); (h) or any breach by Buyer of this Agreement; provided, that any such event described in clauses (a), (b), (c) or (d) does not affect the Companies in a substantially disproportionate manner compared to other Persons operating in the same industry or market.

 

 8 
 

 

Material Contracts” has the meaning set forth in Section 4.07(a).

 

Material Customers” has the meaning set forth in Section 4.13(a).

 

Material Suppliers” has the meaning set forth in Section 4.13(b).

 

Membership Interest Assignment” has the meaning set forth in Section 3.02(a)(ix).

 

NASDAQ” means the NASDAQ Global Market.

 

Non-Party Affiliates” has the meaning set forth in Section 8.15.

 

Owned Real Property” has the meaning set forth in Section 4.10(a).

 

Periodic Taxes” has the meaning set forth in Section 6.08(d).

 

Permits” means all permits, licenses (including, without limitation, insurance licenses), franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.

 

Permitted Encumbrances” means (a) statutory Encumbrances for current Taxes or other governmental charges not yet due and payable or the amount or validity of which is being contested in good faith by appropriate proceedings by the Companies and for which appropriate reserves have been established; (b) mechanics’, carriers’, workers’, repairers’ and similar statutory Encumbrances arising or incurred in the ordinary course of business (provided lien statements have not been filed or such Encumbrances otherwise perfected); (c) zoning, entitlement, building and other land use regulations imposed by any Governmental Authority having jurisdiction over Leased Real Property which are not violated by the current use and operation of the Leased Real Property; (d) covenants, conditions, restrictions, easements and other similar matters of record affecting title to the Leased Real Property which do not materially impair the occupancy or use of the Leased Real Property for the purposes for which it is currently used or proposed to be used in connection with the Business; (e) Encumbrances arising under worker’s compensation, unemployment insurance, social security, retirement and similar legislation; and (f) purchase money Encumbrances and Encumbrances securing rental payments under capital lease arrangements.

 

Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

 

Principals” has the meaning set forth in the Preamble.

 

Pro Rata Percentage” has the meaning set forth on Schedule 1.

 

Purchase Price” has the meaning set forth in 2.02.

 

Purchase Price Allocation” has the meaning set forth in Section 2.05.

 

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Qualified Benefit Plan” means any Benefit Plan that is intended to be qualified under Section 401(a) of the Code.

 

Regulation S” means Regulation S promulgated by the SEC under the Securities Act.

 

Related Party” has the meaning set forth in Section 4.23.

 

Related Party Arrangements” has the meaning set forth in Section 4.23.

 

Representative” means, with respect to any Person, any and all members, partners, stockholders, directors, managers, officers, employees, consultants, financial advisors, legal counsel, accountants, lenders, investment bankers and other agents of such Person.

 

Restricted Period” has the meaning set forth in Section 6.02(a).

 

Restricted Persons” has the meaning set forth in Section 6.02(a).

 

RxH Business” means the business of providing prescription medication assistance to members of health insurance plans.

 

Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.

 

SEC” means the United States Securities and Exchange Commission.

 

SEC Reports” has the meaning set forth in Section 5.05.

 

Securities Act” means the Securities Act of 1933, as amended, or any successor federal statute thereto and the rules and regulations of the SEC promulgated thereunder.

 

Seller” has the meaning set forth in the Preamble.

 

Seller Indemnitees” has the meaning set forth in Section 7.03.

 

Seller Parties” means the Seller and the Principals.

 

Seller Parties’ Representative” has the meaning set forth in the Preamble.

 

Seller Parties’ Transaction Expenses” means all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby by any Seller Party and, prior to the Closing, the Companies.

 

Seller Releasing Parties” has the meaning set forth in Section 8.15.

 

Seller’s Accounting Principles” means GAAP using the same accounting methods, principles, policies, practices and procedures, with consistent classifications, judgments and estimation methodology, as were used in the determination of the current assets or current liabilities, as applicable, in the preparation of the Annual Financial Statements.

 

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Stakeholders” has the meaning set forth in Section 4.15(c)(i).

 

Straddle Period” means a taxable period beginning on or before, and ending after, the Closing Date.

 

Subsidiary” or “Subsidiaries” of any Person means any corporation, partnership, limited liability company or other legal entity in which such Person (either alone or through or together with any other Subsidiary), owns, directly or indirectly, 50% or more of the outstanding voting securities, equity securities, profits interest or capital interest, or is entitled to elect a majority of the board of directors or other governing body of such legal entity.

 

Tax Return” means any return, declaration, report, claim for refund, information return or statement or other document filed or required to be filed with a Governmental Authority relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

Tax Sharing Agreement” means an agreement, whether written or oral, a principal purpose of which is the sharing, allocation or indemnification for Taxes.

 

Taxes” means (a) all federal, state, local or foreign taxes, charges, fees, levies or other similar assessments or liabilities of any kind, including income, gross receipts, sales, use, production, ad valorem, transfer, documentary, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, escheat, unclaimed property, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties, (b) any and all liability for amounts described in clause (a) imposed as a result of being a member of an affiliated, consolidated, combined or unitary group, including pursuant to Treasury Regulations Section 1.1502-6 or any analogous or similar state, local or foreign Law or regulation and (c) any and all liability for amounts described in clause (a) or (b) of any Person payable as a transferee or successor, by contract or pursuant to any Law, rule or regulation or otherwise, except under any agreement entered into in the ordinary course of business and not primarily related to Taxes.

 

THI Business” means the business of owning and operating a health insurance agency.

 

Third Party Claim” has the meaning set forth in Section 7.05(b).

 

THP Business” means the business of lead generation for health insurance.

 

Transaction Documents” means this Agreement, the Inventions Assignment Agreements, and all other certificates, agreements, instruments and documents contemplated to be delivered and executed (including pursuant to Section 3.02) in connection with this Agreement.

 

Transfer Taxes” has the meaning set forth in Section 6.08(f).

 

Treasury Regulations” means the regulations under the Code promulgated by the United States Treasury Department.

 

 11 
 

 

Union” has the meaning set forth in Section 4.20(b).

 

Article II
PURCHASE AND SALE

 

Section 2.01 Purchase and Sale. At the Closing, Seller hereby agrees to sell, assign, transfer, convey and deliver to Buyer, and Buyer hereby agrees to purchase and accept from Seller all of Seller’s rights, title and interest in the Interests, free and clear of all Encumbrances (other than transfer restrictions under applicable securities laws, if any), on the terms and subject to the conditions set forth in this Agreement.

 

Section 2.02 Purchase Price. The aggregate purchase price for the Interests shall be: (i) Fifty Million Dollars ($50,000,000) in cash subject to any adjustment pursuant to Section 2.03(a) and Section 2.04 (the “Cash Consideration”), (ii) 630,000 of Buyer’s Parent’s Shares equal (the “Equity Consideration”), and (iii) the Earn Out Consideration (together with the Cash Consideration and the Equity Consideration, the “Purchase Price”). The Purchase Price shall be payable in accordance with Section 2.03.

 

Section 2.03 Payment of Purchase Price.

 

(a) At the Closing:

 

(i) Buyer’s Parent shall issue the Equity Consideration to the Seller Parties in accordance with the Funds Flow Memo;

 

(ii) Buyer shall pay the Closing Date Payment less the Holdback Amount, less the Adjustment Holdback Amount, less the amount of the Indebtedness as of the Effective Time (as specified on the Funds Flow Memo), less the amount of Seller Parties’ Transaction Expenses (as specified on the Funds Flow Memo), to Seller, subject to any adjustment pursuant to Section 2.04;

 

(iii) pay the Indebtedness in the amount specified on the Funds Flow Memo; and

 

(iv) pay the Seller Parties’ Transaction Expenses in the amount specified on the Funds Flow Memo.

 

All payments pursuant to subsections (ii), (iii) and (iv) shall be paid by wire transfer of immediately available funds in accordance with the allocation and payment instructions set forth in the Funds Flow Memo. Seller shall deliver the Funds Flow Memo to Buyer on the Business Day prior to the Closing Date.

 

(b) Earn Out Consideration.

 

(i) Buyer shall be obligated to pay to Seller the Earn Out Payments, if any, at the times set forth in, pursuant to the terms of, and subject to the conditions and covenants set forth in, Schedule 2.03 and elsewhere in this Agreement. In accordance with Section 7.08 and subject to the terms and conditions set forth in Article VII, Buyer may offset amounts owed to Buyer (or any of the Buyer Indemnitees) in respect of indemnification obligations hereunder against the Earn Out Payments, if any. Any Earn Out Payment required to be made pursuant to this Section 2.03(b) shall be accounted for as an increase to the Purchase Price.

 

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(ii) The Earn Out Payment, if any, for each Earn Out Period shall be payable to the Seller Parties’ Representative in four (4) equal quarterly installments commencing with the first Business Day in the calendar quarter immediately following the final determination pursuant to Section 2.01 of Schedule 2.03 of the applicable Earn Out Payment, if any, for each Earn Out Period. Solely as an example, if the Earn Out payment for Earn Out Period ending May 31, 2020 is finally determined on September 5, 2020 to be equal to $1,000,000, such amount will be paid in four (4) equal payments of $250,000 with the first payment being made on the first Business Day falling on, or after, October 1, 2020.

 

Section 2.04 Purchase Price Adjustment.

 

(a) Closing Date Adjustment.

 

(i) Not less than three (3) Business Days prior to the Closing Date, the Seller Parties’ Representative shall prepare and deliver to Buyer a statement (the “Estimated Closing Statement”) setting forth its good-faith calculation and estimate of the Adjustment Amount (the “Estimated Adjustment Amount”), including calculations of the May Commissions Received, Effective Time Accounts Payable and undistributed Cash as of the Effective Time, with reasonable supporting documentation, all of which shall be reasonably acceptable to Buyer.

 

(ii) The Cash Consideration shall, as applicable, (A) be reduced by the Estimated Adjustment Amount if the Estimated Adjustment Amount is less than zero, or (B) be increased by the Estimated Adjustment Amount if the Estimated Adjustment Amount is a greater than zero. The Cash Consideration as adjusted pursuant to this Section 2.04(a)(ii) shall be referred to as the “Closing Date Payment”. The Closing Date Payment shall be subject to adjustment following the Closing Date pursuant to Section 2.04(b).

 

(b) Post-Closing Adjustment.

 

(i) As soon as practicable following the Closing Date, but in no event later than ninety (90) days after the Closing Date, Buyer shall prepare and deliver to the Seller Parties’ Representative a statement (the “Closing Statement”) setting forth its calculation of the Adjustment Amount, including calculations of the May Commissions Received, Effective Time Accounts Payable and Cash as of the Effective Time, with reasonable supporting documentation. If Buyer fails to timely deliver the Closing Statement as required hereunder, Seller Parties’ Representative may elect to either (x) deliver a Closing Statement to Buyer within one hundred fifty days (150) days after the Closing Date (and the procedures below shall apply mutatis mutandis), in which case Buyer shall provide Seller Parties Representative with reasonable access to the records and work papers necessary to prepare the Closing Statement, or (y) accept the Estimated Closing Statement as the final Closing Statement and not adjust the Closing Date Payment.

 

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(ii) Upon receipt of the Closing Statement, Seller Parties’ Representative and its Representatives will be given reasonable access to all relevant records, workpapers and calculations related to the Closing Statement during reasonable business hours for the purpose of verifying the Closing Statement. Within thirty (30) days of Seller’s receipt of the Closing Statement, Seller Parties’ Representative may deliver written notice (the “Dispute Notice”) to Buyer of any objections, specifying in reasonable detail any contested amounts and the basis therefor which Seller Parties’ Representative may have to the Closing Statement. The failure of Seller Parties’ Representative to deliver such Dispute Notice within the prescribed time period will constitute each Seller Party’s acceptance as final of the Closing Statement as determined by Buyer. Any amounts not disputed in the Dispute Notice (if one is delivered) shall be deemed to be accepted by each Seller Party as final.

 

(iii) If Seller Parties’ Representative and Buyer are unable to resolve any disagreement with respect to the Closing Statement within thirty (30) days following Buyer’s receipt of a Dispute Notice, the items and amounts in dispute shall be submitted for review to the Independent Accountant for final determination within forty-five (45) days after such referral. The review of the Independent Accountant shall be limited solely to the disputed items and amounts in the Dispute Notice. Any determination by the Independent Accountant shall not be outside the range defined by the respective amounts in the Closing Statement and the Dispute Notice proposed by Seller Parties’ Representative and Buyer, respectively, and such determination shall be final and binding upon, and non-appealable by, the Parties and their respective successors and assigns for all purposes of this Agreement, and not subject to collateral attack for any reason absent manifest error or fraud. All expenses and fees of the Independent Accountant will be borne equally by Buyer and Seller Parties’ Representative.

 

(iv) If the Adjustment Amount as finally determined pursuant to this Section 2.04(b) is greater than the Estimated Adjustment Amount such that the Closing Payment should have been higher that what was actually paid at Closing (the amount of such excess, an “Positive Adjustment Amount”), then the Closing Date Payment shall be increased by such Positive Adjustment Amount and, within five (5) Business Days of the final determination of the Adjustment Amount pursuant to this Section 2.04(b), the Buyer shall pay to Seller Parties’ Representative, by wire transfer of immediately available funds to the account designated by Seller Parties’ Representative, an amount equal to the Positive Adjustment Amount.

 

(v) If the Adjustment Amount as finally determined pursuant to this Section 2.04(b) is less than the Estimated Adjustment Amount such that the Closing Payment should have been lower than what was actually paid at Closing (the amount of such shortfall, a “Negative Adjustment Amount”), then the Closing Date Payment shall be decreased by such Negative Adjustment Amount. Buyer’s right to payment of the Negative Adjustment Amount shall be satisfied as follows: (A) first, from the Adjustment Holdback Amount (on a joint and several basis), (B) second, solely at the option of Buyer, from the Holdback Amount (on a joint and several basis) and (B) third, by payment from the Seller Parties, on a several and not joint basis in accordance with the Pro Rata Percentages, within five (5) Business Days following determination of the Adjustment Amount pursuant to this Section 2.04(b) by wire transfer of immediately available funds to an account designated by Buyer. Any Adjustment Holdback Amount remaining after application of the immediately preceding sentence will be paid by Buyer to Seller Parties’ Representative, by wire transfer of immediately available funds to the account designated by Seller Parties’ Representative.

 

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Section 2.05 Allocation of Purchase Price. The Parties agree that the Purchase Price and the liabilities of the Companies that are treated as assumed by the Buyer for Tax purposes shall be allocated among the assets of the Companies for Tax purposes pursuant to the methodology described on Schedule 2.05 (the “Purchase Price Allocation”). In addition, the Parties hereby undertake and agree to file timely any information that may be required to be filed pursuant to Treasury Regulations promulgated under Section 1060(b) of the Code, and shall use the Purchase Price Allocation in connection with the preparation of the Internal Revenue Service Form 8594 relating to the transactions contemplated by this Agreement. None of the Parties shall file any income Tax Return or otherwise take any position with respect thereto which is inconsistent with the Purchase Price Allocation, except as may be adjusted by subsequent agreement following an audit by the Internal Revenue Service or by court decision.

 

Section 2.06 Withholding Tax. Buyer and any other Person making a payment pursuant to this Agreement shall be entitled to deduct and withhold from any consideration otherwise payable to any Person under this Agreement all Taxes that Buyer may be required to deduct and withhold under any provision of Tax Law; provided, however, that other than with respect to the payments to be made at Closing, Buyer shall provide Seller with a written notice of Buyer’s intention to withhold at least ten (10) Business Days prior to any such withholding together with an explanation of the legal basis for such withholding, and shall reasonably cooperate with Seller to minimize or eliminate such withholding, and neither Buyer nor any of its Affiliates shall withhold any amount payable pursuant to this Agreement (or any other agreements contemplated hereby) with respect to which such notice requirement has not been satisfied. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of whom such deductions and withholding was made.

 

Article III
CLOSING

 

Section 3.01 Closing. The consummation of the transactions contemplated by this Agreement (the “Closing”) shall occur via remote exchange of the various documents and instruments required to be exchanged at the Closing hereunder on the Closing Date. All transactions contemplated herein to occur on and as of the Closing Date shall be deemed to have occurred simultaneously and to be effective as of the close of business on the Closing Date (the “Effective Time”). Notwithstanding the foregoing, any indebtedness incurred or assumed by the Companies as a result of any financing of the transactions contemplated herein by Buyer or on behalf of Buyer shall be deemed to have occurred after the Effective Time on the Closing Date.

 

Section 3.02 Closing Deliverables.

 

(a) Seller’s Deliverables. At or prior to the Closing, Seller Parties’ Representative shall deliver, or shall cause to be delivered, to Buyer all of the following:

 

(i) a lock-up agreement (the “Lock-Up Agreement”), duly executed by each of the Persons receiving a portion of the Equity Consideration (as specified in the Funds Flow Memo).

 

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(ii) certificate signed by a duly authorized officer of Seller and each Company, attaching and certifying to the truth and completeness of (i) the resolutions adopted by, as applicable, the general partner of Seller and the managing member or board of managers of each Company, authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby, and that such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby, and (ii) the names and signatures of the officers of Seller and each Company authorized to sign this Agreement, the other Transaction Documents and any other documents to be delivered hereunder and thereunder;

 

(iii) evidence satisfactory to Buyer of the termination of all Related Party Arrangements set forth on Schedule 3.02(a)(iii);

 

(iv) a good standing certificate for Seller and each of the Companies from the applicable Secretary of State, dated no more than ten (10) days prior to the Closing Date;

 

(v) a duly completed and executed certificate, in form and substance satisfactory to Buyer, meeting the requirements of Code Section 1445 and the Treasury Regulations thereunder certifying that Seller is not a foreign person within the meaning of Section 1445 of the Code;

 

(vi) fully executed payoff letters and UCC-3 termination statements, and such other documentation as may be requested by Buyer, in each case, in form and substance satisfactory to Buyer, evidencing the release in full of all Encumbrances other than the Permitted Encumbrances;

 

(vii) copies or evidence satisfactory to Buyer of all consents, approvals, filings, notices and waivers required to be given or obtained by Seller to consummate the transactions contemplated by the Transaction Documents, as set forth in Section 4.03(a) and Section 4.03(b) of the Disclosure Schedules;

 

(viii) an Employment Agreement (each, an “Employment Agreement”), executed by each of Mark Longaro and Robert Gregg (each, a “Key Employee” and, collectively, the “Key Employees”) and Miguel Ponce, as the case may be;

 

(ix) an assignment of the Interests (the “Membership Interest Assignment”), duly executed by Seller;

 

(x) a Proprietary Information and Inventions Agreement, (“Inventions Assignment Agreement”), executed by each of the Principals; and

 

(xi) the resignations contemplated by Section 6.11.

 

(b) Buyer Deliverables. At or prior to the Closing, Buyer shall deliver, or shall cause to be delivered, to Seller all of the following:

 

(i) a certificate signed by a duly authorized officer of Buyer, attaching and certifying to the truth and completeness of (i) the resolutions adopted by the directors and stockholders of Buyer, authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby, and that such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby, and (ii) the names and signatures of the officers of Buyer authorized to sign this Agreement, the other Transaction Documents and any other documents to be delivered hereunder and thereunder;

 

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(ii) the Employment Agreements duly executed by Buyer; and

 

(iii) the Equity Consideration via a restricted book entry at Buyer’s Parent’s transfer agent into segregated accounts established by such transfer agent for the benefit of, and registered in the name of, for each of the Persons set forth in the Funds Flow Memo.

 

Article IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES

 

Seller (and for purposes of Section 4.24, each Seller Party) hereby represents and warrants to Buyer that the representations and warranties contained in this Article IV are true, correct and complete as of the Closing Date (except for representations and warranties made as of a specified date, which are true, correct and complete as of such specified date). The Disclosure Schedules are arranged in sections corresponding to the numbered and lettered sections and subsections contained in this Article IV, and the disclosures in any section or subsection of the Disclosure Schedules shall qualify only the corresponding section or subsection of this Article IV; provided, however, that the disclosure of any item in any section or subsection of the Disclosure Schedules shall be deemed to be disclosure of such item with respect to any other section or subsection of the Disclosure Schedules only to the extent it is reasonably apparent on the face of such disclosure that such disclosure is intended to apply to such other section or subsection. Capitalized terms used in the Disclosure Schedules and not otherwise defined therein have the meanings given to them in this Agreement.

 

Section 4.01 Organization and Qualification of Seller and the Companies; Capitalization; No Subsidiaries.

 

(a) Seller is a limited partnership duly organized, validly existing and in good standing under the Laws of its state of formation, with all requisite power and authority to own its properties and to carry on its business as such business is now conducted. Each Company (i) is a limited liability company duly organized, validly existing and in good standing under the Laws of its state of formation, (ii) has full power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on the Business (as applicable) as currently conducted, and (iii) is duly licensed or qualified to do business and is in good standing each jurisdiction in which the ownership or the operation of the Business as currently conducted makes such licensing or qualification necessary except where the failure be so licensed or qualified would not have a Material Adverse Effect.

 

(b) All the outstanding membership interests of each Company have been validly issued and are fully paid and nonassessable and are owned one hundred percent (100%) by Seller. The limited partners and general partner of Seller are specified in Section 4.01 of the Disclosure Schedules.

 

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(c) All of the outstanding equity interests in each Company are free and clear of any Encumbrances. There are (i) no outstanding options, warrants, rights, restricted units or similar rights in the equity interests of any Company or other securities convertible into or exchangeable or exercisable for any equity interests of any Company, (ii) no other commitments, arrangements, rights or other obligations of any Company to issue or sell, or caused to be issued or sold, any additional equity interests of, or any security convertible or exchangeable for any equity interests of, any Company, or to repurchase, redeem or otherwise acquire any equity interests of any Company, or any security convertible or exchangeable therefor, and (iii) no equity equivalents, restricted units, appreciation rights, phantom ownership interests or similar rights in any Company. There are no voting agreements, management agreements, pledge agreements, buy-sell agreements, proxies or other similar agreements or understandings with respect to the equity interests of any Company or which restrict or grant any right, preference or privilege with respect to the transfer of thereof.

 

(d) The Companies do not own, directly or indirectly, any capital stock, membership interest, partnership interest, joint venture interest or other equity interest in any Person.

 

Section 4.02 Authorization. Seller and each Principal has full legal power and authority to enter into this Agreement and the other Transaction Documents to which such Person is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. Each Company has full limited liability company legal power and authority to enter into this Agreement and the other Transaction Documents to which it is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Seller and each Company of this Agreement and any other Transaction Document to which it is a party, the performance by Seller and each Company of its obligations hereunder and thereunder and the consummation by Seller and each Company of the transactions contemplated hereby and thereby have been duly authorized by all requisite action on the part of Seller and each Company. This Agreement has been duly executed and delivered by Seller, each Principal and each Company, and (assuming due authorization, execution and delivery by Buyer) this Agreement constitutes a legal, valid and binding obligation of Seller, each Principal and each Company, enforceable against each in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar applicable Laws affecting creditors’ rights generally or by general equitable principles affecting the enforcement of contracts. When each other Transaction Document to which each Company, each Principal and the Seller is or will be a party has been duly executed and delivered by Seller, each Principal and each Company (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of Seller, each Principal and each Company, enforceable against each such Person in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar applicable Laws affecting creditors’ rights generally or by general equitable principles affecting the enforcement of contracts.

