Item 1.01. Entry into a Material Definitive Agreement.
On December 31, 2021, Cure TopCo, LLC (the "Company"), a subsidiary of Signify
Health, Inc., entered into (i) an amendment (the "2019 EAR Amendment") to the
equity appreciation fee right agreement between the Company and Collaborative
Care Holdings, LLC ("CCH"), dated December 20, 2019 (the "Original 2019 EAR
Agreement"), and (ii) an amendment (the "2020 EAR Amendment, and collectively
with the 2019 EAR Amendment, the "EAR Amendments") to the equity appreciation
fee right agreement between the Company and CCH, dated September 28, 2020 (the
"Original 2020 EAR Agreement"). The Company previously issued certain equity
appreciation rights ("EARs") to CCH pursuant to the Original 2019 EAR Agreement
and the Original 2020 EAR Agreement.
The EAR Amendments provide, among other things, that CCH may exercise any
unexercised, vested and non-forfeited portion of each EAR upon the sale of the
Company's Class A common stock by New Mountain Capital, the Company's sponsor,
subject to certain terms and conditions. These terms and conditions include,
among others, that CCH has met its revenue targets under each EAR for 2022 and
that New Mountain Capital has sold Class A common stock of the Company above a
certain threshold as set forth in each amendment. The Company has the option to
settle any portion of the EARs so exercised in cash or in Class A common stock,
provided that the aggregate amount of any cash payments do not exceed
$25,000,000 in any calendar quarter (with any amounts exceeding $25,000,000 to
be paid in the following quarter or quarters).
The Company and CCH also agreed to extend their commercial arrangements through
the middle of 2026 and established targets for the minimum number of in-home
evaluations to be performed on behalf of CCH each year (the "Volume Targets").
In connection with this extension, the Company and CCH also entered into a
letter agreement (the "Letter Agreement") that provides that, in the event of a
change in control of the Company or certain other corporate transactions, and
subject to CCH achieving the Volume Targets, if the aggregate amount paid under
the EARs prior to and in connection with such event (the "Aggregate EAR Value")
is less than $118,500,000, then CCH will be paid the difference between
$118,500,000 and the Aggregate EAR Value.
The description above is a summary and is qualified in its entirety by the 2019
EAR Amendment, the 2020 EAR Amendment and the Letter Agreement.
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