 

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Section 4.03 No Conflicts; Consents.

 

(a) Except as set forth in Section 4.03(a) of the Disclosure Schedules, the execution, delivery and performance by Seller, each Principal and each Company of this Agreement and the other Transaction Documents to which each such Person is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) solely with respect to Seller and each Company, conflict with or result in a violation or breach of, or default under, any provision of the organizational documents of Seller or any Company; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to each Seller, any Principal, any Company or the Business; (c) require the consent, approval or other action by, or notice to, any Person under, materially conflict with, result in a material violation or breach of, constitute a material default or any event that breach (with or without notice or lapse of time, or both) would constitute a material default under, result in the acceleration of or create in any party the right to accelerate, terminate, materially modify or cancel any Material Contract; or (d) result in the creation or imposition of any Encumbrance other than Permitted Encumbrances.

 

(b) Except as set forth in Section 4.03(b) of the Disclosure Schedules, no consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Seller, any Principal or any Company in connection with the execution and delivery of this Agreement or any of the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby.

 

Section 4.04 Financial Statements. Section 4.04 of the Disclosure Schedules sets forth complete and accurate copies of: (a) the internally prepared balance sheets and statements of income of (x) THI on a stand-alone basis, and (y) RxH and THP on a consolidated basis, in each case, for the fiscal year ending December 31, 2018 (the “Annual Financial Statements”); and (b) the internally prepared balance sheets and statements of income of (x) THI on a stand-alone basis, and (y) RxH and THP on a consolidated basis, in each case, for the three-month period ended March 31, 2019 (the “Interim Financial Statements”). The Annual Financial Statements and the Interim Financial Statements are referred to herein collectively as the “Financial Statements.” The Financial Statements (i) were prepared from, and are consistent with, the books and records of each Company, (ii) to the Knowledge of Seller, were prepared in a manner to be materially in accordance with GAAP, and (iii) fairly present, the financial condition of each Company as of the respective dates of and for the periods referred to in such Financial Statements.

 

Section 4.05 No Undisclosed Liabilities. The Companies have no Liabilities of the type that would be required to be shown on a balance sheet of the Companies prepared in accordance with GAAP, except for Liabilities (a) as and to the extent reflected or reserved against in the Interim Financial Statements, (b) incurred in the ordinary course of business consistent with past practice since March 31, 2019 (the “Interim Balance Sheet Date”) (except to the extent any such Liabilities arise from any breach or default under any Contract, breach of warranty, tort, infringement or violation of Law), or (c) otherwise disclosed on Section 4.05 of the Disclosure Schedules.

 

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Section 4.06 Absence of Certain Changes, Events and Conditions. Since the Interim Balance Sheet Date, there has not occurred any Material Adverse Effect. Except as set forth in Section 4.06 of the Disclosure Schedules, since the Interim Balance Sheet Date no Company has:

 

(a) amended the certificates or articles of organization or operating agreements (or other comparable organizational documents) of the Companies or taken any action with respect to any such amendment;

 

(b) split, combined, subdivided, reclassified, purchased, redeemed, repurchased or otherwise acquired, issued, sold, pledged, disposed, encumbered or granted any membership interests of the Companies or any options, warrants, convertible or exchangeable securities, stock-based performance units, equity awards denominated in shares of membership interests of the Companies or other rights of any kind to acquire membership interests of the Companies or entered into any agreement, understanding or arrangement with respect to the sale or voting of the membership interests of the Companies;

 

(c) declared or paid any dividends or distributions on or in respect of any of the equity interests of such Company or redeemed, purchased or acquired the equity interests of such Company;

 

(d) changed any accounting method, policy or practice for the Business (including any change in depreciation or amortization policies or rates) or wrote up, wrote down or wrote off the book value of any assets other than in the ordinary course of business;

 

(e) changed any cash management practices or policies, practices and procedures with respect to collection of accounts receivable, establishment of reserves for uncollectible accounts receivable, accrual of accounts receivable, inventory control, prepayment of expenses, payment of trade accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits;

 

(f) (i) terminated, canceled, accelerated, renewed, amended (in any material respect) or requested or agreed to, or otherwise offered or proposed to any counterparty, any material change in or waiver under any Material Contract, Permit or Insurance Policy or (ii) entered into any new Material Contract;

 

(g) incurred, assumed or guaranteed any Indebtedness except unsecured current obligations and Liabilities incurred in the ordinary course of business consistent with past practice;

 

(h) transferred, assigned, abandoned, permitted to lapse or otherwise disposed of, or granted any license or sublicense of any material rights under or with respect to, any Intellectual Property;

 

(i) damaged, destroyed or lost, or experienced an interruption in the use of, any assets of the Companies, whether or not covered by insurance, in excess of $25,000;

 

(j) delayed the payment of any capital expenditure or accounts payable or other Liability (including any payments due to any employee, independent contractor, consultant or other service provider) beyond the date when such capital expenditure or account or Liability would have been paid in the ordinary course of business;

 

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(k) caused or otherwise experienced the imposition of any Encumbrance upon the membership interests or any of the assets of the Companies other than Permitted Encumbrances;

 

(l) with respect to any current or former employee, officer, manager, director, independent contractor or consultant, (i) increased any wages, salary, severance, pension or other compensation or benefits of such Person, (ii) changed the terms of employment of such Person or terminated the employment of such Person, (iii) accelerated the vesting or payment of any compensation or benefit to such Person, (iv) paid to any such Person any compensation or benefit not provided for under any Benefit Plan, (v) granted any severance, change of control, retention, termination or similar compensation or benefits to any such Person, or (vi) entered into any trust, insurance or annuity Contract or similar agreement or taken, or caused to be taken, any other action to fund or otherwise secure the payment of any compensation or benefit to any such Person; in the case of each of clauses (i) through (vi), other than pursuant to the terms of any written agreement delivered to Buyer and disclosed in Section 4.19 or required by applicable Law.

 

(m) experienced any labor Union organizing activity, actual or threatened employee strikes, work stoppages, slow-downs or lock-outs, or material change in the relations with employees, agents, customers or suppliers or any actual or threatened wrongful discharge or other unlawful labor practice action or proceeding;

 

(n) adopted, entered into, modified or terminated, or increased or promised to increase any benefits under, any (i) employment, severance, retention or other agreement with any current or former employee, officer, manager, director, independent contractor or consultant, (ii) Benefit Plan or (iii) collective bargaining or other agreement with a Union, in each case whether written or oral;

 

(o) suffered any material loss of senior management personnel or other employees or received notice of any such impending loss;

 

(p) adopted any plan of merger, consolidation, reorganization, liquidation or dissolution or filed a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consented to the filing of any bankruptcy petition against it under any similar Law;

 

(q) acquired (by merger, consolidation or acquisition of stock or assets or otherwise) any equity interests in any Person or any collection of assets constituting all or substantially all of a business or business unit of any Person;

 

(r) purchased, leased or otherwise acquired the right to own, use or lease any property or assets in connection with the Business for an amount in excess of Fifty Thousand Dollars ($50,000), individually (in the case of a lease, per annum), or One Hundred Thousand Dollars ($100,000), in the aggregate (in the case of a lease, for the entire term of the lease, not including any option term), except for purchases of inventory or supplies in the ordinary course of business consistent with past practice;

 

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(s) loaned to (or forgiven any loan to), or entered into any other transaction with, any current or former directors, managers, officers, members, shareholders, partners, employees, independent contractors or consultants;

 

(t) suffered any loss of one or more Material Customers or Material Suppliers, or any material amounts of business in the aggregate, or received notice of any such impending loss;

 

(u) instituted, settled or agreed to settle any Action of, or entered into any consent decree with, any Governmental Authority relating to the Companies or the Business, or suffered any actual or threatened Action of any Governmental Authority relating to the same;

 

(v) filed any Tax Return (including any amendment to any Tax Return) in a manner inconsistent with past practice, failed to file, on a timely basis, including allowable extensions, with the appropriate Tax authority, any Tax Return, failed to timely pay or remit (or cause to be timely paid or remitted) any Taxes due, requested a ruling with respect to Taxes, made, changed or rescinded any election relating to Taxes, surrendered or compromised any right to claim a Tax refund, settled or compromised any Action relating to Taxes, initiated any voluntary disclosure, Tax amnesty filing or other Action relating to Taxes, entered into any Tax Sharing Agreement, extended or waived any statute of limitations period relating to Taxes, changed any method of Tax accounting; or

 

(w) entered into any Contract to do any of the foregoing.

 

Section 4.07 Material Contracts.

 

(a) Section 4.07(a) of the Disclosure Schedules lists each Contract (x) by which any of the Companies or the Business are bound or affected or (y) to which a Company is a party or beneficiary or by which any Company or any of their properties or assets are bound or affected, which fall within any of the following categories (each such Contract listed on Section 4.07(a) of the Disclosure Schedules, together with all such Contracts for the lease of the Leased Real Property listed or otherwise disclosed in Section 4.10(b) of the Disclosure Schedules and all Intellectual Property Agreements set forth in Section 4.11(b) of the Disclosure Schedules, a “Material Contract” and collectively, the “Material Contracts”):

 

(i) all Contracts involving aggregate consideration in excess of Fifty Thousand Dollars ($50,000);

 

(ii) any Contract pursuant to which any Company (A) markets, sells or distributes Insurance Contracts issued by insurance companies, or (B) acquires, purchases or otherwise receives marketing or remarketing leads;

 

(iii) all Contracts that relate to the acquisition or disposition of any business, any amount of assets other than in the ordinary course of business consistent with past practice, or any Contract granting to any Person any rights to purchase any business, equity or assets;

 

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(iv) all broker, distributor, dealer, manufacturer’s representative, franchise, agency, sales promotion, market research, marketing consulting and advertising Contracts;

 

(v) all employment agreements and Contracts with independent contractors or consultants (or similar arrangements), other than such agreements and Contracts that are cancellable by a Company without penalty and upon thirty (30) days’ notice or less;

 

(vi) except for Contracts relating to trade receivables, all Contracts relating to Indebtedness (including guarantees and other Contracts related to mortgaging, pledging, or otherwise placing an Encumbrance on the Business or the Companies’ assets);

 

(vii) all Contracts that limit or purport to limit the freedom of a Company, or that would or could reasonably be expected to, following the Closing Date, limit the freedom of the Companies to (A) engage in the Business, any business practice, any business activity or any line of business, (B) compete with any Person, (C) conduct any activity in any geographic area or market segment or during any period of time or (D) solicit any Person to enter into a business or employment relationship, or enter into such a relationship with any Person;

 

(viii) all joint venture, partnership or similar Contracts;

 

(ix) all Contracts that relate to the acquisition of, investment in, or sale of any business or assets of any other Person or any real property (whether by merger, sale of equity interests or debt securities, sale of assets or otherwise) or any merger, consolidation or any other business combination;

 

(x) all collective bargaining agreements or Contracts with any Union;

 

(xi) any Contract that by its terms prohibits or restricts the declaration or payment of dividends or other distributions or loans by a Company;

 

(xii) any Contract pursuant to which any Company has continuing indemnification, “earn-out” or other contingent payment obligations;

 

(xiii) any Contract in which a Company has granted “exclusivity” or that requires a Company to deal exclusively with, or grant exclusive rights or rights of first refusal to, any customer, vendor, supplier, distributor, contractor or other Person with respect to any service or product or any geographic location;

 

(xiv) any Contract that provides for a “most-favored-nation”, “best pricing” or other similar term or provision by which another party to such Contract or any other Person is, or could become, entitled to any benefit, right or privilege which, under the terms of such Contract, must be at least as favorable to such party as those offered to another Person;

 

(xv) any Contract under which a Company has made advances or loans of money to any other Person in excess of Ten Thousand Dollars ($10,000), individually, or Fifty Thousand Dollars ($50,000), in the aggregate;

 

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(xvi) any Contracts with any Governmental Authority;

 

(xvii) any Contract involving future commitments to make capital expenditures or to Contract, purchase or sell assets involving Fifty Thousand Dollars ($50,000) or more individually; and

 

(xviii) any Contract entered into in the past three (3) years involving any resolution or settlement of any actual or threatened Action or other dispute with a value of greater than One Hundred Thousand Dollars ($100,000) or which imposes continuing obligations on a Company.

 

(b) Each Material Contract is valid and binding on the applicable Company in accordance with its terms and is in full force and effect. Neither the applicable Company nor, to the Knowledge of Seller, any other party thereto is in material breach of or material default under (or is alleged to be in material breach of or material default under), or has provided or received any notice of any intention to terminate, any Material Contract. To the Knowledge of Seller, no event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. Complete and correct copies of each Material Contract (including all modifications, amendments and supplements thereto and waivers thereunder) have been made available to Buyer. There are no material disputes pending or, to the Knowledge of Seller, threatened under any Material Contract. Consummation of the transactions contemplated by this Agreement will not trigger any provision in any Material Contract that would result in a change in such Material Contract, including the requirement for a transfer fee or new deposit, or termination thereof. Each Company is in compliance with all Contracts listed or required to be lists on Section 4.07 of the Disclosure Schedules that provide for “most-favored-nations”, “best pricing” or other similar terms or provisions, and there are no audits pending or threatened against or by a Company with respect to such Contracts.

 

Section 4.08 Title to Assets. Each Company has good and valid title to, or a valid leasehold interest in, all of its personal property and other assets reflected in the Financial Statements or acquired after the Interim Balance Sheet Date, other than properties and assets sold or otherwise disposed of in the ordinary course of business consistent with past practice since the Interim Balance Sheet Date. All such properties and assets (including leasehold interests) are free and clear of Encumbrances except for (a) those items set forth in Section 4.08 of the Disclosure Schedules; and (b) Permitted Encumbrances. There are no financing statements under the Uniform Commercial Code which name the Company as debtor or lessee filed in any state, except as set forth in Section 4.08 of the Disclosure Schedules. Except for those no longer in effect, the Company has not signed any financing statement or any security agreement under which a secured party thereunder may file any such financing statement.

 

Section 4.09 Condition and Sufficiency of Assets.

 

(a) The buildings, plants and structures and all items of tangible personal property owned by the Companies are structurally sound, are in good operating condition and repair, and are adequate for the uses to which they are being put, and none of such buildings, plants or structures or any items of tangible personal property are in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost.

 

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(b) The assets, properties and rights owned or used by the Companies are sufficient for the continued conduct of the Business after the Closing in the same manner as conducted prior to the Closing, and constitute all of the rights, property and assets necessary to conduct the Business as currently conducted.

 

(c) None of the assets, properties or rights owned or used by the Companies in connection with the conduct of the Business are subject to any Related Party Arrangement.

 

Section 4.10 Real Property.

 

(a) Owned Real Property. No Company owns any real property.

 

(b) Leased Real Property. Section 4.10(b) of the Disclosure Schedules sets forth all real property leased or subleased by a Company and/or used in or necessary for the conduct of the Business as currently conducted (together with all rights, title and interest of each Company, as applicable, in and to leasehold improvements relating thereto, including security deposits, reserves or prepaid rents paid in connection therewith, collectively, the “Leased Real Property”), and a true and complete list of all leases, subleases, licenses, concessions, and other agreements (whether written or oral), including all amendments, extensions, renewals, guaranties, and other agreements with respect thereto, pursuant to which a Company leases, subleases, or otherwise occupies or possesses any Leased Real Property (collectively, the “Leases”). With respect to each Lease:

 

(i) Seller has delivered a true, correct and complete copy of each Lease to Buyer;

 

(ii) each such Lease is legal, valid, binding, enforceable, and in full force and effect, and each such Lease will continue to be legal, valid, binding, enforceable, and in full force and effect, on identical terms, following the consummation of the transactions contemplated hereby;

 

(iii) neither any Company nor, to the Knowledge of Seller, any other party is in material breach or default of any of the provisions of such Lease, and no event has occurred or circumstance exists which, with the delivery of notice, passage of time, or both, would constitute such a material breach or default, or permit termination, modification, or acceleration thereunder;

 

(iv) no party to the Lease has repudiated any provision thereof, nor has any party to the Lease sent or received any notice of any intention to terminate any such Lease;

 

(v) there are no material disputes, oral agreements, or forbearance programs in effect as to the Lease;

 

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(vi) no Company has either received or given any notice of any default or event that with notice or lapse of time, or both, would constitute a default under any of the Leases;

 

(vii) no Company has subleased, assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered any interest in the Lease or the Leased Real Property, nor has any Company granted any other Person the right to use or occupy such Leased Real Property or any portion thereof;

 

(viii) no Company has received any written notice of (A) violations of building codes and/or zoning ordinances or other governmental or regulatory Laws affecting the Leased Real Property, (B) existing, pending or threatened condemnation proceedings affecting the Leased Real Property, or (C) existing, pending or threatened zoning, building code or other moratorium proceedings, or similar matters which could reasonably be expected to materially and adversely affect the ability to operate the Leased Real Property as currently operated; and

 

(ix) neither the whole nor any portion of any Leased Real Property has been damaged or destroyed by fire or other casualty.

 

Section 4.11 Intellectual Property.

 

(a) Section 4.11(a) of the Disclosure Schedules lists all (i) Intellectual Property Registrations and (ii) Intellectual Property Assets (including proprietary software) that are not registered but that are material to the operation of the Business. All required filings and fees related to any filings for the Intellectual Property Registrations have been timely filed with and paid to the relevant Governmental Authorities and authorized registrars, and all Intellectual Property Registrations are otherwise in good standing. Seller has provided Buyer with true and complete copies of file histories, documents, certificates, office actions, correspondence and other materials related to all Intellectual Property Registrations.

 

(b) Section 4.11(b) of the Disclosure Schedules lists all Intellectual Property Agreements governing ownership of the material Intellectual Property Assets. Each Intellectual Property Agreement listed on Section 4.11(b) of the Disclosure Schedules is valid and binding on the applicable Company in accordance with its terms and is in full force and effect. Neither the applicable Company nor any other party thereto is in material breach of or material default under (or is alleged to be in material breach of or material default under), or has provided or received any notice of breach or default of or any intention to terminate, any Intellectual Property Agreement. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Intellectual Property Agreement or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. Except as described on Section 4.11(b) of the Disclosure Schedules, no Company is bound by any Intellectual Property Agreement or other Contract that requires it to transfer, dispose, sell or otherwise license any of its Intellectual Property.

 

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(c) Except as set forth in Section 4.11(c) of the Disclosure Schedules, the Companies are the sole and exclusive legal, beneficial and, with respect to the Intellectual Property Registrations, record, owner of all right, title and interest in and to the Intellectual Property Assets, and has the valid right to use all other Intellectual Property (including Intellectual Property Agreements) used in or necessary for the conduct of the Business as currently conducted, in each case, free and clear of Encumbrances other than Permitted Encumbrances.

 

(d) The Intellectual Property Assets and Intellectual Property licensed under the Intellectual Property Agreements are all of the Intellectual Property necessary to conduct the Business as currently conducted. The consummation of the transactions contemplated under this Agreement will not result in the loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other Person in respect of, Buyer’s right to own, use or hold for use any Intellectual Property as owned, used or held for use in the conduct of the Business as currently conducted.

 

(e) The Companies’ rights in the Intellectual Property Assets are valid, subsisting and enforceable, and the Companies have taken commercially-reasonable steps to maintain the Intellectual Property Assets and to protect and preserve the confidentiality of all trade secrets included in the Intellectual Property Assets, including requiring all Persons having access thereto to execute written non-disclosure agreements.

 

(f) To the Knowledge of Seller, the conduct of the Business as currently and formerly conducted, and the Intellectual Property Assets and Intellectual Property licensed under the Intellectual Property Agreements as currently or formerly owned, licensed or used by the Companies or otherwise, have not infringed, misappropriated, diluted or otherwise violated, and have not, do not and will not infringe, dilute, misappropriate or otherwise violate, the Intellectual Property or other rights of any Person. To the Knowledge of Seller, no Person has infringed, misappropriated, diluted or otherwise violated, or is currently infringing, misappropriating, diluting or otherwise violating, any Intellectual Property Assets.

 

(g) There are no Actions (including any oppositions, interferences or re-examinations) settled, pending, or threatened in writing (including in the form of offers to obtain a license): (i) alleging any infringement, misappropriation, dilution or violation of the Intellectual Property of any Person by any Company in connection with the Business; (ii) challenging the validity, enforceability, registrability or ownership of any Intellectual Property Assets or any Company’s rights with respect to any Intellectual Property Assets; or (iii) by a Company or any other Person alleging any infringement, misappropriation, dilution or violation by any Person of any Intellectual Property Assets. To the Knowledge of Seller, the Business is not subject to any outstanding or prospective Governmental Order (including any motion or petition therefor) that does or would restrict or impair the use of any Intellectual Property Assets.

 

(h) To the Knowledge of Seller, each Company has adequate and appropriate security measures and safeguards, consistent with industry standards, in place to protect any third party Intellectual Property in such Company’s possession at any time, any Intellectual Property Assets and any of the Company’s computer infrastructure from illegal or unauthorized access, interruption, modification, corruption, or use by its personnel or third parties. No Person has at any time gained unauthorized access to or made any unauthorized use of any third party Intellectual Property in the Companies’ possession at any time, any Intellectual Property Assets or any of the Companies’ computer infrastructure.

 

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(i) None of the Companies own and/or have otherwise developed any proprietary software.

 

Section 4.12 Accounts Receivable. The accounts receivable reflected on the Interim Financial Statements and the accounts receivable arising after the date thereof (a) have arisen from bona fide transactions entered into by the Companies involving the sale of products or the rendering of services in the ordinary course of business consistent with past practice; and (b) constitute only valid, undisputed claims of a Company not subject to claims of set-off or other defenses or counterclaims other than normal cash discounts accrued in the ordinary course of business consistent with past practice.

 

Section 4.13 Customers and Suppliers.

 

(a) Section 4.13(a) of the Disclosure Schedules sets forth (i) each customer who is a top six (6) customer of the Companies based on aggregate consideration paid to the Companies for goods or services rendered in the most recently completed fiscal year or the period from January 1, 2019 to the Closing Date (collectively, the “Material Customers”); and (ii) the Seller’s best good faith estimate of the amount of consideration paid by each Material Customer during such periods. No Company has received any notice that any of the Material Customers has ceased, or intends to cease after the Closing, to use the goods or services of the Business or to otherwise terminate or materially reduce its relationship with the Business or the Companies.

 

(b) Section 4.13(b) of the Disclosure Schedules sets forth (i) each supplier who is a top four (4) supplier of the Companies based on aggregate consideration paid by the Companies for goods or services rendered in the most recently completed fiscal year or the period from January 1, 2019 to the Closing Date (collectively, the “Material Suppliers”); and (ii) the Seller’s best good faith estimate of the amount of purchases from each Material Supplier during such periods. No Company has received any notice that any of the Material Suppliers has ceased, or intends to cease, to supply goods or services to the Business or to otherwise terminate or materially reduce its relationship with the Business or the Companies.

 

Section 4.14 Insurance. Section 4.14 of the Disclosure Schedules sets forth (a) a true and complete list of all current policies or binders of fire, liability, product liability, umbrella liability, real and personal property, workers’ compensation, vehicular, fiduciary liability and other casualty and property insurance maintained by a Company or any of its Affiliates and relating to the operations of the Companies and the Business, (collectively, the “Insurance Policies”) and (b) with respect to the Companies and the Business, a list of all pending claims and the claims history for the Companies since January 1, 2017. There are no claims related to the Companies and/or the Business pending under any such Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights. Neither the Companies nor any of their Affiliates have received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any of such Insurance Policies. All premiums due on such Insurance Policies have either been paid or, if not yet due, accrued. All such Insurance Policies (x) are in full force and effect and enforceable in accordance with their terms; (y) are provided by carriers who are financially solvent; and (z) have not been subject to any lapse in coverage. Neither the Companies nor any of their Affiliates are in default under, or have otherwise failed to comply with, in any material respect, any provision contained in any such Insurance Policy.

 

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Section 4.15 Legal Proceedings; Governmental Orders; Anti-Bribery.

 

(a) Legal Proceedings. Each Company is, and during the past three (3) years has been, in compliance in all material respects with all Laws. Since January 1, 2017, no Company has received any written notice from a Governmental Authority that alleges any noncompliance (or that any Company or any of its Affiliates is under any investigation by such Governmental Authority for any such alleged noncompliance) with any order issued by a Governmental Authority, Law or Permit. There are no Actions pending or, to the Knowledge of Seller, threatened (a) against or by the Companies relating to or affecting the Business or any of the Companies’ properties or assets (or by or against Seller or any of its Affiliates and relating to Business or the Companies); or (b) against or by the Companies, Seller or any Affiliate of Seller that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. To the Knowledge of Seller, no event has occurred or circumstances exist that is reasonably likely give rise to, or serve as a basis for, any such Action.

 

(b) Governmental Orders. There are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards against, the Companies.

 

(c) Anti-Bribery.

 

(i) Each Company and each of its officers, directors, managers, employees, and, to the Knowledge of Seller, agents and anyone acting on their behalf (collectively, the “Stakeholders”) is in compliance with all applicable anti-bribery and anti-corruption laws, including the U.S. Foreign Corrupt Practices Act and the regulations promulgated pursuant thereto.

 

(ii) Neither any of the Companies nor any of their Affiliates or Stakeholders have, directly or indirectly, offered, paid, promised, or authorized the giving of money or anything of value to any (A) Government Official; or (B) other Person while knowing that some portion or all of the payment or thing of value will be offered, given, or promised, directly or indirectly, to a Government Official or another Person, in any case for the purpose of: (x) influencing any act or decision of such Government Official or such Person in his, her, or its official capacity, including a decision to do or omit to do any act in violation of his, her, or its lawful duties or proper performance of functions; or (y) inducing such Government Official or such Person to use his, her, or its influence or position with any Governmental Authority or other Person to influence any act or decision, in any case, in order to obtain or retain business for, direct business to, or secure an improper advantage for the Companies.

 

Section 4.16 Compliance With Laws; Permits.

 

(a) Each Company is, and during the past three (3) years has been, in compliance in all material respects with all Laws. Since January 1, 2017, no Company has received any written notice from a Governmental Authority that alleges any noncompliance (or that any Company or any of its Affiliates is under any investigation by such Governmental Authority for any such alleged noncompliance) with any order issued by a Governmental Authority, Law or Permit applicable to the Company or the Business.

 

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(b) All material Permits (including all Permits issued by Insurance Regulators) required for the conduct of the Business as currently conducted in each jurisdiction in which a Company operates have been obtained by each such Company and are valid and in full force and effect. All fees and charges due and owning with respect to such Permits as of the date hereof have been paid in full. Section 4.16(b) of the Disclosure Schedules lists all such current Permits issued to each Company which are related to the conduct of the Business as currently conducted, including the names of the Permits and their respective dates of issuance and expiration. No event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or material limitation of any Permit set forth in Section 4.16(b) of the Disclosure Schedules.

 

Section 4.17 Regulatory Matters.

 

(a) Seller has delivered to Buyer true, complete and correct copies of (i) all reports of examination (including financial, market conduct and similar examinations) of the Companies by any Governmental Authority, and all material correspondence or consent orders related thereto and (ii) all registrations, filings and submissions provided to any Governmental Authority with respect to the Companies and all material correspondence related thereto.

 

(b) The Companies have filed all financial statements and material reports, statements, documents, registrations, filings or submissions required to be filed by such entity with any Insurance Regulator and, to the Knowledge of Seller, no material deficiencies have been asserted by any such Insurance Regulator with respect to any such financial statements, reports, statements, documents, registrations, filings or submissions that have not been remedied.

 

(c) (i) Each Company, as applicable, has marketed, sold and issued Insurance Contracts in compliance, in all material respects, with all consent orders resulting from market conduct or other examinations or audits by Insurance Regulators in the respective jurisdictions in which such products have been marketed, sold or issued; (ii) all advertising, promotional and sales materials and other marketing practices used by the Companies have complied and are currently in compliance, in each case, in all material respects, with all consent orders resulting from market conduct or other examinations or audits by Insurance Regulators in the respective jurisdictions in which such products have been marketed, sold or issued; (iii) the manner in which the Companies compensate any Person that is not an insurance agent who is involved in the sale or servicing of Insurance Contracts issued by insurance companies does not render such Person an insurance agent under any applicable Law, and (iv) the manner in which the Companies are compensated by insurance companies relating to the sale or servicing of their Insurance Contracts is in compliance in all material respects with all applicable Law.

 

Section 4.18 Environmental Matters. The operations of each Company are currently and have been in compliance in all material respects with all Environmental Laws. There is no pending or threatened Action or written notice of violation, inquiry, or information request by any Governmental Authority, relating to any Environmental Law involving any Company. None of the Companies or any real property currently or formerly owned, leased or operated by a Company is listed on, or has been proposed for listing on, the National Priorities List (or CERCLIS) under CERCLA, or any similar state or foreign list.

 

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Section 4.19 Employee Benefit Matters.

 

(a) Section 4.19(a) of the Disclosure Schedules contains a true and complete list of each pension, benefit, retirement, compensation, employment, consulting, profit-sharing, deferred compensation, incentive, bonus, performance award, phantom equity, stock or stock-based, change in control, retention, severance, vacation, paid time off, welfare, fringe-benefit and other similar agreement, plan, policy, program or arrangement (and any amendments thereto), in each case whether or not reduced to writing and whether funded or unfunded, including each “employee benefit plan” within the meaning of Section 3(3) of ERISA, whether or not tax-qualified and whether or not subject to ERISA, which is or has been maintained, sponsored, contributed to, or required to be contributed to by the Companies for the benefit of any current or former employee, officer, director, retiree, independent contractor or consultant of the Business or any spouse or dependent of such individual, or under which the Companies have or may have any Liability (including indirect or contingent liability on account of an ERISA Affiliate) (each, a “Benefit Plan”).

 

(b) The Companies do not have any Qualified Benefit Plans.

 

(c) Each Benefit Plan and related trust has been established, administered and maintained, in all material respects, in accordance with its terms and in compliance with all applicable Laws (including ERISA, the Code and any applicable local Laws). All benefits, contributions and premiums relating to each Benefit Plan have been timely paid in compliance with the terms of such Benefit Plan and all applicable Laws, or, if not yet due, have been accrued or reserved for.

 

(d) The Companies do not have any Defined Benefit Plans. None of the Benefit Plans are (i) a “multiple employer plan” (as defined in Section 4063 or 4064 of ERISA), or (ii) a “multiemployer plan” (as defined in Section 3(37) of ERISA).

 

(e) There is no pending or threatened Action relating to a Benefit Plan (other than routine claims for benefits), and no Benefit Plan has within the three years prior to the date hereof been the subject of an examination or audit by a Governmental Authority or the subject of an application or filing under, or is a participant in, an amnesty, voluntary compliance, self-correction or similar program sponsored by any Governmental Authority.

 

(f) There has been no amendment to, announcement by a Company or any of its Affiliates relating to, or change in employee participation or coverage under, any Benefit Plan or collective bargaining agreement that could reasonably be expected to increase the annual expense of maintaining such plan above the level of the expense incurred for the most recently completed fiscal year with respect to any member, manager, partner, officer, employee, consultant or independent contractor of the Business, as applicable. Neither any Company nor any of its Affiliates has any commitment or obligation or has made any representations to any manager, director, officer, employee, consultant or independent contractor of the Business, whether or not legally binding, to adopt, amend, modify or terminate any Benefit Plan or any collective bargaining agreement.

 

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(i) Neither the execution of this Agreement nor any of the transactions contemplated by this Agreement will (either alone or upon the occurrence of any additional or subsequent events): (i) entitle any current or former member, manager, partner, director, officer, employee, independent contractor or consultant of a Seller or the Business to severance pay or any other payment; (ii) accelerate the time of payment, funding or vesting, or increase the amount of compensation due to any such individual; or (iii) increase the amount payable under or result in any other material obligation pursuant to any Benefit Plan.

 

Section 4.20 Employment Matters.

 

(a) Section 4.20(a) of the Disclosure Schedules contains a list of all persons who are employees or Independent Contractors of the Companies as of the date hereof, including any employee who is on a leave of absence of any nature, paid or unpaid, authorized or unauthorized, and sets forth for each such individual the following: (i) name; (ii) title or position (including whether full or part time, and whether exempt or non-exempt for overtime purposes); (iii) hire date; (iv) severance arrangement (if any); and (v) with respect to any individual on leave at the time of the Closing, the nature of such leave and the anticipated date of return. All compensation, including wages, commissions and bonuses due and payable (in accordance with the Companies’ payroll practices) to all employees and Independent Contractors of the Companies for services performed on or prior to the date hereof have been paid in full. As used herein, “Independent Contractor” means any independent contractor or consultant who: (i) has been engaged by a Company, to perform more than twenty five (25) hours during the past twelve (12) months; and (ii) such engagement was as an individual (rather than through an entity).

 

(b) No Company is, and has not been for the past three (3) years, a party to, bound by, or negotiating any collective bargaining agreement or other Contract with a union, works council or labor organization, whether in the U.S. or in a foreign jurisdiction (collectively, “Union”), and to the Knowledge of Seller, there is not, and has not been for the past three (3) years, any Union representing or purporting to represent any employee of a Company, and no Union or group of employees is seeking or has sought to organize employees for the purpose of collective bargaining. There is not, and within the past three (3) years there has not been, any actual or threatened strike, concerted slowdown, concerted work stoppage, lockout, concerted refusal to work overtime or other similar labor disruption or dispute affecting a Company or any employees of the Business. No Company has a duty to bargain with any Union.

 

(c) Each Company is and during the last three (3) years has been, in compliance in all material respects with all applicable Laws pertaining to employment and employment practices, including all Laws relating to labor relations, equal employment opportunities, fair employment practices, employment discrimination, fair pay, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence and unemployment insurance. All individuals characterized and treated by a Company as consultants or independent contractors are properly characterized as independent contractors under and in compliance in all material respects with all applicable Laws. All employees of the Companies classified as exempt under the Fair Labor Standards Act and state and local wage and hour laws are properly classified. To the Knowledge of Seller, there are no Actions against any Company pending or threatened to be brought or filed, by or with any Governmental Authority or arbitrator in connection with the employment of any current or former applicant, employee, consultant, volunteer, intern or independent contractor, including any claim relating to unfair labor practices, employment discrimination, harassment, retaliation, equal pay, wages and hours or any other employment related matter arising under applicable Laws.

 

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(d) No executive or key employee, or group of employees, of the Companies has notified the respective Company that he or she has any plans to terminate employment with the Companies within the next twelve (12) months. To the Knowledge of Seller no employee or Independent Contractor of the Companies is subject to any non-disclosure or confidentiality, non-compete or non-solicitation, employment, assignment of inventions or similar agreements with any Person (other than the Companies) that materially restricts that individual’s ability to perform the ordinary and customary duties of his or her role for the respective Company in connection with the Business.

 

Section 4.21 Taxes.

 

Except as set forth on Section 4.21 of the Disclosure Schedules:

 

(a) All Tax Returns required to be filed by any Company have been timely filed. Such Tax Returns are true, complete and correct in all respects. All Taxes due and owing by any Company (whether or not shown on any Tax Return) have been timely paid.

 

(b) Seller has delivered to Buyer true and correct copies of all federal, state, local, and foreign income, franchise and similar Tax Returns, examination reports, and statements of deficiencies assessed against, or agreed to by, any Company for each of the prior five (5) years. Each Company has disclosed on its tax returns all positions taken therein that could reasonably be expected to give rise to a substantial understatement of Tax within the meaning of Section 6662 of the Code (or any similar provision of state, local or foreign Tax law).

 

(c) No Company is a party to, or bound by, any Tax indemnity, Tax sharing or Tax allocation agreement other than under any arrangement entered into in the ordinary course of business and not primarily related to Taxes.

 

(d) No private letter rulings, technical advice memoranda or similar agreement or rulings have been requested, entered into, or issued by any taxing authority with respect to any Company.

 

(e) No Company has been a member of an affiliated, combined, consolidated or unitary tax group for Tax purposes. No Company has any liability for Taxes of any Person (other than the Company or a Subsidiary) under Treasury Regulations Section 1.1502-6 (or any corresponding provision of state, local or foreign Law), as transferee or successor, by contract or otherwise.

 

(f) No Company will be required to include any item of income in, or exclude any item or deduction from, taxable income for any taxable period or portion thereof ending after the Closing Date as a result of: (i) any change in a method of accounting under Section 481 of the Code (or any comparable provision of state, local or foreign Tax laws), or use of an improper method of accounting, for a taxable period ending on or prior to the Closing Date; (ii) an installment sale or open transaction occurring on or prior to the Closing Date; (iii) a prepaid amount received on or before the Closing Date; (iv) any closing agreement under Section 7121 of the Code, or similar provision of state, local or foreign Law; or (v) any election under Section 108(i) of the Code.

 

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(g) Each Company has timely withheld and paid each Tax required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, customer, member or other Person, and complied with all information reporting and backup withholding provisions of applicable Law.

 

(h) No Company is currently the beneficiary of any extension of time within which to file any Tax Return, which extension is currently in effect.

 

(i) All deficiencies asserted, or assessments made, against any Company as a result of any examinations by any taxing authority have been fully paid. No issues relating to Taxes with respect the ownership, operation or management of the Business were raised by the relevant Governmental Authority in any completed audit or examination. There are no outstanding assessments, claims or deficiencies for any Taxes of any Company that have been proposed, asserted or assessed by any Governmental Authority.

 

(j) No Company is a party to any Action by any taxing authority. To the Knowledge of Seller, there are no pending or threatened Actions against any Company by any taxing authority, and no taxing authority has given written notice of the commencement of (or its intent to commence) any such Action with respect to any such Taxes.

 

(k) There are no Encumbrances for Taxes upon any of the assets of the Companies (other than statutory liens for current Taxes not yet due and payable).

 

(l) No Company nor any Seller Party is a “foreign person” as that term is used in Treasury Regulations Section 1.1445-2.

 

(m) No Company is, nor has never been, a party to, or a promoter of, a “reportable transaction” within the meaning of Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011-4(b).

 

(n) Each Company has been properly classified as a partnership or disregarded entity for U.S. federal, state and local income Tax purposes since its date of formation. No Company is a party to any Tax Sharing Agreement other than under any arrangement entered into in the ordinary course of business and not primarily related to Taxes.

 

(o) No claim has ever been made by a Taxing authority in a jurisdiction where a Company does not file Tax Returns that a Company is or may be subject to taxation by that jurisdiction.

 

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Section 4.22 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of any Seller Party, any Company or any of their respective Affiliates.

 

Section 4.23 Related Party Arrangements. Except as set forth in Section 4.23 of the Disclosure Schedules, no Seller Party or any Affiliate or Representative of a Seller Party (other than the Companies) (each, a “Related Party”) (a) has any Indebtedness owing from or to the Companies, (b) has any ownership or other interest in any property or asset used by the Companies or pertaining to the Business (other than as a result of his, her or its ownership of or interest in any Company), or (c) is a party to (or a beneficiary of) any Contract (other than any Benefit Plan or employment agreement disclosed to Buyer in Section 4.20 of the Disclosure Schedules), transaction or other business dealing with the Companies (clauses (a) through (c) collectively, the “Related Party Arrangements”).

 

Section 4.24 Investment Representations.

 

(a) Each Seller Party understands and agrees that the consummation of the transactions contemplated by the Transaction Documents, including the delivery of the Equity Consideration constitutes the offer and sale of securities under the Securities Act, applicable state statutes, Buyer’s Parent’s Shares constituting the Equity Consideration are being acquired for each Seller Party’s own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the Securities Act. At the time any Seller Party was offered the Buyer’s Parent’s Shares constituting the Equity Consideration, such Seller Party was, and at the date hereof it is, and it will be, an “accredited investor” as defined in Rule 501(a) under the Securities Act.

 

(b) Each Seller Party understands that the Buyer’s Parent’s Shares constituting the Equity Consideration are being offered and sold hereunder in reliance upon specific exemptions from the registration requirements of the Securities Act and state securities laws, and that the Buyer’s Parent is relying upon the truth and accuracy of, and each Seller Party’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of each Seller Party set forth herein in order to determine the availability of such exemptions and the eligibility of each applicable Seller Party to acquire the Buyer’s Parent’s Shares constituting the Equity Consideration. Each Seller Party understands that agrees the Buyer’s Parent’s Shares are “restricted securities” within the meaning of United Stated securities laws and that they may not sell, transfer or assign the Buyer’s Parent’s Shares, or any portion thereof, without registration under the Securities Act or state securities laws or perfection of an applicable exemption therefrom, and the Buyer’s Parent’s Shares shall bear a customary restrictive legend to that effect.

 

(c) Each Seller Party, and each of such Seller Party’s advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Buyer’s Parent and materials relating to the offer and sale of the Buyer’s Parent’s Shares constituting the Equity Consideration which have been requested by such Seller Party or such Seller Party’s advisors. Each Seller Party, and each of such Seller Party’s advisors, if any, have been afforded the opportunity to ask questions of the Buyer’s Parent and, to the extent such questions have been asked, such questions have been satisfactorily answered. Each Seller Party understands that such Seller Party’s purchase of the Buyer’s Parent’s Shares constituting the Equity Consideration involves a significant degree of risk.

 

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(d) Each Seller Party understands that no United States federal or state agency or any other Governmental Authority has passed upon or made any recommendation or endorsement of the Buyer’s Parent’s Shares constituting the Equity Consideration.

 

(e) Each Seller Party understands that (i) the sale or re-sale of the Buyer’s Parent’s Shares constituting the Equity Consideration have not been and are not being registered under the Securities Act or any applicable state securities laws, and such shares may not be transferred unless (a) such shares are sold pursuant to an effective registration statement under the Securities Act, (b) such Seller Party shall have delivered to the Buyer’s Parent, at the cost of such Seller Party, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in comparable transactions to the effect that such shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, which opinion shall be acceptable to the Buyer’s Parent, (c) such shares are sold or transferred pursuant to Rule 144, or (d) such shares are sold pursuant to Regulation S, and such Seller Party shall have delivered to the Buyer’s Parent, at the cost of such Seller Party, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate transactions, which opinion shall be acceptable to the Buyer’s Parent; (ii) any sale of such shares made in reliance on Rule 144 or Regulation S may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such shares under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC thereunder; and (iii) neither the Buyer’s Parent nor any other person is under any obligation to register the resale of the Buyer’s Parent’s Shares constituting the Equity Consideration under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case).

 

(f) Each Seller Party understands that any certificates representing the Buyer’s Parent’s Shares constituting the Equity Consideration will bear a legend in substantially the following form:

 

THE SHARES REPRESENTED HEREBY (THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATES. THE SECURITIES MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

THE SECURITIES ARE SUBJECT TO A LOCK-UP AGREEMENT, AS MAY BE AMENDED BY THE PARTIES THERETO FROM TIME TO TIME, (A COPY OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST FROM THE ISSUER OF THE SECURITIES) WHICH INCLUDES CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH THEREIN.

 

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Section 4.25 No Other Representations or Warranties. Except to the extent expressly set forth in this Article IV, Seller makes no representations or warranties, express or implied, at law or in equity, in respect of Seller, the Companies or any of their respective assets, liabilities or operations, and Seller expressly disclaims any such other representations or warranties.

 

Article V

REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER’S PARENT

 

Buyer hereby represents and warrants to Seller that the representations and warranties contained in this Article V are true, correct and complete as of the Closing Date (except for representations and warranties made as of a specified date, which are true, correct and complete as of such specified date).

 

Section 5.01 Organization of Buyer and Buyer’s Parent. Each of Buyer and Buyer’s Parent is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware.

 

Section 5.02 Authority of Buyer and Buyer’s Parent. Each of Buyer and Buyer’s Parent has full power and authority to enter into this Agreement and the other Transaction Documents to which Buyer and Buyer’s Parent, as applicable, is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Buyer and Buyer’s Parent of this Agreement and any other Transaction Document to which Buyer and Buyer’s Parent, if applicable, is a party, the performance by Buyer of its obligations hereunder and thereunder and the consummation by Buyer and Buyer’s Parent, if applicable, of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Buyer and Buyer’s Parent. This Agreement has been duly executed and delivered by Buyer and Buyer’s Parent, and (assuming due authorization, execution and delivery by the Seller Parties and the Seller Party Representative) this Agreement constitutes a legal, valid and binding obligation of Buyer and Buyer’s Parent enforceable against Buyer and Buyer’s Parent in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar applicable Laws affecting creditors’ rights generally or by general equitable principles affecting the enforcement of contracts. When each other Transaction Document to which Buyer and Buyer’s Parent, if applicable, is or will be a party has been duly executed and delivered by Buyer and Buyer’s Parent, if applicable, (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of Buyer and Buyer’s Parent, if applicable, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar applicable Laws affecting creditors’ rights generally or by general equitable principles affecting the enforcement of contracts.

 

Section 5.03 Issuance of Buyer’s Parent’s Shares. The issuance and delivery of Buyer’s Parent’s Shares in accordance with this Agreement has been duly authorized by all necessary corporate action on the part of Buyer’s Parent and, when issued as contemplated hereby, such Buyer’s Parent’s Shares shall be duly and validly issued, fully paid and nonassessable.

 

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Section 5.04 No Conflicts; Consents.

 

(a) The execution, delivery and performance by Buyer and Buyer’s Parent of this Agreement and the other Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (i) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation or other organizational documents of Buyer or Buyer’s Parent; (ii) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Buyer or Buyer’s Parent; or (iii) require the consent, approval or other action by, or notice to, any Person under any Contract to which Buyer or Buyer’s Parent is a party.

 

(b) Except for (i) applicable requirements of the Exchange Act, including the filing of any Current Report on Form 8-K required to be filed in connection with the transaction contemplated by this Agreement, (ii) any filings required under state securities laws, and (iii) any filings required by the NASDAQ, no consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Buyer in connection with the execution and delivery of this Agreement or any of the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby.

 

Section 5.05 Public Filings. Buyer has made all filings required under the Exchange Act and the Securities Act (the “SEC Reports”). The Buyer SEC Reports (a) complied with the then-applicable requirements of the Exchange Act and Securities Act, as the case may be, and (b) did not contain as of their respective filing dates (except as amended, and in such cases, as of their amended filing dates) any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

Section 5.06 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Buyer.

 

Section 5.07 No Other Representations or Warranties. Except to the extent expressly set forth in this Article V, Buyer makes no representations or warranties, express or implied, at law or in equity, in respect of Buyer, Buyer’s Parent or any of Buyer’s of Buyer’s Parent’s assets, liabilities or operations, and Buyer expressly disclaims any such other representations or warranties.

 

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Article VI

COVENANTS

 

Section 6.01 Confidentiality. Each Seller Party shall, and shall cause such Seller Party’s Affiliates to, hold, and shall use such Seller Party’s commercially reasonable efforts to cause the respective Representatives of such Seller Party and its Affiliates to hold, in confidence any and all information, whether written or oral, concerning the Business, the Companies, the Transaction Documents (including the Purchase Price) or the transactions contemplated hereby or thereby, except to the extent that such Seller Party can show that such information (i) is generally available to and known by the public through no fault of such Seller Party or such Seller Party’s Affiliates or their respective Representatives; or (ii) is lawfully acquired by such Seller Party or such Seller Party’s Affiliates or their respective Representatives from and after the Closing from sources which, to Knowledge of such Seller Representative, are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If a Seller Party or such Seller Party’s Affiliates or their respective Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law, the same shall promptly notify Buyer in writing and shall disclose only that portion of such information which such Person, as the case may be, is legally required to disclose, provided that such Seller Party shall and shall cause such Seller Party’s Affiliates to, and shall use such Seller Party’s commercially reasonable efforts to cause the Representatives of such Seller Party and such Seller Party’s Affiliates to, use commercially reasonable efforts (at the sole cost and expense of Buyer) to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information. Notwithstanding anything to the contrary, so long as any Principal is an employee of Buyer, the Companies or any of their respective Affiliates, following the Closing, such Principal may use any such confidential information in the ordinary course of such Principal’s employment. Without limiting Section 8.13, each of the Seller Parties hereby acknowledges and agrees on behalf of such Seller Party and its Affiliates and their respective Representatives that a breach or threatened breach of this Section 6.01 by any such Person would give rise to irreparable harm to Buyer, for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of any such breach or threatened breach, Buyer shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction (without any requirement to post bond).

 

Section 6.02 Non-competition; Non-solicitation.

 

(a) In order for Buyer to have and enjoy the full benefit of the Business (including its goodwill), and as a material inducement for Buyer to enter into this Agreement (without such inducement Buyer would not have entered into this Agreement), for a period of five (5) years following the Closing Date (the “Restricted Period”), the Seller Parties shall not, and shall not permit any of their Affiliates (together with the Restricted Parties, collectively, the “Restricted Persons”) to, directly or indirectly, anywhere in the United States of America (i) engage in or assist others in engaging in the Business, other than Buyer and its Affiliates (including the Companies); (ii) have an interest in any Person that engages directly or indirectly in the Business in any capacity, including as a partner, shareholder, member, employee, principal, agent, trustee or consultant, other than in Buyer’s Parent; or (iii) cause, induce or encourage any actual or prospective client, customer, supplier or licensor of any Company or the Business (including any existing or former client or customer of any Company or the Business at or prior to the Closing and any Person that becomes a client or customer of any Company or Business after the Closing), or any other Person who has a business relationship with any Company or Business, to terminate or modify any such actual or prospective relationship. Notwithstanding the foregoing, (A) the Restricted Persons may own, directly or indirectly, solely as an investment, securities of any Person traded on any national securities exchange if such Restricted Person is not a controlling Person of, or a member of a group which controls, such Person and does not, directly or indirectly, own two percent (2%) or more of any class of securities of such Person; and (B) nothing in this Section 6.02(a) shall restrict any Restricted Person who is a Key Employee from being employed by Buyer or any of its Affiliates after the Closing Date or from holding any equity in Buyer’s Parent or any of its Affiliates.

 

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(b) During the Restricted Period, the Restricted Persons shall not, and shall not permit any of their Affiliates to, directly or indirectly, hire or solicit any person who is or was employed by the Companies, or encourage any such employee to leave such employment or hire any such employee who has left such employment, except pursuant to a general solicitation which is not directed specifically to any such employees; provided, that nothing in this Section 6.02(b) shall prevent any Restricted Person or any of its Affiliates from hiring (i) any employee whose employment has been terminated by Buyer, the Companies, or any of their respective Affiliates or (ii) after one hundred eighty (180) days after the date of termination of employment, any employee whose employment has been terminated by the employee.

 

(c) Each of the Restricted Persons acknowledges that (i) the goodwill associated with the Companies, the Business, and the associated clients, customers, suppliers and licensors is an integral component of the value of the foregoing to Buyer, (ii) each Restricted Person’s agreement to and compliance with the terms of this Section 6.02(c) are necessary for the protection of the legitimate business interests of Buyer and to preserve the value and goodwill of the Companies, the Business, and the associated clients, customers, suppliers and licensors following the Closing, (iii) it has a material economic interest in the consummation of the transactions contemplated by this Agreement and (iv) the geographical scope of the restrictions set forth in this Section 6.02 is reasonable to protect the goodwill being acquired by Buyer, as prior to the Closing the Business operated in all states in the United States.

 

(d) Without limiting Section 8.13, each of the Restricted Persons hereby acknowledges and agrees that a breach or threatened breach of this Section 6.02 by any Restricted Person would give rise to irreparable harm to Buyer, for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of any such breach or threatened breach, Buyer shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction (without any requirement to post bond).

 

(e) Each of the Restricted Persons acknowledges and agrees that the restrictions contained in this Section 6.02 are reasonable and necessary to protect the legitimate interests of Buyer and constitute a material inducement to Buyer to enter into this Agreement and consummate the transactions contemplated by this Agreement. In the event that any covenant contained in this Section 6.02 should ever be adjudicated to exceed the time, geographic, product or service or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service or other limitations permitted by applicable Law. The covenants contained in this Section 6.02 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.

 

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Section 6.03 Access to Books and Records.

 

(a) Buyer shall, and shall cause the Companies to, provide Seller and its Representatives with reasonable access (for the purpose of examining and copying), during normal business hours, to the books and records of the Companies with respect to periods prior to the Closing Date. Unless otherwise consented to in writing by Seller, Buyer shall not permit the Companies, prior to the six (6) year anniversary of the Closing Date, destroy or otherwise dispose of any books and records of the Companies, or any portions thereof, relating to periods prior to the Closing Date without first giving reasonable prior written notice to Seller and offering to surrender to Seller such books and records or such portions thereof.

 

(b) Buyer shall not be obligated to provide Seller with access to any books and records (including personnel files) pursuant to this Section 6.03 where such access would violate any Law.

 

Section 6.04 Termination of Rights to Name and Marks. Except with respect to the Key Employees in connection with (and for the sole benefit of Buyer and its Affiliates, including the Companies) their employment pursuant to the Employment Agreements, the Seller Parties shall, and shall cause their Affiliates to, immediately discontinue all use of the words “RxHelpline”, “TogetherHealth” or anything confusingly similar thereto. As soon as practicable and in no event later than five (5) Business Days after the Closing Date, as applicable, each Seller Party shall, and shall cause their Affiliates to, changed its company name to a name that does not include any of the words “RxHelpline”, “TogetherHealth” or anything confusingly similar, and Seller Parties’ Representative shall deliver evidence of such name change to Buyer within such period.

 

Section 6.05 Intentionally Omitted.

 

Section 6.06 Director and Officer Liability and Indemnification. For a period of six (6) years after the Closing, Buyer shall not, and shall not permit any of the Companies to, amend, repeal, or modify any provision of the organizational documents of any of the Companies as in effect immediately to the Closing relating to the exculpation or indemnification of any officers, directors, or managers (unless required by Law), it being the intent of the Parties that the current and former officers, directors, and managers of each of the Companies shall continue to be entitled to such exculpation and indemnification to the fullest extent provided in such organizational documents as in effect immediately prior to the Closing to extent permitted by applicable Law.

 

Section 6.07 Public Announcements. From and after the Closing Date, Buyer and its Affiliates shall be permitted to make such public releases and announcements regarding this Agreement and the other Transaction Documents and the transactions contemplated herein and therein as Buyer or such Affiliate may determine in its sole discretion. The Seller Parties shall not, without the prior written consent of Buyer, make any public releases or other announcements concerning this Agreement, the other Transaction Documents or the transactions contemplated herein or therein without Buyer’s prior written consent.

 

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Section 6.08 Tax Matters.

 

(a) If the taxable year of the Companies for state, local or foreign income Tax purposes does not automatically end on the Closing Date, to the extent permitted under applicable Law, the parties shall elect to cause the taxable year of the Companies to terminate on the Closing Date. Buyer shall prepare, or cause to be prepared, and file, or cause to be filed, all Tax Returns for the Companies that are due to be filed after the Closing Date (each, a “Buyer Return”) and Buyer shall provide such Buyer Return to Seller Parties’ Representative not later than ten (10) days before the due date for filing such Tax Return (including extensions) for Seller Parties’ Representative’s reasonable review and comment and shall make such revisions as are reasonably requested by the Seller Parties’ Representative.

 

(b) The Seller Parties’ Representative shall prepare, or cause to be prepared, and timely file, or cause to be timely filed, all Tax Returns for the Companies that are due to be filed on or prior to the Closing Date (each, a “Company Return”), and shall timely pay, or cause to be paid, all Taxes shown as due and payable thereon. Each Company Return shall be prepared in accordance with the Companies’ past practices unless otherwise required by applicable Law, and the Seller Parties’ Representative shall provide each such Company Return to Buyer not later than twenty (20) days before the due date for filing such Tax Return (including extensions) for Buyer’s review, comment and approval.

 

(c) In the case of Taxes that are payable with respect to a Straddle Period, the portion of any such Taxes that are treated as relating to the portion of the applicable taxable period ending on the Closing Date for purposes of this Agreement shall be: (i) in the case of Taxes based upon, or related to, income, receipts, profits, wages, capital or net worth, deemed equal to the amount which would be payable if the taxable year ended with the Closing Date; and (ii) in the case of other Taxes, deemed to be the amount of such Taxes for the entire taxable period multiplied by a fraction the numerator of which is the number of days in such taxable period ending on the Closing Date and the denominator of which is the number of days in the entire taxable period. Buyer shall prepare, or cause to be prepared, and file, or cause to be filed, all Tax Returns for the Companies for any Straddle Period. Buyer shall provide such Straddle Period Tax Returns to Seller Parties’ Representative not later than ten (10) days before the due date for filing such Tax Returns (including extensions) for Seller Parties’ Representative’s reasonable review and comment and will consider, in good faith, such revisions as are reasonably requested by Seller Parties’ Representative.

 

(d) Real and personal property Taxes, ad valorem Taxes, and franchise fees or Taxes (that are imposed on a periodic basis (as opposed to a net income basis)) attributable to the assets of the Companies other than Transfer Taxes provided for in Section 6.08(f) (collectively, “Periodic Taxes”) shall be prorated between Seller and Buyer for any Straddle Periods. Periodic Taxes attributable to Straddle Periods shall be prorated between Seller and Buyer based on the relative periods that the assets of the Companies subject to such Periodic Taxes were owned by Seller or Buyer during the fiscal period of the taxing jurisdiction for which such Taxes were imposed by such jurisdiction (as such fiscal period is or may be reflected on the bill rendered by such taxing jurisdiction). The amount of all such prorations shall be settled and paid on the Closing Date; provided, however, that final payments with respect to prorations that are not able to be calculated on the Closing Date shall be calculated and paid as soon as practicable thereafter.

 

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(e) Each Party to this Agreement shall cooperate fully, as and to the extent reasonably requested by any other Party, in connection with the preparation and filing of any Tax Return and any Action with respect to Taxes. The Seller, the Principals, the Seller Parties’ Representative and Buyer agree (A) to retain all books and records with respect to Tax matters pertinent to the Companies relating to any taxable period beginning before the Closing Date until expiration of the statute of limitations (and, to the extent notified by Buyer or Seller Parties’ Representative, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority, and (B) to give each other reasonable written notice prior to transferring, destroying or discarding any such books and records and, if any other party so requests, Seller, as the case may be, shall allow such other party to take possession of such books and records.

 

(f) All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the other Transaction Documents (including any real property transfer Tax and any other similar Tax) (“Transfer Taxes”) shall be borne and paid 50% by Seller and 50% by Buyer when due. The party required by law to file a Tax Return with respect to such Taxes shall do so in the time and manner prescribed by law, and the non-filing party shall promptly reimburse the filing party for its share of any such Taxes upon receipt of evidence reasonably satisfactory to the non-filing party of the amount of such Taxes.

 

(g) Seller shall not file for the Companies (i) any amended Tax Return, or (ii) any Tax Return in a jurisdiction in which such a Tax Return has not previously been filed, for any taxable period without Buyer’s prior written consent unless required by applicable Law.

 

(h) The Seller Parties shall indemnify the Companies, Buyer, and each other Buyer Indemnitee and hold them harmless from and against (a) any Loss attributable to any breach of or inaccuracy in any representation or warranty made in Section 4.21; (b) any Loss attributable to any breach or violation of, or the failure to fully perform, any covenant, agreement, undertaking or obligation in this Section 6.02, (c) all Taxes of the Companies or relating to the Business for all pre-Closing Tax periods; (d) the portion of Taxes of the Companies for any Straddle Periods as prorated to Seller pursuant to Section 6.08(c) and Section 6.08(d), (e) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which the Companies (or any predecessor of the Companies) is or was a member on or prior to the Closing Date by reason of a liability under Treasury Regulation Section 1.1502-6 or any comparable provisions of foreign, state or local Law; and (f) any and all Taxes of any person imposed on the Companies arising under the principles of transferee or successor liability or by contract, relating to an event or transaction occurring before the Closing Date, in each of the above cases, together with any out-of-pocket fees and expenses (including attorneys’ and accountants fees) incurred in connection therewith. Seller Parties shall be obligated to reimburse Buyer for any Taxes of the Companies that are the responsibility of Seller pursuant to this Section 6.08 within ten (10) Business Days after payment of such Taxes by Buyer or the Companies. A Buyer Indemnitee’s right to payment from the Seller Parties pursuant to this Section 6.08(h) be satisfied as follows: (a) first, solely at the option of the applicable Buyer Indemnitee, from the Holdback Amount (on a joint and several basis) and (B) second, by payment from the Seller Parties, on a several and not joint basis in accordance with the Pro Rata Percentages.

 

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(i) Any indemnification payments pursuant to Section 6.08(h) shall be treated as an adjustment to the Purchase Price by the parties for Tax purposes, unless otherwise required by Law.

 

(j) Notwithstanding anything in this Agreement to the contrary, the provisions of Section 4.21 and this Section 6.08 shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus ninety (90) days.

 

Section 6.09 Further Assurances. Each of the Parties shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement and the other Transaction Documents.

 

Section 6.10 Termination of Related Party Arrangements. All Liabilities and obligations between or among the Companies and any Related Party in respect of the Business or Companies, on the one hand, and any Related Party, on the other hand, including all Related Party Arrangements disclosed or required to be disclosed in Section 4.23 of the Disclosure Schedules, shall be terminated in full, in each case in a manner satisfactory to Buyer without any Liability to Buyer or any of its Affiliates (including the Companies) following the Closing.

 

Section 6.11 Resignations. Seller shall deliver to Buyer written resignations, effective as of the Closing Date, of any and all officers and directors of the Companies set forth on Section 6.11 of the Disclosure Schedules.

 

Section 6.12 Payment of Holdback Amount. Buyer shall hold and pay the Holdback Amount pursuant to this Section 6.12. If a Buyer Indemnitee has not timely delivered a Claim Notice pursuant to Section 7.05 on or prior to the date that Buyer’s Parent receives a final copy of its audited financial statements for the 2019 fiscal year (the “Buyer’s Parent 2019 Audit Date”), fifty percent (50%) of the Holdback Amount shall be paid to Seller Parties’ Representative within ten (10) Business Days of the Buyer’s Parent 2019 Audit Date. If one or more Buyer Indemnitees has timely delivered one or more Claim Notices pursuant to Section 7.05 to Seller Parties’ Representative on or before the Buyer’s Parent 2019 Audit Date, Buyer shall pay to Seller within ten (10) Business Days of the Buyer’s Parent 2019 Audit Date fifty percent (50%) of the Holdback Amount less the amount of any reasonably estimated Losses related to such outstanding Claim Notices. If a Buyer Indemnitee has not timely delivered a Claim Notice pursuant to Section 7.05 on or prior to the date that is eighteen (18) months after the Closing Date (the “18-Month Anniversary”), the remainder of the Holdback Amount shall be paid to Seller Parties’ Representative within ten (10) Business Days of the 18-Month Anniversary. If one or more Buyer Indemnitees has timely delivered one or more Claim Notices pursuant to Section 7.05 to Seller Parties’ Representative on or before the 18-Month Anniversary (including any Claim Notices delivered prior to the Buyer’s Parent 2019 Audit Date that remain outstanding), Buyer shall pay to Seller Parties’ Representative within ten (10) Business Days of the 18-Month Anniversary the remainder of the Holdback Amount less the amount of any reasonably estimated Losses related to all outstanding Claim Notices. If any claim related to a Claim Notice properly timely pursuant to Section 7.05 remains outstanding after the 18-Month Anniversary, upon any resolution of such pending claim, then such amount of the Holdback Amount held related to the then resolved claim less the amount of such resolution validly due to a Buyer Indemnitee, shall be disbursed to the Seller Parties’ Representative within ten (10) Business Days of the final determination of the underlying claim. The Parties agree and acknowledge that offset against the Holdback Amount shall not be Buyer Indemnitees’ exclusive method of receiving indemnification from the Seller Parties pursuant to Section 6.08 or Article VII.

 

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Section 6.13 Seller Parties’ Representative.

 

(a) By virtue of the execution of this Agreement by each of the Seller Parties, and without further action of any Seller Party, the Seller Parties will be deemed to have irrevocably constituted and appointed Seller Parties’ Representative (and by execution of this Agreement such Person hereby accepts such appointment) as agent and attorney-in-fact for and on behalf of the Seller Parties, with full power of substitution, to act in the name, place and stead of each Seller Party with respect to this Agreement and the taking by the Seller Parties’ Representative of any and all actions and the making of any decisions required or permitted to be taken by Seller or any Principal under this Agreement, including the exercise of the power to: (i) give and receive notices and communications under this Agreement; (ii) authorize or object to claims for indemnification made by any Buyer Indemnitee under this Agreement; (iii) agree to, negotiate, enter into settlements and compromises of, and comply with orders of courts with respect to claims for indemnification made by any Buyer Indemnitee under this Agreement; (iv) agree to, negotiate, enter into settlements and compromises of, and comply with orders or otherwise handle any other matters described in this Agreement; and (v) take all actions necessary or appropriate in the good faith judgment of the Seller Parties’ Representative for the accomplishment of the foregoing. The power of attorney granted hereby is coupled with an interest and is irrevocable, and may be delegated by the Seller Parties’ Representative. The identity of the Seller Parties’ Representative and the terms of the agency may be changed, and a successor Seller Parties’ Representative may be appointed, from time to time (including in the event of the death, disability or other incapacity of the Seller Parties’ Representative) by the consent of at least two (2) of the Principals, and any such successor will succeed the Seller Parties’ Representative as Seller Parties’ Representative under this Agreement.

 

(b) The Seller Parties’ Representative will not be liable for any act done or omitted hereunder as the Seller Parties’ Representative while acting in good faith and not in a manner constituting gross negligence or willful misconduct, and any act done or omitted pursuant to the advice of counsel will be conclusive evidence of such good faith. Each Principal will severally indemnify the Seller Parties’ Representative and hold the Seller Parties’ Representative harmless against any Losses incurred without gross negligence or willful misconduct on the part of the Seller Parties’ Representative and arising out of or in connection with the acceptance or administration of his duties hereunder.

 

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(c) From and after Closing, a decision, act, consent or instruction of the Seller Parties’ Representative will constitute a decision of the Seller Parties and will be final, binding and conclusive upon each Seller Party, and Buyer, its Affiliates (including Buyer’s Parent) and Buyer Indemnitees may rely upon any decision, act, consent or instruction of the Seller Parties’ Representative as being the decision, act, consent or instruction of each Seller Party. Buyer, its Affiliates (including Buyer’s Parent) and Buyer Indemnitees are hereby relieved from any liability to any Person for any acts done by Seller Parties’ Representative and any acts done by Buyer, its Affiliates (including Buyer’s Parent) or any Buyer Indemnitee in accordance with any such decision, act, consent or instruction of the Seller Parties’ Representative.

 

Section 6.14 Equity Consideration. Seller and each Principal acknowledges and agrees that, in addition to any restrictions set forth in each Lock-Up Agreement, Seller and each Principal shall have complete and absolute control (whether through the ownership of voting securities, by contract or otherwise) over any Person that holds Lock-Up Shares (as defined in each Lock-Up Agreement) with the full power and authority to cause any such Person, without the action, consent or order of any other Person (including any Government Official) or any Governmental Authority, to comply with the clawback obligations set forth in Section 7.08(a); provided, however, such obligations in this Section 6.14 shall be lifted with respect to the applicable portion of such Lock-Up Shares on each applicable Restriction Termination Date (as defined in each Lock-Up Agreement).

 

Article VII

INDEMNIFICATION

 

Section 7.01 Survival. The representations and warranties contained in this Agreement and (other than any representations or warranties contained in Section 4.21 which are subject to Section 6.08(h)) shall survive the Closing for a period of eighteen (18) months after the Closing Date; provided, however, that (i) the representations and warranties set forth in Section 4.24, Section 5.04(b) and Section 5.05 shall survive the Closing for the full period of the applicable statute of limitations (giving effect to any waiver, mitigation or extension thereof) plus ninety (90) days, and (ii) the Fundamental Representations shall survive indefinitely. All covenants and agreements of the Parties contained in this Agreement shall survive the Closing in accordance with their terms. Notwithstanding the foregoing, with respect to any Action as to which an Indemnified Party shall have, prior to the expiration of all applicable survival periods described in this Article VII, timely delivered a Claim Notice, the indemnification obligations hereunder with respect to such Action in such Claim Notice shall survive until such time as such Action is fully and finally resolved. It is the express intent of the Parties that, if an applicable survival period as contemplated by this Article VII is shorter or longer than the statute of limitations that would otherwise apply, then, by contract, the applicable statute of limitations shall be modified to the survival period contemplated hereby. The Parties further acknowledge that the time periods set forth in this Article VII for the assertion of indemnification under this Agreement are the result of arms’-length negotiation among the Parties and that they intend for the time periods to be enforced as agreed by the Parties.

 

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Section 7.02 Indemnification By Seller Parties. Subject to the other terms and conditions of this Article VII, the Seller Parties agree to indemnify and defend Buyer and each of its Affiliates and their respective Representatives (collectively, the “Buyer Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Buyer Indemnitees based upon, arising out of, with respect to or by reason of a claim by a Buyer Indemnitee directly or by a third party:

 

(a) any inaccuracy in or breach of any of the representations or warranties of any Seller Party contained in this Agreement or in any certificate or instrument delivered by or on behalf of any Seller Party pursuant to this Agreement;

 

(b) any breach or failure to perform, comply with or observe any covenant, agreement or obligation to be performed by any Seller Party pursuant to this Agreement or any certificate or instrument delivered by or on behalf of any Seller Party pursuant to this Agreement (other than any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in Section 6.08, it being understood that the sole remedy for any such breach, violation or failure shall be pursuant to Section 6.08);

 

(c) following payments made by the Buyer pursuant to Section 2.03(a)(ii), any Indebtedness as of the Effective Time which remains outstanding following the Closing, and any Seller Parties’ Transaction Expenses which remain outstanding following the Closing; or

 

(d) in connection with that certain Employment Agreement, dated effective as of January 12, 2016, by and between Miguel Ponce and THP and that certain Termination Agreement of Employment Agreement, dated as of June 5, 2019, by and among THP, Seller and Miguel Ponce; provided, however, solely for the sake of clarity, not in connection any employment agreement entered into by Miguel Ponce and THP in connection with the Closing.

 

Section 7.03 Indemnification By Buyer. Subject to the other terms and conditions of this Article VII, Buyer and Buyer Parent, jointly and severally, agree unconditionally to indemnify and defend Seller and each of its Affiliates and their respective Representatives (collectively, the “Seller Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Seller Indemnitees based upon, arising out of, with respect to or by reason of a claim by a Seller Indemnitee directly or by a third party:

 

(a) any inaccuracy in or breach of any of the representations or warranties of Buyer contained in this Agreement or in any certificate or instrument delivered by or on behalf of Buyer pursuant to this Agreement; or

 

(b) any breach or failure to perform, comply with or observe any covenant, agreement or obligation to be performed by Buyer pursuant to this Agreement or in any certificate or instrument delivered by or on behalf of Buyer pursuant to this Agreement.

 

Section 7.04 Certain Limitations. The indemnification provided for in Section 7.02(a) and Section 7.03(a) shall be subject to the following limitations:

 

(a) Seller Parties shall not be liable to the Buyer Indemnitees for indemnification under Section 7.02(a) until the aggregate amount of all Losses in respect of indemnification under Section 7.02(a) exceeds $525,000 (the “Basket”), in which event Seller Parties shall be required to indemnify the Buyer Indemnitees for the full amount of such Losses from dollar one subject to the limitations set forth herein. The aggregate amount of all Losses for which Seller Parties shall be liable pursuant to Section 7.02(a) shall not exceed $5,250,000 (the “Cap”). Notwithstanding the foregoing, the Basket and Cap shall not apply to Losses based upon, arising out of, with respect to or by reason of fraud or any inaccuracy in or breach of any Fundamental Representation or in respect of Section 4.21, with respect to which, in each case, no Losses shall count towards the Cap for any purpose under this Agreement.

 

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(b) Buyer shall not be liable to the Seller Indemnitees for indemnification under Section 7.03(a) until the aggregate amount of all Losses in respect of indemnification under Section 7.03(a) exceeds the Basket, in which event Buyer shall be required to indemnify the Seller Indemnitees for the full amount of such Losses from dollar one subject to the limitations set forth herein. The aggregate amount of all Losses for which Buyer shall be liable pursuant to Section 7.03(a) shall not exceed the Cap. Notwithstanding the foregoing, the Basket and Cap shall not apply to Losses based upon, arising out of, with respect to or by reason of fraud or any inaccuracy in or breach of any Fundamental Representation, with respect to which, in each case, no Losses shall count towards the Cap for any purpose under this Agreement.

 

(c) The amount of any Losses sustained under Section 7.02 or Section 7.03 by any Indemnified Party shall be calculated net of the amount of any recoveries from third parties, actually received by such Person (or an Affiliate thereof) in respect of such Losses (net of any reasonable out-of-pocket costs and expenses, including deductibles or premium increases, actually incurred in obtaining such recovery). In the event that any recovery from a third party is made by an Indemnified Party with respect to any Losses for which such Person (or its Affiliate) has been indemnified hereunder, then a refund equal to the net amount of the recovery (net of any reasonable out-of-pocket costs and expenses, including deductibles and premium increases, actually incurred in obtaining such recovery) shall be made promptly to the Indemnifying Party.

 

(d) The Buyer Indemnitees’ right to indemnification from the Seller Parties pursuant to Section 7.02, subject to the limitation set forth in this Article VII, shall be satisfied as follows: (i) first, from the Holdback Amount, on a joint and several basis, (ii) second, by clawback of the Equity Consideration as set forth in Section 7.08(a), on a several and not joint basis in accordance with the Pro Rata Percentages, (iii) third, by setoff of amounts otherwise owing to Seller for the Earn Out Consideration in accordance with Section 7.08(b), on a several and not joint basis in accordance with the Pro Rata Percentages, and (iv) finally by payment from the Seller Parties, or any one or more of them, on a several and not joint basis in accordance with the Pro Rata Percentages.

 

(e) The rights of any Indemnifying Party shall be subrogated to any right of action that the Indemnified Party may have against any other Person with respect to any matter giving rise to a claim for indemnification hereunder and the Indemnified Party shall reasonably cooperate with the Indemnifying Party in pursuing any subrogated right.

 

(f) The Parties may not avoid the limitations on liability, recovery, and recourse set forth in this Article VII by seeking damages for breach of contract, tort, or pursuant to any other theory of liability (other than in respect of fraud).

 

(g) An Indemnified Party shall use its commercially reasonable efforts to mitigate any Losses for which it is entitled to indemnification pursuant to this Article VII to the extent required by applicable Law, and any costs and expenses incurred by an Indemnified Party in such regard shall be included in the computation of Losses such Indemnified Party shall be entitled to recover from the Indemnifying Party.

 

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(h) Notwithstanding anything to the contrary contained in this Agreement, to the extent there is a breach of the terms of Section 6.01 or Section 6.02 by any of the Principals, the liability shall be several and not joint, and only such breaching Principal shall be obligated to indemnify the Buyer Indemnitees for any such breach of Section 6.01 or Section 6.02.

 

(i) In no event shall the Seller Indemnitees, on the one hand, or the Buyer Indemnitees, on the other hand, be entitled to duplicative recoveries for the same underlying Loss under more than one Section (or subsection) of this Article VII or in the final calculations included in the Closing Statement. Solely for the sake of clarity, any recovery pursuant to any indemnification under this Article VII will be reduced by any such amounts that were specifically included in the final calculation of the Closing Date Payment.

 

(j) For purposes of determining the amount of Losses resulting from any misrepresentation or breach of a representation or warranty, all qualifications or exceptions in any representation or warranty relating to or referring to the terms “material”, “materiality”, “in all material respects”, “Material Adverse Effect” or any similar term or phrase shall be disregarded, it being the understanding of the Parties that for purposes of determining liability under this Article VII, the representations and warranties of the Parties contained in this Agreement shall be read as if such terms and phrases were included in them.

 

Section 7.05 Indemnification Procedures. The Person making a claim under this Article VII is referred to as the “Indemnified Party”, and the Person against whom such claims are asserted under this Article VII is referred to as the “Indemnifying Party”.

 

(a) Notice of Claim. An Indemnified Party shall provide the Indemnifying Party with written notice of any actual or potential Losses in respect of which indemnification may be sought under this Article VII (a “Claim Notice”) promptly after the Indemnified Party becomes aware of such Losses. Such Claim Notice shall describe the actual or potential Losses, to the Indemnified Party’s knowledge, in reasonable detail based on the information then reasonably available, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Losses that has been or may be sustained by the Indemnified Party. The Indemnifying Party acknowledges that the Indemnified Party may have incomplete knowledge of an Action or the associated Losses or of the facts and circumstances underlying such Action or Losses at the time that a Claim Notice in connection therewith is delivered to the Indemnifying Party and that any Claim Notice provided hereunder may reflect such incomplete knowledge. Any information provided to the Indemnifying Party in connection with a Claim Notice is disclosed solely for purposes of making a claim for indemnification under this Agreement, and no information so disclosed shall be deemed to be an admission by any Indemnified Party to any third party of any manner whatsoever, including of any violation of law or breach of any agreement. With respect to any documents or information that are protected by the attorney-client privilege, work product doctrine, or other privileges, the Indemnifying Party shall cooperate in good faith with the Indemnified Party to preserve the privileged status of any such document or information. Without limiting any of the foregoing cooperation obligations of the Indemnifying Party or Indemnified Party, nothing in this Agreement shall be construed to require the waiver of any Fifth Amendment or similar protection or require any action that could reasonably be expected to cause the loss of the attorney-client privilege, work-product doctrine, or other privileges as to any document, information, or communication. Any deficiency in the timeliness of the Claim Notice, or substance of the information or detail conveyed, shall not relieve the Indemnifying Party of its obligations under this Agreement, except to the extent that the Indemnifying Party has been actually prejudiced by the deficiency, and only to the extent of such prejudice, so long as any such Claim Notice is provided during the applicable survival period set forth in Section 7.01.

 

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(b) Third Party Claims. If any Claim Notice is in respect of any actual or potential Losses made or brought by any Person who is not a party to this Agreement or an Affiliate of a Party to this Agreement or a Representative of the foregoing (a “Third Party Claim”) against such Indemnified Party, the Indemnifying Party shall have the right to participate in, or assume, the defense of such Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying Party’s own counsel, and the Indemnified Party shall cooperate in good faith in such defense; provided, that if the Indemnifying Party is Seller, such Indemnifying Party shall not have the right to defend or direct the defense of any such Third Party Claim that (i) involves a Governmental Authority, (ii) involves criminal liability, (iii) seeks an injunction or other equitable relief against the Indemnified Party as the primary source of recovery, or (iv) is required by any insurer as a condition to an Indemnified Party’s eligibility to recover insurance proceeds on account of such Third Party Claim, that such carrier control the matter. In the event that the Indemnifying Party assumes the defense of any Third Party Claim, subject to Section 7.05(c), it shall have the right to take such action as it deems necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such Third Party Claim in the name and on behalf of the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any Third Party Claim with counsel selected by it subject to the Indemnifying Party’s right to control the defense thereof. The fees and disbursements of such counsel shall be at the expense of the Indemnified Party, provided, that if in the reasonable opinion of counsel to the Indemnified Party, (A) there are legal defenses available to an Indemnified Party that are different from or additional to those available to the Indemnifying Party, or (B) there exists a conflict of interest between the Indemnifying Party and the Indemnified Party, the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel to the Indemnified Party in each jurisdiction for which the Indemnified Party determines counsel is required. If the Indemnifying Party (x) elects not to compromise or defend such Third Party Claim, (y) fails to notify the Indemnified Party in writing of its election to defend as provided in this Agreement, or (z) fails to diligently prosecute the defense of such Third Party Claim, then in any case the Indemnified Party may, subject to Section 7.05(c) pay, compromise and defend such Third Party Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third Party Claim. The Indemnifying Party and the Indemnified Party shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available (subject to the provisions of Section 6.01) records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third Party Claim.

 

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(c) Settlement of Third Party Claims. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into settlement of any Third Party Claim without the prior written consent of the Indemnified Party, except as provided in this Section 7.05(c). If a firm offer is made to settle a Third Party Claim, without any admission of guilt or wrongdoing on the part of the Indemnified Party, and without leading to liability or the creation of a financial or other obligation on the part of the Indemnified Party and provides, in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations in connection with such Third Party Claim and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm offer within ten (10) days after its receipt of such notice, the Indemnified Party may continue to contest or defend such Third Party Claim and in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim shall not exceed the amount of such settlement offer. If the Indemnified Party fails to consent to such firm offer and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense pursuant to Section 7.05(b), it shall not agree to any settlement without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed).

 

(d) Direct Claims. If any Claim Notice is in respect of any actual or potential Losses by an Indemnified Party on account of Losses which do not result from a Third Party Claim (a “Direct Claim”), the Indemnifying Party shall have thirty (30) days after its receipt of such Claim Notice to respond in writing to such Direct Claim. The Indemnified Party shall allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance alleged to give rise to the Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim and the Indemnified Party shall assist the Indemnifying Party’s investigation by giving such information and assistance (including access to the Indemnified Party’s premises and personnel and the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of its professional advisors may reasonably request. If the Indemnifying Party does not so respond within such 30-day period, the Indemnifying Party shall be deemed to have rejected such Direct Claim, in which case the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.

 

Section 7.06 Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the Parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

 

Section 7.07 Effect of Investigation. The representations, warranties and covenants of the Indemnifying Party, and the Indemnified Party’s right to indemnification with respect thereto, shall not be affected or deemed waived by reason of any investigation made by or on behalf of the Indemnified Party (including by any of its Representatives) or by reason of the fact that the Indemnified Party or any of its Representatives knew or should have known that any such representation or warranty is, was or might be inaccurate.

 

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Section 7.08 Clawback; Setoff.

 

(a) Subject to the order of payments set forth in Section 7.04(d), Buyer shall be entitled to recover any amounts due from Seller Parties, on a several and not joint basis in accordance with the Pro Rata Percentages, under this Agreement by setting off such amounts against the Equity Consideration (including by application of Section 6.14). For purposes of valuing the Equity Consideration in connection with any clawback thereof to satisfy such indemnification obligations, the Equity Consideration shall be valued at 100-day Trailing VWAP measured as of the date of final determination that any amounts are owed by any Seller Party to the Buyer Indemnitees pursuant to the terms of this Article VII.

 

(b) Subject to the order of payments set forth in Section 7.04(d), Buyer shall be entitled to recover any amounts due from Seller Parties, on a several and not joint basis in accordance with the Pro Rata Percentages, under this Agreement by setting off such amounts against the Earn Out Consideration. For the sake of clarity and the avoidance of doubt, any such setoff amount shall be retained by and for the account of Buyer.

 

Section 7.09 Exclusive Remedies. Subject to Section 2.03, Schedule 2.03, Section 2.04, Section 6.01, Section 6.02 and Section 8.13, the Parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims (other than claims arising from fraud or criminal activity on the part of a Party in connection with the transactions contemplated by this Agreement) for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in Section 6.08 and this Article VII. Nothing in this Agreement shall limit any Person’s right (x) to seek and obtain any injunctive or other equitable relief to which any Person shall be entitled (under this Agreement) or (y) to seek any remedy on account of any Party’s fraudulent or criminal misconduct.

 

Article VIII
MISCELLANEOUS

 

Section 8.01 Expenses. Except as otherwise expressly provided herein, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs and expenses, whether or not the Closing shall have occurred.

 

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Section 8.02 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be given by and be deemed received by the receiving Party (i) if sent by an internationally-recognized delivery service, on the date confirmed as the actual date of delivery by such service; (ii) if sent by registered or certified mail, return receipt requested, within seven (7) days of mailing; (iii) if sent by electronic mail with electronic confirmation of transmission, on the next Business Day after transmission, if not transmitted on a Business Day, or on the day of transmission, if transmitted on a Business Day. Such communications must be sent to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 8.02):

 

If to the Seller Parties, which single notice shall constitute notice to all Seller Parties, to:

 

TogetherHealth Soup, L.P.

7551 Wiles Road, Suite 106

Coral Springs, FL 33067

Attn: Robert Gregg and Mark Longaro

Email: greggrobert@gmail.com and mark@togetherhealth.com

 

with a copy (which alone shall not constitute notice) to:

 

McDermott Will & Emery LLP
333 SE 2nd Avenue, Suite 4500
Miami, FL 33131
Attn.: Eric Gilbert
Email: egilbert@mwe.com

 

If to Buyer’s Parent or Buyer, which single notice shall constitute notice to both Buyer’s Parent and Buyer, to:

 

Health Insurance Innovations, Inc.
15438 N. Florida Avenue, Suite 201
Tampa, FL 33613
Attn: Gavin Southwell

 

with copies (which alone shall not constitute notice to Buyer) to:

 

Offit Kurman, P.A.

Ten Penn Center

1801 Market Street, Suite 2300

Philadelphia, Pennsylvania 19103

Attn.: Michael A. Petrizzo, Jr.

E-mail: mpetrizzo@offitkurman.com

 

and to:

 

Greenspoon Marder LLP
1875 Century Park East, Suite 1850
Los Angeles, California 90067
Attn.: Sander C. Zagzebski
Email: sander.zagzebski@gmlaw.com

 

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Section 8.03 Interpretation; Disclosure Schedules. For purposes of this Agreement: (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive and, unless the context otherwise requires, means “and/or”; (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole and not to any particular provision of this Agreement; and (d) where the context requires, the use of a pronoun of one gender or the neuter is to be deemed to include a pronoun of the appropriate gender. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Schedules, Disclosure Schedules and Exhibits mean the Articles and Sections of, and Schedules, Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof (provided that in the case of any Contract listed in the Disclosure Schedules, only if such amendment, supplement or modification is also listed in the Disclosure Schedules); and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein. When calculating the period of time before which, within which or following which any act is to be done or any step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall not be calculated as the first day of such period of time. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day. All references to “$” in this Agreement shall be deemed references to United States dollars. The specification of any dollar amount in the representations and warranties contained in this Agreement or the inclusion of any specific item in the Disclosure Schedule is not intended to imply that such amounts, or higher or lower amounts, or the items so included, are or are not required to be disclosed, and neither Party shall use the fact of the setting of such amounts or the fact of the inclusion of any such item in the Disclosure Schedule in any dispute or controversy with any Party as to whether any obligation, item or matter not described herein or included in a Disclosure Schedule hereto is or is not required to be disclosed (including whether such amounts or items are required to be disclosed as material). The information contained in the Disclosure Schedule is disclosed solely for the purposes of this Agreement, and no information contained therein shall be deemed to be an admission by any Party to any third party of any matter whatsoever, including of any violation of Law or breach of any Contract.

 

Section 8.04 Headings. The headings in this Agreement are for convenience and reference only and shall not affect the interpretation of this Agreement.

 

Section 8.05 Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Except as provided in Section 6.01 or Section 6.02(d), upon such determination that any term or other provision is invalid, illegal or unenforceable, 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 a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

 

Section 8.06 Entire Agreement. This Agreement constitutes the entire agreement of the Parties with respect to the subject matter contained herein and therein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to the subject matter hereof. In the event of any inconsistency between the statements in the body of this Agreement and the Exhibits, Schedules and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.

  

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Section 8.07 Successors and Assigns. No Seller Party may assign its rights or obligations hereunder without the prior written consent of the Buyer, which consent shall not be unreasonably withheld or delayed; and Buyer may not assign its rights or obligations hereunder without the prior written consent of the Seller Parties’ Representative, which consent shall not be unreasonably withheld or delayed; provided, however, Buyer may assign this Agreement and all or any of its rights and obligations hereunder to an Affiliate of Buyer without the consent of the Seller Parties’ Representative, and Buyer may assign this Agreement and any or all of its rights or obligations hereunder as collateral security to any lender to Buyer or any Affiliate of Buyer. Any such assignment will not relieve any Seller Party or Buyer from any liability under this Agreement. Subject to the preceding two sentences, this Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns, and any reference to a Party shall also be a reference to the successors and permitted assigns thereof.

 

Section 8.08 No Third-party Beneficiaries. Except as provided in Article VII, Section 6.06 and Section 6.08, this Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

Section 8.09 Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each Party. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. No waiver by any Party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

Section 8.10 Governing Law/Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of laws that would require the application of the substantive laws of a jurisdiction other than the State of Delaware. Any action or proceeding brought by any Party against any other Party arising out of or related to this Agreement shall be brought exclusively in a state or federal court of competent subject matter jurisdiction located the County of Hillsborough, State of Florida, and each of the Parties consents to the personal jurisdiction and venue of those courts.

 

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Section 8.11 Waiver of Jury Trial. EACH PARTY HEREBY WAIVES (TO THE FULLEST EXTENT PERMITTED BY LAW) ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE PARTIES ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS AGREEMENT, THAT EACH PARTY HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND REPRESENTS IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

Section 8.12 Attorneys’ Fees. If any Party shall bring an action against any other Party by reason of any alleged breach of any covenant, provision or condition hereof, the unsuccessful Party shall pay to the prevailing Party reasonable attorneys’ fees and costs actually incurred by the prevailing Party, in addition to any other relief to which it may be entitled.

 

Section 8.13 Specific Performance. Each of the Parties agrees that this Agreement is intended to be legally binding and specifically enforceable pursuant to its terms and that the Parties would be irreparably harmed if any of the provisions of the Agreement are not performed in accordance with their specific terms and that monetary damages would not provide adequate remedy in such event. Accordingly, in addition to any other remedy to which a non-breaching Party may be entitled at Law, a non-breaching Party shall be entitled to seek injunctive relief without the posting of any bond to prevent breaches of this Agreement and to specifically enforce the terms and provisions hereof. Each Party further waives any defense that a remedy at Law would be adequate in any action for specific performance or injunctive relief hereunder.

 

Section 8.14 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, .pdf format, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

Section 8.15 Release. Effective as of the Closing, Seller and the Principals, on behalf of itself and themselves and each of its and their Affiliates and Representatives, and its and their respective successors and assigns, and all Persons who at any time prior to the Closing were Representatives of Seller or the Principals or its or their Affiliates (in each case, in their respective capacities as such) (collectively, the “Seller Releasing Parties”), hereby generally, irrevocably and completely waive, release, acquit, relinquish and forever discharge the Companies and its Affiliates and each of their respective past, present and future Representatives, successors and assigns (collectively, the “Buyer Released Parties”) from and against any and all Losses and Actions, whether known or unknown, suspected or unsuspected, both at law and in equity, that any Seller Releasing Party now has, or at any time previously had, or shall or may have in the future, against any Buyer Released Party, which arise out of or pertain to any claims such Person has or may have for any matter existing or occurring on or prior to the Closing Date, whether asserted or claimed prior to, on or after the Closing Date; provided, however, that nothing in this Section 8.15 shall operate to release any obligation of Buyer and Buyer’s Parent arising under this Agreement or the other Transaction Documents. Seller and the Principals, on behalf of itself and themselves and the other Seller Releasing Parties, hereby irrevocably covenant to refrain from, directly or indirectly, asserting or commencing any Action of any kind against any Buyer Released Party, based upon any matter released pursuant to this Section 8.15.

 

[Remainder of page is intentionally left blank.]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the Closing Date either individually, or by their respective officers or other Persons thereunto duly authorized.

 

  BUYER’S PARENT:
   
  Health Insurance Innovations, Inc.,
  a Delaware corporation
                        
  By:

/s/ Gavin D. Southwell

  Name: Gavin D. Southwell
  Title: Chief Executive Officer and President
     
  BUYER:
   
  Health Plan Intermediaries Holdings, LLC, a Delaware limited liability company
     

 

  By: Health Insurance Innovations, Inc., a Delaware corporation, Managing Member
     
  By: /s/ Gavin D. Southwell
  Name: Gavin D. Southwell
  Title: Chief Executive Officer and President
     

 

  COMPANIES:
   
  RxHelpline, LLC,
  a Florida limited liability company
   
  By: /s/ Robert Gregg
  Name: Robert Gregg
  Title: President
     
  TogetherHealth PAP, LLC,
  a Delaware limited liability company
     
  By: /s/ Robert Gregg
  Name: Robert Gregg
  Title: President

 

   
 

 

  TogetherHealth Insurance, LLC,
  a Delaware limited liability company
     
  By:

/s/ Robert Gregg

  Name: Robert Gregg
  Title: President
     
  SELLER:
     
  TogetherHealth Soup, L.P.,
  a Delaware limited partnership
     
  By: Soup GP, Inc., its general partner
     
  By: /s/ Robert Gregg
  Name: Robert Gregg
  Title: President
     
  SELLER REPRESENTATIVE:
     
  TogetherHealth Soup, L.P.,
  a Delaware limited partnership, in its capacity as Seller Representation
     
  By: Soup GP, Inc., its general partner
     
  By: /s/ Robert Gregg
  Name: Robert Gregg
  Title: President
     
  Solely for purposes specified herein:
     
  /s/ Mark Longaro
  Mark Longaro, an individual
     
  /s/ Robert Gregg
  Robert Gregg, an individual
   
  /s/ Jason Buchwald
  Jason Buchwald, an individual

 

   
 

 

Exhibits and Schedules Omitted from Exhibit 2.1

 

Schedule 2.03 – Earn-Out Consideration

 

Disclosure Schedules

 

Section 4.03 – No Conflicts; Consents
Section 4.04 – Financial Statements
Section 4.05 – Undisclosed Liabilities
Section 4.06 – Absence of Certain Changes, Events and Conditions
Section 4.07 – Material Contracts
Schedule 4.10 – Real Property
Schedule 4.11 – Intellectual Property
Section 4.13 – Customers and Suppliers
Section 4.14 – Insurance
Schedule 4.15 – Legal Proceedings; Governmental Orders; Anti-Bribery
Section 4.16(b) – Compliance with Laws; Permits
Section 4.19(a) – Employee Benefit Matters
Section 4.20(a) – Employment Matters
Section 4.21 – Taxes
Section 4.23 – Related Party Arrangements

 

 
 

 

Published CUSIP Number: 42227BAA2

Revolver CUSIP Number: 42227BAB0

Term A-1 Loan CUSIP Number: 42227BAC8

 

CREDIT AGREEMENT

 

Dated as of June 5, 2019

 

among

 

HEALTH PLAN INTERMEDIARIES HOLDINGS, LLC,

 

as the Borrower,

 

HEALTH INSURANCE INNOVATIONS, INC.,

 

as the Parent,

 

THE SUBSIDIARIES OF THE PARENT IDENTIFIED HEREIN,

 

as the Guarantors,

 

BANK OF AMERICA, N.A.,

 

as Administrative Agent, Swingline Lender and L/C Issuer,

 

SUNTRUST BANK,

 

as Syndication Agent,

 

ROYAL BANK OF CANADA,

 

as Co-Documentation Agent,

 

and

 

THE OTHER LENDERS PARTY HERETO

 

Arranged By:

 

BofA SECURITIES, INC.

 

and

 

SUNTRUST ROBINSON HUMPHREY, INC.,

 

as Joint Lead Arrangers and Joint Bookrunners

 

 
 

 

TABLE OF CONTENTS

 

      Page
       
ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS 1
   
  1.01 Defined Terms 32
  1.02 Other Interpretive Provisions 33
  1.03 Accounting Terms 33
  1.04 Rounding 34
  1.05 Times of Day; Rates 34
  1.06 Letter of Credit Amounts 34
  1.07 Rules of Interpretation with Respect to the Insurance Subsidiaries 35
  1.08 Limited Condition Acquisitions 35
       
ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS 36
   
  2.01 Revolving Loans and Term Loans 36
  2.02 Borrowings, Conversions and Continuations of Loans 36
  2.03 Letters of Credit 38
  2.04 Swingline Loans 46
  2.05 Prepayments 49
  2.06 Termination or Reduction of Aggregate Revolving Commitments 50
  2.07 Repayment of Loans 51
  2.08 Interest 52
  2.09 Fees 52
  2.10 Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate 53
  2.11 Evidence of Debt 54
  2.12 Payments Generally; Administrative Agent’s Clawback 54
  2.13 Sharing of Payments by Lenders 56
  2.14 Cash Collateral 56
  2.15 Defaulting Lenders 57
  2.16 Incremental Facility Loans 60
       
ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY 62
   
  3.01 Taxes 62
  3.02 Illegality 67
  3.03 Inability to Determine Rates 67
  3.04 Increased Costs; Reserves on Eurodollar Rate Loans 69
  3.05 Compensation for Losses 71
  3.06 Mitigation Obligations; Replacement of Lenders 71
  3.07 Survival 72
       
ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS 72
   
  4.01 Conditions of Initial Credit Extension 72
  4.02 Conditions to all Credit Extensions 74
       
ARTICLE V. REPRESENTATIONS AND WARRANTIES 75
   
  5.01 Existence; Power 75
  5.02 Organizational Power; Authority 75
  5.03 Governmental Approvals; No Conflicts 75
  5.04 Financial Statements 75
  5.05 Litigation and Environmental Matters 76

 

i
 

 

  5.06 Compliance with Laws 76
  5.07 No Default 77
  5.08 Investment Company Act, Etc 77
  5.09 Taxes 77
  5.10 Margin Regulations 78
  5.11 ERISA 78
  5.12 Ownership of Property and Insurance 78
  5.13 Disclosure 79
  5.14 Labor Relations 79
  5.15 Subsidiaries 79
  5.16 Solvency 79
  5.17 Business Locations; Taxpayer Identification Number 80
  5.18 Anti-Corruption Laws and Sanctions 80
  5.19 Perfection of Security Interests in the Collateral 80
  5.20 Insurance Licenses 80
  5.21 No EEA Financial Institution or Covered Entity 81
       
ARTICLE VI. AFFIRMATIVE COVENANTS 81
   
  6.01 Financial Statements and Other Information 81
  6.02 Notices of Material Events 83
  6.03 Existence; Conduct of Business 84
  6.04 Compliance with Laws, Etc 85
  6.05 Payment of Obligations 85
  6.06 Books and Records 85
  6.07 Visitation, Inspection, Etc 85
  6.08 Maintenance of Properties; Insurance 86
  6.09 Use of Proceeds 86
  6.10 Additional Subsidiaries 86
  6.11 Further Assurances 87
  6.12 Depository Relationship 87
  6.13 Anti-Corruption Laws 88
       
ARTICLE VII. NEGATIVE COVENANTS 88
   
  7.01 Indebtedness and Preferred Equity 88
  7.02 Negative Pledge 89
  7.03 Fundamental Changes 89
  7.04 Investments, Loans, Etc 90
  7.05 Restricted Payments 91
  7.06 Sale of Assets 91
  7.07 Transactions with Affiliates 91
  7.08 Restrictive Agreements 92
  7.09 Sale and Leaseback Transactions 92
  7.10 Hedging Transactions 92
  7.11 Legal Name, State of Formation and Form of Entity 92
  7.12 Amendment to Material Documents 92
  7.13 Accounting Changes 93
  7.14 Government Regulation 93
  7.15 Ownership of Subsidiaries 93
  7.16 Use of Proceeds 93
  7.17 Restrictions on the Parent 93
  7.18 Government Receivables 94

 

ii
 

 

  7.19 Healthcare 94
  7.20 Financial Covenants 94
       
ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES 94
   
  8.01 Events of Default 94
  8.02 Remedies Upon Event of Default 97
  8.03 Application of Funds 97
       
ARTICLE IX. ADMINISTRATIVE AGENT 99
     
  9.01 Appointment and Authority 99
  9.02 Rights as a Lender 99
  9.03 Exculpatory Provisions 100
  9.04 Reliance by Administrative Agent 100
  9.05 Delegation of Duties 101
  9.06 Resignation of Administrative Agent 101
  9.07 Non-Reliance on Administrative Agent and Other Lenders 103
  9.08 No Other Duties; Etc 103
  9.09 Administrative Agent May File Proofs of Claim; Credit Bidding 103
  9.10 Collateral and Guaranty Matters 104
  9.11 Secured Cash Management Agreements and Secured Hedge Agreements 105
  9.12 ERISA Matters 105
       
ARTICLE X. GUARANTY 106
   
  10.01 The Guaranty 106
  10.02 Obligations Unconditional 107
  10.03 Reinstatement 108
  10.04 Certain Additional Waivers 108
  10.05 Remedies 108
  10.06 Rights of Contribution 108
  10.07 Guarantee of Payment; Continuing Guarantee 109
  10.08 Keepwell 109
       
ARTICLE XI. MISCELLANEOUS 109
   
  11.01 Amendments, Etc 109
  11.02 Notices; Effectiveness; Electronic Communications 112
  11.03 No Waiver; Cumulative Remedies; Enforcement 114
  11.04 Expenses; Indemnity; Damage Waiver 114
  11.05 Payments Set Aside 116
  11.06 Successors and Assigns 116
  11.07 Treatment of Certain Information; Confidentiality 121
  11.08 Rights of Setoff 122
  11.09 Interest Rate Limitation 122
  11.10 Counterparts; Integration; Effectiveness 123
  11.11 Survival of Representations and Warranties 123
  11.12 Severability 123
  11.13 Replacement of Lenders 124
  11.14 Governing Law; Jurisdiction; Etc 124
  11.15 Waiver of Jury Trial 125
  11.16 No Advisory or Fiduciary Responsibility 126
  11.17 Electronic Execution of Assignments and Certain Other Documents 126
  11.18 USA PATRIOT Act Notice; Beneficial Ownership 127

 

iii
 

 

  11.19 Subordination of Intercompany Indebtedness 127
  11.20 Acknowledgement and Consent to Bail-In of EEA Financial Institutions 127
  11.21 Acknowledgment Regarding any Supported QFCs 128
  11.22 Release of Liens, Etc 128

 

SCHEDULES

 

2.01   Commitments and Applicable Percentages
5.15   Subsidiaries
5.17-1   Locations of Real Property
5.17-2   Locations of Chief Executive Office, Taxpayer Identification Number, Etc.
5.17-3   Changes in Legal Name, State of Formation and Structure
7.01   Existing Indebtedness
7.02   Existing Liens
7.04   Existing Investments
11.02   Certain Addresses for Notices

 

EXHIBITS

 

1.01   Form of Secured Party Designation Notice
2.02   Form of Loan Notice
2.04   Form of Swingline Loan Notice
2.05   Form of Notice of Loan Prepayment
2.11(a)   Form of Note
3.01   Forms of U.S. Tax Compliance Certificates
6.01   Form of Compliance Certificate
6.10   Form of Joinder Agreement
11.06(b)   Form of Assignment and Assumption
11.06(b)(iv)   Form of Administrative Questionnaire

 

iv
 

 

CREDIT AGREEMENT

 

This CREDIT AGREEMENT is entered into as of June 5, 2019 among HEALTH PLAN INTERMEDIARIES HOLDINGS, LLC, a Delaware limited liability company (the “Borrower”), the Guarantors (defined herein), the Lenders (defined herein) and BANK OF AMERICA, N.A., as Administrative Agent, Swingline Lender and L/C Issuer.

 

The Borrower has requested that the Lenders provide credit facilities for the purposes set forth herein, and the Lenders are willing to do so on the terms and conditions set forth herein.

 

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

 

Article I.

 

DEFINITIONS AND ACCOUNTING TERMS

 

1.01 Defined Terms.

 

As used in this Agreement, the following terms shall have the meanings set forth below:

 

Acquired Business” means the entity or assets acquired by the Borrower or any Subsidiary in an Acquisition on or after the Closing Date.

 

Acquisition” means (a) any Investment by the Borrower or any of its Subsidiaries in any other Person pursuant to which such Person shall become a Subsidiary or shall be merged with the Borrower or any of its Subsidiaries or (b) any acquisition by the Borrower or any of its Subsidiaries of the assets of any Person (other than a Subsidiary) that constitute all or a substantial portion of the assets of such Person or a division or business unit of such Person.

 

Administrative Agent” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

 

Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 11.02 or such other address or account as the Administrative Agent may from time to time notify the Borrower and the Lenders.

 

Administrative Questionnaire” means an Administrative Questionnaire in substantially the form of Exhibit 11.06(b)(iv) or any other form approved by the Administrative Agent.

 

Affiliate” means, as 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 Person. For the purposes of this definition, “Control” means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of a Person or (b) direct or cause the direction of the management and policies of a Person, whether through the ability to exercise voting power, by control or otherwise. The terms “Controlling”, “Controlled by”, and “under common Control with” have the meanings correlative thereto.

 

Aggregate Revolving Commitments” means the Revolving Commitments of all the Lenders. The initial amount of the Aggregate Revolving Commitments in effect on the Closing Date is $65,000,000.

 

 
 

 

Agreement” means this Credit Agreement.

 

All-In Yield” means, as to any Indebtedness, the yield thereof, whether in the form of interest rate, margin, original issue discount, upfront fees, a Eurodollar Rate or Base Rate floor or otherwise, in each case, incurred or payable by the Borrower generally to all lenders of such Indebtedness; provided that original issue discount and upfront fees shall be equated to interest rate assuming a 4-year life to maturity (or, if less, the stated life to maturity at the time of incurrence of the applicable Indebtedness); and provided, further, that “All-In Yield” shall not include arrangement, structuring, commitment, underwriting or other similar fees (regardless of whether paid in whole or in part to any lenders) not paid generally to all lenders of such Indebtedness.

 

Annual Statutory Statement” means the annual statutory financial statement of an Insurance Subsidiary required to be filed with the Applicable Department of Insurance.

 

Anti-Corruption Laws” means all Laws applicable to the Loan Parties and their Subsidiaries from time to time concerning or relating to bribery or corruption.

 

Applicable Department of Insurance” means, with respect to any Insurance Subsidiary, the state-level Department of Insurance that regulates such Insurance Subsidiary. “Applicable Insurance Regulatory Authority” means, (a) with respect to any Insurance Brokerage Entity, the Governmental Authority located in the jurisdiction in which such Insurance Brokerage Entity is domiciled or such other jurisdiction which due to the nature of such Insurance Brokerage Entity’s activities, has regulatory authority over such Person, and any federal Governmental Authority regulating the insurance industry and/or the insurance brokerage industry and (b) with respect to any Insurance Subsidiary, the Applicable Department of Insurance and, to the extent it has regulatory authority over such Insurance Subsidiary, the insurance department or similar Governmental Authority charged with regulating insurance companies or insurance holding companies in each other jurisdiction in which the Insurance Subsidiary conducts business or is licensed to conduct business.

 

Applicable Percentage” means with respect to any Lender at any time, (a) with respect to such Lender’s Revolving Commitment at any time, the percentage (carried out to the ninth decimal place) of the Aggregate Revolving Commitments represented by such Lender’s Revolving Commitment at such time; provided that if the commitment of each Lender to make Revolving Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02 or if the Aggregate Revolving Commitments have expired, then the Applicable Percentage of each Lender shall be determined based on the Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent assignments, and (b) with respect to such Lender’s portion of any outstanding class of Term Loan at any time, the percentage (carried out to the ninth decimal place) of the outstanding principal amount of such class of Term Loan held by such Lender at such time. The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption or other documentation pursuant to which such Lender becomes a party hereto, as applicable. The Applicable Percentages shall be subject to adjustment as provided in Section 2.15.

 

Applicable Rate” means the following percentages per annum, based upon the Consolidated Total Leverage Ratio as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.01(c):

 

2
 

 

Pricing Tier  Consolidated Total Leverage Ratio  Commitment Fee   Letter of Credit Fee   Eurodollar Rate Loans   Base Rate Loans 
1  < 1.00 to 1.00   0.20%   1.50%   1.50%   0.50%
2  >1.00 to 1.00 but < 2.00 to 1.00   0.25%   1.75%   1.75%   0.75%
3  > 2.00 to 1.00   0.30%   2.00%   2.00%   1.00%

 

Any increase or decrease in the Applicable Rate resulting from a change in the Consolidated Total Leverage Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.01(c); provided, however, that if a Compliance Certificate is not delivered when due in accordance with such Section, then, upon the request of the Required Lenders, Pricing Tier 3 shall apply as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered and shall remain in effect until the first Business Day immediately following the date on which such Compliance Certificate is delivered in accordance with Section 6.01(c), whereupon the Applicable Rate shall be adjusted based upon the calculation of the Consolidated Total Leverage Ratio contained in such Compliance Certificate. The Applicable Rate in effect from the Closing Date through the first Business Day immediately following the date a Compliance Certificate is required to be delivered pursuant to Section 6.01(c) for the Fiscal Quarter ending September 30, 2019 shall be determined based upon Pricing Tier 3. Notwithstanding anything to the contrary contained in this definition, the determination of the Applicable Rate for any period shall be subject to the provisions of Section 2.10(b).

 

Appropriate Lender” means, at any time, (a) with respect to any facility under this Agreement, a Lender that has a Commitment with respect to such facility or holds a Loan under such facility at such time, (b) with respect to the Letter of Credit Sublimit, (i) the L/C Issuer and (ii) if any Letters of Credit have been issued pursuant to Section 2.03(a), the Lenders with a Revolving Commitment and (c) with respect to the Swing Line Sublimit, (i) the Swing Line Lender and (ii) if any Swing Line Loans are outstanding pursuant to Section 2.04(a), the Lenders with a Revolving Commitment.

 

Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

Arrangers” means BAS and SunTrust Robinson Humphrey, Inc., in their capacity as joint lead arrangers and joint bookrunners. “Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 11.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit 11.06(b) or any other form (including electronic documentation generated by use of an electronic platform) approved by the Administrative Agent.

 

Availability Period” means, with respect to the Revolving Commitments, the period from and including the Closing Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Aggregate Revolving Commitments pursuant to Section 2.06, and (c) the date of termination of the commitment of each Lender to make Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02.

 

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Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

 

Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

 

Bank of America” means Bank of America, N.A. and its successors.

 

BAS” means BofA Securities, Inc., in its capacity as joint lead arranger and joint bookrunner.

 

Base Rate” means for any day a fluctuating rate of interest per annum equal to the highest of (a) the Federal Funds Rate plus 0.50%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate” and (c) the Eurodollar Rate plus 1.0%; provided that if the Base Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement. The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such “prime rate” announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

 

Base Rate Loan” means a Loan that bears interest based on the Base Rate.

 

Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation.

 

Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

 

Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Internal Revenue Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Internal Revenue Code) the assets of any such “employee benefit plan” or “plan”.

 

BHC Act Affiliate” has the meaning specified in Section 11.21(b).

 

Borrower” has the meaning specified in the introductory paragraph hereto.

 

Borrower Materials” has the meaning specified in Section 6.01.

 

Borrowing” means a borrowing consisting of simultaneous Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.01.

 

Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and, if such day relates to any Eurodollar Rate Loan, means any such day that is also a day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

 

4
 

 

California Property” means that certain leasehold interest in the real property located at 444 Castro Street, Mountain View, California 94041.

 

Capital Lease Obligations” of any Person means all obligations of such Person to pay rent or other amounts under any lease (or other arrangement conveying the right to use) of real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person prepared in accordance with GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

 

Capital Stock” means all shares, options, warrants, general or limited partnership interests, membership interests or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity whether voting or nonvoting, including common stock, preferred stock or any other “equity security” (as such term is defined in Rule 3a11 1 of the General Rules and Regulations promulgated by the SEC under the Securities Exchange Act of 1934). “Cash Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of one or more of the L/C Issuer or the Lenders, as collateral for L/C Obligations or obligations of the Lenders to fund participations in respect of L/C Obligations, (a) cash or deposit account balances, (b) backstop letters of credit entered into on terms, from issuers and in amounts satisfactory to the Administrative Agent and the L/C Issuer and/or (c) if the Administrative Agent and the L/C Issuer shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to the Administrative Agent and the L/C Issuer. “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

 

Cash Equivalents” means, as at any date:

 

(a) securities that are the direct obligations of, or obligations the timely payment of principal of and interest on which are unconditionally guaranteed by, the United States (or by any agency or instrumentality thereof to the extent such obligations are backed by the full faith and credit of the United States), in each case maturing within one year from the date of acquisition thereof;

 

(b) Investments in commercial paper having, at the time of acquisition thereof, a credit rating of at least A1 from S&P and at least P1 from Moody’s and in either case maturing within 270 days from the date of acquisition thereof;

 

(c) Investments in certificates of deposit, bankers’ acceptances and time deposits maturing within 180 days of the date of acquisition thereof (i) issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the Laws of the United States or any state thereof; provided that such certificates of deposit, banker’s acceptances and time deposits are held in a securities account (as defined in the Uniform Commercial Code) through which the Lender can perfect a security interest therein and (ii) having, at such date of acquisition, a credit rating of at least A1 from S&P and at least P1 from Moody’s;

 

(d) Investments in fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; and

 

5
 

 

(e) mutual funds investing solely in any one or more of the Cash Equivalents described in clauses (a) through (d) above;

 

provided; if either of Moody’s or S&P changes its rating system, then any ratings included in this definition shall be deemed to be an equivalent rating in a successor rating category of Moody’s or S&P as the case may be.

 

Cash Management Agreement” means any agreement that is not prohibited by the terms hereof to provide treasury or cash management services, including deposit accounts, overnight draft, credit cards, debit cards, p-cards (including purchasing cards and commercial cards), funds transfer, automated clearinghouse, zero balance accounts, returned check concentration, controlled disbursement, lockbox, account reconciliation and reporting and trade finance services and other cash management services.

 

Cash Management Bank” means any Person that (a) at the time it enters into a Cash Management Agreement, is a Lender or the Administrative Agent or an Affiliate of a Lender or the Administrative Agent, (b) in the case of any Cash Management Agreement in effect on or prior to the Closing Date, is, as of the Closing Date or within 30 days thereafter, a Lender or the Administrative Agent or an Affiliate of a Lender or the Administrative Agent and a party to a Cash Management Agreement or (c) within 30 days after the time it enters into the applicable Cash Management Agreement, becomes a Lender, the Administrative Agent or an Affiliate of a Lender or the Administrative Agent, in each case, in its capacity as a party to such Cash Management Agreement.

 

Change in Law” means the occurrence, after the Closing Date, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith or in the implementation thereof and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.

 

Change of Control” means the occurrence of one or more of the following events: (a) a direct or indirect change in ownership or control of the Parent effected through one transaction or a series of related transactions within a 12-month period, whereby any “person” (as used within the Exchange Act) or any two or more persons deemed to be one “person” or “group” (in each case, as used within the Exchange Act) other than the Parent or an employee benefit plan maintained by the Parent, directly or indirectly acquire or maintain “beneficial ownership” (as used within the Exchange Act) of securities of the Parent constituting more than 30% of the total combined voting power of the Parent’s equity securities outstanding immediately after such acquisition; or (b) at any time during a period of 18 consecutive months, individuals who at the beginning of such period constituted the board of directors of Parent cease for any reason to constitute a majority of members of the board of directors of the Parent; provided, however, that any new member of the board of directors of the Parent whose election or nomination for election was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was so approved, shall be considered as though such individual were a member of the board of directors of the Parent at the beginning of the period; or (c) the Parent shall cease to own and control, of record and beneficially, directly or indirectly, 100% of the outstanding Capital Stock of the Borrower; or (d) the Borrower shall cease to own and control, of record and beneficially, directly or indirectly, 100% of the outstanding Capital Stock of each Guarantor (excluding the Parent) entitled to vote.

 

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Closing Date” means June 5, 2019.

 

Closing Date Acquisition” means the Acquisition of RxHelpline, LLC, TogetherHealth PAP, LLC, and TogetherHealth Insurance, LLC, a Delaware limited liability company pursuant to the Closing Date Acquisition Agreement. “Closing Date Acquisition Agreement” means that certain Membership Interest Purchase Agreement dated as of the Closing Date among the Parent, the Borrower, RxHelpline, LLC, TogetherHealth PAP, LLC, TogetherHealth Insurance, LLC, TogetherHealth Soup, L.P. and the other sellers party thereto, together with all exhibits and schedules thereto.

 

Closing Date Acquisition Documents” means the Closing Date Acquisition Agreement and all other agreements, instruments and documents executed and delivered in connection with the Closing Date Acquisition Agreement. For the avoidance of doubt, the Loan Documents shall not constitute “Closing Date Acquisition Documents”. “Collateral” means a collective reference to all property with respect to which Liens in favor of the Administrative Agent, for the benefit of itself and the other holders of the Obligations, are purported to be granted pursuant to and in accordance with the terms of the Collateral Documents.

 

Collateral Documents” means a collective reference to the Security Agreement and other security documents as may be executed and delivered by any Loan Party pursuant to the terms of Section 6.11 or any of the Loan Documents.

 

Commitment” means, as to each Lender, the Revolving Commitment of such Lender and/or the Term A-1 Loan Commitment of such Lender.

 

Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.).

 

Compliance Certificate” means a certificate substantially in the form of Exhibit 6.01.

 

Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

 

Consolidated Capital Expenditures” means, for any period, without duplication, (a) the additions to property, plant and equipment and other capital expenditures of the Parent and its Subsidiaries (other than the Insurance Subsidiaries) that are (or would be) set forth on a consolidated statement of cash flows of the Parent for such period and (b) Capital Lease Obligations incurred by the Parent and its Subsidiaries (other than the Insurance Subsidiaries) during such period.

 

7
 

 

Consolidated EBITDA” means, for the Parent and its Subsidiaries (other than the Insurance Subsidiaries) for any period, determined on a consolidated basis, an amount equal to the sum of (a) Consolidated Net Income for such period plus (b) to the extent deducted in determining Consolidated Net Income for such period, without duplication, (i) Consolidated Interest Expense for such period, (ii) income tax expense for such period, (iii) depreciation and amortization for such period, (iv) non-cash charges, expenses or losses (including, without limitation, non-cash costs and/or expenses incurred pursuant to any management equity plan, stock option plan or any other stock subscription or shareholder agreement and any loss resulting from a mark to market adjustment of an earn out obligation but excluding (A) any regular operating non-cash charge, loss or expense that is an accrual of a reserve for a cash expense or payment to be made, or anticipated to be made, in a future period and (B) any expenses or charges related to accounts receivable), (v) reasonable and documented costs, fees and expenses incurred on or before the date that is ninety (90) days after Closing Date in connection with the negotiation, execution and delivery of this Agreement and the other Loan Documents, (vi) liability adjustments (or minus gains) under the Tax Receivable Agreement, (vii) reasonable and documented out-of-pocket fees and expenses incurred in connection with (A) Acquisitions (whether consummated or not, but excluding the Closing Date Acquisition and the Identified Potential Acquisition) and any attempted or consummated sale, issuance or disposition of Capital Stock or Investments permitted hereunder, including secondary offerings of Class B Shares (as defined in the Exchange Agreement) and (B) one-time regulatory fines or penalties, restructuring, severance and headcount reductions; provided, that the aggregate amount of all such fees and expenses with respect to the items described in this clause (vii) shall not exceed twenty-five percent (25.0%) of Consolidated EBITDA for the period of four (4) Fiscal Quarters most recently ended (determined prior to giving effect to such add-backs), (viii) other cash charges acceptable to the Administrative Agent, and (ix) reasonable and documented out-of-pocket fees and expenses incurred in connection with the Closing Date Acquisition and the Identified Potential Acquisition in an aggregate amount not to exceed $5,000,000 during the term of this Agreement minus (c) to the extent included in calculating Consolidated Net Income, any non-cash gains (including, without limitation, any gain resulting from a mark to market adjustment of an earn out obligation).

 

Consolidated Interest Coverage Ratio” means, as of any date of determination, the ratio of (a) the difference of (i) Consolidated EBITDA for the most recently completed four Fiscal Quarters minus (ii) depreciation and amortization expense for such period to (b) Consolidated Interest Expense for the most recently completed four Fiscal Quarters. “Consolidated Interest Expense” means, for the Parent and its Subsidiaries (other than the Insurance Subsidiaries) for any period determined on a consolidated basis, the sum of (a) total interest expense, including without limitation the interest component of any payments in respect of Capital Lease Obligations capitalized or expensed during such period (whether or not actually paid during such period) plus (b) the net amount payable (or minus the net amount receivable) with respect to Hedging Transactions during such period (whether or not actually paid or received during such period).

 

Consolidated Net Income” means, for the Parent and its Subsidiaries (other than the Insurance Subsidiaries) for any period determined on a consolidated basis, the net income (or loss) of the Parent and its Subsidiaries (other than the Insurance Subsidiaries) for such period but excluding therefrom (to the extent otherwise included therein) (a) any extraordinary gains or losses, (b) any gains attributable to write-ups of assets and (c) any equity interest of the Parent or any Subsidiary of the Parent in the unremitted earnings of any Person that is not a Subsidiary.

 

Consolidated Total Debt” means, as of any date, all Indebtedness of the Parent and its Subsidiaries (other than the Insurance Subsidiaries) measured on a consolidated basis as of such date, but excluding Indebtedness of the type described in subsection (i) of the definition thereto.

 

Consolidated Total Leverage Ratio” means, as of any date of determination, the ratio of (a) Consolidated Total Debt as of such date to (b) Consolidated EBITDA for the most recently completed four Fiscal Quarters.

 

Covered Entity” has the meaning specified in Section 11.21(b)

 

Credit Extension” means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.

 

8
 

 

Debt Issuance” means the issuance by any Loan Party or any Subsidiary of any Indebtedness other than Indebtedness permitted under Section 7.02.

 

Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.

 

Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

 

Default Rate” means (a) with respect to any Obligation for which a rate is specified, a rate per annum equal to two percent (2%) in excess of the rate otherwise applicable thereto and (b) with respect to any Obligation for which a rate is not specified or available, a rate per annum equal to the Base Rate plus the Applicable Rate for Revolving Loans that are Base Rate Loans plus two percent (2%), in each case, to the fullest extent permitted by applicable Law.

 

Default Right” has the meaning specified in Section 11.21(b)

 

Defaulting Lender” means, subject to Section 2.15(d), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, the L/C Issuer, the Swingline Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swingline Loans) within two Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent, the L/C Issuer or the Swingline Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Capital Stock in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.15(d)) as of the date established therefor by the Administrative Agent in a written notice of such determination, which shall be delivered by the Administrative Agent to the Borrower, the L/C Issuer, the Swingline Lender and each other Lender promptly following such determination.

 

9
 

 

Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition of any property by the Parent or any Subsidiary, including any sale and leaseback transaction and any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith, but excluding (a) the sale of inventory in the ordinary course of business; (b) the sale or disposition for fair market value of obsolete or worn out property or other property not necessary for operations of the Parent and its Subsidiaries disposed of in the ordinary course of business; (c) the disposition of property (including the cancellation of Indebtedness permitted by Section 7.04(d)) to the Parent or any Subsidiary; provided, that if the transferor of such property is a Loan Party then the transferee thereof must be a Loan Party; (d) the disposition of accounts receivable in connection with the collection or compromise thereof; (e) licenses, sublicenses, leases or subleases granted to others in the ordinary course of business or not interfering in any material respect with the business of the Parent or any Subsidiary; (f) the sale or disposition of Cash Equivalents for fair market value in the ordinary course of business, (g) the disposition of shares of Capital Stock of any Subsidiary in order to qualify members of the governing body of such Subsidiary if required by applicable Law, but excluding any Recovery Event, and (h) any sale or disposition made by an Insurance Subsidiary in the ordinary course of business.

 

Dollar” and “$” mean lawful money of the United States.

 

Domestic Subsidiary” means any Subsidiary that is organized under the Laws of any state of the United States or the District of Columbia.

 

EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a Subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

 

EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

 

EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

 

Eligible Assignee” means any Person that meets the requirements to be an assignee under Sections 11.06(b) (subject to such consents, if any, as may be required under Section 11.06(b)(iii)).

 

Environmental Laws” means all Laws relating in any way to the environment, preservation or reclamation of natural resources, the management, Release or threatened Release of any Hazardous Material or to health and safety matters.

 

Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental investigation and remediation, costs of administrative oversight, fines, natural resource damages, penalties or indemnities), of the Parent or any Subsidiary directly or indirectly resulting from or based upon (a) any actual or alleged violation of any applicable Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) any actual or alleged exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

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

 

ERISA Affiliate” means any trade or business (whether or not incorporated), which, together with the Parent, is treated as a single employer under Section 414(b) or (c) of the Internal Revenue Code or, solely for the purposes of Section 302 of ERISA and Section 412 of the Internal Revenue Code, is treated as a single employer under Section 414 of the Internal Revenue Code.

 

ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the failure of any Plan to meet the minimum funding standard applicable to the Plan for a plan year under Section 412 of the Internal Revenue Code or Section 302 of ERISA, whether or not waived; (c) the filing pursuant to Section 412(d) of the Internal Revenue Code or Section 303(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Parent or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Parent or any ERISA Affiliate from the PBGC or a plan administrator appointed by the PBGC of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Parent or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Parent or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Parent or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

 

EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

 

Eurodollar Rate” means:

 

(a) for any Interest Period with respect to a Eurodollar Rate Loan, the rate per annum equal to the London Interbank Offered Rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate for U.S. Dollars for a period equal in length to such Interest Period) (“LIBOR”) as published on the applicable Bloomberg screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period;

 

(b) for any interest calculation with respect to a Base Rate Loan on any date, the rate per annum equal to LIBOR, at or about 11:00 a.m., London time determined two Business Days prior to such date for U.S. Dollar deposits with a term of one month commencing that day; and

 

(c) if the Eurodollar Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement.

 

11
 

 

Eurodollar Rate Loan” means a Loan that bears interest at a rate based on clause (a) of the definition of “Eurodollar Rate.”

 

Event of Default” has the meaning specified in Section 8.01.

 

Exchange Act” means the Securities Exchange Act of 1934 and the rules of the SEC thereunder in effect on the Closing Date.

 

Excluded Accounts” means (a) deposit and/or securities accounts the balance of which consists exclusively of (i) withheld income taxes and federal, state or local employment taxes in such amounts as are required in the reasonable judgment of the Parent to be paid to the IRS or state or local government agencies within the following two months with respect to employees of any of the Loan Parties or (ii) amounts required to be paid over to an employee benefit plan pursuant to DOL Reg. Sec. 2510.3-102 on behalf of or for the benefit of employees of one or more Loan Parties, (b) accounts maintained solely in trust for the benefit of third parties and fiduciary purposes, escrow accounts, and employee benefit accounts (including 401(k) accounts and pension fund accounts), in each case, so long as such account is used solely for such purpose, (c) any deposit and/or securities account maintained in a jurisdiction outside of the United States and (d) restricted cash, meaning, collected risk premiums owing to contracted insurance carriers, discount benefit providers and distributors maintained in accounts solely on behalf of such Persons, in each case, so long as such account is used solely for such purpose.

 

Excluded Property” means, with respect to any Loan Party, (a) any owned or leased real property, (b) unless requested by the Administrative Agent or the Required Lenders, any IP Rights for which a perfected Lien thereon is not effected either by filing of a Uniform Commercial Code financing statement or by appropriate evidence of such Lien being filed in either the United States Copyright Office or the United States Patent and Trademark Office, (c) unless requested by the Administrative Agent or the Required Lenders, any personal property (other than personal property described in clause (b) above) for which the attachment or perfection of a Lien thereon is not governed by the Uniform Commercial Code, (d) the Capital Stock of any Foreign Subsidiary or any Insurance Subsidiary to the extent not required to be pledged to secure the Obligations pursuant to Section 6.11(a), (e) any property which, subject to the terms of Section 7.08, is subject to a Lien of the type described in Section 7.02(d) pursuant to documents which prohibit such Loan Party from granting any other Liens in such property, (f) Excluded Accounts and (g) any lease, license or other similar agreement or any property subject to a purchase money security interest or similar arrangement to the extent that a grant of a security interest therein would violate or invalidate such lease, license or similar agreement or purchase money security interest or similar arrangement or create a right of termination in favor of any other party thereto (other than the Borrower or a Guarantor) after giving effect to the applicable anti-assignment provisions of the Uniform Commercial Code and other applicable Laws, other than proceeds and receivables thereof, the assignment of which is expressly deemed effective under the Uniform Commercial Code and other applicable Laws notwithstanding such prohibition; provided, however, that the security interests granted under the Collateral Documents in favor of the Administrative Agent, for the benefit of the holders of the Obligations, shall attach immediately to any asset that ceases to meet any of the criteria for Excluded Property described in any of the foregoing clauses (a) through (g) above, including, without limitation, if the terms of the agreement(s) relating thereto that prohibit or limit the pledge or granting of security interest therein or that would give rise to a violation or invalidation of the agreement(s) with respect thereto, (i) are no longer in effect or (ii) have been waived by the other party to any such lease, license or other agreement.

 

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Excluded Swap Obligation” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guaranty of such Guarantor of, or the grant by such Guarantor of a Lien to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act (determined after giving effect to Section 10.08 and any other “keepwell”, support or other agreement for the benefit of such Guarantor and any and all guarantees of such Guarantor’s Swap Obligations by other Loan Parties) at the time the Guaranty of such Guarantor, or grant by such Guarantor of a Lien, becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a Master Agreement governing more than one Hedging Transaction, such exclusion shall apply to only the portion of such Swap Obligation that is attributable to Hedging Transactions for which such Guaranty or Lien is or becomes excluded in accordance with the first sentence of this definition.

 

Excluded Taxes” means any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the Laws of, or having its principal office or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a Law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 11.13) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 3.01(a)(ii), 3.01(a)(iii) or 3.01(c), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office, (c) Taxes attributable to such Recipient’s failure to comply with Section 3.01(e) and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.

 

Facility Termination Date” means the date as of which all of the following shall have occurred: (a) all Commitments have terminated, (b) all Obligations arising under the Loan Documents have been paid in full (other than contingent indemnification obligations), and (c) all Letters of Credit have terminated or expired (other than Letters of Credit that have been Cash Collateralized or as to which other arrangements with respect thereto satisfactory to the Administrative Agent and the L/C Issuer shall have been made).

 

FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.

 

FATCA” means Sections 1471 through 1474 of the Internal Revenue Code, as of the Closing Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code.

 

Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent and (c) if the Federal Funds Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement.

 

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Fee Letter” means the letter agreement, dated as of the Closing Date, among the Borrower and the Administrative Agent.

 

Fiscal Quarter” shall mean any fiscal quarter of the Parent.

 

Fiscal Year” shall mean any fiscal year of the Parent.

 

Foreign Lender” means a Lender that is not a U.S. Person.

 

Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

 

FRB” means the Board of Governors of the Federal Reserve System of the United States.

 

Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with respect to the L/C Issuer, such Defaulting Lender’s Applicable Percentage of the outstanding L/C Obligations other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the Swingline Lender, such Defaulting Lender’s Applicable Percentage of Swingline Loans other than Swingline Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders in accordance with the terms hereof.

 

Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

 

GAAP” means generally accepted accounting principles in the United States set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession) including, without limitation, the FASB Accounting Standards Codification, that are applicable to the circumstances as of the date of determination, consistently applied and subject to Section 1.03.

 

Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly and including any obligation, direct or indirect, of the guarantor (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued in support of such Indebtedness or obligation; provided, that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which Guarantee is made or, if not so stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith. The term “Guarantee” used as a verb has a corresponding meaning.

 

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Guarantors” means, collectively, (a) the Parent, (b) each Domestic Subsidiary of the Borrower identified as a “Guarantor” on the signature pages hereto, (c) each Person that joins as a Guarantor pursuant to Section 6.10 or otherwise, (d) with respect to (i) Obligations under any Secured Hedge Agreement, (ii) Obligations under any Secured Cash Management Agreement and (iii) any Swap Obligation of a Specified Loan Party (determined before giving effect to Sections 10.01 and 10.08) under the Guaranty, the Borrower, and (e) the successors and permitted assigns of the foregoing. For the avoidance of doubt, in no event shall any Insurance Subsidiary be or become required to be a Guarantor hereunder.

 

Guaranty” means the Guaranty made by the Guarantors in favor of the Administrative Agent and the other holders of the Obligations pursuant to Article X.

 

Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any applicable Environmental Law.

 

Headquarters Property” means that certain leasehold interest in the real property located at 15438 N. Florida Avenue, Suite 201, Tampa, Florida 33613.

 

Healthcare Laws” means all requirements of Law relating to (a) health or healthcare related fraud and abuse (including the following statutes, as amended, modified or supplemented from time to time and any successor statutes thereto and regulations promulgated from time to time thereunder: the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)); the Stark Law (42 U.S.C. § 1395nn and §1395(q)); the civil False Claims Act (31 U.S.C. § 3729 et seq.); Sections 1320a-7 and 1320a-7a and 1320a-7b of Title 42 of the United States Code; the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. No. 108-173)); (b) the provision of, or payment for, health care services, items or supplies; (c) the billing, coding or submission of claims or collection of accounts receivable or refund of overpayments; (d) HIPAA; (e) fee-splitting prohibitions; (f) certificates of operations and authority; (g) applicable state and federal insurance laws and regulations, including ERISA and (h) any and all other applicable federal, state or local health care laws, rules, codes, statutes, regulations, manuals, orders, ordinances, statutes, policies, professional or ethical rules, administrative guidance and requirements, as the same may be amended, modified or supplemented from time to time, and any successor statute thereto.

 

Healthcare Permits” shall have the meaning set forth in Section 5.06(b).

 

Hedge Bank” means any Person that (i) at the time it enters into a Hedging Transaction, is a Lender or the Administrative Agent or an Affiliate of a Lender or the Administrative Agent, (ii) in the case of any Hedging Transactions in effect on or prior to the Closing Date, is, as of the Closing Date or within 30 days thereafter, a Lender or the Administrative Agent or an Affiliate of a Lender or the Administrative Agent and a party to a Hedging Transactions or (iii) within 30 days after the time it enters into the applicable Hedging Transactions, becomes a Lender, the Administrative Agent or an Affiliate of a Lender or the Administrative Agent, in each case, in its capacity as a party to such Hedging Transactions; provided, in the case of a Secured Hedge Agreement with a Person who is no longer a Lender (or Affiliate of a Lender), such Person shall be considered a Hedge Bank only through the stated termination date (without extension or renewal) of such Secured Hedge Agreement.

 

15
 

 

Hedge Termination Value” means, in respect of any one or more Hedging Obligations, after taking into account the effect of any legally enforceable netting agreement relating to such Hedging Obligations, (a) for any date on or after the date such Hedging Obligations 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 Hedging Obligations, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Hedging Obligations (which may include the Lender or any Affiliate of the Lender).

 

Hedging Transaction” of any Person means (a) any transaction (including an agreement with respect to any such transaction) now existing or hereafter entered into by such Person that is a rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option, spot transaction, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, 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 (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

 

Hedging Obligations” of any Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired under (a) any and all Hedging Transactions, (b) any and all cancellations, buy backs, reversals, terminations or assignments of any Hedging Transactions and (c) any and all renewals, extensions and modifications of any Hedging Transactions and any and all substitutions for any Hedging Transactions. “HIPAA” means the Health Insurance Portability and Accountability Act of 1996, Pub. L. 104-191, Aug. 21, 1996, 110 Stat. 1936, as the same may be amended, modified or supplemented from time to time, and any successor statute thereto, and any and all rules or regulations promulgated from time to time thereunder.

 

Honor Date” has the meaning set forth in Section 2.03(c).

 

Hostile Acquisition” means the Acquisition of the Capital Stock of a Person through a tender offer or similar solicitation of the owners of such Capital Stock which has not been approved (prior to such Acquisition) by resolutions of the board of directors of such Person (or by similar action if such Person is not a corporation) or if such approval has been withdrawn.

 

Identified Potential Acquisition” means the potential Acquisition identified to the Administrative Agent prior to the Closing Date.

 

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Identified Potential Acquisition Documents” means the acquisition agreement with respect to the Identified Potential Acquisition, together with all exhibits and schedules thereto, and all other agreements, instruments and documents executed and delivered in connection with the Identified Potential Acquisition. For the avoidance of doubt, the Loan Documents shall not constitute “Identified Potential Acquisition Documents”.

 

IFRS” means international accounting standards within the meaning of IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements delivered under or referred to herein.

 

Incremental Facility Amendment” has the meaning specified in Section 2.16.

 

Incremental Facility Loans” has the meaning specified in Section 2.16.

 

Incremental Request” has the meaning specified in Section 2.16.

 

Incremental Revolving Commitments” has the meaning specified in Section 2.16.

 

Incremental Revolving Loans” has the meaning specified in Section 2.16.

 

Incremental Term Facility” has the meaning specified in Section 2.16.

 

Incremental Term Loans” has the meaning specified in Section 2.16.

 

Indebtedness” means, as to any Person at a particular time, without duplication (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person in respect of the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business; provided, that for purposes of Section 8.01(f), trade payables overdue by more than 120 days shall be included in this definition except to the extent that any of such trade payables are being disputed in good faith and by appropriate measures), (d) all obligations of such Person under any conditional sale or other title retention agreement(s) relating to property acquired by such Person, (e) all Capital Lease Obligations of such Person, (f) all obligations, contingent or otherwise, of such Person in respect of letters of credit, acceptances or similar extensions of credit, (g) all obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any Capital Stock of such Person, (h) Off-Balance Sheet Liabilities, (i) the Hedge Termination Value of all Hedging Obligations, (j) all Guarantees of such Person of the type of Indebtedness described in clauses (a) through (i) above and (k) all Indebtedness of a third party secured by any Lien on property owned by such Person, whether or not such Indebtedness has been assumed by such Person. The Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer, except to the extent that the terms of such Indebtedness provide that such Person is not liable therefor.

 

Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.

 

Indemnitee” has the meaning specified in Section 11.04(b).

 

Information” has the meaning specified in Section 11.07.

 

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Insurance Brokerage Entity” means the Parent and any Subsidiary of the Parent which is licensed by any Applicable Insurance Regulatory Authority to engage in insurance brokerage.

 

Insurance License” means any license, certificate of authority, permit or other authorization which is required to be obtained from any Applicable Insurance Regulatory Authority in connection with the operation, ownership or transaction of insurance or reinsurance business.

 

Insurance Subsidiaries” means (a) Benefytt, LLC, an Arkansas limited liability company and (b) any other direct or indirect Subsidiary of the Parent that is an insurance company.

 

Interest Payment Date” means (a) as to any Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided, however, that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan (including a Swingline Loan), the last Business Day of each March, June, September and December and the Maturity Date.

 

Interest Period” means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months thereafter (in each case, subject to availability), as selected by the Borrower in its Loan Notice, or such other period that is twelve months or less requested by the Borrower and consented to by all of the Appropriate Lenders; provided that:

 

(a) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

 

(b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

 

(c) no Interest Period shall extend beyond the Maturity Date.

 

Internal Revenue Code” means the Internal Revenue Code of 1986.

 

Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) purchase or other acquisition of any Capital Stock of another Person, (b) a loan, advance, other evidence of indebtedness or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other indebtedness or equity participation or interest in, another Person, or (c) an Acquisition. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

 

IP Rights” means all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights that are reasonably necessary for the operation of their respective businesses that the Parent or any of its Subsidiaries owns, or possesses the legal right to use.

 

IRS” means the United States Internal Revenue Service.

 

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ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).

 

Issuer Documents” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the L/C Issuer and the Borrower (or any Subsidiary) or in favor of the L/C Issuer and relating to such Letter of Credit.

 

Joinder Agreement” means a joinder agreement substantially in the form of Exhibit 6.10 executed and delivered by a Domestic Subsidiary in accordance with the provisions of Section 6.10 or any other documents as the Administrative Agent shall deem appropriate for such purpose.

 

Laws” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of Law.

 

L/C Advance” means, with respect to each Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Applicable Percentage.

 

L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Borrowing of Revolving Loans.

 

L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

 

L/C Issuer” means Bank of America in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.

 

L/C Obligations” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

 

Lenders” means each of the Persons identified as a “Lender” on the signature pages hereto, each other Person that becomes a “Lender” in accordance with this Agreement and their successors and assigns and, unless the context requires otherwise, includes the Swingline Lender.

 

Lending Office” means, as to the Administrative Agent, the L/C Issuer or any Lender, the office or offices of such Person described as such in such Person’s Administrative Questionnaire, or such other office or offices as such Person may from time to time notify the Borrower and the Administrative Agent, which office may include any Affiliate of such Person or any domestic or foreign branch of such Person or such affiliate.

 

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Letter of Credit” means any standby letter of credit issued hereunder providing for the payment of cash upon the honoring of a presentation thereunder.

 

Letter of Credit Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.

 

Letter of Credit Expiration Date” means the day that is seven days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).

 

Letter of Credit Fee” has the meaning specified in Section 2.03(h).

 

Letter of Credit Sublimit” means an amount equal to the lesser of (a) $10,000,000 and (b) the Aggregate Revolving Commitments. The Letter of Credit Sublimit is part of, and not in addition to, the Aggregate Revolving Commitments. As of the Closing Date, the Letter of Credit Sublimit is set forth on Schedule 2.01.

 

LIBOR” has the meaning specified in the definition of Eurodollar Rate.

 

LIBOR Screen Rate” means the LIBOR quote on the applicable screen page the Administrative Agent designates to determine LIBOR (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time).

 

LIBOR Successor Rate” has the meaning specified in Section 3.03(c).

 

LIBOR Successor Rate Conforming Changes” has the meaning specified in Section 3.03(c).

 

Lien” means any mortgage, pledge, security interest, lien (statutory or otherwise), charge, encumbrance, hypothecation, assignment, deposit arrangement, or other arrangement having the practical effect of any of the foregoing or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having the same economic effect as any of the foregoing), but not including any approval of any Applicable Insurance Regulatory Authority required in connection with a change in control of any Insurance Subsidiary.

 

Limited Condition Acquisition” means any Permitted Acquisition by one or more of the Loan Parties or their Subsidiaries financed in whole or in part with the substantially concurrent incurrence of a Loan, but whose consummation is not conditioned on the availability of, or on obtaining, third-party financing and which is consummated no more than one hundred eighty (180) days after the applicable Limited Condition Acquisition Agreement date is executed and effective.

 

Limited Condition Acquisition Agreement” has the meaning specified in Section 1.08.

 

Loan” means an extension of credit by a Lender to the Borrower under Article II in the form of a Revolving Loan, Swingline Loan or the Term A-1 Loan, and shall include as the context requires, any Incremental Facility Loan.

 

Loan Documents” means this Agreement, each Note, each Issuer Document, each Joinder Agreement, the Collateral Documents, each Incremental Facility Amendment and the Fee Letter (but specifically excluding Secured Hedge Agreements and any Secured Cash Management Agreements).

 

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Loan Notice” means a notice of (a) a Borrowing of Revolving Loans or a Term Loan, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Eurodollar Rate Loans, in each case pursuant to Section 2.02(a), which shall be substantially in the form of Exhibit 2.02 or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent) appropriately completed and signed by a Responsible Officer of the Borrower.

 

Loan Parties” means, collectively, the Borrower and each Guarantor.

 

Master Agreement” has the meaning specified in the definition of “Hedging Transaction.”

 

Material Adverse Effect” means with respect to any event, act, condition or occurrence of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singularly or in conjunction with any other event or events, act or acts, condition or conditions, occurrence or occurrences whether or not related, resulting in a material adverse change in, or a material adverse effect on, (a) the business, results of operations, financial condition, assets, liabilities or prospects of the Parent and its Subsidiaries taken as a whole, (b) the ability of the Loan Parties, as a whole, to perform their obligations under the Loan Documents, (c) the rights and remedies of the Administrative Agent and the Lenders under any of the Loan Documents or (d) the legality, validity or enforceability of any of the Loan Documents.

 

Material Agreements” means (a) all agreements, indentures or notes governing the terms of any Material Indebtedness, (b) all employment and non-compete agreements with management, (c) all leases of real property, and (d) all other agreements, documents, contracts, indentures and instruments pursuant to which (i) any Loan Party or any of its Subsidiaries (other than an Insurance Subsidiary) are obligated to make payments in any twelve month period of $1,000,000 or more, (ii) any Loan Party or any of its Subsidiaries (other than an Insurance Subsidiary) expects to receive revenue in any twelve month period of $1,000,000 or more and (iii) a default, breach or termination thereof would reasonably be expected to result in a Material Adverse Effect.

 

Material Indebtedness” means any Indebtedness (other than the Loans and Letters of Credit) and Hedging Obligations of the Parent or any of its Subsidiaries (other than an Insurance Subsidiary), individually or in an aggregate committed or outstanding principal amount exceeding $5,000,000. For purposes of determining the amount of attributed Indebtedness from Hedging Obligations, the “principal amount” of any Hedging Obligations at any time shall be the Net Mark-to-Market Exposure of such Hedging Obligations.

 

Maturity Date” means June 5, 2022; provided, however, that if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.

 

Minimum Collateral Amount” means, at any time, (a) with respect to Cash Collateral consisting of cash or deposit account balances provided to reduce or eliminate Fronting Exposure during any period when a Lender constitutes a Defaulting Lender, an amount equal to 105% of the Fronting Exposure of the L/C Issuer with respect to Letters of Credit issued and outstanding at such time, (b) with respect to Cash Collateral consisting of cash or deposit account balances provided in accordance with the provisions of Section 2.14(a)(i), (a)(ii) or (a)(iii), an amount equal to 105% of the Outstanding Amount of all L/C Obligations, and (c) otherwise, an amount determined by the Administrative Agent and the L/C Issuer in their sole discretion.

 

Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

 

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Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA to which the Parent makes or is obligated to make contributions or with respect to which the Parent has any liability (including on account of an ERISA Affiliate).

 

Net Cash Proceeds” means the aggregate cash or Cash Equivalents proceeds received by any Loan Party or any Subsidiary (other than an Insurance Subsidiary) in respect of any Disposition, Debt Issuance or Recovery Event, net of (a) direct costs incurred in connection therewith (including legal, accounting and investment banking fees, and sales commissions), (b) taxes paid or payable as a result thereof and (c) in the case of any Disposition or any Recovery Event, the amount necessary to retire any Indebtedness secured by a Lien permitted by Section 7.02 (ranking senior to any Lien of the Administrative Agent) on the related property; it being understood that “Net Cash Proceeds” shall include any cash or Cash Equivalents received upon the sale or other disposition of any non-cash consideration received by any Loan Party or any such Subsidiary in any Disposition, Debt Issuance or Recovery Event.

 

Net Mark-to-Market Exposure” of any Person means, as of any date of determination with respect to any Hedging Obligation, the excess (if any) of all unrealized losses over all unrealized profits of such Person arising from such Hedging Obligation. “Unrealized losses” means the fair market value of the cost to such Person of replacing the Hedging Transaction giving rise to such Hedging Obligation as of the date of determination (assuming the Hedging Transaction were to be terminated as of that date), and “unrealized profits” means the fair market value of the gain to such Person of replacing such Hedging Transaction as of the date of determination (assuming such Hedging Transaction were to be terminated as of that date).

 

Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (a) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 11.01 and (b) has been approved by the Required Lenders.

 

Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting Lender at such time.

 

Note” has the meaning specified in Section 2.11(a).

 

Notice of Loan Prepayment” means a notice of prepayment with respect to a Loan, which shall be substantially in the form of Exhibit 2.05 or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrower.

 

Obligations” means with respect to each Loan Party (i) all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit, and (ii) all obligations of any Loan Party or any Subsidiary (other than an Insurance Subsidiary) owing to a Cash Management Bank or a Hedge Bank in respect of Secured Cash Management Agreements or Secured Hedge Agreements, in each case identified in clauses (i) and (ii) whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding; provided, however, that the “Obligations” of a Loan Party shall exclude any Excluded Swap Obligations with respect to such Loan Party.

 

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OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.

 

Off-Balance Sheet Liabilities” of any Person means (a) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (b) any liability of such Person under any sale and leaseback transactions that do not create a liability on the balance sheet of such Person, (c) any Synthetic Lease Obligation or (d) any obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheet of such Person.

 

Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement or limited liability company agreement (or equivalent or comparable documents with respect to any non-U.S. jurisdiction); (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization (or equivalent or comparable documents with respect to any non-U.S. jurisdiction) and (d) with respect to all entities, any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization (or equivalent or comparable documents with respect to any non-U.S. jurisdiction).

 

OSHA” means the Occupational Safety and Health Act of 1970, as amended from time to time, and any successor statute.

 

Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

 

Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.06).

 

Other Term Loans” has the meaning specified in Section 2.16.

 

Outstanding Amount” means (a) with respect to any Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of any Loans occurring on such date; and (b) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by the Borrower of Unreimbursed Amounts.

 

Parent” means Health Insurance Innovations, Inc., a Delaware corporation.

 

Participant” has the meaning specified in Section 11.06(d).

 

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“Participant Register” has the meaning specified in Section 11.06(d).

 

PBGC” means the Pension Benefit Guaranty Corporation.

 

Permitted Acquisition” any Acquisition that either has been approved in writing by the Required Lenders or with respect to which all of the following conditions shall have been satisfied:

 

(a) the Acquired Business is in the same or similar line of business as the Parent and its Subsidiaries and has its primary operations within the United States of America;

 

(b) the Acquisition shall not be a Hostile Acquisition;

 

(c) subject to Section 1.08 in the case of an Incremental Term Facility used to finance a Limited Condition Acquisition, (i) no Default or Event of Default shall exist and be continuing immediately before or immediately after giving effect to such Acquisition, (ii) the representations and warranties made by each of the Loan Parties in each Loan Document shall be true and correct in all material respects (other than those representations and warranties that are expressly qualified by concepts of materiality or a Material Adverse Effect, in which case such representations and warranties shall be true and correct in all respects) as if made on the date of such Acquisition (after giving effect thereto) except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date (other than those representations and warranties that are expressly qualified by concepts of materiality or a Material Adverse Effect, in which case such representations and warranties shall be true and correct in all respects as of such earlier date), and except that for purposes of this clause (ii), the representations and warranties contained in Section 5.04 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01, (iii) after giving effect to such Acquisition on a Pro Forma Basis, (A) the Parent shall be in compliance with the financial covenants set forth in Section 7.20 for the period of four (4) Fiscal Quarters most recently ended prior to the date of determination for which financial statements were delivered under Section 6.01(a) or (b) and (B) the Consolidated Total Leverage Ratio shall be no greater than the ratio that is 0.25:1.0 (a “quarter turn”) less than the maximum Consolidated Total Leverage Ratio then permitted under Section 7.20(a), and (iv) at least five (5) Business Days prior to the consummation of such Acquisition, the Parent shall have delivered to the Administrative Agent a duly completed Pro Forma Compliance Certificate;

 

(d) in the case of any Acquisition for which the aggregate consideration is greater than $15,000,000, prior to the consummation of such Acquisition, the Parent shall have furnished to the Administrative Agent such financial and other information as to such Acquisition or the Acquired Business as the Administrative Agent or the Required Lenders may reasonably request including, without limitation, (i) a description of the material terms of such Acquisition and (ii) either, at the Parent’s option, (A) audited financial statements of the Acquired Business for its most recent Fiscal Year ended, which audited financial statements shall have been audited by an independent public accountant reasonably satisfactory to the Administrative Agent, and financial statements for any Fiscal Quarters ended within the Fiscal Year to date prepared by management of the Acquired Business (which shall be certified by the chief financial officer or treasurer (or manager or member holding performing similar roles) of the Acquired Business as fairly presenting in all material respects the consolidated financial condition of the Acquired Business and its subsidiaries as of such dates and the consolidated results of operations for such periods in conformity with GAAP consistently applied subject to year-end audit adjustments and the absence of footnotes in the case of the statements), or (B) a quality of earnings report or other due diligence report on the Acquired Business from a third party reasonably acceptable to the Administrative Agent, which report shall be in form and detail reasonably satisfactory to the Administrative Agent;

 

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(e) if a new Subsidiary is formed or acquired as a result of or in connection with such Acquisition, the Parent shall have caused such Subsidiary to join as a Guarantor within ten (10) business days of the Acquisition as provided for in Sections 6.10 and 6.11 in connection therewith; and

 

(f) the aggregate cash and non-cash consideration (including any assumption of Indebtedness, deferred purchase price and any earn-out obligations (in the case of earn-out obligations, included only to the extent such earn-out obligations should be recorded as a liability on the financial statements of the Parent and its Subsidiaries in accordance with GAAP in connection with such Acquisition) and any equity consideration) paid by the Parent and its Subsidiaries shall not exceed for all Acquisitions occurring in any Fiscal Year, $40,000,000.

 

Permitted Encumbrances” means:

 

(a) Liens imposed by applicable Law for taxes not yet due or which are being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves are being maintained in accordance with GAAP;

 

(b) statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen and other Liens imposed by applicable Law in the ordinary course of business for amounts not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP;

 

(c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other applicable social security Laws or regulations;

 

(d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;

 

(e) judgment and attachment liens not giving rise to a Default or an Event of Default or Liens created by or existing from any litigation or legal proceeding that are currently being contested in good faith by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP;

 

(f) customary rights of set-off, revocation, refund or chargeback under deposit agreements or under the Uniform Commercial Code or common law of banks or other financial institutions where Parent or any of its Subsidiaries maintains deposits (other than deposits intended as cash collateral) in the ordinary course of business;

 

(g) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by applicable Law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or materially interfere with the ordinary conduct of business of the Parent and its Subsidiaries taken as a whole; and

 

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(h) any interest of title of a lessor under, and Liens arising from Uniform Commercial Code financing statements (or equivalent filings, registrations or agreements in foreign jurisdictions) relating to, leases permitted by this Agreement;

 

provided, that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.

 

Permitted Tax Distributions” means cash distributions made by the Borrower (with respect to any period for which the Borrower is a limited liability company, partnership or S corporation) to the holders of its Capital Stock to provide such holders with funds to pay any federal, state or local income (or similar) taxes attributable to such holders’ ownership interest in the Borrower, including pursuant to the Tax Receivable Agreement. Such distributions shall be made to such holders on an equal basis per unit of Capital Stock based upon the tax rate of the holder of such Capital Stock having the highest tax rate.

 

Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

Personal Information” means (a) all information that could reveal the identity of any natural Person; and (b) all other information regarding natural Persons, the collection, use, or disclosure of which is subject to the requirement of Healthcare Laws, including without limitation information regarding patient care or payment for patient care.

 

Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Parent or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

Platform” has the meaning specified in Section 6.01.

 

Pro Forma Basis” means, for purposes of calculating compliance with respect to any Disposition, Recovery Event, Permitted Acquisition, Restricted Payment, increase in the Aggregate Revolving Commitments or incurrence of an Incremental Term Loan pursuant to Section 2.16 or incurrence of Indebtedness, or any other transaction subject to calculation on a “Pro Forma Basis” as indicated herein, that such transaction shall be deemed to have occurred as of the first day of the period of four (4) Fiscal Quarters most recently ended for which the Parent has delivered financial statements pursuant to Section 6.01(a) or (b). For purposes of any such calculation in respect of any Permitted Acquisition, (a) income statement and cash flow statement items attributable to the Person or property subject to such Permitted Acquisition shall be included in Consolidated EBITDA to the extent such items are included in such income statement and cash flow statement items of the Parent and its Subsidiaries in accordance with the definition of “Consolidated EBITDA” set forth in Section 1.01; (b) any Indebtedness incurred or assumed by the Parent or any Subsidiary (including the Person or property acquired) in connection with such transaction and any Indebtedness of the Person or property acquired which is not retired in connection with such transaction (i) shall be deemed to have been incurred as of the first day of the applicable period and (ii) if such Indebtedness has a floating or formula rate, shall have an implied rate of interest for the applicable period for purposes of this definition determined by utilizing the rate which is or would be in effect with respect to such Indebtedness as at the relevant date of determination; and (c) Consolidated Capital Expenditures attributable to the Person or property acquired shall be included beginning as of the first day of the applicable period.

 

Pro Forma Budget” shall have the meaning set forth in Section 6.01(d).

 

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Pro Forma Compliance Certificate” means a certificate of a Responsible Officer of the Parent containing (a) reasonably detailed calculations of the financial covenants set forth in Section 7.20 recomputed as of the end of the period of the four (4) Fiscal Quarters most recently ended for which the Parent has delivered financial statements pursuant to Section 6.01(a) or (b) after giving effect to the applicable transaction on a Pro Forma Basis and (b) if delivered in connection with any Permitted Acquisition, certifications that clauses (a) through (h) of the definition of “Permitted Acquisition” have been satisfied (or will be satisfied in the time permitted under this Agreement).

 

PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

 

Public Lender” has the meaning specified in Section 6.01.

 

QFC” has the meaning specified in Section 11.21.

 

QFC Credit Support” has the meaning specified in Section 11.21.

 

Qualified Acquisition” means a Permitted Acquisition with aggregate consideration of at least $20,000,000; provided, that, for any such Permitted Acquisition to qualify as a Qualified Acquisition, a Responsible Officer of the Borrower shall have delivered to the Administrative Agent a certificate (any such certificate, a “Qualified Acquisition Notice”) on or prior to the consummation of such Permitted Acquisition, (x) certifying that the Permitted Acquisition meets the criteria set forth before the proviso above and (y) notifying the Administrative Agent that the Borrower has elected to treat such Permitted Acquisition as a Qualified Acquisition.

 

Qualified Acquisition Notice” has the meaning specified in the definition of “Qualified Acquisition”.

 

Qualified Acquisition Pro Forma Determination” means, to the extent required in connection with determining the permissibility of any Permitted Acquisition that constitutes a Qualified Acquisition, the determination required by clause (c)(iii) in the definition of “Permitted Acquisition”.

 

Qualified ECP Guarantor” means, at any time, each Loan Party with total assets exceeding $10,000,000 or that qualifies at such time as an “eligible contract participant” under the Commodity Exchange Act and can cause another Person to qualify as an “eligible contract participant” at such time under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

Quarterly Statutory Statement” means the quarterly statutory financial statement of an Insurance Subsidiary required to be filed with the Applicable Department of Insurance.

 

Recipient” means the Administrative Agent, any Lender, the L/C Issuer or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder.

 

Recovery Event” means any loss of, damage to or destruction of, or any condemnation or other taking for public use of, any property of the Parent or any Subsidiary.

 

Register” has the meaning specified in Section 11.06(c).

 

Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System, as the same may be in effect from time to time, and any successor regulations.

 

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Regulation T” means Regulation T of the Board of Governors of the Federal Reserve System, as the same may be in effect from time to time, and any successor regulations.

 

Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System, as the same may be in effect from time to time, and any successor regulations.

 

Regulation X” means Regulation X of the Board of Governors of the Federal Reserve System, as the same may be in effect from time to time, and any successor regulations.

 

Regulation Y” means Regulation Y of the Board of Governors of the Federal Reserve System, as the same may be in effect from time to time, and any successor regulations.

 

Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

 

Release” means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) or within any building, structure, facility or fixture.

 

Request for Credit Extension” means (a) with respect to a Borrowing, conversion or continuation of Loans, a Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to a Swingline Loan, a Swingline Loan Notice.

 

Required Lenders” means, at any time, Lenders having Total Credit Exposures representing more than 50% of the Total Credit Exposures of all Lenders. The Total Credit Exposure of any Defaulting Lender shall be disregarded in determining Required Lenders at any time; provided that the amount of any participation in any Swingline Loan and Unreimbursed Amounts that such Defaulting Lender has failed to fund that have not been reallocated to and funded by another Lender shall be deemed to be held by the Lender that is the Swingline Lender or L/C Issuer, as the case may be, in making such determination.

 

Resignation Effective Date” has the meaning specified in Section 9.06.

 

Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller of a Loan Party, and, solely for purposes of the delivery of incumbency certificates, the secretary or any assistant secretary of a Loan Party and, solely for purposes of notices given pursuant to Article II, any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer or employee of the applicable Loan Party designated in or pursuant to an agreement between the applicable Loan Party and the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, limited liability company, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party. To the extent requested by the Administrative Agent, each Responsible Officer will provide an incumbency certificate and appropriate authorization documentation, in form and substance reasonably satisfactory to the Administrative Agent.

 

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Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Capital Stock of any Person, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such Capital Stock or on account of any return of capital to such Person’s stockholders, partners or members (or the equivalent Person thereof), or any option, warrant or other right to acquire any such dividend or other distribution or payment.

 

Revolving Commitment” means, as to each Lender, its obligation to (a) make Revolving Loans to the Borrower pursuant to Section 2.01, (b) purchase participations in L/C Obligations, and (c) purchase participations in Swingline Loans, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and Assumption or other documentation pursuant to which such Lender becomes a party hereto, as applicable as such amount may be adjusted from time to time in accordance with this Agreement. Revolving Commitments shall include any Incremental Revolving Commitment.

 

Revolving Credit Exposure” means, as to any Lender at any time, the aggregate principal amount at such time of its outstanding Revolving Loans and such Lender’s participation in L/C Obligations and Swingline Loans at such time.

 

Revolving Loan” has the meaning specified in Section 2.01(a).

 

S&P” means Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw Hill Companies, Inc. and any successor thereto.

 

Sanctioned Country” means, at any time, a country or territory that is, or whose government is, the subject or target of any Sanctions.

 

Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of State, the United Nations Security Council, the European Union or any European Union member state, (b) any Person located, organized or resident in a Sanctioned Country or (c) any Person controlled by any such Person.

 

Sanctions” means economic or financial sanctions or trade embargoes administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State, (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom, or (c) any other relevant sanctions authority.

 

SAP” means, as to an Insurance Subsidiary, the statutory accounting practices prescribed or permitted by the Applicable Insurance Regulatory Authority for the preparation of its financial statements and other reports by insurance corporations of the same type as such Insurance Subsidiary in effect on the date such statements or reports are to be prepared.

 

Scheduled Unavailability Date” has the meaning specified in Section 3.03(c).

 

SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

 

Secured Cash Management Agreement” means any Cash Management Agreement that is entered into by and between any Loan Party or any Subsidiary (excluding any Insurance Subsidiary) and any Cash Management Bank with respect to such Cash Management Agreement. For the avoidance of doubt, a holder of Obligations in respect of Secured Cash Management Agreements shall be subject to the last paragraph of Section 8.03 and Section 9.11.

 

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Secured Hedge Agreement” means any Hedging Transaction that is entered into by and between any Loan Party or any Subsidiary (excluding any Insurance Subsidiary) and any Hedge Bank with respect to such Hedging Transaction. For the avoidance of doubt, a holder of Obligations in respect of Secured Hedge Agreements shall be subject to the last paragraph of Section 8.03 and Section 9.11.

 

Secured Party Designation Notice” means a notice from any Lender or an Affiliate of a Lender substantially in the form of Exhibit 1.01.

 

Security Agreement” means the security and pledge agreement, dated as of the Closing Date, executed in favor of the Administrative Agent for the benefit of the holders of the Obligations by each of the Loan Parties.

 

Social Security Act” means the Social Security Act of 1965.

 

Solvent” or “Solvency” means, with respect to the Loan Parties on a particular date, that on such date (a) the present fair saleable value of the property and assets of the Loan Parties and their Subsidiari